613 Egyptian factories closed in recent months: Trade minister

Marwa Hussein, Tuesday 3 Sep 2013

Minister for industry and foreign trade says that the cabinet has allocated LE 500 million to help reopen some closed factories

A guard sits in front of one of the gates of a metal factory, which is operating with few workers, on the outskirts of Cairo (Photo: Reuters)

The minister for industry and foreign trade, Mounir Fakhry Abdel-Nour, has stressed that the number of Egyptian factories that have closed in recent months is not in the thousands as some reports – and government officials – have suggested.

The total number of factories closed in Egypt because of financial, technical or security issues is 613, according to the ministry.

"That is the only accurate and sure figure. Talking about thousands of factories closed as some do is an exaggeration," Abdel- Nour said during a press conference on Tuesday.

Kamal Abu-Eita, minister of manpower, announced a few weeks ago that more than 4,500 factories had closed in Egypt. After the announcement, the state-run Industrial Modernisation Centre (IMC) and the ministry invited those investors in difficulties to contact them.

"It is very possible that more factories are facing difficulties but they did not announce themselves," added Abdel-Nour.

The figures declared by Abu-Eita were based on a survey conducted by independent NGO the Centre for Trade Union and Workers Services (CTUWS) published a few months ago.

According to Kamal Abbas, the general coordinator of CTUWS, the figures were obtained through a survey by centre employees with the collaboration of the Egyptian Democratic Labour Congress, an independent labour federation, in different industrial cities.

"It is possible that some of these factories have reopened since that time. However, the difference between our figures and [the ministry's] numbers is huge," he told Ahram Online.

Abbas added that the methodology behind the figures might be different, as CTUWS counted the factories, not the enterprises.

Abbas argues that some of the investors have left the country, while others closed shop because the fiscal advantages they were benefitting from have ended. "Those investors will not go to report their factories have closed as they do not seek to reopen them," he told Ahram Online.

Mohamed El-Bahey, head of the tax committee of the Federation of Egyptian Industries, says that most of the closed companies have been facing long-term difficulties, mainly because of insolvability.

"We have held different meetings with bank directors and even with the central bank governor to solve this issue but there has been no progress," El-Bahey told Ahram Online.

The IMC has already dealt with 110 of the 613 factories and helped them resume work, according to the minister. The government has allocated LE 500 million ($71 million) to help those factories as part of a of LE 22.3 billion ($3.2 billion) stimulus package to boost the economy.

"The money will be used to finance the working capital of companies unable to find financial resources," added the Abdel-Nour.

He said that he would suggest in a cabinet meeting that the funds be given through banks to assure the money will be assigned according to a sound economic basis.

There are many reasons why factory owners close their factories, both before and after the revolution. "In some cases the owners of the factory closed it and fled the country; some even sold the machinery. In those cases, we cannot offer much help," says Mostafa Shouman, an advisor to the minister of manpower.

According to Shouman, other reasons for factor closure include insolvability in debt repayment, lack of raw materials or of skilled workers, and security reasons.

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