Productivity levels in Egypt’s manufacturing sector could do with improvement, according to the “Productivity Review of Egypt: Focusing on the Manufacturing Sector” report recently released by the Organisation for Economic Cooperation and Development (OECD).
According to the report, in 2010 Egypt’s manufacturing productivity was equivalent to 90 per cent of the OECD average, but it had dropped significantly to 66 per cent by 2023. The report, which compares Egyptian manufacturing firms with firms in OECD countries, is one of the outcomes of the first phase of Egypt’s country programme with the OECD.
In order to improve productivity, the report’s recommendations include improving workforce skills, especially through continued investment in vocational education and training systems and better access to finance for small and medium-sized enterprises (SMEs).
Existing and future support initiatives by the Central Bank of Egypt (CBE) and other institutions should be better targeted to help productive firms grow is another recommendation, as is intensifying efforts to reduce informality in the business sector. The report also recommends better integration and cooperation with foreign firms so Egyptian companies can benefit from knowledge and technology spillovers.
The manufacturing sector is a key contributor to the Egyptian economy. It represented 15 per cent of value added in 2023, says the report. However, that figure was 20 per cent in 2010, and it is also lower than in some peer countries, such as Jordan and Turkey. Manufacturing is also important for job creation. The report says that it accounted for 12 per cent of employment in Egypt in 2024.
Egypt’s country programme with the OECD, inked in 2021, has been used as a policy tool to support the exchange of expertise, the implementation of structural reforms, and closer alignment with international policy frameworks.
The programme involves five pillars of cooperation: inclusive and sustainable economic growth, innovation and digital transformation, governance and anti-corruption, statistics, and sustainable development. Within these five pillars, it includes a list of 35 projects as well as a coordination function to ensure that the programme is implemented and monitored effectively.
It also supports the regional work of the OECD in the Middle East and North Africa (MENA) region, such as the MENA-OECD Initiative on Governance and Competitiveness for Development, which is co-chaired by Egypt.
Ten reports were launched at the conclusion of the country programme offering policy advice on everything from the investment climate to improving spending policies, policies for farming, women’s empowerment, and the governance of public investments.
The “Business Dynamics Review of Egypt”, part of the Egypt-OECD programme, highlights urgent priorities to unlock private‑sector‑led growth.
Chiara Criscuolo, head of the Productivity, Innovation, and Entrepreneurship Division at the OECD, wrote on her Linkedin page that the inclusion of Egypt in the OECD Dynamic of Employment (DynEmp) database, which collects information on employment dynamics and productivity across countries, showed that in 2023 Egyptian firms that have not been around for more than two years represented 15 per cent of firms in manufacturing and 18 per cent of firms in services.
They accounted for eight per cent and 13 per cent of employment, respectively, exceeding the OECD average. But Criscuolo lamented that 70 per cent of these young manufacturing firms and 58 per cent of services firms were informal, limiting their growth potential.
She said the report highlights urgent priorities to unlock private‑sector‑led growth including speeding up licences and permits, supporting SMEs to scale up in an economy marked by a “missing middle” and where micro and large firms account for 74 per cent of manufacturing jobs, and strengthening support for women‑owned businesses, which represent just four per cent of manufacturing firms.
Innovation was also among the issues tackled by the reports. Encouraging innovation among firms could play a major role in raising productivity growth in Egypt, according to the OECD “Productivity Review”.
It says that Egypt’s spending on research and development (R&D) reached one per cent of GDP in 2023, below the three per cent average of the OECD in 2022 but higher than in peer economies such as Tunisia, South Africa, and Vietnam. However, the report says that Egypt has relatively low levels of intellectual property activity including patents, trademarks, and industrial designs, compared to peer countries.
The report recommends increasing private-sector R&D spending through measures such as expanding tax credits for R&D, providing R&D subsidies, and encouraging joint research projects between companies and universities.
Expanding its focus on innovation, the OECD “Review of Innovation Policy” report says that Egypt has built strong foundations for innovation. It says that Egypt is one of the MENA region’s largest startup ecosystems. Three of its private startups are valued at over $1 billion. It also has the highest number of venture capital deals in the region.
Despite this strong foundation, real opportunity lies in infusing innovation across the economy, the report says, noting that achieving this will require spreading R&D and tech adoption beyond start-ups into SMEs and established firms.
It highlights the importance of actions towards stronger science, technology, and innovation data for evidence-based decisions, wider diffusion through university to industry links and clusters, and developing and retaining talent.
“Egypt has strong foundations in science, technology, and innovation,” Jerry Sheehan, director for Science, Technology, and Innovation at the OECD, wrote on his Linkedin page. He said Egypt has “highly cited scientific research, leadership in venture capital across the MENA region, and a robust start-up environment, with three unicorns to-date.”
In addition, Sheehan said Egypt has positioned itself as a regional leader on artificial intelligence (AI), co-chairing the African Union AI Working Group and helping to align continental frameworks with OECD AI principles.
What is needed next based on the various OECD reports, according to Sheehan, is “extending support to business innovation beyond startups to widen the basis for productivity growth across the economy and reducing informality.”
The reports highlight the need to ease entry barriers for companies and for “better targeting incentives to help transform entrepreneurship into a powerful engine of employment and productivity,” as well as the effective implementation of existing strategies for AI and innovation.
“Egypt has the strategic foundations in place and must build on them now through coherent, forward‑looking reforms that deliver inclusive and durable growth,” Sheehan said.
* A version of this article appears in print in the 14 May, 2026 edition of Al-Ahram Weekly.
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