The Federation of Egyptian Industries (FEI) affirmed that the current period is in need of new monetary policies that promote industrial investment, as well as new policies needed by the national economy and the Egyptian industry in particular.
The FEI said on Wednesday that policies pursued by the Central Bank of Egypt (CBE) in previous periods were appropriate to challenges of that stage, and expressed its appreciation for the decision of the political leadership regarding the change that took place in the leadership of the CBE.
Furthermore, the FEI affirmed its constant interaction with all measures aimed at achieving the interests of the Egyptian economy, increasing investments in the industrial sector, and solving all obstacles to attract more investments and increase the industrial sector’s contribution to the national economy.
Mohamed Al-Bahi, the board member of the FEI, stated, “A basic problem that the new governor must work on is the scarcity of financing for the industrial sectors, especially since many banks in Egypt do not provide sufficient financing for the industrial sector. The banks’ reluctance to finance industrial projects frustrated most business owners due to terrible guarantees imposed by the banking sector on manufacturers, as well as other obligations related to payment of labor salaries and production raw materials, whose prices have increased dramatically in light of the current global crises.”
Al-Bahi added that it is necessary to reconsider the decision of opening documentary credits in banks, especially since such procedures are outdated and the world is now dealing electronically in import and export operations. Moreover, other countries do not prefer to deal with documentary credits because it disrupts the collection of money to meet obligations.
He explained that the process of opening documentary credits in banks requires transferring the entire amount of money to the supplier, and delay in transfers leads to a loss of confidence between manufacturer and supplier abroad. In addition, delay in financing or subsidising shipping or exporting leads to the interruption of shipments and their accumulation for months inside ports and customs, which incur fines on goods storage that turn profits of companies into losses.
He called for the need for a link between the Ministry of Industry and the relevant authorities, the first of which is the CBE, to manage hard currency in order to purchase production requirements for industry.
He further demanded that the procedures for establishing and operating factories should be completed electronically to facilitate procedures for factories and not waste time.
He concluded that Tarek Amer contributed greatly to upgrading the industrial sector, especially supporting small and medium-sized companies (SMEs) and providing financial support through bank financing for these SMEs to avoid halting their business in light of current circumstances.
Khaled Abu Al-Makarem, Chairperson of the Chemical and Fertilizers Export Council, agreed with Al-Bahi that reconsidering the decision of opening documentary credits is one of the most important files that must be reviewed by the new governor of the CBE.
Abu Al-Makarem added that the issue of currency management for external suppliers is also one of the important files awaiting the new governor.
He explained that working on this file may lead to alleviating significant financial burdens on manufacturers, especially in light of weak manufacturing operations, and at the same time, the manufacturer is committed to paying taxes, salaries, customs, and other obligations.
Abu Al-Makarem confirmed that many factories were threatened with closure due to lack of raw materials and production requirements, which negatively led to price hikes in the local market. Moreover, many manufacturers in Egypt no longer have the ability to continue in light of the current situation in light of the raw materials crisis and the length of manufacturing process approvals.
