Daily News Egypt spoke to the executive director of the Ministry of Industry-affiliated Industrial Modernisation Centre (IMC) in order to lean of their plans and programmes for the new fiscal year.
We heard that the IMC has adopted a new plan in 2015. How did you prepare for the plan?
Since I took over as head of the IMC in 2013, I was keen on talking directly with manufacturers, located in 15 governorates in which we are active, to understand in depth their needs, so this phase has lasted from late March to late June. We did this in fiscal year (FY) 2014/2015, however, the new thing this year is that we sat with manufacturers and governors as well. We agreed on four programmes.
What are the four programmes of your plan?
The first programme focuses on developing Damietta, which is divided into four programmes too. The first thing is the furniture, which the centre started working on 2005. By furniture, we mean all stages, starting from stocking wood to finishing, painting and upholstery. The second programme in Damietta is the dairy industry. With regards to the number of dairy laboratories in the city, we have two different figures, either 5,000 laboratories or 10,000 laboratories. We are currently studying this industry, from the gathering of the milk to the final product. The third programme is the fish products. Damietta has several fish farms, including one on 1,000 acres that is not used at all, due to mismanagement of the farm, malnutrition and bad fishing practices.
What is the target for fish production from Damietta?
We sent a team of four to observe the process of fish production there. After concluding the study phase, we hope fish production in Damietta will increase by 15% more than the current production rate, for which there are no accurate statistics on.
When is the study expected to be completed?
Damietta’s programme is estimated to last for three years. We have clear indicators for the first year, relying on four programmes; investment, productivity, environment and waste management, and the social aspect that focuses on creating job opportunities.
What is the final aspect in the Damietta development programme?
The fourth aspect is focusing on fishing boats. We found that fishermen stock fish in boats using ice boards, so the result is that the fish rot in the period between the deep waters and reaching the markets, which usually takes four weeks. So we need to develop this aspect. We are also facing an issue in old motors on boats, which use 40% more diesel than the usual consumption. If we addressed these issues, fishermen can increase their production by 15%.
Have you spoken with stakeholders in Damietta?
Yes. For each aspect of the aforementioned aspects, I appointed a director, in addition to two general coordinators of the programme; one is located in Damietta and one is located here in Cairo. They spoke with fishermen, farmers and dairy producers.
How was their response?
It was more than great. We had a mindset and thought in terms of “what’s in it for them”. When you tell a fisherman that you will increase production by 15% just by changing the motor, this means you won him over.
What are the other programmes in your new plan?
This year, we are working on a project called “Creative Egypt”, which is an outlet that showcases products from different governorates. It aims to increase the geographical distribution of the industrial, artisanal and heritage complexes. Over the past years, we could spot 61 complexes, and we aim to increase them to 90-100 complexes by the end of FY 2015/2016. Our team also works on improving the quality of the products and training workers and handcrafters.
Are you planning to increase the number of Creative Egypt outlets?
We are currently showcasing the products in the first floor of the Omar Effendi store in the Mohandessin district of Cairo. On 15 September, we will open the second floor. By the end of October, we will have a Creative Egypt exhibition in Sharjah, the UAE. We are planning three exhibitions in Europe in Italy, Germany and Spain. Creative Egypt gathers 16,000 manufacturers from 17 governorates.
Why are you focusing on this project?
Because of the low cost of the job opportunity (from EGP 500-EGP 1,500). Also, anyone can work in the handicrafts sector; men, women, young people, the handicapped. Products are sold at their actual prices. The problem with the galleries we see in Zamalek, for example, is that they are sold at 10 times their cost because they go through several brokers and middlemen. In Creative Egypt outlets, we face two challenges – generating traffic and maintaining the minimum stock of products, as handicrafts usually take time to be ready. We have to keep our stocks always full.
What are the two remaining programmes of IMC’s new plan?
The third programme focuses on developing exports, as we have a problem with exports. Through our Studies Unit, we will be able to determine export strategies. We want to know the needs of countries to meet them, how to enter new markets and how to find alternative markets. The two sectors that are most negatively affected are the chemical industries sector and building materials sector, because the biggest two markets that import these products are Iraq and Libya, both of which are damaged due to the security situation there.
