Egypt's Textile Boom
An IMF-sponsored reform program has encouraged the development of the nation's export potential
CLOTHING stores are popping up everywhere on Egypt's streets, reflecting a five-fold increase in clothing production in the last decade.
In fact, clothing manufacturing is the nation's fastest-growing industry, as a result of economic reforms inspired by the International Monetary Fund (IMF), according to Egypt's General Organization for Industrialization.
"In the last three to four years there has been very fast development in the quantity and quality of ready-made clothes," says M. A. Mongi, deputy chairman of GOFI. "This growth is not just for the local market, but also for export."
Clothing production has increased from nearly 7,000 tons in 1980 to 37,000 tons in 1990, according to government estimates. In 1991, over $150 million worth of garments were exported to the United States. In 1986, only $5 million in clothing was exported. But production quality and technology must improve for Egypt to compete with Southeast Asian exporters, experts here say. Indeed, Egypt's apparelmakers may be threatened by foreign imports if the government lowers tariff barriers in five years, as plann ed.
Growth has been fastest in the private sector, Dr. Mongi says. With former president Anwar Sadat's 1974 open-door policy to encourage private investment, private entrepreneurs whose businesses had been nationalized began to return. Egypt's 1991 agreement with the IMF and the World Bank has made private investment in the country even easier. The local currency has been liberalized and government bureaucracy limited.
"The garment industry ... did not exist before we started in 1974," says Albert Ashba, chairman of Mobaco.
Clothing is a favorite investment. With a population of nearly 58 million, growing by 1 million every nine months, there is a ready market of consumers. Egypt also has the raw materials (high-quality cotton), cheap labor (the average factory worker makes from $45 to $60 per month), and extensive experience with textiles.
Today, besides local brand-name shops, foreign franchises including Benetton, Stefanel, Joval, and Mex, are located here. These firms give their Egyptian licensees technical training, fabrics, and patterns in return for a percentage of sales income.
Eighty percent of Egypt's textile industry is still owned by the government. While it has promised to start selling these businesses, entrepreneurs say they would rather start anew than deal with the old machinery and excess workers of the publicly held firms.