Industry & Retail
From The Report: Egypt 2014
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The manufacturing industry is a central part of Egypt’s economic engine, producing goods for the huge domestic market and for export across the world. Manufacturing industries accounted for 15.6% of GDP in the fiscal year 2013 (July 2012-June 2013). The sector was affected by the difficult post-revolution period, but as of 2014 the outlook seemed more positive. The sector’s recovery has been supported by a more favourable global economic climate, as well as by a return to greater stability following the presidential elections in early 2014. While the domestic market is the primary focus for many investors, Egypt’s relatively low costs, decades of experience in many sectors and skills base all make it an attractive location for production for export. Egypt has benefitted from particularly strong trade ties with Europe and the Middle East, but is now also turning its attention to Africa and Asia. Egypt’s retail market has continued to expand despite the economic and political challenges of the past few years, though consumer spending patterns have shifted in some areas towards lower-cost goods. Household retail spending was worth about $90.3bn in 2013, according to the General Authority for Investment and Free Zones, and is expected to keep rising at a steady clip over the next few years. Modern retail outlets are taking an increasing share of the market, benefitting from an expansion in dedicated commercial space, although traditional retailers – and indeed the informal sector – will continue to account for a large portion of Egyptians’ spending.

This chapter contains interviews with Mounir Fakhry Abdel Nour, Minister of Industry; Raouf Ghabbour, Chairman and CEO, Ghabbour Auto; Mark Duffelen, Regional General Manager, Xerox Middle East and Africa; and Basil El Baz, Chairman and CEO, Carbon Holdings.

Articles from this Chapter

Overview

The sector is recovering thanks to a more favourable economic climate
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The most populous country in the MENA region has not only its second-biggest economy, but also one of its most diversified. The manufacturing industry is a central part of Egypt’s economic engine, producing goods for the huge domestic market and for export across the world. The sector was affected by the difficult post-revolution years, which slowed domestic market demand growth, disrupted supply chains and compelled some investors to delay plans. But as of 2014, the outlook seems more positive,…

Interview

OBG talks to Mounir Fakhry Abdel Nour, Minister of Trade and Industry
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Interview:Mounir Fakhry Abdel Nour What is the biggest obstacle to further development that the industrial sector faces in Egypt? MOUNIR FAKHRY ABDEL NOUR: The severe energy crunch, which started in 2009, is the major challenge for industrial development. Unfortunately, we are paying the price today. This is precisely why it is a top priority for Egypt to increase production of oil and gas, as well as develop renewable energy. To mitigate this situation, we are using short-term solutions…

Interview

OBG talks to Mounir Fakhry Abdel Nour, Minister of Trade and Industry
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Interview:Mounir Fakhry Abdel Nour What is the biggest obstacle to further development that the industrial sector faces in Egypt? MOUNIR FAKHRY ABDEL NOUR: The severe energy crunch, which started in 2009, is the major challenge for industrial development. Unfortunately, we are paying the price today. This is precisely why it is a top priority for Egypt to increase production of oil and gas, as well as develop renewable energy. To mitigate this situation, we are using short-term solutions…

Analysis

Locating manufacturing in the country makes commercial sense for many large automotive companies
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Unsurprisingly, given its comparative advantages as a manufacturing hub and its sizeable consumer market, Egypt is the third-largest car manufacturing country in Africa, after South Africa and Morocco, according to the International Organisation of Motor Vehicle Manufacturers (OICA). The automotive manufacturing sector has a range of major international brands present, as well as a growing components industry. Many international names have established facilities in Egypt, often with local partners,…

Interview

OBG talks to Raouf Ghabbour, Chairman and CEO, Ghabbour Auto
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Interview:Raouf Ghabbour To what extent would improved financing boost retail sales for new automobiles? RAOUF GHABBOUR: Financing options are available through banks, consumer finance companies, microfinance or financial leasing companies. The foremost obstacle to increased sales has been the lack of stability in the country, which translates into employment insecurity. The events that have taken place since 2011 have created an environment of political uncertainty that extends to the sphere…

Interview

OBG talks to Mark Duffelen, Regional General Manager, Xerox Middle East and Africa
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Interview:Mark Duffelen How challenging is it to establish viable innovation centres in emerging markets? MARK DUFFELEN: The role of innovation in emerging markets is to develop solutions and services that are relevant to those markets and to contribute to wider growth. Having the infrastructure and capability to give clients in emerging markets access to critical resources – such as infrastructure and expertise across the entire value chain, including design, integration, testing and proof…

Analysis

Producers of fast-moving consumer goods are benefitting from rising demand in the country and the wider region
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With a population of close to 90m, Egypt is the biggest consumer market in the MENA region and one of the largest emerging markets in the world. While average incomes are still fairly low – Egypt’s GDP per capita, according to the World Bank, reached $3314 in 2013 – the country presents a huge opportunity for manufacturers of fast-moving consumer goods (FMCGs). FMCGs encompass packaged goods that tend to be low in price and sold quickly, including soft drinks, processed food, toiletries, over-the-counter…

Interview

OBG talks to Basil El Baz, Chairman and CEO, Carbon Holdings
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Interview:Basil El Baz How challenging is it to secure financing for major infrastructure and industrial projects? BASIL EL BAZ: Egypt will very likely be embarking on a number of mega-infrastructure deals, in the form of highways, toll roads, railways, water desalination facilities, power plants and ports; these projects are likely to be financed by domestic or regional banks. Since the global financial crisis, access to financing has been complicated, to say the least. The methodology has…

Analysis

Industry is exploring alternative energy sources
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For decades Egypt has been a significant energy exporter and one of the MENA region’s largest centres for manufacturing, with the latter having traditionally benefitted significantly from the former. Sizeable reserves of natural gas and crude have allowed the country to provide energy at low prices to large industrial consumers, such as steel and cement producers. However, with energy prices rising due to reductions in government subsidies and increasing domestic consumption, energy-hungry industrial…

Analysis

Although the short-term outlook is challenging, investment is planned to meet future demand for steel
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Heavy industry has been one of Egypt’s traditional stalwart sectors, with a lineage dating back decades and several large capacity facilities, and nowhere is this more evident than in steel. Egypt produced 6.8m tonnes of steel in 2013, up from 6.6m tonnes in 2012 and 6.5m tonnes in 2011, and nudging it up to the word’s 23rd biggest steel producer, from 24th and overtaking the Netherlands, according to “World Steel in Figures 2014”, published by the World Steel Association. Egypt also produced…

Overview

Consumer spending patterns shift as the country returns to stability
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A large and growing population, restored economic growth and low penetration all make Egypt’s retail market a strong prospect for investors. Household retail spending was worth about $90.3bn in 2013, according to the General Authority for Investment and Free Zones (GAFI), a state agency, and is expected to keep rising at a steady clip over the next few years. Modern retail outlets are taking an increasing share of the market, benefitting from an expansion in dedicated commercial space, although…