How much improvement has the Industrial Modernisation Centre brought to Egypt? That, Mona El-Fiqi discovers, is the hundred million euro question The performance of the Industrial Modernisation Centre (IMC) during the six years of its existence is a controversial issue. While IMC officials assert that the organisation has achieved a lot of success among the companies and industrial units which participated in the IMC programmes, experts have severely criticised its work. The improvement of the industry sector, which is the engine of Egypt's development as its share on total Growth Domestic Product (GDP) reaches 20 per cent, is given priority by the government and the private sector. "The IMC is a tool amongst different bodies affiliated to the Ministry of Industry. These work together to achieve the ultimate aim of boosting the industrial sector and raising its investments from LE92 billion to LE722 billion in 2025. This will enable it to provide more job opportunities." said Helmi Abul-Eish, IMC executive director during a seminar held recently at the Press Syndicate entitled, "An assessment of the Industrial Modernisation Centre" When it was established, the IMC was funded by the European Union which paid 250 million euros, the Egyptian government which paid 103 million euros and the private sector which paid 73 million euros. The government announced that the aim of the IMC is to enhance industrial sector standards in order to integrate it within the global economy. According to figures of the Ministry of Trade and Industry, there are nearly 25,000 industrial companies and factories currently registered. Some 10,310 of these medium and large companies and factories are targeted by the IMC. The remaining 14,481 companies which employ less than 10 workers are categorised as small and micro enterprises which are helped by the Social Fund for Development (SDF). During the seminar, Abul-Eish explained that the IMC supports industrial projects through different programmes including human resources development, technology transfer, financing, quality control and exports development. Moreover, the IMC has a strategy that aims at increasing the labour force on the industrial sector from 1.1 million in 2005 to 2.4 million in 2011. Adham El-Nadeem, IMC deputy executive director said that the real aim of developing industry is to provide job opportunities for new graduates since the great problem the Egyptian market is facing is the high unemployment rate. "The labour market absorbed 240,000 out of seven million graduates during the period from 2000 to 2006," explained El-Nadeem. The IMC strategy also includes raising industrial exports from LE18 billion in 2005 to LE42 billion, and industrial investments from LE12.1 billion to LE45.2 billion. However, Hamdi Abdel-Azim, professor of economics and former dean of Al-Sadat Academy for Administrative Sciences told Al-Ahram Weekly that this plan is unrealistic. He explained that while the IMC has a limited fund through which it can provide services to develop human resources and promote Egyptian industrial products in international markets, it cannot participate in establishing new investment projects and so cannot guarantee increases of investment. Abdel-Azim explained that attracting new investment projects is simply left to the economic environment in Egypt. One more problem with the role of the IMC, according to Abdel-Azim, is that the IMC focuses only on private sector companies and ignores the public sector factories completely. Moreover, Abdel-Azim blamed the IMC for having programmes that concentrate on company structural reform, human resources development and management rather than technical fields that would help to raise the quality of the industrial products, allowing them to be more competitive in the international markets. The modernisation of industry, according to Abdel-Azim, should involve the imposition of high technological standards on Egyptian companies to help them produce high quality products that will be able to compete in the global market. However, there are no programmes within the IMC strategy to improve the productive abilities of the industrial units and to modernise the machinery system of factories. "There are some industrial units that got benefits when they participated in the IMC programmes but this is a limited benefit and below what was expected in light of the high prices of the services provided by the IMC." said Abdel-Azim. Agreeing with Abdel-Azim that the IMC strategy has many problems, Galal Essameddin, chairman of the National Society for Technology and Economic Development, said the IMC will not succeed in improving industrial units unless it comes up with a comprehensive plan to reform many other fields such as the education system, scientific research, taxes and customs duties. One more problem, according to Essameddin, is that IMC beneficiaries do not participate in setting the plans and programmes. "The IMC should also depend on Egyptian expertise and not foreigners who are not well informed by local economic problems." Defending the IMC, Abul-Eish asserted that it is currently providing its services to 3,500 companies and plans to increase the number of companies to 10,319 in 2008. He also explained that the IMC provided grants estimated at LE8.3 million to 104 companies to buy new machinery. Moreover, the IMC signed a protocol with the Ministry of Scientific Research aiming at providing LE100 million to finance scientific studies. Abul-Eish admitted that one of the main problems facing the industrial sector in general and the IMC in particular is the low productivity rates of Egyptian labour force. "The productivity of a Chinese worker is three times that of the Egyptian worker and that's why the Chinese products are cheaper and more competitive", he added. Competitiveness is key for developing the Egyptian industry sector. According to Abul-Eish only 1,200 out of 10,000 Egyptian companies dealing with the IMC are able to export their products. "However, I am optimistic that the IMC can achieve its aim since the companies are themselves keen to participate in the IMC programmes to develop their factories capabilities," said Abul-Eish.
