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French Version

Egypt modernization drive spurs industrial sector

Small and medium businesses get funding for upgrades

Egypt's antiquated industrial sector is being electrified by a modernization program of public-private partnership aimed at making hundreds of small suppliers competitive on the global market.

Close to $35 million is being poured into the National Supplier Development Program (NSDP), an unprecedented project initiated by the Foreign Trade Ministry to peel Egypt's industry out of its old protectionist cocoon.

"Over the past few years, industry sought to protect itself and sought to operate in an environment with low competitiveness and could not compete worldwide," Foreign Trade Minister Rashid Mohammad Rashid said.

"I am convinced there is a dire need to modernize the industrial sector," added Rashid, speaking at an event launching the program in Cairo on Wednesday.

"The attitude is changing, this is what counts. We are creating momentum and enthusiasm," said Helmy Abuleish, chairman of the Industrial Modernization Center (IMC) that is implementing the plan with the ministry.

Under the scheme, hundreds of small and medium enterprises (SME) supplying large "mother companies" will be able to embark on a 1 million Egyptian pound ($173,000) upgrade.

Of that money, 85 percent is provided by the IMC, which itself is financed up to two-thirds by the European Union. The remaining 15 percent can be borrowed at a preferential interest rate.

Mother companies benefit from a more efficient supply chain while suppliers reach a level that puts them on the global sourcing map, a win-win formula the ministry stresses guarantees the modernization effort's sustainability.

So far, 37 large industrial companies have signed up, including Egyptian and regional groups, as well as multinationals such as American behemoths General Motors and Procter & Gamble.

The scheme also includes European giants Mercedes, Unilever, Nestle, Siemens and Cadbury Schweppes.

The project stems from July, when General Motors (GM) Egypt requested a meeting with Rashid to express concern about the quality of the local feeder industry that supplied its assembly chain.

Rashid promptly signed a memorandum of understanding under which the government committed to upgrading GM's suppliers in exchange for which they would be placed on the motoring giant's global network of suppliers.

GM Egypt chairman and managing director Don Butler, whose company will not incur any cost for the upgrading, praised Rashid's no-nonsense approach to reforming the country's ailing economy.

"And I think this open and transparent attitude is a microcosm of what is happening in the country at large," Butler added.

Rashid, a successful business executive who had to resign from 27 company boards in 24 hours when he was appointed last year, has set Egypt's long depressed economic indicators in motion since taking over and has also drawn praise for his work ethic.

Tarek Tawfik, managing director of the consumer foods division for the Americana group, also credited Rashid for the new wind of confidence sweeping Egypt's economy.

"It boils down to him, he has the drive, he has the vision. He is pulling us and the pace is high. This program is meant to involve the country's leading 100 companies and there could be quite a chain reaction," he said.

According to Helmy, these companies are currently worth $4.3 billion and employ 50,000 people. He said the target was for the NSDP to generate a growth of $2.6 billion and 25,000 jobs over the next five years.

With serious obstacles such as endemic red tape and an inadequate banking system, the industrial modernization program will still not be sufficient to meet President Hosni Mubarak's pharaonic pledge to create 4,000 new factories over the next six years.

But Mohammad Fathi, a former Unilever executive whom Rashid brought with him to the Foreign Trade Ministry and masterminded the program, stressed the project would play an "important part" in achieving these goals.

Cairo,10 24 2005
The Daily Star
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