This chapter examines the performance and characteristics of SMEs and entrepreneurs in Egypt. It analyses data on the structure of the business economy and the performance of SMEs with respect to productivity, growth, innovation and exporting. It also assesses entrepreneurship performance in Egypt, analysing business creation, business ownership and self-employment rates and presenting data on entrepreneurial attitudes and venture capital investment flows.
SME and Entrepreneurship Policy in Egypt
Abstract
SME population
Egypt’s business population stands out internationally as one that is particularly dominated by small businesses.1 According to the fifth economic census in Egypt, there were 3.7 million economic establishments (including registered and unregistered establishments) in Egypt in 2017, of which the vast majority (89%) had fewer than 5 employees (CAPMAS, 2018[1]). A further 8% had between 5 and 9 employees, 2% had between 10 and 19 employees and 0.7% had between 20 and 49 employees. This means that 99.7% of Egyptian establishments had fewer than 50 employees in 2017, as shown in Figure 2.1. For comparison, 98.9% of businesses in the European Union (EU) had fewer than 50 employees in 2017 (Eurostat, 2023[2]). This means that the share of businesses with at least 50 employees in the EU economy (1.1%) is more than three times as large as the share in Egypt (0.3%). On the one hand, this highlights the great importance of the small business population to the Egyptian economy. However, given the generally greater productivity, exporting and innovation levels of medium sized firms with at least 50 employees in the economy, it also signals the importance of developing a more substantial medium-sized firm sector in Egypt.
Source: (CAPMAS, 2018[1]), (Eurostat, 2023[2])
Across most sectors of the Egyptian economy, businesses with fewer than 50 employees account for at least 90% of total businesses (Figure 2.2). The exceptions to this are the construction sector, the financial and insurance activities sector and the electricity, gas, steam and air conditioning supply sector. The sectors most dominated by businesses with less than 50 employees are other service activities (100.0%), wholesale and retail trade (99.9%) and agriculture, forestry and fishing (99.9%).
Note: For visualisation purposes, the Electricity, gas, steam and air conditioning supply sector has not been included in the chart. In this sector 39.0% of establishments had fewer than 50 employees in 2017.
Source: (CAPMAS, 2018[1])
The definition for MSMEs set out in the MSMEs Law is based on capital and annual turnover thresholds and varies by sector, as outlined in Table 2.1.
Note: Definition specified in MSME Development Law No. 152 of 2020
There are not currently data available on the performance or economic contribution of MSMEs in Egypt, as defined by the turnover and capital thresholds outlined in Table 2.1. However, the development of statistics on SMEs’ performance and characteristics as defined by the MSME Law is underway.
At present, data from Egypt’s Fifth Economic Census, which was carried out in 2017 and 2018, are the most recent source of data on the structure of the Egyptian economy and the economic contribution of small businesses. While the data in the census are not broken down according to the definitions set out in the MSME Law, there is information on the number of establishments in different sectors, broken down by the employment level of the establishment. There are two key limitations of the economic census that should be taken into consideration when analysing the data:
1. The census was conducted in 2017 and 2018, meaning that the results do not provide the most recent picture.1 This may be particularly significant given the potential impact of the COVID-19 pandemic on the structure of the economy. With that being said, the figures analysed in this chapter, such as the share of businesses in different sectors and the economic contribution of small businesses, are generally relatively stable over time and the 2017-18 data can be expected to provide a reasonably accurate representation of the current situation in Egypt. The sixth census covering 2022 and 2023 is currently being completed, the results of which will provide a more up-to-date picture with a more accurate representation of current economic activity in Egypt.
