This chapter assesses the national programmes for SME and entrepreneurship development in Egypt. It examines national government measures in support of SMEs and entrepreneurship in the areas of access to financing, innovation, exporting and internationalisation, skills upgrading, business development services, entrepreneurship education and training, public procurement, green entrepreneurship, and programmes for specific target groups in the population. It concludes with recommendations for actions to strengthen these support programmes.
SME and Entrepreneurship Policy in Egypt
Abstract
Government programmes involve the provision of direct supports to a specific set of beneficiaries. These differ from broader government policies and regulations, which are implicitly applicable to all relevant agents. SME and entrepreneurship programmes are integral in enhancing the performance of SMEs and entrepreneurs, helping to address various market failures and the many size- and age-related obstacles that small and young businesses encounter. SME and entrepreneurship programmes are therefore unsurprisingly an important aspect of many elements of the OECD Recommendation on SME and Entrepreneurship Policy1, including:
Recommendation 6: Encouraging and enabling SMEs and entrepreneurs to transition to sustainable business models, practices and technologies, and to drive green innovations, taking into account their specificities and needs in environmental policies; fostering their access to resources, including sustainable finance; and supporting their adoption of circular economy strategies.
Recommendation 7: Enhancing SMEs’ and entrepreneurs’ participation in international trade and global value chains through open markets; conducive regulatory frameworks; trade facilitation and trade finance; and by strengthening their access to services and networks, including with foreign partners and multinationals.
Recommendation 9: Encouraging and supporting under-represented or disadvantaged groups to participate in entrepreneurship by taking into account structural barriers and specific challenges and needs through appropriate targeted measures, where necessary, and through equal access to wider entrepreneurship support programmes.
Recommendation 10: Facilitating the transition from informal to formal entrepreneurship, easing access to resources where needed; and ensuring a level playing field and enabling conditions for productive employment and decent work for the self-employed and for all kinds of entrepreneurship, including in the platform economy.
Recommendation 12: Providing adequate incentives for SMEs and entrepreneurs to innovate and fostering their capacity to benefit from innovation diffusion, through conducive market conditions; robust and inclusive innovation ecosystems, local networks and infrastructure; and appropriate targeted measures, where necessary.
Recommendation 13: Enhancing SMEs and entrepreneurs’ access to a diverse range of financing instruments, sources and channels that are adapted to their needs in terms of development, growth and sustainability, by implementing evidence-based policies and regulatory approaches conducive to transparent and resilient SME finance markets; leveraging the role of new technologies; encouraging timely payments; and strengthening SME financial skills and vision.
Recommendation 14: Encouraging the development of an entrepreneurial mindset throughout society, and creating adequate incentives for SMEs and entrepreneurs to invest in skills; in particular promote the development of and access to skills that are transversal across jobs and contexts, such as management, problem-solving and digital skills.
This chapter reviews the selection of SME and entrepreneurship programmes in Egypt, assessing the extent to which current approaches are aligned with the principles and guidance embedded in the OECD Recommendation and proposing future policy actions for consideration by the Egyptian government.
Access to bank finance
The banking sector is a key source of financing for SMEs. By the end of 2021, an estimated EGP 400 billion of bank financing (approximately USD 13 billion) was extended to SMEs, with a more than 20% annual increase in the SME bank loan portfolio in both 2020 and 2021 (National Bank of Egypt, 2022[1]). This growth is largely an outcome of the ongoing regulatory efforts of the Central Bank of Egypt (CBE) to induce Egyptian banks to lend more to SMEs (see the Business Environment chapter for further details on CBE regulations relating to bank lending to SMEs). Another factor underlying the growth of SME bank lending is the influx of credit lines to banks from international financial institutions to support on-lending to SMEs. These include, for example:
An unsecured loan of USD 100 million in 2023 from the European Bank for Reconstruction and Development (EBRD) to Banque Misr for on-lending to SMEs.
An EBRD unsecured loan of USD 30 million in 2021 to the Ahli United Bank of Egypt for on-lending to SMEs.
An EBRD unsecured loan of USD 25 million in 2023 to the Export Development Bank of Egypt for on-lending to underserved SMEs, with focus on local small exporters.
A USD 148 million financial package from the AfDB to the Commercial International Bank of Egypt (CIB) in 2023 to strengthen SMEs and facilitate trade (comprised of a USD 10 million line of credit, a USD 90 million subordinated loan, a USD 32 million trade finance line of credit, and a USD 16 million trade finance line of credit sourced from the Africa Growing Together Fund).
Despite this progress, it is estimated that only 2 million out of the 4.5 million SMEs in Egypt satisfy the requirements for bank financing, and that less than 10% of all Egyptian SMEs currently receive loans from banks (CGC Egypt, 2022[2]). This bank financing gap is a major barrier to SME and entrepreneurship development.
