22 November 2017 07:39 AM

Economic harvest 2015

Thursday، 07 April 2016 - 02:08 PM

Introduction

Despite the economic challenges that is currently facing Egypt, public debt and unemployment, yet the noticeably improving Egyptian economy had compelled the economic international institutions to change Egypt's credit rating from "stable" to "positive".

 

Egypt is rich in traditional, new and renewable wealth, on top of which is the human wealth, besides the natural, oil and mineral resources, not to mention the great investment opportunities along its shores that extend at a total length of 995 km along the Mediterranean Sea and 1941 km along the Red Sea, in addition to the Nile that extends at a total length of 1532 km and its delta that constitutes a triangle of the most fertile agrarian lands.

 

The results of the Economic Conference which was held in Sharm al-Sheikh (March 13-15, 2015) with an unprecedented international participation (100 countries and 25 international organizations) is the best proof on Egypt's growing status. During the Conference, several investment contracts and agreements and understanding memorandums, including the new administrative capital, in addition to petroleum and gas production agreements, and other projects in the fields of infrastructure, among others, have all been signed.

 

Furthermore, investment agreements in the field of electricity (traditional and renewable sources) and of increasing the natural gas production at a total value of $ 32.2 billion have been signed. The Conference also succeeded in attracting Gulf grants and assistance at a total value of $ 12.5 billion and in signing preliminary agreements at a total value of U$ 89 billion, supposed to be translated to local and foreign investments in energy, transportation, logical support and real estate development projects, in addition to other political sectors of the Egyptian economy.

Thereupon, housing project contracts in New Cairo and 6th of October City have been signed (May, 21/22, 2015) with a total value of LE 90 billion, thus creating around 25,000 direct job opportunities that raised Egypt's credit rating from "stable" to "positive". Such a new momentum represented in the investment agreements of the national economy is supported by a series of mega national projects, on top of which are: Suez Canal Axis Development, the Golden Triangle, North-West Coast Development Project, National Roads, Logistics Center for Grain Handling in Damietta Port and the Million Feddan, in addition to other projects that contribute to creating real job opportunities for youth.

The state is adopting a developmental philosophy that is mainly based on realizing social justice in its full concept. In this respect, a modern mechanism has been applied so as to assure that the subsidy would reach those who deserve it through implementing the new Bread System and the Fuel Smart Card. Furthermore, LE one billion has been allocated to developing the squat areas and the random markets. The state had also started implementing the Most Needy Villages Project (1153 villages) and the eco-friendly villages.

 

The government had launched the Karama or "Dignity" and Takaful or "Solidarity" Programmes. Karama offers a monthly salary for people of special needs who can't work while Takaful Programme is applied on families with children in schools and live in in-active economic zones with limited job opportunities. Total amount of money dedicated for both projects reached LE 5.6 billion for the benefit of 0.3 million families. Furthermore, the National project for Societal, Humanitarian and Local Development Project entitled "Youth Project" has been launched.

 

The state is currently working on applying an integrated system for Health Care for the benefit of more than 50 million citizens. It is also working on including farmers and peasant workers in the health insurance system, in addition to organizing national campaigns for vaccination and combating infectious diseases such as the Hepatitis C and Poliomyelitis. 

 

Tangible efforts are also exerted in order to ensure that fundamental services would reach the citizens, on top of which is the electricity. This should be done through a plan that aims at generating 6832 megawatt. In this vein, al-Ain as-Sokhna Power Station was inaugurated on May 7, 2015 with a total capacity of 1300 megawatt and an investment cost of around LE 9.6 billion. Furthermore, Ataqa Station will enter into service in July 2015 with total investment of US Dollar 460 million.

 

Efforts are further exerted to expand the underground metro network. Since its establishment in 1987, two and a half lines have been constructed with total lengths of around 87 km. Moreover, such a project has been egyptianized where Egyptian construction companies implement the fourth phase which will be extended at a total length of 18 km underground.

 

Egypt is currently witnessing an active development and modernization to the railway and bridges network so as to link all governorates. In this respect, around 3200 km from the National Roads Project has been implemented; around 45% of the project which is expected to be fully implemented by next August, including the Regional Ring road which links more than 20 governorates. Such projects will be implemented concomitant with the New Administrative Capital Project.

