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AEC prepares to enter Africa - Daily News Egypt

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AEC prepares to enter Africa

We are preparing market and consumer studies for African markets, says Demerdash

The Agriculture Export Council (AEC) is working on the preparation of marketing and consumer studies for the African markets and is expected to finish them in May.

The AEC also intends to raise exports of the sector to $2.26bn in 2017, up from $2.146bn in 2016, with an expected growth of 5%.

Head of the AEC, Abdel Hamid Demerdash, said that the African market is important and promising for the future of Egyptian crops, where there are many potential large markets.

He added that the studies are based on exploiting the joint trade agreements between Egypt and the rest of the African countries, which will contribute to entering these markets with the help of intact economic trade plans.

He explained that the AEC is cooperating with the Egyptian trade representation offices in Africa to target specific markets, feed the council with information and market needs, and prepare studies.

He noted that the current size of exports to Africa is very low, with plans to boost exports to 5% of all agricultural exports over the next five years, with 1% growth per year.

Demerdash explained that the AEC will first send delegations with representatives from the Ministry of Agriculture to communicate with African countries on trade and their willingness to open their markets for Egyptian products.

He added that, despite their importance, African markets have many challenges facing Egyptian exporters, limiting their penetration.

He explained that the most important problems facing Egyptian exporters are the lack of guarantees to receive their financial dues and the difficult logistical situation, both of which raise the cost of production.

Demerdash noted that many exporters complain about their inability to collect their payments after exporting, due to scams committed by importers in these markets.

He pointed out that exporters can resort to the Export Development Bank of Egypt (EXPA) to prepare studies on importers in these markets and prepare a list of trusted importers.

Moreover, he said that transportation and logistics also hinder Egyptian exporters, where the lack of direct shipping lines drive production costs up, which limits the exports to these markets.

Exporters aim for the easiest markets, so they prefer European markets, he pointed out, ruling out the possibility that the African markets can be alternatives to the European markets.

Demerdash pointed out that studies aim to open new markets to increase the size of Egyptian exports and expand the country’s influence on trade in order to attract more foreign currency and stimulate the local economy.

He added that the lack of expansion in Africa so far is unjustified and cannot be explained by the challenges, as solutions must be sought to overcome these problems.

He highlighted the importance of African markets to other exporters, even though Egypt is closer to them.

Furthermore, he explained that Egypt’s location in the continent helps it penetrate these markets quickly. He asserted the need to eliminate all problems between Egypt and other African countries, as this could help Egyptian exports.

He explained that Egyptian agricultural exports to the markets of Africa are low in terms of size and value. He noted that Kenya is one of the most important countries to Egyptian exports; despite so, Kenya only receives 7,000 tonnes of agricultural exports per year from Egypt. He added that the total size of Egyptian agricultural exports to all markets in Africa is below $25m per year.

He pointed out that Kenya moved to inject huge investments into its agricultural sector over the past few years to benefit from its location, which is 2,000 metres above sea level, where the government established many refrigeration and packaging plants.

He stressed that Egypt must seek partnerships with different countries to strengthen relations and benefit the Egyptian economy.

Demerdash said that exporting to African countries now could be difficult, but will ease up in the future if problems are fixed.

He added that most importers there need new technologies to receive shipments and learn the best means for storage, which is something Egypt could help with.

He pointed out that citrus fruits are among Egypt’s top exports to Africa, but argued for the need to expand in exporting other products, which will be decided after completing the current studies.

He explained that Egyptian exports to Africa are between 30,000 and 40,0000 tonnes per year, half of which are channeled to three countries only, and this signals the weakness of Egyptian agricultural exports to African markets.

Most of Egypt’s agricultural exports are to six countries—Kenya, Mauritius, South Africa, Seychelles, Gabon, and Uganda—despite the COMESA agreement that enables Egyptian exports to access these markets without customs.

In terms of the overall sector performance, Demerdash said that the first quarter of each year can indicate the expected exports size for the entire year. Climate changes impacted the production this year, he added.

He explained that most crops will ripen late this year, which hinders AEC from completing an expected growth estimate.

The AEC intends to raise exports of the sector to all countries to $2.26bn in 2017, up from $2.146bn in 2016, with an expected growth of 5%.

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