The credit guarantee programmes of the Credit Guarantee Company (CGC) are one of the main ways in which these bank financing challenges are being addressed. The CGC was established by the government in 1989 and was brought under the CBE regulatory body in 2018. The majority (70%) of the 206 000 loan guarantee recipients in the CGC’s outstanding portfolio as of 31 January 2021 were medium enterprises, with small enterprises accounting for 20% of the beneficiaries and micro enterprises for just 1%. The CGC offers two programmes that aim to increase the credit guarantee share of micro and small enterprises:
The Small and Emerging Businesses (SEB) programme, which offers wholesale guarantees to microfinance institutions (MFIs) capable of providing financial and technical services to micro and small enterprises, including self-employed clients and poor women engaged in simple income generating activities. The wholesale model provides a guarantee umbrella for financial institutions lending to MFIs that enables the MFI to create a portfolio of microloans. The SEB programme includes comprehensive technical assistance on a range of topics including board composition, portfolio management, outreach activities, risk, governance, finance, and IT.
The Small and Medium Enterprises (SME) programme, which provides individual loan guarantees to new and existing SMEs (both banked and unbanked). The programme uses a digital platform that connects SME borrowers with lending banks through a digitised and simplified credit application and assessment process.
It will be important for the CGC to monitor the extent to which these targeted programmes are successful in increasing the share of micro and small enterprises in the guarantee portfolio. The CGC should also examine whether there is scope to increase the leverage ratio of guaranteed loans to its capital base, while remaining within the maximum permitted ratio.
An issue with the credit guarantee scheme currently is that the guarantees are mostly taken up by existing small and (mostly) medium enterprises, with minimal targeting of start-ups and innovative firms with high growth potential. As such, the CGC programmes could seek stronger alignment with emerging government priorities, such as supporting the financing of innovative SMEs and start-ups and the digital and greening transformations of SMEs. Box 5.1 provides a description of the approach taken by the Korea Credit Guarantee Fund to diversify its guarantee product offerings, which at one time faced similar issues.
Description of the approach
The Korea Credit Guarantee Fund (KODIT) was established in 1976 to support the financing of SMEs through the provision of credit guarantees. KODIT’s capital base is composed of contributions from the government, financial institutions and enterprises, as stipulated in the Korea Credit Guarantee Fund Act. With contributions of USD 839 million from the government, USD 825 million from financial institutions, and USD 50 million from non-bank financial institutions and local governments in 2022, KODIT’s capital fund reached USD 8.3 billion in size at the end of 2022. Outstanding guarantees stood at USD 65.6 billion, which was approximately 4% of GDP. The Korea Credit Guarantee Fund Act prohibits the operational multiple (the outstanding credit guarantee amount divided by the capital fund, which is an important measure indicating the capacity to provide guarantees) from exceeding 20. At the end of 2022, the multiple stood at 7.9. In 2022, the usage rate of credit guarantees was 14.2% of total bank loans, up from 12.4% in 2019, while the KODIT default rate fell from 3.6% in 2018 to 2% in 2022.
KODIT operates through 40 branches across the Republic of Korea, including five Business Start-up Branches. KODIT aligns its programme support with government policy priorities, and consequently makes adjustments to its credit guarantee products and offerings, such as guarantees for start-ups, exporters, innovative SMEs, and the green transition. KODIT accordingly offers 11 types of guarantee product offerings, including special guarantee programmes, such as:
The Promising Start-up Growth Support Programme, consisting of four credit guarantee products: Guarantee for Pre-Stage Start-up; Guarantee for New Start-up; Guarantee for Early-Stage Start-up; and Guarantee for Growth Stage Start-up. In 2022, this programme provided guarantees of USD 3.1 billion to 10 256 start-ups.
The Start-up Nest Platform, a one-stop system to increase the supply of “scale-up start-ups” by combining credit and investment guarantees with non-financial supports, such as consulting, mentoring, and technical advice. As of 2022, KODIT had selected 1 060 Start-up Nest businesses and provided USD 244 million in credit guarantees and USD 26 million in direct investment.
The Innovative Start-up Support Programme, to foster the scaling of start-ups with innovative technologies or in new industries. The programme provides credit guarantee products for four stages (“R&D”, “Initial”, “Growth”, and “Leap”) to ensure sufficient support is available throughout the growth process.
The Innovation Icons Support Programme, which provides a credit guarantee of up to USD 1.4 million in value for innovative start-ups with high growth potential. The guarantees are supplemented by services such as consulting, legal advice and support for overseas expansion. The goal is to support 50 innovative icons by 2026.
The Green Guarantee Programme, which, in 2022, provided guarantees of USD 134 million to 95 companies in the field of new and renewable energy.
The Green Fair Transition Guarantee Programme, launched in June 2022 with contributions from the Ministry of Economy and Finance, aims to assist SMEs in achieving carbon neutrality and mitigating greenhouse gas emissions. As of late 2022, 706 SMEs were provided with USD 428 million of new guarantees.
The Guarantees for Social Economy Enterprises Programme, which provided guarantees of USD 151 million to social enterprises, co-operatives, and other eligible entities in 2022.
The E-Commerce Guarantee Programme, which consists of guarantees for bank loans taken out to purchase goods under an e-commerce contract and guarantees for payment obligations when a company purchases goods or services on credit from a supplier. The programme provided guarantees of USD 3.35 billion to 12 817 enterprises in 2022.
Factors for success
To align its credit guarantee offers with government policy priorities of increasing support for entrepreneurship, export competitiveness and businesses in key industries and future innovative sectors, KODIT innovated with an adapted policy focus on start-ups and new deal enterprises. Consequently, 33.6% of KODIT guarantees support start-ups, 23.1% support exporting, 22.5% support new deal Industries, and 7.2% support key industries.
