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Liana Lotfy • 2017 IFPRI Egypt Seminar Series: Unleashing Untapped Potential of Industrial Clusters in Egypt

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As part of IFPRI Egypt Seminar in partnership with the Egyptian Center for Economic Studies: "Unleashing Untapped Potential of Industrial Clusters in Egypt"

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Liana Lotfy • 2017 IFPRI Egypt Seminar Series: Unleashing Untapped Potential of Industrial Clusters in Egypt

  1. 1. To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 E g y p t M A K A R Y C O N S U L T I N G Mapping of Organic Clusters in Egypt “Support to Micro, Small and Medium Enterprises in Organic Clusters Project” December, 2017 Conducted by: In Cooperation with:
  2. 2. E g y p t M A K A R Y C O N S U L T I N G Contents of the Presentation 2 1.Purpose of the Study 1.Key Activities 1.Definition of Organic Clusters 1.Cluster Mapping Approach 1.Cluster Mapping Results 1.Cluster Selection Approach 1.Cluster Selection Results 1.Conclusion/ Recommendations The Developed Egyptian Cluster Map To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 1 2 3 4 5 6 7 8 9
  3. 3. E g y p t M A K A R Y C O N S U L T I N G 3 What is the Economic & Social Importance of Clusters?B. • Maximize economic impact through value added, productive jobs, and foreign exchange creation (direct & indirect) to reduce probability of shrinkage due to encountered challenges; • Preserve the local Egyptian culture, history and/ or authenticity. Why Mapping Study?C. • A powerful tool to access relevant information and improve knowledge/ data accuracy on (informal) organic clusters in Egypt (essence of development) towards better decision making. Is The Study Enough?D. • The first step in the road map for developing organic cluster map in Egypt and for future cluster(s) support and/ or development. A. What Are Organic Clusters? • Cluster is defined as a group of enterprises producing same or similar products, situated within a geographical area spanning over a few villages, a town or city, and facing common opportunities and threats. To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 1. Purpose of the Study
  4. 4. E g y p t M A K A R Y C O N S U L T I N G 1. Purpose of the Study (Cont’d) 4 Produce an interactive updatable map of organic clusters in Egypt. Recommend a representative list of six potential organic clusters (i.e. 3 in Lower Egypt and 3 in Upper Egypt) to be targeted by relevant stakeholders, and assess their needs in terms of financing, business development services, capacity development activities, and key required interventions. Capacity building to a team from SFD in field activities and mapping process in order to build and develop their capacity in cluster mapping and selection. Cluster Mapping Cluster Selection Capacity Building To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  5. 5. E g y p t M A K A R Y C O N S U L T I N G 2. Key Activities 5  Definition (process oriented);  Sequential clusters’ replicable identification, mapping & selection methodology;  Updating & upgrading map (capacity building).  Identified 193 concentrations of which 145 are organic clusters;  Collected statistical data on 145 organic clusters in 27 governorates covering 9 sub-sectors;  Presented data on simple, user friendly, interactive map;  Ranked 145 clusters by potentiality;  Recommended 6 potential clusters (related to SFD OCP). Activities Approach Output  Review of local & international experiences;  Intensive field work all over Egypt;  Contacts with around 300 stakeholders. To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  6. 