Near the shores of Anfoushi in the Bahri area of Alexandria, dozens of workshops for manufacturing ships, boats, and yachts (a trade that began when Muhammad Ali Pasha established a shipbuilding complex in the area) now sit idle. Among these workshops is “Farag Amer & Sons,” a family business passed down through generations. However, in recent years, their craft has been battered by the skyrocketing prices of raw materials, following the devaluation of the Egyptian pound five times since 2016, and an inflation rate that has surged to 33.7%. This has led to a noticeable decline in production and a recession in the local market for manufacturing ships, boats, and yachts, forcing many workshop owners to close their doors and lay off workers, which has negatively impacted the sector’s exports.
Mohamed Farag, who runs his father’s workshop with his siblings in the Anfoushi area, spoke to Zawia3, saying: “The prices of raw materials have increased three to four times in recent years. For example, the price of Swedish wood has risen from EGP 4,500 ($94) to between EGP 19,000 and EGP 20,000 ($396 to $417). The price of green wood has jumped to around EGP 2,700 ($56) per meter, up from EGP 500 or EGP 600 ($10 to $13), and the price of nails has soared from EGP 10 ($0.21) to EGP 70 ($1.46) per kilogram. The cost of goods changes daily.”
According to Farag, the surge in raw material prices has cut the output of workshops manufacturing ships, boats, and yachts by more than half. Operating a shipbuilding workshop requires at least seven workers, each earning a daily wage of EGP 130 to EGP 150 ($2.71 to $3.13).
Farag reveals that the difficulty in obtaining fishing licenses has caused workshops to cease the production of fishing boats, focusing instead on renovating and upgrading existing vessels, as well as manufacturing tourist ships and yachts, including those for safari, leisure, and tourism. His workshop specializes in building wooden tourist yachts that start at 16 meters in length, as well as iron yachts that reach up to 30 meters. However, the sharp increase in iron prices has led many workshops to stop manufacturing iron ships and yachts, opting for wood instead. Farag also notes that workshop owners are responsible for issuing construction certificates for the ships or yachts and handling the procedures for obtaining tourism licenses, while no licenses are issued for fishing boats. Some even sell their boat licenses for as much as EGP 500,000 ($10,417).
According to the Law on the Protection and Development of Lakes and Fisheries (Law No. 146 of 2021), approval from the Lakes and Fisheries Protection Authority is required for the design and dimensions of fishing vessels or when modifying them, in accordance with regulations set forth by the executive bylaws. Fishing vessel licenses, or renewals, are prohibited unless the vessel is equipped with a tracking device. Licensing fees, as per Article 47, and their renewals vary according to different categories, with a maximum of EGP 5,000 ($104). The law also prohibits the operation of any vessel under another vessel’s license or the transfer of a license without the authority’s approval. If a vessel is lost or out of service for five years, the license may be used for another vessel.
Farag also mentions the need to import engines required for operating ships and yachts, which are not produced locally, but their prices have skyrocketed. Marine engines now cost between EGP 1.5 million and EGP 2 million ($31,250 to $41,667). “We are now forced to use land engines, where the price of a 600-horsepower land engine is around EGP 500,000 ($10,417), which significantly increases the total cost of ships. The cost of building a yacht that is 20 meters long can reach around EGP 2 million ($41,667), and the construction period for a large tourist yacht can range from a year to a year and a half, depending on the client’s financial resources. Many workshops in Anfoushi have closed, and most suffer from a recession and remain inactive most of the time, leaving only one or two workshops in the ship complex still operating.”
For years, the Anfoushi shipbuilding workshops, including Farag Amer & Sons, have been exporting a significant portion of their output to Arab and foreign countries, most notably Libya, Jordan, and Turkey. However, the decline in production due to rising raw material prices has led to a drop in exports. According to local residents in Alexandria, several shipbuilding workshops that had been on the Anfoushi shore for years have been closed and replaced by various clubs.
