Historical books show that ancient Egyptians engaged in industrial activities, specially after discovering mining activities. They extracted minerals such as copper, silver and gold. They succeeded in smelting and making minerals.

 

They were famous for a number of industries such as making machines, agricultural cools, and military equipment. They excelled in making artifacts setting with precious stones. The monuments displayed at museums point to the accuracy of the ancient Egyptian craftsmen and the beauty of their fine artifacts. The most important industries that flourished in ancient Egypt were textiles, dyeing, paper,cooking oil squeezing and shipbuilding.

 

Egypt was known for ages as an agricultural country and the governors never paid attention to industry till the beginning of 19^th Century. Egypt witnessed a huge industrial revival when Muhammad Ali created a great industrial base including textile, sugar,cooking oil squeezing, rice mills and the military industries were flourished. A shipyard and factories for preparation of chemical materials were established. The industrial revival declined during the following periods till the end of World War I.

 

Banque Misr founded in 1920 with Egyptian capital led a campaign to revive the Egyptian industry. The bank succeeded in establishing an industrial base that included a chain of great companies and factories which succeeded in establishing an advanced Egyptian industry.

The Egyptians adopted the slogan of “the Egyptian product” for Egyptians which succeeded in protecting the Egyptian products.

 

The July 1952 Revolution came to complete the march by launching a number of pioneering heavy industry projects such as iron and steel, mining, petroleum, chemical, spinning and weaving and food industries.

The period from 1967 to 1973 negatively affected, the performance of the industrial sector caused by war and revived again after the 1973 October  war victory. The open-door economy policy was actively embraced.

 

On the path of peace, Egypt began a new stage on the way of industrial development. The motto “Made in Egypt” became a national goal and the industrial sector endeavored to develop the Egyptian product. By virtue of the economic reform policy that started in 1990s of the past century, the role of the private sector increased achieving the industrial development. The industrial sector enjoyed a wide variety of privileges and incentives to investors.

 

At the early beginning of 21^st century, Egypt has started a stage of reviving the Egyptian industry specially after associating industry and foreign and interior Trade under one ministry that assumed the achievement of a major move to the Egyptian economy enabling the Egyptian product to compete as well as modernization of the Egyptian industry within an integrated program that participate in increasing the exports to join efficiently in the World economy, in addition to providing the suitable atmosphere to the industry and commercial activities to encourage the private sector assuming the main role to achieve the economic development.

 

The industrial sector represents an important advanced rank for the national Egyptian economy. It is on the top of the economic sectors due to its participation in Gross Domestic Product (about 17.5% in 2005/06) in addition to its strong interrelation with several productive and service sectors, in addition to its role in developing the foreign trade and improving the balance of payments.

 

The industrial sector's contribution to the Gross Domestic product reached about LE 275.3 billion in 2005/06 (expected) of which the private sector Contributed about LE 223.9 billion-81.3 percent and the public sector about LE 51.5 billion-18.7 percent.

The industrial sector's Gross Domestic Product reached in 2005/06 (expected) about LE 97.8 billion of which the private sector contributed about LE 84.6 billion-86.6 percent and the public Sector about LE 13.1 billion-13.4 percent.

 

Egypt has recently witnessed a marked improvement in the atmosphere of investment due to several elements topped by the republican decree of amending customs tariffs, issuing the new tax law, launching the Great Free Arab Trade Zone Since January 2005, issuing the law of Investment No. 13 of 2005 that aims to facilitate the procedures of investment through establishing the unified services centre, establishing the public Association of Industrial Development that is in charge of the industrial developing policies and responsible for developing the industrial areas which is qualified to attract industrial investment.

 

Within the framework of the new facilities of allocating lands to the investors in the industrial sector, the industrial investment allocated land moved from the Authority of New Urban Communities to the Industrial Development Authority which took important procedures to reduce the prices of land and offer facilities in paying bank and allowed to build on 65% of the industrial investment land instead of 50%. Reducing the prices of land, energy and the low labour cost are main factors to attract foreign investment to build great factories and companies in Egypt.

 

Egypt has 90 industrial areas which are considered the most attractive methods to the investment due to the offered privileges and incentives. The areas allocated to these cities reached about 657 km2 in 2005 spread all over the governorates.

