Partnering on everything from trade and investment to migration and security, the relationship between Germany and Egypt is beneficial for both countries, and also for the whole of Europe, Africa and the Arab world. Although Germany is only the 20th largest investor in Egypt, opportunities are now ripe for new investments. Egypt has recently passed a new investment law that adds new incentives and as the current head of the African Union, its priority is to establish an Africa-wide free trade zone that is set to revolutionize the market. Here, Dr. Badr Abdelatty, Egypt’s Ambassador to Germany, explains how Germany and Egypt can best continue to enhance win-win cooperation in the years to come
You were appointed ambassador to Germany in 2015. What have been your main achievements and challenges so far, and what are your main priorities to enhance bilateral cooperation?
I assumed my post in September 2015, with the main objective to enhance bilateral relations between Egypt and Germany on different levels and in different sectors. The close and continuous cooperation with the German side has resulted in significant achievements on the political, economic, security and cultural levels, including education and vocational training. Over the years that I have served in Berlin, the president of Egypt has visited Germany three times and Chancellor Merkel has been to Egypt twice. This reflects the mutual confidence and trust between the two leaders and their joint commitment to further enhance and strengthen the strategic bilateral partnership between both countries.
In parallel to the political engagement, close cooperation with and enhancement of bilateral relations in the business sector is among the top goals of my mission as an ambassador. Economic growth is one of the most important pillars of our relationship and serves the interests of both countries.
President Abdel Fattah al-Sisi met with CEOs of major German companies during his visits to Berlin and Munich between 2017 and 2019. The Egyptian prime minister did the same during his January 2019 visit to Germany, discussing business opportunities and new areas of cooperation between both countries. Meanwhile, in February 2019 Peter Altmaier, the German Federal Minister of Economy and Energy, led a private sector delegation to Egypt to exchange views on how to enhance bilateral relations in the areas of trade, investments and energy.
As for the cooperation in the field of education, Germany is now Egypt’s most important partner, especially for vocational training and technical education. Over the past four years, Germany has been the country producing the largest numbers of tourists visiting Egypt.
Furthermore, our close cooperation has been expanded in the field of security, fighting terrorism and illegal migration. This area of cooperation is very important to our nations’ mutual stability. The two countries signed a security agreement in July 2016 and a cooperation agreement on migration in August 2017.
Having said that, we believe that there is still room for strengthening bilateral relations between Egypt and Germany. Egypt values the economic and political capabilities of Germany and is willing to import the investment and know-how in pursuit of empowering its own economy. We are looking forward to more German investment, increasing our goods exports to Germany, more tourists, the transfer of technology, and German expertise in education and training.
On the other hand, Germany needs Egypt as well because we are the most reliable and stable country in a turbulent region and we are at the forefront in the fight against terrorism and illegal migration. Germany appreciates how the role of Egypt in the Middle East enhances the stability of Europe as a whole. In addition, Egypt is now chairing the African Union. For German companies, Egypt is considered the gateway to African markets, and to Arab markets as a result of continental free trade agreements. The Suez Canal is a vital logistical and trade hub.
Now I can say that the relationship between Egypt and Germany is based on real strategic partnership, on a win-win situation bringing us mutual benefits. It is no longer a recipient-donor relationship.
In September, Egypt’s Ministry of Investment and International Cooperation said that German investments in Egypt had reached $641.4 million. Germany now ranks as the 20th largest investor in Egypt. What does this mean for Egypt?
As I mentioned before, Egypt values the economic and technological capabilities of Germany, and we are aiming to increase German investment in Egypt not only in terms of growing inflow of capital but also via technology and knowledge transfer. In 2016, Egypt adopted a comprehensive economic reform program aimed at restoring macroeconomic stability, achieving strong and sustainable growth rates, and improving the functioning of the financial market. In addition, Egypt witnessed positive developments to its investment environment and infrastructure. This can offer vast opportunities to German investors.
Frankly speaking, the current ranking of Germany as 20th among foreign investors in Egypt matches neither Germany’s capabilities as the largest economy in Europe and the main engine of the European Union (EU), nor the huge investment opportunities Egypt has. We aim to establish partnerships with more German investors especially in labor-intensive industries such as pharmaceuticals, petrochemicals, logistics and automotive as well as in artificial intelligence, digitalization, e-mobility and the IT sector. The mentioned sectors are known for their ability to create a large number of job opportunities, which we target in Egypt. We have a domestic market of 100 million people and thus can provide low-cost skilled labor.
