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Egypt lacks medium-sized businesses, as analysts blame regulation

Newly-released census data shows that Egypt is lacking medium-sized businesses, as the majority of enterprises employ less than 10 workers

Marwa Hussein, Wednesday 22 Oct 2014
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70 percent of business in Egypt has only one ore two employees (Photo: Reuters)
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Most of Egypt's businesses are small-sized, with 97 percent employing less than 10 workers, according to census data released on Tuesday by state-run statistics body CAPMAS.

Medium-sized enterprises with 10 to 50 employees account for around 2.7 percent of total businesses. However, big businesses with over 50 employees account for 0.4 percent of all enterprises nationwide.

The data is part of Egypt's 2012/13 economic census on establishments ranging from small stalls to big enterprises. Economic activity outside the establishments – like street vendors and farmers, for example – were excluded from the census.

The results show that Egypt is greatly lacking in medium-sized businesses.

Seventy percent of the country's 2.4 million businesses have only one or two employees. But less than 0.1 percent – only 784 businesses – employ between 45 to 49 people.

"Looking at the data, I realized that the medium-sized business is almost missing in Egypt, while in fact it is the sector that worldwide generates more employment and has a capacity to innovate and export", says Sherif El-Diwany, executive director of the Egyptian Centre for Economic Studies (ECES), Egypt's most prominent liberal economic think tank.

El-Diwani believes this is due to policies that do not allow small business to grow, leading to a gap in Egypt's economy.

"Laws are not friendly to small and medium-sized enterprises. Small business face lot of barriers and procedures that don't allow the sector to grow to a bigger size," he said during a conference to announce the economic census.

The census data shows that as the amount of employees in a business increases, the number of businesses of that size decrease drastically.

For example, 7.6 percent of businesses employ between five and nine workers. But only 1.5 percent of businesses employ between 10 to 14 workers.

The figures start to grow again for large-scale enterprises. Egypt has almost 10,000 big businesses offering more than 50 jobs. They employ 32.5 percent of wage earners and offer almost 80 percent of wages for the country's established businesses.

Small businesses, however, aren't generating the same kind of wealth. Businesses with only one or two workers offer only 2.1 percent of wages within the establishment, showing the precariousness of working conditions in Egypt's micro-businesses.

The published data is part of Egypt's fourth economic census and its first in 13 years. The first was launched in 1991/92 and was to be issued every four years, but had been halted since 2001/2.

In 2006, the government conducted a population and establishment census but did not publish an economic census similar to the previous ones, making it difficult to assess the development of economic activity in Egypt over the last decade.

Moreover, the 2001/02 economic census isn't available on the CAPMAS website, although the first two reports from the 1990s are online.

"The previous regime rescheduled its priorities and economic census did not seem to be one of them, even though it is of a major importance," Ashraf Al-Araby, Egypt's planning minister, told Ahram Online.


 

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