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Thursday, 18 July 2019

Africa is the key for Egypt cement export growth -Shuaa

Africa is the key for Egypt cement export growth -Shuaa: Egyptian cement companies should look to Africa to expand their exports and clear excess production, Mai Abdelaziz, equity analyst at Shuaa Securities, wrote in a note. Sub-Saharan countries are projected to need an additional 10-15 mn metric tonnes per year amid increasing housing and infrastructure development, creating a solid potential export market.

Egypt should take advantage of Comesa: Just 0.3% of Egypt’s total exports went to members of the no-customs eastern and southern Africa common market (Comesa) in 2015 and 2016, 4% of which came from the cement industry. Shuaa believes that Egyptian companies can bump up this figure if export incentives and logistical measures are introduced.

Exporting to MENA may prove challenging: Egypt does not currently have a comparative advantage in the MENA space over countries like Turkey, Iran, and Saudi Arabia. Reconstruction efforts in Syria and Iraq will be extremely lucrative, but Egyptian companies would struggle to compete against other exporters who enjoy comparatively lower domestic input costs.

Incentives and cost reduction are essential: “Reduction in transportation costs, tax reduction/exemptions on imported coal, and reduction of clay costs could all help Egyptian cement producers find that comparative advantage for their exports,” Abdelaziz wrote.

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