‘Egyptian economy is rebounding’: ITFC head

Doaa A. Moneim, Thursday 17 Jun 2021

CEO of the Islamic Trade Finance Corporation Hani Salem Sonbol spoke to Al Ahram Weekly about expectations for Egypt and the region’s recovery from the Covid-19 pandemic

‘Egypt is  rebounding’

On 6 June, CEO of the Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank (IsDB), Hani Salem Sonbol paid a five-day official visit to Egypt, his first since the onset of the Covid-19 pandemic.

During his stay, Sonbol met with Hala Al-Said, minister of planning and economic development, and governor for Egypt at the IsDB Group, as well as Ali Moselhi, minister of supply and internal trade, to discuss the corporation’s provision of $400 million to the General Authority for Supply Commodities.

He also met with Tarek Al-Molla, minister of petroleum and mineral resources, to discuss the $700 million provided to the Egyptian General Petroleum Corporation, and Rania Al-Mashat, minister of international cooperation, to pave the way for further cooperation and the implementation of the $1.1 billion 2021 financing programme.

In an exclusive interview with Al-Ahram Weekly while in Cairo, Sonbol talked about the efforts needed to overcome the fallout from the pandemic and how the ITFC can help.

How does the ITFC perceive the investment and business atmosphere in Egypt?

Despite the ongoing impact of the Covid-19 pandemic, economic activity in Egypt is rebounding. According to the World Bank, remittances, portfolio inflows, and external financing continue to support the country’s international reserves. The government of Egypt is committed to strengthening its pandemic-containment efforts, pushing ahead with fiscal and structural reforms, strengthening social protection, and advancing its human capital efforts, all of which provide a more stable investment and business environment.

As part of its national development strategy, the government intends to increase exports to $100 billion cumulatively within the next five years, as well as to strengthen private-sector development and tap into its productive capacities to meet the country’s economic ambitions. With the implementation of the African Continental Free Trade Area (AfCFTA), which as the largest free-trade area of its kind stands to increase Africa’s exports by $560 billion, mostly in manufacturing, Egypt is well placed to be a driver of inter-regional trade with emerging African economies and surrounding regions.

The AfCFTA represents an important opportunity for Egypt, especially in supporting the country’s ambitions to build fourth-generation cities that will accommodate an estimated 30 million people, providing millions of jobs and catalysing the role of the private sector in driving growth. This is where programmes such as the Arab-Africa Trade Bridges (AATB) Programme, which aims to drive inter-regional trade and investment flows between Arab and African countries, are supporting both the Egyptian public and private sectors to identify and build stronger commercial partnerships, develop export capacity, and enhance trade potential across key growth sectors.

How are the ITFC facilities good for Egypt?

Egypt has always been an important member of the ITFC. The corporation continues to build strategic relationship with Egypt, supporting the country to meet its trade finance and development needs, enhance its export potential, help strengthen the capacity of its SMEs, and support private-sector development amongst others, with a total financing of $12 billion through five framework agreements. The most recent, the fifth framework agreement, signed in January this year for $1.1 billion, focuses on integrated trade solutions to support Egyptian entities through trade financing and trade development components, boosting the country’s export potential, developing value chains in sectors such as cotton, driving female entrepreneurship, enhancing SME growth, and providing strategic commodities for the country.

In relation to strengthening the economic participation of women, the ITFC has, in coordination with the International Trade Centre (ITC), launched the She Trades Egypt Programme within the framework of the Aid-for-Trade Initiative for Arab States (AfTIAS). Through this programme, 50 women-led SMEs from the Egyptian Women’s Union Association and Egyptian Businesswomen’s Association will be able to take advantage of expanded trade networks and be empowered to upskill, identify new market trends, and exploit new technologies and environments such as the digital economy and virtual learning.

Furthermore, given Egypt’s ideal location between the Arab and African regions, the country is a major partner and governing board member of the Arab-Africa Trade Bridges Programme (AATB). Between 2018 and 2019, Egyptian companies have benefited significantly from enhanced trade relations and partnerships with African countries, particularly in the pharmaceutical and food industries. Under the AATB alliance, the ITFC also supports the Egyptian Export Development Authority (EDA) to implement a comprehensive programme for Egyptian exporters in various projects between 2020 and 2021.

Amongst these projects are capacity development workshops for furniture exporters in Cairo and Damietta, allowing them to tap into African markets. Additionally, a partnership with the Egyptian Exporters Association (EXPOLINK) is underway to organise an export incubator programme in cooperation with the Foreign Trade Training Centre (FTTC).

What kind of assistance has the ITFC extended to Egypt in relation to the ongoing Covid-19 crisis?

The ITFC’s pandemic-response strategy had been part of the Islamic Development Bank Group’s response programme, with a total allocation of $2.3 billion as part of its Rapid Response Initiative to support the immediate needs of member countries. The ITFC’s trade finance approvals reached $605 million in the Rapid Response phase, exceeding the initial targeted allocations.

Egypt was amongst the first beneficiaries for emergency funding through the provision of $200 million to the General Authority for Supply Commodities (GASC) to cover the Egyptian government’s immediate needs for basic strategic commodities, including food staples.

In addition, the ITFC’s ongoing trade solutions agreements as part of the 2021 development plan for Egypt are all geared towards protecting the continuity of trade to sustain the Egyptian economy by building the capacities of important export sectors such as SMEs, strengthening the economic participation of women through trade, and building stronger value chains in sectors such as cotton, all of which contribute to the government’s ongoing pandemic-containment measures.

