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In recent years, and due to some difficult financial conditions, Egypt has emerged as a burgeoning manufacturing hub, attracting businesses looking to reduce their manufacturing cost. With its strategic location, cost-effectiveness, and skilled workforce, the country offers a plethora of advantages for UK brands in Egypt considering expansion and competing in a global market.

Let us delve into Egypt’s potential as a manufacturing destination, highlighting success stories, sectors with high potential, government initiatives, challenges, and steps for UK brands to explore manufacturing opportunities in Egypt.

Key Advantages of Manufacturing in Egypt

Egypt’s allure as a manufacturing base is multi-faceted. Firstly, its strategic location as a gateway between Europe, Africa, and the Middle East enables easy access to a variety of markets.

Cost-effectiveness is another significant advantage; due to the devaluation of the Egyptian currency and the scarcity of US dollars and foreign currencies, Egypt now has some of the most competitive labour costs and some of the lowest production expenses compared to many other countries.  Additionally, Egypt boasts a large, skilled workforce well-versed in various manufacturing disciplines that can be employed at a minimum cost. For example, the average wage in Egypt for labour is around $120 per month. These factors combined make Egypt an attractive destination for expanding business internationally.

Success Stories of UK Brands in Egypt

 

Several UK brands such as the likes of Ted Baker, Marks & Spencer, The Body Shop, etc. have already tapped into Egypt’s potential, achieving notable success. These success stories serve as a testament to Egypt’s conducive manufacturing environment and the opportunities it offers for growth and expansion.

Sectors with High Potential

Egypt’s manufacturing sector presents a dynamic and varied landscape, offering substantial opportunities for UK brands across multiple industries. Key sectors such as textiles, automotive, and electronics stand out for their robust growth and investment appeal.

Specifically, the textile industry has attracted over $1 billion in investment in the past five years, showcasing a compound annual growth rate (CAGR) of 8%.

The automotive sector is not far behind, with investments reaching $700 million and a growth rate of 5% annually, reflecting Egypt’s strategic efforts to become a regional manufacturing hub. The electronics sector, known for its innovation and export potential, has seen a remarkable 10% yearly growth, with investments surpassing $500 million.

This growth is a testament to Egypt’s strong manufacturing capabilities and its appeal to both local and international investors aiming to capitalize on the country’s strategic position and skilled workforce.

Government Initiatives and Incentives for Foreign Investors

The Egyptian government has implemented numerous initiatives and incentives to attract foreign investment. These include tax exemptions, streamlined customs procedures, and investment zones dedicated to specific industries.

Such measures have made the country more appealing for the expansion of business, especially for UK brands looking to establish a manufacturing presence abroad.

Challenges and Considerations for UK Businesses

While the opportunities are plentiful, UK brands must also navigate certain challenges when expanding into Egypt. These include understanding local regulations, cultural differences, and navigating the logistical aspects of international manufacturing. However, with proper planning and local partnerships, these challenges can be effectively managed.

Steps for UK Businesses to Explore Manufacturing Opportunities in Egypt

For UK companies considering manufacturing in Egypt, the below steps should increase your chances of success.

  1. Market Research: Deep dive into Egypt’s industrial sectors to identify opportunities aligned with your brand’s expertise and market demand.
  2. Legal and Regulatory Compliance: Engage with local legal experts to understand Egypt’s business regulations, tax laws, and any sector-specific requirements.
  3. Partnership and Networking: Identify potential local partners, suppliers, and distributors. Participating in industry-specific expos and joining local business chambers can facilitate these connections.
  4. Leverage Government Incentives: Explore investment zones and special economic areas that offer tax breaks, customs relief, and other incentives to foreign investors.
  5. Pilot Projects: Consider starting with a pilot project to test the waters. This allows for a deeper understanding of operational nuances without a full-scale commitment.
  6. Sustainability and Social Responsibility: Align your business practices with sustainability goals and social responsibility, which can strengthen brand value and appeal to both local and global consumers.

 

Sectors Ripe for Investment

Beyond textiles, automotive and car assembly, and electronics, Egypt’s manufacturing capabilities stretch into:

  • Pharmaceuticals
  • Steel and metal products
  • food processing
  • renewable energy equipment
  • Furniture

For instance, the pharmaceutical sector, supported by Egypt’s robust chemical industry, is forecasted to grow by 15% over the next three years, driven by an increasing global demand for medical products and treatments.

Similarly, the food processing industry has seen a surge, with a growth rate of 10% annually, fueled by both domestic consumption and export opportunities.

Bottom Line: Capitalising on Egypt’s Manufacturing Potential

For UK businesses, the path to establishing a manufacturing base in Egypt is lined with opportunities. The sectors ripe for investment are diverse, offering numerous avenues for growth. By strategically navigating the local business landscape, leveraging government incentives, and fostering strong local partnerships.

Egypt’s evolving economic landscape presents a compelling value proposition for UK manufacturers aiming to diversify their production footprint and tap into new markets. The journey towards expanding business internationally into Egypt is not just about exploring new territories; it’s about embracing opportunities for innovation, sustainability, and strategic growth. Start your business venture with OneWorld

Written by – Omar Shams

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