A forum involving Egyptian officials and business representatives along with their counterparts from countries in the Common Market for Eastern and Southern Africa (COMESA) has heard that not using letters of credit (L/Cs) is impeding business links between Egypt and the trade bloc.

The forum met in Cairo recently to discuss the African Development Bank's (AfDB's) Egypt-COMESA Trade Enhancement Study, which tackles the challenges and growth opportunities in intra-regional trade.

Major challenges

Transport and logistics, trade finance, business knowledge and trade promotion are the three major challenges according to the study.

It recommends focusing on sea transport as well as leveraging the Red Sea-Indian Ocean corridor and revamping ports and logistics facilities along the trade route.

Trade finance

The study argues that African traders' preference for cash terms or trade credit over L/Cs was damaging business prospects.

It describes the low uptake of L/Cs as a serious issue.

Bank network

To improve trade finance access, the study advocates the establishment of an African bank network to set up a revolving line-of-credit facility exclusively marketed by a network of national African banks.

It also recommends establishing an African traders' database so that banks in the network could exchange detailed profiles of creditworthy clients.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.