Representatives from the United States Export and Import Bank (EXIM Bank) and the US International Development Finance Corporation (DFC) are expected to visit Egypt soon to explore future opportunities of collaboration, Minister Counsellor for Economic Affairs at the US embassy in Cairo, Jim Boughner said.
DFC, which has over $1.7bn in active projects and investments in Egypt, has already assisted in financing US investments in Egypt, including, most recently, $430m in insurance for a major gas pipeline project and $84m to finance a wind energy project that will strengthen Egypt’s energy security, Boughner added.
“I can also note that the USAID will soon award a new $38m technical assistance programme to support Egyptian companies and boost US-Egypt bilateral trade,” Boughner noted,
Daily News Egypt interviewed Boughner to learn more about the updates of the US-Egypt economic cooperation at the end of 2019 and 2020 plans that include trade, investment, financial cooperation, and joint agreements, transcript of the interview is below, lightly edited for clarity;
US EXIM Bank is keen on boosting its activities in Egypt in the future through the US embassy. What projects are you preparing for Egypt in 2020?
In November, Judith Pryor, a board member of EXIM Bank, visited Egypt as part of a delegation led by US Department of Commerce Assistant Secretary Ian Steff. While here, Pryor met with Egyptian public and private sector entities to discuss potential ways to increase bilateral trade, including opportunities for the Bank to support the export of US goods and services to Egypt.
Also, in November, Adam Boehler, CEO of our new development bank, DFC, participated in the Investment for Africa Forum and met with Prime Minister Madbouly.
Boehler reaffirmed the importance of the US’s strong strategic partnership with Egypt and underscored DFC’s commitment to expanding private sector investment as a stabilising force in the region. The DFC, which has over $1.7bn in active projects and investments in Egypt, has already assisted in financing US investment in Egypt, including most recently $430m in insurance for a major gas pipeline project and $84m to finance a wind energy project that will strengthen Egypt’s energy security.
How does the US embassy help in implementing the Prosper Africa Initiative? Can you please shed light on its future plans in 2020, especially for Egypt?
Prosper Africa Interim Coordinator Matt Rees visited Egypt in November. As he shared, during an American Chamber of Commerce program in Cairo, the US embassy has a “Deal Team” in place that meets regularly to help the US private sector engage in business in Egypt and elsewhere in Africa.
Representatives from USAID, the Departments of Commerce, State, and Agriculture, and other agencies advocate on behalf of US commercial deals and investment projects.
I can also note that USAID will soon award a new $38m technical assistance programme to support Egyptian companies and boost US-Egypt bilateral trade. The embassy also supports Egypt’s increased use of technology to improve the business environment and facilitate investment.
One example in this area is the development of online platforms that make it easy for investors to apply for licences, which increases US company participation in the economy and foreign direct investment.
How did the US embassy support Egyptian entrepreneurs in 2019? What are your plans for 2020 in this key area?
Supporting Egyptian entrepreneurs is a top priority of the US government. USAID supports small and medium-sized entrepreneurs through a four-year programme valued at $22.6m. So far, the programme has supported the development of 13 startup incubators, six one-stop shoppes to register new businesses, and 13 business development service (BDS) centres throughout Egypt.
Last year this programme helped formalise 6,900 enterprises and provided extensive technical assistance to 360 Egyptian small and medium-sized businesses.
This boosted revenues of the firms by $1.1m and resulted in 7,000 new or significantly improved jobs for Egyptians. Also, USAID and the Egyptian Business Women Association created the Women’s Entrepreneurship Network to provide mentorship for women-owned businesses. Last year, USAID also supported the launch of the Tiye Angels investor group, the first women’s angel investor network in Egypt.
Our Public Affairs section also supports entrepreneurship in Egypt. Last year we supported Egypt’s delegation to the Global Entrepreneurship Summit and also held Global Entrepreneurship Week events at the American Center and our American Corner in Maadi. We also funded two important programmes, StartUp Egypt and Meet Silicon Valley, both implemented by INJAZ Egypt, a local non-profit that empowers young Egyptians with financial literacy and entrepreneurship training.
In Alexandria, the embassy launched IceAlex’s “Ladies Startup League,” to train 60 female entrepreneurs in business model development and marketing skills. And in Upper Egypt, at the second annual “StartupZ Fair” more than 800 entrepreneurs attended 45 workshops on FinTech, angel investing and pitching strategies.
We also welcomed entrepreneurs from Austin, Texas, who met with Egypt’s creative economy community and served as panellists during the annual RiseUp Summit, the largest gathering of entrepreneurs in the Middle East.
