Egyptian startups moderately satisfied with business climate: Report

Ahram Online , Monday 25 Dec 2023

Egyptian entrepreneurs are moderately satisfied with various aspects of the business climate, according to a report released on Sunday by local startup incubation firm Entlaq Holding.

The Egyptian Entrepreneurship Diagnostics Report release event. Entlaq Holding.
The Egyptian Entrepreneurship Diagnostics Report release event. Entlaq Holding.

 

The report finds the Egyptian entrepreneurial ecosystem showing room for progress in key areas such as policy, venture capital and private sector involvement.

The Egyptian Entrepreneurship Diagnostics Report, encompassing micro startups to large enterprises, offers aggregate ratings of various aspects of Egypt's business environment, evaluating government policies, social inclusion, financial accessibility, venture capital financing, ease of doing business, cross-border capital flows, private sector contribution, and development sector contribution. Each aspect received ratings on a scale from 0 (very inadequate) to 5 (very adequate) from a diverse range of Egyptian enterprises.

The survey revealed a moderate satisfaction level of 2.99 for government policies. The healthcare and biotechnology sectors rated this area relatively highly at 3.59, but for most, gaps and inefficiencies persist when dealing with the government.

Scoring a commendable 3.27, social inclusion received positive recognition, yet areas for improvement remain evident.

The report indicated a moderately positive perception (3.26) of financial accessibility, with notable sector-specific disparities in AI and healthcare sectors (rated 3.9).

Interestingly, larger startups rated financial accessibility in the Egyptian business climate higher than medium enterprises, perhaps reflecting a difficulty particular to medium and small businesses.

Venture capital financing received a lower score of 2.66.

Dynamics across sectors highlighted positive responses in AI (3.5) and healthcare (3.4) but challenges in software-related sectors.

Ease of doing business received an average rating of 2.90, highlighting bureaucratic hurdles across different sectors and firm sizes.

Cross-border capital mobility received a moderate score of 2.72, indicating potential challenges in international financial interactions, especially for startups.

Dissatisfaction among the surveyed enterprises, even among solo entrepreneurs, signals obstacles for international business, notably among larger startups.

Both private sector contribution and development sector contribution received a rating of 2.66 and 2.99, respectively.

The report's findings provide a comprehensive understanding of Egypt's startup landscape, offering valuable insights for policymakers, investors, and entrepreneurs seeking to enhance the country's burgeoning entrepreneurial ecosystem.

Entlaq Holding, in response to the insights revealed in the "Egyptian Entrepreneurship Diagnostics Report," has presented a strategic policy framework, offering targeted recommendations to reinvigorate Egypt's entrepreneurial domain.

Policy and Government

In a bid to fortify the entrepreneurial infrastructure, Entlaq advocates for:

  • Crafting a clearer legal understanding within policy frameworks to tailor sector-specific programs.
  • Urging a review of cumbersome governmental procedures to expedite the establishment of private enterprises.
  • Emphasizing consistent evaluation of incentive-based policies to amplify their impact on entrepreneurship.
  • Proposing a comprehensive governmental strategy fostering innovative collaborations for a public-private partnership.

Social Inclusion

Entlaq's recommendations aim to promote inclusivity through:

  • Pushing for equal access to innovation initiatives across diverse sectors and educational institutions.
  • Advocating for media discourse and educational content focused on gender equality in the economic sector.
  • Championing public-private programs to address gender disparities, particularly in underserved sectors and regions.
  • Expanding government-sponsored R&D programs for tech and sector-specific companies.

Financial Inclusion

To bolster financial accessibility, Entlaq suggests:

  • Launching financial awareness campaigns through educational content.
  • Integrating financial literacy programs into school curricula.
  • Expanding financial inclusion initiatives to reach marginalized rural and suburban areas.
  • Proposing a variety of regulated financial instruments to facilitate access to foreign capital.

Venture Capital Financing

Entlaq advocates for reforms to stimulate venture capital support, including:

  • Encouraging local venture capital channels as viable alternatives, possibly supported by government initiatives.
  • Addressing financing gaps for growth-stage startups through flexible funding programs.
  • Implementing industry-tailored initiatives to elevate venture capital investment in key sectors like technology and exports.
  • Proposing an innovation sub-fund under the Sovereign Fund of Egypt.

As for ease of doing business, cross-border capital mobility flows, private sector contribution, and development sector contribution, Entlaq’s report recommends introducing certain regulations, such as expedited judicial processes and contract enforcement, customized to the needs of startups.

Entlaq also emphasized the need for conducive regulatory conditions to facilitate the flow of foreign capital, and incentivizing corporate participation in entrepreneurship programs through tax breaks and incentives.

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