The government is set to launch an initiative to assist the country’s struggling factories, focusing on restructuring 6,000 facilities in different sectors to restore operational capacity. The details and conditions of the initiative, organised in cooperation with the Central Bank of Egypt (CBE), are currently being drafted.
Two committees from the Ministry of Industry and the banking sector are making the necessary arrangements for the launch of the initiative, said Kamel Al-Wazir, deputy prime minister for industrial development and minister of industry and transport.
The initiative provides for the establishment of an investment fund, in which several state-owned banks will participate as shareholders. The fund will invest in financially distressed factories in return for an equity stake, tailored to the needs of each facility and its restructuring plan.
The fund will retain the right to recover its investments once production resumes and operational conditions stabilise.
In October 2024, Al-Wazir stated before the House of Representatives that there were 5,800 non-operational factories and 5,500 factories that had been stalled at the construction stage in Egypt.
But Mohamed Al-Bahi, a member of the executive of the Federation of Egyptian Industries, believes the number is larger. He has said on television that there are more than 20,000 factories facing partial or complete shutdowns due to various problems.
The political turmoil following the 25 January Revolution in 2011 disrupted factory operations and led many to halt production and exports, while the 2020 Covid-19 pandemic brought economic activity to an almost complete standstill, Al-Bahi said.
Sobhi Nasr, deputy chairman of the Egyptian Investors Federation, said that some factories are operating at only half their productive capacity, barely breaking even but considering survival itself a success.
Others are functioning at changing capacities, while a small number have stopped altogether, Nasr said.
All sectors reliant on natural gas are struggling, including building materials, fertilisers, iron, ceramics, and glass, because of high costs, Nasr said, adding that many are unable to settle their bills.
Once debts accumulate, the state suspends their gas supply, forcing operations to shut down, he said.
“Although the current gas prices are unfavourable for us as producers, they remain subsidised by the state, which leaves us unable to demand further reductions,” Nasr said.
“But we are unable to compete with Chinese and Indian products due to energy costs,” he said, adding that the cost of Egyptian products is often higher than importing alternatives as a result.
“Despite this, we cannot stop production altogether due to considerations such as jobs, social stability, and social protection. For this reason, the state continues to support us, since the only way forward is to increase productivity and improve quality to compete in global markets.”
Nasr called for debt rescheduling for struggling factories at interest rates not exceeding seven per cent.
Shaimaa Eleiba, a member of the board of the Engineering Industries Chamber at the Federation of Egyptian Industries, believes Egypt’s factories face other challenges besides financing and energy prices.
Many difficulties are primarily linked to rising production costs and weak planning, she said.
“Support initiatives should become more comprehensive. They should not be confined to financing alone, but should also secure inputs at fair prices, guarantee equitable energy pricing, provide protection from dumping, and ease customs and tax procedures to reduce these burdens,” Eleiba said.
Mohamed Al-Mohandess, chairman of the Engineering Industries Chamber at the Federation of Egyptian Industries, said that rising prices are the main obstacle, particularly in the engineering industries.
Tariffs have recently been imposed on imported sheet metal, which will inevitably drive up its price, he added.
The engineering industries are at the heart of the production of water heaters, cookers, refrigerators, and household appliances. “Sheet metal is a fundamental input for the engineering industries, and the tariffs will increase the price of final products at a time when the government wants us to reduce prices,” Al-Mohandess said.
Eleiba pointed to other internal factors that lead factories to struggle, such as weak marketing, the poor targeting of suitable markets, and strained cash flows due to delayed payments or ill-considered borrowing from the banks.
“Practical solutions should be introduced, foremost among them debt rescheduling in line with the actual ability of factories to pay their dues,” he said.
In the pharmaceutical sector, another set of challenges has emerged. In other sectors, if costs rise, a manufacturer or trader can raise sale prices to reflect the increase. But pharmaceutical prices are fixed by the government, making such increases impossible, said Gamal Al-Leithi, chairman of the Pharmaceuticals Chamber at the Federation of Egyptian Industries.
The floatation of the Egyptian pound in November 2016 affected the exchange rate, causing a sharp increase in pharmaceutical production costs, since nearly all raw materials are imported.
Since that time, the majority of Egypt’s industrial sectors have been suffering from liquidity shortages, Al-Leithi said.
He added that one leading pharmaceutical distributor, the United Company for Pharmacies, has heavy debts to distribution companies and the banks. This has strained cash flows, as most pharmaceutical companies are now unable to collect their dues.
The Egyptian Authority for Unified Procurement owes billions of pounds, which has caused difficulties for companies across the board, especially small and medium-sized enterprises (SMEs), Al-Leithi said, suggesting that “initiatives to support small companies would benefit the sector as a whole.”
Islam Mansour, a member of the Pharmaceuticals Chamber at the Federation of Egyptian Industries, said on television that the government’s initiative to revive struggling factories will include eligibility requirements, among them the need for a well-organised administrative structure and a board of directors capable of managing operations, production, and market engagement.
Launching the initiative with a focus on debt rescheduling rather than debt cancellation would be the best course for restarting operations, he noted, explaining that rescheduling debts can be a continuous incentive for factory management to work to restore production, generate profits, and repay obligations.
This, in turn, strengthens a factory’s ability to adapt to market conditions, enabling it to achieve sustainable growth. “Ultimately, once the debts are cleared, the outcome will be a stronger factory with the capacity to endure and expand,” Mansour said.
* A version of this article appears in print in the 2 October, 2025 edition of Al-Ahram Weekly
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