Exporters complain that political instability has a negative impact on Egypt's non-oil exports, Mona El-Fiqi reports Since the 25 January Revolution and due to the continuing political unrest, the non-oil exports sector is facing a lot of problems which led to a reduction in the volume of total exports. Samir El-Sayad, minister of industry and external trade, announced recently that the volume of exports was reduced by 40 per cent in the past three months. The reasons, according to exporters, include a difficulty in dealing with banks to obtain finance, worker strikes, the depreciation of the pound, shipping problems, loss of markets in some Arab countries such as Libya, a delay in receiving the financial export assistance provided by the government and an increase in the prices of some raw materials. Ihab El-Messiri, chairman of customs committee at the Federation of Egyptian Industries and a textiles exporter, asserted that it has become very difficult for textiles exporters to produce and export. "Workers are in strikes, cotton's international prices are soaring to three times higher than before, there is less demand on cotton products in the global markets in addition to internal security problems," explained El-Messiri. Exporters also complained that banks are applying severe restrictions on doing business. "The banks hesitate to provide financing to any businessmen, although they do not announce their hesitation," explained Samir El-Nagari, deputy chairman of Fresh Fruits Company Egypt, an agricultural products exporter. "In fact, bank officials do not take decisions, and when the banks hesitate, trade is negatively affected," he said. When they first re-opened for business after the revolution, the banks set a ceiling for daily cash withdrawals at LE50,000 per day. According to El-Nagari, this means a delay when concluding a deal. "It means that if I need LE1.5 million, I have to wait for 10 days to collect the money and so I might lose the deal," said El-Nagari. To boost exports, El-Nagari said that banks should give priority to trade by applying a package of procedures to help in providing finance for trade operations. One more problem mentioned by El-Nagari is that the number of ships reaching Egyptian ports since January is less than usual due to the reduction of exports and imports. "Shipping companies are giving priority to other destinations where traffic is heavier," he said. Exporters also complain that the depreciation of the pound is one of the important problems they are currently facing. An exporter who preferred to remain anonymous said that the pound has lost almost four per cent of its value since the revolution. It was trading at around LE5.8 before 25 January, but last week it was traded at around LE5.98 per dollar. Due to political unrest in other Arab countries, Egypt lost some important markets for many of its exports. According to the Food Export Council (FEC), Egyptian exports of food products to Libya, which ranks as the first Arab country in importing Egyptian food products, was greatly hit by the unrest there. However, the FEC said that Egyptian exporters are targeting some new markets such as African countries as an alternative. The possibility of losing part of Egypt's share in the international trade is not only the negative impact of reducing exports, but experts warned that Egypt's trade deficit could increase. Mokhtar El-Sherif, an economic expert, explained that the gap between export revenues and the import bill will increase, especially that 70 per cent of Egypt's imports are capital goods and the fact that Egypt depends on imports to provide 60 per cent of its food needs. Less export, in addition to the drop in other foreign currency earners from tourism and remittances, simply means less total foreign currency earnings, which El-Sherif considers very dangerous for Egypt's economy. "Egypt's reserves of foreign currency are already reduced by $6 billion during the past two months, and so the period during which Egypt can cover its needs is decreased every month," El-Sherif explained. A return to some sort of stability is needed to minimise the negative impact of the political turmoil on exports, according to El-Sherif. To overcome these problems and to regain the normal level of exports, he asserted that stability is the first step followed by the continuity of work and production. In an attempt to promote Egypt's exports in foreign markets, Minister El-Sayad announced that the ministry is considering stamping its exports with the Egyptian flag or an emblem representing Cairo's Tahrir Square since they recently have become two of the world's most famous symbols. El-Sayad said that the ministry has prepared a package of new policies that will invigorate industrial production, broaden the manufacturing base, especially on the level of small- and medium-sized industries, and offset a shortfall in exports. The minister added that the package aims at reinforcing investors in Egypt's economy as they kick off industrial activities from this year through 2012. Moreover, the government is considering postponing debt instalments due by factories in order to provide them with capital liquidity. More attention will be given to new exporters who, he said, will enjoy a programme to help them improve their products and qualify to obtain quality certificates. According to El-Sayad, all institutions affiliated to the Ministry of Industry and External Trade such as the Industrial Modernisation Centre, the Industrial Development Authority and the Export Support Fund, will be completely revised to guarantee achieving the maximum level of services provided to investors. El-Sayad added that the services provided by these organisations will not be cancelled, but to the contrary, they will increase. The minister asserted that the exports support programme is to continue but it will include strict measures to guarantee that the majority of small- and medium-sized exporters benefit from the programme.
