AfCFTA could be a game changer for Egyptian industry exports — once it’s properly implemented: The African Continental Freetrade Agreement (AfCFTA) has the potential to be a boon for Egyptian export figures, particularly as African countries are promising export markets, but the agreement still needs to be implemented across the continent. Egyptian industry players Enterprise spoke with are optimistic about what the pact could mean for us here at home, but note that there are several obstacles that need to be cleared before it’s implemented, and to ensure that it has a real effect on our exports.

REFRESHER- The AfCFTA was signed in March 2018 by 44 countries with the goal of creating a pan-African single market and eventually, a single currency, alongside unobstructed movement for persons. Egypt signed the AfCFTA in 2018, but the outbreak of the Covid-19 pandemic threw a wrench in the works. To date, the agreement has 54 states that have signed the agreement, 47 of which have also ratified it. These 47 states returned to the discussion table in the past several months to resume talks on the implementation of AfCFTA and fully bringing it into force.

We have our first agreement under AfCFTA: Last month, Egypt signed a commercialagreement with Ghana on food exports, marking the first agreement under the framework of the AfCFTA.

By the numbers: Egypt exported some USD 6.3 bn worth of goods to African countries in 2022, up 14% y-o-y from the year prior. Libya was our biggest export market in 2022, accounting for USD 1.2 bn of our exports, followed by Sudan (USD 929 mn), Morocco (USD 881 mn), Algeria (USD 741 mn), Kenya (USD 356 mn), Tunisia (USD 307 mn), and Ghana (USD 238 mn). On the import side, Egypt has also been importing more from African countries, with imports coming in at USD 2.3 bn in 2022, up 15.4% y-o-y from 2021.

We could be doing better: Activating the AfCFTA and ironing out some key details could allow Egypt to bump up its export figures to Africa to USD 7.8 bn annually within three years, according to Egyptian Commercial Representation Service head Yahya Al Wathiq Billah.

Egypt has presence on the ground to boost trade: We have 14 commercial representative offices in Africa, including North African countries, with an eye to bumping up trade, industrial integration, and intra-continental trade, Al Wathiq Billah told us. AfCFTA aims to improve the competitiveness of the economies of African countries, attract investment opportunities within the continent, remove customs and non-tariff barriers and obstacles, as well as create a unified African market for goods and services.

There’s plenty of optimism — but challenges abound: The most critical aspects of the continental trade agreement for Egypt are setting a customs control framework that doesn’t create more hiccups, as well as ironing out monetary questions including how to conduct trade while accepting each country’s currency as payment, according to our sources. Central banks from across the signatory countries must work to create a payment mechanism for the continental platform, Egyptian-African Businessmen Association Chairman Yousry El Sharqawi told Enterprise. Policymakers also need to set up frameworks to link the countries’ financial systems with unified customs transactions and commodity codes, while establishing a unified accreditation body to streamline the movement of goods between countries.

And some infrastructural questions to answer, too: Africa’s transport network — particularly through river and sea transport — needs to be modernized and properly equipped to connect countries together for ease of movement, El Sharqawy noted. Perhaps more challenging, however, is customs warehousing across the continent, which will require investments and a unified framework and set of rules.

The most important lesson to apply in all this: Eliminate bureaucracy and focus on streamlining. That’s El Sharqawy’s take on the path forward with discussions, stressing that all the relevant authorities and organizations from each country need to be rowing in the same direction to create a unified system and avoid redundancies.

What’s next? Countries that have ratified the AfCFTA are now working on signing bilateral or multi-party trade agreements, some of which are only experimental or early-stage agreements, El Wathiq Billah told us. There are currently seven signatory countries waiting on parliamentary approval of their entrance into the continental pact, he said.

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