Improvements made to KODIT’s digital credit guarantee service allowed expansion of its online services through digital innovation. In 2022, KODIT introduced the Easy-one Guarantee digital platform, which allows customers to use the credit guarantee service via the Internet or mobile phone. Tools such as the Artificial Intelligence chatbot and social networking service (SNS) provide 24/7 access to support when using the digital platform. KODIT also established a Robotic Process Automation system to enhance digital customer services and work efficiency.
KODIT is notable for providing non-financial support services to its guarantee clients, including management consulting (through a dedicated management consultant group) and specialised consulting through its in-house professional consultants who work co-operatively with universities, the Korea Trade Promotion Agency, and others. KODIT also offers a training programme to support the human resource development of SMEs and improve the practical skills of management and workers.
Obstacles and responses
Establishing a stable capital base is essential in building confidence in the credit guarantee system and ensuring the growth and sustainability of the fund. Without this, credit guarantee schemes will lack effectiveness and impact. Korea dealt with this challenge by making it a legal requirement for financial institutions to make contributions to the credit guarantee fund on an annual basis to supplement its initial capital base. The government also allocates an annual budget contribution to the fund and different ministries make contributions to the fund for establishing new guarantee products to meet the needs of client groups and government priorities.
Relevance to Egypt
With additional capital funding, the Egyptian Credit Guarantee Company (CGC) could further diversify its guarantee product offerings to align with government priorities such as stimulating innovative start-ups, supporting SMEs in priority sectors, and fostering e-commerce and digitalisation. In this regard, consultations should be held by the CGC with MSMEDA, GAFI, the banking institutions and other relevant stakeholders to discuss the special financing needs of innovative start-ups and SMEs and how the guarantee scheme can better match other government priorities, such as SME digitalisation and supporting green enterprises.
Access to microfinance
The second primary source of financing for micro and small enterprises in Egypt is the microfinance sector, which has grown significantly in recent years. As of March 2024, the total outstanding loan portfolio of the microfinance sector (including from both microfinance institutions and the microlending from banks) was EGP 93.4 billion. This compares to an outstanding loan portfolio of EGP 2 billion and 1 million borrowers in 2014.
Institutional Upgrade Programme for Microfinance NGOs - Category (C)
The microfinance sector is comprised of business associations, microfinance companies (MFCs), and NGOs. The NGOs are classified as Category A, B, or C, depending on their portfolio size. Many of the more than 1 000 NGOs offering microfinance in the Egyptian governorates lack operational efficiency, professionalism, and sustainability. This is particularly the case among the Category C NGOs. To address this, the CBE is collaborating with the International Finance Corporation (IFC), the FRA and MSMEDA on a three-year programme to build the institutional capacities of 41 Category C NGOs, with the aim of eventually upgrading them to Category B.2
The upgrading training programme, implemented by the Egyptian Microfinance Federation (EMF) covers basic aspects of the NGOs’ activities, such as reports preparation, financial and administrative structures, as well as digital upgrading and the use of electronic payment systems for lending and repayment operations.3 The programme also provides follow-up support to ensure the NGOs can implement the knowledge and skills acquired during the training. When deemed ready, the NGOs will submit requests to the FRA for Category B classification. It is anticipated that the upgraded NGOs will be in a better position to attract financing from banks and investors and to increase their client base of financially marginalised groups. This programme will therefore contribute to the aims of the CBE’s National Financial Inclusion Strategy.
The FRA monitors the qualifying processes for Category C NGOs on an on-going basis and coaches the EMF and NGOs for any modifications needed to submit a correct file for upgrading. In addition, the FRA reviews qualifications and holds interviews for key positions before the upgrade and participates effectively in a review all the training material and the tailored and delivered special topics related to Governance, Internal Control and Internal Audit, Microfinance Regulatory Rules and Responsible Pricing.
MSMEDA direct lending programme
MSMEDA lends directly to formal MSMEs (falling within the definitions presented in the MSMEs Law), including start-ups. The maximum loan amount for MSMEDA’s direct lending is EGP 30 million for small business and EGP 60 million for medium enterprises. In this regard, MSMEDA’s direct lending fills the gap left by the maximum MFI lending ceiling of EGP 242 000. MSMEDA reports an outstanding direct lending portfolio of EGP 2.1 billion spread across 9719 borrowers as of 31 December 2022.4
One of the advantages of MSMEDA’s direct lending activities is that the provision of finance can be complemented by other MSMEDA services, such as training and advisory support, which most MFIs do not provide. MSMEDA also lends to microfinance NGOs for on-lending to micro-credit borrowers.5 Most of the microfinance channelled through third parties in this way supports informal micro enterprises.
Establishing an SME Bank and/or allowing larger microfinance companies to be licenced as Microfinance Banks could bridge the gap between microfinance and bank finance
Many Egyptian MSMEs do not have access to bank financing, and of the estimated 2 million who could be eligible for bank financing, only 400 000 currently receive loans (CGC Egypt, 2022[2]). Half of those considered eligible would not be able to supply the documentation required by banks and a third lack financial awareness or interest in borrowing from banks. Thus, MSMEs still face barriers in accessing loans from the traditional banking sector. Many micro and small enterprises can make use of MFIs where bank finance is not accessible. However, with lending capped at EGP 242 000 (approximately EUR 4 600), enterprises will have difficulty scaling without access to higher levels of financing. Mechanisms to bridge the gap between microfinance and bank financing are not well established, although the CBE is making efforts to encourage banks to down-ramp their lending to micro and small enterprises.