2. The census only covers establishments, which are defined as fixed locations held by natural or legal persons where economic activities are carried out. This coverage excludes much of Egypt’s agricultural sector, which employs a significant share of the population. The International Labour Organization (ILO) estimates that the total number of people in employment in Egypt was 26.0 million in 2017, of which 6.5 million were agriculture workers and 19.5 million worked outside the agriculture sector (International Labour Organization, 2023[3]). The ILO also estimates that there were 5.5 million people employed in the public sector in 2017. Under the assumption that public sector workers are not in the agriculture sector, subtracting the number of public sector workers (5.5 million) from the total number of workers outside of the agriculture sector (19.5 million) provides an estimate of the total number of private sector employees working in non-agriculture sectors in 2017. This calculation yields a figure of 13.0 million, which is consistent with the number of employees in establishments covered by the Fifth Economic Census, excluding the agriculture, forestry and fishing sector (CAPMAS, 2018[1]). Therefore, while the census data do not comprehensively cover the private economy of Egypt, they are representative of the business economy, which comprises businesses in industry, construction and services.
1. The economic census is implemented periodically and the new results are expected to be published in 2025,
Sectoral distribution of the SME population
Egypt’s population of small businesses is dominated by the wholesale and retail trade sector, which accounted for 58% (2.2 million) of all Egyptian establishments with fewer than 50 employees in 2017 (Figure 2.3). The large majority (86%) of establishments in this sector are retail businesses.
The next largest sector by establishment count is the manufacturing sector, with 518 557 establishments with fewer than 50 employees in 2017. This figure includes 136 392 furniture manufacturers, 89 890 manufacturers of food products and 76 149 manufacturers of fabricated metal products. Other important activities within the manufacturing sector include the manufacture of wood and wood products (66 311 establishments with fewer than 50 employees) and clothing (65 453 establishments with fewer than 50 employees).
The other service activities sector had 319 273 establishments with fewer than 50 employees in 2017, most of which (213 397) were in the other personal service activities sub-sector. The accommodation and food service activities sector was the next largest sector by establishment count. In 2017, there were 182 086 establishments with less than 50 employees in this sector, of which 179 933 were food and beverage services businesses.
Source: (CAPMAS, 2018[1])
Figure 2.4 shows that Egypt’s business population is significantly more skewed towards the wholesale and retail sector than is typical for an economy. Across OECD countries, an average of 23% of enterprises in the business economy (excluding financial and insurance activities) were in the wholesale and retail sector in 2017 (OECD, 2018[4]). This is less than half the share (60%) observed in Egypt. In non-OECD countries for which data are available, the share of wholesale and retail businesses is higher on average (38%) than in OECD countries but still significantly below the share observed in Egypt (OECD, 2018[4]). This points to a need to diversify the sectors of the Egyptian small business economy towards more productive sectors, especially those that generate income through exporting rather than depending on existing domestic markets. One of the key sectors to develop in this respect is the manufacturing sector, which has a far higher export-intensity than the retail sector, particularly in Egypt. Although at 15%, the share of manufacturing businesses in Egypt in the non-financial business economy is already above the OECD average of 9% of firms and the average of 11% in non-OECD countries, there is further scope to develop the manufacturing sector as an income-generator for the Egyptian economy, as well as activities in knowledge-intensive services.
Note: Share of enterprises in the business economy (excluding financial and insurance activities)
Source: (OECD, 2018[4]) (CAPMAS, 2018[1])
Productivity
The number of SMEs operating in traditionally less productivity sectors of the economy points to significant productivity challenges in Egypt. The large majority of SMEs operate in the wholesale and retail sector. On average in OECD countries, the gross value added (GVA) per employee in the wholesale and retail sector is just slightly below the average for the non-financial business economy (Figure 2.5). By contrast, in Egypt, at EGP 89 436, the average GVA per employee in the wholesale and retail sector was less than two-thirds the figure (EGP 157 767) for the non-financial business economy as a whole in 2017 (CAPMAS, 2018[1]). Egypt’s larger than average and less productive than average wholesale and retail sector is a key factor influencing the overall productivity of the SME population, and the economy as a whole. There is considerable scope to raise SMEs’ average productivity by enhancing the performance of existing wholesalers and retailers while also in parallel supporting a shift towards more productive sectors.
