Record-breaking exports

Doaa A. Moneim, Tuesday 11 Jan 2022

The value of Egypt’s exports recorded an all-time high last year despite the impacts of the Covid-19 pandemic, writes Doaa A. Moneim

Record-breaking exports
Egypt s exports grew by 40 per cent in 2021

Despite the Covid-19 pandemic and its impacts on all sectors of the economy, Egypt’s exports reached $31 billion in 2021. This figure exceeds the pre-pandemic level, when the country’s exports recorded $30 billion in 2019, according to ministry of trade and industry figures.

Egypt’s total exports contracted in 2020 by 12.4 per cent compared to 2019, posting $26 billion in terms of value, according to data portal TrendEconomy, as a result of the pandemic.

Chemical industry products topped Egypt’s exports in 2021, growing by 40 per cent compared to 2019 to surpass $6 billion, according to the Trade Ministry.

Construction materials, food stuffs, engineering items, agricultural products, ready-made garments, paper and packaging, and upholstery and medical products were top sectors that achieved significant growth in exports in 2021, the ministry said.

In 2019, President Abdel-Fattah Al-Sisi launched an initiative targeting a total of $100 billion in exports annually. Exports are one of Egypt’s key sources of foreign exchange alongside the Suez Canal, tourism, and remittances.

Al-Sisi directed the ministries concerned to produce a roadmap improving local industry by setting 100 incentives for foreign and domestic manufacturers and business owners in Egypt with a view to increasing productivity and raising competitiveness.

Speaking to Al-Ahram Weekly, chair of Egypt’s Chemical Exports Council Khaled Abul-Makarem said the action taken by the government to disburse export arrears had contributed to keeping factories open in the first wave of the pandemic and had helped to meet internal and external market needs, particularly amid the supply chain disruption caused by the pandemic.

Exporters had been owed large sums in overdue export subsidies, and these had now been paid, Abul-Makarem said. “This helped provide liquidity for companies to repay their financial obligations and keep on their labour force,” he added.

In September 2020, the government launched an initiative targeting instant cash repayments of exporter arrears with the aim of providing the liquidity needed for companies to fulfil their obligations towards their clients and keep on their employees.

Over three stages, the Ministry of Finance disbursed up to 85 per cent of the total value of export dues from the Export Development Fund (EDF) to a total of LE30 billion.

Markets that depend heavily on China as an export and import market started to eye alternatives in the wake of the pandemic, making Egypt an ideal market for them based on its geographical position and stable economy. This was especially the case for African markets and the Gulf Cooperation Council (GCC) countries, Abul-Makarem said.

He expected Egypt to attain the goal of $100 billion in exports within five years at a total growth rate averaging 20 to 25 per cent per year.

Chair of Egypt’s Engineering Export Council Sherif Al-Sayad told the Weekly that making support for the export sector among the state’s top priorities had contributed to reaching record exports.

Egypt’s engineering industry exports recorded $3 billion in 2021, he said, adding that they could increase by 50 per cent to exceed $4 billion in 2022 if the government introduced other measures, including disbursing export arrears in a guaranteed period.

The government should focus on the manufacture of strategic production inputs through foreign and local investments to avoid supply chains disruption and strengthen domestic industry and competitiveness, Al-Sayad said.

He urged the bodies concerned to establish rapid, direct, and low-cost transport lines to African markets, especially to countries having seaports. He added that there was a need to decrease customs duties on production inputs to keep the prices of finished products down in the local market as well as the prices of products to be exported.

Local laboratories issuing standards certificates should be established, instead of relying on laboratories outside the country that only issue them to larger companies.

The government has taken steps over recent years to support the export sector and clear the way for exports to enter new markets.

In September 2021, the Trade Ministry applied customs reductions on 6,900 commodities exchanged between Egypt and the Mercosur trade bloc countries, allowing for a 50 to 60 per cent reduction in customs on almost 7,000 Egyptian commodities.

Egyptian exports to the Mercosur countries have jumped by 115 per cent since the agreement came into effect in 2017, according to the Trade Ministry.

The government has also adopted initiatives aimed at securing greater access to the COMESA trade bloc markets, including the African Continental Free Trade Area (AfCFTA) agreement, effective in January 2021.

Egypt’s trade exchange with the COMESA countries recorded $3 billion last year, accounting for 60 per cent of total trade flows between Egypt and the African countries, according to the cabinet’s Information and Decision Support Centre.

In December 2020, Egypt signed a bilateral trade agreement with the UK called the UK-Egypt Association Agreement that replaced the EU-Egypt Association Agreement on 1 January 2021. The agreement was signed on the back of the Brexit deal.

A new export subsidy programme that came into effect in July 2021 is expected to boost figures further and allow industries such as automotives, ceramics, pharmaceuticals, electronics, and chemicals to enrol in the export subsidy programme for the first time.

The programme provides larger subsides for exporters to Africa and favours exporters from Upper Egypt, the border governorates, and industrial zones such as the Al-Rubiki Industrial Zone and the Damietta Furniture City.

*A version of this article appears in print in the 13 January, 2022 edition of Al-Ahram Weekly.

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