{"id":586604,"date":"2023-05-14T00:00:00","date_gmt":"2023-05-14T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/explaining-the-governments-plans-to-develop-transformative-industries-in-fy-2023-24\/"},"modified":"2023-05-14T00:00:00","modified_gmt":"2023-05-14T00:00:00","slug":"explaining-the-governments-plans-to-develop-transformative-industries-in-fy-2023-24","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/explaining-the-governments-plans-to-develop-transformative-industries-in-fy-2023-24\/","title":{"rendered":"Explaining the government\u2019s plans to develop transformative industries in FY 2023-24"},"content":{"rendered":"

<\/span>Breaking down the gov\u2019t\u2019s plans on developing transformative industries next FY:<\/span> Last<\/span> week, Planning Minister Hala El Said laid out the government\u2019s <\/span>sustainable development plan for FY 2023-24<\/a><\/span> in an address to the House of Representatives, while Finance Minister <\/span>Mohamed Maait presented<\/a><\/span> the draft state budget for the upcoming fiscal year. The sustainable development plan \u2014 which the ministry issues every year to work towards Egypt Vision 2030 \u2014 covers planned government spending on several key sectors, including education, infrastructure, the green economy, and manufacturing. <\/span><\/p>\n

The upcoming fiscal year\u2019s plan sees the government spending EGP 100 bn on<\/span> supporting transformative industries in the oil and non-oil sectors<\/span>, in a bid to help increase local manufacturing, improve the competitiveness of local industries, and grow industrial exports. That\u2019s a c.20% y-o-y increase from the current fiscal year, El Said noted in her statement. <\/span><\/p>\n

IN CONTEXT-<\/span> The state budget for the upcoming fiscal year sees Egypt\u2019s economic growth<\/span> remaining flat y-o-y at 4.1%, compared to 4.2% in FY2022-23. The Finance Ministry also expects our deficit to widen to 7.0%. The push to increase spending on growing local manufacturing comes as the Madbouly government has been working to reduce our reliance on imports while encouraging the <\/span>localization of industrial production<\/a><\/span>.<\/span><\/p>\n

The development plan for transformative industries is comprised of four main programs<\/span>,<\/span> with each program focusing on a specific aspect of boosting industrial performance through sub-programs, according to El Said. The minister\u2019s statement does not specify the spending allocations for each of the main programs under the development plan. <\/span><\/p>\n

#1- Encouraging local manufacturing:<\/span> This program will focus on expanding manufacturing<\/span> across the value chain, including intermediary goods that are typically imported, as the government looks to cut back on import reliance, according to El Said. The program will also look to ramp up production capacity at local companies, in addition to working on expanding environmentally-friendly industries, such as producing electric vehicles, solar panels, green hydrogen, and water- and electricity-saving devices for residential, commercial, and tourist establishments. <\/span><\/p>\n

There\u2019s supplemental projects to go with that:<\/span> This industrial development project includes<\/span> setting up industrial complexes to serve high-tech industries, in addition to wrapping up doing something for the Roubiki leather city, and industrial zones in Sohag and Qena \u2014 with an eye to raising the operating capacities of these two governorates\u2019 zones. The program also plans to work on pushing 2k factories operating in the informal economy to go legit, and move 300 of them to industrial complexes to act as supportive industries. Separately, another 80 idle factories are slated for revival under the program. <\/span><\/p>\n

#2- Improving local industry\u2019s competitiveness:<\/span> The government plans to issue a set of 700<\/span> quality standards that are on par with global standards, El Said said, without providing further details on what the standards will be or how they will be implemented on Egyptian industry players. The development plan also aims to raise the number of <\/span>ISO certifications<\/a><\/span> in Egypt to 4200, in addition to securing quality assurance certificates for 260 locally manufactured products, the minister said. <\/span><\/p>\n

#3- Growing industrial exports:<\/span> The upcoming fiscal year\u2019s sustainable development plan<\/span> aims to boost industrial exports by expanding the scope of its export subsidy program to include new commodities and companies, with a specific focus on SMEs, the minister said. The government is also looking to ramp up efforts to organize exhibitions locally and abroad, and will prioritize tapping promising export markets in Africa. We\u2019re hoping to export USD 10 bn worth of goods in 2024 \u2014 up from USD 6 bn now \u2014 with an eye to further raising that figure to USD 15 bn by the end of 2025, according to El Said. Skill and capacity building will also be a key pillar of ramping up industrial exports, with plans to offer vocational training to some 15k students and upgrading seven vocational training centers and their curriculums. <\/span><\/p>\n

ALSO- Export subsidies are almost quadrupling and industry + agriculture are getting<\/span> subsidized loans:<\/span> The export subsidy will see the highest upward percentage change in next year\u2019s budget to reach EGP 28 bn, while the government will spend EGP 19.5 bn on subsidizing loans to industrial and agricultural companies, according to the state budget. This will be the first fiscal year the state has picked up the tab for the subsidized loan program after it agreed to take the responsibility from the central bank at the request of the IMF. The central bank previously managed the programs by directing commercial banks to provide loans to qualifying businesses at lower rates.<\/span><\/p>\n

#4- Expanding economic clusters:<\/span> This component of the sustainable development program<\/span> for industry so far has the fewest details available, with El Said telling the House that the government intends to focus its efforts on a handful of specific promising industries with a competitive advantage. El Said\u2019s statement to parliament did not offer further information on what these industries could be, or specific action points the government intends to implement in the upcoming fiscal year, but this shift to focus on a handful of industries in which we have clear absolute or competitive advantages is exactly what we believe is the best route to build an export-led economy that <\/span>could turn Egypt into an export hub and magnet for FDI<\/a><\/span>.<\/span><\/p>\n

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