One of Egypt’s main objectives during its presidency of the African Union is to implement the African Continental Free Trade Agreement. That will create a market of 1.2 billion people. This is top of our agenda. Forty-nine countries have already signed this agreement, and now we are concluding ratifications in order for it to enter into force. This can provide enormous opportunities for German investors in Egypt and in the African market. In addition, we have a free trade agreement with the Arab world.
Which sectors of the economy present the greatest opportunities?
One of our main targets is introducing Egypt as a hub for e-mobility. We aim to produce electric cars in Egypt to serve the local market and to export to Europe and neighboring countries. To this end, President el-Sisi assured German automotive companies during his two visits to Germany in October 2018 and 2019 that Egypt is ready to establish partnerships with them, joint ventures to produce electric cars in Egypt, as well as feeding industries including spare parts to serve our domestic market and also to export to Europe and neighboring markets in Africa and the Arab world. Renewable energy is also an important sector for bilateral cooperation. The intense labor sectors are also very important for creating jobs in Egypt.
We have at least 50 universities and 1 million undergraduates in Egypt, thus we have the skilled labor. We have 65 million people aged 40 or under. In the last 40 years we have managed to create 5 million new jobs.
What role can Egypt play in promoting energy security for the Mediterranean region and beyond?
Egypt has a specific vision to be a regional hub for oil and gas trade, in addition to attracting more investments and securing energy sources to meet the country’s need as well as providing job opportunities and foreign currency revenues. Egypt possesses the necessary infrastructure for liquefied natural gas (LNG) facilities as it owns two LNG export plants, Idku and Damietta, located on the Mediterranean.
We are now conducting agreements with other Mediterranean countries to receive the gas, liquefy it and export it to the European market. Egypt wants to achieve optimal economic benefit from its strong natural gas infrastructure, particularly the LNG plants and the national gas grid. In January 2019 the energy ministers of seven countries – Egypt, Jordan, Palestine, Cyprus, Greece, Italy and Israel, with the possibility of others to join in the future – launched the Eastern Mediterranean Gas Forum with its headquarters in Cairo. Its main objectives are to benefit from the region’s rich natural gas resources, to enhance cooperation with consumer and transitory parties in the region, to take advantage of existing infrastructure and to develop further infrastructure to accommodate current and future needs and ensure security of supply and demand. Egypt hopes that its strategic location between Africa and Asia, as well as the Suez Canal and well-developed infrastructure, will all help to turn it into a trade and distribution hub for the region and beyond.
It is also worth mentioning that we have signed a Memorandum of Understanding with the EU which is considered the most significant market for natural gas. In fact, this is part of an ongoing strategic dialogue between Egypt and Europe in the field of energy.
Renewable energy is also growing fast in Egypt, both solar and wind. Egypt is now building one of the largest solar parks in the world, with capacity of 2000 MW, in Benban in upper Egypt as well as the largest wind farm, with capacity of 200 MW, on the Red Sea.
Do you think there is a perception of risk among German investors towards Egypt?
In the pursuit of empowering its economy, Egypt is now more determined than ever to improve its investment environment for both national and foreign investors. Thus a new investment law has been adopted, providing a variety of motivating incentives and guarantees to foreign investors. Today, foreign investments are immune from nationalization.
In his meeting with 45 CEOs of German companies in Munich, President al-Sisi explicitly said that the most important guarantee for German investors is the Egyptian people, because the stability we have has not only been achieved by the security authorities but it is an enduring stability guaranteed by the consensus of the people of Egypt. They would like the country to be stable, to flourish more, in order to create jobs. We value foreign investments for creating more jobs. By providing young people with job opportunities and decent livelihoods, we assist in fighting terrorism, radicalism and illegal migration. Furthermore, there are a lot of opportunities. Profitability in Egypt exceeds 35 percent.
Our main target in Germany is SMEs, the Mittelstand. We are working with them and listening to their requests. Many of them would like to come to Egypt but they need investment guarantees from the German government, and I believe that the German side is looking positively at this request.