The last programme was already launched last year and it is called “The Green City”, which aims at reducing industrial pollution. Last year, we did a great job in Borg Al-Arab in Alexandria. We have worked on a glass factory there and agreed with an electricity company to fix their power factor through using alternative energy, thus we helped in decreasing their energy cost. The factory could save EGP 400,000-EGP 500,000 per month. In addition to that, they have also created a unit called Power Management; it includes experts in production, production quality, stocks and maintenance. Based upon the success we achieved last year, we decided to add two new cities this year, namely Sadat City and Obour City.
Are you targeting all industries/factories in those new cities?
Not all of them, we announce the project then discuss it with manufacturers and stakeholders. Those who have problems can apply to the project, and thus we can help them.
What is the total budget for this plan?
The budget is set at EGP 140m, fully funded from the IMC budget. We don’t fall under the state budget this year. In FY 2014/2015, the IMC allocation in the state budget was EGP 2m, and in FY 2013/2014, the IMC allocation was EGP 5m. However, the last two allocations have reached us; they were used by the Ministry of Industry and Foreign Trade to address other needs.
The IMC was previously funded by the European Union (EU). Why has this funding stopped?
The last EU fund that reached the IMC was in FY 2005/2006. The EU had signed an agreement with the Egyptian government to grant the IMC €250m, scheduled to be offered in instalments. When they exited their IMC activities in FY 2005/2006, €175m remained unused, so the EU left them as a support for the state budget, under the condition that the state continue supporting the IMC, and this actually happened until the 25 January Revolution. Before the revolution, the budget allocation for the IMC was EGP 1.3bn, so there is a huge slump. The IMC’s own budget in FY 2014/2015 was EGP 70m, and this year we doubled the figure due to our various projects. But, we actually need funds, especially as we are assigned tasks outside our plans, and we don’t have enough budgets to cover all these needs.
Did you negotiate with the international financial institutions to access funding?
Yes, we are seeking funds. We are in discussions with the World Bank, but it is not over yet. However, as you know, any governmental entity in Egypt can’t directly obtain loans or grants; it should be through the Ministry of International Cooperation and after the approval of security entities. We have also talked with the EU, but they have completely stopped grants at the moment, they also offer loans, and they are only focusing on three sectors, namely the health, energy and education sectors, not the industrial sector.
The IMC had taken over the inoperative factories issue. Are there any updates in this regard?
Factories that are directly and negatively affected by the revolution sent their files to the IMC. Until now, we have no more than 870 files. The Central Bank of Egypt (CBE) has an industrial loans portfolio where the number of applicants is much higher. There are no official statistics with the number of halted factories. The problem is that not all those who applied to the IMC are affected after the revolution; we have factories which have not been working since the 1990s. When we filtered the request, we found out that only 37 factories are eligible for IMC support. The state has allocated EGP 500m to support insolvent factories, but the CBE preferred to loan factories with the same interest rates, which are 12%-13%, and the factories can’t afford to pay the interests. So the EGP 500m returned to the state.
In the previous fiscal year, we discussed non-banking solutions, such as investment funds; however, we didn’t reach any solution. We are currently holding several meetings with the Central Auditing Organisation, the economic consultancy council of the president, and Ayady Company, but we also didn’t reach any solutions.
We know that the IMC is offering services to companies. What are those services?
We are offering services to micro-companies and registered associations. We offer them business services, such as company assessment, and technical assistance services, such as human resources, quality, marketing, exporting and production. We offer anything related to helping factories technically, not financially. Starting from the next fiscal year, we will offer these services on a paid basis to reduce our costs. This year, we target a minimum of 2,080 clients to offer them 5,655 services.
How do you choose the 2,080 clients?
We don’t choose them, they apply.
How do you view the energy shortage issue facing the industrial sector?
The issue has been addressed this year. In order to address the issue, we have the Green City programme. We also made an agreement with the Electricity Distribution Company in Alexandria to install the factories’ power factor to reduce energy consumption.
Do you have any plans for the Suez Canal Axis Development project?
We made a number of proposals, including small and medium units for assembling products that enter the axis in parts. I am referring to LCD screens, laptops and car vehicles.
Applying the maximum wage on the IMC employees was extensively discussed last year. Did it come into effect?
Right after the revolution, the salaries of employees of the IMC were cut in half by a decision by former Minister of Industry Mahmoud Eissa.