One potential solution to addressing the lending gap would be for Egypt to establish a public SME Bank. This is the route taken by governments in many countries. Examples of SME Banks in other countries include:
The SME Bank in Saudi Arabia, established by a Council of Ministers Resolution in 2021.
The SME Development Bank in Thailand, 99% owned by the Ministry of Finance.
The SME Development Bank Malaysia, established in 2005, 100% owned by the Ministry of Finance and regulated by the Malaysian central bank.
The CARD SME Bank in the Philippines, which facilitates the transition of micro entrepreneurs to small businesses and addresses a gap not filled by the commercial banks.
The SME Bank in Lithuania, a neobank licenced by the European Central Bank in 2021 that offers a single digital platform for SMEs’ financing and daily banking services.
The new Egyptian Banking Law No. 194/2020 provided for the establishment of digital banks (which would be prohibited from granting credit facilities to large corporations) and “specialised banks”. The CBE has subsequently issued the regulatory framework and licensing requirements for Digital Banks (circular of 12 July 2023) and is currently developing regulations for specialised MSME Banks. The CBE has granted initial approval to the Egypt Digital Innovation Company, a subsidiary of Banque Misr, which is set to launch as Egypt’s first digital bank before the end of 2024.
Another option may be to create a licence for microbanks, which would enable the most qualified Microfinance Companies to eventually transition towards becoming microbanks, including allowing them to accept deposits from clients. This is the approach taken by the government in Georgia through the adoption of the Law on Microbanks6 in early 2023. The microbanks operate as financial institutions and serve to address the gap between MFIs and commercial banks with a primary focus on lending to individuals who generate income from entrepreneurial endeavours, including agricultural activities. While commercial banks require a capital of GEL 50 million in order to be licensed and MFIs require a capital of GEL 1 million, microbanks must have a capital of GEL 10 million to be licenced. Moreover, microbanks cannot issue loans of more than GEL 1 million. Once operating under a microbank license, microbanks can accept savings deposits and are able to improve their range of service offerings and graduate their clients to larger loans to support their growth plans. The first microbank licence was issued to FINCA Georgia, formerly an MFI. Under the license, FINCA Georgia can accept deposits and issue loans, letters of credit, credit cards, and leasing and factoring operations.
Access to equity finance
Venture capital
There are a number of private venture capital firms in Egypt, but they tend to invest in later-stage, more established medium-size enterprises. However, Egypt’s start-up community is beginning to attract considerable interest from investors both inside Egypt and the Gulf areas, particularly in the fintech sector. This is happening without any government intervention.
Other venture funding initiatives, initiated by banks and the government, are moving into the landscape. In 2017, the investment firm Egypt Ventures was established and seeded by the former Ministry of Investment and International Cooperation. Egypt Ventures invests in accelerators and co-invests in tech-based and high-growth potential enterprises. Falak Startups, a venture fund powered by the Ministry of Planning, Economic Development and International Cooperation, invests in tech-enabled and scalable start-ups with a ticket size of up to EGP 2 million.
Since 2021, the CBE has allowed banks to include their contributions to funds-of-funds and investment companies targeting SMEs towards the requirement for 25% of their total lending portfolios to be directed to SMEs. Avanz Manara was the first investment fund initiative of the banking system. It was launched by Egyptian banks and local institutions7 in 2022 with a targeted investment amount of EGP 2 billion. The investment priority was placed on funds supporting SMEs in healthcare, education, fintech, agribusiness, renewables, fast-moving consumer goods and IT. Further, in early 2022, Egypt’s largest banks launched the Nclude Venture Fund with an initial investment of USD 85 million to target innovative youth in fintech and fintech-enabled start-ups.
Following a pilot phase that began in 2015, MSMEDA launched in 2021 a pioneering Fund of Funds programme for venture capital, in partnership with the World Bank, with initial capital of USD 50 million. The primary objective of the programme is to strengthen access to finance for innovative start-ups and young SMEs with high growth and job creation potential. The programme makes equity and quasi-equity investments into a range of experienced or emerging, privately-managed investment vehicles, targeting first time fund managers with early-stage investing experience, experienced local, regional and international fund managers, accelerators, angel funds, early and growth-stage venture capital funds, as well as other SME funds. These intermediaries then make equity or quasi-equity investments – including venture debt and mezzanine finance – into start-ups and high-growth potential SMEs. The fund managers may invest up to 40% of the fund’s capital with a maximum ticket of USD 5 million per fund, subject to raising at least 50% of fund equity from private sector investors or development finance institutions. The programme is sector agnostic, although priority may be given to certain sectors where they have particularly high sustainable growth or development impacts.
Out of 40 applications, the scheme has issued 19 soft commitments, out of which eight commitments totalling approximately USD 20.7 million have been transferred into solid commitments. MSMEDA conducted due diligence on the applications using external consultants, which were then approved by the MSMEDA Investment Committee. Since almost half of the approved venture funds had new fund managers, MSMEDA also offered capacity building training as part of the scheme.
