INTERVIEW: Localising industrial components

Abdel-Razek Mohamed, Saturday 18 Dec 2021

Chair of the Chamber of Engineering Industries at the Federation of Egyptian Industries Mohamed Al-Mohandess explains what Egypt is doing to advance the localisation of its engineering industry to Al-Ahram Weekly.

Localising industrial components
Egypt s engineering exports in the first nine months of 2021 grew by 43 per cent

Egypt’s industrial sector is increasing the percentage of local components used in final products, with engineering industries succeeding in localising between 50 per cent and 70 per cent of their components over the past five years, said Mohamed Al-Mohandess, chair of the Chamber of Engineering Industries at the Federation of Egyptian Industries, in an interview with Al-Ahram Weekly.

Restrictions associated with the Covid-19 pandemic had turned out to be a blessing in disguise, Al-Mohandess said, adding that they had encouraged the engineering industries to rely on local components, pinpoint deficiencies in the sector, resolve associated challenges, and benefit from the experiences of leading industrial countries sharing similar conditions.

Egypt’s engineering exports in the first nine months of 2021 grew by 43 per cent to record $2.28 billion, up from $1.59 billion in the same period of 2020, according to Egypt’s Engineering Export Council.

Localising industry contributes to increasing employment, raising exports, relieving pressure on foreign currency holdings, and reducing imports, Al-Mohandess said. The improvements have been felt particularly in household appliances, and there is still a way to go in increasing the percentage of local components used in heavy industry, currently standing at less than 40 per cent.

The localisation had been done in collaboration between the government and the private sector, Al-Mohandess said. The government has targeted increasing Egypt’s non-petroleum exports to $100 billion a year over the coming five years while raising the percentage of local components used in industry, he added.

“People can see for themselves the improvements in the engineering industries through the increased availability of high-quality household appliances that can easily compete with imported products,” Al-Mohandess said.

Egypt adopted European import standards in September to ensure the quality of imported products and protect Egyptian factories from competing with low-quality products at cheap prices, he added.

The step is critical to protecting and developing local industry, Al-Mohandess said, adding that cheap and low-quality imported products are harmful to Egyptian industry and consumers.

The improvements in the engineering industries sector have been reflected in the increase in the membership of the Chamber of Engineering Industries from 4,000 to 12,000 members over the past four years, he said.

Al-Mohandess did not reveal the number of factories that had stopped production during the Covid-19 pandemic, but he said the chamber was conducting field visits to identify problems. “The main challenges are financial or technical. Some have to do with an inability to develop or buy new equipment. We try to solve these problems, especially those of smaller companies founded by younger people,” he added.

The banking sector is a partner of the industrial sector, and “we sit together with the banks to explain and resolve any problems that arise with the ultimate aim of growing the Egyptian economy,” Al-Mohandess said, urging the banks to look into each case individually and to take into consideration the impacts of the pandemic on the local and global economy.

Regarding the initiative to manufacture electronic equipment in Egypt that was launched in 2018, Al-Mohandess said that the field was important yet complicated and the country has some way to go in it.

“People have got used to importing electronic products, but today we are manufacturing them. This is a difficult phase that requires a lot of time and effort and needs to benefit from others’ experiences,” he said.

*A version of this article appears in print in the 16 December, 2021 edition of Al-Ahram Weekly.

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