Investment in the African continent has long served as an oasis of potential growth for foreign investors, with Russian, US, and Chinese parties recently looking to the various regions on the continent to find new sources of revenue.
However, in regards to the countries that make up the East African bloc, fundamental hindrances to foreign investment persist.
In a phone interview with Al-Borsa, Waleed Al-Zomor, the economic and commercial counsellor of the Egyptian embassy in Ethiopia, indexed these hindrances as germane to the fields of the political, infrastructural, and legislative.
In the first instance, many countries in the region are plagued by political instability, subject to coup d’états that interrupt what investors see as the necessary political continuity that allows for financial returns on investment. The countries in the region also rely on a moribund transport and industrial infrastructure which investors see as an impediment to the flow of goods and capital investment. In the third index, Al-Zomor pointed to legislative ambiguity that obstructs coherence across sectors of the government as much as with the private sector.
Al-Zomor pointed to the relative novelty of investment laws in African countries as a reason for the legislative ambiguity.
The Common Market for Eastern and Southern Africa (COMESA) treaty is a significant step towards integrating the countries that make up the African market, especially as it includes trade, investment, and, at a later stage, the free movement of persons, according to Al-Zomor.
Regarding those countries that remain outside the purview of the treaty—notably Kenya, Tanzania, Ethiopia, and Uganda—Al-Zomor said he expects them to join the agreement in the near future. “These countries seek to activate the agreement soon. Even though they’re members in this African bloc, the absence of an industrial environment in these countries stands in the way of activating that agreement. Such things need a balanced economic system that combines investments and reliable industries,” Al-Zomor said.
Al-Zomor contended that the recent completion of the Kenya to Egypt segment of the Cairo–Cape Town Highway will encourage Kenya to active COMESA, as the road is considered the gateway to East African countries.
Trade between Ethiopia and Egypt has increased significantly in the recent period. Egyptian exports to Kenya between January and October 2015 amounted to $185m, a 30% increase in a year over year comparison to 2014. Egyptian imports from Ethiopia also rose by 15% during the first 10 months of 2015.
Egypt exports electric cables to Ethiopia, mainly from Elsewedy Electric, as well as ceramics, insulation material, chemicals, beverages, and dairy products.
Meanwhile, Ethiopia provides Egypt with coffee beans, meat, and beans.
Al-Zomor stated that Egypt parties have invested $750m in Ethiopia.
Among the most prominent Egyptian companies in Ethiopia include PVC Company and Golden Trust, the latter of which has eight existing factories and is currently establishing two additional factories.
