Do we need to reinvent the wheel? Or just make the wheel run?

28 Apr, 2018

In the last meeting of President el Sissi with the Economic Specialized Council the press release indicated the establishment of a new Industrial Cluster in Qualyiobia governorate (right next to Cairo). The idea of finally considering the industrial clusters as a developmental target is a great idea since it has been discussed over the previous two decades with no progress until this date.
However, acknowledging the importance of the topic, the question should be:
Is establishing new industrial cluster a priority? Or is it better to support the already existing industrial clusters that lack a great deal of government support?

In the beginning of the millennium a French researcher (Elisabeth Cottonet) who was studying in Egypt, wrote her thesis on the existing industrial clusters, their locations, economic activities, number of workers….etc. She described in details and using a thorough mapping system each of the Industrial Clusters. I thought it was one of the best studies ever written to describe the situation in Egypt.

Based on this study, and as participant in the writing of Egypt’s Human Development report 2005, I undertook an empirical study on the largest 15 of the 35 industrial clusters in Egypt. The fifteen main ICs are specialized in 4 basic activities: Food and Beverages; Furniture and wooden products; weaving, textiles and ready-made clothes; and heavy industries. They are geographically distributed between Lower-, Upper Egypt and metropolitan cities, however with higher concentration in Lower Egypt and Cairo.
The goal of the study was to understand more about the kind of services that were provided to them either by the government or the civil society organizations. The shocking news were that these large industrial clusters – in terms of number of workers or number of enterprises- lack most of the necessary support elements such as the financial and the technically specialized services that help raise their productivity and makes them more capable to develop, expand and export.
The study mentioned in details what was needed in each IC and how much it would cost, and how many direct and indirect jobs would be created accordingly.

What do we need to focus on right NOW?
We need to:

Revisit the existing clusters, which are rich in their horizontally and vertically integrated industries whether micro, small, medium or large.

Identify what each cluster lacks in services, infrastructure or means of optimal communications in 2015.

Based upon the new information, the government should devise a plan of action fitting to the needs of each of the different clusters, while taking into account the opinion and support of the business community to improve the existing infrastructure, provide the financial and technical support services required.

The donor community and international assistance organizations could be crucial and helpful to the ICs. Since international donors could play an important role especially in providing business resource services, in connecting the ICs with related industries abroad, and designing specialized training programs. Thus, a tripartite cooperation between the government, the business community and the donors’ programs could be the right mix that Egypt needs now.
That’s the way to go. 
Alia El Mahdi


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