What is your vision for Egypt’s industrial sector following COVID-19, and what are the most promising industrial sectors?
Despite the many challenges that have affected the global economy as a result of the ongoing COVID-19, Egypt can exploit this crisis to expand local industry and increase the proportion of Egyptian components in products.
The opportunity can be exploited by investing in feeding industries and refer to local production requirements to decrease imports. This comes particularly in light of the pandemic, which caused the closure of many factories and reduced production capacities of other factories in the majority of countries supplying production requirements to Egypt.
The post-COVID-19 phase includes radical changes in global economic systems and relations that may affect commercial and industrial businesses around the world. It is also likely to affect jobs, air and sea travel, as well as the flow of funds from central banks and governments, to prevent the world from entering an economic recession.
The pandemic has resulted in a dire need for more measures internal to countries, to secure energy and food resources. Additionally, international borders suddenly became more valuable and important, after countries kept hold of equipment and medical supplies.
Countries also sought to increase their domestic production, without looking at the needs of other countries. Consequently, the new economic system must be more flexible after the end of COVID-19, so that countries achieve a balance between taking advantage of economic globalisation and need for self-sufficiency at the level of industrialisation and domestic production.
The COVID-19 crisis has revealed many opportunities in addition to challenges, as it prompted Egypt to pay attention to transitioning to a green economy. Moreover, the government also seeks to strengthen value-added chains and localise industry, besides achieving structural reforms in various sectors.
Despite the closures and ensuing collapse in trade exchange rates worldwide, and the halt in international production and exports, the production wheel did not stop in Egypt. This was because the government was keen to continue the production process, while preserving the safety of workers. Perhaps the important reason behind the Egyptian economy’s resilience during the COVID-19 crisis was the diversity of the Egyptian economy structure.
Accordingly, the Egyptian Commercial Service and its overseas offices have been assigned to encourage more communication between Egyptian producers, exporters and their counterparts abroad. This comes on the back of international flight suspensions around the world, with the aim of preserving the Egyptian presence in foreign markets.
I believe that the current crisis represents a great opportunity for Egyptian manufacturers to depend on national industries and limit imports. Therefore, we are currently coordinating with the industry community to encourage them to locally manufacture raw materials and production requirements to meet the needs of Egypt’s industry sector.
This will take place through networking with national manufacturing chains, deepening local manufacturing, and achieving integration between the government and private sectors.
Among the most promising industrial sectors at present are engineering, building materials, metallurgical industries, food industries, chemical industries, the medical and pharmaceutical sector, and textiles.
What are the ministry’s main priorities and strategies in the current year?
The Ministry of Trade and Industry is looking to develop industrial and foreign trade sectors in a way that contributes to raising industrial growth rates, increasing industry’s share in the GDP, and providing thousands of job opportunities.
This comes along with enhancing the competitiveness of Egyptian products in the domestic and foreign markets, besides increasing Egyptian exports to global markets.
In 2021, the ministry will work on a number of important issues, including replacing and converting vehicles to work on clean energy, which will continue for three years starting from this year.
This is in addition to completing the launch of six new industrial complexes, most of whom are in the governorates of Upper Egypt, as part of the ministry’s plan to establish 13 new industrial complexes. The ministry recently launched seven industrial complexes that include 1,657 industrial units, and their allocation procedures for investors are currently being completed.
The Ministry will prepare for Egypt’s participation in Dubai Expo 2020, from 1 October 2021 to 31 March 2022, to adequately reflect the country’s position and weight at the regional and global levels. It will also present Egypt as an investment destination with its smart cities, industrial zones, and the Suez Canal Economic Zone (SCZone).
Meanwhile, the Ministry will also activate the system for boosting locally manufactured components and production requirements for local goods. There will be an additional expansion in establishing industrial complexes and operating factories at full production capacity, which represent basic pillars of the Ministry’s 2021 work plan, with the aim of increasing dependence on national products as an alternative to imported products.
