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Wednesday, 3 November 2021

Gov’t really wants us to cut down on imports

Import substitution is back on the Cabinet’s priority list: The government is setting up a new committee on import substitution and growing domestic manufacturing, according to a statement following the weekly cabinet meeting. The committee is mandated with laying out proposed steps to encourage industrial investments in the sectors specified by the Trade and Industry Ministry where domestic manufacturing is the most lacking, the statement says. The strategy will be prepared with input from the private sector to avoid overcrowding or duplicates in certain industries. The committee, headed by the Trade and Industry minister, will prepare quarterly reports on its progress and report these findings to the prime minister.

This might ring a bell for longtime Enterprise readers: Back in 2018, Cabinet — which was then headed by Sherif Ismail — had ordered a study of the total import of goods and services over the previous three years to help the government set policy priorities for which goods can be manufactured by the private sector domestically. The move was meant to reduce unemployment and help narrow the current account deficit.

It’s as good a time as any to prioritize cutting back on imports: Egypt’s current account deficit widened by USD 7.2 bn in FY2020-2021, as a “noticeable drop” in tourism revenues meant there was less to offset expenditures on imports, according to Central Bank of Egypt figures released last month. Egypt’s spending on non-oil imports rose 11% y-o-y during the first half of the current calendar year, rising to USD 36.6 bn, Trade and Industry Ministry figures previously showed.

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