Over the past decade, Egypt has undergone sweeping economic changes, with industry positioned as a cornerstone of sustainable growth. Yet amid these transformations, the plight of distressed or shuttered factories has emerged as a sensitive indicator of the economy's true health. In recent statements, Prime Minister Moustafa Madbouly declared that "Egypt has overcome its economic crisis" and that "all factories are operating at full capacity." The message was clearly intended to project stability and resilience to both domestic and international audiences. However, official figures from the Ministry of Industry suggest a far more complex reality. Of the 7,422 factories classified as distressed—due to procedural or technical obstacles—only 987 have resumed operations. That leaves more than 6,400 factories still idle or struggling to survive. Between rhetoric and reality This disparity between official rhetoric and actual reality calls for a deep, critical reading to understand its dimensions, its impact on economic confidence, and the risks that may arise from ignoring the facts. There is no doubt that positive messaging from political and government leaders plays an important role in boosting investor morale, attracting capital, and rallying public opinion behind development plans. When the Prime Minister declares that "all factories are operating at full capacity," the implicit message is that the industrial sector's problems have been resolved and the economy is on a stable, upward trajectory. Such language energises the market and creates a sense of optimism—an indispensable ingredient in any economic recovery process. But in economics, confidence alone is not enough; it must be supported by verifiable figures. Otherwise, any gap between reality and rhetoric can turn into a deeper crisis of trust. Why the Numbers Matter Statements by the Minister of Industry reveal the reality in numbers, shedding light on another side of the picture. The difference between a "distressed" and a "closed" factory is often blurred, but the numbers matter because they indicate the scale of recovery still needed. Reviving just under a thousand facilities is a positive step, but the impact is limited when the majority remain inactive. This disparity raises questions about the pace of industrial rehabilitation and the policies driving it. Root Causes of Factory Closures Multiple factors are feeding into the crisis. Liquidity shortages, coupled with high interest rates, have restricted access to operational loans. Import restrictions and a shortage of foreign currency have made raw materials more expensive and harder to source. At the same time, energy price hikes—both for electricity and fuel—have eaten into already thin profit margins, while heavy taxation and cumbersome administrative procedures add further strain. Competing with cheaper imported goods has also undermined the viability of many local producers. Economic Ripple Effects The shutdown of thousands of factories has had consequences far beyond the gates of industrial zones. It leads to job losses for hundreds of thousands, shrinking the labour market and eroding household purchasing power. Domestic supply chains have been disrupted, forcing Egypt to rely more heavily on imports to make up for local production. The Politics of Optimism Government optimism plays a role in boosting market confidence, but the credibility of that optimism depends on alignment with verifiable data. Discrepancies between public statements and hard figures risk undermining investor trust—both foreign and domestic. In a global marketplace, credibility is as critical as capital. Transparency as an Economic Tool One solution could be what might be called "course-corrective transparency." This would involve regular public reporting on the number and status of factories, complete with clear revival timelines and measurable benchmarks. Frequent updates—monthly or quarterly—would make it possible to track progress and hold stakeholders accountable. Incentives for private sector participation could also help accelerate the recovery. If investors sense a gap in transparency, it may prompt them to reassess their risks. It also requires involving the private sector in shaping solutions to ensure that decisions are realistic and effective, alongside offering tangible incentives such as temporary tax reductions or providing concessional loans to finance the resumption of operations. Most importantly, the root causes of factory distress must be addressed, rather than settling for a superficial restart that cannot withstand economic challenges. Global Lessons for Industrial Recovery Other nations offer valuable lessons. Turkey went through a severe economic crisis affected by currency and inflation problems, yet the government managed to overcome it by launching a comprehensive programme to rescue the industrial sector, which included a package of key measures. These measures included restructuring industrial debts through cooperation between public and private banks to ease interest burdens and extend repayment periods, giving factories a chance to regain their financial balance. Direct energy subsidies were also provided to energy-intensive factories to maintain their production capacity and avoid layoffs. The government linked the resumption of operations to export plans, granting greater incentives to factories that contribute to increasing exports and bringing in foreign currency—strengthening the economy's resilience against fluctuations Vietnam faced similar challenges in the 1990s and early 2000s, particularly in state-owned factories, but succeeded in dealing with them by adopting a 'production redirection' model based on several key steps. Unproductive production lines were shifted towards manufacturing goods in demand in global markets instead of insisting on locally