Egypt’s top priority on re-engagement in East Africa has to be water security. After months in which talks went nowhere, Egypt, Ethiopia and Sudan signed agreements with consultancy firms to conduct impact studies on the Grand Ethiopian Renaissance Dam (GERD). Risks to progress on this include Ethiopia’s accusations that Egypt is meddling in its affairs vis-a-vis the Oromo issue, and perceived involvement of Saudi Arabia and Qatar. With the support of parliament, El Sisi went on the charm offensive with Nile basin countries. These overtures signal that Egypt may be going back to the Nile Basin Initiative, after strongly opposing it since 2010.

We expect continued overtures in 2017 and for the Sisi administration to try to deepen ties with East Africa in part through trade, helping the nation’s trade deficit by taking a long, hard look at natural export markets. As part of its strategy, Egypt’s Export Subsidies Fund issued incentives to companies looking to export to the continent, with the Kenya-Tanzania, West Africa (by way of Cote D’Ivoire) routes getting preferential treatment. Exporters to Africa will receive a 2% top-up on top of the base subsidy, with the fund covering 50% of expenses.