🏭 Throughout 2025, EnterpriseAM’s Inside Industry has mapped out Egyptian industries’ strategies amid various risk and shifting priorities — expansion has proven to be a long-term strategic pillar. This year has highlighted the limits of growth under high costs while simultaneously showcasing the resilience of industrial firms that opted for adaptation over retreat.

Many companies entered the year driven not by domestic demand momentum, but by the necessity of defending market share, securing supply chains, and maximizing export avenues. The result was a cycle of expansions that were more selective, with a focus on efficiency, import substitution by way of localization, and diversifying manufacturing hubs to boost exports.

Despite high interest rates and rising operating costs, major industrial players pushed forward with pre-existing expansion plans and new production lines, albeit at a slower pace than in previous years. A prime example is Elsewedy Electric: officials confirmed plans to expand in cables and electrical equipment — both domestically and in regional markets — prioritizing existing capacities. In the building materials sector, several firms directed investment towards operational efficiency and cost reduction rather than horizontal expansion against a backdrop of slowing domestic demand.

A defining element of 2025 was the practical transition to localization and import substitution. EnterpriseAM tracked significant expansions in cables, automotive components, engineering industries, and petrochemicals. The challenge has evolved beyond simply setting up production lines to achieving quality parity with imports and meeting strict delivery timelines, especially for those tied to state contracts, industry officials told us. This reflects a growing realization of the importance of supply agility through diversification and the reduction of risks associated with single-site reliance, particularly in sectors governed by long-term contracts.

Across sectors, export potential became the decisive factor in investment decisions. Following a wave of US tariffs that disrupted global trade dynamics, we noticed a strategic pivot: players like Elsewedy Electric, Edita, and various other local and foreign firms are now designing expansions from the outset to serve external markets, primarily across the GCC and in Africa.

Once production sites, now export platforms: Industrial zones, particularly the Suez Canal Economic Zone (SCZone), are now a primary hub for export-oriented FDI. Throughout 2025, we saw a steady stream of announcements of new plants and expansions by foreign and local investors leveraging proximity to ports and easy access to foreign markets. These zones are now being marketed as integrated export platforms rather than the run-of-the-mill industrial clusters.

We tracked an uptick in factories adopting solar energy and centralized cooling solutions, particularly within energy-intensive industries throughout 2025. Also, companies in steel, cement, aluminum, and fertilizers continued to advocate for more stable energy pricing policies — from gas supply to electricity price hikes — given direct impact on the bottom line.

Elevated interest rates were one of the primary obstacles to rapid expansion in 2025. Many firms resorted to self-financing or partnerships, whereas others deferred capital expenditures until liquidity conditions or domestic demand improved, according to experts speaking to EnterpriseAM. SMEs in particular bore the brunt of tightened bank credit and high borrowing costs.

The industrial finance framework was restructured through initiatives aimed at supporting operations and throwing a lifeline to struggling factories. This included a specialized fund in partnership with CI Capital, with an initial total capital of EGP 1 bn. Operating on a project partner model, the fund addresses technical, administrative, and financial troubles for companies with debts between EGP 30-40 bn, with operations kicking off early 2026.

A mixed bag of performances-

The steel and cement sectors faced a dual blow from shrinking domestic demand and rising energy costs. While recent price cuts helped move inventory, margins were squeezed to near-zero levels, according to Metallurgical Industries Chamber director Mohamed Hanafi. Players like Ezz Steel shifted focus toward exports and production recalibration to maintain balance.

Pharma and F&B sectors showed the highest resilience, with players like Edita and Juhayna expanding. The pharma sector underwent its largest restructuring wave in a decade, as players moved to increase capacity and export reach, benefiting from relatively more stable demand — at least when compared to other sectors.

The year also saw gradual improvements in industrial licensing, particularly with the expanded issuance of golden licenses and new measures to combatland hoarding, and a new package of customs facilitations to support local manufacturing.

2026 will be the true litmus test. Following the CBE’s decision to hold interest rates steady last month, analysts predict a reduction in financing costs and a retreat in prevailing interest rates by approximately 600 bps over the coming year. There are also a significant number of expansions slated to go live this year, so Egypt’s ability to convert investment into output and actual exports will be tested.

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