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Al-Ahram Weekly 9 - 15 March 2000 Issue No. 472 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 9 - 15 March 2000 Issue No. 472
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Focus Books Travel Living Sports Profile People Time Out Chronicles Cartoons Billion dollar questions
By Mona El-FiqiCOMESA's first regional conference in Cairo, convened last week, sounded an optimistic note on trade prospects among member states provided a free trade zone is declared at the Lusaka summit, scheduled for October.
The conference presented an arena for the unveiling of several Egyptian trade initiatives, including the establishment of a technical assistance fund, a businessmen's association and intra-COMESA credit facilities. Until these and other initiatives bear fruit, however, the situation is less positive than delegates would wish.
Egypt's trade with COMESA -- despite the 90 per cent cut in tariffs on imports from member states necessary when Egypt joined -- remains much less than anticipated. Ministry of Trade and Supply statistics indicate that Egypt's trade with member states fell from $179.6 million in 1997 to $157.7 million in 1998.
Egyptian exports to member states fell from $38.6 million in 1997 to $31.2 million in 1998, while imports to Egypt in the same period fell from $140.9 million to $126.5 million. Trade with some member states -- notably Mauritius, Namibia and Eritrea during 1998 was almost nil.
Political instability, high transportation costs and a lack of credit facilities are only some of the problems cited by Egyptian businessmen doing business in Africa.
Nonetheless, the continent remains a "good market" for a number of Egyptian products, including chemicals, ceramics, furniture and carpets. Trade, though, is hampered by high transportation costs. The scarcity of direct airline routes results in a ton of air-freight between Egypt and Brazzaville, Congo, costing $2,400 compared to $750 per ton from European countries.
Attempts to tackle the problem of exorbitant transportation costs include establishing a private sector marine route, operated by the International Association Cargo Carrier (IACC) across the Red Sea and the Arabian Gulf, while a marine line from Egypt to Djibouti, and on to Dar Es Salaam, has been operated since last August by Transmar Shipping Company, a subsidiary of IACC.
"Doing business in African countries does entail some risk and I would stress one reason -- the absence of a sound banking system," says Ahmed Shiha, Chairman of the Africa Committee of the Egyptian Businessmen's Association (EBA). "And since Egyptian banks have no branches in these countries, deals must be concluded with an immediate cash payment which can lead to many problems." Liquidity problems within many African economies further restrict activity. "It is incredible," complains Shiha, "that Egyptian businessmen wanting to export to many African countries are expected to wait until the African importer sells the products before being paid."
One businessman, who requested anonymity, insisted he "prefers to conclude one export deal per year to Europe rather than 10 deals in Africa out of which nine are likely to be swindles".
The solution, according to Shiha, is to provide sufficient help to local exporters so that they can effectively market themselves in COMESA member states while avoiding any unnecessary risks.
"Providing information will definitely help. In addition, businessmen should be provided a 12-month visa facilitating their movement in the COMESA market," says Ismail Osman, chairman of Arab Contractors -- which currently has projects worth $1 billion in 16 African countries. Despite the difficulties "Egyptians must take the initiative to do business in Africa," stressed Osman "because it will be profitable in the long run".