produced, low-demand products—opening wider export opportunities. The country also encouraged partnerships with foreign investors to bring in modern technology and management expertise that enhanced operational efficiency. In addition, clear tax and customs incentives were introduced to attract investment into targeted industrial sectors, boosting competitiveness in the international market. In Germany, after the global financial crisis in 2008, some industrial sectors suffered a severe slowdown, prompting government intervention. It did not stop at financial support but invested in transforming factories into smart production models using automation, artificial intelligence, and the Internet of Things. Training packages were also provided to workers to upgrade their skills instead of laying them off, directly increasing productivity, reducing operating costs, and enhancing export competitiveness. In Brazil, during periods of recession, the Brazilian Development Bank (BNDES) allocated billions of dollars in low-interest loans to factories, tying financing to clear plans for increasing domestic production and reducing imports. Partnerships between the public and private sectors were also encouraged to develop strategic sectors such as mining and petrochemicals. In South Korea, after the Asian financial crisis of the 1990s, the focus was on supporting exporting companies, particularly in electronics and automobiles. The state provided tax and customs incentives to factories that achieved annual export targets and also offered government guarantees for loans aimed at purchasing technology or upgrading production lines. All successful countries linked financial support to structural reforms and clear production plans. Training and skill development were key elements in every successful experience, while exports and opening new markets were a common pillar in most rescue plans. These countries adhered to transparency in data, which proved essential for attracting investment and building confidence both locally and internationally. A Four-Level Recovery Plan for Egypt In Egypt, addressing the crisis of distressed factories requires fully coordinated efforts across four main levels of stakeholders, as the problem is not limited to financial aspects but also encompasses administrative, legislative, and logistical dimensions. First: The government and relevant ministries. The Ministry of Industry must act swiftly to develop a clear plan for restarting operations and resolving production bottlenecks, while the Ministry of Finance simultaneously offers a package of tax incentives or temporary exemptions for factories resuming work. The Ministry of Investment should focus on attracting local and foreign investments to operate or acquire idle factories, in addition to the role of the Ministries of Electricity and Petroleum in providing suitable energy prices during the recovery period. Second: The banking sector and financial institutions. This involves offering operational loans at subsidised interest rates and restructuring debts, launching targeted financing initiatives for industry with government guarantees, and enabling microfinance and industrial finance companies to support small and medium-sized factories that cannot access bank financing. Third: The private sector. The Federation of Egyptian Industries plays a key role in identifying priorities for distressed sectors and compiling accurate data. Local investors can enter into partnerships to restart production lines, while industrial developers focus on providing industrial zones with reduced rental rates for struggling factories. Fourth: International partners, including international financial institutions such as the World Bank and the African Development Bank, which can provide grants and concessional loans for restart programmes; development organisations offering technical and advisory support to improve production efficiency; and trade partners opening fast-track export markets for products from revived factories. Renegotiating IMF deals From my personal perspective, it is essential to negotiate with the International Monetary Fund (IMF) to ease the severity of its reform demands, which have negatively affected various productive industrial activities in favour of fiscal reforms. The IMF typically recommends contractionary policies to curb inflation, such as raising interest rates. This approach makes industrial financing more expensive and reduces banks' willingness to lend to high-risk sectors like distressed factories. The Fund also pushes for maintaining high financial solvency for banks and reducing non-performing loans, which drives banks to avoid granting new loans to factories classified as 'high risk,' even if the aim is to restart them. Instead, they prefer to channel liquidity into safer instruments like government bonds. This must be corrected immediately, as most shutdown actions against distressed factories come from creditors such as tax authorities, social insurance agencies, banks, and non-bank financial institutions. Energy subsidy reform also emerges as one of the IMF's top priorities, which raises production costs and increases the burden of loans, thereby doubling the risks for banks when financing industry. In short, the Fund's primary objective is to stabilise macroeconomic indicators (inflation, deficit, external debt, foreign currency reserves). Supporting industry or increasing factory financing may come as a positive side effect if macroeconomic policies stabilise, but it is not among the core conditions or goals in its programmes. Therefore, changing the state's policy and orientation to preserve industrial investment is both urgent and essential—it is the dividing line between the continuation and the end of the economic crisis, not government or official statements made for positive publicity.
