{"id":654494,"date":"2024-11-03T00:00:00","date_gmt":"2024-11-03T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/a-deep-dive-into-egypts-localization-efforts\/"},"modified":"2024-11-03T00:00:00","modified_gmt":"2024-11-03T00:00:00","slug":"a-deep-dive-into-egypts-localization-efforts","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/a-deep-dive-into-egypts-localization-efforts\/","title":{"rendered":"A deep dive into Egypt\u2019s localization efforts"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>A look into Egypt\u2019s localization efforts:<\/strong> The government has been very outspoken about its localization push as it works to cut down on imports and increase industry\u2019s share of the total GDP. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Enter the government\u2019s plan:<\/strong> The Madbouly government is working to slash its import bill, meet local market needs, and ensure production input is available by encouraging Egyptian manufacturers and attracting global investors. In order to achieve its goals, the government has a plan to:<\/p>\n<ul>\n<li><strong>Expand Egypt\u2019s industrial base to boost exports<\/strong>, especially in green and electronic industries;<\/li>\n<li><strong>Improve the technical attributes and capabilities of Egyptian industry<\/strong> as a whole;<\/li>\n<li><strong>Assist struggling factories <\/strong>\u2014 boosting their overall activity, increasing production capacity, and providing them with technical assistance.<\/li>\n<\/ul>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Imports have been on the declin<\/strong><strong>e:<\/strong> Egypt\u2019s imports fell 5.1% y-o-y to USD 7.4 bn in May, according to data from state statistics agency Capmas. The drop was driven by a decrease in iron and steel imports, which fell by 0.3%, plastics (2.9%), pharma products (24.7%), and chemicals (23.3%).<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Egypt\u2019s localization efforts are in full swing:<\/strong> The government is aiming to localize 152 industries by 2030 in sectors including \u2014 but not limited to \u2014 the engineering, transport, pharma, and automotive sectors, a government source told EnterpriseAM. The Madbouly government last month <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/0c63a1e3-9d75-4490-864e-ba087d245a77\/egypt-wants-to-localize-the-manufacture-of-12-products\" style=\"\" rel=\"noopener\">announced its plans<\/a> to localize the manufacture of 12 products selected by the ministries of housing and industry \u2014 the products include electric motors, generators, valves, pumps, water filtration devices, electric tools, solar cells, electrical control and power distribution panels, and elevators.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Support to factories is key:<\/strong> Egypt has the potential to manufacture a wide range of industrial equipment and products domestically, provided that there\u2019s sufficient support for factories and reduction in imports to boost demand for local products, Chamber of Engineering Industries head Mohamed El Mohandes tells us.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Having specific target industries in mind is also crucial:<\/strong> Federation of Egyptian Industries\u2019 Mohamed El Bahy told EnterpriseAM that localizing industries and supporting local production is a top priority for the Federation \u2014 but it\u2019s also essential to identify target industries based on the cost-effectiveness of producing certain goods locally, saying that it would be better to invest in goods that are economically viable if production costs are significantly lower abroad. This would help balance investments and avoid draining the country\u2019s FX supply.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Work is underway to better govern key industries:<\/strong> The government is in the process of conducting studies to transfer the oversight of pharma, cosmetic, and nutritional supplement industries from the Health Ministry to the Industrial Development Authority, a government source told us. This would help the localization push by unifying oversight over production, easing land allocation, and facilitating the approval process, which would make the sectors more attractive to investors, El Bahy said.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Local industry will have a bigger role to play in our GDP:<\/strong> The government aims to increase the overall contribution of the local industrial sector to Egypt\u2019s GDP to 20%, up from 16% currently, one government official told EnterpriseAM. Current efforts to stimulate investment in the industrial sector will bear fruit over the next two years, the source said, adding that the restructuring of the sector and the development of specialized industrial zones and services will have a big role to play in that regard.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>There\u2019s still a long way to go:<\/strong> Deepening Egypt\u2019s industrial activity and increasing the ratio of local component used will not happen without active effort from the state, MP Mohamed Attia El Fayoumi told EnterpriseAM, pointing to the need to hold exhibitions that showcase local suppliers\u2019 products, particularly production inputs that Egypt currently imports. This would create synergy between local factories, deepen local manufacturing, reduce import costs, and boost exports.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Integration between manufacturers and suppliers will speed the process along:<\/strong> Industrial integration between manufacturers and their suppliers is crucial to ensuring the successful relaunch of the government\u2019s Local Manufacturing Empowerment program, which aims to connect manufacturers and local suppliers and connect local suppliers to global supply chains for major companies. