Sunday, 5 March 2023

Checking in on the state’s export initiatives

How are the state efforts to boost exports playing out? The government has been working to increase exports over the past several months in a bid to narrow our trade deficit and reduce the country’s reliance on imports. To that end, the government launched a series of new initiatives and has been working to support individual sectors’ contribution to the country’s export portfolio. Today, we take a look at how these efforts have panned out and the extent to which they have managed to achieve the desired outcome.

REMEMBER- The government is aiming to increase exports to USD 100 bn a year by the middle of the decade and reduce dependency on imported products. The state has identified nine sectors to focus on, including food, textiles, pharma and metals.

Our exports at a glance: Egyptian non-oil exports rose 10% y-o-y in 2022, recording USD 35.6 bn from the USD 32.3 bn in 2021, according to figures from cabinet and the General Organization for Export and Import Control (GOEIC). This increase in exports was led by chemicals and building materials, followed by textiles and engineering products. Our oil exports also saw a significant increase to record USD 18.2 bn for the year from USD 12.9 in 2021.

The state has been lending exporters a hand with subsidy arrears: The Export Development Fund has so far paid EGP 42.5 bn in overdue subsidies to 2.5k exporters under its export subsidy program, which allows exporters to receive their subsidies in a single payment rather than in installments over four to five years, in return for a haircut.

The Madbouly government has been working overtime to boost exports, having introduced a number of initiatives and funding programs to push industrial sectors to step into new markets. The government has also inked a number of trade agreements to enhance the presence of Egyptian products in global markets.

Enter the Ezdhar Program: German development agency GIZ kicked off the Ezdhar Program last year in cooperation with the Trade Ministry, the Alexandria Business Association, Export Council for Chemical Industries, and a number of other associations and government bodies.

About the program: The program’s current cycle, which kicked off earlier this month, is targeting some 34 local companies operating in the printing and packaging and chemical sectors with the aim of developing them and helping them step into new markets, GIZ said in a statement. The program aims to aid more than 80 Egyptian companies in the aforementioned sectors as well as the engineering sector.

Ezdhar is expected to help the chemical sector grow: Fertilizer exports grew 187% y-o-y last year, as Egypt rose as Russia’s replacement for fertilizer exports upon global demand, Export Council for Chemical Industries and Fertilizers head Khaled Aboul Makarem told Enterprise, adding that he is expecting the sector to grow even further as it taps new markets, with the help of the Ezdhar program. The program is working to push SMEs to up their production for the sake of exporting them.

Our chemical exports in numbers: Chemical exports increased 150% y-o-y to sit at USD 8.7 bn in 2022 — a figure the government is looking to push up to USD 10 bn within the coming two years, About Makarem said. The sector is mainly looking at African markets and preparing to amp up its exports there through establishing storage units in Kenya, Tanzania, and Senegal, he told Enterprise.

The state has also launched EXXA to award the country’s top exporters: The Trade Ministry and the Engineering Export Council launched the Engineering Export Excellence Award (EXXA) last year with the aim of recognizing the country’s best performing exporters. The award’s first run recognized nine exporters, while the second run recognized 18 from 90 applicants — including Samsung, El Araby Group, Fresh Electric, and Kiriazi. EXXA honors companies that have played a significant role in increasing the volume of exports despite the many challenges currently standing in the way of our export targets.

It’s part of a bigger plan to create an export community that brings together exporters operating in various sectors and of various sizes and create a competitive environment in efforts to boost exports, head of the Engineering Export Council Sherif El Sayad told us.

Engineering industries exports saw unprecedented numbers last year, recording USD 3.8 bn, up around 10% from 2021’s USD 3.5 bn, buoyed by a 25.6% y-o-y increase in cable exports, El Sayad said.

Increasing food exports is also on the agenda: The Food Export Council has launched an initiative aimed at setting export standards for food industries and creating a new generation of exporters.

Our food exports remained more or less flat last year — but could benefit from more marketing: Egyptian food industries exports sat at USD 4.1 bn in 2022 and the council is working on increasing that number through supporting SMEs, Food Export Council head Hani Berzi told Enterprise. Berzi called on authorities to allocate the needed budget to launch a promotional campaign to advertise Egyptian foods, adding that this will play a significant role in supporting our food exports, increase our presence in the targeted markets.

Despite the state’s tireless efforts, exporters are still facing a lot of challenges, our sources tell us. The state needs to intervene and fix costs that include transportation, electricity, and other expenses that may hinder players from reaching their full export potential, Aboul Makarem said.

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