This publication presents an OECD country review of small and medium-sized enterprise (SME) and entrepreneurship policy in Egypt. It was prepared as part of the OECD-Egypt Country Programme and forms part of the series of OECD Country Reviews on SME and Entrepreneurship Policy undertaken by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities.
These reviews provide governments from participating countries with a tool for assessing the design and implementation of their SME and entrepreneurship policies and their alignment with the OECD Council Recommendation on SME and Entrepreneurship Policy. In addition to Egypt, this series of country reviews has covered countries including Brazil, Canada, Indonesia, Ireland, Israel, Italy, Kazakhstan, Mexico, Poland, the Slovak Republic, Thailand and Viet Nam.
The reviews are developed using a standard methodology. This includes a diagnostic questionnaire completed by national government authorities, a fact-finding mission by an OECD team to hold detailed interviews with policy and business stakeholders, and discussion of a draft report at a peer review session in the OECD Committee on SMEs and Entrepreneurship (CSMEE).
The country reviews typically includes a thematic chapter on issues of special relevance for the reviewed country, as agreed between the OECD and the country concerned. This review has two thematic chapters, one focusing on SME digitalisation and the other examining the role of fintech in promoting SME and entrepreneurship development in Egypt.
The report shows that Egypt is making strides in advancing the SME and entrepreneurship economy. It has a strong entrepreneurial spirit, a growing start-up scene and a large population of micro, small and medium-sized enterprises (MSMEs) and entrepreneurs. Priorities are to grow more medium-sized, innovative and export-oriented SMEs, boost productivity and increase business formalisation.
The government has a strong policy agenda in place to achieve these aims. It has recognised the importance of SMEs and entrepreneurs to the future development of the country, and made a number of important policy reforms, including the introduction of Law Number 152 of 2020 on the Development of Micro, Small and Medium Enterprises, which sets out the definition of the sector, the eligibility for policy supports, the budget effort to be applied to SME and entrepreneurship development and the main financial and non-financial support efforts to be used.
The Micro, Small and Medium Enterprises Development Agency (MSMEDA) has the lead responsibility for MSME and entrepreneurship development in the country and has developed a range of effective support instruments. It works in collaboration with other key agencies in this area including the General Authority for Investment and Free Zones (GAFI) and the Egypt Entrepreneurship and Innovation Centre (EEIC). MSMEDA plays a key role in policy co-ordination, alongside the Central Bank of Egypt and other public actors.
In order to reinforce these positive developments, future policy development priorities include further easing of the regulatory burden, improving access to financing, strengthening R&D exploitation, improving policy monitoring and evaluation, and strengthening business advice. There are also new opportunities in SME digitalisation and using fintech to improve financing opportunities for small business.
The report offers policy recommendations to help achieve these ambitions. The recommendations fall across a number of areas. From the perspective of creating a more conducive business environment, it is important to expand the use of SME Tests and regulatory impact assessments, which can be facilitated by increasing the capacity of the Egyptian Regulatory Reform and Development Activity (ERRADA). The policy framework could be enhanced through the establishment of more effective governance structures and co-ordination mechanisms, while MSMEs and entrepreneurs would benefit from the scaling up of existing programmes such as the credit guarantee scheme as well as from the introduction of new programmes, for example in the areas of internationalisation and skills upgrading. It is also important that the policy framework provides sufficient autonomy to local policy actors to tailor supports to the widely varying conditions and challenges that MSMEs and entrepreneurs face in different parts of the country. Moreover, creating incentives for MSMEs to adopt digital technologies and developing a more flexible regulatory framework to streamline the development of fintech products and services represent promising avenues for supporting MSME and entrepreneurship development in Egypt.