Economics of Tobacco Manufacturing in Egypt اقتصاديات انتاج التبغ والسجائر في مصر

Abstract

: Tobacco and Cigarette industry is one of the agricultural industries that provides a huge return to the general budget of the country, as the public sector tobacco companies represent about 14% of the total assets, 33% of the invested capital, 23% of the sales, and 63.48% of the net profit in the manufacturing sector in 2019 / 2020. The tobacco sector is one of the most important and financing sectors to the Egyptian public treasury after the Suez Canal, and the proceeds from tobacco and cigarette industry taxes contribute to supporting development plans and projects in Egypt. However, the American “Philip Morris” company broke the monopoly of the “Eastern Tobacco Company” for the manufacture of smoke and foreign tobacco in Egypt for more than 100 years after it announced the start of the production of some items through the United Tobacco Company after the latter obtained a license to manufacture in Egypt this year. Will this affect the production of cigarettes in the Egyptian market? The performance evaluation criteria of profitability, liquidity, activity, capital and human factor indicators were used, in addition to using Data Envelopment Analysis (DEA) to estimate the technical efficiency and productivity of the overall factors for each of the public and private business sector companies producing tobacco and comparing them together. Results of the study showed an increase in the self-sufficiency rate of cigarettes with a growth rate of about 0.9%, and the value of exports and imports of cigarettes increased at a growth rate of about 49.5% and 77%, respectively, during the period. The changes in the TFP index were compared with tobacco companies of the public and private sectors, and it was found that the technical efficiency in the public sector increased compared to the private sector, where their value amounted to be 101.9% and 100%, respectively, due to the high practical experience in the public sector compared to the private sector. While the impact of technological change in the private sector increased compared to the public sector, reaching 308.2% and 266.3%, respectively. This is due to the recent entry of the private sector into the field of tobacco production and its use of newer production methods. This led to a rise in the index of total factor productivity in the private sector compared to the public sector, reaching about 308.2% and 271.4%, respectively, which means an improvement in the productivity of the total factors by 208.2% and 171.4% during (2007/2008 – 2017/2018).