What we can learn from companies with success stories in local manufacturing and exporting: Food and beverage, fertilizers and chemical products, and textiles and garments are consistently among the three industries that either have the highest value of exports out of Egypt, or the highest level of y-o-y growth in our non-oil exports. Several companies in these key export industries have individual legacies or experiences with being early movers in specific areas of manufacturing and exporting out of Egypt. These legacies come with plenty of lessons learned, both in terms of what they did right and what works for businesses exporting out of Egypt — and in terms of the obstacles that businesses face as they look to tap global markets and how to overcome these obstacles.

We brought together a panel of companies with legacies of early movers during ourEnterprise Exports and FDI Forum last week, to gauge how they were able to unlock their market in Egypt, what exactly makes products manufactured in Egypt competitive abroad and how we can better leverage our competitive advantages. Sitting on the panel: Mohamed Talaat Khalifa, CEO of Concrete (LinkedIn); Tarek Hosny, head of investments and projects at Fertiglobe (LinkedIn); and Shams Eweis, corporate affairs manager, Egypt, North Africa, Levant at Mars (LinkedIn).

Play to strengths to make a clear value and competition proposition: In order to attract investors, companies may need to make concessions that they otherwise might not make, said Tarek Hosny. The MENA fertilizers firm Fertiglobe exported USD 1.2 bn of urea from Egypt last year, yet the company is making a shift to low carbon energy — a move dictated by the market, rather than regulations, he said. This move is an example of how manufacturers can keep track of global trends and industry shifts to remain agile and competitive, he noted.

Egypt, with all the advantages of its natural resources, “should be at the forefront” of the renewable energies market, Hosny said. While some countries may enjoy lower natural gas prices — which, for fertilizers, is a form of “local content” — than us, we can be competitive, Hosny added. Not only does Egypt have a consistent supply of wind and sun, we have the know-how and are seen as one of the best locations for the renewable energy sector, he said. Egypt is ”in a good place, businesses just have to leverage it,” Hosny concluded.

The experts agree — use what we (naturally) have: Hosny’s calls to leverage Egypt’s natural competitive edge echoed comments made by Yasmine Khamis, chair of Oriental Group and Yassir Zouaoui, partner at McKinsey, during the opening panel, in which they outlined the need to combine Egypt’s natural value proposition with clarity and focus in order to build exporting economies of scale.

Confectioner Mars is a key example of this: Egyptians make up an ideal customer base for any food and beverages company, said Shams Eweis. The population is young, large, has high rates of consumption and the local hospitality and entertainment industry is booming, Eweis added. Mars’ ability to adapt has been important to their success, she said. The company diversified its product offerings last year, allowing it to maintain its exports at 80% despite economic upheavals as a result of the war in Ukraine.

The global attraction also makes Egypt a “key market to crack'' for an international exporter, said Eweis. Several years ago, Mars brought operations from the UAE to Egypt, which is now the global company’s regional manufacturing hub, from which it exports to Africa, Asia, and Australia, Eweis noted. There were several benefits Eweis pointed to that fed into that decision and has kept Mars consistently investing: Multiple freetrade agreements that support exporting to countries like the US, economical transportation and packaging, a preferential geographic location that simplifies entrance to markets, and trade routes that are stronger than those of other MENA countries and access to raw materials.

On the whole, our policymakers are thinking in the right direction: We have authority figures “with the right mindset and understanding” when it comes to policies, laws, and regulations that are geared towards increasing investment and exports, Eweis said. And while the efficacy of policies is sometimes held back by the inconsistency of application, Eweis said, Mohamed Talaat Khalifa stressed that we can’t wait for the government to create the ideal regulations and conditions for exports and growth. “We have to think about the goals, rather than the tools. The goals are that we want growth, we want investments, and we want jobs. So let’s take the decisions that help us achieve these goals, without fixating on tools like interest rates,” Khalifa said.

Focusing on import substitution is not how to build a strong manufacturing base: If we insist on substituting all our imports, that would entail producing everything locally, which is inefficient and costly, Khalifa said. Instead, Egyptian companies should focus on creating higher value products that can then substitute an imported product, and support leveling up of the entire supply chain, he said.

Value should not be based on lower costs, as there is always someone else offering a lower price, Khalifa added, instead our focus needs to be quality. The by-product will be greater market competition and inter-company knowledge sharing, which will organically create a more skilled labor force, feed-in-industries and ultimately exposure for Egyptian products. It’s a long-term approach, Khalifa said, but a sustainable one. “If we make short-term decisions — even if they’re tempting today — they’re not helping us move towards the long-term goals” of job creation and growth, he stressed.

The long-term view is all about sustainability — and that includes supporting our labor market: Sustainable job creation adds economic value, our panelists agreed. Eweis outlined Mars’ various career promotion programs that develop employees and export talented individuals to the company’s overseas offices. The presence of a stable labor force is key to any capital intensive industry, said Hosny, in order to maintain production. “If we support industries where we have a competitive advantage, then we are supporting sustainability,” he said.

We could not have made the Enterprise Exports and FDI Forum without the support of…

Your top industrial development stories for the week:

• VAT breaks on importing machinery: Companies will be handed a temporary VAT exemption on all imported machinery and equipment used to produce goods or perform services under amendments to the executive regulations of the VAT Law.
• Gov’t rolls out the sixth phase of the export subsidy program: The board of the Export Development Fund approved the rolling out of a new phase for the export subsidy program allowing exporters to receive their subsidies in a single payment.
• Develop quality local products and build strong relationships abroad to kickstart your export business: That was among the key advice heads of major local exporters had to share at our panel at the Enterprise Exports and FDI Forum.
• Moussy: Made in Egypt. F&B player Ayman Shahin Group, in partnership with the Danish brewer Carlsberg, has inaugurated the country’s first Moussy Malt beverage factory, with investments of USD 20 mn.