Egypt’s Ministry of Industry introduced a new decision on Monday, April 13, reorganizing the licensing framework for industrial activities outside designated industrial zones, marking a step toward improving the country’s investment climate.
The reform allows the establishment of 65 low-impact industrial activities within urban areas in standalone buildings, up from 17 previously. It also permits certain activities outside urban boundaries, subject to regulatory approvals and compliance requirements, according to a statement from the Ministry of Trade and Industry.
The decision preserves existing licenses and enables current facilities to expand or add new permitted activities within the same premises, provided they meet the necessary conditions. It also assigns the Industrial Development Authority (IDA) responsibility for issuing detailed implementation guidelines and periodically reviewing the approved activity lists.
The measures are set to take effect one day after publication in Egypt’s Official Gazette, although the publication date has yet to be announced.
Accelerating investment
In an interview with Business Monthly, Eng. Khaled El Sayed, Managing Director of Synerjies International & Strategic Studies MEA, described the decision as a meaningful reform aligned with investment needs.
“This is a competitive reform that simplifies compliance for low-risk activity to unlock faster investment,” he said. “The underlying problem is that industrial licensing has often been slowed by rigid location rules and procedural complexity, which raises entry costs and creates uncertainty for investors.”
He added that the move reflects a shift toward a more modern, risk-based regulatory framework.
“In case of an accurate implementation, the impact is shorter time-to-license, greater predictability, and stronger industrial deepening and formalization, translating into job creation, especially for light industry and SMEs.”
Expanded opportunities for SMEs
The expansion from 17 to 65 permitted activities is expected to widen investment opportunities, particularly for small and medium-sized enterprises.
The latest measures build on discussions held during a March 2 meeting between Egypt’s Minister of Industry, Khaled Hashem, the board of the Federation of Egyptian Industries (FEI), heads of its 21 industrial chambers, and officials from the Industrial Development Authority. During the meeting, the government outlined plans to overhaul the National Industrial Strategy to strengthen competitiveness, expand manufacturing output, and address structural challenges facing the sector.
Hashem said the government plans to adopt a more practical and coordinated industrial policy through closer collaboration with manufacturers, regular field visits to industrial zones, and the establishment of industrial investment funds aimed at supporting production expansion and sustainable growth.
He also stated that the revised strategy would introduce “productive villages” to support local industries across governorates by leveraging regional economic advantages and reducing internal migration pressures.
Discussions during the meeting additionally focused on labor shortages, financing accessibility, export guarantees, industrial zone conditions, technology adoption, and support for heritage and handicraft industries. Both sides also agreed to study the creation of a joint digital platform to improve industrial services and facilitate data sharing between the ministry and manufacturers.
Officials said the updated strategy forms part of Egypt’s broader economic development agenda, which aims to raise the industrial sector’s contribution to GDP from 14% to 20% by 2030 while reinforcing manufacturing as one of the country’s five priority growth sectors.
The strategy also targets the creation of between seven million and eight million jobs, increasing the green economy’s contribution to 5% of GDP, and providing technical assistance to help small factories transition into the formal economy.
Within this framework, the expansion of permitted industrial activities from 17 to 65, alongside streamlined licensing procedures, is expected to create wider opportunities for SMEs, particularly by helping more businesses formalize operations, improve access to financing, and integrate more effectively into industrial supply chains.
Officials also said during the meeting that the Ministry of Industry is collaborating with the International Finance Corporation (IFC) and the World Bank to support private sector-led industrial growth, expand financial inclusion for SMEs, and provide technical assistance aimed at helping factories reduce carbon emissions and adopt more sustainable production models.
“I see this as a classic case of aligning regulation with real risk, rather than regulating everything the same way,” El Sayed noted. “What the government is doing now by expanding the list from 17 to 65 is formally recognizing a wider set of low-externality activities and calibrating the licensing framework to their actual risk profile.”
He added that the move is likely to improve market access, reduce operational costs, and enhance competitiveness through clearer definitions and more transparent compliance standards.
Supporting regional development
The flexibility to allow certain activities outside traditional industrial zones could also contribute to more balanced regional development.
“The economic logic here is to reduce bottlenecks while keeping externalities under control,” El Sayed said.
Enabling industries to operate closer to demand centers may strengthen local value chains and reduce logistical costs, while maintaining environmental and safety standards will remain critical to ensuring sustainable growth aligned with urban planning priorities.
Encouraging expansion
The reform also provides clarity for existing manufacturers by ensuring license continuity and facilitating expansion.
“For existing manufacturers, the biggest value of policy is certainly knowing expansion won’t reset the clock or the license,” El Sayed stated. “By confirming license continuity and explicitly enabling expansion, this decision reduces that ‘hold-up’ risk and creates a clearer pathway for incumbents to scale.”
This clarity is expected to support reinvestment, capacity expansion, and modernization across Egypt’s industrial base.
Implementation will determine impact
The Industrial Development Authority will play a central role in translating the reform into tangible outcomes.
“The IDA is where this policy either becomes an investor-friendly process or remains a headline,” El Sayed said. “If the IDA can deliver a single coherent pathway, ideally digitized, the impact is reduced discretion, higher predictability, and a faster conversion of policy intent into real investment and formal jobs.”
Strong coordination, consistent enforcement, and transparent procedures will be critical to ensuring the reform delivers on its intended objectives.
Set to take effect following publication in the Official Gazette, the decision reflects Egypt’s ongoing efforts to improve its business environment, support industrial growth, and position itself as a more competitive destination for investment.