 

Moreover, the state did not ignore the other rights, on top of which are the cultural rights. In this respect, Egypt is establishing cultural palaces all over the governorates; an important project in this respect is Ahalina or "Our Peoples" so as to reach, through cultural caravans, the culturally deprived areas and villages.

There are also various tangible achievements and promising initiatives on various levels, including the manufacture of the first Egyptian armored vehicle according to the state-of-the-art systems, the establishment of a Technology Complex in North Sinai so as to support the technical education in various govenorates, the Fish Farming Project and a national project to plant 100 million olive trees.

Economic Indicators

Economic indicators revealed the improved performance of the industrial sector during 2014, including: the industrial growth rate rising to 6.9% in the third quarter of the fiscal year 2013/2014, and the increase of industrial investments by 55% and direct foreign investments by 89% within 9 months of the fiscal year 2013/2014 compared to the same period of the previous year. Furthermore, the number of industrial approvals issued by the Industrial Development Authority during the period from June to November, 2014 reached 1257 approvals, of which 836 are final approvals at an investment cost of up to L.E 15535.9 and allow 33 134 direct jobs; and 421 approvals for expansions at an investment cost of up to L.E 23420.5 and allow 36 927 direct jobs.

Among the other economic indicators:

§  The total number of establishments registered by the Industrial Development Authority reached 3248 companies, of which 706 are under registration for the first time and 2316 are renewing their registration and 226 are modifying their status, during the period from June to November, 2014.

§  3557 units were housed in small industrial complexes until the end of November, 2014 out of 3663 complexes and the remaining are 106 units that will be housed during the next phase.

§  The completion of most grids in Al-Motawareen areas, the first phase, in addition to the completion of 55% of the networks in the second phase.

§  Modifying schemes of two companies (Polaris Al-Zamil - Industrial Development Group) in 6th of October City in Phase II.

§  3 Egyptian companies in the field of food and textile industries, and petrochemicals sector have won the first place in the Arab Quality Award.

Mechanisms to Attract and Stimulate Investments

Many decisions have been taken to attract and stimulate domestic, Arab and foreign investments, including:

·        Starting the application and usage of new and renewable energy technologies, particularly solar energy in cooling and heating processes in the industrial sector and trade establishments in cooperation between the Council of Industry for Technology and Innovation under the Ministry of Industry and the United Nations Industrial Development Organization (UNIDO) at a cost of $ 6.5 million funded by the Global Environment Facility. The project aims to stimulate and encourage the various industrial and commercial sectors on the application of new and renewable energy technology, as well as deepen the domestic manufacturing by using systems and components of solar energy.

·         Reviewing legislative frameworks and the development of the necessary incentives to design innovative funding packages to encourage the establishment of new projects in the field of solar energy usage and the introduction of modern technology through holding partnerships between Egyptian and foreign companies.

·        The completion of the integrated industrial map that aims at conceptualizing the industrial production in each region, and is associated with inputs and capabilities of manufacturing.

·        Approving of the allocation of L.E 240 million to fund programs and projects implemented by the Industrial Training Council during the fiscal year 2014/2015.

 Development Programs

  1. Industry Modernization Program:

It Includes supporting troubled factories (that reached 672 factories), and increasing the competitiveness of small and medium establishments, the development of value-added chains, strengthening the partnership and international relations, and the establishment of industrial and professional gatherings with active and dynamic roles.

2. Relocation of Old Cairo Tanneries:

Through the creation of a city that attracts national industry by promoting the transition of old tanneries existing in Magra Al-Oyoun area to the new city in Robeiky, in order to develop tanning and leather industry and increase the value-added of the Egyptian product and develop it in order to achieve competitiveness in global markets with investments reaching L.E 5.8 billion for the three stages of the project.

3. Technological Centers:

They aim to provide specialized training programs and help companies through providing technical consultancy; as well as modern and innovative designs and increasing the value-added and competitiveness; and meeting the technical needs of various industries.

