CAIRO: Egyptian President Abdel Fattah El-Sisi has called for the reopening of factories that were forced to close during and after the 2011 revolution as a result of economic pressures and lack of security.
It comes after the Central Bank of Egypt launched a 100 billion Egyptian pound ($6.5 billion) initiative in December to boost the country’s industrial sector.
The new measures could create more than a million job opportunities according to Magdy Ghazy, the head of the Industrial Development Authority. A strong and successful industrial sector is key to development in any country that aspires to strong economic growth and stability, he added.
Official figures reveal that the contribution by Egypt’s industrial sector to the nation’s GDP has risen from 11 percent in 2011 to 18 percent as a result of economic reforms. It is expected to grow further when shuttered factories resume production.
“For Egypt to achieve a real industrial renaissance, the contribution of the industrial sector should be 25 to 35 percent of GDP,” Ghazy said.
Hamdy Arafa, a professor of local and government administration, said 8,324 private-sector factories have closed since 2011 as a result of financial and administrative pressures, which has cost the economy at least 560 billion Egyptian pounds a year. CBE figures show that many of the businesses accumulated debts, while tens of thousands of workers lost jobs.
Economic expert Ahmed Sayed said now is the perfect time to start reopening the factories, thanks to the economic reforms the government has introduced. These have achieved “great success” in overcoming the financial crisis, he added, and recent initiatives to boost industry are therefore a welcome sign.
During a ministerial meeting chaired by El-Sisi last week, CBE Governor Tarek Amer said a committee has been formed to examine the situation of thousands of factories and banks that were affected by the lack of security in 2011 during the nationwide demonstrations. This led to robberies and attacks which, along with strikes by workers, caused many factories to halt production. As a result, their reputations suffered at home and abroad, and many workers were laid off.
El-Sisi this week called for swift action to help businesses resume operations. Such measures will include reaching agreements with banks, providing the necessary funding through low-interest loan initiatives from the CBE, canceling government action taken against companies, and assistance to alleviate the burden on the banking sector caused by the industrial slump.
“Starting factories up again would bring hundreds of thousands of unemployed people back to work, thus providing more job opportunities,” said Sayed. “Unemployment rates would go down and more products and commodities would be available in the markets.
“Moreover, there would be less dependence on imported commodities, which would lead to a decline in hard-currency imports.”
Hesham Ibrahim, professor of investment at Cairo University, said that if the factories reopen, they would create more than 500,000 jobs, along with additional employment opportunities in related sectors such as logistics and distribution.