🏭 In a move set to inject new life into local industry, the government is restructuring the industrial financing system by way of a package of initiatives ranging from aiding struggling factories to injecting considerable funding for working capital and expanding production capacity. The new programs will include a specialized fund to address insolvency, launched in partnership with CI Capital, alongside financing initiatives at a 15% interest rate to support operations, equipment purchases, and import substitution with domestic products, Assistant to the Minister for Developmental Projects and Financial Affairs Emad Abdel Hamid told EnterpriseAM.

The Industry Ministry is currently working on the launch of an integrated mechanism designed to support struggling factories and companies in partnership with CI Capital, which will conduct an analysis for each to determine main hindrances — whether technical, administrative, or financial, Abdel Hamid told us.

The first phase of the initiative will target companies with debts ranging between EGP 30-40 mn, and would be limited to certain sectors, primarily engineering and food industries. There will also be a specific focus on companies based on sound business models, yet lack funding or proper structuring. The initiative will be managed through a specialized fund set to contribute to the equity of the targeted companies, rather than through banks, he added. The fund is expected to be offered for subscription following the completion of Financial Regulatory Authority procedures, with work projected to begin in early 2026.

The new fund will be allocated EGP 1 bn in its first phase, and will operate through a project partner model, rather than a traditional lender model, with the aim of helping viable factories reach full recovery, Abdel Hamid said. He further noted that CI Capital — as the technical partner — would be responsible for preparing valuation models and appointing a specialized project manager to oversee companies within the initiative.

Earlier in October, the Industrial Development Authority (IDA) granted struggling industrial projects that missed their execution deadlines further extensions and facilitations until the end of April 2026. This includes six months for industrial projects that completed over 50% of construction work, allowing them to finalize the project and obtain licenses and industrial registration. These projects would receive full exemption from late fees throughout the extension period. Additionally, land slated for withdrawal — though not yet re-allocated — would remain with the same investor upon application at the currently approved price, subject to fines.

What’s happening with the EGP 90 bn working capital initiative? Some 2.5k companies benefited from a combined EGP 73 bn since its launch of the 15% interest rate program two years ago, according to Abdel Hamid. EGP 80 bn is allocated for working capital financing, with a remaining EGP 10 bn for machinery and equipment, he noted.

The initiative had initially started with a financing volume of EGP 150 bn, which then gradually decreased to EGP 120 bn, and now sits at EGP 90 bn. In 2026, the initiative is scheduled to drop to EGP 60 bn, further dropping to EGP 30 bn before concluding its five-year term, according to Abdel Hamid. Abdel Hamid attributed the staggered allocation to the nature of working capital financing, which is cyclical — a factory receives funding, repays it, and so on and so forth.

This is in addition to another EGP 30 bn program with 15% interest rate to promote localization, albeit with more specialized conditions. The initiative targets industrial activities capable of substituting local products for imports, expanding production capacity, adding a hitherto locally unavailable product, or increasing the local component ratio in industry, Abdel Hamid told us. The list of industries making use of this initiative include sectors such as food, engineering, chemical, and pharma.

Despite the initiative’s significance, demand has been limited, with the ministry receiving just 199 applications for a total of EGP 2 bn. Only 40 requests have been approved, as the ministry is currently reviewing targeted activities in cooperation with the Federation of Egyptian Industries (FEI) to incentivize companies to apply.

To obtain the funding, companies must provide proof of a building license and construction progress, alongside opening a letter of credit for machinery, equipment, and production lines, or a tax invoice for local purchases. Interested manufacturers can submit their applications to the IDA headquarters in New Cairo or its branches in other governorates, which would be reviewed — and ruled on — within two weeks of submission.

The FEI had demanded that the Finance Ministry swiftly activate the first phase of the EGP 30 bn initiative in August to support companies operating in priority sectors, after several industrial chambers flagged a delay in activating the initiative and providing the necessary funding, sources had previously told us. Yet, demand was modest — why? The activities eligible to benefit from the initiative are complex, and require in-depth technical studies and larger investments, such as the manufacturing of pharma raw materials or tech required to produce products currently unavailable in the Egyptian market, Abdel Hamid told us. This comes as the ministry re-evaluates the targeted sectors alongside industrial chambers, according to Abdel Hamid.

The basic rate in all current government financing initiatives is 15%, which might be lowered to 13.5% for companies that achieve higher rates of local manufacturing or substitute imported raw materials with local alternatives, thereby gaining a competitive advantage, Abdel Hamid told us. The ministry had also set a maximum lending limit of EGP 100 mn per company, or EGP 150 mn if the group includes two related companies, to ensure fair distribution of funding among the largest possible number of factories benefited.

The initiatives are active, and demand is there. Initiatives are currently fully operational with no obstacles, and banks receive daily requests from industrial companies, Abdel Hamid told us, noting that the main working capital financing initiatives allows customers to re-borrow after repaying a financing cycle, granting factories some much-needed operational flexibility.

Banks are also able to provide USD for financing industrial operations so long as creditworthiness and sound feasibility studies are available, Abdel Hamid told us. “The USD problem no longer exists in its previous form,” he told us. This comes after banks resumed opening USD letters of credit for companies, which can be covered by the initiative’s allocations in their EGP equivalent.

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