Egypt Leads North Africa’s Re-emergence
The ongoing development of The New Suez Canal could be a symbol of industrial revolution for a region desperately trying to restore old glories and revive its status as a gateway to the continent
Historically, the industrial and economical hubs of Africa formed a top-to-bottom line across the continent, with Cairo in the North and Johannesburg in the south enveloping a land of opportunity in one of the world’s most lucrative markets for developing trends and enterprises.
In the 21st century though, the parameters have changed, and that line has transformed into a triangle between the still thriving Johannesburg, Nairobi in the east, and Lagos in the west, dissecting the middle of the continent and casting the previously dominant north into the background.
Political and civil unrest are widely accepted as primary causes for the failure to evolve along with the rest of the continent, but this isn’t to stay that the likes of Morocco, Algeria, Tunisia and Libya are stuck in the dark ages.
Vast, untapped potential still remains - and is being realised in some spaces - and as energy problems engulf South Africa, and the oil price drop disrupts Nigeria’s concerted momentum, the forgotten giant of Egypt is now looking to recapture old glories for the north, to produce an axis of wealth for Africa’s bright future.
New Suez Canal
A more stable political outlook in the North’s largest and most economically prosperous nation is a trend that neighbouring countries have either followed already in recent years, or are on the way to resolving; Sudan also in a state of rebuild following its split from the now established South Sudan.
Foreign investment is still tentative at present, however, with many multinationals looking for tangible signs of progress in Egypt especially before properly reigniting their interest in the region.
Such a tangible example may be achieved through the expansion of one the country’s most iconic landmarks: the Suez Canal.
New Suez Canal as it is known was initially a brainchild of former President, Mohamed Morsi alongside the Chairman of the Suez Canal Authority, Mohab Mamish, but has since been overseen by presidential successor, Abdel Fattah el-Sisi since late 2014.
The plan: to not only send a signal around the world that Egypt is investing to take one of its most renowned features into the 21st century, but to generate vast amounts of business opportunities, employment enhancements and trade boosts for the good of the economy at large.
Above all else, the plans unveiled for the expansion of the waterway – which were unveiled earlier this year – have instilled a renewed sense of national pride in the country, buoyed by the prospect of new central business districts and trade hubs included within the $50 billion development project.
Not just a widening of the canal itself – which will allow for hugely increased levels of traffic along the route - the Suez Canal Zone will comprise more than 100 square kilometres of logistics facilities along its journey, boosting business in Arish, Port Said, Ismailia, Suez, Ain Sokhna and Tor; especially thriving across manufacturing, shipping, energy and IT sectors.
All in all, this may well be the symbol that the north has been looking for to kickstart its 21st century industrial revolution and it could definitely be argued that it has a promising platform on which to build when considering the extent of continentally-thriving businesses based in the country already.
Within African Business’s annual countdown of the top 250 companies on the continent exists a fair reflection of conditions within Africa, as some countries - below a more stable core top 10 - either saturate the chart or begin to dwindle from recognition.
Last year’s instalment would hardly ignite a parade in the north of the continent, but there were signs that the likes of Egypt and Morocco especially are still playing a significant role within the overall African economy; all 25 of the region’s biggest companies making the overall top 100.
More concerning though is the lack of new entrants emanating from North Africa; only 17 compared to 91 five years previously. An indictment on recent issues should perhaps be expected, but the potential is clearly still there for businesses willing to take a chance on Egypt, Morocco, Algeria, Tunisia, Libya and even Sudan.
Located ideally in the epicentre of transport links to Europe, the Middle East and the rest of Africa, the sheer size of these nations is also a potential draw for foreign direct investment moving forward, as well as indigenous growth once the respective economies begin to respond favourably.
Reasons for optimism
A snowball effect is what’s required from what seems like not just a standing start, but almost reverse gear when it comes to FDIs in North Africa at present.
Previously the benchmark for the continent due to the region’s prime location, Sub-Saharan Africa has long since surpassed its northern neighbours according to Ernst & Young’s annual Attractiveness Survey.
While the southern cluster’s rates of FDI rose by 4.7 percent in 2013, projects in North Africa declined a staggering 28.7 percent; dictating the overall reduction in projects continent-wide.
All is not lost and there are still reasons for optimism, however. The likes of Casablanca, Cairo and Tunis are still perceived as lucrative areas in which to carry out business and to make investments; and if key areas of infrastructure, consumerism, labour and productivity can be addressed, then a resurgence of investor interest in the north may be seen in the future.
The fall in oil prices and the inevitably falling Egyptian pound makes the country even more attractive from an international perspective, and signs of a recovery are already being seen in the manufacturing industry.
Aerospace companies including the likes of Bombardier are moving production operations to Tunisia and Morocco to capitalise on the low costs and location, while Cairo is also being identified more and more as a prime city and surrounding area for heavy industry projects.
Across the entire northern corridor, there are clusters and isolated cities recovering from social and political storms; meticulously planning and enjoying the calm before what they hope will be an investment storm in years to come.
If projects like New Suez Canal reap the anticipated rewards, and the region can stay free of acrimony in the interim, then there is no reason why the historical point of entry standing proudly at the top of Africa, can’t become a gateway to the continent once again.
Read the full article in the latest issue of Africa Outlook here