Are there expected visits from American companies or officials during the first half of 2020 to discuss investment in Egypt? If so, please mention some details.
Nearly 1,400 American companies, large and small, currently invest and operate in Egypt, and new companies visit Egypt regularly to explore opportunities and seek out partners.
This reflects, in part, the success that Egypt has had in the past three years in implementing structural reforms related to its $12bn International Monetary Fund (IMF) programme.
As of the beginning of 2019, Egypt was the second-largest recipient of total US foreign direct investment in Africa, and the fifth-largest recipient in the Middle East. We at the embassy would love to see Egypt take the number one position by continuously improving the business environment.
What are the most prominent areas that American companies want to invest in Egypt in the coming period?
In line with Egypt’s efforts to becoming a regional energy hub, US companies have taken a keen interest in the energy sector, both oil and gas, as well as renewables.
Besides, American firms are active in nearly all economic sectors in Egypt, including fast-moving consumer goods, hotels and restaurants, manufacturing, information and communication technology, transportation, construction, financial services, health care, education, and agriculture.
What are some incentives that American companies need to increase their investments in Egypt?
US companies typically look at a range of parameters, such as those measured in the World Bank’s Ease of Doing Business Index. A stable regulatory environment and a strong IPR regime, for examples, are critical. Consolidating steps and reducing red tape for both importers and exporters is another important element.
Many investors looking at Egypt see the potential for an export hub and have encouraged the government to look at ways to simplify and expedite the customs process.
During a past interview in 2018, you mentioned that “there are some trade barriers. The United States is still concerned about some shortfalls in the enforcement of intellectual property rights, particularly with respect to the usage of pirated and counterfeit goods, including software, music, unlicensed satellite TV broadcasts, and videos, which represent barriers to U.S. exports and investment.”
Do you notice improvements to this situation now? Will you have meetings with Egyptian officials to discuss this issue?
We meet regularly with Egyptian officials to discuss these issues. We’ve seen some evidence of improvements in the IPR regime, especially on the enforcement side, and we continue to look for ways to work together and make improvements in other areas, particularly concerning pharmaceuticals and medical devices.
What is the volume of trade exchange between Egypt and the US according to the latest statistics in 2019? What are your expectations for 2020?
Two-way trade between the US and Egypt had reached $7.6bn at the end of October 2019, which is higher than the total value from 2018 of $7.5bn. This is a 19% increase over the same period in 2018.
Given the success of the Egyptian government thus far in implementing important structural reforms, and an improved investment and “Ease of Doing Business” climate, there is greater interest on the part of US companies.
We are optimistic that the growth in trade as well as investment will continue through 2020 and well into the future. Top US exports to Egypt include heavy machinery, agricultural products, refined petroleum products, and medical equipment, while top Egyptian exports to the United States consist of clothing and textiles, crude oil, and fertilisers.
Do you think that the trade tensions between US and China will continue in 2020?
The US seeks a constructive, results-oriented relationship with China, which is the third-largest export market for US goods, after Canada and Mexico. The United States is China’s largest export market.
The US trade deficit in goods with China grew to an unacceptable $419.2bn as of 2018. The US seeks fair and reciprocal trade with China and works to protect American workers and businesses from unfair Chinese economic actions, including market access restrictions, forced technology transfers, and weak protection of intellectual property rights.
Will Egypt, Israel, and America start negotiations to include new industries within the scope of the QIZ agreement?
A common misperception is that the QIZ programme is limited to textile products and ready-made garments, when in fact almost any product manufactured within the QIZs that meet the programme’s requirements, including content and value-added, are eligible for duty-free export to the United States.
Besides, Egyptian manufacturers outside the QIZs can take advantage of the US Generalized System of Preferences (GSP) programme, which provides for the duty-free export of over 3,500 products to the United States. Companies interested in taking advantage of either program should contact the Egyptian Ministry of Trade.
From your point of view, how can Egypt enhance its benefits from the QIZ agreement to increase its exports to the US?
The QIZ and GSP programmes are important parts of our economic relationship with Egypt, and ensuring their success advances our common goals of growing Egypt’s economy and promoting prosperity and stability.
There is a myriad of opportunities under both programmes for entering the U.S. market, and Egyptian companies that would like to take advantage of these programmes should contact the Egyptian Ministry of Trade and Industry.
What is the position of the Egyptian-American discussions on the Free Trade Agreement (FTA)?
We have no update on this matter.