North Africa is emerging as an engine of growth, led by Egypt and Morocco. But structural challenges remain.
This year again, North Africa is the fastest growing region in Africa and the Arab world. The combined GDP growth of Mauritania, Morocco, Algeria, Tunisia, Egypt and Libya is expected to reach 4% in 2025, compared to about 3.9% for the rest of the continent and 2% in the Middle East, according to the International Monetary Fund.
They aim to keep the trend going. Despite their different economic paths, the six countries have signed multiple agreements over the years to boost trade. Chronic political tensions have limited the impact of these deals, and North Africa is far from a single market. But there is still growth potential.
In 2023, Egypt’s exports to North Africa reached a record level of $3.5 billion, or 9% of total exports. Trade with Morocco has almost doubled over the past decade, and Libya is Egypt’s largest regional export market, with many Egyptian companies playing a role in rebuilding the war-torn country.
To support corporate activity, many local banks in the region have established a cross-border footprint. Attijariwafa Bank, the leading institution in Morocco, operates in Tunisia, Mauritania and Egypt. Algerian banks have recently expanded to include Mauritania and the Tunisian Arab International Bank, which has offices in Libya.
“Many Tunisian SMEs export to Libya and vice versa, and this sector has strong growth potential,” says Elias Djebair, general manager of Bayat, Tunisia’s largest bank by assets.
Currently, Europe remains the main trading partner for North African countries, but Morocco and Egypt are also increasingly looking to Sub-Saharan Africa for new projects.
“Our added value is providing safe and effective products at affordable prices,” says Seif Yashar Helmy, director of international affairs at Pharco Pharmaceuticals, which ships 20% of its exports — worth $9 million annually — to other parts of Africa, and he expects strong growth in the coming years thanks to a new line of WHO-approved mRNA vaccine.
Egypt and Morocco are leading the way
Egypt is by far the largest market in North Africa with a population of more than 110 million, half of whom are under 30 years of age. The country is emerging from a severe financial crisis that nearly led to bankruptcy in 2024, but is expected to achieve strong GDP growth of 3.8% this year, according to the International Monetary Fund. While the economy relies heavily on foreign support and imports, Cairo, Africa’s largest city, has a strong industrial base in sectors including textiles, food processing and automobiles.
Pharco, the leading pharmaceutical manufacturing company in Egypt, produces 1.7 million boxes of medicines daily. During last year’s crisis, it was forced to reduce some production, but optimism began to return.
“We see that the economy is recovering, and the prospects are good,” Helmy says. Pharco recently invested $350,000 in Medoc, a clinic management startup. “Egypt suffers from a lack of services in the field of healthcare, whether it is clinics, polyclinics, laboratories or imaging, and this opens up opportunities.”
Recent reforms, including the floating of the Egyptian pound, have helped stabilize the economy and sparked interest from foreign investors. Many local companies are looking for new global partners, and a strong group of initial public offerings is expected to be launched on the Egyptian Stock Exchange.
Helmy points out that “laws have become more flexible for foreigners to invest, and we see a great appetite for foreign direct investment coming from Europe and the Gulf Cooperation Council.”
Egypt also boasts some of Africa’s largest banks and most successful financial innovators. Fawry and MNT Halan were among the first financial technology companies in the region to reach $1 billion in value. Today, Cairo is one of the top three fintech hubs in Africa, home to hundreds of startups ranging from giants like Paymob to emerging players like Sahl and Kilivvr.
For fintech entrepreneurs, structural challenges, from low financial literacy to currency devaluation, create space for innovation.
“There is a global problem in our region, which is a shortage of foreign exchange, coupled with high inflation, high consumer price indexes, and a lack of investment products,” says Ahmed Amer, CEO of EMURGO Labs, a Web3 technology provider. “People only have two ways to invest their money, either in gold or in real estate.” EMURGO supported the launch of USDA, an SEC-regulated stablecoin pegged to the US dollar to finance trade and remittances.