The performance of MSMEDA’s Fund of Funds programme has so far exceeded expectations. The programme initially aimed to leverage almost two times the USD 50 million allocated. Thus far, it has attracted USD 117 million in foreign direct investment and USD 19 million in private sector investment (Yassin, 2023[5]). Over 130 enterprises have received investment thus far through the programme. The current value of the portfolio of investee companies is approximately USD 3 billion.
MSMEDA is currently raising an additional USD 100 million to top up the initial USD 50 million allocated to the programme. It is also looking into the possibility of introducing new financing tools that address market gaps and support the growth plans of the start-ups, such as quasi-equity funds, debt to start-ups, secondary funds, and Series B funds (Yassin, 2023[5]). Furthermore, MSMEDA is actively working on the implementation of supplementary initiatives designed to boost private sector participation in the financing of early-stage start-ups within Egypt. These initiatives encompass a broad range of programmes designed to address bottlenecks in the entrepreneurial ecosystem.
Angel investment
Business angel networks are not well developed in Egypt. Some private business angel networks are present, such as Cairo Angels, AUC Business Angels, Alexandria Business Angels (Alex Angels), and Hult Alumni Angels. However, the government does not have any policy or programme initiatives to develop the business angel segment, such as exist in a number of other countries. There are also no regulations in place for business angel networks or investments. One of the advantages of MSMEDA’s new Fund of Funds programme is the possibility of providing an exit opportunity for some of the business angel network investments. In this regard, enabling the connection between angel investors and the Fund of Funds venture capital groups is critical. In the meantime, MSMEDA is working on the design of a set of programmes to support the scaling-up of business angel investing in Egypt.
Access to leasing, factoring and SME finance through non-banking financial institutions
Leasing serves a significant function in assisting SMEs with the acquisition of machinery, equipment, and production inputs. Meanwhile, factoring is essential for enhancing access to working capital, thereby preventing cash flow deficiencies. Additionally, non-bank financial institutions (NBFIs) play a crucial role in facilitating SME financing, which helps to bridge the financing gap within the SME sector.
The Factoring and Leasing Law No. 176 of 2018 established a regulatory framework for factoring and leasing services. However, these markets remain in the early stages of development in Egypt. The limited number of leasing and factoring companies mainly engage with larger corporations. From the fiscal year 2023 until October 31 2024, the share of SMEs within the overall portfolio of leasing, factoring, and finance intermediaries – from both the banking and non-banking portfolios – averaged 10%.
MSMEDA extends credit lines to leasing and factoring firms to encourage increased engagement with SMEs. However, additional initiatives are necessary to enhance this effort, particularly in relation to raising awareness among leasing and factoring companies about the potential advantages of focusing on SMEs. MSMEDA should also promote greater awareness among SMEs regarding the benefits of utilising leasing options for acquiring capital equipment and the advantages of factoring services to enhance their cash flow.
Innovation hubs and clusters
Numerous public entities are involved in supporting SME and entrepreneurship innovation in Egypt. Often, the approach taken involves the establishment of innovation hubs or clusters that provide a range of services from a single location. The Ministry of Communications and Information Technology’s (MCIT) Technology Innovation and Entrepreneurship Centre (TIEC) has a number of such initiatives:
The Innovation Cluster Initiative (ICI) creates a network of innovation clusters across the local business and technology parks in second tier cities, each specialising in a specific ICT-enabled sector. The cluster members include universities (each cluster must include at least one university), private companies and entrepreneurship centres. The members collaborate within a specific scope of work in a certain geographical area to offer high-value innovations to global markets. Each innovation cluster benefits from TIEC’s services, funding and incentives for five years. In its first phase, the ICI aims to establish two innovation clusters: the Alexandria Innovation Cluster operating from the new Borg Al Arab Tech Park and the Assiut Innovation Cluster to be based in the new Assiut Tech Park.
TIEC’s CREATIVA Innovation Hubs are based within nine governmental university campuses, providing co-working spaces for students, faculty members, or local entrepreneurs to test their ideas and commercial potential through digital transformation. The hubs provide a variety of supports including for ideation, mentoring, networking, workshops, venture demos, and product launches, as well as other collaborative activities, such as Hackathons and competitions.
The EgyptInnovate platform is an online innovation hub for entrepreneurs and innovators to share knowledge and connect with the innovation and entrepreneurship ecosystem.8 The platform provides access to networks of innovation hubs and spaces that exist in Egypt and internationally. It also provides a single point of access for information on the innovation ecosystem, with links to courses, innovation tools, self-assessment tools and expert videos, as well as lists of innovation-related events and news. The aims are to educate innovators, start-ups and businesses on technology and innovation management, to provide Egypt’s innovators with national and international exposure, and to build collaborative communities within Egypt’s innovation and entrepreneurship ecosystem.
The MCIT and the Ministry of Higher Education and Scientific Research (MHESR) also collaborate to establish Creativa Innovation and Learning Hubs in all governorates. These provide technological innovation support to Egyptian youth in order to address skills gaps that exist in the market. The hubs present single window access to training on digital technologies and other innovation supporting activities, such as co-working spaces, advanced technology labs, and start-up and technology incubators. They also connect start-up entrepreneurs with mentors, customers and investors. The Creativa hubs are available in Mansoura, Monufia, Menia, Sohag, Qena and Aswan, with each hub providing a tailored offering based on the needs of the local community.