4. The Project of Reforming Technical Education and Vocational Training:

The project is based on the framework of the European-Egyptian cooperation and the Euro-Mediterranean Partnership (MEDA) in order to contribute to increasing the competitiveness of Egyptian factories in the domestic markets, through the formulation and implementation of a national reform policy for technical and vocational education and training. The project is working on establishing a network of partnerships among sectors that are guided and led by the related partners from industry sector and specialists of technical education and vocational training in a decentralized way (establishment of, at least, 12 partnerships among sectors at the level of the Republic) and a number of local partnerships in governorates and industrial areas.

New Projects

During 2014, the Ministry of Industry recorded the approval of several new projects, where it completed the preparation of the general report reviewing the technical evaluation of the three companies that applied for the preparation of the master plan for the Golden Triangle project the nationalities of which are: Italian, American and English. Moreover, the Ministry completed the establishment of a new factory for LG Electronics in Tenth of Ramadan for the production of 1.5 million TV sets and 500 000 electric washing machines. Furthermore, the Ministry established a new project for TCI Sanmar for the establishment of a marine terminal at Al-Gameel Port in Port Said to unload ships carrying imported Ethylene. In addition, the Ministry approved a project of Al-Qanah Company for Sugar at a cost of $ 550 million in Minya Governorate for the cultivation of sugar beet on an area of 150 000 feddans.

Among the most important projects that have been approved was the inauguration of the newest factory for the production of fiberglass at Chinese investments of $ 235 million, and Betty Company begins pumping L.E 4 billion of new investments in the Egyptian market. Moreover, implementing has started of a project to deepen domestic manufacturing of leather tanning equipments for the support and development of the tanning sector and the creation of a new Egyptian high quality products in collaboration among each of the Industry Council for Technology and Innovation of the Ministry of Industry, the National Authority for Military Production and the Faculty of Engineering, Cairo University. Furthermore, the preparation of a comprehensive vision for the development of Safaga Mining Port to become an industrial port through which high value-added products can be exported. The vision also includes the establishment of storage and handling areas and industrial areas for the manufacture of mineral raw materials and food products.

Job Opportunities

The industry sector has provided various work opportunities, including: launching forums for employment and rehabilitation in the governorates of Minya, Dakahlia and Giza in collaboration between the Board of Industrial Training, the Ministry of State for Youth and Sports. The 3 forums allow 20 000 real job opportunities for youth job seekers of holders of medium and higher qualifications in 100 companies representing various industrial sectors. Furthermore, an Egyptian -Arab Emirates Agreement was signed to train and rehabilitate 100 000 young men and women to the labor market with a finance of L.E 250 million. Moreover, a new forum for recruitment to provide 16 000  job opportunities for young people in Cairo, Giza, Qaliobia and Tenth of Ramadan, as well as the graduation of 446 trainees from the first batch of a craftsman program in collaboration with the UAE.

Furthermore, 148 543 jobs were provided during the fiscal year 2013/2014 in food, engineering and chemical industries, garment and textile, printing and construction and building materials, leather, wood, tourism, telecommunications, and commercial, agricultural, mineral and services sectors. A new vocational training center has been established in "Beni Suef" that receives the first batch of graduates of preparatory schools in 2014. A protocol of cooperation was signed between the Ministries of Industry and Military Production for the training and employment of 10 000 job seekers to be qualified according to the needs and requirements of the labor market. The Protocol includes providing a fund of L.E 20 million from the Industrial Training Council to provide trained technical manpower in various productive sectors, and providing a loan of $ 25 million from the Saudi Islamic Bank for the development of vocational training centers in Egypt, including the rehabilitation of nine training centers and equipping of 16 centers according to international standards.

Among the most significant employment opportunities, the Ministry of Industry takes over providing technical trained workers to meet the needs of the project of the Suez Canal Axis, starting the first training course in the field of equipments used to dig the Canal  in cooperation with Port Said Governorate and allowing 500 training grants for the operation of the various port equipments, studying the introduction of new careers for vocational training centers in Port Said and Suez in the field of maintenance of marine diesel engines, and underwater welding, and announcing the start of the implementation of the convoys for youth employment in various governorates of Egypt. The first convoy begins with  Qaliobia Governorate and allows 5000 job opportunities for the people of Kafr Shukr, and signing a protocol of cooperation between the Council of Industrial Training and the Ministry of Interior to train 4000 recruits on industrial trades, construction works, and rehabilitating them to the labor market after the end of the period of recruitment, the completion of the employment of 6000 youth of Qaliobia Governorate through two convoys of the Industrial Training Council, which launched the National Program for Social and Economic Empowerment of Egyptian Woman, the program targets the participation of woman in making a better future for Egypt during the coming phase.

