{"id":587060,"date":"2023-05-21T00:00:00","date_gmt":"2023-05-21T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/made-in-egypt-lessons-from-egypts-manufacturing-export-success-stories\/"},"modified":"2023-05-21T00:00:00","modified_gmt":"2023-05-21T00:00:00","slug":"made-in-egypt-lessons-from-egypts-manufacturing-export-success-stories","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/made-in-egypt-lessons-from-egypts-manufacturing-export-success-stories\/","title":{"rendered":"Made in Egypt: Lessons from Egypt\u2019s manufacturing + export success stories"},"content":{"rendered":"

<\/span>What we can learn from companies with success stories in local manufacturing and exporting:<\/span> Food and beverage, fertilizers and chemical products, and textiles and<\/span> garments are consistently among the three industries that either have the highest value of exports out of Egypt, or the highest level of y-o-y growth in our non-oil exports. Several companies in these key export industries have individual legacies or experiences with being early movers in specific areas of manufacturing and exporting out of Egypt. These legacies come with plenty of lessons learned, both in terms of what they did right and what works for businesses exporting out of Egypt \u2014 and in terms of the obstacles that businesses face as they look to tap global markets and how to overcome these obstacles.<\/span><\/p>\n

We brought together a panel of companies with legacies of early movers <\/span>during our<\/span>Enterprise Exports and FDI Forum last week, to gauge how they were able to unlock their market in Egypt, what exactly makes products manufactured in Egypt competitive abroad and how we can better leverag<\/span>e our competitive advantages. S<\/span>itting on the panel: Mohamed Talaat Khalifa, CEO of Concrete (<\/span>LinkedIn<\/a><\/span>); Tarek Hosny, head of investments and projects at Fertiglobe (<\/span>LinkedIn<\/a><\/span>); and Shams Eweis, corporate affairs manager, Egypt, North Africa, Levant at Mars (<\/span>LinkedIn<\/a><\/span>).<\/span><\/p>\n

Play to strengths to make a clear value and competition proposition:<\/span> In order to attract investors, companies may need to make concessions that<\/span> they otherwise might not make, said Tarek Hosny. The MENA fertilizers firm Fertiglobe exported USD 1.2 bn of urea from Egypt last year, yet the company is making a shift to low carbon energy \u2014 a move dictated by the market, rather than regulations, he said. This move is an example of how manufacturers can keep track of global trends and industry shifts to remain agile and competitive, he noted. <\/span><\/p>\n

Egypt, with all the advantages of its natural resources, \u201cshould be at the forefront\u201d of the<\/span> renewable energies market<\/span>, Hosny said. While some countries may enjoy lower natural gas prices \u2014 which, for fertilizers, is a form of \u201clocal content\u201d \u2014 than us, we can be competitive, Hosny added. Not only does Egypt have a consistent supply of wind and sun, we have the know-how and are seen as one of the best locations for the renewable energy sector, he said. Egypt is \u201din a good place, businesses just have to leverage it,\u201d Hosny concluded.<\/span><\/p>\n

The experts agree \u2014 use what we (naturally) have:<\/span> Hosny\u2019s calls to leverage Egypt\u2019s natural<\/span> competitive edge echoed comments made by Yasmine Khamis, chair of Oriental Group and Yassir Zouaoui, partner at McKinsey, <\/span>during the opening panel<\/a><\/span>,<\/span> in which they outlined the need to combine Egypt\u2019s natural value proposition with clarity and focus in order to build exporting economies of scale. <\/span><\/p>\n

Confectioner Mars is a key example of this: <\/span>Egyptians make up an ideal customer base for<\/span> any food and beverages company, said Shams Eweis. The population is young, large, has high rates of consumption and the local hospitality and entertainment industry is booming, Eweis added. Mars\u2019 ability to adapt has been important to their success, she said. The company diversified its product offerings last year, allowing it to maintain its exports at 80% despite economic upheavals as a result of the war in Ukraine.<\/span><\/p>\n

The global attraction also makes Egypt a \u201ckey market to crack'' for an international<\/span> exporter<\/span>, said Eweis. Several years ago, Mars brought operations from the UAE to Egypt, which is now the global company\u2019s regional manufacturing hub, from which it exports to Africa, Asia, and Australia, Eweis noted. There were several benefits Eweis pointed to that fed into that decision and has kept Mars consistently investing: Multiple freetrade agreements that support exporting to countries like the US, economical transportation and packaging, a preferential geographic location that simplifies entrance to markets, and trade routes that are stronger than those of other MENA countries and access to raw materials. <\/span><\/p>\n

On the whole, our policymakers are thinking in the right direction:<\/span> We have authority<\/span> figures \u201cwith the right mindset and understanding\u201d when it comes to policies, laws, and regulations that are geared towards increasing investment and exports, Eweis said. And while the efficacy of policies is sometimes held back by the inconsistency of application, Eweis said, Mohamed Talaat Khalifa stressed that we can\u2019t wait for the government to create the ideal regulations and conditions for exports and growth. \u201cWe have to think about the goals, rather than the tools. The goals are that we want growth, we want investments, and we want jobs. So let\u2019s take the decisions that help us achieve these goals, without fixating on tools like interest rates,\u201d Khalifa said. <\/span><\/p>\n

Focusing on import substitution is not how to build a strong manufacturing base:<\/span> If we<\/span> insist on substituting all our imports, that would entail producing everything locally, which is inefficient and costly, Khalifa said. Instead, Egyptian companies should focus on creating higher value products that can then substitute an imported product, and support leveling up of the entire supply chain, he said. <\/span><\/p>\n

Value should not be based on lower costs, as there is always someone else offering a<\/span> lower price<\/span>, Khalifa added, instead our focus needs to be quality. The by-product will be greater market competition and inter-company knowledge sharing, which will organically create a more skilled labor force, feed-in-industries and ultimately exposure for Egyptian products. It\u2019s a long-term approach, Khalifa said, but a sustainable one. \u201cIf we make short-term decisions \u2014 even if they\u2019re tempting today \u2014 they\u2019re not helping us move towards the long-term goals\u201d of job creation and growth, he stressed.<\/span><\/p>\n

The long-term view is all about sustainability \u2014 and that includes supporting our labor<\/span> market:<\/span> Sustainable job creation adds economic value, our panelists agreed. Eweis outlined Mars\u2019 various career promotion programs that develop employees and export talented individuals to the company\u2019s overseas offices. The presence of a stable labor force is key to any capital intensive industry, said Hosny, in order to maintain production. \u201cIf we support industries where we have a competitive advantage, then we are supporting sustainability,\u201d he said.<\/span><\/p>\n

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We could not have made the Enterprise Exports and FDI Forum without the support of\u2026<\/span><\/p>\n

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Your top industrial development stories for the week:<\/span><\/p>\n