Egypt's International Furniture and Home Furnishings Trade Fair, known as Furnex, ended earlier this week. It was organised by the Egyptian Exporters Association Expolink and the Egyptian Furniture Export Council (EFEC) to showcase the Egyptian furniture and home furnishing industries Ihab Derias, chairman of the EFEC, talked about some of the challenges facing the industry in an interview with the Weekly. What is the size of the Egyptian furniture industry? It has a workforce of one million people, 60 per cent of whom are directly involved in furniture factories and workshops, and 40 per cent are involved indirectly in feeder industries. There are some 200,000 manufacturers, from workshops employing a handful of people to large factories employing 3,000 or 4,000 people. Local consumption of furniture is estimated at around LE12 billion, 80 per cent of which is locally made, while the rest is imported. Total investment in the industry is around LE8 billion to LE9 billion. Has the industry been affected by the revolution? Like the rest of the economy it has been hugely affected, especially because the support that the government had been giving prior to the revolution was cut. Not only has direct support in the form of export subsidies lowered, but technical support in the form of training and assistance in taking part in local and international exhibitions and trade fairs has stopped. What challenges are you facing today? It is difficult to find trained labour. Artisans are leaving the industry, and at the higher end of the labour market it is hard to find the kind of qualified engineers and technicians that can run modern facilities. As a result, each factory has to train its own staff, whereas in the past the government provided training through various programmes, including one where it brought in highly qualified and internationally recognised experts to spend residencies in Egyptian factories. Our export figures grew largely because of government support to the industry. But today we feel that industry is no longer a national priority. Before 2010 the slogan was that industry was the locomotive of growth, and there was a national programme to promote industry and exports. Today, this slogan has disappeared and we do not hear politicians talking about industry. All they talk about are mega-projects, which are all well and good but it seems that smaller-scale industry has taken a back seat. But no economy ever grew without industry, and there will not be development or job creation without industry. We cannot depend on tourism alone, which is volatile and is affected by circumstances. If a factory falters it can produce a different product or target new markets, but with tourism that is not possible. In addition, competition in the domestic market from imported products is unfair. Ninety per cent of Egypt's furniture imports are from Southeast Asia, China, Malaysia and Turkey. The bulk of these imports are hugely underpriced, possibly because exporters like China and Turkey heavily support their exports. There is also preferential treatment for Turkish furniture because of the free-trade agreement with Turkey. How much does the industry export? Figures for 2014 show exports at LE2.5 billion, an eight-fold increase compared to eight years ago. We are aiming for LE15 billion worth of exports by 2030. In 2010 we drafted a 20-year vision statement for the industry that aimed at reaching LE5 billion today. We are not there yet, not because we have not grown, but because we have grown at a slower rate than projected. We are behind schedule, and we need to do more to reach our targets. However, we cannot do this alone, and we cannot do it without increased investment. Increasing investment means acquiring land, which is currently hard to come by. Where is the export market for Egyptian-made furniture? Sixty-five per cent of our exports go to the Gulf and the rest goes to Europe. Prices are very competitive, and there is geographical and cultural proximity, as well as a common language in the case of the Gulf markets. These things should mean that we have the opportunity to further grow in these markets, but the government must lend a helping hand by creating a more investment-friendly environment, by modernising the law to enable current firms to grow and by facilitating the formalisation of the informal sector of the economy, which would boost current production capacity. Will the depreciation in the value of the pound help exports? Unfortunately, contrary to what is being propagated in the media, depreciation does not necessarily mean higher exports. A lot of inputs such as wood, timber, vinyl, varnishes and accessories are imported, so the cost of production will increase with falls in the value of the pound. Such imported components increase the cost of production. A weaker pound might be a good thing for other businesses that do not require imported raw materials, but this is not the case for us. Creative Egypt One corner of Furnex this year was dedicated to displaying the works of young designers and handicraft-makers, showcasing the work of entrepreneurs from governorates across Egypt. Entitled “Creative Egypt”, it included woodwork, handmade carpets, embroidered textiles, glasswork, pottery, candles and work in copper, along with a wide range of colourful works of art. The 50 exhibitors from 13 governorates in the section were brought together by the Industrial Modernisation Centre (IMC), an organisation which aims to help empower small artisans while keeping alive Egypt's traditional handicrafts. According to Sherine Al-Shorbagi, director of the Sustainable Development and Technical Assistance Department at the IMC, the organisation's programmes help men and women involved in handicrafts make decent livings. “Our goal is to make Egyptian handicrafts more functional and trendy, making them more attractive to foreign and Egyptian buyers,” Al-Shorbagi says. As part of the programme foreign designers were brought in to work with local designers and artisans, helping to train them in improving the quality of the items they make while retaining their Egyptian motifs and character. Ahmed Taha, executive director of the IMC, says the programme helps develop skills and provide sustainable employment for many families. Exhibitors at this year's Furnex help serve around 7,000 families directly and indirectly, he says, and the exhibition also provided those taking part with a valuable opportunity to market their goods. The “Creative Egypt” brand is now being patented, which “will enable Egypt's handicrafts to be instantly recognised worldwide.”
