Export support is next on the subsidy cutting board: The government will reduce the percentage payout under the revamped export subsidy program to an average of 3% of the total value of exports depending on the sector, according to a document seen by EnterpriseAM. The new rate is less than half that of the previous average of 8-10% during the previous iteration of the program.

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The details: Food exports will be receiving a subsidy of 3% of the total value of exports if their added value exceeds 80%, 2.7% if their added value sits between 70-80%, 2.10% if their added value comes in at 60-70%, and 1.2% if their added value is 35-50%.

Engineering exports will receive a subsidy of up to 3.6% if their added value exceeds 70% and a subsidy of 3% if their added value is 35-70%.

A special focus on exports heading to other African nations: The revamped program earmarks EGP 2 bn to exports heading to other African markets. It also dedicated EGP 250 mn of its budget to support participation in foreign exhibitions and another EGP 350 mn to air freight.

Industry insiders are concerned that the retroactively applied rates are going to cause big problems for business: Exports between the start of March of this year to the end of June next year will be subject to the new rates, but private sector export representatives like Engineering Export Council Sherif El Sayad head “were notified of the reduction in payouts only weeks ago,” he told EnterpriseAM. Businesses have been budgeting around a much higher rate of export support for the last eight months, El Sayed added.

Other new conditions may put off companies from signing up for the program: Unlike its previous iteration, the revamped program requires exporters to give up 50% of their USD proceeds. This could deter companies from participating, as many rely on these proceeds to secure imported raw materials, El Sayed said.

But the program does promise to offer speedier payouts: The state will disburse the support no more than three months after the company completes the necessary papers, a government source told us.

Business organizations are making their unease with the new program known: The Apparel Export Council of Egypt and the Agricultural Export Council have sent urgent letters to the finance and investment ministers warning of potential setbacks to export growth due to the revamped program, sources from the councils told us.

Export councils are also trying to push for their own alternative solutions: The Engineering Export Council met with Investment Minister Hassan Al Khatib to suggest that the Export Support Fund could instead add a EGP 100 charge for each container, El Sayed said. Instead of relying on the state budget, the fund could through initiatives like this try to self-finance in order to provide additional support for the sector.

Higher export support rates could be back next fiscal year — especially for companies driving localisation efforts: A senior government official reportedly said that the export support for the next fiscal year should rise to 6% of the item’s total value for exports with local component ratios higher than 50%, one industry insider told us. Our source added that this rate would rise further to 10% for items with higher local component ratios.

DATA POINT- The state budget for the current fiscal year allocates some EGP 23 bn to exportsubsidies

A chunk of it has already been disbursed: The textile sector has already received EGP 4.06 bn in export subsidies this fiscal year. It was followed by food industries which got EGP 3.89 bn, the agriculture sector with EGP 3.65 bn, and the chemical industries sector that got EGP 3.16 bn. Next in line were engineering industries and automotive sectors which got EGP 3.13 bn in export subsidies, and building materials (EGP 1.11 bn), printing and packaging (EGP 940 mn), medical industries (EGP 330 mn), furniture (EGP 130 mn), and leather and footwear (EGP 17 mn).

A record year for engineering exports: Egypt is expected to record an unprecedented USD 5.5 bn in engineering exports this year, El Sayad said, adding that he expects the figure to jump to USD 6.5 bn next year.

On the back of a solid year for Egyptian exports: Exports rose 9.8% y-o-y during 2024 to sit at USD 16.6 bn.

Your top industrial development stories for the week:

  • Nissan Egypt looks to up its export game: Nissan Egypt is looking to increase its exports this year by more than 50% on a y-o-y basis, as the company looks to increase its USD revenues. (Asharq Business)
  • The Suez Canal Economic Zone (SCZone) signed a land usufruct agreement with Orascom Construction subsidiary Orascom Industrial Parks for its already announced EGP 13 bn integrated industrial complex planned for the Sokhna Industrial Zone.
  • Eipico’s biopharma plant to begin operations during the beginning of next year: Eipico’s USD 100 mn biopharma factory is set to launch operations during 1Q 2025.
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