What the government has planned for industrial zone development: With local industry and manufacturing named among the economic priorities for President Abdel Fattah El Sisi in his third term as president, the government is likely to turn its attention to industrial zones, which have been a source of frustration among the private sector over the past several years. Manufacturers have been exiting these zones in recent years, in large part due to high land prices, head of the Tenth of Ramadan Investors Association Samir Aref told Enterprise. Offering the private sector incentives to cluster in industrial zones is necessary, and will require a series of measures, chief among them being reducing land prices and allowing for longer-tenor payment plans, Aref said. Authorities also need to focus on providing utilities to make the land plots ready to be used, Aref said.

Where things currently stand: Egypt has 114 industrial zones across 26 governorates, 15% of which are concentrated in the Greater Cairo area. Alexandria comes in second place, followed by Upper Egypt governorates, according to data from the General Authority for Freezones and Investment.

Land allocation has gone digital — with financial perks: The Industrial Development Authority (IDA) has overhauled its land allocation process over the past two years through its online industrial investment map. The IDA has also cut costs for manufacturers in the process to provide financial incentives, including reducing its fees to study a land allocation request, canceling fees for submitting offers, and marking down the fees investors need to pay to indicate seriousness. Investors can also pay annual fees for industrial licenses every three or five years, rather than being required to head to the IDA each year.

New industrial tenders are going live soon: The Trade and Industry Ministry is planning to announce 152 new industrial projects after the Eid Al Fitr break as it looks to deepen local industry and locally manufacture products that have typically been imported, ministry sources who asked to remain anonymous told Enterprise. The new projects are focused primarily on engineering industries, as well as raw and active materials for several sectors, such as for pharma production.

We’ve already made some headway with localizing the manufacturing of certain products, such as industrial nails and several other industrial parts that were previously entirely imported, head of the Federation of Egyptian Industries’ engineering division Mohamed El Mohandis told Enterprise.

Still, there are headwinds facing local manufacturers: Local industry is struggling with several issues, including a dearth of industrial lands connected to utilities and infrastructure, head of the Internal Trade Committee of the Importers Division of the Federation of Chambers of Commerce Matta Bishay told Enterprise. Other challenges local industry currently faces include high energy costs, a lack of scientific research and technology geared towards industry, and low competitiveness for locally manufactured goods in the local and global markets.

Adjusting energy prices to boost competitiveness: Although the cost of energy for industry is preferential, industry needs more support to slash production costs and therefore increase exports, Egyptian Businessmen’s Association member Ahmed El Zayat told Enterprise. This support could include even lower energy prices, he suggested.

New industrial complexes need to be built, with some regulatory changes: Authorities need to focus on building out new industrial complexes and drafting a unified industry law that is compatible with industry’s current state and needs, Bishai said.

The good news: Concerns about financing are now being assuaged after the Finance Ministry rolled out last month an EGP 120 bn package of subsidized loans for manufacturers in freezones, according to all our sources. The program will offer financing at an interest rate of 15% for agriculture and manufacturing players, with the lion’s share (EGP 105 bn) earmarked for financing working capital, while the remaining EGP 15 bn will be allocated to financing capital expenditures for production lines and related facilities.

Authorities are working on infrastructure + environmental friendliness: The IDA has been working to provide manufacturers with clean energy at competitive prices to support sustainable industrial growth, according to IDA Chair Nahed Youssef. The authority is also working with the Oil Ministry to connect four industrial zones — in Qena’s Qift and Hiw, as well as Sohag’s Girga and West Tahta — in a project that will cost EGP 641 mn, according to Youssef. The IDA is also working on pushing industrial zones to become more environmentally friendly, as part of a project it’s working on with the United Nations Industrial Development Organization (UNIDO).

Your top industrial development stories for the week:

  • Elsewedy Industrial Development is expected to break ground on its industrial zone in New 6 October City within two to three weeks once they have received a 2.5 mn-sqm plot from the New Urban Communities Authority.
  • Misrayon & Polyester Fiber Company exports for the first time in over a decade:The recently revived state-owned textile manufacturer Misrayon & Polyester Fiber Company has shipped five containers of artificial silk to Turkey — its first export in 12 years.
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