The textile industry is Egypt's second largest industrial sector and has seen recent growth. Egypt is known for its long-staple cotton and has shifted its focus from imports to growing domestic cotton. The government is working to develop the textile city of Sadat over 7 years and has signed agreements to increase value addition to Egyptian cotton. The largest export markets for Egyptian garments are the US and EU. Despite growth, high worker turnover and a need for improved working conditions and management remain challenges for the industry.

2. Introduction
• The Arab Republic of Egypt, or Egypt as fondly known by all, is the Mediterranean,
transcontinental country, spanning through Africa and Asia, joined by a land bridge,
Sinai Peninsula.
• Known for its earliest developments in the fields of writing, organized religion,
agriculture, and urbanization, Egypt’s legacy is reflected in its rich cultural heritage
and national identity.
• Egypt’s textile history is as rich as its cultural history. The textile industry in Egypt is
its second largest industrial sector.
• Egypt is known for its Egyptian Extra Long Staple Cotton, competitive labor costs,
geographical proximity to major markets, and centuries of textile experience.

3. Why Invest in Egypt?
• The Egyptian garment and textile sector has seen a rebound and a new spurt of growth in
the recent years.
• Egypt’s focus has shifted from imports to growing quality cotton crop. The Ministry of Trade
and Industry (MTI), Egypt has shown faith in the industry for enabling in Egypt’s trade
balance in 2017.
• In 2017, Egypt’s exports increased by around 12%, while the imports saw a substantial
decline of around 59%.
• In 2017, the industry has contributed to more than 3% of the country’s GDP, while
providing employment to a third of Egypt’s total industrial labor force.
• By September 2017, the garment exports alone reached $951 million for the year, as per
the data provided by the Readymade Garments Export Council of Egypt.

4. Policy Initiatives
• The government is working on multiple policy initiatives to bring the garment and textile
industry back to life in the country.
• In July 2017, the Ministry of Trade and Industry and Ministry of Agriculture signed a 2 year,
$1.72 million protocol with the Italian Agency for Development Cooperation and the UN
Industrial Development Organization, to grow value addition to Egyptian cotton. This
agreement includes capacity-building for the training of 400 cotton farmers, workers, and
students at around 15 textile businesses.
• In 2017, MTI, Egypt has also announced that it working for the development of a national
strategy for readymade garment and textile industry in the country.
• In January 2018, MTI has also announced it plans (worth $2 Billion) to work on the
development of the industry in Egypt’s biggest textile city of Sadat, over a period of 7 years,
aiming for project completion by 2024.

5. International Trade Agreements
• the US is the most popular export destination for the Egyptian garment and textile industry.
53.5% of RMG exports from Egypt go to the US.
• This is closely followed by Egypt’s EU exports (31.7% RMG), as per the General Organization
for Export and Import Control data.
• Egypt’s Qualified Industrial Zone (QIZ) program, allows garment manufacturers in the
Egyptian QIZ to export their output to the US at zero tariff rate.
• A HSBC 2016 report states that there are over 4000 companies operating in Egypt out of
which around 196 are in free zones.

6. FDI Inflow
• the recent growth in the industry has garnered global attention.
• In May 2017, Chinese textile company Shandong Ruyi Technology announced its interest
in building an $800 million RMG & textile industrial complex in Egypt.
• In the Cairo Fashion and Tex Exhibition, 2017, several Indian players announced their
plans to collaborate with Egypt’s textile industry.
• Proximity to the EU, Africa, and the MENA region also makes Egypt an attractive
destination for foreign players to invest in.

7. The enormity of the
Egyptian Industry
• the main players in the African region are Kenya, Ethiopia, and Egypt.
• The sheer size of the garment industry in Egypt gives it a driving power over
its neighboring competitors.
• In 2017, garment exports alone for Egypt amounted to 1377 million, while
Kenya exported 627 million, (data source: https://comtrade.un.org/) and
Ethiopia exported 68 million (data Source: https://www.trademap.org/)
worth of garment products.

8. Strategic Location
• Egypt is an intercontinental country, and multiple ports and facilities
enable it to enjoy a strategic advantage, for exports to the US and the EU.
• The Canal region in Egypt is dedicated primarily to denim production.
• The Suez Canal facility is used to felicitate exports to the EU and Asian
countries.
• The Alexandria region also enables exports due to the presence of various
ports.
• The Middle Delta region is getting a lot of attention from new players
entering into the sector.

9. Challenges faced by the Egyptian
Textile & Garment Industry
• The Egyptian textile and apparel industry in on an upward trend, but the biggest concern
still facing the industry is the high worker turnover that affects the overall cost of doing
business in this sector.
• The Egyptian factories employ a lot of migrant labor, which further worsen the turnover
troubles for them.
• Also, qualitative management issues and lack of health and safety awareness prevents the
industry from creating a more promising work environment for the labor.
• As the global competition in this sector is intensifying, Egypt needs to focus more on R&D
and invest in building technology to sustain its industry.
• The government does have a vision for the industry now, but this vision has to translate
into strategic plans to ensure the industry keeps moving on a growth trajectory.

10. Future of Egyptian Garment Industry
• Egyptian garment industry is trying to boost its overall potential as a sourcing
destination on the world map.
• The industry still needs to work on its labor efficiency, working conditions, and
personnel management factors, but it has started to gather global attention, from
brands like Decathlon, PVH and Gap.
• Country’s unstable political environment and the economy have reflected in its industrial
performance in the past, and Egypt has to overcome this challenge to grow its prospects
in the world garment market.
• The key to survival here is the Egyptian local market. The size of Egypt’s local market has
the strength to support Egypt’s trade imbalances to some extent which can be very
beneficial for the garment industry there.

11. For more insight on this topic, visit
www.stitchdiary.com