Export promotion is a critical aspect of Egypt’s economic strategy as the country looks to diversify its revenue streams and boost growth in this time of economic hardship. With a large budget deficit, the government and private sector have placed a renewed emphasis on expanding the country’s export sector.
Besides foreign currency generation, one of the key benefits of export promotion is job creation. As companies increase their exports, they often see an uptick in revenue and profits. This, in turn, leads to the need for additional workers to keep up with the increased demand for their products. This is especially crucial in Egypt, where unemployment remains a significant issue.
Another benefit of export promotion is the diversification of the economy. Egypt has long relied on tourism and the Suez Canal as major sources of income, but these industries can be vulnerable to external factors such as economic shocks and political instability. By expanding exports, the country can reduce its dependence on these sectors and improve overall economic resilience.
Successful export promotion directly improves Egypt’s balance of trade, which has for so long been in deficit. By increasing the value of exports and reducing the value of imports, the country can improve its balance of trade. This is essential as a trade deficit can lead to a depletion of foreign currency reserves, making it more difficult for the country to finance imports and service its debt as we are currently witnessing.
Additionally, export promotion can enhance Egypt’s integration in the global market. By promoting its products and services, the country can increase their visibility, attract new customers and investors, and improve its reputation as a reliable trading partner.
Trade in services
In addition to promoting traditional goods exports, Egypt should also focus on expanding its trade in services. According to Ahmed Farouk Ghoneim, deputy minister of planning and professor of economics at Cairo University, “the services sector has the potential to be a major growth driver for the country, as it can create high-skilled jobs and generate significant revenue.”
One area where Egypt has potential in the service sector is in the IT and technology sector. The country has a growing pool of highly-skilled workers, and it has the potential to become a major player in the global IT and technology industry. By investing in research and development, education and training, Egypt can build a competitive IT and technology sector.
Education is also a potential area of service export for Egypt. The country has a long tradition of education and it has a large pool of highly educated professionals. By investing in education infrastructure and building strong partnerships with international universities, Egypt can become a major player in the education services industry.
Another area where Egypt has yet to reach its full potential is the tourism industry. The country is home to some of the world’s most famous historical and cultural sites, and it has a rich history and culture that can be capitalized on for marketing the country and unique touristic activities, with some investment in tourism infrastructure. Utilizing idle real estate and residential units for short-term rentals through modalities such as Airbnb and its likes, to diversify accommodation options for different types of tourists is being recently discussed.
Egypt should also focus on expanding its trade in other services such as healthcare, engineering and consulting services. Trade in services have the potential to be a major growth driver for Egypt. The support of the government is needed to focus on creating an enabling environment that will support and encourage the growth of the service sector, as well as support the private sector in their efforts to expand their services export.
The government of Egypt has been working to improve the country’s infrastructure and transportation systems. This has enabled exporters to reduce the cost of shipping their products and has improved the efficiency of the overall export process. Moreover, the government of Egypt has implemented a number of incentives to encourage exporters. These include tax breaks, export financing and credit guarantees, and export subsidies.
Other attempts at supporting exporting businesses include the Egypt Export Promotion Center (EEPC), several export councils like that of engineering products and the food exports council, among others, all mandated to assist exporters in obtaining market access and making use of preferential trade agreements. The effectiveness and reach of these entities needs to be assessed and understood to inform policy.
Overall, the efforts of the government of Egypt to promote exports will be indispensable in helping revive the country’s economy during this time of global uncertainty.
International development assistance
Export promotion has also been the focus of international organizations working in Egypt. For example, the United Nations, USAID, the World Bank, the International Monetary Fund, and the African Development Bank have provided funding for accelerators to help exporters in Egypt achieve greater success. These accelerators provide access to funding, technical assistance and advice, as well as connections to global markets; which has supported national export-development efforts.
Numerous international organizations have provided grants and other forms of support that channel to exporters in Egypt to help them access new markets and increase the value of their exports. The efforts of international organizations will continue to be a pivotal in the upcoming years in order for Egypt to become an export-oriented economy.
Lessons from Morocco and Indonesia
Morocco and Indonesia are shining examples of success in export promotion. Both countries have made a priority of boosting their exports and are reaping the rewards.
In Morocco, the government has made strategic investments in transportation infrastructure and port development, while also offering tax incentives and access to export credit insurance to support its exporters. Efforts to streamline export procedures and offer electronic filing systems have also helped to reduce transaction costs, addressing doing business challenges.
Similarly, Indonesia has implemented policies to increase exports, such as lowering import tariffs and removing taxes and restrictions on foreign investments. The government has also provided access to export credit insurance and reduced transaction costs, as well as offering training and education to local producers to enhance competitiveness in the global market.
The results speak for themselves. Morocco and Indonesia have both achieved great success in export promotion. Their strategies serve as a blueprint for other countries looking to increase their exports and benefit from the global market.
It’s no question that exports are the catalyst that Egypt needs to solve its foreign currency dilemma, and ultimately improve the standard of living for Egyptians by creating jobs, increasing consumption and economic growth, and reducing poverty and inequality. Concrete steps in this direction call for the Egyptian Government enabling the environment for export promotion and supporting the private sector. The private sector, on the other hand, must also play its role by investing in product development, marketing, and networking in order to increase their competitiveness in the global market.