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Egypt may be best known for its impressive pyramids and colorful history, but it is also known as the most attractive African country for investment and one of the most developed in the Middle East/Africa, with a gross domestic product of $298 billion in 2018 achieving 5.3% growth, projected to be 5.9% in 2019. Like many larger countries, the economy is dominated by the service sector (54 percent), and agricultural sector (12 percent), but it is also known for its industrial sector (34 percent) that achieved 6.3% growth in 2018 & provided significant employment contributed to reach the lowest level of unemployment rate since 2011.The apparel sector plays an extremely important role in the Egyptian economy and it has seen a rebound and a new spurt of growth in recent years. Egypt has more than 2,500 apparel factories and it is considered to be the first sector in terms of labor force, which recorded 1.5 million workers, 50 percent of which are women.With about $1.6 billion exports in 2018, the apparel sector is the country’s most important industrial sector; it represents 6.5 percent of total non-petroleum exports.Apparel exports reached $1.604 billion for 2018 compared to $1.459 billion in 2017, achieving a rise of 10 percent of which 50 percent of the apparel production was exported to the U.S. and 30 percent to Europe.
Egyptian apparel sector enjoying many advantages
• International Trade Agreements:The U.S. is the main export destination for the Egyptian apparel industry. Apparel createdwithin the Egyptian Qualified Industrial(QIZ) Zone are duty free to the U.S. Under the protocol, goods made in Egyptian QIZs can use fabric imported from third countries and remain eligible for duty-freeentry into the U.S. market, provided 35% of their value is added in Egypt, including a minimum of 10.5% of Israeli content.
Egypt also enjoys duty-free market access to the EU with a double transformation rule of origin. With its fabric base and sourcingproximity to Turkey, exports to the EU are likely to increase.
• Vertical integration and a developed infrastructure:Egypt’s textiles and clothing sector is the most integrated on the African continent. The country offers a well-developed infrastructure and is investing more than $15 billion in roads, electricity networks and irrigation projects, including15 marine ports. Egypt is also the largest producer of Extra-long- staple cotton in Africa.
• Proximity: Egypt offers shorter routes to the U.S. than Asian ports (12 days compared to over a month). Egypt also provides easy access to markets in Europeand Africa.Egypt is an intercontinental country, with multiple ports and facilities giving it a strategic advantage for exports to the U.S. and the EU.
• Egyptian Apparel Factories:Egypt is a sourcing hub for a large variety of apparelproducts. The region offers ethical, sociallycompliant factories with export experience.The supply chain is vertically integrated.Many companies are certified by Wrap, ISO and OEKO-TEX.
• Competitive factor costs: Egypt offers a large, cost-effective, skilled labour force.Labor costs are low in Egypt, with minimumlabor wages of $115, compared to competitors like China, Cambodia, India, or Vietnam.Electricity costs around 7 cents a kilowatt-hour compared to three to four times that amount in China.
