Underscoring industrial problems

Nahla Abul-Ezz , Sunday 4 Jun 2023

The National Dialogue’s session on industry revealed many of the sector’s problems and unmet needs.

Underscoring industrial problems
Improving the skills of Egyptian labour is one of the means to upgrade industrial production


The Egyptian National Dialogue aims to search for solutions to the crises that have afflicted the economy due to domestic and global causes. Industrial development is a central issue, given its intersections with other economic sectors and its importance to job creation and supporting the balance of payments and hard currency revenues through exports.

It comes as little surprise that the discussions that took place in the National Dialogue session on industry attracted considerable attention. One subject on which the participants were of one mind was the need to increase the percentage of local components in industrial output and the concomitant need to develop a realistic, quantifiable, and target-based plan towards this end.

Amr Al-Gabali of the Constitution (Dostour) Party agreed on the need to focus on increasing the local components in Egyptian industrial output, but stressed the importance of looking for ways to satisfy local market needs before addressing exports and called for ways to support the production of locally made components.

In addition to a clear, time-bound, and phased plan towards this end, he proposed exempting manufacturing start-ups from taxes for a specified period until these enterprises begin to turn a profit. In the framework of boosting domestic production, he stressed the need to develop intermediate industries, upgrade technical and industrial training and education, and incorporate the informal into the formal economy.

Mohamed Al-Bahi, a member of the Board of the Federation of Egyptian Industries, was inclined to prioritise boosting exports, and he underscored the importance of creating a legal architecture favourable to this end.

Lawmakers must engage in the task of reviewing and amending the relevant legislation, he said, with a particular eye to offering foreign investors incentives to invest in projects geared toward export production. He also stressed the need to link research and development more closely to industrial production and to take advantage of the nationwide infrastructural development drive to promote Egypt as a production and trade logistics hub.

Osama Al-Shahed of the Patriotic Movement Party agreed that it is possible to boost Egyptian exports by encouraging foreign entrepreneurs to set up factories in Egypt through local franchises whose production would have easier access to foreign markets. Egypt’s geographical location gave it a great competitive advantage, but prospective foreign investors needed other incentives, he said.

Many factories have had to cut back production or even suspend operations due to the economic turndown. Amr Mohamed of the Reform and Development Party held that these firms should be given both technical and financial support, but of more critical importance in the long run was investment in human resource development, he said.

Planners need to flesh out a comprehensive strategy for labour-force training and capacity-building, he said. Particular attention needed to be paid to developing proficiency in skills related to the latest production technologies, as well as to technology transfer from abroad. A needs-based study was of the essence to identify priorities, target areas, and the means for carrying out training projects.  

Mina Emad, a member of the steering committee of the Al-Shabab (Youth) Party, said that the key to human resource development resided less in policies and laws than in executive mechanisms. He proposed forging a protocol between the National Training Academy and the agencies that work with investors in order to better organise and coordinate skills development in the industrial and manufacturing sectors.

He also underscored the importance of the speedy implementation of the decisions of the Supreme Council for Investment and the need to crystallise a detailed strategy for promoting production for exports.

“The relationship between the investor and the state needs to be reconsidered in order to ensure that both sides profit,” he said. This meant “accelerating the implementation of the Supreme Council for Investment’s decisions and eliminating red tape in the implementing agencies in order to push the wheels of development forward.”

Emad raised another problem relating to bureaucracy and red tape. The complications did not end with obtaining a license to set up a particular company, he said. For example, factories are not allowed to apply to renew their licenses until 20 days before the expiration date, even though it is known that the renewal process takes months.

Senate member Ahmed Al-Qinawi noted that the main agency responsible for addressing the challenges facing Egyptian industry was the Industrial Development Authority, which should be transformed from an economic agency to a service agency tasked with facilitating matters for industrial entrepreneurs, he said.

 On the question of an industrial development strategy, he recommended that this focus on two or three sectors and include legislative impact studies that would analyse the tangible effects of current laws on industrial development.

MP Hala Fawzi of the Modern Egypt Party raised another concern, namely the need to facilitate the access of small and medium-sized enterprises (SMEs) to land allocated for industrial development. For example, they should be able to obtain plots free of advance costs and only have to begin paying for the land after their projects begin to turn a profit.

The Industrial Development Authority’s budget should include an allocation to cover water, wastewater, and electricity linkups to the plots of land so that the start-up enterprises do not have to pay these.

The head of the authority, Mohamed Abdel-Karim, pointed out that expenses related to industrial zone land do not fall under the scope of the authority, which does not own the land or obtain any returns from sales. It is an intermediary in the process of allocating land, he stressed, adding that it has transferred about LE400 million to the Industrial Lands Utilities Fund as the Authority itself is a non-profit organisation and is not entitled to invest funds on its own account.

Manufacturing and intermediate industries were not the only subject of concern in the light of the domestic and international economic climate. CEO of the Egyptian Feed Company Mahmoud Hosni said that the animal feed industry was “an important cog in food security” and explained how the Ibdaa (Start) initiative had contributed to the launch of many new enterprises in the period since it began.

His own start-up was one of the beneficiaries, he said, adding that “supporting Egyptian manufacturers can contribute to achieving a boom in both industry and exports.”

In a similar spirit, Haitham Hussein, founder of the Omal Misr Complex (Egyptian Labour Complex) said that “the human element is the main engine of production,” and recommended engaging foreign experts or sending missions abroad for capacity-building and human-resource development.

He urged the creation of a special academy for training entrepreneurs who would receive support for their projects after they graduated. He also proposed that licenses for factories operating in a particular field should be worded more broadly to make it easier for them to develop and branch out in related areas. Not only would this help industrial expansion, it would also promote job growth, he said.

Speaking from a general economic perspective, Nihal Al-Megharbel, a member of the Senate’s Housing and Transportation Committee, underscored the need for financial stability so that the government could better control the budget and provide real and effective support to industry.

Any comprehensive view of industrial development must take into account a range of diverse factors when assessing needs and incentives, from geographic and demographic considerations to various performance indicators, she said.

She advised keeping pace with technological developments and keeping an eye on the impacts of climate change, which could lead to the death of some industries and the birth of others, with all the implications this had in terms of employment and demands for new and more diverse skills.

Many representatives of labour among the participants stressed the importance of paying closer attention to the needs of workers. They urged amending labour laws to ensure that workers’ minimum demands for fair wages and job security are met.

* A version of this article appears in print in the 1 June, 2023 edition of Al-Ahram Weekly

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