There are seven public free zones in Egypt equipped with utilities and infrastructure. They enjoy the best, incentives, investment privileges, guarantees and tax exemption compared to many countries. These zones are located near ports where 50 percent of their production  must be exported.

 

Investment activity can be conducted in Egypt inside the private free zones provided that the project has actually started its activity, will have satisfied rules specified by the regulations and has generated exports of more than 50 percent of its production.

In 2005/06 the Industrial Development Authority agreed initially on allocating lands for 120 industrial projects with an investment cost of LE 2.7 billion providing about 70 thousand job opportunities, 1,3 million meters are allocated to foreign investors; a number of 22 companies with 21 percent of the allocated areas.

 

The past five years have witnessed a sustainable rise in the total of industrial facilities. They reached more than 27 thousand facilities in 2005 against 24.5 thousand in 2006 with an increase rate 10 percent. The registered facilities in the first half of 2006 reached 2888 facilities.

 

The industrial sector construction is characterized by clear concentration on the micro facilities that represent 70 percent of the small industrial total facilities . They reached 18868 facilities, the small facilities are 5065 facilities with a rate of 19 percent of the total facilities ,the large facilities represent 6 percent of the total facilities .

 

Most of the working industrial facilities are specialized in weaving and textile, ready made garments and leather with a rate of 22 percent .The tobacco, foods and beverages industries with a rate of 20 percent for each.

The total of the investment costs to the registered industrial facilities reached L.E 309 billion in 2005.

 

The huge industrial facilities have achieved 88 percent of the implemented industrial investments .The average facilities reached 6 percent and small facilities reached 4 percent.

The industrial production amounted to L.E 254.1 billion in 2005. The volume of the huge facilities production reached LE 203  billion with a rate of 79.8 percent .The average facilities production reached L.E 25.4 billion with a rate of 10 percent and the volume of small facilities production reached about L.E20 billion with a rate of 8 percent .

 

The programme which has been carried out during 2006-11 aims at encouraging the partnership between the private sector and the bank sector to build one thousand big factories upon international standards or expanding the working factories that their investments are more than LE 15 million.

 

 

 

Targeted	2006	2007	2008	2009	2010	2011	Total
No of factories	90	123	153	180	200	254	1000

 

 The year 2006 has witnessed the implementation of 110 huge factories with an implementation rate of 122 percent within the period January – September/2006.

The number of the new factories that began production reached 62 factories while 48 factories have witnessed expansion with a rate of 43% of the total factories, the investment costs reached LE 5644 million. The new factories are privileged with LE 3599 and the expansions about LE 2045 million. These factories provided 26128 job opportunities, out of them 17197 job opportunities in the new factories with a rate of 65 percent of total employment.

 

The program aims to finance 2000  small and overage projects in the field of industry and productive services that have the ability of quick operation. Their investments rang from LE 5 million to LE 15 million for the overage project and less than LE 5 million to the small one. The number implemented factories during the period January-September/2006 reached 436 projects.

 

Description	Factories started production	Expansions in working factories	Grand total
- The program of 1000 huge factories (LE 15 million and more) - Business market program, average (LE 5-15 million) - Business market program, small (LE 0,5-5 million)	62   57   191	48   54   134	110   111   325
- The total Factories - Total investments (LE billion) - Job opportunities (by thousands)	310 3.4 29	236 5.4 42	546 8.8 71

 

In the framework of Egyptian –European partnership, Egypt began to implement the modernization program since 2002/03. The program aims at increasing the competitiveness of the Egyptian product to integrate the country into international economy. Another goal is creating more job opportunities and increasing the national income due to the increase of industrial exports volume.

 

The modernization program costs 437 million euros, the European Union contributed 250 million euros or 59 percent of the total cost. The program has benefited 430 industrial facilities during the first three years. The Egyptian Modernization Industry Centre has assumed the full supervision on implementing the program since 2005/06. The centre succeeded in implementing the program in 3400 facilities within the modernization plan. The volume of financing to the modernization activity reached 146 million euros during this year, while 145.6 million euros were allocated to finance the Egyptian modernization program during 2006/07 to reach 7300 facilities benefited from the program.

