The local clothing and textile industry is set to see a boom in investments after the EGP float, with investors that were previously sitting on the sidelines now looking to unlock planned investments. The sector has brought in several investment offers to set up specialized factories in Egypt, in addition to a push to bring idle spinning and weaving factories back online as the country works to slash our import bill and work on ramping up Egyptian exports of clothing and textile products.

A lay of the land: There are currently 4.2k spinning and weaving factories in Egypt that are registered with the Federation of Egyptian Industries’ Textile Industries division. A large number of these factories were severely affected by macroeconomic conditions over the past two years, including our FX crunch and the resulting shortage of raw materials and other necessary production inputs due to difficulties funding imports, according to industry sources. Local players have also been facing heated competition from Syrian companies in industrial zones, our sources said.

Reviving a major industrial cornerstone: Since 2020, the government has been working on a EGP 20 bn program to revive the spinning and weaving industry in Kafr El Dawwar and Beheira, a source in the Public Enterprises Ministry told Enterprise. Alongside spinning and weaving companies, the government decided to renovate a major silk and polyester factory in Kafr El Dawar, according to our source.

Since the EGP float earlier this month, the government has “received a large number of offers” from investors looking to become partners in the factory, our source said. “The investments will help significantly boost exports from the sector while saving USD 600-800 mn from state coffers that would have been spent on importing silk and industrial polyester,” according to our source. Bringing the factory back online will cost less than the returns it will generate, particularly as its output will be used partially for the local market and partially for exports, the source said.

We’re getting attention from Turkish investors in particular: Local private sector investors have expressed interest to the government in investing in the Kafr El Dawwar factory — which dates back to the 1950s — and the government has already met with several of the investors that have submitted investment offers for the factory, our ministry source said. However, the government’s current strategy is focused on drawing in foreign direct investment and shoring up exports, meaning it is currently prioritizing investments from foreign partners. The government is working on operating two other factories with new production lines to produce textile fibers that meet international quality standards, making it viable for exports.

Foreign investors are going to partner with local manufacturers, but they plan to set up their own projects to take advantage of a favorable business environment in Egypt, according to International Textiles Chairman Sayed El Barhamtoshy, who is also a member of the 10 Ramadan Investors Association. Foreign investors now see plenty of attractive points in the Egyptian market, including a now-flexible exchange rate, the end of the parallel market, and a weakened official currency which means more exports at lower costs, El Barhamtoshy told Enterprise. “Since the EGP float, we’ve received several calls from major Turkish yarn production companies that are now looking at either brownfield or greenfield investments in Egypt,” he said.

Part of our appeal to Turkish investors is that they have their own economic woes, El Barhamtoshy pointed out, noting that Turkey has been grappling with soaring inflation and a weakening currency, which has pushed local manufacturers to look at taking their business offshore.

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