Note: Data include companies of all sizes (SMEs and large companies)
Source: (OECD, 2022[5]), (CAPMAS, 2018[1])
Innovation
Another factor that has an important impact on productivity is SMEs’ performance in the area of innovation. The World Bank Enterprise Survey (WBES) reveals a large innovation gap between SMEs and large companies in Egypt (World Bank Enterprise Surveys, 2023[6]). Just 1.5% of businesses with 5-19 employees reported introducing new products or services in 2020. This compares to a figure of 4.4% for Egyptian businesses with at least 100 employees. The share of Egypt’s small businesses that have reported introducing new products or services is also below the corresponding share among small businesses in other countries in the Middle East and North Africa (MENA) region. The WBES also indicates that the extent of technology spillovers from foreign companies in Egypt is fairly limited, with just 1.3% of businesses with 5-19 employees using technology licensed from foreign companies in 2020, as illustrated in Figure 2.6. This implies an opportunity to draw more productivity and technology enhancing spillovers from foreign direct investment attracted to Egypt with appropriate supply chain development programmes around these investors.
Note: Survey year indicated in parentheses
Exports
Exporting can deliver many benefits to businesses, including an enlarged revenue base, risk diversification, technology transfer and an improvement in standards and efficiency. However, SMEs in Egypt export less than in other MENA countries, limiting the degree to which they can enjoy these benefits of internationalisation. The World Bank Enterprise Survey found that in 2020, 4.7% of Egyptian businesses with 5-19 employees had exports accounting for at least 10% of sales (World Bank Enterprise Surveys, 2023[6]). This is below the average for small businesses in the MENA region (Figure 2.7). Some of the contributing factors are discussed in the Business Environment chapter of this report. Both business environment improvements and policies targeting specific SMEs with strong export potential are required to address this issue.
Note: Survey year indicated in parentheses
Informality
A defining characteristic of the population of Egyptian SMEs and entrepreneurs is the high rate of informality. According to the 2017-18 economic census, 53% of establishments in Egypt were unregistered in 2017 (CAPMAS, 2018[1]). This figure would likely be far higher when considering the large number of agricultural enterprises not included in the census. Figure 2.8 shows that informality rates are particularly high in the agriculture, forestry and fishing sector (73%), the accommodation and food services activities sector (57%), the wholesale and retail sector (54%) and the manufacturing sector (54%).
Source: (CAPMAS, 2018[1])
In terms of economic output, the World Bank estimates that the informal sector accounted for just under a third (32%) of Egypt’s GDP in 2018 (Elgin et al., 2021[7]). This figure is similar to that in other middle-income countries in North Africa (Figure 2.9) but significantly higher than in most OECD countries, where the informal economy typically accounts for less than 20% of economic output.
Note: Figures based on the average of the World Bank's estimates of informal output in middle-income countries in the MENA region
Informal enterprises represent an integral part of the Egyptian economy, providing the opportunity for millions of Egyptians to participate in the labour force (OECD, 2021[8]). However, the prevalence of informal enterprises has significant implications for the overall performance of SMEs and entrepreneurs. Informal businesses are in general less likely to invest in skills, training and technology, weighing on productivity and innovation. Many informal enterprises are also excluded from the banking sector, restricting their access to finance and slowing the transition to cashless transactions (OECD, 2021[8]). Informality also creates an uneven playing field, with formal enterprises often struggling to compete with informal enterprises that do not face the same financial and administrative costs associated with regulatory compliance. Furthermore, high informality rates erode the tax base of the Egyptian economy, contributing to macroeconomic imbalances and reducing the government’s capacity to invest in the infrastructure and facilities needed for SME and entrepreneurship development. Another issue is that informal enterprises may not always provide a safe working environment for employees, including women and people with disabilities. Working conditions in informal enterprises also tend to be weaker, with employees having more limited access to medical and social insurance, overtime reimbursement, training opportunities and rights surrounding their working hours.
