Sisi follows up on Egypt's food security, retail sector development    Gold posts modest gains on July 15th    China's urban jobless rate eases in June '25    Egypt's Health Minister reviews drug authority cooperation with WHO    Egypt's PM orders 60,000 new homes for Alexandria's unsafe buildings    Crystal Martin to build large-scale textile, apparel factory in Egypt    Egypt urges EU support for Gaza ceasefire, reconstruction at Brussels talks    Escalation in Gaza as Israeli airstrikes intensify, ceasefire talks stagnate    Agriculture Minister discusses boosting agricultural cooperation with Romania, Moldova    Pakistan names Qatari royal as brand ambassador after 'Killer Mountain' climb    Health Ministry denies claims of meningitis-related deaths among siblings    Egypt, Mexico explore joint action on environment, sustainability    Egypt, Mexico discuss environmental cooperation, combating desertification    Needle-spiking attacks in France prompt government warning, public fear    Foreign, housing ministers discuss Egypt's role in African development push    Korea Culture Week in Egypt to blend K-Pop with traditional arts    Egypt, France FMs review Gaza ceasefire efforts, reconstruction    CIB finances Giza Pyramids Sound and Light Show redevelopment with EGP 963m loan    Greco-Roman tombs with hieroglyphic inscriptions discovered in Aswan    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Egypt condemns deadly terrorist attack in Niger        Sisi launches new support initiative for families of war, terrorism victims    Egypt's GAH, Spain's Konecta discuss digital health partnership    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    Egypt's Democratic Generation Party Evaluates 84 Candidates Ahead of Parliamentary Vote    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Cabinet approves establishment of national medical tourism council to boost healthcare sector    Egypt's PM follows up on Julius Nyerere dam project in Tanzania    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Egypt's automotive industry faces growing competition: UNCTAD
AfCFTA expected to boost intra-African trade by 33%, says report
Published in Daily News Egypt on 08 - 07 - 2019

The automotive industry in Egypt faces growing competition as the tariffs levied on vehicles originating from Europe and components have been gradually reduced within the framework of the Euro-Mediterranean Free Trade Agreement, according to the newly released report by United Nations Conference on Trade and Development (UNCTAD), entitled "Made in Africa ..Rules of origin for enhanced intra-African trade 2019."
Egypt's automotive industry has traditionally catered to the domestic market, especially in relation to its most important component, passenger cars, the report said, adding that once heavily protected and subsidised, the sector has been negatively affected by the fallout caused by the Arab Spring and the subsequent devaluation of the Egyptian pound, which increased the cost of imported components.
The report mentioned that with domestic production spread across small-scale factories unable to attain sufficient economies of scale, imports have sharply risen to the extent that 59% of vehicles sold in 2014 were locally assembled, down from 66% in 2004.
Although the automotive sector has a fairly long tradition in a few countries such as Egypt, Nigeria, or South Africa, the African continent continues to play a peripheral role in an industry characterised by strong geographic concentration around key markets, the report noted.
Demand for new vehicles has long been restricted by the average consumer's limited purchasing power, high lending rates, comparatively low road density, and an overall poor state of the road network, the report highlighted.
Africa plays a peripheral role in the automotive industry, the report asserted, noting that in 2017, Africa accounted for 1% of world vehicle production and 1.2% of sales (mainly of passenger cars), with three countries – Egypt, Morocco, and South Africa – representing the lion's share.
Data from the International Trade Centre indicates that between 2015 and 2017, total exports of automotive products reached an average of $4.4bn per year, compared to $11.2bn of imports, with passenger cars accounting for the bulk of these trade flows.
Leading exporters in the region were South Africa and Morocco while other key players included Ivory Coast, Egypt, Namibia, Kenya, and Tunisia.
Except for Namibia, these countries also featured prominently among the main importers of automotive products. Algeria, Ethiopia, Ghana, and Nigeria imported over $1bn automotive products per year during the period considered (2015–2017).
“To better gauge the effect of preferential or regional trade agreements and related rules of origin on the automotive industry, it is worth comparing the experiences of four major producing countries: Egypt, Kenya, Morocco, and South Africa,” the report said.
In Egypt and Kenya, the inability to reach adequate economies of scale, despite attempts to leverage preferential and regional trade agreements, have undermined the performance of the automotive sector, leaving it exposed to growing international competition.
In comparison, Morocco and South Africa provide examples of how strategic export orientation, through international trade agreements, has helped attract key original equipment manufacturers and contributed to the emergence of a viable industry, despite the challenges of domestic value addition.
North Africa countries are the main tea importers in the continent
Additionally, the report said that North Africa countries are the main importers of tea in Africa. Egypt and Morocco alone account for over half of total tea imports in Africa, followed by Libya, South Africa, and Ghana.
Between 2015 and 2017, about 43% of Africa's tea imports come from China, another 40% from within Africa, and the rest originated primarily from India and Sri Lanka, the report noted.
Over 90% of Africa's tea exports are made up of black tea and green tea – widely consumed in the Maghreb region – accounts for over 40% of the tea imported to Africa.
Overall, the intra-African market accounts for roughly 25% of tea exports from Africa; the remainder is sold mainly to Kazakhstan, Pakistan, Russia, the United Arab Emirates, the United Kingdom, and the United States.
Even though, Kenya only exports 15% of its tea to the rest of Africa, it is the leading player in intra-African trade, mainly because of its exports to Egypt which are worth of $173m, and to a lesser extent, Nigeria with about $12m.
Africa accounts for 10% of global cement exports
China is by far the world leader in cement production, followed by India and the US. Africa accounts for 10% of global cement exports, while its share of global imports hovers around 21%, the report stated, adding that the major players in Africa include Egypt, Morocco, Senegal, South Africa, and Tunisia.
In contrast to the global context of overcapacity, the African region has traditionally been a net importer of cement, the report declared.
“Against the backdrop of multifaceted trade-offs involved in the liberalisation of politically sensitive industries, such as cement, protection for specific sectors can be better calibrated through an appropriate selection of the tariff schedule than through overly restrictive rules of origin,” the report read, adding that this is because sensitive sectors are likely to differ from one country to another, and the degree of freedom in negotiating tariff schedules is much greater than in negotiating a single set of rules of origin to be applied toward every country.
The African Continental Free Trade Area (AfCFTA) is expected to boost intra-African trade by 33% once full tariff liberalisation is implemented, attracting additional intra-African investments and creating market opportunities to foster Africa's industrialisation through regional value chains, according to the report.
However, many of these gains could be undermined if rules of origin are not appropriately designated and enforced to support preferential trade liberalisation, the report shared.
"The AfCFTA is a landmark achievement in the continent's history of regional integration and is expected to generate significant gains. But it is the rules of origin that will determine whether preferential trade liberalisation under the AfCFTA can be a game changer for Africa's industrialisation," UNCTAD Secretary-General, Mukhisa Kituyi, said.
Currently, intra-African trade is a mere 15%, compared to around 47% in America, 61% in Asia, and 67% in Europe, according to UNCTAD data from 2015 to 2017, but the AfCFTA could radically change that, according to a 2019 UNCTAD report.
If the agreement is fully implemented, the gross domestic product (GDP) of most African countries could increase by 1% to 3% once all tariffs are eliminated, according to the report.


Clic here to read the story from its source.