Key conclusions
Economic relations of Russia and Egypt are on a high level, but there is potential for growth
“Turnover exceeded USD 4.7 bln [in 2021, – Ed.]. Our export from Egypt to Russia has reached USD 590 mln compared to USD 519 mln the year before. Export from Russia has exceeded 4 bln. <…> I aspire to increase trade exchange, especially now when we have certain needs. We are satisfying them thanks to Russia – it concerns grain and wheat. On the other hand, we have a lot of agricultural products that Russia needs,” Nevine Gamea, Minister of Trade and Industry of the Arab Republic of Egypt.
“If we look at last year’s numbers [on turnover, – Ed.], it’s USD 4.7 bln, which 5% more than the year before. The first quarter of this year gained additional 20% year-over-year, while the biggest segment of our export is non-commodity and non-energy. It is mostly machine building and grain supply. This is our biggest market,” Denis Manturov, Minister of Industry and Trade of the Russian Federation.
Signing a free trade agreement between Egypt and the Eurasian Economic Union will result in new growth points in Russia–Egypt cooperation
“The agreement [on free trade between Egypt and the Eurasian Economic Union, – Ed.] is at the final stage. We hope this document is signed as soon as the preparation is over. It will give a bigger impetus to the trade, expand the product mix and lower the barriers among our countries – parties to this agreement,” Denis Manturov, Minister of Industry and Trade of the Russian Federation.
“The negotiations on the free trade agreement are continuing. Now we are at the fourth round of the negotiations nearing their end, which will make trade exchange with the Eurasian Economic Union easier. We are also finalizing execution procedures in relation to the Suez Canal Economic Zone. We have almost reached an agreement. It is not a final one, but we intend to implement what we agree upon. It will leave a good footprint,” Nevine Gamea, Minister of Trade and Industry of the Arab Republic of Egypt.
“My intention is to sign the free trade agreement as soon as possible. We discussed it at the special committee under Egypt Chamber of Industry [Egypt Chamber of Commerce and Industry, – Ed.]. We all are confident that it will increase the trade exchange volume and can create parity,” Mohamed Kassem, Chairman, Egyptian Exporters Association, Expolink.
“We have made good progress, especially over the past 12–18 months, though we have experienced communication problems. <…> We expect it to be one of the most ambitious agreements in terms of liberalization level,” Andrey Slepnev, Member of the Board, Minister in Charge of Trade, Eurasian Economic Commission.
PROBLEMS
Trade imbalance in the economic relations between Russia and Egypt
“Trade imbalance is an important issue. Russia annually sells [exports goods worth over, – Ed.] 4 bln and buys [imports goods worth over, – Ed.] 500 mln. It means that all-encompassing clearing [procedures for international settlements based on the netting of payments for goods and services of equal value calculated in clearing currency at agreed prices, – Ed.] is hardly happening, if we are talking about large amounts. At the same time, there is segment-based clearing with local thresholds. It is probably a topic important enough to be addressed,” Daniil Algulyan, Deputy Chairman, VEB.RF.
There is a need to adjust mutual settlement mechanisms and customs legislation
“We need to find a payment mechanism that would satisfy both parties,” Nevine Gamea, Minister of Trade and Industry of the Arab Republic of Egypt.
“Until recently, most of the trade volume between Russia and Egypt was commodities and agricultural products. In this department, the players could afford using third-party ‘track’, third-party ‘railway’ – they used third-party currencies, correspondent accounts and other countries’ banks. It is going to be difficult at the moment. <…> The main question is building our own ‘track’ and using it to move forward,” Daniil Algulyan, Deputy Chairman, VEB.RF.
“It is absolutely clear to me that we will have to take enormous efforts to amend the tax legislation and adjust the Customs Code. I see problems that we will have to overcome, as we share our Customs Code with the Eurasian Economic Union,” Igor Morozov, Member of the Committee for Economy Policy of the Federation Council of the Russian Federation.
Cross-cultural barriers between Russia and Egypt
“We see a great share of transactions that is clear in paper not happening, because there is a huge cross-cultural barrier,” Mikhail Orlov, Chairman, Russian-Egyptian Business Council.
SOLUTIONS
Using Russian rouble and Egyptian pound can be a solution for mutual settlement
“We need to actively use the rouble–pound combination for mutual settlement. Turnover volumes allow us to do that. We base this judgement on the fact that our colleagues from central banks, government agencies and business cooperate with each other closely. We use our own currencies, when trading with other friendly countries – China, India, and the Arab Emirates. I am confident that we can use this cooperation format with Egypt,” Denis Manturov, Minister of Industry and Trade of the Russian Federation.
“We need to use roubles for some of the operations. We may be able to use Egyptian pound, though we must note that it is under strict currency regulation. It limits its use outside of the country. We can consider using currencies of neighbouring countries or rouble. Together with our colleagues, we will do our best to consider using the Egyptian pound for some of the operations,” Daniil Algulyan, Deputy Chairman, VEB.RF.
Egyptian business can replace western companies that left Russia, especially in the pharmaceutical industry
“New opportunities for expanding Egypt’s export to Russia open up,” Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences.
“I see a huge potential in the food supply chain. We are talking about grain, because Egypt imports 300 mln tonnes. <…> The other segment where I see potential is the pharmaceutical, medical industry. Egypt produces many agents that we do not make,” Mikhail Orlov, Chairman, Russian-Egyptian Business Council.
“Medications and chemical products can be among those things Egypt can use to enter Russian market, unlike agricultural products,” Mohamed Kassem, Chairman, Egyptian Exporters Association, Expolink.
Egypt can help Russian companies build new logistics chains
“Recently we decided to update our agreement that provides for placing our logistics capacities in Egypt, including assembly facilities, as well as facilities that manufacture goods that are of interest to other countries as well. As it was noted earlier, Egypt is the gateway to North Africa. We hope… to supply our goods with added value to Northern Africa markets,” Denis Manturov, Minister of Industry and Trade of the Russian Federation.
“Now we provide Russian companies with an opportunity to create their divisions in this zone [the Suez Canal Economic Zone, – Ed.]. Transmash is one of the importing companies that will find a place in this zone and will establish a division. It is a great platform for investors, for entering the domestic and the external markets,” Waleid Gamaleldien, Vice-President, General Authority of the Suez Canal Economic Zone (SCZONE) for Investment and Promotion Affairs.
“You can export to Europe from Egypt, because we have a free trade agreement with the European Union. When you invest in Egypt, Russian company will receive an Egyptian certificate of origin. Give it a thought,” Mohamed Kassem, Chairman, Egyptian Exporters Association, Expolink.
For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org.
