SA’s long-envisioned Cape-to-Cairo trade corridor in partnership with Egypt is expected to start from the Eastern Cape’s industrial parks, as the national government seeks to reduce the province’s over-reliance on its automotive sector.
This, according to trade, industry and competition minister Parks Tau, is part of the government’s “butterfly strategy” to bring new markets to the province in the face of economic migration and a dwindling automotive industry.
“If one wing is disrupted, as we have seen with recent shifts in global tariffs, the strategy does not collapse because the foundation still holds.
“Egypt illustrates the scale of opportunity still in front of us.
“South Africa and Egypt are Africa’s two largest intra-African exporters, yet more than 80% of our trade within the continent still flows to just five Southern African neighbours,” Tau said.
Speaking at an Eastern Cape Development Agency export symposium at the ICC in KuGompo City on Wednesday night, Tau announced that SA had reached bilateral agreements with Egypt for its businesses to set up shop in the East London Industrial Development Zone (IDZ) and Coega as part of its trade agreement.
The deal will also give South African businesses seeking to enter the North African-Middle East market space in Cairo’s economic zones.
Tau said the Eastern Cape was a strategic location for the trade corridor.
“Our renewed engagement with Egypt through the joint commission for co-operation is part of closing that gap.
“Because diversification means more than reducing our exposure to one market,” he said.
“We will realise the Cape-to-Cairo trade corridor, and it begins here in the Eastern Cape.
“The Eastern Cape in particular as the anchor of industrial activity between us and Egypt and therefore Egyptian production and access to the Southern African market would take place from the Eastern Cape as the entry point.
“But signing an agreement is not the same as exporting.
“The next phase of our export agenda must therefore be about implementation,” Tau said.
No timeframes have been given for the trade corridor plan, or details on which sectors or businesses would set up shop in the province.
The Eastern Cape’s automotive sector has been dealt a number of body blows, including the closure of the Goodyear SA plant in Kariega, which cost more than 900 people their jobs.
Mercedes-Benz’s plant in KuGompo has had to slow production in the past year amid uncertainty over US tariffs.
Since the Trump administration imposed a 25% Section 232 tariff on vehicle imports, Tau said, SA’s vehicle exports to the US had collapsed by more than 80%, from more than 24,000 units in 2024 to about 4,000 in 2025.
“This is a direct hit to a plant and a city that has built part of its identity on the automotive industry.
“We are negotiating a duty-free quota to soften that impact, but we cannot negotiate our way out of the need to diversify our markets.
“That is precisely why our butterfly strategy matters.”
He said a second threat arose from the EU’s Carbon Border Adjustment Mechanism, which was expected to hit steel, aluminium and other carbon-intensive exports on which the Eastern Cape depended.
“I have said before that if we do not decarbonise our production, we place an extra premium on everything we export to Europe and the United Kingdom.
“That is not a future risk. It is already shaping investment decisions,” Tau said.
“But I’m not saying this to dampen the spirit of the people in this room because I honestly and sincerely believe that we can turn this crisis into opportunity.
“So, we are developing an end-of-life vehicle policy in the department.
“But the question is whether the province readies itself as the centre of recycling end-of-life vehicles or do you expect the [end-of-life] vehicles to come from where I come from [Gauteng], when the biggest threat to the industry is here.
“So, it’s an opportunity for the province to reposition itself in particular.”
Since 2025, the Eastern Cape government has been wooing Chinese electric vehicle manufacturers to build assembly plants in the province and rescue the regional automotive industry.
Border-Kei Business Chamber chief executive Lizelle Maurice said additional investments would be welcome as long as they were not to the detriment of existing businesses.
“It’s good for us to open up new markets, particularly on the African continent so that we can tap into the Africa Free Trade Agreement.
“If it’s going to benefit our people then we’re 100% behind any trade agreement that is going to be made, as long as it doesn’t cost our other manufacturing sector, our existing manufacturing base, as long as it’s not going to cost them.
“Because what has happened with our Chinese trade, it impacted our textile industry.
“It’s impacting right now our automotive sector.”
The Egyptian trade agreement has been reached in tandem with SA securing a $14bn (R255.84bn) loan deal with Egypt’s African Export-Import Bank (Afreximbank).
Tau said this would give South African businesses, state-owned companies and financial institutions direct access to trade and industrial finance for manufacturing, mineral beneficiation, energy, infrastructure and businesses in special economic zones.
In 2023, Eastern Cape premier Oscar Mabuyane led a provincial delegation on an investment drive to Tunisia and Egypt to identify opportunities in sectors considered strategic to the provincial economy, including agriculture, maritime industries, trade and investment.
Mabuyane told the Dispatch that though it took the national government time to buy into the idea, he was happy.
“We engaged Afreximbank when South Africa was not even willing to talk to Afreximbank because we saw a financial institution that was keen and prepared to look at areas like the Eastern Cape that have unparalleled potential, which is untapped.
“So, I’m quite happy that finally South Africa has signed that agreement with Afreximbank.”
Questions sent to Afreximbank and the Egyptian embassy were not answered by the time of publication.
Daily Dispatch
Mandilakhe Kwababana,Mpumzi Mshweshwe
www.dailydispatch.co.za