In 2021, there were approximately 65 ship, boat, and yacht manufacturing workshops in Alexandria, most of them located on the Anfoushi shore and others near the Citadel of Qaitbay. However, their number has now been reduced by nearly half.
Development Threatens Workshops
In contrast to the recession and declining production in Anfoushi, the ship and yacht manufacturing workshops in the city of Rashid—administratively part of Beheira Governorate in the Nile Delta—are bustling like a beehive, manufacturing ships and tourist yachts for clients who operate them in the tourism sector in Hurghada and Sharm El-Sheikh. Most of their production is dedicated to the local market, but other obstacles are threatening them, primarily the absence of licenses and the shortage of and interruptions in electricity.
Zawia3 spoke with Hussein Adel (a pseudonym), who manages a shipbuilding workshop in Rashid with his brothers and cousins, a business established by their father and uncle. The workshop was founded 30 years ago, with the trade and workshop name being passed down from their grandfather, who started building ships in the 1950s.
“We have a major issue: all the workshops here in Rashid operate without licenses, even though some have been around for 30 years. The workshops are located within the development line, so several were demolished during the Corniche expansion, from the beginning of the Corniche to the new fishing port. The local council refuses to grant us licenses without approval from the General Authority for Nile Protection, which never grants approval. My father tried for years to obtain a license, but to no avail.”
Like other ship and yacht manufacturing and repair workshops across Egypt, the increase in the prices of raw materials, engines, and spare parts due to the devaluation of the Egyptian pound against the dollar has led to significant losses and reduced profit margins. However, Adel tells Zawia3 how Rashid shipbuilders resorted to bank loans or formed groups to share the costs of production, especially since the shipbuilding cycle lasts from a year and a half to two years. Nevertheless, their profits have significantly declined compared to previous years, despite their continuous work. He notes that they used to build boats from local wood, mainly mulberry and eucalyptus trees, but the shortage of wood in Egypt, along with the inferior durability of wooden boats and yachts compared to those made of iron—making them prone to damage and in need of more frequent repairs—has forced them to switch to building iron ships and yachts.
“One of our major problems as workshop owners in Rashid is the inadequate power supply that doesn’t meet the needs of the workshops. The electricity supply is often interrupted or too weak, which disrupts production. Additionally, the rent for state-owned lands and Nile-reclaimed lands under the governorate’s jurisdiction, on which the workshops are built, has increased from EGP 1 per square meter to EGP 17.5 ($0.36) per square meter, causing discontent among workshop owners. These workshops occupy large areas, up to 1,000 square meters per workshop, meaning an annual rent of EGP 175,000 ($3,646). The governorate had to reduce the rent to EGP 10 ($0.21) per square meter. Moreover, our workshops face tax audits and pressure from social insurance authorities to provide insurance for seasonal, non-regular workers, even though we already insure permanent workers, which adds significant financial burdens.”
Black Market
Another challenge is faced by Amr Ali (a pseudonym), who owns a company specializing in the design and manufacture of fiberglass yachts in the tourist city of Hurghada. He encounters difficulties with the Industrial Development Authority due to the unrealistic requirements for offering units in industrial zones. For instance, the authority requires an industrial registration certificate to obtain a unit, while many investors, including Ali, apply for a unit to obtain the industrial registration certificate. Obtaining such a certificate in Hurghada is particularly challenging.
Ali complains about the lack of interest from government officials in meeting with ship manufacturers to understand their challenges and problems, and the lack of support or incentives. Moreover, there is no union or association that brings together marine vessel manufacturers.
The Industrial Development Authority outlines the requirements and documents needed to obtain an industrial registration certificate, including proof of ownership of the facility, a recent and valid commercial registration certificate, a membership certificate from the relevant industrial chamber, a technical and environmental file or previous environmental approval, a fire safety report or previous civil defense approval, and a prohibition letter from outside the industrial zones.
