Egypt’s Food Processing Industry (FPI) represents 50 per cent of total manufactured output. with total value of EGP 31 billion in 2004, and a strong annual growth rate of 20 per cent.

The Egyptian food processing industry comprises 4,700 registered enterprises forming the formal sector which represent 20 per cent of total food processing enterprises, and employ roughly 250,000 skilled workers. About 87 per cent of the formal FPI companies are small and medium-sized enterprises (SMEs).

It is estimated 80 per cent of total food processing enterprises are informal.

The FPI has high potential for low cost raw material supplies and low labour costs compared with other global and regional competitors. Foreign investors include Nestle, Kraft and Unilever.

Of the formal producing enterprises, 87 per cent small and medium-sized enterprises (SMEs) focus on niche products for regional and local markets while 17.4 per cent is represented by large enterprises that operate over multiple product sectors for local and export markets.

The food processing industry in Egypt has main sub-sectors, arranged according to their labor productivity in the FPI for the year 2004.

Value added per employee in FPI subsectors

Export revenues of  FPI companies amounted to USD 625.8 million in 2003.

Egypt's export performance in fruits, vegetables and juices is outstanding among its regional and global peers. Exports of fresh, chilled, and frozen vegetables are increasing.

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Profile - Cement

Egypt is the Arab region’s largest cement producer. Without Egypt, the Middle East region would be a net importer of cement. Egypt exports cement, at almost half the price charged in most parts of the world.

Consolidation, investment by foreign companies in plant and equipment and improved productivity are helping to increase Egypt’s cement export performance and satisfy local demand with high-quality cement, mainly for construction and building.

Egypt is expected be one of the top five global exporters of cement in the next few years. Cement production is rising and exceeds 28 million tons in 2004.

The world’s demand for cement is estimated to increase by 3.6 per cent between 2003 and 2020, 84 per cent from emerging markets. China, will take 52 per cent of world production.

Since 2001, Egyptian cement production capacity has increased by almost 21 per cent.

Cement Production Vs Consumption

Source: Ministry of Foreign Trade and Industry monthly Bullet in Feb. 2005

The construction sector relies heavily on cement. It is one of the most dynamic sectors in the Egyptian economy and has been growing rapidly since the eighties.

In lockstep with the construction and real estate boom, the cement sector witnessed its own boom with market demand growing rapidly. Producers could sell all they could manufacture. Cement exports increased by 100% in 2004 compared to 2003.

Actual Consumption & Production

Source: Jan - May 05 data: Ministry of Investment - Cement Committee Report, May 2005

Consumption increased by 11 per cent compared with the same period last year

Relatively low labor and energy costs and an abundance of raw materials has led to very high profit margins.

Construction investments reached EGP 1.084 billion in 2003/04 which represents 1.4 per cent of the country’s total investments. This sector has a significant impact on GDP. In 2002/2003 construction and building sector output reached EL16.710 million, representing 4 per cent of total GDP.

International cement companies partially or wholly own about 70 per cent of Egypt’s cement industry. They are attracted to Egypt by the large and growing market, with healthy margins and low energy and labor costs.

France’s Lafarge and Mexico Cemex are among the giant foreign companies that entered the local market through state sell-offs in the mid to late 1990s. Seven of the 10 largest privatization transactions have involved cement firms, generating L.E. 6.3 billion, more than a third of total privatization proceeds since 1991.

The Egyptian cement market comprises twelve players. Suez Cement is the largest producer with a production capacity of 7.85 million metric tons per annum, followed by the Egyptian Cement Company and Assuit Cement with production capacities 6.95 and 4.60 million tons respectively.

National, Quena and Misr Beni Suef are three main wholly-Egyptian key players in the Egyptian cement market.

With Ciments Francais (Italcementi) increasing its stake in Suez Cement Company – owning 66 per cent of  Torah  – and Beni Suef Cement acquiring 8.84 per cent of Alexandria Portland Cement (majority owned and controlled by France’s Lafarge).

