CAIRO – 4 August 2021: The Information and Decision Support Center (IDSC) organized Wednesday a panel discussion displaying the opportunities and challenges impacting Egyptian exports to fellow African countries.
There was congruence among the three panelists that the high cost of transportation because of the lack of the necessary infrastructure is the main hindrance.
Economics Professor and Former Chair of Political Science and Economics at the High College of African Affairs Howaida Abdel Azim highlighted the lack of regular maritime lines and flights between Egypt and most of African states, and the high costs of intra-African trade due to the absence of necessary transport infrastructure, mainly railways and roads.
Chairman of the Egyptian African Business Association Yosry al-Sharqawy proposed that if the size of Egyptian exports rises, the prices of shipping and transportation will by default become lower. For instance, the costs of exporting just five containers are not like exporting 50. For that to materialize, the businessman reiterated supporting Egypt's SMEs, and not just Egyptian large enterprises. He also suggests better integration with the international maritime transport system to ensure reliable access to African states.
Economics Professor at the High College of African Affairs Samar al-Bagoury pointed out that one third of Egyptian exports to Africa go mainly to Kenya, Sudan, and Ethiopia, which are located eastern Africa. That is because of geographic proximity and because COMESA rules applies to trade with them.
Egypt is backing some intra-African transport projects. Those are Cairo-Cape Town Road, and Victoria Lake-Mediterranean (VIC-MED) inland transport route. The country had also been supporting the Single African Air Transport Market (SAATM) until it went into effect in 2018. The agreement grants African airlines advantages like discounted fees and fewer requirements to get permits to operate flights among African states.
Abdel Azim showcased other obstacles facing Egyptian exports such as the fact that the African market is characterized with high commercial and non-commercial risks, and that it misses congruence on the technical specifications regulating the entry of imported products.
That is in addition to legal impediments, unqualified human resources, bureaucracy, political conflicts, security instability, shortage in funding, and high prices of energy.
As for competition with Egyptian exports, it comes mainly from southeastern Asian countries, particularly in the sectors of textiles and garments.
Bagoury underlines that a competitive edge Egypt has is its diverse economic structure in light of very similar economic structures in other African countries being focused in the raw material sector. Only Egypt and other few African countries can offer manufactured goods. Also, Egypt is part of many trade agreements on the continent, including the African Continental Free Trade Agreement (AfCFTA).
It is noted that for most trade agreements Egypt is part in, the foreign component must not exceed 60 percent of the final product exported by a given country.
Sharqawy underscored that Egyptian exports compose merely 0.8 percent of total African imports, which is so little in light of the capabilities of the country's industries.
Abdel Azim highlighted that Egyptian exports to African states recorded at the beginning of 2019 almost $4.3 billion but dropped by 10.7 percent in November of the same year so as the decline is worth almost $404 million.
However, Egypt has set a target to achieve exports worth $30 billion to Africa in tandem with entering 22 countries in the center and west of Africa benefiting from Dakar Port being the largest western Africa.
As for the sector whose exports to Africa have been booming, it is that of chemicals and fertilizers. Exports kept rising by 14 percent annually between 2015 and 2019 hitting $5.5 billion.
Egypt eyes exporting to 34 African states construction services, infrastructure, medical equipment, energy, telecommunication services, and agricultural equipment. For that purpose, Egypt is expanding trade representation western Africa given that there are no preferential trade agreements with those countries.
Yet, exports remain concentrated in states that are both African and Arab. Exports to Libya and Tunisia recorded $749 million and $687 million in 2019, respectively. As for those to Morocco and Sudan, they hit $525 million and $413.5 million, respectively. With regard to non-Arab African states, Kenya comes on top with $348 million followed by Ethiopia with $139 million then Nigeria and South Africa with $136.7 million and $85 million, respectively.
On the other hand, Algeria and Zambia are the top African exporters to Egypt with $495 million and $235 million in 2019, respectively.