Another obstacle faced by Ali’s company and other ship manufacturers is the need to buy yacht and boat licenses from the black market at several times their official price due to the difficulty in obtaining fishing licenses and the government’s ban on Type 3 tourist licenses for all beaches. This has significantly increased the overall cost of boats and yachts, impacting customers’ purchasing power.
“We have to look for an owner who has a license and is willing to sell it. We end up buying one for between EGP 300,000 and EGP 400,000 ($6,250 to $8,333) instead of its actual price of around EGP 20,000 ($417). The first thing customers ask about is the license and how we will obtain it, followed by questions about how to get and import the engines. What drives up the price of yachts or boats is the cost of purchasing licenses and engines,” says Ali.
Ship manufacturers incur high monthly costs for mooring their ships, boats, and yachts in private or public marinas in the sea, with prices varying widely, reaching EGP 20,000 ($417) per month for each boat or yacht, and up to EGP 600,000 ($12,500) per year in some marinas., according to Ali.
“The Maritime Safety Authority issues construction certificates to shipbuilding companies and workshops, which qualify them for licenses. The licenses were previously divided into three types: private, rental (which allows for leasing and is extremely expensive), and all-beach licenses. The third type has been canceled, restricting the movement of boats and yachts to the governorate where they are licensed. The restrictions have even reached the point where a boat licensed in Hurghada cannot enter the waters of El Gouna within Hurghada,” Ali added.
In recent years, the young engineer has faced waves of skyrocketing prices for raw materials and marine engines from suppliers before each devaluation of the Egyptian pound. Suppliers set prices far exceeding the devaluation rates. He has also struggled with customs clearance delays and the detention of imported raw materials at ports for several months, sometimes leading to their spoilage. Fiberglass, for example, has a shelf life of only six months, and some suppliers remove expiration dates from spoiled materials and replace them with new, fake dates, causing companies to lose money and dispose of unusable materials.
Ali explains, “The government facilitates exports, but the poor quality of materials we receive reduces the quality of our products. The high costs also limit our competitiveness and profit margins. Ultimately, I might be forced to stop working as an investor in the shipbuilding industry because customers in Egypt lack stability and have concerns about operation and licensing.”
Losing Competitive Edge
Suleiman Mohamed, who owns a shipbuilding company in the Suez Free Zone, governed by foreign investment laws, faces different challenges, such as securing the necessary dollars to pay the high rent for their factories. Additionally, clients within Egypt must pay customs duties as if they were importing the ships from abroad, making their costs higher than ships manufactured elsewhere in Egypt. However, what all shipbuilders and yacht manufacturers in Egypt share is the impact of rising raw material prices, including iron, wood, and fiberglass, which have increased by about 60% due to imports. This, coupled with a stagnant local market and decreased demand for tourist ships and yachts, resulting from specific licensing restrictions in Sharm El-Sheikh and Hurghada, and varying marina fees imposed by the Maritime Ports Authority, all pose challenges. Mohamed also notes the difficulty in obtaining the necessary dollars for imports, forcing companies to turn to the black market until the recent exchange rate liberalization, which allowed the Central Bank to provide the needed dollars at the official rate.
For 17 years, Mohamed’s company has manufactured large yachts and ships up to 50 meters in length from iron and fiberglass, in addition to maintaining offshore boats and large vessels. The company exports tourist ships and yachts to Jordan and Dubai and fishing vessels to Saudi Arabia, while also serving the local market in Egypt. The company employs between 25 and 35 workers, technicians, and engineers, with monthly wages ranging from EGP 6,000 to EGP 12,000 ($194 to $387) per worker. About 40% to 45% of the production process relies on electricity, which has seen price hikes but not as steep as the significant increase in raw material and engine costs.