How has Egypt benefited from the AfTIAS?

Egypt is a vital member of the AfTIAS, having played a key role in the establishment of the first phase of the programme and directly contributing to the supervision of 28 projects geared towards driving foreign trade between the Arab countries. During the first phase of the AfTIAS, the Egyptian trade ecosystem benefited from nine initiatives aimed at facilitating trade, addressing non-tariff measures, building export capacity, and enhancing the role of women in trade.

Egypt also contributed to the design of the second phase of the AfTIAS, which included addressing priorities to overcome the negative effects of the pandemic on Arab trade. The government has committed $1.25 million to improving the capabilities of export development institutions and strengthening access to foreign markets, as well as strengthening the participation of Arab countries in global value chains. This sum will also go towards improving the skills of youth and women and drive SMEs in the e-commerce sector, digitise commercial operations in vital foreign-trade sectors, and address barriers to accessing Arab and international markets.

How do you see the impact of Covid-19 on intra-Arab trade and on trade between Arab and African countries?

The Covid-19 pandemic has shown just how important programmes such as AfTIAS and AATB are in ensuring ongoing trade and investment flows and safeguarding economies. Now more than ever, Arab and African countries should embrace greater trade integration and cooperation and build regional supply chains to boost local industries and exports. Under the two programmes, several key initiatives have already been held this year to drive trade continuity.

As part of the AfTIAS, the first-ever International Virtual Exhibition for Madinah Dates was held, aimed at increasing internal and external demand for the province’s dates and enhancing their competitiveness on the global market. Over 35 exhibitors, date-export companies and government agencies participated in the event. More than 90 business-matching meetings between exhibitors and potential buyers from targeted international date markets were also held. Additionally, an agreement with the Arab Tourism Organisation (ATO) laid down a general framework for cooperation and coordination to support the development of the tourism sector in the Arab region, especially in view of the impacts of Covid-19.

In terms of securing Arab-Africa trade, earlier this year the ITFC alongside the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the Islamic Corporation for the Development of the Private Sector (ICD) hosted a webinar for over 1,000 development institutions, sovereign funds, banks, investment and private equity companies, and key government and corporate sector representatives. Held under the AATB programme, the event set out to identify channels to bridge the gap between regions by leveraging the programme’s investment, trade, and insurance pillars to drive business opportunities across key industries such as agro-food, health and pharmaceuticals, building and construction materials and equipment, and machinery and electrical equipment.

Another AATB initiative was the launch of the Market Access Requirements Programme for African Markets in partnership with the Export Development Authority (EDA) to enable Egyptian exporters to access African markets across industries such as building materials, chemicals, medical and pharmaceuticals, engineering, printing, packaging, paper products, and furniture. Target African markets include Kenya, Uganda, Tanzania, Ethiopia, and Rwanda in the East, along with Senegal, Cote d’Ivoire, Nigeria, Ghana, Cameroon, and Guinea in the West, and South Africa, Angola, Zambia, and Zimbabwe in the South.

In March, a workshop was held for over 70 furniture-exporting companies in Damietta aimed at facilitating knowledge-transfer on the technical requirements, export-planning, and marketing services required to effectively access African markets.

Both the AfTIAS and AATB programme platforms will continue to address the need for enhanced trade integration and identify opportunities to protect trade continuity in these key regions. 

How can the Arab countries deal positively with challenges in the near term and beyond?

The Covid-19 pandemic revealed the priority sectors that are critical to the development and recovery of the Arab countries. Prioritising healthcare and inclusive human capital through the creation of decent and sustainable jobs is integral to building the resilience of communities. There is immense opportunity to increase dialogue with the private sector and identify ways to overcome various challenges.

Earlier this year, as part of the AfTIAS programme a roundtable was held on post-Covid-19 economic recovery through inclusive job creation. The virtual roundtable highlighted key areas of intervention, ranging from poverty alleviation to inclusive job creation, enhancing stability in fragile states, and curbing migration.

Over the course of the year, additional workshops will be held for the private sector to provide it with a wider understanding of the Arab market and identify opportunities for enhanced trade collaboration in these challenging times.

What were some of the additional outcomes of your five-day visit to Cairo this month?

One of the most important outcomes was the signing of a partnership agreement with the Egyptian Exporters Association (EXPOLINK) to support young entrepreneurs seeking trade and trade-finance opportunities in Egypt and beyond under the umbrella of the AATB. The partnership agreement comes in response to the conditions imposed by the Covid-19 pandemic to enable Egyptian exporters to enter new markets and grow their competitive edge, particularly understanding the requirements of electronic exports and their importance to targeting a larger number of potential customers around the world. The programme also supports entrepreneurs in identifying future export trends and handling various issues related to shipping, customs, electronic contracts, and transactions.

The training programme for exporters on Entering African Markets also successfully concluded last Thursday in Cairo. Organised by the ITFC in cooperation with the Export Development Authority under the AATB programme, this was the first in a series of initiatives to train Egyptian exporters on tangible mechanisms to access African markets and benefiting representatives from 50 companies from the targeted exporting sectors in many fields.

The workshop helped to spotlight opportunities for trade in Africa, forge an integrated export strategy for the African market, understand the legal landscape of the continent, and map opportunities across Africa’s diverse countries and cities.

*A version of this article appears in print in the 17 June, 2021 edition of Al-Ahram Weekly


Short link: