The Egyptian government, concerned that internal strife is undermining its central textile industry, is now weighing the possibility of directing LE 5 billion ($730 million) into it for the purposes of economic stimulus.
Beset by internal chaos, Egypt has persistently maintained that its textile industry remains strong, despite mounting evidence to the contrary. Now, its government is finally acknowledging the negative impact it has suffered from political tumult. One anonymous source, speaking to the Egypt Independent, said, “The government is really serious about saving the industry.”
A consortium of banks, including the National Bank of Egypt, has formed to discuss the matter. In advance of the potential financing, a Ministerial Committee has been convened to compile an exhaustive list of textile industry assets. Much of the money would be used to rebuild dilapidated factories and update increasingly outdated textile manufacturing machinery.
The textile industry in Egypt is state run and, as a consequence of stubborn political unrest, has been badly battered. In 2013, the Holding Company lost an estimated $2.9 billion. Also, the general consumption of cotton by Egyptian weaving and spinning mills recorded a 1.7% decline between March and May 2013. The consumption of imported cotton also experienced a marked decline, dropping 6.3%, according to data provided by the Central Agency for Public Mobilization and Statistics (CAPMAS).
The U.S. has imported $847 million worth of textiles and apparel from Egypt so far this year, down almost 4% from the same period in 2012.
Osama Saleh, the Minister of Investment, attributed the losses to degraded textile equipment and the increasingly dire financial circumstances of its workers. Fouad Abdel Aleem, chairman of the Holding Company, said that the steady rise of the price of cotton has also taken its toil on Egypt as well.
Egypt’s exports received a short-lived boost last December from the devaluation of its currency. However, businesses have struggled to capture these gains since the general economic condition continues to deteriorate and the garment industry is so dependent upon its own imports of yarn, fabric, and various accessories.
At least at this time, no specific timeline has been disclosed regarding the financing project. Much will depend on the input of the National Investment Bank, to which the Holding Company owes about LE 4.5 billion ($650 million).