Egypt, Algeria, and Nigeria, all visited by Korean president Roh in March2006, are politically and economically important countries in Africa.

They all have relatively large populations and economies, and are richly endowed with energy resources. Therefore, there are various economic areas in which Korea can cooperate, the most feasible and mutually beneficial of which are identified in this report. The African countries' own economic features, such as market size, resource endowment, economic policy, and so forth are taken into account.

This report suggests that Korean overseas direct investment in Egypt would be an effective channel through which to enhance economic cooperation between Korea and Egypt. Egypt achieved noteworthy progress in its recent reforms to promote foreign investment. It established a Ministry of Investment, which will create the institutional framework and infrastructure required to attract foreign investment. It reduced the amount of red-tape involved with doing business, revised laws to make the labor market more flexible, and strengthened its intellectual property rights. Its location interlinking the Middle East, Africa, and Europe is a merit for foreign investors.

Algeria has a relatively large population and domestic market among African countries. It also has immense energy reserves, such as crude oil and natural gas. Korea, therefore, can strengthen economic ties with Algeria through export promotion and participation in energy development projects. The products for which Korea can rapidly increase its exports are automobiles, IT products, industrial machinery, steel, and iron. On the other hand, Algeria has kept open the domestic energy exploration market, and recently restructured its oil industry by lifting the regulatory rights of its national oil company. The restructuring is intended to accelerate the participation of foreign companies in the development of its energy resources. Korean oil companies and the government need to make an effort to seize these energy exploration opportunities in Algeria. Because of a long-lasting civil war, Algeria's infrastructure, such as electricity and transportation, remains destroyed or less developed. Therefore, linking energy exploration and infrastructure construction could be an effective strategy.

Nigeria also has a great amount of oil and gas, and allows foreign companies to participate in its exploration. Its recent policy on energy development is oriented toward inducing more foreign investor participation. However, there are a few risks associated with energy exploration by a foreign company in Nigeria. Most of the oil fields to be explored in Nigeria are offshore, which requires large-scale capital and advanced technology. In addition, the requirements of localization tend to be stricter, and there still remain political risks such as ethnic insurgencies and sudden policy changes.