Meanwhile, the 12 sector-focused Technology and Innovation Centres9 under the Ministry of Industry provide technology and innovation services to businesses in Egypt’s industrial sectors. This includes technical assistance, product development and quality testing facilities, access to financing instruments, incubation services, and networking linkages with sources of technology and international linkages for innovation and technology transfer opportunities. The Technology and Innovation Centres are a member of the newly-established ECOSAYS Hub for innovation and entrepreneurship, a platform that aims to reinforce the national innovation system.10
The NilePreneurs Initiative has launched the “Innovation & Design Technologies” programme, which is an innovation consultancy and R&D as a Service entity that is supported by a consortium of sponsors who believe in the power of design in the growth and strengthening of economic development. Through three different programmes, it provides a list of services, including consultancy, new product development, product re-engineering, prototyping, and production.
Innovation funding programmes
Innovation and entrepreneurship is an important pillar of the MHESR’s strategy. There are three entities within MHESR that provide innovation funding to support businesses and the wider ecosystem:
The Academy of Scientific Research and Technology (ASRT), which provides grants to support early-stage research up to technological readiness level 3.
The Science and Technology Development Fund (STDF), which has a mandate to promote science and technology (S&T) through funding scientific research and technology development. The specific objectives of the STDF are to develop innovation capacity, enhance and monitor S&T systems and develop appropriate and flexible funding mechanisms for S&T activities. To achieve this, it provides funding for infrastructure and early-stage businesses as well as training on how to use research equipment.
The Innovators Support Fund (ISF) (EGP 1 billion fund launched in January 2022), which focuses on investing in promising enterprises in order to take their businesses to the next level. The ISF’s activities are designed to address existing funding gaps for projects that are at a technological readiness level of 3 or higher, but are not yet mature enough to attract venture capital investment (the so-called “valley of death” that is observed in many countries). The ISF has two main areas of focus:
Supporting the commercialisation of R&D output: The ISF supports research commercialisation through two channels. The first is working with technology transfer offices in universities to establish licensing or royalty agreements with researchers. The second is to identify researchers with entrepreneurial potential and to invest in these researchers’ start-ups.
Improving the entrepreneurship skills of researchers: The ISF provides education awareness programmes for researchers to make them more business oriented and help them to better understand commercial processes. The aims are to create a small number of potential entrepreneurs and create a greater awareness of entrepreneurship among the wider population of researchers. The programme seeks to replicate a similar initiative overseen by the National Science Foundation in the United States. Efforts are being undertaken to tailor the programme to the Egyptian context, taking into account cultural factors and the more limited entrepreneurial experience and knowledge of Egyptian researchers.
This structure represents a good model for supporting the commercialisation of R&D in Egypt’s innovation system at various different levels of technological and/or commercial maturity. However, many of the initiatives are relatively new and are being conducted on a relatively small scale.
NilePreneurs has also been offering R&D as a service in the form of innovation vouchers, which are covered by NilePreneurs Funds. Through these vouchers, SMEs can receive services in areas such as new product development, mentoring and capacity building. This model has supported more than 200 product development projects, and overall provided various innovation related services to 800 SMEs.
Innovation technical support, training and capacity building
Some Egyptian entities are providing capacity building programmes in the area of innovation. For example, InnovEgypt is a TIEC-offered training programme directed to university students and graduates in ICT specialisations who aspire to being future innovators and entrepreneurs. The 30-hour training programme is delivered over four days of interactive workshops. It is structured around three modules: innovation and technology management, design thinking, and entrepreneurship.
The Huawei Spark Programme was launched by the Information Technology Industry Development Agency (ITIDA) in 2022, in partnership with Huawei Technologies. This competitive programme provides opportunities for tech-driven start-ups to enter new markets and widen their client reach,11 providing training and knowledge in eight fields of interest, such as artificial intelligence (AI), data management, gaming, and e-commerce. Selected start-ups receive technical support from Huawei Technologies and access to its ecosystem of cloud resources, as well as to its AI development framework, database, and operating system to support them in developing their own applications and services.
Finally, the MHESR’s “Researcher to Entrepreneur” programme builds the commercialisation capacity of researchers in Egyptian universities and research centres by training them on the skills needed to turn their scientific and technical research into viable ventures. The competitive online training programme, led by the Innovators Support Fund, also includes mentoring support to the researchers as they work on their business model and start-up processes.
SMEs’ innovative activities can also be encouraged and facilitated through collaboration with other businesses, which can provide them with resources, knowledge and contacts they need to implement these projects. Italy’s Network Contracts approach, as described in Box 5.2 below, provides a good illustration of how inter-firm collaboration can be facilitated in a way that successfully fosters innovation and improved business performance.
Description of approach
Italy has a long-established tradition of informal collaborations between firms in its local enterprise clusters. However, owing to changes in global supply chains, which have attenuated the traditional advantages of geographical proximity and forced clusters to move up the value chain, it became apparent that more needed to be done to promote innovation linkages among Italian SMEs. In response to this need, the “network contract” was introduced into Italy’s regulatory framework by Law Decree 5 of 2009.
