Now is right time for Egyptian companies to invest in Ethiopian market while it is still blossoming: Al-Zumar

EGP 1bn expected Egyptian exports once Ethiopia enforces COMESA agreement: Al-Zumar

Daily News Egypt sat down with the economic and commercial counselor of Egypt's Embassy in Ethiopia Walid Al-Zumar to discuss the trade relations between both countries as well the obstacles facing those relations. During the sit down, the lack of application in COMSEA and on the expected date in which the company will apply.
What are the latest negotiations about establishing an Egyptian-Ethiopian industrial zone on an area of 2m meters?
The higher commission of investment in Ethiopia is holding meetings to finalise the allocation of lands to the Egyptian-Ethiopian industrial zone on an area of 2m meters with a cost of $150m, managed by businessman Ahmed El-Sewedy.
What is the size of Egyptian exports to Ethiopia?
Egyptian exports to Ethiopia reached EGP 85m during the first half of 2015 with an increase of 33% compared to last year where exports reached EGP 137m.
Ethiopian imports to Egypt reached $67m in 2014.
What are the most prominent Egyptian exports to Ethiopia?
The most important Egyptian exports are from El-Sewedy, whether imported from Egypt or any other country, in addition to some exports of building materials like ceramic and isolating materials, as well as exports of some food industries like juice and dairy.
The Ethiopian market is large and accommodates Egyptian products with the presence of importers that can provide the hard currency to seal the exporting deal.
What is the size of Ethiopian exports to Egypt?
Ethiopian exports to Egypt reached EGP 25m during the first half of 2015 with an increase of 11% compared to the same period last year where exports reached EGP 67m in 2014.
What are the sectors that Ethiopian exports to Egypt are focused on?
Ethiopian exports in Egypt are focused on Coffee, and meats, whether frozen or living, in addition to some legumes and beans.
What about Egyptian exports to Ethiopia?
They are focused on sesame, meats, and some legumes including lentils, beans, corn, and white beans.
What do you think of the fifth round of the Ethiopia International Exhibition?
The exhibition is witnessing significant progress in terms of organisation, which makes it one of the most important exhibitions in Ethiopia in the upcoming period. The exhibition includes several industrial sectors, like chemical, petrochemical, packaging, and printing industries.
The second round of the exhibition is prepared and participating with nearly 70 Egyptian companies in addition to a number of meetings between the Ethiopian and Egyptian parties, which will result in signing a number of agreements.
What are the obstacles against investment in Ethiopia?
The obstacle that is hindering Egyptian companies from entering the Ethiopian market, whether investment or exporting wise, is the availability of currency. Ethiopian importers have the desire to import from Egypt but currency availability stops.
Also, Ethiopian importers import in small amounts, with a high cost, which calls for considering the importance of establishing a storage area on the borders for example, taking into account that there are no free zones in Ethiopia.
The problem of transporting goods between Egypt and Ethiopia is one of the biggest problems of exchange between both countries. This calls for the establishment of a route between Egypt and Ethiopia.
The route will solve all transportation problems and cargo trucks would be able to make the trip in only 10 days.
Do countries investing in Ethiopia make efforts to develop the road network?
China is making efforts to develop the transportation sector and launched a new railway to the port of Addis Ababa and Djibouti.
The Arab Contractors Company is currently working on two projects with financing from The African Development Bank (AFDB). The projects are two roads to connect Ethiopia and Kenya. One of the roads is 110km long and its construction is finished, while the other is 72Km long and is still underway.
Do you consider the Ethiopian market as an industrial or consuming market?
It is a large consuming market and the Egyptian product has a good reputation in it. Ethiopia has no resources and depends on importing rather than exporting. Its imports amount to $14bn compared to $3bn of exports.
Do the Egyptian companies adhere to participating in the Ethiopian exhibitions?
The Egyptian investors and industrialists significantly participated in the exhibitions held in Ethiopia last month. Four Egyptian companies participated in an exhibition specialised in building materials industry, which was held in October.
Seven companies participated in the Africa Origin Exhibition, specialised in the industries of clothes and textiles, as well as representing the Ready Made Garments Export Council (RMGEC). Egyptian companies took part in a conference recently organised by Arab Union for Industrial Exports Development (AUIED).
Do you expect the trade exchange between Egypt and Ethiopia to increase as soon as the later applies the Common Market for Eastern and Southern Africa (COMESA) agreement?
I expect that the trade exchange between Egypt and Ethiopia will amount to EGP 1bn when Ethiopia applies the COMESA agreement.
Why didn't Ethiopia apply COMESA?
Ethiopia did not apply COMESA to its foreign imports because it relied on customs and taxes and COMESA countries' imports can enter without customs.
Ethiopia has no industrial structure fit for export, and in case of opening the market for goods exempted from customs while it has nothing to export, Ethiopian will lose its fundamental resource, the customs.
The Ethiopian trade minister negotiated with its Cabinet and the finance minister to apply COMESA but the government refused until new investments are pumped in the Ethiopian market, which can be depended on as an alternative to customs and taxes.
When do you expect Ethiopia to apply COMESA?
I expect COMESA will be applied gradually over three years.
The telecommunication and banking sectors are dominated by the Ethiopian government until now.
What are the stimulators that the Ethiopian government offers for investors?
The Ethiopian government offers tax exemption for investors up to seven years and nine years for exporting projects. The tax exemption depends on the importance of the project, ranging from one or five to nine years.
Those working on the "drawback system" enjoy investing advantages since the lands are available for investors with competitiveness prices and provide them with electricity; three cents per KW.
What is your advice for Egyptian companies?
Now is the best time for Egyptian companies to invest in its country as it is an emerging market in different sectors such as telecommunications and infrastructure.
What is the average of Egyptian investments in Ethiopia?
There is a difference between the Egyptian and the Ethiopian statistics regarding this issue. In my estimate, the investment size of Egyptian companies amounts to $850m.
What are the most prominent Egyptian companies in Ethiopia?
Golden Trust, which specialises in manufacturing plastic pipes, is the most important Egyptian company there. It has eight factories and two others under construction, as well as El-Sewedy, whether Emad El-Sewedy or Ahmed El-Sewedy, and another new company of domestic appliance.