- Title: Egyptians ditch imports and buy local as pound sinks
- Date: 12th February 2017
- Summary: CAIRO, EGYPT (FEBRUARY 5, 2017) (REUTERS) VARIOUS OF WORKERS OPERATING MACHINERY INSIDE LOCAL CHOCOLATE FACTORY COVERTINA CHOCOLATE-MAKING MACHINE WORKERS OPERATING MACHINERY INSIDE COVERTINA FACTORY VARIOUS TRAYS OF CHOCOLATE SLIDING IN MACHINE VARIOUS OF WORKER STACKING TRAYS OF CHOCOLATE ON TOP OF EACH OTHER (SOUNDBITE) (Arabic) COVERTINA CEO AND BOARD MEMBER, MOSTAFA SAYED SALAM, SAYING: "Egyptian products were able to prove themselves in the market, at the same quality of imported goods, and also importers of chocolate, say for example products from Turkey, after the flotation of the currency, it became hard for importers to sell the chocolate at the old prices, and therefore consumers were forced to turn to local products which enjoy the same quality of the imported." CAIRO, EGYPT (FEBRUARY 6, 2017) (REUTERS) SHOP EXTERIOR VARIOUS OF SHOPPERS BUYING GROCERIES COSTUMER PAYING AT CASHIER SHOPKEEPERS SORTING THROUGH PRODUCTS AT SHOP (SOUNDBITE) (Arabic) MANAGER OF RETAIL CHAIN SAMY SALAMA, EMAD MAHER, SAYING: "The decision (to float) led to an increase in all prices. All prices in Egypt have recently gone up by 80 percent. There isn't one customer who walks in without complaining. Things that used to cost 1 pound now cost 5, and whatever used to cost 5 pounds, is now 10 pounds. Some prices are exaggerated and I don't know why. Is there a reason the government is letting this happen? What are their reasons? We don't know." WOMAN BUYING GROCERY BOXES OF LOCAL SWEETS ON SHELF VARIOUS OF COSTUMERS INSIDE SHOP (SOUNDBITE) (Arabic) MANAGER OF RETAIL CHAIN SAMY SALAMA, EMAD MAHER, SAYING: "(Switching to local products) has increased by 90 percent. Firstly, because of the difference in cost. The quality (of the local products) is also considered very close to the imported. In some products, you can compare the local and imported, and not find much difference. But Egyptians are obsessed with everything foreign." CAIRO, EGYPT (FEBRUARY 7, 2017) (REUTERS) VARIOUS OF WORKERS INSIDE 'YASMINE FOR COSMETICS' FACTORY VARIOUS OF YASMINE LOTION BOTTLES ON SLIDE WORKER STICKING INSTRUCTIONS ON YASMINE LOTION BOTTLES YASMINE LOTION BOTTLES ON MACHINE (SOUNDBITE) (Arabic) CHAIRMAN OF 'YASMINE FOR COSMETICS', HESHAM ZAHRA, SAYING: "There's no doubt that, in all fields not just the cosmetics industry, Egyptians have always chosen imported products over the local. But because of the increase in prices of imported goods, Egyptians are now forced to turn to local products, which have become more affordable. The quality is what will decide the rest; whether the local product will continue to win or not will depend on its quality. If the quality is good, people will keep buying it, again and again. It's survival of the fittest." WORKERS OPERATING MACHINE INSIDE YASMINE FACTORY VARIOUS OF LOTION BOTTLES BEING PRESSED BY MACHINE VARIOUS OF FACTORY WORKER PUTTING LOTION BOTTLES INSIDE BOX (SOUNDBITE) (Arabic) CHAIRMAN OF YASMINE FOR COSMETICS, HESHAM ZAHRA, SAYING: "Our production has increased by 25-35 percent since the decision (to float) until today - and that's because there are still remnants of imported goods in the markets here - but we're expecting growth to reach 100 percent by the end of the year." VARIOUS OF WORKERS PUTTING LOTION BOTTLES INSIDE BOX
- Embargoed: 26th February 2017 12:18
- Keywords: Egypt Industry Production Factory Currency Float Economy Society Produce Imports Manufacturing
- Location: CAIRO, EGYPT
- City: CAIRO, EGYPT
- Country: Egypt
- Topics: Currencies/Foreign Exchange Markets,Economic Events
- Reuters ID: LVA001637REC5
- Aspect Ratio: 16:9
- Story Text: At Egyptian chocolate-maker Covertina, business is booming.
Chief Executive Mostafa Sayed Salam said production had risen 19 percent in 2016 from the previous year.
Since the pound dived in November after currency flotation, shoppers who traditionally preferred everything foreign have ditched pricey imports to buy local.
"Egyptian products were able to prove themselves in the market, at the same quality of imported goods, and also importers of chocolate, say for example products from Turkey, after the flotation of the currency, it became hard for importers to sell the chocolate at the old prices, and therefore consumers were forced to turn to local products which enjoy the same quality of the imported," Salam said.
The pound's flotation and an ensuing increase in tariffs on more than 300 products shipped from abroad have hit importers hard. But the measures have been a boon for domestic manufacturers such as Covertina.
Egyptian-made products are much more affordable for customers who are increasingly price conscious as inflation has shot above 28 percent.
After Egypt abandoned its peg of 8.8 pounds to the dollar on November 3, the currency has roughly halved in value to around 17.75.
Floating the pound helped Egypt secure a $12 billion IMF loan in return for a reform programme that includes tax increases and electricity subsidy cuts, driving up inflation.
Egypt also raised customs tariffs on many luxury goods to more than 50 percent, plugged customs loopholes, and tightened quality controls in an effort to rein in trade deficit.
According to Emad Maher, manager of hypermarket chain Samy Salama, switching to local products has increased by 90 percent, mainly because of the price difference.
"The quality (of the local products) is also considered very close to the imported. In some products, you can compare the local and imported, and not find much difference. But Egyptians are obsessed with everything foreign," he said.
Multinationals are taking notice. Nestle, the packaged food giant, said in January it had signed a deal to acquire Caravan Marketing Company, an Egyptian instant coffee maker that had increased its domestic market share due to competitive pricing.
With Egypt long dependent on imports, the trend suggests the government's efforts to narrow a big trade deficit and boost domestic industries are starting to work.
A government official told Reuters this month that the deficit had narrowed by 17.4 percent compared with 2015.
As the unofficial figures suggest, the weaker pound is also helping Egyptian exporters.
Hesham Zahra, chairman of Yasmine cosmetic company, said production had risen 25-35 percent since the flotation boosted sales both at home and abroad.
"The quality is what will decide the rest; whether the local product will continue to win or not will depend on its quality," he said, adding that Yasmine lotion retails for a quarter of the price of some imported brands.
Trade and Industry Minister Tarek Kabil told Reuters in October that Egypt had produced $4 billion worth of import substitutes since the start of 2016 and aimed to expand domestic industry by 8 percent in three years.
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