Back to the complete issue
Thursday, 18 March 2021

Hop on board

Egypt could join in a new USD 1 bn continental transit [assurance] scheme from AfreximBank, which is designed to encourage trade across Africa by improving tax collection and cutting back on trade costs. The new scheme will “help remove bottlenecks” in implementing the new African Continental Freetrade Zone (AfCFTA) and could be a boon for trade through the Cairo-Cape Town highway, AfreximBank’s Managing Director for Intra-African Trade Kanayo Awani tells The Africa Report. AfreximBank recently launched the scheme with a pilot USD 200 mn agreement to cover the COMESA region, which includes Egypt. Afreximbank aims to issue the first transit bonds in 3Q2021

What is the scheme? The plan will see AfreximBank act as a regional and continent-wide guarantor for trade by providing transit bonds covering the full range of borders that goods are required to cross, Awani said. Transit bonds are a kind of ins. given to freight shippers to protect against the risk of goods being disposed of in transit countries.

What’s the benefit? Without regional transit assurance schemes, traders are required to obtain national bonds for each border they cross, driving up transit costs. Africa currently has no regional transit framework, pushing transit costs in African countries such as Egypt to be more than 150% higher than the average in Europe. Transit assurance provided by the African lender would enable businesses to release working capital otherwise tied up as collateral against transit bonds, while also accelerating the movement of trade exports. The scheme will also ensure that when goods make a U-turn, the duties and taxes due would still be settled.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.