Peter BurdinBy Peter Burdin|July 17, 2021|9 Minutes|In AfCFTA



South Africa may be in its winter of discontent but at the other end of the continent North Africa has gone through its Arab Spring and is now busy enjoying an African Summer.

Business is booming in Egypt, Morocco and Tunisia and the good news is that entrepreneurs there are looking south to the large markets of Sub Saharan Africa to help transform their livelihoods and bring new opportunities to the continent.

According to Kenza Lahlou, the Co-Founder and Managing Partner of Outlierz Ventures,  investment funding in North Africa by venture capitalists is increasing by 50% year on year. Before the pandemic in 2019 that meant an annual injection of more than 2 billion dollars.

Kenza Lahlou is a veteran of Sillicon Valley but she returned to Morocco more than four years ago to work in the country’s emerging start-up sector. She sees very exciting times ahead for the region:

“Egypt is now a key tech hub for the continent. It received around 20% of that VC funding. It has a large population and many market opportunities”.

She detects further opportunities south of the Sahara, particularly in   Kenya and Nigeria. She points out along with Egypt and South Africa those four countries alone receive some 85% of total investor funding in Africa. That investment breaks down into three major sectors – Supply Chain Logistics accounts for 50% of funding, Fin Tech 35% and Healthcare 15%.

All three sectors have grown in importance during the Covid-19 pandemic, and there are clearly opportunities for further expansion in these areas as the continent seeks to recover from the crisis.

Africa Invest’s Senior Partner Ismail Talbi agrees. He says his company is currently targeting the health care sector along with exporters seeking to trade across borders:


“Egyptian entrepreneurs are trying to spread outside their local markets. We want to use our know-how to help them go south and accelerate their activities in Sub Saharan Africa. For instance we think the healthcare sector in East Africa has great potential.”

Future multi-million dollar investments by Africa Invest will include funding in enterprises in Kenya, Nigeria, Cote D’Ivoire, Morocco and South Africa. This will surely be music to the ears of the senior officials sitting in Accra in the Secretariat of the newly launched African Continental Free Trade Agreement (AfCFTA) as it contemplates how to create a single market of more than a billion Africans across the continent.

Ismail points out though that it’s not an easy game, but more of a long-term return on those investments.


That view is also held by Adel Goucha, the Director of the Investors RMBV in neighboring Tunisia:

“At present, only 3% of North Africa’s global trade is intra-Africa trade within our region, and with Sub Saharan Africa its even lower”, he explains, “but I’m optimistic that our companies will head south. Tunisia is only a small market so we must tap into those vast markets in the south, even if the risk is higher than it is in Tunisia”.

He points to impediments to intra-Africa trade like border restrictions and regulations that the AfCFTA is seeking to tackle. He says border controls make any “just in time” supply chain difficult, and that regulations can mean that it can currently take up to a year to register a single product.

In spite of these obstacles, Ismail Talbi of Africa Invest says he remains very optimistic. He sees a new Egypt which is full of dynamic young start-ups and entrepreneurs who are pushing for change, and he says this will also benefit the rest of Africa as more and more entrepreneurs realise the great potential in the rest of the continent.

He points to the blossoming FinTech sector in Egypt which is leading to greater financial inclusion. This in turn is giving start-ups better access to finance for scaling up and expanding south. As Kenza Larlou says markets like Nigeria and Kenya are eagerly awaiting to collaborate with their north African counterparts. She points to a Nigerian company she invested in which enables Nigerians to buy shares on the US stock market. It could’ve caused  long regulation delays but the Nigerian government proved very receptive to the innovation and promptly created a sub-license for these digital brokers:

“ That couldn’t have happened in Morocco and could take up to two years in Egypt”, she commented,  “countries like Kenya with its mobile money and Nigeria are way ahead”

As South Africa, the continent’s largest economy continues to take stock of recent rioting and looting and assesses how negative an impact those violent events have had on investor confidence, it seems that after the ructions and upheavals of the Arab Spring North African countries are on move. And it’s a journey in the direction of Sub-Saharan Africa.  A region that has long seen itself as part of the “middle east” is now seeing that it’s firmly part of Africa, economically as well as geographically.

As the African Continental Free Trade Agreement starts its own journey towards creating a single market it has to be a positive development that entrepreneurs in the north of Africa are keen to engage with the rest of the continent.

This perspective is shared by Sorana Parvulescu who’s a Partner at the consultancy Control Risks where she heads geopolitical risk analysis for Europe, Middle East and Africa. As the keynote speaker at a recent gathering set up by Hogan Lovell’s Africa Practice team she pointed to Africa’s demographic boom and the pressing need for more infrastructure as just two reasons to make it an attractive destination for investors. She predicted:

“Morocco and Egypt are positioning themselves away from middle east and Asian supply chains. They see manufacturing and infrastructure opportunities in Africa and Egypt, followed by Tunisia and Morocco, will drive this. They will invest in renewable energy and in health tech where the pandemic has exposed challenges and where we’re now seeing Tunisia setting up its own drug manufacturing facilities and Morocco and Egypt starting vaccine production”.

They say it often takes a crisis to build back better. The Covid-19 pandemic has brought misery to millions but it also bringing the harbingers of a new more self-sufficient Africa, no longer relying solely on Chinese or Western imports, but creating its own solutions. North Africa had its own crisis during the long Arab Spring but now it’s perhaps becoming the driver of a new Africa.

Perhaps better days will even come out of the devastation that’s gripped South Africa and that the continent’s most advanced economy will re-emerge like its friends in the north to enjoy the opportunities presented by the AfCFTA and the growth of more intra-Africa trade.