Likewise, the Ministry is working to provide necessary legislation to improve Egypt’s business environment. Hence, decisions and laws regulating industrial and commercial sectors are currently being reviewed to study their suitability for requirements of the current phase. This is in addition to completing the automation system for all services to eliminate bureaucracy, improve the quality and efficiency of services provided to the business community, and activate the one-stop shop.
Regarding the trade sector, the Ministry has prepared a comprehensive plan to increase export rates for all sectors. This focuses particularly on products in which Egypt has competitive advantages that enable it to compete in foreign markets, with a focus on Africa.
This is in addition to activating the exhibitions system and diversifying support provided by the Ministry, to expand the circle of beneficiary companies. It targets new exporters, and supports small- and medium-sized enterprises (SMEs), to participate in these exhibitions.
The ministry is also looking to improve the services provided to exporters and importers by adhering to the latest international regulations and rules in inspection procedures. This also relates to the release of exported and imported shipments in a way that contributes to facilitating trade between Egypt and its trading partners.
Are there new facilities the Egyptian government will provide to manufacturers and exporters?
The state has not and will not delay in providing support to productive sectors in general and export in particular. Henceforth, the government is keen to provide more facilities for this vital sector. For instance, Egypt has provided urgent measures since the COVID-19 outbreak, which have helped preserve productivity rates and employment at factories, whilst preserving the presence of Egyptian products abroad.
Egypt was one of the first countries to sign the African Continental Free Trade Agreement (AfCFTA). What is the ministry’s plan to activate the agreement and benefit from it in the coming period?
The AfCFTA, which came into force at the beginning of 2021, is a major step on the road to economic integration in Africa, through establishing the Common African Market to reach the African Economic Union. The agreement promotes sustainable development and increases growth rates across the continent, in line with the Africa Vision 2063 agenda.
Through the actual liberalisation of trade within the agreement, the continent will see a real qualitative leap in economic performance, and development, regional and continental integration. This is through productive and commercial integration based on competitive advantages and building value-added chains across the continent.
The African continent represents the future market for Egyptian exports more than any other market in the world, as the AfCFTA will contribute to increasing the volume of trade between the current African countries from about 13% to 25% or more.
The agreement will contribute to developing infrastructure and achieving industrial development in the continent. It will also facilitate the movement of people and transfer of technical expertise and trade-related services, which include energy, information and communication technology, financial, educational, health and professional services of great importance for sustainable economic growth.
The Ministry of Trade and Industry is currently making efforts, in coordination with all national authorities, with the aim of starting actual trade within the agreement’s framework. This includes introducing the business community to the agreement, opening new markets for Egyptian products and integration with African countries.
Egypt’s political leadership is attentive to activating the agreement, and President Abdel Fattah Al-Sisi has directed the formation of a committee headed by the Ministry of Trade and Industry.
The committee will also have the membership of representatives from ministries and other concerned parties to study all aspects related to commercial and financial integration within the agreement.
Despite COVID-19, Egypt’s industry achieved positive results in 2020, why?
Despite the pandemic’s repercussions, Egypt’s industrial sector was able to achieve positive performance indicators during fiscal year (FY) 2019/20. Industrial growth reached 6.3%, while the contribution of industrial production recorded about 17.1% of GDP. The industrial sector absorbed approximately 28.2% of the total Egyptian employment.
The measures taken by the government contributed to reducing many of the burdens on Egypt’s business community, namely standardising and cutting natural gas prices for factories to $4.5 per million thermal units. It also postponed the settlement of real estate tax due on factories.
The government additionally reduced selling prices of electrical energy supplied to factories on extra, high, and medium voltages outside and during peak times by 10 piasters per KW/ hour.
It also sought to protect local industry from fluctuations in world prices by regulating the import of white sugar, extending protection fees imposed on some imports of iron and steel, and suspending imports of ceramic products. Meanwhile, it held meetings with export councils to discuss the COVID-19 repercussions on the global economy and its impact on Egyptian exports to global markets in various sectors.
Furthermore, the government has made great strides in the export subsidy programme. During the past year the crisis of paying back dues to exporters was solved by launching a number of government initiatives to speed up such payments with the Export Development Fund. It brought the total available export support during 2020 to around EGP 20bn.
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