geo/egypt
Depending on which statistics you read, up to 75% of Egypt’s workforce is employed in the SME sector, making it a crucial part of the country’s economy. Getting finance into the sector is therefore crucial.
The Arab Monetary Fund, in cooperation with the World Bank Group, and the Central Bank of Egypt are organizing the 2015 Small and Medium Enterprises (SME) Business Development Conference on the "Role of Regulators in Promoting SME Financing in the Arab countries", to be held at Fairmont Nile City Hotel, Cairo - Egypt on January 14-15,
The EBRD is partnering with National Bank of Egypt (NBE) to introduce new lending products in the Egyptian market. The package includes a US$ 20 million Women in Business Programme loan and a US$ 30 million Energy Efficiency facility. Both credit lines will address areas that are a priority for Egypt, namely facilitating access to finance for women-led micro, small and medium-sized enterprises (MSMEs) and supporting energy efficiency and renewable energy.
We know that North African economies urgently need economic reforms, opportunities for youth, and greater economic inclusion. But what do we know about where the opportunities lie and – just as important – what are the greatest barriers that obstruct the growth of businesses?
A few salient insights emerged from a recent survey of 131 Egyptian and 100 Tunisian entrepreneurs and business owners, which was conducted by the Center on Development, Democracy, and the Rule of Law at Stanford in cooperation with CIPE. Many of the findings will come as no surprise — the business environment and entrepreneurial ecosystems have room to improve in both countries, and political uncertainty puts a drag on business. One major, policy-relevant finding is the need to address disparities in access to opportunity.
Yallah! (Go!)
When I first started as the Entrepreneur-in-Residence as part of the Pilot State Department Global Entrepreneurship Program in Egypt funded by USAID, angel investing was high on the priority list. In initial discussions on the subject, “experts” would bring up thousands potential problems; Egyptians won’t invest and entrepreneurs are too stubborn to share their ideas. Fortunately I did receive one great piece of advice from Usama Fayyad the Founder of Oasis 500. “Mike just start, everything else will fall into place”. Two months later we held our first Angel Pitch sessions at the local Abraaja offices.
Finding Heroes
It was August 7th 2011; I had been talking about angel investing in Egypt for over 6 months and meeting with different business groups and associations. I talked to anyone I thought to be a successful business person; giving my best sales pitch on angel investing. Despite my efforts I had little to show. Lots of people were happy to wait on the sidelines and jump in when they saw success, but nobody was willing to take the first step. Then I met with Hossam Allam and I couldn’t believe my ears. Hossam was part of an angel group in London and was ready to lead the first angel group in Egypt. Then I met Con O’Donnell an Irishman who came to Egypt 18 years ago to learn Arabic, started some of the first Arabic web sites which he later sold and was looking to support startups. The same month I met with Dr. Khaled Ismail, who has one of the most impressive bios of anyone I have met - a Ph.D. from MIT, a recognized engineer at IBM’s Watson Research Center and founder of a company that designs wireless communications systems, which he later sold. He wanted to invest into Egyptian entrepreneur’s and asked if we could help him find some potential candidates. One big mental change I had to make was to understand that I was an American who will someday leave; so I shouldn’t be the catalyst for change. I had to find, support, and encourage the other ecosystem heroes to be that catalyst.
Finding Entrepreneurs Ready to Walk Through Walls
It was great to have investors but what was missing were entrepreneurs who were committed to building a great company. Too many programs taught young people they just needed an idea and a nice business plan or pitch to get funded. The fact of the matter is that only a small percentage of young start-ups are ready for financing. Too many are not committed to do the hard work of building a business, letting go of control, and allowing other smart people to lead parts of the company. The other issue was entrepreneurs don’t even understand an investor, who will want to create a corporate governance structure to keep the entrepreneurs focused. Nobody likes to have a supervisor, especially entrepreneurs. Donors and governments need to think about how to support great entrepreneurs before thinking about putting more money into another investment fund. An ecosystem with easy capital and inexperienced entrepreneurs with a business idea is a path to failure. Thankfully due to the efforts of the Egyptian Angel Investors and a great number of other programs to support entrepreneurs in Egypt, about $2 million dollars of additional capital for serious entrepreneurs has been made available over the last year.
The European Bank for Reconstruction and Development (EBRD) is supporting the development of small businesses in Egypt with a US$ 50 million credit line to the National Bank of Egypt (NBE). The funds will be on-lent to Egyptian small and medium-sized enterprises (SMEs).
Financial services seem to be underutilized by small and medium enterprises (SMEs); only 50 percent deal with banks and benefit from an improved access to finance. In addition, these firms still face several constraints in terms of access to finance.
May Abulnaga, Head of Regulations Dept. of the Central Bank of Egypt details the initiatives lead by the Central Bank of Egypt to improve access to finance or SMEs through regulations.
This presentation was given during a conference jointly organized by The Arab Monetary Fund and IFC on “Building a High Performance Small Medium Enterprise Business in the Arab World” on 7-8 May 2013 in Dubai, UAE.
Over the past decade, Egyptian women have made significant progress in improving their economic and social status. The Egyptian government’s commitment to women’s empowerment is strong at the highest political level. Yet continued disparities remain in the country’s labor market and the business arena. This book analyzes these disparities and makes recommendations for needed change to ensure a level playing field.
