Tuesday,24 October, 2017
Current issue | Issue 1249, (4 - 10 June 2015)
Tuesday,24 October, 2017
Issue 1249, (4 - 10 June 2015)

Ahram Weekly

­­Exports worse than expected

Egypt’s non-oil exports have declined by more than 25 per cent since the beginning of the year, reports Mona El-Fiqi

Egypt’s exports
Egypt’s exports
Al-Ahram Weekly

The total value of Egypt’s non-petroleum exports during the first four months of 2015 came in at $6.207 billion, marking an almost 21 per cent decline over the same period in 2014, according to the General Organisation for Exports and Imports Control (GOEIC).

This fell short of the target set by the government of $9.28 billion for the four months ending in April. The target for the year as a whole is $25 billion. Egypt’s non-oil exports reached a total of $26.1 billion in the fiscal year ending on 30 June 2014, according to the Central Bank of Egypt (CBE).

Prime Minister Ibrahim Mehleb held a meeting with the ministers concerned to discuss the reasons for the disappointing figures, including political instability in some Arab countries, including Iraq, Syria, Yemen and Libya, which are considered essential markets for Egyptian exports, according to the Ministry of Foreign Trade.

The introduction of new monetary policies related to setting ceilings on dollar deposits has affected the available liquidity for letters of credit. This has made it difficult for local factories to import the raw materials they need, leading to a negative impact on export volumes, the ministry said.

Exporters point out that the reduction in the support given to exporters by half since July 2014 is also to blame for the decline.

Mohamed Qassem, chairman of the Readymade Garments Exports Council, told the Weekly that the financial support provided by the government to exporters had been cut from five to 2.5 per cent since the beginning of the 2015 fiscal year.

“This reduction makes it difficult for Egyptian exports to compete with lower-priced products in international markets,” he said.

He added that while China is supporting exporters with 17 per cent support, “Egyptian exporters can hardly get 2.5 per cent due to the government’s non-stop excuses for delays.”

The Ministry of Foreign Trade’s report also noted that the devaluation of the euro against the Egyptian pound has made Egyptian export prices less competitive in the European market, which is the largest market for Egyptian exports.

Sayed Ahmed, chairman of the Home Textiles Export Council, agreed that the devaluation of some foreign currencies such as the euro and the Russian rouble have had a strongly negative impact on exports.

“When the euro lost 15 per cent of its value against the dollar over the past few months, the value of my exports was cut to 85 per cent. The same thing happened to exporters who export agricultural products to Russia,” Ahmed explained.

Moreover, Qassem said that the energy shortage that has affected intensive energy-using industrial sectors such as cement, fertilisers and steel has led to less production and fewer exports.

He said that monetary policies should be more supportive of exporters. When faced with an economic slowdown, India and Turkey devalued their local currencies by 20 to 22 per cent to increase the competitiveness of their exports, he said.

“I think the Egyptian pound should be devalued to reach its real price against the dollar, in order to reflect the real macroeconomic figures for inflation, growth and the budget deficit,” he added.

According to GOEIC figures, Egypt’s 14 different export councils, including those for furniture, food industries, agricultural products, leather and readymade garments, have recorded a decrease in their exports.

Exports from the home textiles sector declined by 11 per cent over the past four months, according to Ahmed. “To help exports to increase, the financial support should be put back to its previous level. Introducing this support was the main reason behind increasing exports, from $5 billion in 2005 to $26 billion in 2014,” Ahmed said.

In addition to financial support, the local industry needs modernisation, including state-of-the-art machinery, qualified labour and good marketing, according to Ahmed.

Regarding better-qualified workers, Ahmed pointed to a new project in the textiles sector that includes setting up a vocational school financed and supported by several factories in Alexandria to train workers in the sector.

The school was launched in 2015 by a group of factories in Alexandria, he said.

To encourage students to enrol at the school, they are paid a monthly allowance of between LE500 and LE700 during the school year.

They are also paid LE1,200 per month when they start training during the summer months. Ahmed is optimistic that after two years the school graduates will be well qualified to join the labour market.

Minister of Foreign Trade and Industry Mounir Fakhry Abdel-Nour recently announced that the government is setting up a strategy to double the value of merchandise exports by increasing the manufacture of high-value-added products. He forecast that exports could reach $42 billion by fiscal year 2018-2019.

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