Interview: Tarek Kabil
What segments do you expect to be the main drivers of growth for the manufacturing sector?
TAREK KABIL: The authorities are putting an emphasis on four main manufacturing segments, namely chemicals, textiles, building materials and engineering, putting in place a strategy to deepen local content. There are strong programmes in place, aimed at boosting the feeding activities of the chemical, textiles and engineering segments. The strategy for the building material segment is slightly different, emphasising energy efficiency measures to increase competitiveness.
How has the flotation of the currency affected the country’s manufacturing industries?
KABIL: Prior to the currency flotation, Egyptian authorities had engaged in a series of economic reforms throughout 2015 and 2016 with the objective of rationalising the imports of low-quality products that were causing unfair competition for local industry and costing a significant proportion of the foreign currency. As a result, the country has been able to reduce its deficit by $7bn in 2016 and $12.5bn in 2017, combined with a drop in imports by $15bn and an increase in exports by $4bn. The currency flotation is of course expected to encourage import rationalisation as well as give a strong edge to exports in 2017. One of the reasons why exports have not been growing as much as expected is that production has primarily been directed toward filling the gaps within the local market. The currency flotation has helped exports to be increasingly competitive in international markets, and we should see the trade balance continue to improve over the coming years.
How has the government facilitated access to industrial land over the years?
KABIL: In recent years, the government has made great efforts to increase the supply of industrial land as a way of boosting manufacturing activities. Between 2016 and 2017 a total of 28.5m sq metres were supplied (11m sq metres in 2016 and 17.5m sq metres in 2017), compared to the combined 9.5m sq metres between 2007 and 2015. Simultaneously, the government has rolled out a strategy to transform the existing fragmented industrial zones into structured and integrated clusters. Four main clusters have been recently completed: leather, furniture, textiles and chemicals. These new clusters offer a plug-and-play system with all the necessary equipment and utilities made available. These clusters also include research and development centres to facilitate access to new technologies and innovation for small and medium-sized companies. This new ecosystem is meant to encourage the development of feeding players around traditional manufacturers as a way to extend the scope for locally made industrial components and add value.
What measures are being taken to enhance the vocational training segment?
KABIL: Egypt boasts one of the largest and most affordable pools of skilled labour at a global level. In 2016 about 1880 teachers and facilitators were trained and around 90 vocational schools – most of them close to the new clusters – have been built or refurbished. Initiatives have been carried out to include the private sector in vocational training provision.
There are now two vocational training centres operating in partnership with the private sector, including one for the automotive industry and one for the chemical industry. In these two centres, some improvements have been seen in terms of equipment, the overall curriculum and teacher training, which have helped lift standards for the training of mechanical and electronic technicians. Other initiatives in partnership with the private sector include our partnership with Siemens, which is aimed at boosting digitalisation amongst white collar workers. Egypt also has a €118m programme, co-funded by the EU, aimed at enhancing the technological, vocational education and training segment.
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