Egypt’s manufactured exports held steady at $35.3 billion in 2023, mirroring the 2022 figure, said Minister of Trade and Industry Ahmed Samir this week.

The statement came after the release of the Strategic Directions for the Egyptian Economy for the Period 2024-2030 document by the cabinet’s Information and Decision Support Centre (IDSC).

The document states that the government aims to realise an annual growth of exports of no less than 20 per cent, reaching LE145 billion by 2030.

The document followed the approval by the Senate and the House of Representatives of the Development Plan document prepared by the Ministry of Planning and Economic Development. It outlines the goal of achieving $100 billion in manufactured exports within the next three years in order to address the trade deficit.

According to the IDSC document, the target of achieving LE145 billion in exports was the result of an analysis of Egyptian imports and exports over the past four years. The study concluded that Egypt could realise this goal, despite its surpassing the target parliament approved in the Ministry of Planning document.

Moetaz Mahmoud, undersecretary of the Industry Committee of the House of Representatives, said the targets for Egyptian exports should not be viewed in isolation from the state’s broader financial and development plans because Egypt’s industrial sector is the best able to help pay off the country’s debts.

Decision-makers in financial-policy circles must establish binding regulations to ensure foreign investors can freely transfer their profits abroad as a way of encouraging investment in Egypt, he said.

While this is a financial decision, Mahmoud added, it constitutes a fundamental factor that can help the country’s businessmen to attract foreign partners. It would boost the scale of foreign direct investment (FDI), particularly in productive sectors that generate revenue through exports and create employment opportunities.

According to Mahmoud, the crucial aim is ensuring “harmonious” policies between government bodies focused on investment and industry. It is also necessary for the economic group of ministries to work together to establish a coherent and stable set of priorities for manufacturing and exports.

In the long term, the government should consider legislative amendments that address the high production costs of certain local goods due to the imposition of double duties, rendering the cost of importing these goods more economic than producing them domestically.

The legislative amendments should incorporate a clear and updated definition of the production inputs that are exempted from customs duties when imported.

In mid-January, the Engineering Industries Export Council reported an eight per cent growth rate in engineering exports in 2023 compared to the previous year to reach $4 billion. The council aims for a growth rate of 20 per cent in 2024, or $4.8 billion worth of exports.

Council chairman Sherif Al-Sayad said surpassing the $4 billion target for exports for the engineering industries sector was unprecedented. Although the 2023 growth was lower than planned, owing to regional crises extending from the Gaza war to disruptions in the Bab Al-Mandab Strait, the accomplishment stands as a remarkable success amid logistical challenges, he added.

Al-Sayad attributed the growth in 2023 to many Egyptian factories increasing the percentage of products directed to export markets from their overall production from 20 per cent to 30 per cent. This had enabled them to increase their dollar revenues as a means of guaranteeing having enough dollars to pay for imported production inputs and sustain production rates.

To achieve the targeted 20 per cent growth in 2024, the availability of dollars is a must, he added. He acknowledged the challenges involved, noting that while the state may not be able to provide enough dollars at the official exchange rate to all manufacturers, companies that have increased their export share could benefit from such support.

“As per our economic analysis of the sector, about 50 per cent of production inputs are imported in greenbacks, but the revenues of exporting these goods is almost double the cost. This means that in return for every dollar provided by the state to exporters in the sector it receives two dollars back,” Al-Sayad said.

“Despite the regional challenges, Egypt’s home-appliances manufacturing sector remains highly attractive, presenting opportunities to attract direct foreign investment. In 2023, Indian, Chinese, and Turkish companies ventured into the sector, for example,” he concluded.

* A version of this article appears in print in the 8 February, 2024 edition of Al-Ahram Weekly