Start Industry in Egypt

The Egyptian economy has been historically agricultural, with cotton as the mainstay. Land prices are extremely high because of the shortage of arable land, and output of food is not sufficient to meet the needs of a 2.1% population growth rate as of 2003. Although Egypt has expanded its private sector in recent years, industry remains centrally controlled and for the most part government owned; since the 1950s, the government has developed the petroleum, services, and construction sectors, largely at the expense of agriculture.

 

Egypt's significant economic growth rate from 1975 to 1981, made possible in large measure through foreign aid and credits, had declined to about 5% by 1986. Revenues for 1985–86 from petroleum exports, Suez Canal traffic, tourism, and remittances from Egyptians working abroad were eroded in the wake of sharp declines in international oil prices and developments in the Iran-Iraq war. The inflation rate grew from less than 5% annually in the 1960s to nearly 23% by 1986, reflecting worldwide price increases and the government's deficit spending. Egypt's economic position was strengthened when the Gulf states and the United States rewarded the Egyptians for their role in forming the Arab anti-Iraq coalition, reducing external debt to about $40 billion in 1990.

 

 

Egypt at the time of the 1952 revolution was much further advanced industrially than any other Arab country or indeed any country in Africa except South Africa. Under the socialist Nasser administration, the government coordinated industrial expansion and the establishment of an industrial base. As a result, bureaucracy and a dependence on political directives from the government became common to Egyptian industry. Since the early 1990s the government has promoted privatization as a way to eventually increase industrial output.

 

Industry accounted for 30% of GDP in 2001. Major industrial products included textiles, chemicals (including fertilizers, polymers, and petrochemicals), pharmaceuticals, food processing, petroleum, construction, cement, metals, and light consumer goods. The clothing and textiles sector is the largest industrial employer.

 

Greater Cairo, Alexandria, and Helwan are Egypt's main industrial centers, producing iron and steel, textiles, refined petroleum products, plastics, building materials, electronics, paper, trucks and automobiles, and chemicals. The Helwan iron and steel plant, 29 km (18 mi) south of Cairo, using imported coke, processes iron ore mined near Aswan into sheets, bars, billets, plates, and blooms.

 

The petroleum industry accounts for 40% of export earnings, but there are concerns that by 2005–10 Egypt will have to import oil, as oil fields mature and domestic demand increases. Egypt's proven oil reserves in 1999 were estimated at 3.5 billion barrels. In 2002, the country had 9 oil refineries, and was producing 631,616 barrels per day of crude oil, down from 748,000 barrels per day in 2000. Egypt is encouraging oil exploration, but natural gas is becoming the focus of the country's oil and gas industries. In 2002, two multi-billion dollar liquefied natural gas projects designed to export gas to Europe were underway. A large natural gas field off the Mediterranean coast of the Egyptian city Damietta was discovered in 2002, with the field's reserves estimated at 530–1,060 billion cubic feet. Natural gas reserves in the country are estimated at 55 trillion cubic feet (Tcf).

 

Egypt's industrial sector has undergone major reforms since World Bank adjustment programs went into effect during 1991, privatizing and restructuring state owned enterprises. Some of the companies in important non-oil industries are technically in the private sector, but control still remains with the government.