Introduction
Government policies have a major impact on private entrepreneurship in the early stage, and policies are related to many areas such as taxes, public procurement, licenses, and permits. There are two areas of government policy: taxes and government support.
Egypt achieved an average of 4.2 close to the global average of 4.3, and this number indicates little improvement from the past. Through examination, government policies that favor new companies have emerged, in general, through regulatory reforms, supporting for new programs, amending some investment laws in Egypt, and launching programs to support entrepreneurship.
Government Entrepreneurship Programs
Government support programs play an important role for entrepreneurship, especially in disadvantaged and marginalized societies. Egypt score is 3.3 in this program, compared with the global average of 4.3. Government programs in Egypt scored low on availability, accessibility, and effectiveness.
Entrepreneurship Education
With regard to providing basic business education on how to start and run a business in areas such as marketing, finance, and strategic operations, Egypt ranks lower than all countries in school education and university education. Egypt score is 3.4 in entrepreneurial education, compared with the global average of 4.8. Currently, there are ambitious initiatives by the government to introduce educational reforms.
Research and Development Transfer
The ability to transfer technology from universities and research centers in the industry is absolutely necessary to move from an efficient economy to an innovation-based one. Egypt score is 2.9, compared with the global average of 3.9.
The link between the industry and universities and researches is very low, which highlights the problem of separation between research, the industry, and technology transfer.
Commercial and Legal Infrastructure
Commercial and legal infrastructure highlights the ability of a new and growing firm to access legal, accounting, banking, and consulting services as well. Egypt score is 4, compared to the global average of 4.9. In most of the areas surveyed, grades are still close to the past two years for major legal reforms taking place in investment laws and industrial licenses.
Internal Market Dynamics
This is the internal market dynamics on the new company ability to enter, compete, and grow in a specific economy. There are two areas for market dynamics:
• The level of change in the market
• Market entry regulations
Egypt score is 5.8, compared to the global average of 5.1.
Physical Infrastructure
Physical infrastructure describes the ease of access to physical resources. Physical infrastructure in Egypt is the strongest area among the entrepreneurship framework conditions. The availability of physical infrastructure in Egypt regularly increased over the past five years. especially with regard to roads, utilities, and water. Egypt score is 6, compared to the global average of 6.5.
Cultural and Social Norms
Cultural and social norms describe the extent to which culture encourages or allows actions or activities leading to new businesses. Egypt score is 4, compared to the global average of average 4.8. In general, there is a trend to support the key features of entrepreneurship such as risk, creativity, and innovation.
Experts’ Views and Recommendations
Based on expert recommendations, we are in urgent need of:
(a) Reducing government bureaucracy and red tape, which remains a major obstacle for start-ups, as well as organizing reforms and simplifying laws related to licenses, permits, and tax collection
(b) Obtaining financing, which is still a priority, both for start-up companies driven by innovation or for investors
(c) Teaching entrepreneurship at all levels and promoting a culture of entrepreneurship
(d) Allowing space for the experiment to be more able to adapt to organizational matters
Key Factors Constraining Entrepreneurship in Egypt
1. Limited access to financing
2. The lack of sufficient number of investors and the absence of financing opportunities for public subscription
3. Lack of national support in the science based on high-tech market
4. Governmental and bureaucratic regulations and laws due to the lack of a comprehensive political vision in the relevant areas, such as education and taxes, and the lack of a stable judicial system
5. Bureaucracy and inefficiency in legal work with the government
6. Corruption and a bad legal system
7. Weakness and absence of the ecosystem for entrepreneurship outside Cairo and Alexandria
8. Lack of access to rapid education, especially in the skills that are needed to run a business—in other words, education for entrepreneurship by the government
9. The attitude of the government and political decision makers toward sabotage is often extremely negative
10. The absence of appropriate channels for competitive competition for start-ups
11. Lack of a good cultural environment and lack of access to new knowledge or exposure to new ways of doing business
12. Government regulations, especially bankruptcy law
13. Challenges related to supply chain management and logistic services for production to the global market
Key Factors Fostering Entrepreneurship in Egypt
1. Good infrastructure
