{"id":580294,"date":"2022-12-18T13:28:30","date_gmt":"2022-12-18T13:28:30","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/industry-players-saw-some-good-and-some-bad-in-2022\/"},"modified":"2022-12-18T13:28:30","modified_gmt":"2022-12-18T13:28:30","slug":"industry-players-saw-some-good-and-some-bad-in-2022","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/industry-players-saw-some-good-and-some-bad-in-2022\/","title":{"rendered":"Industry players saw some good and some bad in 2022"},"content":{"rendered":"

<\/a> It\u2019s been a roller-coaster year for industry: <\/strong>The outbreak of the war in Ukraine at the end of February piled on pressure to global supply chains that were just recovering from covid-19, leaving industrial players the world over facing shortages of manufacturing inputs. Here in Egypt, these supply chain snarls were compounded by import controls that led to a buildup<\/a>of backlogged imports at ports<\/a>. Faced with these external pressures gave the government fresh impetus to focus on localizing manufacturing and launch an import substitution<\/a> substitution strategy, paired with a renewed effort to expand the private sector\u2019s participation in the economy.<\/p>\n

Enter the <\/strong>state ownership policy document<\/a><\/strong>:<\/strong> The long-term strategy plans to see the government making full and partial exits from more than 79 industries, while maintaining an eye on strategic industries. The plan \u2014 which just got a nod from cabinet<\/a> this month \u2014 is designed to more than double the private sector\u2019s share of the economy to 65% within three years. Following its release, the Madbouly Cabinet began hosting twice-weekly workshops<\/a> with industry players, business experts, economists, and investors for their input on the plan.<\/p>\n

Key takeaways from the workshops:<\/strong> Cabinet ran individual workshops, including for textile and garment<\/a> manufacturers, automotive and engineering<\/a> players, the printing and packaging<\/a> industry, FMCG<\/a> players, the pharma industry<\/a>, and furniture makers<\/a>. Each group had their own subset of concerns and requests, but the themes that ran throughout many of the workshops included calls for more government support \u2014 including raising export subsidies and more incentives for investors \u2014 streamlining regulatory and licensing procedures, ramping up public-private partnerships, and clamping down on unlicensed factories.<\/p>\n

The big thorn in everyone\u2019s side: Import shortages.<\/strong> Several industries, including automotive assemblers, have been struggling to keep the lights on<\/a> as import restrictions mean they can\u2019t bring in raw materials or components. These restrictions have translated into \u201ctens of mns of USD\u201d in losses a day for businesses, some industry players have said<\/a>, leading President Abdel Fattah El Sisi to promise manufacturers that their import woes would be resolved before the year is out<\/a>. On the consumer side of the equation, buyers are increasingly moving away<\/a> from imported goods due to their prohibitively high prices and lack of availability of these products.<\/p>\n

In the meantime, local industry has been working on the transition to Industry 4.0 \u2014 but<\/strong> we\u2019re lagging:<\/strong> Our transition to Industry 4.0 \u2014 having little to no human intervention in manufacturing \u2014 is accelerating as industrial park developers join the club of \u201csmart\u201d industrial parks. This shift to smart industrial parks is all about taking sustainability, integration, resource efficiency, and waste reduction into account when designing or creating clusters of factories. A number of businesses<\/a>, including IDG, Polaris Parks, and Suez Industrial Development Company (SIDC), have succeeded in integrating intelligent infrastructure and supply chain technologies into their parks. IDG has set aside some EGP 300 mn for investments in digital infrastructure for the next five years. But broadly speaking, Egypt is still largely stuck in the Industry 2.0 phase, which is heavily dependent on human input. Although a handful of companies are embracing and investing<\/a> heavily in the transition, research and development investments from the private sector remain low relative to global averages.<\/p>\n

It's not all bad news, though:<\/strong> Out of six nations in the region \u2014 Kuwait, Bahrain, the UAE, Saudi Arabia, and Oman \u2014 we showed the highest level of automation potential (48%), with manufacturing showing a 50% level. The home appliance, food and beverage, pharmaceutical, and chemical industries are driving our automation drive, while SMEs and companies that produce plastics and metals are among those who are falling behind in the shift. One of the reasons these sectors are lagging behind is the difference in cost<\/a> between the expensive price tag of automation equipment and the cheaper labor costs. This difference is expected to even out with the new private sector minimum wage encouraging more companies to turn their head towards automation. Other contributing factors include the lack of digitally skilled labor and the low production volumes.<\/p>\n

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