CAIRO: Aswan Governor Moustafa El-Sayed has ordered the reopening of a steel production plant in the governorate after a 12-year closure, according to local reports.
El-Sayed attributed the plant’s closure to the prevailing anti-competitive practices in the sector of the time, which has been heavily criticized for being monopolized and for price manipulation, despite extensive raw materials reserves as well as suitable infrastructure in the area.
The plant will provide more than 3,000 jobs and is currently in its marketing phase.
Tarek Selim, an industrial economist and professor at the American University in Cairo, said that there exited a political monopoly by steel tycoon and former prominent NDP member Ahmed Ezz’s industries.
In terms of economic analysis, the fact that the factory could not open because it could not compete would depend on the capacity of that plant and what technology is used in terms of steel production.
Selim said that Ezz Steel monopolizing the market partially because of the monopoly on billet technology which other producers didn’t have. According to Selim, this created economies of scale that made it harder to compete for others in the sector creating artificial barriers to entry.
In order to resolve this issue, Selim called for more regulation of markets.
“I believe in striking a balance between competitive markets and regulation by creating incentives for entry and increasing investment in different sectors to create more competition.”
These investments should have priorities achieving higher returns for the national economy, with Egyptian investments taking precedents over foreign investments, and more value added, employment creating investments taking precedence of capital intensive investments.
El-Sayed added that he expects the completion of strategic plans currently underway for the governorate to increase urban expansion its cities and develop an attractive investment climate for industry, tourism and other service sectors.
