2020-07-28 00:00:00 | by Saleh Abdou | EGYPT Economy

Egypt is Switzerland’s most important export market, fourth biggest trade partner in Africa: Ambassador

Egypt is Switzerland’s most important export market, fourth biggest trade partner in Africa: Ambassador

What is your assessment of the current relationship between Switzerland and Egypt, especially economically? How have both countries benefited from their interaction?

In 2019, Egypt and Switzerland celebrated 40 years of international cooperation, and to commemorate our longstanding partnership, our cooperation programme highlighted considerable results in several fields. The aim is to increase the inclusiveness of economic growth nationwide, by contributing to improved access to basic services. Our first and foremost priority with tapping into these domains is to support the economic and social segments of Egypt’s Vision 2030, especially regarding political and social inclusion. As you know, Egypt’s Vision 2030 is aligned with the UN’s Agenda 2030, to which both Egypt and Switzerland adhere.

Our bilateral relations cover a wide range of topics, which we regularly address in political consultations and during ministerial or technical level visits. Here, I would like to mention our mutual interest in promoting peace, conflict prevention and conflict transformation in Africa. Egypt is a key player in the region and in multilateral forums, including the African Union and the UN. Another example includes the migration talks which started in 2019, where we identified common areas of interest to work together on.

Economically, Egypt is our most important export market in Africa and the fourth most important bilateral trading partner in the MENA-region. Economic relations between Switzerland and Egypt date back further than the opening of our Embassy [in Cairo], with Switzerland’s first trade representation in Egypt established in 1909. Last year, we celebrated 110 years of Swiss-Egyptian economic relations, which is a testament to the proximity of our two countries and economies. Egypt is a gateway to African, and to some Asian, markets, and as a guarantor of regional stability it remains a crucial partner for Switzerland.

Switzerland and Egypt share a common understanding of what it means to be at the crossroads of important trade routes, as trade is the soul of inter-state relations.

Switzerland wants to invest more in Egypt, to increase these trade figures, and cooperate with Egypt to improve the framework conditions, which are indispensable for solid foreign investment. Transparency, a lean administration, and stability, are key factors to this. Investment in people is needed to promote the growth of the middle class and entrepreneurship, which are the backbone for every emerging economy. Our new Swiss cooperation strategy, starting in 2021, will take this into account.

How has the embassy supported Egypt in its fight against the coronavirus (COVID-19)?

The Embassy has offered its support, through some flagship projects, to many vulnerable communities of migrants, refugees and Egyptians to face the challenges and hardships posed by the pandemic. We have helped build the capacity and microfinance of local and refugee entrepreneurs through the ‘Hope Together Project’, to help them sustain their businesses when economies have slowed down drastically.

We have provided emergency medical and hygiene materials to families and children in need through our “Child Protection Emergency Response to COVID-19” project. We helped provide communications and awareness material for refugee communities, and psycho-social helplines through the “provision of protection and humanitarian assistance to vulnerable migrants in greater Cairo” project. Together with our partners, we issued protective equipment to thousands of employees having to deal with solid waste and hazardous material at our sustainable environment projects. The Embassy has also supported unaccompanied minor refugees and vulnerable Egyptians with cash assistance, food and hygiene packages.

What is the value of the trade exchange between Egypt and Switzerland in the first half (H1) of 2020? What are the targets by the end of the year?

According to the Swiss Federal Customs Administration (FCA), the volume of trade between the two countries for the first quarter (Q1) of 2020 is CHF 410m, compared to CHF 383m in Q1 of 2019, which is a remarkable increase considering the difficult situation.

According to FCA data for 2018 and 2019, Egypt has been Switzerland’s biggest trade partner in Africa and will certainly remain one of the biggest trade partners in 2020. Switzerland was Egypt’s tenth biggest trade partner in fiscal year (FY) 2018/2019. In 2019, the total trade volume between the two countries amounted to CHF 1.3bn. It has increased by 14.2% from 2018, with a significant boost in Swiss exports to Egypt (+24.7%) and a decrease in imports (-52.2%). This is due to the decrease of imported precious metals and gemstones including gold. Furthermore, some Swiss companies re-export from Egypt to other countries, which is a direct contribution to Egypt’s economy.

Our Free Trade Agreement with Egypt still offers much potential. The agreement abandoned all tariffs on industrial products between our two countries as of 1 January 2020.

What about Egypt’s exports to and imports from Switzerland during H1 of 2020? What are the expectations by the end of the current year?

According to provisional data for Q1 of 2020, Egyptian exports to Switzerland increased in quantity but decreased in value, most probably due to the type of goods exported but also to the decreased value of the Egyptian pound (EGP) in relation to the Swiss Franc (CHF). If it lasts, the EGP’s new exchange rate allows us to predict more exports from Egypt to Switzerland long term. It is early to make predictions, however, as the data is still provisional.

Swiss exports to Egypt decreased in quantity but increased in value in Q1 of 2020. We would like to see more exports going to Switzerland and a reduction of barriers to trade, to attract more Swiss investors to Egypt. This will be especially necessary in the COVID-19 recovery phase, which has hit both our economies.

The overall imports/exports between our countries increased in Q1 of 2020 compared to Q1 of 2019, which, despite the global hardships we’ve been facing with the pandemic, is a positive indicator to where trade between the two countries is headed.