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>One glaring issue stands in the way: <\/strong>All those we spoke to indicated that energy and electricity prices represent one of the biggest challenges for industrial expansion, especially with additional price hikes soon to come. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Remember: <\/strong>Prime Minister Moustafa Madbouly <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/144e0e2f-276a-429d-a414-0b2427177e53\" style=\"\" rel=\"noopener\">signaled in May<\/a> that the state is looking to gradually \u201crestore balance\u201d between fuel cost and its end price by the close of 2025. The <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/2e1e29b9-af1f-412d-9492-354ca6e76353\/\" style=\"\" rel=\"noopener\">latest energy price hike in October<\/a> saw the price of industrial mazut rise 11.8% to EGP 9.5k per ton. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Could renewables be the answer? <\/strong>Solar energy presents a glimmer of hope for industry, especially with the government working to localize solar cell production \u2014 a move that would reduce the cost of establishing solar units for industrial expansion. The zones for most of the industries targeted for localization are located in Upper Egypt, close to Egypt\u2019s large renewable energy stations. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A promising future: <\/strong>The future of renewable energy as a solution for manufacturing and localization in Egypt is promising, Romany Hakeem, chairman of Beneshty Solar and vice chairman of Sustainable Energy Development Association told EnterpriseAM, pointing to the current strategy to localize various industries to boost renewable energy capacity and to lower import costs. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>A move in the right direction: <\/strong>The cabinet in August <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/49a2b46f-b33c-48aa-924a-b99ea95b13c2\/executive-regs-to-hospital-privatization-and-more-received-the-greenlight-from-the-cabinet\" style=\"\" rel=\"noopener\">approved a draft resolution<\/a> to set up the National Council for the Localization of Chip and Solar Cell Tech Production, which will be tasked with approving the government\u2019s strategy for localizing the manufacturing of chips and PV cells, updating the strategy as needed, and overseeing the progress of its implementation, as well as working to eliminate any obstacles for investment in the sector and reviewing related legislation. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Localizing solar panels? <\/strong>We dive into why Egypt should double down on manufacturing solar panels in a <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/51149763-df66-4ee4-bd6f-87a84b7963c7\/why-should-egypt-double-down-on-manufacturing%253cmark%253e-solar-panels%253c%2Fmark%253e%3F\" style=\"\" rel=\"noopener\">Going Green<\/a> published earlier this year.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<hr style=\"height:2px;border-width:0;color:gray;background-color:gray\">\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Your top industrial development stories for the week:<\/strong><\/p>\n<ul>\n<li><strong>Huawei could help localize power grid components:<\/strong> Electricity Minister Mahmoud Esmat met with Huawei Egypt\u2019s CEO Jim Liu to discuss localizing the manufacture of electricity grid equipment and communication tools. (<a target=\"_blank\" href=\"https:\/\/www.facebook.com\/EgyptianCabinet\/posts\/pfbid02ibuNtiKxrDcnMJ5vmn59HQRWQYnLRM1w5Tz8j9Ss5un16YjeZ4Mr2gwRo95TwBXLl\" style=\"\" rel=\"noopener\">Electricity Ministry statement<\/a>)<\/li>\n<li><strong>Ostuka Egypt laid the foundation for a new factory for nutritional products <\/strong><strong>in Tenth<\/strong><strong> of Ramadan.<\/strong> The factory is <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/4204b1c8-f280-4703-b435-01a0bae60d04\/egypt-is-mapping-out-three-potential-routes-for-its-imf-program-adjustment\" style=\"\" rel=\"noopener\">expected to kick off<\/a> by September 2025, with an eye toward exporting to Gulf countries by January 2026. (<a target=\"_blank\" href=\"https:\/\/www.facebook.com\/EgyptianCabinet\/posts\/pfbid02uvULGWKKL6VEGqDbjyreCtfdWfMLR8CsSqghJ3Ksjr3BhL5noGT7dnyCNbhSG2e2l\" style=\"\" rel=\"noopener\">Investment Ministry statement<\/a>)<\/li>\n<li><strong>Chinese BAIC group signed an agreement with local agent Alkan Auto to <\/strong><strong>establish an EV factory<\/strong>, set to kick off by the end of 2025. The factory will have an initial production capacity of 20k vehicles \u2014 which will increase to 50k by the end of its fifth year of production. (<a target=\"_blank\" href=\"https:\/\/www.facebook.com\/EgyptianCabinet\/posts\/pfbid02cELLsUU2CwVwNihcViJ9Rf673pEt2V8nyTfgJokhS46yCyTzMCqWFwUHNrCiq7fKl\" style=\"\" rel=\"noopener\">Industry Ministry statement<\/a>)<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The government is aiming to localize 152 industries by 2030<\/p>\n","protected":false},"featured_media":654495,"template":"","categories":[7334],"tags":[93,1548,633,7333,131],"class_list":["post-654494","inside_industry","type-inside_industry","status-publish","has-post-thumbnail","hentry","category-inside-industry","tag-energy","tag-enterprise-inside-industry","tag-enterprisepm","tag-inside-industry","tag-manufacturing","wpautop","entry"],"acf":{"mongo_id":"d3fdb838-5768-4201-8be9-a6cdc8b3aa29","order":"11","is_powered_by":false,"story_type":"2","photo_url":"https:\/\/ent.news\/2024\/11\/29.jpg","photo_position":"above","homepage_title":"","full_issue_title":"","related_issue":[654478],"teaser":"The government is aiming to localize 152 industries by 2030","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/11\/.894728bf-6a61-4f56-8dde-e329d0e6c5c7.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - 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