“It is really important that emerging economies start thinking outside the box to develop new ways to attract and retain capital,” Amer adds.
Traditional banks are moving in the same direction. “We are investing heavily in creating a group-wide data infrastructure, not only in Egypt but throughout our African presence,” says Islam Zekry, group CFO and COO of Commercial International Bank (Egypt), the country’s largest private bank. “One clear opportunity is to streamline KYC and compliance processes. By creating an integrated data warehouse and sharing verified customer information across our marketplaces, we expect to reduce the cost of service by 20% to 30%. We aspire to be a platform that attracts capital, connects businesses, and delivers a new standard for banking experiences, all while proudly establishing our roots in Egypt.”
Morocco is the second pillar of the North African economy. Decades of economic reforms that have encouraged private sector growth and investment in infrastructure have turned the country into a magnet for foreign direct investment. Today, Morocco is considered one of the best places in Africa to do business, with global giants including Procter & Gamble, Unilever, Siemens, and AstraZeneca setting up factories and regional headquarters in the Kingdom. Despite global headwinds, the International Monetary Fund expects Morocco’s GDP to grow by 3.9% this year.
Tunisia faces fluctuations
Other North African countries present a different story.
Mauritania, Algeria, and Libya remain largely closed, and their economies depend on rentierism. In Tunisia, despite years of profound economic and financial turmoil, the government has yet to enact reforms that could unleash IMF support.
Last year, Tunisia’s Central Bank had to step in to save the economy, and the International Monetary Fund forecasts growth of just 1.4% for 2025. However, the banking sector has held up relatively well. In March, Moody’s raised Tunisia’s sovereign debt rating to Caa1 from Caa2, citing the central bank’s ability to maintain stable foreign exchange reserves.
“The results for 2023, 2024 and the first half of 2025 show the resilience of Tunisian banks,” says BIAT’s Djebair. “I believe we can expect progress in Tunisia’s upcoming reviews, which will have a positive impact on banks’ ratings. This should enable us to expand further internationally without restrictions.”
Tunisia’s banking model is still largely brick-and-mortar, but modernization efforts are underway. This year, the government passed laws restricting the use of paper checks and encouraging digital payments. Jubeir sees opportunity in this shift.
“We are developing a wide range of digital solutions for both retail and corporate clients,” he says. “At the same time, we are reshaping our branch network into advisory centers and expertise centers, providing added value beyond the bank’s traditional services.”
The fintech ecosystem is emerging, with startups like mobile wallet Floucy, but international investors remain cautious.
“It’s difficult to work there,” says Amer, who has supported Tunisian startups in the past. “I mean, it’s very difficult to attract FDI when your fiscal and monetary policy doesn’t provide any confidence to investors, right?”
Looking south
As their economies improve, North African companies are looking south for expansion, with the support of their banks. Moroccan lenders now operate across the continent; Bank Africa, Attijariwafa and BCP Group cover more than 25 African countries, from Senegal to Ethiopia. Egyptian banks, including the Commercial International Bank and Banque Misr, track trade corridors in East Africa using Kenya as a regional base.
“We are working to enhance lending to SMEs through digital partnerships, leveraging the country’s evolving ecosystem,” says CIB’s Zakri. “We are also developing digital channels to expand reach and deepen customer engagement, reflecting our broader model of local innovation with regional consistency.”
Zakri also sees growth potential in climate finance. “As we expand across Africa, a significant share of our growth will come from transitional financing, particularly in agricultural and disadvantaged communities. We provide specialized services in these areas, not only as a development objective but because they make strong business sense.”
Cross-border trade, industrial strength, and financial innovation are opening new opportunities across North Africa, but structural issues remain. “The potential is huge, but reforms must continue and the ability to introduce new technologies will be crucial,” Amer points out. If these elements align, North Africa could achieve its ambition of becoming a strategic hub linking Europe, the Middle East, and sub-Saharan Africa.