Network contracts are formal multilateral agreements whereby two or more independent businesses undertake to perform some economic activities in their core line of business consistent with the aims of promoting competitiveness and innovation. Each network contract sets out a co-operation programme which is prepared and implemented by the participating entities. These co-operation programmes can involve one or more of the following activities:
Collaborating in predetermined formats and fields relating to the operation of the parties’ businesses.
Exchanging information or services of an industrial, commercial, technical or technological nature
Carrying out jointly one or more activities falling within the scope of the parties’ undertakings.
The network contracts were initially aimed at entrepreneurs but Law 81 of 2017 subsequently extended the programme to professionals, enabling the formation of mixed networks. Firms have considerable leeway in how they write and structure a network contract, which must be registered in the sections of the business registry in which each participant is registered. The contracts are required to include provisions for the accession of new entrepreneurs. They also allow for the flexible use of personnel, providing for forms of co-employment and joint ownership of employment contracts belonging to network companies.
Success factors
Since the introduction of the in 2009, an increasing number of Italian firms have decided to join a formal network. More than 7 000 network agreements were signed between 2010 and 2021, involving nearly 42 000 firms. The advantages of the instrument are that it can diffuse innovations among the contract participants and mutually increase their innovative capacity and competitiveness, while greater scale through collaboration can enable some SMEs to initiate more ambitious industrial projects. It can also protect supply chains connecting larger firms with SMEs. It is well suited to SMEs that lack the scale to innovate or internationalise on their own but wish to preserve their operational independence. Indeed, a recent econometric analysis found that firms that participated earlier in a network had on average higher value added and revenues than those that joined a network at a later stage (Correani and Morganti, 2024[6]). Strengths of the initiative include the requirement to formalise network objectives and prepare a detailed programme, as well as the option to formally define governance rules (Tiscini and Martiniello, 2015[7]).
Relevance for Egypt
Boosting innovation and exports is key to the future development of Egypt’s SME sector. Italy’s Network Contracts provide a model for supporting collaboration between groups of firms in a way that helps them to share knowledge, reduce costs, and gain access to larger international markets. These features are of particular benefit to SMEs, given that many small businesses in Egypt lack access to the knowledge, contacts and technologies needed to innovate and internationalise (Correani and Morganti, 2024[6]).
Business and technology incubators are a key element of the government’s policy for transitioning Egypt to an innovation-driven economy. Law No. 23 of 2018 on Incentives for Science, Technology and Innovation, gives the right to public and civil universities, research centres and entities affiliated to different ministries to establish incubators or companies to promote local production and innovation-based research. As a further incentive, the incubators formed are exempted from VAT and other taxes and customs on the purchase of goods and equipment.
This section reviews the government-sponsored incubators and university-based incubators that operate in Egypt. It is important to note, however, that Egypt also has a number of private sector incubators and accelerators, such as Flat6Labs, EdVentures, Plug and Play, Entlaq Accelerator, and Logivators, which target high growth potential, innovative start-ups and often provide their services in exchange for equity, as well as NGO-operated incubators, such as the Nadhet El Mahrousa incubator for social enterprises, which typically provide services related to their mission.
Government-sponsored incubators and accelerators
National Programme for Technological Incubators
The largest system of government-sponsored incubators derives from the ASRT’s National Programme for Technological Incubators (INTILAC). The INTILAC programme, which was launched in 2013, established a network of incubators throughout the country to support the start-up of innovative and commercialisable projects by entrepreneurs and researchers. The programme provides financial support for the establishment of the incubator and seed funding for start-ups working on a technological idea or innovation. The ASRT partnered with universities, research centres, the TIEC, GAFI, NGOs, and the Misr El Kheir Foundation to establish the incubators. The supported incubators provide working spaces to the start-up teams, entrepreneurship training, technology validation, prototype financing, technical and advisory support, ecosystem networking, and seed funding of up to EGP 200 000 per project. The INTILAC programme has supported 48 technological incubators and entrepreneurship centres in national universities (African Development Bank, 2022[10]).
To build on the INTILAC programme, the incubators component of the Tanmia wa Tatweer project which is funded by the African Development Bank and implemented by the ASRT, was launched in June 2020. The Agri-Business Incubator initiative strengthens the incubation and acceleration of enterprises in three priority sectors (agribusiness, clean and green, and creative industries) by supporting start-up pitch competitions and awarding non-equity seed funding of EUR 51 000 for each selected start-up. The aim is to support 480 start-ups through five incubation and seven acceleration programmes, with 50% of the project beneficiaries being based in Upper Egypt and remote areas and 50% of the project beneficiaries being female.
Technology Incubators programme
The Technology Incubators programme, under the Science, Technology and Innovation Funding Authority (STDF), seeks to accelerate the commercialisation of research and development by providing integrated support to assist in the development of technology-based start-ups.12 The programme issues targeted calls for innovative ideas in the following sectors: Aquaculture and Fisheries; Development of Sinai; Health, Pharmaceutical Industries; Renewable Energy; Sustainable Food Production; and Water Desalination.
