The past year saw the resolution of many of the issues facing Egypt’s industrial sector — particularly via increased land allocation, exchange rate stability, investments directed toward reducing our import bill, and local content ratios. Government support in the second half of 2024 played no small part in this, with this support potentially offering the key to overcoming even more challenges in the new year.

Several industry players believe that 2025 holds a lot of potential for the sector — though concerns remain over the feasibility of the government’s timeline to raise the sector’s contribution to total GDP to 20-30%. Transport and Industry Minister Kamel El Wazir affirmed that 2025 will represent a renaissance for Egypt’s industrial sector, saying that it will mark the beginning of efforts to solve some of industry’s biggest problems — with fruits of these efforts set to be reaped in 2026.

The sector will see further localization efforts: The industrial sector is set to see the launch of locally produced vehicles into the market, as well as investment opportunities in local raw materials manufacturing.

The government's financing initiatives also represent an opportunity for the sector: Federation of Egyptian Industries (FEI) member Mohamed El Bahy told EnterpriseAM that the FEI values the government’s efforts to support the industrial sector, both through providing industrial land and the government’s low-interest financing initiative — which offers loans at a 15% interest rate for manufacturers. However, financing appears likely to remain among the sector’s primary challenges this year, El Bahy noted, as interest rates remain unsuitable for sector players despite being lower than official rates.

Reducing production costs is key for industrial players: Efforts must be made by manufacturers to reduce production costs further, El Bahy said, explaining that industry is still heavily reliant on the USD. Lower reliance on the USD will help Egyptian manufacturers take advantage of the EGP float in making Egyptian export products cheaper.

Attracting investments in manufacturing, production inputs, and raw materials is top priority this year, El Bahy told us, as the sector works toward reducing manufacturing costs and achieving competitive export prices. This sentiment was echoed by the Chamber of Wood Working & Furniture Industries’ Alaa Nasr, who told us that maintaining high interest rates will increase financing costs and, consequently, affect investment volumes.

High financing costs are ending projects before they begin: "We have projects that are halted before they can even get started, as establishing industrial activities can take up to three years,” El Bahy told us. “With high financing costs, factories face the risk of closure despite significant start-up costs, while existing projects have seen weak investment due to losses related to various recent crises," he added. Nasr added that high borrowing costs to finance large companies and SMEs will reduce their ability to invest in expanding their projects, potentially delaying or leading to the cancellation of new projects.

Economic support packages could be the solution: Direct international support packages provided at reduced interest rates could represent a solution, El Bahy said. Activating the role of the Industrial Development Bank to manage these grants was also suggested.

Markets have opened up for Egyptian products: Export volumes for the industrial sector are at a historic high, which opens up more opportunities for the new year — especially in the home appliances and electrical equipment sectors, Engineering Export Council head Sherif El Sayad told EnterpriseAM.

Engineering industries recorded USD 5.1 bn in exports in the first 11 months of 2024, with a further increase targeted in 2025, El Sayad noted. Recent investments have contributed to this leap, he said, stressing the importance of continued government efforts to attract more investments, incentives for leading sectors, and improvements in local manufacturing capabilities.

Agricultural production is a sector with significant potential for growth: The diversity of local inputs has significantly reduced the cost of Egyptian agricultural products, increasing demand for Egyptian exports, a source from the Export Council for Agricultural Crops told EnterpriseAM. El Bahy emphasized the need to enter neighboring markets like Libya and Iraq as well as other markets in Africa, with regional expansion being the biggest challenge for the industry in the new year.

New financing agreements are imminent: The FEI will sign financing agreements for the industrial sector at a presidential meeting on 8 January — one that will see participation from Egypt, Cyprus, and Greece, El Bahy said. He called for enhancing the role of commercial representation and investment promotion to transform Egypt into an industrial stronghold supported by local and foreign investments.

Egypt’s maritime commercial fleet can help support industry, one source told us, adding that high transport costs remain an obstacle despite significant progress on the file. In addition, the House of Representatives last month approved amendments to maritime laws and ship registration procedures that are set to expand the Egyptian commercial fleet.

The industrial sector is awaiting the launch of a new export support program in July 2025, which will see support rates increase as local component ratios increase, El Sayad noted. The Finance Ministry has reduced export support rates by about 70% for one year, with a promise to formulate a new program with new incentives thereafter, he added.

Expansion in dry ports and logistics zones will further reduce the sector’s burdens: High transport costs represent a major challenge for the industrial sector, Marble Manufacturers Division head Mohamed Aref told EnterpriseAM. Expanding transport links between industrial zones and dry ports will enhance the sector’s ability to cut costs by allowing manufacturers to complete all procedures within the dry port, reducing the time goods spend in seaports.

The informal economy represents a challenge: Competition from the informal economy limits the industrial sector’s capacity and competitiveness due to high sector burdens and the availability of multiple price points for the same products, Chamber of Engineering Industries member Bassim Youssef told EnterpriseAM.

The industrial sector is also waiting on amendments to the Labor Act, which would reduce the 1% of net income rate that businesses with at least 10 employees must pay into the Manpower Ministry’s training fund and offer greater flexibility in labor laws regarding holidays for industrial sector workers, according to all those interviewed by EnterpriseAM.

Your top industrial development stories for the week:

• NERIC to set up railway industrial complex: The National Egyptian Railway Industries Company (NERIC) is establishing an industrial complex for railway manufacturing in the East Port Said industrial zone. The complex is 60% complete, with the start of production penciled in for July.
• A new EGP 30 bn initiative for local manufacturers: The industry and finance ministries announced the launch of the first phase of a new EGP 30 bn initiative to support companies in priority industrial sectors. The initiative aims to help private players finance the purchase of new machinery, equipment, and production lines.