{"id":17113,"date":"2025-12-07T12:53:10","date_gmt":"2025-12-07T10:53:10","guid":{"rendered":"https:\/\/zawia3.com\/?p=17113"},"modified":"2026-10-07T16:41:08","modified_gmt":"2026-10-07T14:41:08","slug":"spinning-and-weaving","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/spinning-and-weaving\/","title":{"rendered":"Egypt\u2019s Textile Mills: Modernisation or Privatisation?"},"content":{"rendered":"

Egypt has spent billions of pounds modernising publicly owned textile mills. It is now exploring partnerships with private investors to manage and operate some of the upgraded factories. Supporters describe this as a way to improve efficiency; critics see a gradual retreat from public production under the language of partnership.<\/p>\n

On 20 October 2025, Public Business Sector Minister Mohamed Sheimi met the chairman of Turkey\u2019s Ero\u011flu Global Holding to discuss cooperation with the Holding Company for Cotton, Spinning and Weaving. A technical delegation also visited Misr Spinning and Weaving in Mahalla El-Kubra, one of the largest and oldest enterprises included in Egypt\u2019s textile modernisation programme. These were discussions about possible partnership models, rather than an announcement that the factories had been sold.<\/p>\n

The meeting raises a broader question: when the state finances the renewal of an industrial asset and subsequently brings in a private operator, who retains control, who bears the costs and who receives the returns?<\/p>\n

The textile development programme predates December 2024. During his visit to Mahalla that month, Prime Minister Mostafa Madbouly discussed a three-stage programme estimated at approximately EGP 56 billion. Subsequent negotiations with foreign companies concerned the operation of the renewed facilities. Other sectors have seen different forms of private participation, including share sales and hotel management agreements. The liquidation of the Egyptian Iron and Steel Company in 2021 was a different legal process and should not be treated as an equivalent transaction.<\/p>\n

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Modernisation or privatisation?<\/h2>\n

State-owned textile companies have undergone extensive renewal of buildings, machinery and infrastructure. The government has subsequently sought investment partnerships or joint management arrangements for some of these businesses.<\/p>\n

On 28 December 2024, Madbouly inspected Mahalla\u2019s new factories zone, including the Spinning 1 project. Machinery installation was already being discussed in February 2024, when the Public Business Sector Ministry described approximately 183,000 spindles under one roof. Contemporary reporting described a factory covering around 62,000 square metres, with capacity of up to 30 tonnes of fine yarn a day.<\/p>\n

Published estimates placed construction costs at approximately EGP 780 million and machinery costs at EGP 2 billion, a combined EGP 2.78 billion. These are reported project estimates, rather than a new cost assessment conducted for this article.<\/p>\n

In December 2024, the prime minister outlined three phases. The first included Spinning 4, Spinning 1, weaving preparation facilities and a power generation station. The second encompassed further factories in Mahalla and other cities, including Kafr El-Dawar, Damietta, Mansoura, Minya and Helwan. At that time, the government expected the second phase to be completed by mid-2025 and the final phase by the end of 2025 or early 2026. Those dates were announced targets.<\/p>\n

The announced programme cost included EGP 22 billion for buildings and \u20ac640 million for machinery and equipment. The figures are denominated in different currencies and cannot simply be added together without specifying an exchange rate and valuation date.<\/p>\n

At Kafr El-Dawar, published accounts put the refurbishment of Misr Spinning and Linen at approximately EGP 600 million. The works included infrastructure and machinery renewal and changes to the workforce. The ministry\u2019s next step was to attract Egyptian and foreign partners to operate and manage facilities in pursuit of what it described as operational sustainability.<\/p>\n

The wider government divestment programme extends beyond textiles to telecommunications, banking, petrochemicals, pharmaceuticals, mining, oil and gas, tourism, airports and property. A cabinet meeting on 5 October 2025 addressed preparations for offerings of state-owned companies.<\/p>\n

Labour and economic researcher Hassan El-Barbary argues that the state is moving from being a producer and operator to being a developer and facilitator. He describes some management partnerships as privatisation under another name.<\/p><\/blockquote>\n

Speaking to Zawia3, El-Barbary recalls successive ministers announcing a large textile development plan, initially estimated at EGP 21 billion, before discussing the involvement of investment funds and specialist banks in major companies such as Ghazl El-Mahalla and Kafr El-Dawar. He says this was presented as cooperation with the private sector in management and marketing.<\/p>\n

He draws a comparison with government share offerings in Abu Qir Fertilizers, Alexandria Mineral Oils Company (AMOC) and Misr Fertilizers Production Company (MOPCO). Officials described such offerings as an expansion of ownership and a means of attracting foreign investment. In El-Barbary\u2019s view, they also transferred elements of control to Gulf investment funds.<\/p>\n

He also points to mergers in the oils and soap sector, arguing that restructuring can conceal substantial labour reductions. He estimates that around 30% of workers lost their jobs following the merger of the Tanta and Alexandria oils businesses, and says around 50 companies were merged or closed during 2023. These are his claims; they are not a new independently verified count compiled for this report.<\/p>\n

El-Barbary cites Ghazl El-Mahalla as an example of a shrinking workforce, recalling a company that once employed more than 20,000 people and subsequently employed roughly half that number. Historical reporting on workforce reductions should not be read as an independently verified employee count for December 2025.<\/p>\n

He disputes the interpretation of improved financial results following restructuring. In his assessment, some reductions in losses reflect mergers and a smaller wage bill rather than better industrial performance. This is his explanation of the results, rather than a demonstrated causal finding established by the reporting.<\/p>\n

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A changing map of state ownership<\/h2>\n

