By Basma Tharwat, Inam Al-Adawy, Nihal Mounir, and Mohamed Azb
Egyptian investors are cautiously eyeing the political tensions erupting in Libya, which have cast a shadow over the economic situation in the country given the cessation of trade between the two countries.
Exporters have expressed fears that the violence which escalated recently in Libya will have negative effects on the export market.
Head of the Libyan-Egyptian Business Council Nasser Bayan said that political tensions in Libya have led to a decline in trade exchange by 5%, which amounted to EGP 8bn last year. He expects a continued decline in economic relations between Egypt and Libya until the situation in Libya stabilises.
Libyan investments in Egypt amount to EGP 3.1bn last year in the fields of industry, agriculture, finance, services, construction, tourism, and telecommunications, according to the Egypt State Information Service (SIS). Meanwhile, Egyptian investments in the Libyan market amounted to EGP 18bn in the oil industry last year.
Sayed Badr, a produce seller in the transit market between Egypt and Libya, estimated an EGP 100,000 daily loss in fruits and vegetable sales due to the poor security condition in Libya.
He added that on a daily basis, the Libyan vegetable market needs 30,000 tonnes of potatoes and tomatoes to be brought in from Egypt at prices ranging from EGP 2,500 to 3,000 per tonne.
Head of the employment division at the Cairo Chamber of Commerce Hamdi Emam stated that the Libyan market is one of the most important markets for Egyptian workers and that the labour market will be affected if the situation worsens.
Before the 25 January Revolution, the number of Egyptian workers in Libya reached nearly 2 million, half of which returned to Egypt after the revolution due to the instability in Libya and the increasing amount of displaced persons within Libya as a result of recent events.
Kasem Taher, head of the Chamber of Commerce in Matrouh, said that coordination must take place with Libyan authorities to resolve the crisis, especially in the case of displaced Egyptians. He stated that the people of his province rely heavily on trade with Libya to lead their daily lives, and that problems in the neighbouring country will lead to local unemployment.
The general committee for accident insurance at the Insurance Federation of Egypt (IFE) also recognises the gravity of the tension, and will work to finalise a draft document on compulsory insurance for workers abroad during a meeting scheduled for 17 August.
Aly Bashandi, head of the committee and general manager of technical affairs at the Arab-Misr Insurance Group stated that this draft document covers the risk of death and permanent, complete disability of the insured.
Bashandi added that the document is scheduled to be sent to the executive council of the federation upon receiving approval for its final formulation, and has been sent to the Financial Supervisory Authority for approval.
He asked government agencies involved in labour issues, namely the Ministry of Interior, the Ministry of Manpower and Immigration, to swiftly issue a ministerial decision to enforce the document for workers abroad in order to protect them from the risks of death associated with events taking place in neighbouring countries.
Mohamed Samy Al-Hamboly, head of the Medical Supplies Division at the Engineering Industries Chamber of the Federation of Industries, said that the Libyan market was excluded from the council’s export plan due to the political tension that has characterised the nation over the past three years.
He added that export operations have recently taken place informally through land outlets.
Abdel Ghani Al-Abasiry, a member of the Export Council for Garments, said that exports have not exceeded EGP 16m since the beginning of the year through the end of June, compared to EGP 61m for the same period in 2012.
He added that the Libyan market was one of the most important export markets for Egypt in recent years due to the ease of transporting goods by land and low ground shipping costs.
Exporters have avoided trade with Libya in recent times due to the unrest. It is expected that the sector’s export goal of $1.3bn by the end of 2014 will not be reached in light of tension across the Arab world, and a 20% decline is probable for this year.
Translated from Al-Borsa newspaper