Egypt looks to protect investments at risk by Ethiopian civil war

Dec 31, 2020

Alaa Al-Saqati, head of the Egyptian Industrial Zone in Ethiopia, recently revealed Egypt’s decision to appoint an international law firm to handle a case before international courts against the Ethiopian government to protect Egypt’s investments there.

In a statement to the Egyptian daily Youm7 on Dec. 22, Saqati said this step came after a meeting he held with representatives of the Ethiopian Embassy in Cairo on Dec. 16. The meeting did not result in any positive development to solve Egypt’s investment crisis in the Tigray region in Ethiopia, where an armed conflict has been raging for weeks. 

Ethiopian Embassy officials did not provide a specific and binding date allowing the resumption of work in Egyptian factories in the Tigray region without any risks to employment, Saqati said, adding that factories in the region have been closed for over four months now.

“During the meeting, officials of the Ethiopian Embassy talked about the benefits and advantages that the investment law offers to investors in Ethiopia, while existing investments face a state of ambiguity in light of the current situation and the outcome of the ongoing armed conflict,” Saqati told the Egyptian daily.

The Ethiopian News Agency reported on Dec. 19 that a virtual meeting of the Egyptian-Ethiopian Business Council, organized by the Ethiopian Embassy in Cairo, was held in the presence of Ethiopian officials and businessmen from both countries. During the meeting, Marcus Tekeli, Ethiopia’s ambassador to Cairo, confirmed his intention to “face the challenges facing businessmen.” Meanwhile, Ethiopian government officials addressed “the main concerns, questions and challenges raised by Egyptian businessmen.” In a statement, the ambassador stressed his conviction of “the need to strengthen trade and investment cooperation between the two countries.”

Moreover, during the meeting, Aschalew Tadesse, Foreign Direct Investment Promotion director at the Ethiopian Investment Commission, presented the new Ethiopian Investment Law and the commercial opportunities and tools that the two countries can exploit. 

The armed confrontation between Ethiopian federal forces and Tigrayan forces has caused regional concern over the past couple of months. The Tigray People’s Liberation Front (TPLF) blames the government for the flare-up of hostile actions in the region seeking independence from Ethiopia. The escalation was preceded by several events, namely the region’s local elections that took place in September in defiance of the federal government. Tigray’s regional government criticized Ethiopian Prime Minister Abiy Ahmed for not holding new elections and remaining in office. Ahmed had cited the coronavirus pandemic for his actions.

The escalation of events in the Tigray region in northern Ethiopia has dealt a blow to Egyptian investments there, especially following the evacuation of many Egyptian nationals, in light of the fierce fighting between local forces and the Ethiopian army.

The Egyptian Embassy in Ethiopia evacuated in November nine of its citizens who were stranded in the city of Mekelle, capital of the Tigray region. The embassy said in a statement on Nov. 18 that it has been making efforts to evacuate the workers since the outbreak of the clashes, with full support by the United Nations’ offices operation in Addis Ababa and the International Committee of the Red Cross, in coordination and cooperation with the relevant Ethiopian authorities.

Regarding the volume of Egyptian investments in Ethiopia, Saqati — who owns several projects in Tigray with other Egyptian investors — told Al-Monitor, “Egyptian investments in the Tigray region in Ethiopia amount to about $10 million, while the total Egyptian investments in Ethiopia exceeded $750 million between 2010 and 2018.”

Saqati, who is also the vice president of the Egyptian Federation of Investors Associations, said that 25 Egyptian employees and five engineers returned to Egypt after the recent outbreak of armed clashes in the Tigray region, stressing the need for protection for Egyptian investors in Africa. He also explained that investors have been greatly affected by the ongoing armed events in the Tigray region and that factories have stopped working.

On Dec. 16, a French agency revealed an internal European document indicating that the European Union would suspend the payment of 90 million euros (about $110 million) in budget support payments to Ethiopia due to the ongoing conflict in Tigray, while the military operation launched by the Ethiopian army in the northern region of the country has been met with a great deal of criticism. 

Saqati confirmed that the decision to resort to international courts aims to preserve their rights as a result of the heavy losses they have suffered since the outbreak of the recent conflict in Ethiopia

The Ethiopian embassy in Cairo did not issue any official statement after the annoucement that the country would be sued internationally over the loss of Egyptian investments in the Tigray region. The embassy did not respond to Al-Monitor’s request for comment.

According to Saqati, he and several Egyptian investors and an Ethiopian partner have established two factories since 2015 on an area of 10,000 square meters in Tigray — one for the manufacture of electrical transformers and the other for wooden furniture. He explained that since Ahmed came to office, “We began to face some harassment in residency papers and treatment at the airport.”

The crisis of Egyptian investors in Ethiopia comes at a time when relations between the two countries are experiencing tension due to the crisis over the Grand Ethiopia Renaissance Dam. Cairo fears the crisis’ impact on its share of water, on which more than 90% of Egyptians depend. Negotiations between the two countries and with the participation of Sudan — which have been ongoing for about 10 years — have not resulted in an agreement thus far.