Made in Egypt: Revolutionizing Local Smartphone Production
Updated 5/2/2023 8:00:00 AM
As smartphones become a significant part of everyone’s lives, Egypt is encouraging the localization of smartphone manufacturing. In October 2022, Samsung released its first-ever Made in Egypt Galaxy A13 (SM-A137F/DS) smartphone in the local market. Moreover, the French ACE company has started producing phones at SICO Egypt's factory in Assiut, while other firms, including Infinix, Oppo, and HMD Global, are encouraged to manufacture in Egypt. Oppo has already signed a memorandum of understanding (MoU) to establish a smartphone factory in Egypt. Localizing smartphone manufacturing not only has an effect on the phone maker, but also on the country’s economy.
Egypt Encourages Smartphone Manufacturing
The Egyptian government is trying several means to encourage smartphone makers to manufacture in Egypt. In 2015, the government launched an initiative named Egypt Makes Electronics (EME) to support development of the nascent sector. This comes as a part of Egypt Vision 2030, aiming to boost industrial localization via increasing the local materials. To encourage investments, the government launched the Golden License which grants the investor comprehensive approval of operations, the setup, as well as the management of their project. The license covers the allocation of necessary real estate and building licenses.
Heba Salah, Economic Researcher and Public Policy Analyst at the Information and Decision Support Center (IDSC), tells Arab Finance: “Ultimately, the Egyptian government is proactively and consistently stimulating foreign direct investments (FDI), notably in the smartphones industry. This is clear given the presence of several multinational smartphone companies in Egypt, such as Samsung and ACE.”
In February, members of the Parliament voted on dropping development fees and reducing customs duties on imported cellphone components in an attempt to localize the industry. Accordingly, the 5% state development fee will not be applied to components, and customs tariffs, which go as high as 30% for some items, are set to be cut to as low as 0% for some of the items, according to Asharq Business. This decision shall be approved by President Abdel Fattah El-Sisi and then published in the Official Gazette before it enters into force.
Prosperous Economic Dynamism
As Egypt offers incentives to smartphone companies to manufacture in Egypt, several Chinese firms are searching for an alternative to India, where they were previously manufacturing. “More than 2,800 Chinese companies have left the Indian market since 2014 amid increasing restrictions by Indian authorities and high tariffs, as India seeks to boost its domestic industry,” according to Al Monitor.
Having several firms manufacture their cell phones in Egypt is a dynamic move that positively affects the economy. The move is expected to stand the stagnation in the smartphones market, which was caused by inflation, and to provide an opportunity for exports. A number of smartphone makers have injected investments into Egypt, including Oppo which is set to establish a cell phone factory with investments worth $20 million.
Establishing factories for manufacturing smartphones creates job vacancies, which contributes to solving unemployment challenges. Salah explains that “on the macroeconomic level, it would result in increasing the contribution of the industrial sector to the gross domestic product (GDP). Moreover, it would contribute to promoting Egyptian exports, which represent one of the main sources of foreign currency for the Egyptian economy as well as creating more decent job opportunities and reinvigorating growth in this time of economic hardship.”
Ahmed Eid, Field Trainer at Samsung Electronics, tells Arab Finance: “The good thing about the matter is that the majority of workers for the new factory are Egyptian youth, which will greatly increase the volume of local workforce, as well as experience, enabling us to see a fully-made in Egypt mobile in Egyptian hands.”
As several companies target producing smartphones in Egypt, the country could be a regional hub for smartphones. Tamer El Gamal, General Manager at HMD Global in Egypt, previously told Asharq Business on the sidelines of an industry conference in Barcelona that the manufacturer of Nokia phones in the country intends to export locally-assembled phones to North African countries in 2023. The targeted markets for Nokia exports might include Algeria, Morocco, and Tunisia, he said.
To boost the localization of smartphone industries, Salah highlights the importance of “bolstering the logistical areas and ports of the Suez Canal Economic Zone in order to make it a global hub for industry and trade; exports and investments are recommended.”
Meanwhile, Eid affirms that “customs facilities in all aspects are the key to attracting investors”.
Manufacturing smartphones in Egypt is going to have a positive impact on the Egyptian economy, both in terms of employment and boosting regional exports.
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