Amid Egypt’s economic challenges over the past two years and the repercussions of the Middle East conflict, industry leaders stress the crucial role of the private sector in driving growth and job creation, as discussed during a workshop organized by the Egyptian Centre for Strategic Studies (ECSS) in February.
During two sessions, key figures in leading sectors in Egypt addressed some challenges facing both the Egyptian economy and the industrial sector, offering real-time solutions to navigate the complex situation.
Here are the workshop’s main takeaways:
Slow implementation
Mohamed El Sewedy, Head of the Federation of the Egyptian Industries (FEI), highlighted challenges faced by the private sector, such as the shortage of US dollars and high interest rates on borrowing. He attributed these challenges to the slow implementation and regulation of incentives approved by Egypt’s President Abdel Fattah Al Sisi over the past decade. These incentives include offering lands for the sector in the Purchase Order Text (POT) system, granting a golden license for serious investors, and tax-related incentives.
El Sewedy specifically addressed the issuance of “golden licenses” to facilitate project implementation for investors. He noted that while these licenses were granted in select cases, the stringent requirements make them difficult to obtain.
Last year, Egypt introduced the Golden License for investors as part of efforts to attract more investments and improve the business climate. This license enables investors to acquire or lease land and operate enterprises without needing additional approvals from relevant authorities.
In November, Egypt’s General Authority for Investments and Free Zone (GAFI) launched the first phase of the single-window approval “Golden License” online portal, enabling investors to register and obtain the license.
El Sewedy also highlighted several other challenges faced by the industrial sector, including elevated prices of end products and fluctuating exchange rates in the local market. These factors complicate investment, cost, and salary planning for business owners, he emphasized.
El Sewedy concluded by urging the government to empower the private sector to play a more significant role in the country’s economy, suggesting that the government should focus primarily on supervisory and regulatory roles.
Real estate concerns
Hassan Allam, CEO of Hassan Allam Holding, Egypt’s largest infrastructure company, underscored the sector’s substantial growth propelled by national mega projects since 2014.
Nevertheless, he pointed out the delays in disbursing dues (receivables) to his company and other companies involved in project implementation.
With 6 million workers and engineers in Egypt’s infrastructure sector, delays in dues payments pose a crisis for firms. Allam urged the government to compensate companies for US dollar exchange rate differences. Projects were assigned when the dollar rate was lower, creating discrepancies, he said.
“These delays pose a significant challenge for us and other companies in terms of paying salaries to workers and covering operational costs. Additionally, the disparity in the US dollar exchange rate presents another obstacle we are facing. When we initially signed the contracts for these projects several years ago, the US dollar rate was much lower than the current rate. Therefore, the government should establish a mechanism to compensate the companies,” Allam emphasized.
Allam further underscored the limited implementation of partnership types outlined in the State Ownership Policy, such as Public Private Partnerships (PPP) and POT, urging executive bodies to promptly address challenges faced by the private sector.
“Despite the policy outlining various types of partnerships with the private sector, only a few cases have benefited from them on the ground,” he remarked.
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