The August 2025 State Ownership Policy monitoring report<\/a> counted 561 companies as of 2 July, with 45 owning entities. The Public Business Sector Ministry participated in 146 companies, representing 26% of the inventory\u2014not a 26% annual decline.<\/p>\n

Of the companies counted, 364 were profitable, 78 loss-making and 14 reported neither profit nor loss. Financial statements remained incomplete for 105. Changes between inventories alone do not establish how many companies were sold or merged.<\/p>\n

\"State-participated<\/figure>\n

El-Barbary argues that divestment may provide short-term budget relief or help meet debt payments, while weakening public control of strategic industrial sectors over time. He invokes the closure of Egyptian Iron and Steel as an example of the loss of an industrial base, although the company\u2019s liquidation was legally distinct from the sale of a state shareholding.<\/p>\n

\u201cIt is no longer called privatisation, but offerings or partnerships,\u201d El-Barbary says. In his view, the terminology does not resolve the underlying question of how control and wealth move between public institutions and private capital.<\/p><\/blockquote>\n

He contends that public spending on industrial renewal risks becoming preparation for eventual divestment, rather than the foundation of a sustained public industrial strategy. These concerns form one side of a debate about ownership, productivity and the public interest.<\/p>\n

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From factories to hotels<\/h2>\n

In December 2023, Talaat Moustafa Group\u2019s hospitality arm, ICON, signed agreements for an initial 39% stake with management rights in a portfolio of seven historic hotels. A 39% holding was not a majority. The acquisition of a 51% majority stake in Legacy Hotels and Tourism Projects was completed on 5 February 2024, according to the group\u2019s financial statements.<\/p>\n

The portfolio comprised Cairo Marriott and Omar Khayyam in Zamalek, Marriott Mena House in Cairo, Sofitel Legend Old Cataract in Aswan, M\u00f6venpick Aswan Resort, Sofitel Winter Palace in Luxor, Steigenberger El Tahrir in Cairo and Steigenberger Cecil in Alexandria.<\/p>\n

Some of these hotels had previously undergone publicly financed renovation. Contemporary reporting estimated work at Mena House at approximately EGP 150 million. Old Cataract\u2019s renovation began in 2008 and continued for three years, with reported costs of EGP 300\u2013400 million. At the time, Ali Abdel Aziz, chairman of the tourism and cinema holding company, emphasised the exceptional historic value of its assets and said Old Cataract would not be sold even for $10 billion.<\/p>\n

These historical costs relate to particular renovation periods. They should not be treated as current valuations or as the total amount invested in the portfolio before the ICON transaction.<\/p>\n

Political economy professor Karim El-Omda offers a different reading. He says greater private participation has long featured in structural reform programmes monitored by the International Monetary Fund, with loan reviews linked to progress on measures including company offerings and the introduction of strategic investors.<\/p>\n

Speaking to Zawia3, El-Omda argues that bureaucratic processes, corruption and weak management have contributed to accumulated losses in parts of the public sector. From his perspective, involving private operators can improve the performance of productive and service businesses, particularly hotels.<\/p>\n

He describes arrangements in which investors receive a share of profits while the state retains assets and a larger share of returns. However, such a description cannot be assumed to apply to every partnership: ownership rights, profit allocations and management control depend on the terms of each agreement. In the Legacy transaction, ICON acquired a majority shareholding.<\/p>\n

Mohamed Ramadan, an economic researcher at the Egyptian Initiative for Personal Rights, connects the broader expansion of private management to Egypt\u2019s IMF commitments and the pressure created by accumulated debt. He says greater private participation has become central to the government\u2019s economic language.<\/p>\n

In Ramadan\u2019s assessment, the practical result is a gradual withdrawal of the state from managing some productive sectors and assets, with private companies assuming those responsibilities. He sees the State Ownership Policy as a roadmap for this shift, defining areas where the government would reduce its presence and allow a larger role for domestic and foreign investors.<\/p>\n

Ramadan argues that the government could also recruit private-sector expertise into public institutions, transferring knowledge and improving management while retaining control of national assets.<\/p><\/blockquote>\n

He cautions that outsourcing public asset management may offer a relatively quick way to meet reform commitments, while overlooking alternatives that could produce a more durable balance between efficiency and the public interest.<\/p>\n

The government\u2019s case rests on investment, better management and stronger operating performance. Its critics fear that public industrial assets will become a temporary source of liquidity rather than a foundation for sustained production. The distinction between a management contract, a minority share sale, a majority acquisition and liquidation is therefore essential: each has different consequences for public ownership and accountability.<\/p>\n

The central question is whether the chosen partnerships will deliver productive investment and transparent returns, and whether the public can assess their costs, contractual safeguards and long-term effects.<\/p>\n","protected":false},"excerpt":{"rendered":"

Egypt spent billions upgrading state textile mills and is exploring private operating partnerships. What happens to public ownership, workers and the returns on that investment?<\/p>\n","protected":false},"author":4,"featured_media":14738,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[409],"tags":[],"kateb":[728],"class_list":["post-17113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics-en","kateb-shimaa-hamdy"],"jetpack_featured_media_url":"https:\/\/zawia3.com\/wp-content\/uploads\/2025\/12\/\u0627\u0644\u0646\u0633\u064a\u062c-scaled.png","_links":{"self":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/17113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/comments?post=17113"}],"version-history":[{"count":2,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/17113\/revisions"}],"predecessor-version":[{"id":17115,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/17113\/revisions\/17115"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/media\/14738"}],"wp:attachment":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/media?parent=17113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/categories?post=17113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/tags?post=17113"},{"taxonomy":"kateb","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/kateb?post=17113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}