CAIRO: Trade and Industry ministers from two of Africa’s largest economies met Sunday for a set of far-reaching discussions on the future of bilateral trade and continental trade ties.
Egyptian Minister Rachid Mohamed Rachid and South African Minister Rob Davies signed a Memorandum of Understanding (MoU), discussed trade in a series of meetings, and shared their thoughts with the press Sunday.
The meetings come at a time when bilateral trade between the two countries is booming – to the tune of a 300 percent increase over the past year – and at a sensitive moment when African countries are working to establish a set of trade blocs capable of competing with developed nations.
“There is commitment from both sides to intensify efforts to promote trade between the two countries and expand the volume of trade while reducing the trade imbalance, said Rachid. “Both sides are also committed to encouraging and assisting members of the business community engaged in trading between the two countries.
According to Egypt’s Ministry of Trade and Industry, Egypt exported $134 million in goods to South Africa, while South African exports reached $133 million.
The trade gap between the two countries has oscillated significantly in recent years, with Egypt experiencing a trade surplus of $61 million in 2006 and a trade deficit of $37 million in 2007 based on a dramatic drop in Egyptian exports that year.
By the end of 2008, South Africa had invested $41.6 million in Egypt.
MOUs typically offer little more than lip service to the need for more cooperation between the two sides, but this one sought to engage more specific means to boost bilateral trade.
The memorandum called for the creation of a joint committee, overseen by the two countries, to promote trade cooperation.
This agreement adds to a long history of trade agreements between the two countries, notable the creation of the Egyptian-South African Joint Business Council in 2001.
With Egyptian President Hosni Mubarak visiting South Africa and forging stronger diplomatic relations last July, Rachid stressed to the media that “investment levels as well as investment levels will have to catch up with the political situation.
Davies said that the biggest hurdle to increased economic cooperation between the two countries remained general ignorance by the countries’ respective business communities on the trade opportunities.
“Our business people don’t know each other sufficiently, he said.
Rachid echoed the sentiment, calling business groups on both sides “insufficiently aware.
But both ministers said they believed that further economic cooperation between the two countries was part of a broader continental goal to strengthen economic ties and build trade blocs between all African countries.
Three major trade blocs have taken root in Africa: the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and a group established through the East African Business Summit.
Though members of each bloc enjoy trading privileges with one another, cooperation between the three groups has yet to blossom. Davies called the need for increased ties between the three groups a “mandate.
Rachid expressed frustration over the continent’s inability to come together, saying “there is no doubt that there have been challenges with Africa in general for quite some time.
He also defended against accusations that trade agreements decided upon under COMESA, of which Egypt is a member, have been slow to come together.
“What we’ve agreed on in COMESA, we’ve actually begun to implement, he said. “Most African countries consider the customs arrangement as a main source of income.
Ministers from COMESA’s 19 member states gathered in Egypt this February in an effort to bolster the agreement. Several member states argued that the only way for African countries to have a fighting chance in the international trade lanes was to strengthen COMESA to the point where it can compete with the US and the EU.
COMESA states, though, have suffered because many in the international business community are loathe to trade with African countries they view as unstable.
And that’s what makes increased economic ties between Egypt and South Africa so important. Viewed as two of the region’s most stable countries, the two governments believe themselves to hold a leadership role in bolstering African trade and acting as vehicles for promoting international confidence in the continent.
“We need to guide the African continent through our cooperation together, said Rachid.
Rachid said he planned to help boost Egypt’s global exports, minus petroleum, from $4 billion to $15 billion over the next four to five years.
“We hope we will become as important a market as South Africa, he said.