The Performance Indicator of the Manufacturing Sector

The Industry Sector in Egypt contributes fundamentally in spurring economic growth, providing job opportunities and increasing export earnings.  

 

The sector contributed in about 15.5% in the expected economic growth in 2013/2014   

Activity (in L.E million)

Number of Establishments

Value of Production in L.E million

Investment Costs in L.E million

Number of Laborers

Wages in L.E million

Plant and animal production

22

245.7

194.62

1783

10.5

Coal extraction and processing

3

801.64

626.21

1244

18.38

Oil and its refining and products and natural gas

14

30212.4

46184.62

19417

476.23

Exploitation of mineral ores

2

137.11

237

882

9.51

Exploiting mining and quarries

51

300.86

476.69

6421

52.98

Food and beverages and tobacco

7219

173387

98568.01

329246

3428.12

Textiles, apparel and leather

7329

74381.76

47225.65

505512

3600.82

Wood and its products

2849

7153.84

4088.98

40248

312.06

Paper, its products, and printing and publishing

1953

15735.22

18182.82

79828

795.31

Basic chemicals and its products

4417

144940.04

121966.02

252276

4831.47

Building materials, ceramics, porcelain  and refractories

2423

52449.5

69582.5

162631

2448.94

Basic metals

706

85886.38

63729.24

84680

1775.83

Engineering, electronic and electrical industries

6680

194920.7

95707.85

331656

4074.44

Other manufacturing industries

595

28432.01

7952.47

9068

64.3

Production and distribution of lighting electricity and power

34

8915.69

39232.59

20726

389.1

Service and maintenance centers

84

107.23

521.78

3061

21.28

Total

34381

818007.3

614477.06

1848679

22309.29

The gross domestic product (GDP) of non-oil manufacturing industries has reached L.E 281.7 billion in 2013/2014, and it is targeted to increase the GDP to about L.E 333.4 billion in 2014/2015 at a real growth rate of 3.2%. The manufacturing industries accommodate about 14% of the employed and this ratio is considered low if compared to the capabilities of the industry sector, and what is expected from it in terms of employment. The estimated number of laborers in 2013/2014 is about 1.8 million.

Contribution of Small and Medium Enterprises in the Egyptian Economy:

Small and medium enterprises are considered the backbone of the development of the economies of both developed and developing countries. This happens through their contribution to employment and providing opportunities for training. Thus, these projects raise the capabilities and skills of a huge segment of the community, improve the level of production and contribute to the gross value-added, and provide goods and services, and work on increasing the income levels. Furthermore, it is an effective way to direct the small savings to investment as well as being related to all branches of other industries in the economy.

Small and medium enterprises (including micro enterprises) form about 90% of the establishments in the world at employment rates ranging between (50% -60%) of the global workforce.  According to the importance of these projects and what they proved of ability and efficiency in dealing with the major problems facing the various economies, many experts and economists see it at the moment not only as a lifeline to get rid of the effects of the global financial crisis but also as the locomotive of economic growth in Egypt in the coming decades.

Small and medium enterprises play a significant economic and social role in the Egyptian economy, according to official statistics:

·        Small and medium enterprises, which employ less than 50 laborers, represent about 99% of the total number of establishments that operate in the private non-agricultural sector.

·         Small and medium enterprises sector contributes by at least 80% of the total value-added.

·        About 2 / 3 of the labor force in the private sector as a whole, and about 3 / 4 of the labor force in the private non-agricultural sector work in the small and medium enterprises sector.

·         Despite the importance of small and medium enterprises in the Egyptian economy, the rate of their contribution to the total Egyptian exports is not equivalent to other countries as it does not exceed 4% (as direct exports) compared to 60% in China, 56% in Taiwan, 70% in Hong Kong and 43% in Korea because most of which are industries that feed large-scale industries.

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