Over the last three years, German investment in Egypt has increased, but we are looking forward to more. A lot of German companies have become more interested in investing in Egypt after visiting. At the end of January 2019, Mercedes-Benz announced the resumption of their activities in Egypt, including assembling vehicles. They are very keen now to work with Egypt not only in conventional automotive industries, but also in e-mobility: electric cars, self-driving vehicles and so on. A big company like Mercedes coming back to Egypt is a testimony of the stability of the country, and that we have a conducive environment for German companies to invest. I believe Mercedes will be followed by others that are now interested in Egypt.
What more can be done to promote German investment in the country?
We have a big event at the end of June 2019, the 22nd Arab-German Business Forum in Berlin, where Egypt will be the partner country of the Ghorfa Arab-German Chamber of Commerce. A high-ranking delegation from the government as well as the Egyptian private sector will participate in this important event in order for Egyptian and German companies to interact. Now, Egypt is looking differently towards business partnership – no longer only with the traditional aim of increasing inflow of foreign capital into the local market. Our private sector and our government are more than ready to share costs and to have joint ventures. Also, I am visiting all big German cities and meeting different companies in order to promote the business and investment opportunities Egypt has.
During the first half of 2018, Egypt’s exports to Germany increased 9.5 percent year-on-year, reaching €717 million. What are the driving factors behind this growth and what potential exists to further boost trade ties?
Egypt exports a variety of products to Germany. Among the important ones are fruits and vegetables, petrochemicals, herbs for both medical and industrial use, food processing exports, and Egyptian wood and furniture. On the other side, 90 percent of our imports from Germany are machinery and capital goods, which are important for our industry.
As chair of the African Union and recent host of the EU-League of Arab States Summit, what is Egypt’s role in helping deepen Euro-Arab and Euro-African ties, and how can Germany benefit from this?
For 5,000 years Egypt has served as a geographical and cultural bridge between north and south, between Europe and Africa and the Arab world, between the two shores of the Mediterranean Sea. As you know, Egypt hosted the League of Arab States in Cairo and is one of the founding fathers of the African Union. Thus it has a big role to play in defending Arab and African causes and rights.
Egypt is also the pillar of stability in the Middle East. We are making utmost efforts to bring political settlement to the region’s different crises, especially in Libya, Syria and Yemen. Egypt is a strategic partner to Europe and Germany in fighting terrorism and illegal migration. One major reason behind the flow of illegal migrants coming from Africa is armed conflict. If we manage to resolve conflicts and deal with post-conflict reconstruction and development, then we can sustainably overcome conflicts, and that will stop the flow of illegal migration by young men and women from Africa.
Egypt achieved enormous success in dismantling the infrastructure of terrorist groups in North Sinai. Without our efforts, these terrorists will cross the Mediterranean. Egypt is the only country in the Arab world and Africa from which, since September 2016, not one single boat of illegal migrants has disembarked.
Egypt was the world’s fastest-growing tourism destination in 2018. What would be your message to potential German tourists about visiting Egypt?
First of all, Egypt is a very safe and stable country, which is why we are witnessing a recovery in tourism from Germany and other countries. In 2018, we achieved the highest numbers of German tourists in history. We welcomed more than 1.7 million, exceeding the previous peak for German tourists of 1.3 million, achieved in 2010. The tourism sector’s stability is guaranteed because Egypt has 25 million people who rely directly and indirectly on tourism.
We are currently conducting an ambitious promotion campaign in the German market in different media outlets, the TV, newspapers and so on, which will raise awareness of Egypt as a tourism destination. More than 95 percent of German tourists come only to the Red Sea resorts, to enjoy one of the world’s most beautiful beaches and discover the secrets of its underwater world. This is very important, but it is not enough. It doesn’t reflect the diversity of Egypt as a tourist destination. We have cultural tourism, eco-tourism in the Western Desert and medical tourism, especially in Sharm el-Sheikh. We need to further promote Luxor, Aswan and Cairo. And in light of recent discoveries, we need to promote cultural tourism. Last year, 2018, we excavated and discovered a lot of Pharaonic tombs in different areas of Egypt. Next year, 2020, will witness the official opening of the Grand Egyptian Museum, the world’s largest museum devoted to a single civilization.