 ASEC and Sinai Cement are the only two local producers in the white cement industry.

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Profile - Steel

The Egyptian Steel Industry symbolizes the backbone of Egypt's economy and provides the impetus for the growth of major industries including construction and building, ship building, automotive and consumer goods.

Steel is vital to the development of the construction and building sector and is considered one of the most crucial and strategic industries necessary for national development.

The Egyptian steel industry divides into

• Steel rebars: Rods or bars used primarily in construction and building.
• Flat steel: Used in automotive, ship building, and consumer goods.

The production of steel rebars dominates the Egyptain market, with a total capacity of 6.2 million tons compared with 2.8 million tons of flat steel (2004). The raw materials, mainly scrap and billet, represent around 45-85 per cent of total production costs, and are being imported.

The Egyptian steel industry is dominated by the private sector which supplies more than 95 per cent of the market. Of the 18 steel producers in Egypt, privately-held EZDK DIKHEILA supplies almost 60 per cent of local demand.

Three Egyptian companies produce flat steel. Two are private companies: Al Ezz Flat Steel (EFS), and Alexandria National Iron and Steel Company (ANSDK). The third is the Egyptian Iron and Steel Company.

Other companies produce long steel rebars to meet the growing local demand in construction and building

Egyptian Steel Production (Million metric tons)

Source: EZDK databases

Leading companies’ market share

Source: HC Brokerage, Egypt-Steel sector report, 2004   Top Profile - Automotive Assembly   Egypt is home to one of the few domestic auto production capacities in the region and is the largest North African producer of cars. Egypt benefits from global changes in the automotive industry and the desire of the original Equipment Manufacturers (OEM) to shift towards new markets and lower costs of production in countries such as Egypt where low costs and labour are available. The automotive industry comprises vehicle assembly and components. The assembly industry has three main sub-industries Passenger cars assembling industry Light, Medium, and heavy commercial vehicles assembly Buses 29 vehicle assembly operations: 12 for passenger cars, 9 for light, medium and heavy commercial vehicles, and 8 for buses. Total production of passenger cars, light, medium and heavy vehicles, and buses reached 50,127 units in 2003 with a total turnover of Euro 1.9 billion. Total investments amounted to 1.6 billion Euro. The Egyptian automotive industry already generates significant employment for approximetely 62 thousand employees, and can undoubtedly play an important role in reducing unemployment. Companies in the Egyptian Automotive industry may assemble vehicles from a Completely Knocked Down (CKD) kits imported to Egypt from  international companies, or import certain vehicles in completely Built Up (CBU) forms from their international partners. Total sales of the Egyptian automotive assembling industry in 2003 indicate the dominance of local assembly by major companies, such as BMW, Citroen, Daewoo, Fiat, Jeep and KIA. Assembly operations and production of passenger cars constitute the largest component in the vehicle assembling industry’s total production, with the lion’s share of 65.2 per cent in total production volume for 2003. Daewoo Motors is by far the leader of this market segment with the share 33 per cent of total passenger cars production in 2003. Shares of Total Production (2003) Source: Author’s calculations based on the IMC’s  “Strategic study to update Egypt’s auto sector”, October 2004. General Motors is the market leader for light commercial vehicles with 86 per cent of this market segment’s production in 2003. Also, the Manufacturers of Commercial Vehicles (MCV) is the leader for bus production (38 per cent). The state-owned automotive company NASCO, which assembles cars under license from Fiat-Italy, had a 19 per cent share of total passenger car production in 2003. IVECO/Nasr, the state-owned Egyptian automotive company that assembles buses, accounted for 23 per cent of total bus production in 2003. Egypt’s automotive assembly market is small due to low demand and purchasing power. However, the fast developing components base will supply the assembly market and signalling potential growth in future years. The total issued capital in the automotive sector up to 30/4/2005 was EGP 1.4 billion (48 projects) and investment of EGP 2.2 billion. Top