These factors imply the need for a range of measures to promote the formalisation of informal businesses, such as through fiscal incentives, deterrence measures and training and capacity building support for formalising entrepreneurs. Progressing in this area represents a strong opportunity for Egypt to enhance its alignment with the OECD Recommendation on SME and Entrepreneurship Policy, which emphasises the importance of policy and regulations in facilitating the transition from the informal economy to the formal economy.
Self-employment and business ownership
The International Labour Organization (ILO) estimates that, in 2021, 27% of those in employment in Egypt were self-employed (International Labour Organization, 2023[3]). This is a very high self-employment rate relative to most OECD countries. However, self-employment rates are typically higher in developing economies due to a variety of factors including higher rates of informality and fewer opportunities in the labour market. A more representative comparison can be made to other countries in North Africa, with Egypt’s self-employment rate falling slightly below the North African average of 35% in 2021 (International Labour Organization, 2023[3]).
It is important to note that the category of self-employment contains a very diverse range of enterprise-types, from those involved in traditional, relatively unproductive sectors to highly productive and innovative businesses with a high potential for growth and positive economic spillovers. This distinction is conceptualised by the notion of productive entrepreneurship, which refers to entrepreneurial activities that generate wider economic benefits, for example through job creation or innovation (OECD, 2020[9]).
One indicator of productive entrepreneurship rates is the number of employer enterprises. In Egypt, a third (33%) of self-employed people had employees that were not family members in 2021 (International Labour Organization, 2023[3]). This means that 9% of those in employment in Egypt in 2021 were self-employed with employees, equating to 3.7% of working-age (15–64-year-old) adults (Figure 2.10). This figure is high by international standards. The average share of working-age adults that were self-employed with employees in North African countries in 2021 was 2.5%, while the corresponding figure for high-income countries globally was 2.4%.
Overall, the high rates of self-employment in the Egyptian economy can be taken as an indicator of entrepreneurial dynamism, at least in terms of the stock of existing, as opposed to new, entrepreneurs. However, for this potential to be truly realised it is important that informality rates are reduced, that the share of self-employed with employees is increased further, and that the sectors of activity are skewed more towards tradable sectors.
Business creation
Business dynamism, and in particular the entry of new firms to the market, is an important driver of productivity, innovation and competition in an economy. In Egypt, there is a need to increase the rate of new start-up creation. Indeed, the Global Entrepreneurship Monitor (GEM) 2022 Adult Population Survey (APS) found that less than 7% of 18-64 year old Egyptians were involved in total early-stage entrepreneurial activity (TEA), meaning that they were either involved in setting up a business or were the owner-manager of a firm less than 3.5 years old, as shown in Figure 2.11 below (Global Entrepreneurship Monitor, 2023[10]). Egypt’s TEA rate of 7% in 2022 was the lowest it has been since data collection began in 2008.
A significant portion of new business creation in Egypt appears to be driven by necessity rather than opportunity. Indeed, the most commonly cited motivation for starting a business in Egypt is to generate income due to a scarcity of job opportunities. In 2022, around 85% of Egyptians involved in early-stage entrepreneurial activity indicated that a lack of employment opportunities was a contributing factor to them engaging in this activity (Global Entrepreneurship Monitor, 2023[10]). In more developed economies, this share is generally less than 50%, pointing to a larger portion of entrepreneurs that are creating businesses due to market opportunities rather than out of economic necessity.
The 2017-18 economic census provides an insight into rates of business creation in different sectors, illustrated in Figure 2.12 below. In the wholesale and retail sector – Egypt’s largest economic sector by establishment count – 9% of establishments in the 2017/18 economic census started their operations in 2017 (CAPMAS, 2018[1]). This is above the all-economy average of 8%. Meanwhile, the business creation rate in the manufacturing sector – Egypt’s second largest economic sector by establishment count – was below the all-economy average, at 6%. The sectors with the highest rate of business creation in 2017 were the arts, entertainment and recreation sector (15%), the retail estate activities sector (11%) and the mining and quarrying sector (11%). There were very low rates of business creation in the agriculture, forestry and fishing sector (2%) and the financial and insurance activities sector (1%) in 2017.
