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Egypt’s potential for trade success

Egypt has no shortage of advantages when it comes to bilateral investment and trade with Africa and the GCC, and its geographic location is the jewel in the crown. Positioned in the North East edge of Africa, Egypt has large borders with Sudan, Libya and Palestine. It has extensive coastline on the Mediterranean and Red Sea, across which it faces the Middle East powerhouse of Saudi Arabia. The Suez Canal connects the Indian Ocean to the Mediterranean, and therefore links Asia to Europe confers advantages in terms of trade with the GCC and North Africa.

Egypt is ripe to play a significant role in leveraging synergies and harnessing efforts towards holistic continental economic integration. The government of Egypt is investing heavily to maximize these advantages and is also setting policies to boost bilateral trade with key African markets and the GCC. For example, the Egyptian government is developing free zone areas around the Suez Canal, which will help win business and investment from China as well as positioning the country to gain re-export business from major ports in the Arabian Gulf.

Globally, Egyptian exports have increased by 14% during the first four months of 2017 compared to 2016. According to the Ministry of Trade & Industry, the value of Egyptian exports reached $7.438 billion in 2017, compared to 2016 when they recorded $6.545 billion.

The Gulf region is the most forthcoming as a promising geographical base for investors approaching Egypt. Trade with the GCC performed well, with latest figures indicating a strong uptick in trade. The United Arab Emirates provides a prime example. Trade between Egypt and the UAE grew significantly in 2017, with a slight increase in Egypt’s trade surplus with the UAE, which reached $1.5 billion compared to $1.4 billion in 2016, according to a recent report by the Egyptian commercial office in Dubai.

Hassan Abdalla, CEO of Arab African International Bank “AAIB”, said: “The geo-economic advantage of Egypt – the nexus between the African and the Arab world’s overlooking the Mediterranean, the Red Sea and the Suez Canal – is further boosted by the completion of the Suez Canal mega project of the twin canal.” Abdalla added: “In addition, the establishment of the Suez Canal Economic Zone (SCZone) – which is a significant development that will transform 461 square kilometers and six maritime ports strategically located along one of world’s most main trading routes into an international commercial hub – will further sharpen Egypt’s competitive edge in advancing trade and investment between Europe, Asia, Africa and the Gulf area. In this, AAIB is perfectly poised to provide integrated services to exporters and investors in Egypt and the Gulf.”

“The UAE is the biggest investor in the Egyptian market, with total investments amounting to $6.2 billion, in various projects both in the service and production sectors,” said Tarek Kabil, Minister of Industry and Trade.

Many sectors experienced a rise in exports, including agricultural products, construction materials, textiles, food products, fertilizers and chemicals.

The main markets that Egyptian exports targeted in the first four months of 2017 were the EU, the US, Turkey, Saudi Arabia, the United Arab Emirates, and Lebanon.

Egyptian exports to the US recorded $381 million compared to $370 million, while imports decreased by 27% to $1 billion instead of $1.279 billion, according to a statement from the Ministry.

Egyptian exports to Turkey increased by 54% to $608 million compared to $395m a year ago. Meanwhile, imports decreased by 43% to $624 million compared to $1.093 billion in 2016.

Looking to Sub Saharan Africa, Egypt is also keen to boost investment and exports. It recently opened its first logistics office in Kenya, which led to a 239% increase in trade surplus between both countries during the first half of 2017. The trade volume between Egypt and Kenya increased by 30%, hitting 170 million dollars during the first 6 months 2017, up from 130 million dollars during the same period in 2016. On the other hand, Egyptian imports from Kenya decreased from 109 million dollars in the first half of 2016 to 79 million dollars this year, demonstrating the need for greater trade ties.

Egypt has also been working to increase trade and investment ties with Morocco, one of North Africa’s most successful economies and observers say there are huge investment opportunities in Egypt, especially in the fields of heavy industries, foodstuff, textiles, fertilizers and car assembly.

Egyptian authorities also aim to reduce the country’s gap in the balance of trade by increasing Egyptian exports and rationalizing imports. The achievement of this goal, which was outlined by the Ministry of Trade and Industry in May 2017, requires non-petroleum exports to rise by 10% a year between 2016 and 2020, bringing the total target of non-petroleum exports to rise to 61%. This sets a goal of achieving non-petroleum exports of more than $30 billion by 2020, up from $18.6 billion in 2015.

To achieve this, Egypt is working on the implementation of a number of incentives to increase exports. These consist of institutional legislation and procedures to support the business climate in general, including reviewing the legislation regulating import and export law and simplifying export and import procedures.

The country is also keen to help exporters enhance their competitiveness, particularly through pricing and improved promotion, whether in current or prospect markets. This particularly applies to exports sectors including agribusiness, food industries, construction and building materials, engineering industries, chemicals industries, iron and steel industries, and textiles and readymade garments industries.

Products and services by market

Egypt aims to increase product and service exports around the world. In Africa and the GCC, the focus is on exporting the following products and services:

North Africa: Engineering goods, white goods, cables, televisions, receivers (Morocco, Algeria and Libya), ceramic, fruits and vegetables, food goods (Algeria and Libya), carpets and moquette (Algeria).

Africa: Food industries – chemicals including plastic, engineering industries (electronic industries, machines and equipment, car components, cables, wires, televisions and receivers, houseware, metal forming, means of transportation), textile and clothes, furniture, building material, white products, ceramic, aromatics, plastic, building materials, pharmaceuticals

GCC: Food industries, agricultural crops, engineering goods, electronic industries, machines and equipment, automotive components, cables, houseware, metal formation, means of transportation

Jordan: White foods, chemical industries including plastic, construction materials, clothing and textiles, furnishings, furniture, crafts and traditional industries, cacao and chocolates, sugar candies

Syria, Palestinian Territories: dairy products and oils, vegetable and animal fats

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