Where we stand on Egypt’s plans to localize electronics manufacturing

25 October 2022

How Egypt is growing its local electronics manufacturing industry: The CIT Ministry has been working over the past several years to localize the country’s electronics manufacturing industry, through ITIDA’s Egypt Makes Electronics initiative, which President Abdel Fattah El Sisi launched at the end of 2015. The initiative, which is designed to cut down on Egypt’s imports of electronic products and increase our exports, initially earmarked mobile phones, tablets, GPS tracking devices, LED lighting, smart meters, LED TVs and displays, and solar energy systems as the most promising products to manufacture domestically and export.

Some seven years after the launch of the initiative, we’ve seen some progress — but industry players are still facing hurdles: Sources in the industry Enterprise spoke with noted that, although the government is taking “serious steps” to work on localizing the industry, many manufacturers are struggling with material shortages and red tape.

What we’ve achieved so far: The first locally manufactured smartphone made its debut in the market five years ago, courtesy of Egyptian electronics firm Sico Egypt. The company manufactured some 1.5 mn devices in 2021 and is planning to up that figure to 2 mn this year, CEO Mohamed Salem previously told Bloomberg. Sico has sourced nearly half of its production inputs from the local market, with the remainder coming from other markets, including China, Salem said.

There’s a bullish consumer market to capitalize on: Mobile phone sales in Egypt rose to 15 mn in 2021, up from 13.3 mn in 2020, according to data from market intelligence firm Gfk. And the cost of imported mobile phones has been rising in recent months after the government decided to double tariffs on imported handsets to 10% last year. Mobile phone imports dropped 50.7% y-o-y during the first four months of the year to USD 299 mn. In December, market intelligence firm International Data Corporation forecast prices to rise 10% during 4Q2021 on the back of the move and ongoing supply shortages, leading vendors to resort to increasing stock of cheaper models. It said that growth in Egypt’s smartphone market will likely slow to 1% this year due to the duty as well as ongoing shortages of mobile phone components.

Egypt is a prime location for electronics manufacturing, thanks to its cheap but large labor market, our strong consumer market, and favorable geographical location that makes us ideally placed to become an export hub, KMG Egypt CEO and head of the Federation of Egyptian Chambers of Commerce’s digital economy and tech division Karim Ghoneim told Enterprise. The Egypt Makes Electronics initiative also offers other incentives to electronics manufacturers, including tax incentives for industrial and freezones, as well as customs exemptions for tools and equipment.

Read more: Enterprise.Press

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