“Most of our clients work in the tourism or fishing sectors, and they are reconsidering purchases due to the high cost of ships and yachts resulting from the increased prices of raw materials, despite our slim profit margins. Occasionally, the client is a corporation or oil company that doesn’t mind the high costs,” Mohamed explains.
He adds that the price hikes have led to a relative decrease in exports of Egyptian ships, causing them to lose their competitive edge in global markets compared to their counterparts produced in other countries like China. Some in Egypt have even started importing used yachts and boats from abroad because their cost is significantly lower than manufacturing them locally.
Despite the challenges facing the shipbuilding industry, Mohamed believes that the government now shows a strong interest in developing this industry. The sector has introduced the practice of breaking up old ships that have exceeded their lifespan to replace them with new ones, recycling their steel plates, engines, and some spare parts like propellers for building new ships instead of importing them. He points out that the Industrial Development Authority has recently included shipbuilding as a sector of focus, which previously received little attention from the government. However, he is unsure whether the government’s plans to localize shipbuilding in Egypt will make it a competitor to private sector companies and the free zone or if it will boost the industry.
Interest Rate Hike and Navigation Tensions
According to the International Transportation and Logistics Division of the Cairo Chamber of Commerce, the size of Egypt’s logistics services market, including imported containers, ships, and transportation fees paid by companies, reached approximately $14.6 billion in 2024. The market is expected to grow to $18 billion by 2029, with an annual growth rate of 4.3%.
The maritime transport industry accounts for about 80% of global trade, according to the Information and Decision Support Center of the Egyptian Cabinet.
Commenting on the challenges facing Egypt’s shipbuilding industry, economic expert Ali El-Idrissi, an assistant professor of economics at the Arab Academy for Maritime Transport and an economics professor at the City of Culture and Sciences in 6th of October City, states that the exchange rate liberalization and the devaluation of the Egyptian pound against the dollar have inevitably led to increased shipbuilding costs due to the sharp rise in raw material prices. Additionally, the high cost of investment, which relies on borrowing and bank financing, has been exacerbated by the Central Bank’s interest rate hikes in 2024—first by 2% in February and then by 6% in March, bringing the total increase to 8%—making the cost of borrowing and financing significantly higher.
El-Idrissi explains to Zawia3 that the political and logistical tensions in the region have negatively impacted maritime transport and increased costs, thereby affecting shipbuilding. He emphasizes that a thriving international shipping industry increases demand for ships, while tensions reduce demand.
The professor of economics stresses the need for the government to work in the coming period to remove all obstacles to shipbuilding, provide the necessary infrastructure, and deepen the use of modern technology in the manufacturing process. He also suggests that the government should offer guarantees and incentives that match the challenges facing this industry.
The challenges facing Egypt’s shipbuilding industry come at a time when the government is planning to localize shipbuilding and related industries and restore the strength of the Egyptian commercial fleet, making Egypt a global hub for trade and logistics, as directed by President Abdel Fattah al-Sisi, according to statements made by Kamel El-Wazir, Deputy Prime Minister for Industrial Development and Minister of Industry and Transport, in media statements last February.
El-Wazir announced a plan to manufacture commercial ships in Egypt through collaboration with South Korea’s Dyson Corporation and other global companies, develop Port Tawfiq and Suez Shipyard in partnership with the Suez Canal Authority, establish a ship manufacturing plant, and create a steel plate factory in Egypt to support the shipbuilding industry instead of relying on imports.
The challenges facing Egypt’s shipbuilding sector vary depending on the location of the company or workshop. However, they all share the common struggle resulting from the economic crisis, characterized by rising inflation, which has impacted both manufacturing costs and customers’ purchasing power, leading to a recession in the local market and a loss of competitiveness in global markets. Manufacturers hope that the government’s plan to localize shipbuilding in Egypt will translate into policies that facilitate procedures, licensing, and customs clearance, enabling the sector to withstand and compete globally, ultimately contributing to the influx of foreign currency into the country, which is already facing a severe dollar shortage.