2. A high percentage of community supporters and ecosystem developers, which leads to availability of meeting spaces and exchange of ideas
3. Several capacity-building initiatives in the field of entrepreneurship provided by the government
4. Multiple market failures, which lead to strong demand for products and services
5. The vital role played by a group of investors and businessmen in supporting and guiding start-ups
6. Access to world-class development opportunities sponsored by the government
7. Appointment of an entity by the government to collect all services for entrepreneurs
8. The existence of good training programs by community organizations at schools and universities
9. Universities and research centers
10. The presence of a vibrant ecosystem in Cairo with a lot of investment and support
11. Culture and traditions of family business and social ability
12. Currency devaluation providing opportunity for export to markets
13. The promotion of entrepreneurship as a career path by the increasing number of youth and the presence of role models for young entrepreneurs
14. The existence of some governmental initiatives to supporting entrepreneurs, such as the Central Bank initiative
15. The government growing interest in entrepreneurship resulting in the new investment law
16. The IT sector providing promises and an open market in entrepreneurship
Key Recommendations to Support Entrepreneurship in Egypt
1. The inclusion of entrepreneurship in the education, especially at universities and schools in Egypt
2. The expansion of science parks outside Cairo
3. Working on developing the spirit of initiative and risk for the youth and society as a whole
4. Ensuring a more coherent government policy to support project initiatives and enable better access to financing
5. More government participation and support
6. Establishing appropriate government support mechanisms for technology innovation
7. Clear industry mapping
8. Working to reform financial policies and their stability in the market, especially the interest and exchange rates
9. Encouraging the government in legal ways for companies that are three years old or less
10. Government support for participation and financing, with adequate supply programs without monopoly, thus helping companies generate opportunities
11. Changing the culture through media awareness and highlighting success stories of young entrepreneurs
12. Encouraging and educating students about entrepreneurship at primary and secondary education and supporting innovation in educational curricula
13. Providing more flexible legislation and regulations to support entrepreneurial activity
14. Providing government subsidies to encourage companies to start
15. Ensuring small tax exemptions for new start-ups
Recommendations for Policy and Practice
The entrepreneurial system in Egypt has grown in the past three years, creating a positive atmosphere as a result of new programs and political reforms, and as a result of that, project organization indicators in Egypt have improved.
As a result, we list some recommendations for policy and practice as follows:
1. Positioning Egypt as a Regional Hub for Entrepreneurship and Innovation
Egypt has the ability to become a regional center for establishing innovative technology companies, and these types of companies operate as comprehensive growth platforms. Egypt has influencing factors for such a strategy from a strong talent pool and a large market.
First: Improving access to project financing—in particular venture capital funds
Second: Providing incentives to retain technical means and managerial talents and working on developing them
2. Expanding Entrepreneurial Education and Awareness Among Youth
The government is implementing radical reforms in the Egyptian education system, but this takes time to translate into actual impact among youth.
There are two specific areas that need focusing on:
First: Building trust between youth and young professionals to start their own business
Second: Providing the foundational knowledge of business management, with a focus on the needs of small and medium-sized companies
3. Unleashing the Power of Youth Entrepreneurship for Inclusive Growth and Job Creation
Most of the narrative around entrepreneurship is focused on tech start-ups, and they ignore the small and medium companies that provide the social and economic basis and work to create job opportunities, although they can be easily accelerated for faster growth and more productivity. Significant progress has been made in obtaining financing for SMEs. In addition, major reforms have been implemented in the areas of investment laws and industrial licensing requirements, but dealing with 12 government agencies drains resources and energy for microenterprises and impedes growth.
4. Strengthening the Entrepreneurship Ecosystem Through Programs and Policies
The emerging entrepreneurship ecosystem in Egypt is a promising system and can have a major impact on economic growth. Many indicators confirm this in the light of the improvements in the areas of obtaining financing, government policies, and easier access to markets.
On the government side, there are many organizational reforms and support programs that have been implemented over the past three years, especially in the areas of investment and corporate and bankruptcy laws.