What are the main Egyptian exports to and imports from Switzerland?

The main Egyptian export goods to Switzerland are textiles, agricultural products, and chemical and pharmaceutical industries products.

The main Swiss exports to Egypt were chemical and pharmaceutical products, which increased 26.6% from 2018, followed by machinery and electronic devices which increased 34.5%, and precision instruments and watches which increased 11.4%.

The 2020 data is still provisional, however, but Q1 of 2020 marked a welcome increase in total import and export trade values compared to Q1 of 2019.

Egypt is considered one of Switzerland’s main investment destinations in Africa – is this true?  What sectors are the investments focused in?

According to the Central Bank of Egypt (CBE), Switzerland was the 12th biggest investor in Egypt in FY 2018/2019. According to Swiss National Bank (SNB) statistics, the capital stock of Swiss direct investment in Egypt amounted to CHF 612m at the end of 2018, whereas the SNB registered a value of CHF 71m in capital transactions for Egypt.

There is potential interest for the Swiss Logistics sector. The Suez Canal Economic Zone (SCZone), launched in 2015, may be of special interest for foreign investors interested in export-oriented industries. There is also potential in infrastructure development, and in the real estate and construction industries.

Growing interest from Egypt’s tech investors is also noticeable, with the country’s ICT sector a major employer which is encouraging an increase in staffing. Some renowned Egyptian IT companies also provide outsourcing services for companies in the US and Europe. Egypt has a large pool of skilled graduates, with 220,000 gaining business-process-related degrees and 50,000 gaining ICT-focused degrees annually, according to the Information Technology Industry Development Agency (ITIDA). This can be coupled with low operating costs. Technical and vocational education and training is important. Swiss companies in Egypt are in need of qualified workers, with Switzerland having long experience when it comes to skills development and technical education to match labour market needs. I believe a transfer of knowledge in this field is a great opportunity.

How many Swiss companies are currently operating in Egypt? How many direct job opportunities do they provide?

There are around 70 Swiss companies and affiliated Swiss companies in Egypt, providing over 12,000 job opportunities. According to the General Authority for Investments and Free Zones (GAFI), there are over 460 companies with Swiss participation in issued capital.

What are the main challenges preventing more Swiss companies and private sector entities investing in Egypt? What are your recommendations to attract more Swiss companies?

Stable and flexible framework conditions and legal certainty are a prerequisite for Swiss companies to invest abroad. It would be of mutual benefit if the flow of some processes, like company and product registration, and customs’ practices, could be more robustly established. Our aim is to encourage easier and more widspread investor and exporter access to the Egyptian market.

My primary recommendation would be the continued regular exchange between competent authorities at different levels. It is important to explain our positions to each other, and to find common interests and projects in which to cooperate. It is a sign for bilateral relations that the number of visits and meetings on different levels and the size of delegations have increased between the two countries in the past two years.

A business delegation, headed by our Minister of Economy, Education and Research, in February 2020, allowed us to have exchanges with Egypt’s Prime Minister, Minister of Trade and Industry, and the Minister of International Cooperation. This gave our businesses an excellent first hand impression of Egypt’s economy and investment opportunities.

What are Switzerland’s plans for the development of a new cooperation strategy for the period between 2021 and 2024?

I recently had an excellent meeting with Minister of International Cooperation Rania Al-Mashat, in which we discussed ways to enhance the achievements of Egypt and Switzerland’s cooperation strategy for 2017-2020. We reviewed our new bilateral cooperation strategy for the next four years, between 2021 and 2024. Our cooperation efforts are focused on several areas that the Egyptian government prioritises, such as small- and medium-sized enterprises (SMEs), entrepreneurship, digital transformation, education, technical training, health, agriculture, and renewable energy.

I also praised the ministry’s new strategy in partnership with international financial institutions, stressing Switzerland’s support for Egypt in completing the economic reform process towards achieving the UN’s Sustainable Development Goals (SDGs).

Switzerland will focus on the compatibility of the new cooperation strategy between the two countries with the ministry’s strategy, especially in the SME, education and agriculture fields.

Minister Al-Mashat highlighted the importance of extending cooperation between Egypt and Switzerland to include women’s empowerment, given that Egypt is the first Middle Eastern country to launch, in collaboration with the World Economic Forum, a project to bridge the gender gap.

Egyptian-Swiss cooperation has amounted to CHF 700m, over a long-standing partnership extending over 40 years, and contributed to the implementation of 200 projects.

What are the Embassy’s plans in the next few years?

The Embassy is at the service of the bilateral Swiss–Egyptian relations, and of Swiss citizens and travellers in Egypt. Its agenda is very often dictated externally.

We do however set priorities together with our Bern headquarters and in consultation with the Egyptian government. The cooperation strategy 2021-2024 is just one example, and here we will adapt to the economic consequences of the COVID-19 crisis and contribute to a “leave no one behind” approach.

Regarding this, we are working on a special initiative involving Swiss companies in technical and vocational education and training (TVET) efforts. Our wish is to also develop scientific and archaeological cooperation between our two countries, as well as a dialogue on financial issues.

At regional and international levels, we see cooperation possibilities for promoting peace and to find common responses to global challenges such as climate change, water scarcity, and illegal migration. There are plenty of possibilities to further develop bilateral relations with Egypt, and we are already in a quite good place.

By Daily News