Alexandria the great: With a number of advantages, the city has a bright future

Founded by Alexander the Great and famous for its classical history, Alexandria – now Egypt’s second-largest town and the biggest city on the Mediterranean – is also arguably the country’s industrial heart, with around 40% of national industrial activity taking place in and around it.

KEY LOCATION: Foremost among the city’s advantages is its coastal location and status as the country’s main port, “Egypt’s biggest advantage is its location and cost-competitiveness. The distance to European markets is a maximum of three to four days by ship,” Mounir A Shehfe, chairman of Shehfe Casings Company, told OBG. The city is also linked by both road and rail to the capital Cairo, about 220 km way. “Alexandria offers a very unique location for industry,” said Nayera Abd El Moneim Ahmed, head of the investment service at the General Authority for Investment and Free Zones (GAFI) in the city. “The city boasts free zones, two marine ports, international roads and two airports.” GAFI also operates a one-stop shop for firms investing in both the free zone and inland at which 29 government agencies are represented, and which aims to allow multinational companies to be fully registered and established in Alexandria within three days.

PORTS: Among the main advantages for export-oriented industries offered by the city are its ports, though which around 75% of foreign trade passes. These are the main Alexandria Port and the Port of El Dekheila, an extension of the main wharf to its west.

The two are the largest and second-largest ports, respectively, by cargo capacity in the country, at 36.8m tonnes for Alexandria (27.5% of national port capacity) and 22.1m tonnes of capacity for El Dekheila. The main port covers a land surface area of 16.5 sq km and offers 67 berths, stretching over 10 km, with water depths of between 8.5 and 16 metres. El Dekheila is smaller, with a surface area of 3.5 sq km and 14 berths of a combined length of around 7200 metres, but offers draughts of up to 20 metres. In February 2012 the Qatari and Egyptian governments agreed to upgrade El Dekheila.

IN THE ZONE: There are two major industrial zones in the Greater Alexandria urban area. These are, respectively, Amreya, at around 30 km west of Alexandria, and New Borg El Arab, another 30 km further west. Amreya is the site of the city’s 5.2m-sq-metre public free zone – one of 10 such zones in the country – along with the major petrochemical plants. Borg El Arab covers an area of 47,500 feddans (1 feddan:1 acre), of which 26,300 has so far been built on, and contains approximately 1800 factories, concentrated in industries such as food, textiles, plastics and carpentry. The zone also has its own airport. Moreover, there are a further eight industrial zones in the governorate of Alexandria, namely Ajami, Mergham, Al Nahda, Al Nasseria, Ohm Zagheo, New Manshia, Seibco and the K31 Desert Road Zone.

SECTOR BY SECTOR: In terms of the number of companies registered in the city, food and agro-industry is one of the largest industrial sectors, with 350 companies active in the field of vegetables, 192 in prepared foodstuffs and 50 in livestock. The other major sectors in terms of the number of companies are textiles (284 firms), chemical products (176) and plastics and rubber (101).

In addition, the city is Egypt’s petrochemicals and refining centre; the country’s only producer of ethylene and polyethylene, Sidpec, is located at Amreya and a new firm, Ethydco, is being established in the same area. A $400m styrene and polystyrene plant opened in February 2013 at El Dekheila.

CHALLENGING TIMES: Alexandria has, of course, been affected by some of the same challenges as the country as a whole in the wake of the 2011 revolution, with the most prominent being security. “We now have to pay for security to protect cargoes on their way to airports and seaports as they have been stolen on roads, even when travelling short distances such as from the Borg El Arab industrial zone to the airport,” said Hany El Menshawy, CEO of seafood appetiser producer Summer Moon, who sits on New Borg El Arab’s board of trustees. Speaking to OBG in March 2013, El Menshawy told OBG that in the previous three months 12 factories had been robbed, and that personal security and extortion was a serious concern. “Delivery and distribution are some of the biggest challenges facing Egyptian manufacturers,” Mohamed Sabry, chairman of textile and furniture producer Sabry Group, told OBG.

SHARED CONCERNS: Other firms echo these concerns. “We used to be able to export at any time of day or night,” said Mohamed Kamal, export manager and board member of Cold Alex for Food Processing, which is based in the free zone. “However, trucks can no longer leave after six or seven o’clock in the evening, and if they are going to a port that is far away they need a police escort, which has to be paid for and isn’t always available.”

However, within the free zone itself security is stronger. “The police provide security here and the free zone has been one of the areas least affected by recent security problems.” Labour unrest has been a problem since the revolution in 2011. However, local industrialists say the situation is improving. “There are still strikes, but significantly fewer than before,” El Menshawy told OBG. The workforce is ultimately an asset and could provide much-need manpower as the economy grows. Sabry told OBG, “Egypt has the advantage of having a large and youthful workforce, so it is just a matter of giving them the appropriate training to enhance their productivity.”

INFRASTRUCTURE: A longer-standing challenge is infrastructure; while the city offers the largest ports in the country, local industrialists say that the wider infrastructural situation can be problematic. “Alexandria is crowded and the infrastructure is not sufficient for industry at the moment,” said Kamal. A train service between Alexandria and the Borg El Arab Zone was established two years ago, at a cost of around LE700m ($99.6m), but its impact so far has been muted. “Transportation from Alexandria is expensive and the workers have to get up at 5am and don’t get home until 9pm, and are therefore often very tired, which undermines efficiency,” said Bülent Aytaş, financial coordinator at textile firm Rubyed Garment, based in Borg El Arab.

Traffic in the city is a major problem, particularly on port roads. Kamal explained that because of problems affecting the roads to some ports in particular, as well as unrest in the port city of Port Said, road congestion had worsened at Alexandria Port and El Dekheila in recent times, and at Damietta port. Alexandria also suffered from brief blackouts in December 2012 as a result of fuel shortages, yet local industrialists say that the problem has been minor.

UPGRADES: Efforts are being made to improve infrastructure in the city. Between 2007 and 2012 the World Bank directed the Alexandria Development Project, to help the city’s economic and social development. It focused on four broad objectives: encouraging private investment in the areas surrounding Lake Mariout; improving accessibility and reducing travel times; providing basic utilities to informal housing settlements; and streamlining procedures for starting a business. The project also included constructing new links between cities, industrial zones and other areas and encouraging investment by making the process of acquiring land easier. The bank contributed $100m of the project’s $110m budget, about 55% of which went to transportation.