The stability of the exchange rates in the past months contributed to the absence of significant price increases in the prices of raw materials and construction materials similar to the highs in the market before the flotation, according to Tarek Akkary, an expert in administrative and economic systems and the CEO of Online Modern Systems Industries (OMSI).
Akkary said the recent hike in the price of steel came as a result of many factors, including the shortage of scrap metal worldwide, which is used in production.
Akkary added that the relative stability of cement prices before and after the flotation is due to the association of the product mainly with energy prices, which represents 35% of the cost of production. Furthermore, aluminium prices increased by up to 20% after flotation compared to 70-80% before flotation.
He pointed out that the current period does not witness any shortage in the provision of dollar currency by banks to all manufacturers and importers and the currency is provided in accordance with the basic commodities of agricultural crops, medicines, and food, and then industry raw materials. Additionally, there are no crises in the supply of any goods including luxury ones and products in the market.
“The recent period witnessed unjustified or reasonable hikes in the prices of many goods and products following the flotation, which doubled in some products, while the cost of import and production did not exceed that percentage,” said Akkary. “After the flotation, the dollar became available in banks at a value equal to the black market—and with the disappearance of the black market, the dollar value fell. However, the custom exchange dollar increased to EGP 16.6.”
He explained that this difference in the cost of import before or after the flotation is relatively equal, and doesn’t exceed 15 to 30%, according to the relative increase in the value of the customs exchange rate in the cost.
He added that the last period witnessed the adoption of the state in the implementation of its major projects by means of locally manufactured raw materials, consequently reducing the dependence on import ones, to stimulate the industry. Such an approach will contribute in the coming period to achieving returns and improving the quality of products and the entry of new entities in the production process.
The CEO revealed that his company adopted a series of expansive policies during the current year and the next one, such as establishing several new projects with ORASCOM in 6th of October City, in addition to contracting a project with Al Kharafi Group. The company has recently completed the contract works for Emaar Misr, besides, it is negotiating launching business in the New Administrative Capital.
He pointed out that the current circumstances and challenges facing the government from the provision of financial resources require the adoption of non-traditional mechanisms, including the expansion of the scope of tax payment and the introduction of new tranches.