By Shaimaa Elise and Ahmed El-Adly
The Sharm El-Sheikh Agreement aims at liberalising the trade in goods, in which the three main economic agreements integrate SADC, COMESA and the East African Community (EAC), according to Trade Minister Plenipotentiary of Egyptian Commercial Services Ali El-Leithi. Daily News Egypt interviewed El-Leithi to talk about the activation plan of the trade movement between Egypt and African countries.
What is the purpose of the Sharm El-Sheikh agreement?
The Egyptian political leadership is now heading to Africa, and the summit in Sharm El-Sheikh is considered the third summit. The agreement aims at merging the three main African blocs in one agreement, which will be called the “Sharm El-Sheikh Agreement”, after the 26 countries included [in Africa] agreed to sign it, which is considered recognition of Egypt’s role and its desire to cooperate with African countries. Our exports before joining the COMESA Convention reached $440m, and after joining our exports reached $2.2bn in 2014. In addition, Egypt raised the ceiling of its exports five times, despite the challenges facing the agreement. For instance, not all countries are committed to the Convention, and there is a disparity in the proportion of some countries’ commitment to the Convention.
During the conference, what agreements will be announced?
The Sharm El-Sheikh Agreement, as I mentioned, aims at liberalising trade in goods, through decreasing customs between the 26 countries by 65% as a first stage, and we aim to decrease customs with a decrease rate of 85% on trade in goods within the coming three years. There are some countries which are wary of the agreement, such as South Africa, and after some problems will emerge afterwards. South Africa is mainly worried about the ratification of the Convention for fear of Egyptian Industries, as it threatened their marked presence in southern Africa. A declaration of intent will be signed, a so-called “Declaration of Sharm El-Sheikh”, for the start of the second round of negotiations in the liberalisation of trade in goods and services. Furthermore, there will be active cooperation in trade sectors as the volume of the 25 states’ imports without Egypt amounted to $82bn. Egyptian involvement in Africa will open areas of work to Egypt and jobs locally, in addition to increasing Egypt’s outcome of the foreign currency. On 7 June, a meeting with officials and experts will be held to conduct a report about what happened in the Convention event on 6 June, to be submitted to the Ministerial Council to be held on 8 June, and on 10 June will be adopted.
What is the Egyptian Commercial Services’ plan to activate trade exchange between Egypt and Africa?
On the conference’s occasion, Minister of Industry [and Foreign Trade] Mounir Fakhry Abdel Nour is looking to form a unit to follow up on the results of the conference, along the lines of what has been happened in Sharm El-Sheikh. The minister started a plan of action in Africa with a meeting with the Federation of Egyptian Industries (FEI) on 26 April, including the Federation of Egyptian Chambers of Commerce (FEDCOC), the Egyptian Businessmen’s Association (EBA) and a number of Egyptian businessmen in Africa. They discussed some issues, including the problems exporters face in shipping, ensuring exports’ movement, and activation of our presence in Africa, including the role of the Egyptian Commercial Services in the coming period. The minister is looking to promote our presence in Africa, such as Rwanda, Angola and Tanzania, because we see there are a large investment opportunities, as we seek to restructure the current six offices and support them (in Ethiopia, Zambia, South Africa, Sudan, Nigeria, Kenya). Besides this, four new offices will be opened in Tanzania, Uganda, Angola and Congo before the end of this year, which came after hearings with stakeholders and Egyptian businessmen in Africa. On the activation of trade and industry between Egypt and Africa, we plan to activate the soft power of some actors companies in Africa, such as the Arab Contractors, and El-Nasr for Import and Export, which had a large role in the ‘60s.
Will expos be opened in Africa?
The proposal on this issue was submitted to the industry minister to establish permanent expos in Africa to allow the goods to be on show all the time. There was a very good expo in Sudan for the Chemical Export Council (CEC) on this issue. We can make sure of this, especially since there is much land in Africa belonging to Egyptian embassies and consulates, which are valid for exhibitions to present and provide Egyptian goods. A complete strategy was submitted to the minister to be discussed. It is expected to launch Egyptian exhibitions in Africa by the end of the year. In coordination with the expo link, we worked on a plan for expos in Africa to find out the most important exhibitions that we focus on in the proposal, as there are general expos and specialised expos. We believe that the specialised expos are better and more attractive than public expos. We planned for specialised expos such as household products, engineering industries, plastic industries, electrics, drugs and chemicals. We focused on the sectors that we have a competitive advantage in.
What does the Egyptian Commercial Services demand in increased budget for the next fiscal year 2015/2016?
We always demand that the Ministry of Finance increase our budget, but the budget allocated is limited. We ask for an increase in the budget and add an item in the budget for promotions such as promotional ads, concerts, exhibitions, hosting delegations and competitions, as well as manpower.
How will Egypt compete with China, India, and the Gulf countries in Africa?
China and India depend on two basic elements, which are low production costs and the tax repayment. For example, China allocates 17% of its budget to support its exports, which helps the presence of Chinese products in Africa. Meanwhile, the Egyptian government supports exports amounting to $2.6bn, and the FEI demanded the cabinet increase the support of industries by EGP 5bn. The government is considering entering into joint investments in the African market, but it is difficult to support exports with 17% of our national budget.
President Abdel Fattah Al-Sisi announced at the end of March’s Economic Summit that Egypt will hold an annual economic conference to support Africa – have there been any arrangements by the Egyptian government to hold this conference?
The process is underway to arrange for this conference, and it will be arranged after the completion of the current African Economic Conference. Through the annual economic conference to support Africa, Egypt is endeavouring to achieve trilateral cooperation between Egypt, the investor country and the African states. The African Union will discuss the Continental Free Trade Area (CFTA) at the summit in South Africa on 1415 June, which will be the second phase of activation development after the Sharm El-Sheikh Agreement. The Free Trade Area (FTA) is the first step for achieving the common African market, as the 26 countries represent 650 million people, as well as a GDP size amounting to $1.2tn and foreign trade amounting to $530bn.