Israeli businesses, exporters encouraged to expand Africa operations

"The African continent is an important destination in the coming years for Israeli industry and companies."

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October 17, 2018 17:11
3 minute read.
Israeli businesses, exporters encouraged to expand Africa operations

Israeli Prime Minister Benjamin Netanyahu inspects a guard of honor at the National Palace during his State visit to Addis Ababa, Ethiopia, July 7, 2016. (photo credit: REUTERS/TIKSA NEGERI)

 
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Israeli companies and exporters were encouraged to expand their trading operations in Africa on Wednesday, with those operating on the continent due to benefit from a further $700 million in trade insurance supplied by the state-owned Israel Foreign Trade Risks Insurance Corporation (ASHRA).

Citing increasingly healthy diplomatic ties between Israel and African nations, the Economy Ministry, accountant-general and ASHRA decided to double the existing $700m. insurance coverage available to Israeli companies operating in Africa to a total of $1.4 billion and thereby encourage more Israeli companies to trade on the continent.

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“The African continent is an important destination in the coming years for Israeli industry and companies, during which they can develop, grow and take advantage of the great potential hidden on the continent,” said Economy Minister Eli Cohen.

“Israeli exporters are at the forefront of our industry, and Israeli exports are the growth engine for the market and a central source of stable employment and economic and social prosperity. Only recently the State of Israel passed the bar of $100b. in exports, and we have given ourselves a target of passing $120b. annually by 2020,” Cohen added.

ASHRA will provide insurance policies backed by a state guarantee to Israeli companies working in a range of African countries, including allocating $150m. in insurance coverage to those operating in Kenya, $105m. to those in Nigeria, $70m. for those in Uganda, $60m. for those in Cameroon and $33m. for those in Ethiopia.

The state-owned corporation operates mainly in developing countries characterized by a high level of commercial and political risks. Most of the insured countries covered by ASHRA are located in Southeast Asia, Eastern Europe and South America.

ASHRA offers up to 95% insurance coverage against political risks including war, confiscation and limitations on foreign currency transfers, and up to 90% against commercial risks such as bankruptcies or continued inability to make payments.

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According to the United Nations, the populations of 26 African countries are projected to at least double their current size by 2050. The continent is expected to become one of the most highly and densely populated areas in the world, offering great potential for companies offering solutions in the fields of infrastructure, energy, health, agriculture, water and more.

In order to strengthen trade relations between Israeli companies and Africa, the ministry is working through three key channels to assist Israeli exporters.

First, the ministry has opened two economic offices in Africa this year - in Accra, Ghana, and Nairobi, Kenya - in addition to its existing economic office in South Africa to assist existing and new exporters succeed in the African market.

Second, help will come through an agreement signed in December 2017 with the US Agency for International Development for Israeli companies to access lucrative contracts in its Power Africa program. The aid program seeks to provide electricity, via private companies, to approximately 60 millions Africans by 2030.

Finally, the ministry offers state guarantees to companies operating in developing economies through ASHRA.

According to the Israel Export & International Cooperation Institute, Israeli exports to Africa rose by 5% to a total of $860 million in 2017 – only 1.6% of total national exports. The increase comes after a steady decline in exports to the continent since 2012 due to a decrease in exports of chemical products, Israel’s primary industry in exports to Africa.

Prime Minister Benjamin Netanyahu has made improving ties with Africa one of his primary foreign policy objectives in recent years. He became the first sitting Israeli prime minister to visit Africa in three decades when he traveled to Rwanda, Ethiopia, Kenya and Uganda in 2016.

Netanyahu attended the summit of the 15-member Economic Community of West African States in June 2017 and returned to Kenya in November 2017 to participate in the swearing-in ceremony of President Uhuru Kenyatta.

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