As the Covid-19 pandemic was taking its toll on global and regional business enterprises, in April 2020, Commercial Bank of Egypt (CIB) became the first Egyptian bank to establish a presence in Kenya, through acquisition of a majority stake in Nairobi-based Mayfair Bank (MBL).
The $35 million deal allows Egypt’s largest private bank, with over $24 billion in assets, to take over a network of five branches and a portfolio of high-net-worth individuals and corporate clients. This was just one of the ventures through, which Egyptian based brands were expanding their footprints across the continent. The pandemic has devastated global economies, and since the crisis set in, Egypt has provided assistance to several countries to help alleviate negative impact.
However, despite the pressure put on national resources, international economic institutions have stated that, among a few number of countries, Egypt has recorded a positive growth rate during the pandemic.
Like other governments, Egypt under President Abdel Fattah El Sisi, was faced with the Herculean task of balancing development and the emerging problems against the backdrop of the crisis. The government allotted huge sums of money to develop the health and education sectors as well as provide financial subsidies for the per diem employees and the most affected households.
Under President Al Sisi, Egypt has transformed from a consumer to a manufacturing economy with emphasis on industrial and infrastructural development. The government has heavily invested in construction of roads and bridges, reclamation of hundreds of thousands of acres, the provision of housing units for the poor and middle-income, the establishment of a new capital and the development of factories.
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Egypt is banking on increased trade with the rest of Africa to scale up export volumes, enable their banks to participate in infrastructure projects and reduce the country’s commercial deficit.
Egyptian businesses already benefit from the country’s membership in the Common Market for Eastern and Southern Africa (Comesa) and other recent trade agreements, and should also be beneficiaries once the African Union—led African Continental Free Trade Area is implemented.
Several Egyptian companies have already expanded footprint in other parts of the continent, “CIB and other Egyptian banks will be able to easily support” projects like the $3 billion hydroelectric dam in Tanzania that El Electric Company and Arab Contractors are building.
Poverty alleviation through structured social security programmes are already in place. Since 2017 the programme is targeted at achieving social justice and properly directing the state subsidy to those who deserve.
Reports by the IMF indicated a noticeable improvement of the economic conditions in Egypt since the beginning of the economic reform programme. Liberalisation of the exchange rate has accelerated the growth rate, decreased the foreign trade and financial deficit, increased foreign exchange reserves and decreased unemployment to 8.3%. In a broader economic sense, the reform measures undertaken with the backing of the IMF were difficult – but necessary – for the health of the economy going forwards. The steps taken to improve the regulatory framework and reduce bureaucratic inefficiency were important and will continue to be a priority.
This is because improving the ease of doing business creates jobs, and allows families to improve their lives and the lives of their children. The fiscal measures taken have strengthened the government’s financial position and have enabled it to manage the effects of the pandemic. These reforms will move ahead as planned. However, additional consideration needs to be given to policies that could place additional pressure on businesses that are struggling – whether directly or indirectly – due to the pandemic.
On a regional level, the African Continental Free Trade Agreement was a landmark development in terms of continental integration. It covers around 1.2 billion people and the GDP of involved nations is valued at $2.5trillion. The agreement provides an opportunity to scrap more than 90 per cent of Customs tariffs to contribute to a higher economic growth and more income for the average African citizen.
-The writer is a communication specialist with interest in Diplomacy and International Affairs