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More than 70 senior officials representing the Common Market for Eastern and Southern Africa (COMESA) trade bloc, the Egyptian export and business council private sector, leading banks and related ministries, attended the African Development Bank’s (AfDB) forum held at the Four Season’s Hotel on March 27 to boost regional integration between Egypt and COMESA. The forum tackled challenges and growth opportunities and highlighted AfDB’s efforts to facilitate trade through financial and non-financial measures. The discussion and potential solutions were recorded as part of a study commissioned by AfDB entitled “Egypt-COMESA Trade Enhancement.”
Amongst the attendees were Ambassador Mohamed Al Hamzawy, Egypt’s Assistant Minister of Foreign Affairs to the Nile Basin countries; Alaa Al Bahie, Head of the Egyptian Export Council for Food Industries and Chairman of Mass Food Co; Walid Helal, Head of the Export Council for Chemical Industries and Chairman of El Helal Group of Companies; Ayman Eissa, Chairman of the Ethiopia-Egypt Business Council and Ethiopia’s Golden Capital; and Karim Sadek, the Managing Director of Citadel Capital and Head of its Africa Operations.
In her opening remarks, Leila Mokadem, AfDB’s Resident Representative in Egypt, said that Egypt has been a major player in the trading bloc since January 1999, although it was not among the 16 founding member states that joined COMESA in December 1994 when it was established.
Egypt “exports the largest number of goods in the bloc, accounting for 26.8% of exports from intra-COMESA trade. It ranks fourth regarding imports,” she explained, adding that there were still more opportunities for involvement. Mokadem explained that in order to meet its full trade potential, Egypt must focus on trade with neighbouring African countries which have been experiencing significant growth in recent years and could be a great source of income for Egyptian traders, particularly in terms of natural resources.
“Egypt must continue leveraging its relationship with Africa and COMESA countries. The value of Egypt’s trade and export sectors has gone from $200 million to $2.4 billion between 2002 and 2012,” said Mokadem, although exports to COMESA member nations only account for 8% of trade volumes, leaving a lot of room for growth.
COMESA’s goal to increase regional integration goes hand-in-hand with economic prosperity and the African Development Bank’s vision in this regard. Today, this large marketplace comprises 19 member states, covers a surface of 12 million square metres and accounts for an annual import bill worth $32 billion and an export bill that has reached $82 billion annually.
Transport and logistics, trade finance, business knowledge and trade promotion are the three major challenges that have been identified by the aforementioned study. Poor transport infrastructure and high fuel costs remain challenging for both Egyptian and African exporters. Although major investments have been channeled into improving roads like the Alexandria-Cape Town Highway, regional railways and river transport, these infrastructure projects take a great deal of time and money to complete. The study recommends focusing on sea transport and leveraging the Red Sea-Indian Ocean corridor and revamping ports along the trade route by establishing transit, logistics and packing facilities to maximize products’ added value. The study also recommends the creation of an African stand-alone shipping service that would transport Egyptian exports south as well as link African exports and the European Union through the Suez Canal.
To tackle the second challenge related to trade finance, the study advocates the establishment of an African bank network to set up a revolving line-of-credit facility exclusively marketed by a network of national African banks.
The third challenge concerns business knowledge and trade promotion, which are hindered by customs and administrative entry barriers at border crossings. African traders’ preference for stocked goods over letters of credit was identified as a serious issue in addition to lackluster e-commerce facilities, which create a perception that African trading partners are unreliable. To counter this, the study recommends the establishment of an African Traders Database, whereby banks involved in the African bank network could provide detailed profiles of credit-worthy clients.
In conclusion, Mokadem showcased AfDB’s tailored programs and financing options to facilitate regional integration. Stressing the African Development Bank’s commitment to support Egypt’s transformation and provide development assistance to the Egyptian Government in the form of loans and grants, she added that a second workshop would be organized to wrap up the final conclusions and recommendations.