6. E g y p t M A K A R Y C O N S U L T I N G 3. Organic Cluster Definition 6 Organic Initiated and/or expanded without governmental planning/ interventions. Industrial Production oriented only, i.e. agribusiness, handicrafts and industrial, and do not include service, creative, agricultural and natural resources clusters. Clusters Geographical Concentration In geographical proximity to each other, i.e. within the same city/ village. Interdependent Nature of the cluster (vertical/ horizontal/ large enterprise centered). Distinct Characteristics Competitive or “popular” on the basis of specific characteristics in products (such as low prices, high quality, innovative or customized products, green industries…etc.). Products Beyond Regional Concentration Clusters sell products beyond the district level. Contribution of MSMEs Composed of MSME enterprises with similar/complementary activities. Critical Mass Should consist of a minimum of 30 productive units/enterprises or employees. To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  7. 7. E g y p t M A K A R Y C O N S U L T I N G 7 “Organic Clusters” are defined as industrial interdependent concentrations, located in a geographical proximity, developed and/or expanded without government planning/intervention, producing similar or complementary products with distinct characteristics or competitive edge, having the experience or capacity to sell beyond their geographic boundaries, and with a minimum of 30 enterprises/employees. 3. Organic Cluster Definition (Cont’d) To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  8. 8. E g y p t M A K A R Y C O N S U L T I N G 4. Cluster Mapping Approach (Stage 1) 8 CapacityBuilding Phase Activities Tools Output Research Desk Research Analysis of international best practices and local initiatives - Initial Organic Cluster definition - Mapping approach - List of stakeholders Data Collection Collection of data relevant to identified clusters • Specific stakeholders’ questionnaire (Layer 2) • Clusters’ questionnaire (Layer 3) - Confirmed list of organic clusters + aggregate data collection & analysis Cluster Identification - Research on industrial concentrations - Building list of clusters • Location Quotient • General stakeholders’ questionnaire (Snow Ball) (Layer 1) - Preliminary list of clusters + general data collection Data Presentation IT Tool (Cluster Profile) - Develop interactive updatable map - Design & construct map - Data entry on map To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  9. 9. E g y p t M A K A R Y C O N S U L T I N G 9 5. Cluster Mapping Results 145 Organic Clusters To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 17 12 9 9 8 7 7 7 6 6 6 6 5 5 5 4 4 4 3 3 3 3 3 2 1 0 2 4 6 8 10 12 14 16 18 OC Distribution by Governorate
  10. 10. E g y p t M A K A R Y C O N S U L T I N G 10 Agribusiness (17) Food (31) Wood (14)Textile (46) Chemical (3) Metal (8) Mining & Construction (18) Paper & Printing (2) Leather (6) OC Distribution by Sector 5. Cluster Mapping Results 145 Organic Clusters To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  11. 11. E g y p t M A K A R Y C O N S U L T I N G 6. Cluster Selection Approach (Stage 2) 11 CapacityBuilding Phase Activities Tools Output Cluster Selection AHP Model (on basis of mapping data) Develop screening criteria & application on identified clusters - Ranking of clusters - Shortlist of 10 clusters Detailed Data Collection Gathering further data on shortlisted clusters. Further field work with shortlisted clusters (Layer 4) Assessment report for 10 clusters Cluster Recommendation Develop fine-tuned selection criteria AHP Model (on basis of further survey) List of 6 potential clusters for development Needs Assessment Further field work with the recommended clusters (Layer 5) Initial assessment reports for the selected 6 clusters In-Depth Analysis & Assessment To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  12. 12. E g y p t M A K A R Y C O N S U L T I N G 12 Criteria Ranges of Answers & Their Score A. Sustainability (40.3%) 1 2 3 A.1. Alignment with Governmental Policy (12%) Low Medium High A.2. Seasonality (8%) Random Seasonal All Year Long A.3. Challenges & Negative Social & Environmental Impact (8%) Challenges with High Impact Challenges with Moderate Impact Challenges with Minor Impact A.4. Nature of the Cluster & Linkages Existence/Potentiality (5%) Weak Linkages Moderate Linkages High Linkages A.5. Export Contribution (4%) below 10% 10% - 30% 30% + A.6. Presence of Support Firms (3%) No Support Firm One Support Firm More Than One Support Firm B. Size / Importance of the Cluster (33.9%) B.1. Total Number of Workers (14%) Below 30 31 - 500 500+ B.2. No. of Productive Units (11%) below 30 31 - 500 500+ B.3. Income Level (9%) Low Medium High C. Cluster Specific Preferences (25.8%) C.1. Percentage of MSEs (10%) Below 30% Between 30 - 70% Above 70% C.2. Percentage of Female & Youth (8%) 0% - 19% 20% - 50% 50% + C.3. Percentage of Formal Enterprises (8%) 0% - 19% 20% - 50% 50% + 6. Cluster Selection Approach (Cont’d) To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  13. 