Egypt Pulse

Egypt seeks to increase exports to Africa

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Article Summary
Despite figures indicating an increase in the Egyptian exports to Africa, there still seem to be several obstacles facing Egyptian exports to the continent.

CAIRO — As Egypt gets ready to host the "Africa 2019” conference scheduled for Nov. 22-23, a report published by the Egyptian Ministry of Trade and Industry expects the volume of Egyptian exports to African countries to increase moving forward.

This comes after figures published July 6 by the Central Agency for Public Mobilization and Statistics (CAPMAS) indicated the Egyptian government’s increased interest in exporting to neighboring African countries. In 2018, trade exchange between Egypt and African countries increased by 23% to $6.9 billion, compared to $5.6 billion in 2017, and Egyptian exports to African countries increased by 26.9% to reach $4.7 billion in 2018, compared to $3.7 billion in 2017.

CAPMAS also pointed out that Egyptian imports from African countries increased by 15.2% to $2.1 billion in 2018, compared to $1.9 billion in 2017.

Abdel Nabi Abdel Mottaleb, former undersecretary for research and economic studies at the Ministry of Trade and Industry, told Al-Monitor that this increase is the result of the Egyptian export development strategy that the ministry started implementing in 2016.

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In order to encourage exports, the ministry launched in July a program aimed at providing cash assistance to be deducted from the exporting companies’ obligations to the Ministry of Finance; in addition, it organizes regular trade missions to African countries.

The Egyptian Commercial Service offices of the Ministry of Trade and Industry are spread across 11 African countries, and they provide exporters with marketing studies about the most promising sectors in Africa and the products to be exported to African markets.

Abdel Mottaleb said that such exports will increase further in the next two to three years, and pointed out that the Egyptian government is seeking to increase its exports to Africa by up to 50% in 2019.

Egyptian chemical products, fertilizers, food products, iron and steel, electrical appliances, medicines, cement, furniture and textiles were products most in demand in Africa in 2018, according to the Egyptian Commercial Service of the Ministry of Trade and Industry.

Head of the Chemicals and Fertilizers Export Council Khaled Abu El-Makarem told Al-Monitor that the share of African countries from the Egyptian chemical and fertilizer industries amounts to $4 billion, out of a total of $5.4 billion.

The council, he continued, aims to increase the proportion of Egyptian chemical and fertilizer exports to African countries to 20% by 2020, but said this remains subject to the incentives and customs exemptions granted by African countries.

He said that Egyptian chemical products are exported to more than 30 African countries, including Kenya, Sudan, Ghana, Tanzania, Ethiopia and South Africa.

Makarem noted that they are working to enter new markets in the coming period.

The Egyptian government encourages exporters to open up to the African market through the Egyptian Commercial Service of the Ministry of Trade and Industry, which provides the necessary marketing studies on the most promising sectors and products to be exported. It also provides assistance in resolving trade disputes between Egyptian companies and their African counterparts.

However, despite the Egyptian government’s interest in the African market, Trade and Industry Minister Amr Nassar said during a July conference — titled "Bridges of Foreign Trade for the East and Central African Markets" — that Egyptian exports to the African market are estimated at less than 1% of the total African imports.

Attiya Essawi, a writer focusing on African affairs for Al-Ahram daily, told Al-Monitor there are several reasons that prevent Egyptian exports from making it to East, Central and South Africa.

He said a major obstacle facing Egyptian exporters is the lack of foreign currency in many African countries that can help them pay for goods. In addition, the banking system in Africa is not modern, delaying the payment process to exporters. Add to this widespread corruption, with exporters bribing officials at African ports to facilitate the arrival of their goods, leading them to incur losses.

Corruption is also rampant in several African governments, as senior government officials often own import or export companies, which increases the chance that any export or import agreement concluded with Egyptian companies or any other company are revoked.

In addition, Egyptian products face fierce competition from their Chinese counterparts in the African market given Beijing's cheap and diversified goods.

He added that the same situation arises when political differences occur — for instance, he said, when Khartoum decided to impose a ban on the import of Egyptian agricultural and animal products in May 2017 for 17 months, in light of border disputes between the two countries and accusations of political interference. Sudan accused Egypt of interfering in its internal affairs in 2017 as Sudanese President Omar al-Bashir accused Cairo of supporting rebel movements in Sudan.

The crisis was only contained after political relations between the two countries improved in the last days of Sudanese President Omar al-Bashir's rule.

According to Essawi, the main obstacle facing Cairo's efforts to increase its exports to the continent is the African infrastructure, which he described as "worn out," especially in landlocked countries such as Botswana, Burkina Faso, Central African Republic, Chad, Ethiopia, Lesotho, Malawi, Mali, Niger, Rwanda, South Sudan, Swaziland, Uganda, Zambia and Zimbabwe. He also said security instability and the civil wars raging in some countries pose a threat to exports.

However, he noted that economic blocs may contribute to alleviating some obstacles standing in the way of trade exchange among African countries. Chief among these blocs, he said, is the Common Market for Eastern and Southern Africa (COMESA), which includes Egypt, among 18 other member states. This bloc proved that it can increase exports among its member states through the abolition or easing of many custom barriers.

According to CAPMAS, Egypt's exports to COMESA member states increased by 16.6% in 2018 to $1.9 billion, compared to $1.6 billion in 2017.

Abdel Mottaleb expects Egypt's exports to the continent to increase with the entry into force in July 2020 of the African Continential Free Trade Agreement. The continent-wide free trade zone was launched July 7 by African leaders to unite 1.3 billion people and create an economic bloc worth $3.4 trillion. Members of the bloc pledged to eliminate tariffs on most products, which would increase the trade volume in the region by 15% to 25% over the medium term.

Abdel Mottaleb concluded that the main problem standing in the way of Egyptian exports to Africa is the similarity between Egyptian exports and African products, both of which are mostly raw materials.

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Found in: Economy and trade

Mohamed Saied is an Egyptian journalist based in Cairo and a graduate of Cairo University's Faculty of Mass Communication. On Twitter: @MohamedSaiedF

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