4 -10 April 2002
Issue No.580
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Al-Ahram Weekly Online 4 -10 April 2002 Issue No.580 |
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Mobilising modernisation
After three years of delay, the Industry Modernisation Programme is finally up and running. Niveen Wahish reports
For the past three years, the Industry Modernisation Programme (IMP) has been the stuff of controversy. The programme, scheduled to start in 1999, only launched last January. Approved by the People's Assembly back in December 1998, it aims at boosting Egypt's export capacity by improving industrial efficiency and competitiveness, bringing about policy and regulatory reform and boosting the capacity and services of both the Ministry of Industry and business associations. The sum of 250 million Euros has been earmarked by the European Union for the programme, in addition to 103 million Euros to be mobilised by the Egyptian government and 73 million Euros-worth of contributions provided by Egyptian industrialists.
The failure of the programme to materialise until early this year, despite the availability of the funding, had the European Commission threatening to withdraw its support. President Hosni Mubarak intervened in December 2000, issuing a presidential decree establishing the organisational structure for the programme.
Today, the executive body of the IMP, the Industrial Modernisation Centre (IMC) is located in a temporary facility on the eighth floor of the Arkadia mall overlooking the Nile Corniche. It will soon move to permanent headquarters on the second floor of the Federation of Egyptian Industries. Until then, IMC executives are hurrying to make up for lost time.
The Specific Financing Agreement that launched the programme set a time-frame of 54 months (due to expire in June 2003) for the programme. The three-year delay means that only a year and a half of the programme are left. To cover the lost time, Minister of Industry Ali El-Saidi has announced that the ministry is currently arranging with the European Commission (EC) for the programme to extend until 2006.
"To be able to do our job properly we need long-term planning. A year and a half is not enough. It's like taking off to land again," Sarwat Adam, executive director of the IMC, told Al- Ahram Weekly. He is optimistic that the EC will understand the need to extend the programme. "We have been given the green light by the EC to go ahead and make a one-year plan that starts in June 2002, which means that, in principle, the programme will be extended beyond its deadline." he said.
To raise awareness of the programme and its goals and to encourage the participation of business, the minister of industry and technological development last week spoke to members of the German-Arab Chamber of Industry and Commerce. He mentioned that certain goals were set for the programme under the terms of the agreement signed between the EU and the ministry of industry. These goals aim eventually to upgrade Egyptian industries so they can compete internationally. The minister particularly cited improving competitiveness in about 5,000 enterprises by offering technical assistance; improving the ability of business associations to represent and serve their members' interests; making 300 Egyptian business consultants and trainers more effective; and improving the business environment through institutional development of the ministry and other support institutions. He also commented on plans to better the legislative and administrative environment by means of draft texts outlining legislative and institutional reform in four areas that affect business.
Adam also described the more quotidian help the IMC can give business. "We cannot finance the purchase of machinery," he pointed out, but said the centre could provide letters of recommendation which companies could present to banks in order to win financing for the purchase of machinery. He also stressed that the programme is targeted at small and medium private sector companies, employing 10 to 1,000 people.
Other criteria are required of companies wanting to benefit from the programme. A company should be registered in Egypt, and the majority of the shares should be Egyptian. It must also
have operated for at least 12 months and have the financial records needed for the IMC to assess its chances of success. "The company must also have a vision of what it wants to do," Adam said.
"Our target is to assist companies capable of exporting." Adam said, explaining that anyone exporting will be able to fulfill the needs of the local market as well. "If you have the quality, productivity and an internationally competitive price, then for sure, your product will be accepted locally."
The centre will also give priority to industries the government thinks have potential. These are the food, textiles and leather industries and IT. According to Adam, IT adds a lot of value to the economy as a whole, and is, therefore, vital.
Due to time and money constraints, Adam said that the centre will start with companies that "need a little push to go over the top." He explained that the centre would work on raising the standard of companies to that of their competitors.
The IMC is currently looking at 65 companies which have applied to the programme for help. Once a company applies and is eligible, it is given a self-assessment booklet to fill out. The information in the booklet is then verified by the centre and a work plan is prepared for each company, stating the time-frame for assistance, its estimated cost and how much the programme will contribute to the company's overhaul. The centre also advises on whether the factory's machinery needs substituting. Adam believes a change of machinery is needed if Egypt's industrial sector is to turn around. "We need to move three times faster than our current pace. We'll never catch up because no one is standing still, they're running," he said.
Adam lamented the fact that exporting has so far been haphazard in Egypt, with companies failing to devise a marketing strategy and to study the taste and behaviour of their audience properly. "Now that we're playing in the same court as international companies, we have to use their tools, otherwise we are going to lose," he said. Adam added that exporting was not a matter of marketing alone, but that the administrative organisation of the factory, order processing, and how long it takes to put the order out were also crucial.
Time and again, Adam highlighted the importance of quality. He said that in the past the Egyptian market was like a sponge and people, for lack of choice, bought whatever was available. That, he thinks, has now changed. With the increased liberalisation of the Egyptian market, and the availability of imported goods, Egyptian consumers are preferring non- Egyptian goods.
Competition is coming into our market. "They'll win over our home market as well," Adam said, adding that local companies should be at an advantage, at least in their own backyards. But, alas, "Egyptian manufacturers have ruined the relationship with the consumer, who no longer trusts local products," he said.
The work plan of the IMC is overseen by the Industry Modernisation Council, in which both the government and the private sector are represented. It provides the strategies and guidelines and approves the annual work plan and budget of the centre. An advisory board advises the council on drafts of the annual work plan and the budget of the centre. A representative of the EC is also present on the board as an observer. "They have a right to be there and to ensure that everything we do is within the framework of the financing agreement," Adam said, adding that any country that contributed more than 10 million Euros to the IMP would have a vote in the advisory council.
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