The overall picture is one of a need to increase start-up rates in Egypt, particularly with respect to opportunity-oriented business starts. This will help to increase the dynamism of the Egyptian economy and foster improvements in many priority areas such as innovation, productivity, exports and competition.
Source: (CAPMAS, 2018[1])
Entrepreneurship culture
The findings are more encouraging for Egypt when it comes to entrepreneurial intentions, suggesting that there is start-up potential to build on. In 2022, 47% of Egyptians not currently involved in entrepreneurial activity indicated that they were intending to start a business within the next three years (Global Entrepreneurship Monitor, 2023[10]). This is the fifth highest share out of the 49 countries for which data are available, pointing to a strong pipeline of entrepreneurs with the potential (or at least the ambition) to start new business ventures in the short to medium term. With that being said, entrepreneurial intentions in Egypt were lower in 2022 than in 2021, when 55% of Egyptians intended to start a business within the coming three years (Figure 2.13).
Note: Excluding those already involved in entrepreneurial activity
The high rates of entrepreneurial intention in Egypt are underpinned by a culture and outlook that is conducive to entrepreneurship. Indeed, nearly two-thirds (64%) of respondents in the GEM’s 2022 Adult Population Survey agreed that they see good opportunities for starting a business in their area (Global Entrepreneurship Monitor, 2023[11]). This compares to an average of 55% across the 49 countries covered by the survey. Furthermore, 78% of adult Egyptians agree that in Egypt, successful entrepreneurs receive a high status, while 71% agree that most people consider starting a business to be a desirable career choice. Both of these shares are above the global average.
The status afforded to successful entrepreneurs, the high share of Egyptians that see opportunities to start a business and the large numbers that are intending to do so all indicate that Egypt has a culture that embraces entrepreneurship and recognises entrepreneurial opportunities. However, Egypt has persistently registered a high rate of entrepreneurial intentions alongside low rates of early-stage entrepreneurial activity (Figure 2.14), relative to other countries. This gap between entrepreneurial intentions and entrepreneurial activity indicates that many budding entrepreneurs encounter barriers to creating and operating a business that results in an overall weaker rate of enterprise creation. Moreover, the established business ownership rate in Egypt, defined by the GEM as the share of people aged 18-64 who are an owner-manager of an established business that has paid salaries, wages, or any other payments to the owners for more than 42 months, was 2.6% in 2022. This figure is considerably lower than the share of Egyptian adults engaged in early-stage entrepreneurial activity (6.6%), highlighting that even among those that initiate early-stage entrepreneurial activity, most do not remain involved in the venture on a longer-term basis. An important policy challenge therefore is to seek to translate greater shares of those with entrepreneurial intentions into active opportunity-exploiting entrepreneurs. Key to this is the provision of supports to develop the entrepreneurship skills required to establish and grow an innovative business, which requires a combination of expertise in both technical areas and business management (OECD, 2025[12]).
Business exit
In 2022, nearly 10% of Egyptian adults surveyed in the GEM’s Adult Population Survey had exited a business over the past 12 months (Global Entrepreneurship Monitor, 2023[10]). While the COVID-19 pandemic will have likely impacted this figure, it was nonetheless the eighth highest business exit rate among the 49 countries covered by the study. While business exit can be a healthy feature of business dynamism when coupled with high business creation rates, it leads to a decline in the stock of enterprises and employment if exit substantially exceeds entry. Other countries with a high business exit rate, such as Brazil, Saudi Arabia and the United Arab Emirates, typically also have a high rate of early-stage entrepreneurial activity (TEA). Such cases point to a high level of business dynamism with large flows of enterprises entering and exiting the market. By contrast, Egypt is unusual in having a high rate of business exit twinned with a relatively low TEA rate.
