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China-Africa Trade Information Service
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China-Africa Trade Information Service
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Egypt already has well established manufacturing sub-sectors such as food & beverage, steel, pharmaceuticals, automotive, and is well positioned to become a top destination for manufacturing globally. Its newly-expanded Suez Canal and proximity to Asian, African and European markets, low wages in global terms particularly for those wishing to use Egypt as a base for export-oriented manufacturing, and a similar time zone to the region all make it attractive for businesses. In addition, there are multiple industrial zones and special economic zones (SEZs) across the different governorates offering investors simplified taxation and customs systems.
Food & Beverage
Egypt's food and beverage (F&B) sector is largely driven by the country's rapidly growing consumer base, which has the largest population size across the MENA region. It's the fourth-largest halal food market globally, behind Indonesia, Turkey, and Pakistan. The expected annual increase in population is a strong indicator that there will be a continued demand with a healthy 15% growth in headline food sales being forecasted in 2019. According to Egypt's Export Council for Food Industries, food exports during the first half of 2018 totaled US$1.44 billion, led by frozen vegetables (US$191 million), soft drinks (US$187 million) and cheese (US$139 million). Arab countries accounted for the largest share of the exports of Egyptian food industries by 52%, worth US$753 million, followed by the EU with 15% of total exports (US$213 million).
According to the Egyptian Chamber of Food Industries (CFI), there are over 7,000 food manufacturing companies operating in the country. One example of a company with high level of technology adoption is Al-Nouran Sugar, which established Egypt's first integrated complex for manufacturing sugar from sugar beets. The facility has the largest beet sugar productionline in Egypt at 14,000 tonnes a day capacity.Egypt is home to global F&B manufacturing leaders including Mondelēz, Coca-Cola, PepsiCo and Unilever.
Steel
When it comes to the steel industry, Egypt is a powerful global player, ranked 23rd in the world for crude steel production in 2017 by producing 6.9 million tonnes, a 38% increase from the previous year where it ranked 28th and produced 5 million.
In terms of sales, Egypt heavily relies on rebars as those account for around 80% of all steel sales. As it's a fundamental part of almost all other industries which encourage economic growth, such as infrastructure, automotive, consumer goods and construction, the steel industry will continue to be one of the cornerstones of Egypt's economic growth.
In terms of future prospects for the Egyptian steel industry, there's an expected rise in demand for building materials to support the many planned megaprojects to be launched by the government to achieve their SDS: Vision 2030 targets. An example of such a megaproject is their plan to build 1 million homes for low-income people at a cost of almost US$20 billion over the next five years.
Pharmaceuticals
Egypt is amongst the largest markets for pharmaceuticals in the MENA region, with pharmaceutical sales forecast to grow from US$ 2.3 billion in 2018 to US$ 3.11 billion by 2023 with a CAGR of 6.0%.This industry is 'import-dominated' in terms of volume of raw materials used in domestic production. However, export growth is forecast to increase at a faster rate than that of imports of pharmaceuticals in Egypt, although from a much lower base. Key companies in the domestic pharmaceutical manufacturing industry include Egyptian International Pharmaceutical Industries (EIPICO), South Egyptian Drug Industries (SEDICO), Medical Union Pharmaceuticals, Vacsera and Amoun Pharmaceuticals. Among the multinational drug makers that have manufacturing sites in Egypt are Novartis, Pfizer, Sanofi, GlaxoSmithKline and AstraZeneca.
L'Oréal, the world's largest cosmetics company, opened its first factory in the Arab world near Cairo in 2014. The state-ofthe-art facility features modern technologies such as fully automated processing skids with automated recipe control, automated packing lines, and fully integrated worldwide enterprise resource planning (ERP) to optimise supply chain and quality management.
Automotive
Egypt is one of the leading countries for the MENA region's motor vehicle production along with Iran, Turkey and Morocco. However, with the elimination of tariffs on imported EU vehicles under the Egypt-EU Association Agreement, it is expected that local producers and assemblers will lose their competitive edge resulting in subdued growth in domestic production levels. In 2018, Minsk Automobile Plant (MAZ) of Belarus opened a production facility through a joint venture with Helwan Machinery and Equipment valued at US$ 5 million to produce heavy commercial vehicles in Egypt. Shortly after, Kia Motors and the Egyptian International Trading & Agencies Co.(EIT) signed a five-year contract worth EGP 4,240 billion to assemble Kia-branded vehicles in Egypt. Moreover, in July 2018, an announcement was made regarding initial plans of fully electric microbuses to be produced in Egypt by SMG Engineering Automotive Company production lines.
There were 12 automotive producers with assembly lines in Egypt in 2018, where local components only accounted for 17% of the final product. The aim of the Ministry of Public Enterprise is to raise this figure to 46% through the revival and enhancement of a major state-owned manufacturing company, El Nasr Automotive.
