Gov’t waives the 5% development fee for zone-based phone makers selling locally

The government will stop charging the 5% development fee on handsets that zone-based manufacturers sell into the domestic market, trading part of its fee revenue for new investment in local assembly, three government officials tell EnterpriseAM. The exemption covers factories operating in the economic and private investment zones, which were paying the fee on phones they released onto the local market, where zone output is cleared as an import.

The change lands on a narrow slice of the industry: The fee was in play for the zone-based factories selling into the local market; a device made inside the customs area is already exempt. Manufacturers outside those zones were not paying it on local sales, so the relief narrows the gap between zone-based assembly and the rest rather than cutting costs across the board.

And it comes with strings: The government wants commitments on new investment and higher capacity, and it lands on top of the mobile sector’s inclusion in the export-rebate program — electronics design, semiconductors, embedded systems, and mobile services were added to it in May for seven years — plus smoother export procedures and other support for selling into the domestic market.

The fee is the 5% Egypt charges on phones, their parts, and accessories under Law 147/1984, while exempting the components factories import for manufacturing and the finished locally made device. Zone-based production is paying it on local sales, as imports do. Waiving it gives up part of a fee the budget targets at about EGP 1.9 bn this fiscal year, the officials say; the government expects new investment, higher output, and exports to replace part of that through more industrial value added, foreign currency, and jobs.

Fifteen brands, 10 mn handsets

Fifteen global brands now make phones in Egyptian factories — Samsung, vivo, Infinix, and Sico among them — and output has reached about 10.5 mn handsets, covering much of local demand, a telecom-sector source tells EnterpriseAM. The government wants 14-15 mn devices this year, against about 10 mn in 2025 and roughly 3 mn in 2024, according to earlier statements by the ICT minister. Announced annual capacity is about 20 mn units on government data — above actual output, leaving room to grow as investment and export demand rise.

Who makes what

Manufacturing runs across Samsung’s plant in Beni Suef and Oppo’s in 10th of Ramadan, planned at USD 50 mn with 17 lines and a target of 500k devices a month. Vivo assembles locally in the 10th of Ramadan, Sico (Egypt’s own handset maker) builds for brands including Infinix, and Xiaomi products are assembled by Al Safy in 6th of October. HMD Global has assembled Nokia handsets in New Assiut since 2023. Silicon Valley for Electronic Industries’ factory in Sokhna’s Teda-Egypt industrial area makes wearables — smartwatches and Bluetooth earphones — and runs a production line for Infinix. Total investment in the industry stands at about USD 200 mn, MCIT says, with wide variation in scale and capacity between the players.

Exports are still early

Local makers have shipped limited volumes to Morocco and other North African markets, and export contracts have slowed as output stays short of local demand, the officials say. New investment and capacity are meant to change that without starving the home market. A weaker EGP cuts both ways, the telecom source says. They added that it raises the cost of imported components and has companies studying higher prices at home while making Egyptian-made devices cheaper to price in foreign currency.

The plan goes beyond handsets: Egypt is preparing to start producing its first fully locally made router, with a specialized company picked to supply Telecom Egypt with the volumes, the telecom source says, extending the localization drive into network gear and cutting reliance on imported devices. We looked at the local router industry back in October 2024, after the Information Technology Industry Development Agency (Itida) signed contracts with Telecom Egypt and three private companies in March that year to design and develop locally made high-speed internet routers.

IN CONTEXT- The incentives come to a market where locally made handsets have lost ground: sales are down about 20% this year as higher prices and weaker consumer spending cut demand, says Mohamed Talaat, who heads the telecoms and mobile division at the Federation of Egyptian Chambers of Commerce, even as imports of phone production inputs climbed 37.1% to about USD 500 mn in the first half on foreign trade data. Egypt is assembling more and importing more to do it, so whether the package pays for itself turns on local content, not on assembly lines.