What have we gained from localizing transport?

Egyptian media have recently reported heated debates between members of parliament and Transport Minister Kamel Al-Wazir over the approval of additional loans for the high-speed electric rail.

These discussion have centred on loans for major transport projects and how they have exacerbated the country’s external debt. In response, the minister has defended his policies by pointing to the success of efforts to localize transport industries in curbing the drain on foreign currency. To prove his point, he said that 70% of the high-speed rail’s components had been manufactured locally as a result of this policy.

Since 2022, the minister has courted investments in transport manufacturing, offering incentives and guaranteed state contracts to meet the needs of rail, metro, and electric traction networks. But how successful has localization been in saving dollars? And how will these new industries help ease the pressures of the transport sector’s mounting debts?

100% Egyptian railway ties

Kamel Al-Wazir points to the production of concrete railway ties, or sleepers, as a key benchmark of localization progress, citing both a growing influx of manufacturers and complete self-sufficiency.

Four companies now produce these concrete railway ties, three of which were established between 2022 and 2024. Meanwhile, the private contracting firm Concrete Plus is putting the final touches on a fifth factory ahead of its opening.

Alongside state-owned enterprises like the Egyptian Company for Self-Maintenance for Roads and Airports (ECSM), the General Nile Company for Construction and Roads, and Siegwart, which have started producing railway ties, private firms are also carving out a space. Among them is EICW, a veteran infrastructure company that recently entered the field.

Thanks to these new factories, the National Authority for Tunnels (NAT) has achieved self-sufficiency in concrete sleepers, a board member who requested anonymity told Al Manassa. The source noted that current contracts exceed 6 billion Egyptian pounds (about $120 million) for the high-speed and light rail projects, and that future contracts are expected to exceed 15 billion pounds (about $300 million).

As for the Egyptian National Railways (ENR), a board member told Al Manassa that contracts with railway-tie manufacturing companies between 2024 and the end of the next fiscal year range from 600–800 million pounds (about $12–16 million).

Beyond sleepers

The minister has also sought investment to localize other, more expensive components, and has already secured several commitments. His approach relies on a range of incentives, from heavily discounted or free land to guaranteed state contracts on major transport projects.

The ENR board member cited a Chinese company that was promised a complete halt on train wheel imports, worth around 90 million euros annually, if it established a local factory. “This means there is a guaranteed outlet from the start of manufacturing; the company won’t have to look for buyers,” the source said.

Spain’s Colway also arrived amid the 2023 dollar shortage to establish a sleeper-car component factory. Launched in 2025, the facility has saved around 40 million euros, according to the ENR source, who told Al Manassa that the government pays the firm in local currency.

The authority also reached an agreement with the Austrian company Voestalpine to set up a factory for railway switches. This has saved around 45 million euros to date, with the ENR’s entire needs expected to be met locally within the next two years, the source added.

Beyond these foreign investors, the minister also drew on state-owned and state-affiliated factories, including the Suez Steel Company, which has been run by the armed forces since 2016. The company began the experimental production of railway tracks in 2024, a milestone the minister cites frequently given the high cost of importing tracks.

The Suez Steel factory has also helped reduce the import bill by around 100 million euros—the value of tracks needed for the high-speed rail project—the ENR official said. He added that the ministry also worked with Lenza Egypt, a private Egyptian company with a track record of cooperation with the Ministry of Defense and Military Production, to establish a factory for spare railway parts in partnership with the authority.

Alongside these local players, the minister is banking on two global giants, France’s Alstom and Spain’s Talgo, to showvcase his ability to attract major entities to the Egyptian market. Alstom is establishing an industrial complex for railway electrical systems, including signaling equipment, which is expected to open this year.

In contrast, Talgo’s status remains ambiguous. The company is expected to establish a domestic factory to manufacture carriages in line with its 2022 supply contracts, worth 440 million euros for 13 trains.

“We offered incentives like streamlined land acquisition, but major companies like Talgo take time to decide,” the ENR source told Al Manassa, explaining the investment delay. The source noted that because Talgo specializes exclusively in luxury carriages, the Egyptian market alone cannot absorb its output, requiring a study of accessible export markets.

The carriage industry’s localization is not limited to Talgo; about six years ago, the state began its efforts to establish a company in this field—the National Egyptian Railway Industries Company (NERIC)—in partnership with prominent contracting firms such as Samcrete, Hassan Allam, and Orascom Construction.

Initial hurdles, particularly the dollar crisis, delayed the factory’s opening until April 2026. Yet, the same economic climate ultimately facilitated partnerships with global giants. South Korea’s Hyundai Rotem, a leading metro supplier, signed a major contract with NERIC to co-manufacture metro trains for Cairo and Alexandria, while China’s CRRC teamed up with the company to produce carriages for the Abu Qir electric metro.

“Thanks to NERIC, an international tender launched in 2022 to supply carriages for the Abu Qir electric metro was canceled after we confirmed the company’s capacity to produce the carriages,” said the NAT source, who expected that this would “contribute to estimated savings of around 734 million euros in the Abu Qir metro project alone.”

In addition to NERIC, the government moved to modernize its older carriage factory, SEMAF, which is currently manufacturing 210 freight cars for the high-speed rail network. The source said that a single car, which costs around 16 million pounds (about $320,000) to import, will cost around 9 million pounds (about $180,000) to be manufactured locally.

How to clear the sins of past debt?

Previously, Al Manassa estimated the total financing requirements for major transport projects at around 19 billion dollars, a figure that further strains an external debt that has grown rapidly over the past decade.

Although Mohamed Ramadan, a researcher at the Egyptian Initiative for Personal Rights, sees attracting foreign companies and factories to operate within the Egyptian market as a positive step, he argues that it will not meaningfully offset the significant costs of rail and metro projects. This is particularly because these industries are tied to more complex factors, including technology, sustained research and development, as well as marketing and future export potential.

Ramadan told Al Manassa that the methodology for calculating the local component in partnerships with international firms is flawed. While some entities count local labor in that percentage, he argued that the true benchmark should be based on value added, technology transfer, the number of trained engineers, and the final product’s technical and financial value compared to an identical import.

Meanwhile, Fakhry El-Fiky, former head of parliament’s Budget and Planning Committee, stressed that alleviating future external debt pressures depends on orienting these new industries toward exports. He noted that early localization savings will be modest while production initially covers domestic needs, with the real economic impact coming only through expansion into foreign markets.

Here, the NAT source pointed out that many newly established companies are, in the long term, looking to use Egypt as an export base. He cited Alstom as an example: the company’s first-phase production will be allocated to Cairo Metro Line 6, before being exported later on.

NERIC Managing Director Ahmed El-Mufti told Al Manassa that the company is pursuing a phased localization strategy: first meeting domestic demand before shifting to exports. NERIC plans to draft a detailed study on the African market’s rail requirements by the end of the year, paving the way for regional expansion by leveraging Egyptian contractors already executing infrastructure projects across the continent.

El-Mufti explained that this approach aims to build integrated alliances capable of executing turnkey projects for client entities in African countries, thereby enhancing the capacity of Egyptian companies to compete regionally and internationally.

The shift toward exports represents the transport sector’s core wager to stem the foreign currency drain plaguing the Egyptian economy, though penetrating new markets remains its biggest challenge.