13. E g y p t M A K A R Y C O N S U L T I N G 13 Region Governorate Cluster Rank Lower Egypt Damietta ‫لألثاث‬ ‫دمياط‬ ‫تجمع‬ 1 Cairo (including Helwan) ‫القاهرة‬ ‫مدابغ‬ ‫تجمع‬ 2 Kafr El Sheikh ‫اليدوى‬ ‫للكليم‬ ‫فوه‬ ‫تجمع‬ 3 Gharbia ‫لألثاث‬ ‫كتامة‬ ‫تجمع‬ 4 Damietta ‫دمياط‬ ‫حلويات‬ ‫تجمع‬ 5 Upper Egypt Fayoum ‫تجمع‬‫قرية‬‫الخزف‬ ‫لصناعة‬ ‫تونس‬ 1 Luxor ‫األلباست‬ ‫من‬ ‫الخزفية‬ ‫للصناعات‬ ‫القرنة‬ ‫تجمع‬‫ر‬ 2 Sohag ‫اليدوى‬ ‫للنول‬ ‫الكوثر‬ ‫تجمع‬ 3 Qena ‫الحرير‬ ‫لمشغوالت‬ ‫نقادة‬ ‫تجمع‬ 4 Assiut ‫العديات‬ ‫ببنى‬ ‫اليدوى‬ ‫الكليم‬ ‫تجمع‬ 5 7. Cluster Selection Results  Sakiet Abu Sha’ara Cluster for Handmade Carpets was excluded from the selection since SFD started a diagnostic study on it before the mapping study. SFD conducted further studies and initiated development under the OCP in 2 of the 6 recommended clusters, i.e. Furniture Cluster in Damietta and Hand-Made Kilim Cluster in Fowa. To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  14. 14.  The map is the first step towards and a key initial stone in the development of a cluster map site to be accessible by key cluster stakeholders and a selection tool for future cluster development.  The next step is to seek policy initiations in line of the following: 1. Develop a common definition for organic cluster to be applied; 2. Identify a mechanism for cluster development and management; 3. Exchange experience, data and unify all the efforts for the benefit of cluster development in Egypt; 4. Initiate support/ strategy for key recommended clusters and help them overcome their challenges. E g y p t M A K A R Y C O N S U L T I N G 8. Conclusion/ Recommendations 14 To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  15. 15. The following observatories/maps are reviewed and analyzed: The Egyptian cluster map is inspired by and builds on the different international cluster observatories reviewed, as follows: o Enhanced intuitive filtering mechanism (similar to India, Canada, and Japan); o Few clicks to get a cluster profile (similar to Japan and India); o Full interactive map (similar to Europe); o Simple and user friendly. 15 E g y p t M A K A R Y C O N S U L T I N G To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 9. The Developed Egyptian Cluster Map
  16. 16. 9. The Developed Egyptian Cluster Map (Cont’d) The aim of the Egyptian cluster map is to provide a quick and easy way to:  Locate clusters by governorate and by sector;  Understand basic information on clusters and their production;  Identify clusters’ needs and challenges, and hence identify development priorities;  Locate clusters with specific features to be consistent with objectives of programs such as high percentage of informal companies (mostly helpful to the government), high export potentiality, hence higher possibility to contribute in economic growth and/ or high potentiality in creating jobs;  Initiate future collaboration for data exchange in order to update the map. 16 E g y p t M A K A R Y C O N S U L T I N G To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017
  17. 17. THANK YOU FOR YOUR ATTENTION! To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017 17 E g y p t M A K A R Y C O N S U L T I N G
  18. 18. E g y p t M A K A R Y C O N S U L T I N G 18 Reviewed Countries USA Serbia Romania Europe India Canada Bangladesh Japan International Local Programs CCI - UNIDO ATA - USAID Zaytun Project - USAID Leather Program EEDP - CIDA Poultry - UNIDO EPALM - UNIDO EMAP - UNIDO SME Dev. – Egyptian Gov. OC Project - AfDB MDG- F IMC Cluster Program SICDP - IMC To Conduct Mapping of Organic Clusters for Upper and Lower Egypt, December 2017

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