The cost of insuring exports to Egypt and several other Arab countries is expected to rise by up to 20 per cent as local traders feel the financial cost of turmoil in the region.
Companies wanting to start exporting to Egypt, Tunisia, Algeria and Libya will have to pay more as the risk rises in key regional export markets, according to the Export Credit Insurance Company of the Emirates (ECIE), the export credit agency based in the UAE.
It intends to raise premiums for new exporters to those countries by 15 to 20 per cent.
"We don't see things getting worse in the region but if we are to cover for new exporters, the premiums will be higher," said Schuyler D'Souza, the company's chief commercial officer.
The ECIE decided early this month to temporarily stop insuring new shipments to Egypt with existing exporters.
That decision will be reviewed over the next month, said Mr D'Souza.
The ECIE markets in Egypt and Tunisia have grown by about 35 per cent over the past 18 months to between about Dh40 million (US$10.8m) and Dh50m.
Manufacturers of food, chemicals and plastics are among the UAE companies that have established a presence in Egypt.
The ECIE, which is based in Dubai, is hopeful all outstanding non-payments by creditors in the north African country will be resolved within the next month or so, Mr D'Souza said.
It is still uncertain what the effect of the recent turmoil will be on Egypt's trade.
The Suez Canal and the nation's ports have been working as normal despite unrest elsewhere.
But Samiha Fawzi Ibrahim, Egypt's trade and industry minister, said the country's exports last month fell 6 per cent compared with December.
The UAE is one of the largest exporters to Egypt in the Arab world. Plastic sheets, gold, machinery and electronics are the major non-oil exports to Egypt.
Gold, cables and fruit and vegetables are among goods heading in the other direction.
Exports to Egypt from Dubai, which account for the bulk of the country's non-oil trade, rose 35 per cent to Dh3.43 billion in the first nine months of last year compared with the year-earlier period, according to figures from Dubai Customs.
Egyptian imports to Dubai increased by about 4 per cent to Dh1.31bn over the same period.
There would be a slight short-term drop in trade between the two, said Dr Ashraf Mahate, the head of market intelligence at Dubai's Export Development Corporation.
"Exports will be impacted as industry has not been at full capacity for the last two weeks but that drop will be recouped later in the year," he said. Saudi Arabia's trade with Egypt has also been hit.
Banque Saudi Fransi calculates that each day of unrest has cut about 1 percentage point from Egyptian annual imports and exports. Resuming imports of food items is likely to be a priority for the transitional government.
tarnold@thenational.ae
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
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Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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Western Region Asia Cup Qualifier, Al Amerat, Oman
The two finalists advance to the next stage of qualifying, in Malaysia in August
Results
UAE beat Iran by 10 wickets
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Monday fixtures
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.