Mona El-Fiqi reports on government attempts to boost manufacturing industry Minister of Foreign Trade and Industry Rachid Mohamed Rachid has announced a raft of strategic goals for the industrial sector which include increasing the industry's contribution to GNP from 20 to 25 per cent. To identify obstacles in the way of these goals the National Planning Institute last week held a one-day seminar during which Minister of Planning Osman Mohamed Osman argued that, whatever problems it currently faced, the manufacturing sector would remain the backbone of the Egyptian economy. Egypt, he noted, will be unable to engineer the required increase in growth without the performance of the industrial sector improving. The sector, according to official figures, comprises 26,000 companies employing 2.4 million people out of which two million work in large and medium-sized companies. The Ministry of Trade and Industry further estimates that between 700,000 and 1.7 million additional employees work on an informal basis within the sector. During the seminar Rachid said industrial sector performance had registered incremental improvements in recent years, and growth had increased from 2.6 per cent during the first quarter of fiscal year 2004/2005 to five per cent for the same period in 2005/ 2006. Exports increased in value by 31 per cent over the same period. In seeking to increase growth from five to nine per cent the government is targeting investments worth LE175 billion over the next five years. Too optimistic, say many experts. Yet Rachid insists that the strategy, which involves securing LE16 billion in investments in the industrial sector this year, is realistic. He pointed out that a study commissioned jointly by the Ministry of Trade and Industry and the Ministry of Investment revealed that 837 new companies had been set up in the last 12 months. Their combined total investment was estimated at LE15.5 billion, and they had created 117,450 new jobs. One of the aims of the survey, Rachid said, was to collate statistics that will help in evaluating the problems facing the industry sector and inform the allocation of resources so as to ensure they are properly targeted. Some of those problems are well-known, and include poor marketing, a lack of the requisite skilled labour, technological backwardness, low productivity and high costs for industrial land. The sector, said Rachid, must adopt a new mindset and begin to direct resources to producing what can be exported rather than attempting to export what is already produced. Local manufacturers must also, he said, make more effort to reap the benefits of trade agreements already signed by Egypt allowing easier access to European, American and African markets. Such agreements, he pointed out, will not be in place forever, and should be used now to strengthen the nation's manufacturing base. Nor, said Rachid, "can there be any substantial development of industry until well- trained workers are available". Despite the huge numbers of young graduates entering the job market qualified workers remain in short supply. The answer, Rachid said, is to redirect the enormous sums of public money spent on education to ensure that "young people graduate with skills that are in line with market needs". "Supply," he argued, "must be more closely tailored to demand." Rachid cited one foreign investor in need of more than 3,000 workers for a new project in the 10th of Ramadan city who complained that only 60 applicants possessed the required skills. In an attempt to combat the lack of relevant training the Ministry of Trade is now offering to foot the costs of training new employees at a number of approved training centres. Low productivity levels, Rachid said, cannot be blamed on workers: management practices are also at fault. Huge increases in the cost of industrial land have also hindered growth within the sector, a problem the newly established General Authority for Industrial Development is currently examining. One possible solution, said Rachid, would be to subsidise industrial land for development, providing it for free, or at substantially reduced cost. It is financing, though, that remains the most serious hurdle, particularly for small and medium investors. Small investors are often unfamiliar with banking practices and are consequently deterred from seeking the finance necessary to expand their operations. To overcome the problem training schemes have been launched for both banks and potential customers in an attempt to facilitate their dealings. And in an attempt to attract manufacturers to the 64 sites the government has demarcated as industrial zones -- only 17 per cent of the available land is currently used -- Rachid argued that infrastructure should be up-graded to include training and technological centres and a quota of buildings available for rent.
