Entrepreneurship Ecosystem Growing in Egypt: Report

Across Egypt, entrepreneurship and entrepreneurial ventures have experienced an increase in popularity in recent years.

Such findings are part of the recently released Global Entrepreneurship Monitor (GEM) Egypt national report, which found that more than 73 percent of Egyptians think that entrepreneurship is a wise career choice. At the same time, more than 30 percent of Egyptians shy away from starting a new business due to fear of failure, while 46 percent of Egypt’s adult population is able to recognize good market opportunities for new businesses, perhaps suggesting that more people have the capability and knowledge to become entrepreneurs.

As an example of Egypt’s success, Rise Up, which brings the Middle East’s biggest start-up event every year to Cairo, won the “Ecosystem Player of the Year” award at the TechWadi Annual Forum.

Despite this growing trend, however, serious obstacles remain for Egyptians hoping to start a new business.

“Entrepreneurship is a key driver of economic growth in Egypt and around the world,” said Ayman Ismail, an assistant professor of management, the Abdul Latif Jameel Endowed Chair of Entrepreneurship and one of the authors of the report.

AUC’s School of Business also joined forces with the GEM consortium to produce the report.

Utilizing the Adult Population Survey, a sample of more than 2,500 individuals, this report analyzes both general attitudes toward entrepreneurship and characteristics of early-stage enterprises, as well as the broader eco-system and environment for entrepreneurship in Egypt. Notably, the report examines how attitudes and behaviors toward entrepreneurship have changed in recent years.

“While much progress has been made in Egypt’s entrepreneurial ecosystem over the past few years, it remains at the infancy stage,” said Ismail. “The GEM report offers policymakers, development agencies and even individual entrepreneurs important advice and resources to move forward.”

Broadly, the GEM report reached the conclusion that there are about half as many “early-stage entrepreneurs” in Egypt as the global average. Total early-stage entrepreneurial activity (TEA) is the overall metric used in the report’s measurements, and the TEA rate in Egypt is 7.4 percent, while the global average is 13 percent. While this rate can signal many things, the report’s authors note that it likely indicates a national workforce that is highly dependent on more traditional forms of employment, rather than entrepreneurship.

However, during the same period of measurement (2010-2015), the report also states a notable increase in interest for undertaking an entrepreneurial venture, even if fewer are acting on such an interest. The study also reports a significant increase in the number of individuals engaged in the process of starting a new business, while the number of people who have created a new business has decreased.

Explaining the reasons why Egyptians might choose to start a new venture, the report states that more than 42 percent of early-stage entrepreneurs are “necessity entrepreneurs”, meaning they started a new venture due to a lack of other employment opportunities.

One of the report’s important findings is that only one out of every four entrepreneurs in Egypt is a woman, which is significantly lower than the global average. Young adults between the ages of 25-34 are also the group most likely to undertake an entrepreneurial venture.

Despite the current economic challenges present in Egypt and the world, the report notes the important role that entrepreneurship can and should have in economic recovery. As more and more people become interested in pursuing entrepreneurship and entrepreneurs are being regarded with a higher status, the potential for a strong economy only grows.

“Over the past decade, Egypt has witnessed an entrepreneurial revolution, with a growing number of support organizations, emerging policy focus, and numerous government and donor support programs,” said the authors of the report. “However, despite our progress as an ecosystem over the past decade, a lot remains to be done.”

Beyond simply reporting the current state of Egypt’s entrepreneurial environment, the report also provides various policy recommendations. First, it urges the government to recognize entrepreneurship as a priority. Second, both international and local donor organizations, as well as well-established companies, should better research the field of entrepreneurship to more accurately and effectively target long-term development. Lastly, the report recognizes the vital need for specifically targeted campaigns that support women entrepreneurs, business education, internationalization of local firms and the use of technology, and that improve the image of entrepreneurship on broader terms.