Figure 2.15 shows that in Egypt, as was the case in many countries, the COVID-19 pandemic has been a major driver of business exit. A more entrenched difficulty is low profitability. In 2021, 36% of people who exited a business in Egypt said that unprofitability was a reason for doing so (Global Entrepreneurship Monitor, 2022[13]). This compares to an average figure of 29% in the MENA region as a whole and an average figure of 25% among middle-income countries. The large share of entrepreneurs closing their business due to unprofitability is symptomatic of the significant macroeconomic challenges facing the Egyptian economy. These challenges are reported by stakeholders to be placing a considerable strain on the business population, including many otherwise promising Egyptian start-ups. Actions to improve the business climate for entrepreneurship as well as capacity building support to entrepreneurs to increase the value added and profitability of their enterprises are needed to address this challenge.
Innovation in early-stage entrepreneurship
In the GEM’s 2022 Adult Population Survey (APS) less than 1% of early-stage entrepreneurs in Egypt reported offering products or services that were new to their area (Global Entrepreneurship Monitor, 2023[10]). In terms of technology adoption, 29.3% of early-stage entrepreneurs in Egypt made use of new technologies in 2020, which is below the average in MENA countries of 33.1% (Global Entrepreneurship Monitor, 2021[14]). A key policy priority is therefore to support more start-ups in Egypt to adopt and also to innovate and develop new technologies, products and services.
Venture capital-backed start-ups
At the top end of the performance spectrum, Egypt has a healthy and growing population of innovative tech start-ups with success in obtaining funding and expanding. According to a study by Disrupt Africa, 131 Egyptian tech start-ups received venture capital funding in 2022 (Disrupt Africa, 2022[15]). This was the second highest number of funded start-ups in Africa, behind only Nigeria, as shown in Figure 2.16. The total amount of venture capital funding received in 2022 by these Egyptian start-ups was USD 812 million, equating to an average of USD 6.2 million per start-up. This compares to a figure of USD 446 million in 2021. Meanwhile, these 131 Egyptian tech start-ups employed 11 153 people in 2022 – an average of 85 employees per start-up. For comparison, the average Nigerian tech start-up that received funding in 2022 employed 38 people, while in Kenya the corresponding figure was 88 employees per start-up. Egypt was also home to 13 acquisition deals for tech start-ups in 2022 – a higher figure than in any other African country. These data indicate that, despite the many challenges facing the broader population of SMEs and entrepreneurs, Egypt does possess a healthy crop of high potential start-ups that are succeeding in securing funding from investors. It suggests potential for further development of these high impact businesses, which is being supported by initiatives such as MSMEDA’s venture capital programme, discussed further in Chapter 5 of this report.
Source: (Disrupt Africa, 2022[15])
Women entrepreneurship
In 2021, 31% of Egypt’s early-stage entrepreneurs were women (Global Entrepreneurship Monitor, 2022[13]). The gender gap is even wider in terms of ownership of established businesses, with women accounting for just 14% of established business owners (Figure 2.17). For countries in the MENA region, women make up on average 41% of early-stage entrepreneurs and 31% of established business owners.
While the share of working-age women that are self-employed with employees in Egypt (0.3%) is in line with the average for North Africa, Figure 2.18 illustrates that the gender gap is larger due to the higher than average share of working-age men in Egypt that are self-employed with employees (6.9%) (International Labour Organization, 2023[3]).
The underrepresentation of women in early-stage entrepreneurship in Egypt represents an important challenge but also an opportunity to foster more impactful entrepreneurial activity by tapping into the potential of women entrepreneurs. Chapter 4 of this report discusses further these issues surrounding the participation of women in entrepreneurship activities and proposes potential policy approaches that could be deployed in Egypt to address them. These include the development of a women’s entrepreneurship strategy, the provision of training to MSMEDA policy officers on gender issues, and the expansion of business development supports for women interested in creating a business.
Youth entrepreneurship
As is the case across the MENA region and globally, young people in Egypt are more likely to be involved in early-stage entrepreneurship than older age groups. In 2021, 10% of Egyptians aged 15-24 were involved in early-stage entrepreneurship according to the GEM study (Figure 2.19). This share rises to 11.2% among those aged 25-34. Only 5.1% of Egyptians aged 55-64 are involved in early-stage entrepreneurship, which is less than half the share of younger age groups.