 

The centre of Modernization the Egyptian industry made a protocol to the program of financing industry in cooperation with the Union of Industries and banks to pump LE 70 billion to finance the Egyptian industry to participate in implementing the 1000 factories program during 2005/2011, that participate in rising the industrial growth rate from 5 percent to 9 percent within this period and increase the new direct job opportunities to 1.5 million. The job opportunities increase from 2.4 million to 3.9 million. The industrial exports increase from LE 18 billion to LE 42 billion within the mentioned period.

 

In the framework of the sustainable efforts exerted by industrial sector to support the Egyptian Industrial base and push the Egyptian industrial product to occupy a suitable position in the outer markets, the productivity capacity of a number of basic industries increased at a rate of 25 percent during the past twenty five years. In addition, such new fields as hi-tech and micro-electronic industries were introduced.

 

The Egyptian industrial construction is based on seven industries representing 80 percent of the industrial facilities. The country's three top industries are textiles, food and beverage, Furniture, minerals, chemicals and metallurgy are also major industries.

 

In regard to the distribution of industrial production sector in 2005, it was remarkable that the engineering, electronic and electric industries ranked first with 30 present of the industrial production volume. Then tobacco, foods and beverage sector with 23 percent, the chemical industries with 15 percent and the weaving and spinning, clothes and leather with 10 percent.

 

These are the most important four sector in the Egyptian economy in terms of the number of industrial facilities. Their participation in the total industrial production and their capacity to absorb labor force and wages standard. In 2005 they obtained 78 percent of industrial investments and 79 percent of labours.

 

The volume of production has been regularly growing in many industries. In 2005/06 the spinning and weaving industry reached about 305 thousand tons and 315,1 million pieces of ready-made garments. Construction and building materials plants put out 33060 thousand tons of cement and 4954.9 thousand tons of reinforcement steel and food industry, 1645 thousand tons of sugar.

 

In the polity fodder production 10597 thousand tons. In the fertilizers industry 10810 thousand tons of azotic fertilizers and about 1393 thousand tons of phosphates fertilizers.

 

Ministry of foreign trade and Industry was mandated to emphasize the concept of “quality” as a national motto to the next stage aiming to raise competitive capacity of the Egyptian product, to standardize specifications of industrial products with the international ones and identify the environmental specifications of such products for international demand and for Europe in particular.

 

The ministry succeeded in putting and implementing an integrated plan to revive the quality of the Egyptian products. The Egyptian standardize specifications were identified with the international and European ones a number of 1719 Egyptian specifications were issued to the foods, engineering, chemical spinning and weaving industries. The Egyptian specifications reached 6000.

 

Setting the first electronic map of quality in Egypt and Launching it on the Internet to introduce all the companies that obtained the quality measures and the European safety mark. A national institute for quality established in cooperation with the Arab Academy for Modern Technology.

 

The five years (2001/05) have witnessed a remarkable gradual increase in the total Egyptian exports, the total exports volume increased from $ 4.2 billion in 2001 to $ 10.7 billion in 2005 at a rate of 156 percent. The petroleum exports contributed the greatest share in the volume of Egyptian exports reaching 49 percent of the total exports in 2005.

 

The volume of non-petroleum export increased from $ 2.3 billion in 2001 to $ 4.2 billion in 2005. The Egyptian exports increased to about $ 8.5 billion in May 2006 at a rate of increase 46 percent from the targeted plan of the fiscal year 2005/06, that reflects the true development to the new export methods which were laid by the councils of export and the Council of Developing Exports.

 

The foods industrial sector made a dramatic leap in its exports during the first half of the fiscal year 2005/06 with an increase of 49 percent against the same period of the past year. These exports reached LE 2.127 billion.

The agricultural exports witnessed a remarkable development reaching a growth rate of 54 percent during the last five years. Rice, potatoes and orange make up 61 percent of Egypt's agricultural exports (except of cotton). Non petroleum Communities witnessed a remarkable increase during (2001/05), they increased at a rate of 84 percent to reach $ 3 billion in 2005 against $ 1.6 billion in 2001. Italy topped the importer list of Egyptian products. USA, Italy and Spain rank the first of trade volume with Egypt.

 

* The Ministry of Trade and Industry

* General Authority for Industrial Development, Ministry of Trade and Industry