Engineering Industries and Electronics: Riding the Export Wave in Egypt

Updated 1/21/2025 8:00:00 AM

Exports of the Egyptian engineering industries and electronics sector are experiencing significant growth, showcasing the country's potential as a key player in the global market. This growth reflects not just favorable market conditions, but also deliberates strategic initiatives to enhance Egypt's export capacity.

While challenges such as bureaucratic hurdles and dependency on imported materials remain, the sector’s outlook is optimistic, with substantial potential for expansion into new markets and niches.

Engineering Exports Hit New Highs

Engineering industry and electronic exports increased by 21.6% in the first 11 months of 2024, valuing at $5.1 billion for the first time in history, compared to $4.2 billion in the same period in 2023, according to the Engineering Industries Export Council of Egypt (EECE). Key contributors to this growth include a 32.7% increase in cable exports, a 6.1% rise in electrical appliance exports, and a 15.5% surge in car component exports.

The government aims to sustain an annual export growth rate of at least 20%, building on the sector's substantial growth over the past three years, Sherif El Sayad, Head of the EECE announced at the Future of Egypt's Engineering Industry Exports Conference.

Hatem Abdelazim, a senior economist and public policy advisor, tells Arab Finance: “This objective aligns with Egypt’s vision of diversifying its economy and establishing itself as a competitive player in global markets.”

Key Drivers of Export Growth

The growth of the engineering industry and electronic exports in Egypt can be attributed to several key factors. Ahmed Fawzy Hussein, a PhD holder and assistant professor of economics, says, “Government initiatives like ‘Decent Life’ and infrastructure development programs have created significant demand for locally manufactured engineering products.”

“Moreover, programs to support small and medium enterprises (SMEs) and encourage local manufacturing have enabled smaller players to access export markets,” Hussein adds.

He also points out, “Global shifts in supply chains caused by geopolitical tensions have presented an opportunity for Egypt to position itself as an alternative manufacturing hub. Rising demand for renewable energy solutions, such as solar and wind technologies, has also boosted exports in specific engineering segments.”

“Egypt's improved logistics, investments in port modernization, and the Suez Canal’s trade facilitation have played a pivotal role in ensuring timely delivery to international markets,” Hussian explains, noting that this positively drove engineering export growth.

As for the targeted 20% increase in exports, Abdelazim outlines strategies to achieve this objective and expand Egypt’s engineering exports into new markets by strengthening local manufacturing and innovation.

Hence, he emphasizes the importance of investing in research and development (R&D) and innovation and reducing reliance on imported materials, so, the government can enhance domestic production efficiency.

“Expanding trade agreements and partnerships, workforce development, as well as export incentives and infrastructure are also critical for meeting the government’s export targets,” according to Abdelazim.

Meanwhile, Hussein says, “Egypt can strengthen its industrial infrastructure by creating specialized technology zones and free trade zones tailored for engineering and electronics industries. Increasing partnerships with international companies for technology transfer and joint ventures would enhance local production capabilities.”

Egypt can further enhance its global competitiveness by implementing several strategies and offering export incentives, such as tax breaks or reduced tariffs on raw materials, making its products more attractive.

Expanding market access through trade agreements, especially with Africa, the EU, and Gulf countries, can create a wider export base. Furthermore, investing in workforce upskilling to meet the demands of high-tech engineering industries, along with aligning quality standards with international benchmarks, is essential for sustained growth, Hussein explains.

Niche Opportunities for Engineering Exports

While holding great potential, boosting Egypt's engineering industries and electronic exports might face several challenges. According to Hussein, “Limited access to advanced technologies and a lack of local R&D initiatives hinder the competitiveness of Egyptian products. Bureaucratic hurdles and complicated customs procedures can delay exports and inflate costs.”

Hussein explains, “Dependency on imported raw materials exposes the sector to fluctuations in global prices and exchange rates. Lack of awareness among small and medium-sized enterprises (SMEs) about export opportunities and standards reduces their participation in the global market.”

Despite these challenges, the future for increasing engineering and electronics exports is promising, as the country works on resolving them. Therefore, Hussein highlights the importance of encouraging R&D investments to achieve this goal.

Hussein suggests that Egypt should simplify export procedures, introduce digital platforms for easy documentation and compliance, promote local production of raw materials to reduce dependency on imports, and provide SMEs with targeted training on export markets, international certifications, and trade opportunities.”

Abdelazim agrees, stating, “Egypt’s engineering and electronics sector possesses substantial growth potential, contingent upon implementing appropriate strategies. Investing in local manufacturing, leveraging trade agreements, and targeting emerging markets can achieve Egypt’s ambitious export objectives while fortifying its position as a competitive global player.”

Additionally, Abdelazim highlights that Egypt can expand its engineering export market, pointing out that “emerging economies such as India, Indonesia, and Vietnam are seeking cost-effective engineering solutions.”

“By establishing trade relations and comprehending these markets’ requirements, Egypt can significantly diversify its export destinations,” he says.

Abdelazim adds, “The European Union offers opportunities for niche products, such as eco-friendly and energy-efficient engineering solutions. Besides, Latin America remains an untapped market with potential demand for Egyptian engineering products.”

Egypt's engineering industry and electronic export sector is at a turning point, marking a pivotal moment in the nation’s economic landscape. This growth reflects favorable market dynamics and effective strategic initiatives to bolster export capacity and enhance local manufacturing.

As Egypt continues to explore niche opportunities and target emerging markets, the potential for sustained growth in the engineering and electronics sector is significant.

With the right strategies in place, Egypt can achieve its ambitious export goals and solidify its role as a key player in the global economy, ready to meet the demands of a rapidly evolving market landscape.

By Sarah Samir