Figure 2.20 shows that the share of young people that own established businesses in Egypt is below the share among older age groups. This is consistent with the pattern observed internationally. However, in Egypt the difference in the established business ownership rate between the 15-24 age group and the 45-54 age group (2.7 percentage points) is significantly lower than the average for the MENA region (7.2 percentage points). This suggests a strong baseline of entrepreneurial interest and capabilities among young people in Egypt. There are good opportunities to tap into this potential further in order to stimulate more widespread and impactful entrepreneurship among youth in Egypt.
Egypt’s business population is dominated by MSMEs, and its MSME population is dominated by firms in the wholesale and retail sector. There are strong opportunities to raise the productivity of the SME population by fostering a shift towards more productive sectors, reducing the size of the informal sector and increasing innovation and export performance. In terms of entrepreneurship, Egypt has a healthy stream of high potential start-ups as measured by the number of new businesses that are successful in obtaining venture capital investment. However, outside of this narrow group of top performers, overall rates of early-stage entrepreneurial activity are lower in Egypt than in other countries. Moreover, the economic challenges that Egypt has faced in recent years have contributed to a high rate of business exit. SMEs and entrepreneurs – including some of Egypt’s most promising new businesses – need a range of supports to help them to weather the challenging macroeconomic climate.
Promote policy measures to:
Develop reliable and recurring statistics on SME and entrepreneurship performance and characteristics, to be published on an annual basis. As a starting point, data should be collected on i). the number of enterprises, ii). the number of persons employed, and iii). the value added of micro, small, medium, and large-sized businesses. These data should ideally be disaggregated by industrial sector. The European Commission’s Annual Report on European SMEs is a good illustration of the scope of data on SMEs that should be aspired for (European Commission, 2024[16]).
Accelerate the formalisation of SMEs and entrepreneurs through outreach activities to raise awareness and uptake of the formalisation incentives in the MSME Law. These uptake and impact of these incentives should also be closely monitored to determine whether adjustments or additions are needed.
Facilitate the transition of SMEs towards higher productivity sectors and activities by taking steps to increase the role of the private enterprises in sectors of the economy and facilitating access to international markets (see Boxes 3.8 and 5.15).
Encourage innovation and technological adoption among SMEs and entrepreneurs, for example through financial support programmes (digital vouchers) and tax incentives to support SME digitalisation and the establishment of digital innovation hubs in rural areas (see Box 7.14).
Address business creation bottlenecks that create gaps between entrepreneurial intention and action by introducing mandatory SME tests, ramping up regulatory impact assessments and simplifying business licensing systems (see Box 3.8).
Develop actions to further support opportunity-based entrepreneurship and innovation in start-ups, including through measures to enhance the incubation and acceleration system and create stronger incentives for private and venture capital investors (see Box 5.15).
References
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[15] Disrupt Africa (2022), The African Tech Startups Funding Report.
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[3] International Labour Organization (2023), ILOSTAT.
[12] OECD (2025), OECD Reviews of Innovation Policies: Egypt 2025 (forthcoming).
[5] OECD (2022), SDBS Business Demography Indicators, https://stats.oecd.org/index.aspx?queryid=81074 (accessed on 24 February 2022).
[8] OECD (2021), MENA-OECD Government Business Summit, Session 4. Social resilience: moving away from informality to formal employment and businesses.
[9] OECD (2020), International Compendium of Entrepreneurship Policies, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/338f1873-en.
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← 1. Egypt’s Micro, Small and Medium-Sized Enterprises (MSME) Development Law No. 152 of 2020 establishes a unified definition for micro, small and medium-sized enterprises in Egypt, based on turnover and capital thresholds (see Box 2.1). However, this chapter therefore primarily analyses SME performance and characteristics based on the employment-disaggregated data available in the economic census, which, at the time of the analysis, is the main source of data available on MSME activity in Egypt.