TIEC incubator programmes
The TIEC, under the MCIT, operates a range of incubation programmes targeting entrepreneurs and start-ups in the IT sector. The entry point is the national Start IT Business Plan Competition, which has four intakes per year and targets aspiring tech-entrepreneurs with proof of concept or prototypes. The most promising candidates from the competition are selected either for the pre-incubation programme or for full-scale incubation in the Start IT incubator.
The pre-incubation programme works with first-stage entrepreneurs, providing training and information on a range of business and operational issues. Graduates of the pre-incubator programme may then be deemed ready to enter the Start IT incubator. The 1-year incubator programme offers working spaces equipped with hardware and software tools, access to technical advisory, marketing and business counselling services, a large community of mentors, and networking with other technology entrepreneurs and investors (valued at up to EGP 120 000 of in-kind services). The incubator programme also provides the incubated teams with EGP 60 000 of financing, delivered in three instalments, conditional on meeting milestone targets. A positive feature of the incubation programme is its virtual accessibility, enabling TIEC to provide its incubation services to entrepreneurs across all governorates.
The NilePreneurs Incubate programme
The NilePreneurs Incubate Programme is an initiative of the CBE and operated from Nile University. The programme seeks to tap into the potential of innovative young people. It consists of four full-service incubators:13
The Creative Design Incubator, which is focused on furniture, home décor, and environmentally-friendly handicrafts, is a hardware incubator that aims to integrate design into the development of diverse products by graduating a new generation of professional designers who can create innovative products that compete effectively in local and international markets.
The Technology Applications Incubator, a software as a service (SaaS) incubator, which allows B2B software start-ups in Egypt to launch products aiming to help SMEs automate their workflow. Consequently, it leads to achieving digital transformation while equipping incubated start-ups with gamification modules to produce engaging software with high usage and low churn rates.
The Engineering Business Incubator, which is dedicated to climate change technologies and the manufacturing of local products that promote sustainable industries.
The TechSpace Incubator, which aims to transform AI concepts into viable ventures, is a technology-focused business incubator that supports Egyptian startups in building sustainable business models that operate and compete in high potential industries’ markets such as banking, retail, insurance, corporate applications, and health tech. It also helps start-ups with high-tech factors like machine learning, Artificial Intelligence, deep learning, and blockchain, etc..
There are also two pre-incubation programmes that aim to support innovators at the earliest stages of their businesses by providing them with the means required to bring their ideas to life: one on product design and one on packaging design, which are both sponsored by the Export Development Bank of Egypt. The design pre-incubator attempts to support passionate designers who create original and visionary packages from start to finish. It also assists companies by connecting them with those unique and creative designs and offering consultancy for the selection of materials used to produce their own designs.
The NilePreneurs incubators offer the full range of incubation services, including co-working spaces, technical and innovation support, logistic and legal services, business consultancy, mentoring, and access to investors, business partners, and potential markets. This amounts to approximately EGP 200 000 of in-kind services. To enter the incubator programmes, applicants must first participate in a bootcamp, after which final selections are made.
Pre-incubation and business incubator programmes launched by other ministries and agencies
The Ministry of Planning, Economic Development and International Cooperation (MPEDIC) sought to address the gap in business incubators at the regional level outside Cairo by beginning the process of establishing a national network of incubators across Egypt in co-operation with the ASRT. This included efforts to expand the establishment of business incubators in public universities to serve innovative entrepreneurs in local and remote areas. Nine business incubators were created as part of the initiative.14 These include five incubators in different universities to support start-ups and projects in the industrial sector, and four specialised incubators in collaboration with universities and other partners – an AI incubator, a tourism incubator, a micro-factory incubator, and an online Egyptian-African incubator for Arab and African youth with a target of 500 start-up companies.
The MPEDIC is also responsible for other incubators and pre-incubation programmes:
Falak Startups, a Cairo-based incubator for tech-enabled and scalable start-ups launched in 2021. It offers incubator space, the necessary tools, resources, and networks to develop their strategies and scale-up their businesses (e.g. training, mentorship, growth hacking, networking, and a wide variety of perks and benefits, including equity investment. After completing the incubation cycle and meeting the required key performance indicators, the venture founders are able to showcase their start-ups on the Falak Startups Virtual Stage platform, a tool for connecting with potential investors, stakeholders, and partners. Falak Startups also runs the EFGEV Fintech Track, a 6-month accelerator programme for start-ups in the fintech sector.
The Orange Corners Egypt incubation programmes in Cairo and Upper Egypt, which offer training, mentorship, business development support, and networking opportunities to support entrepreneurs, focusing particularly on young entrepreneurs in the agriculture and creative sectors, to start and grow innovative enterprises. Orange Corners Egypt is a public-private partnership involving the Bank of Alexandria and the Madinet Masr Company as key partners.
Since August of 2023, the Egypt Entrepreneurship and Innovation Centre (EEIC), under MPEDIC, has been offering integrated and intensive Pre-Incubation Programmes to support participants in the development of their business ideas into viable start-ups. To date, pre-incubation programmes have been offered in the Sustainable Ready-Made Garments industry, the Digital Transformation sector, and Agribusiness and Biotechnology sector. The EEIC Sustainable Innovation Lab also includes incubation and acceleration components for enterprises in the green economy, creative and cultural industries, digital transformation and 4G industries, and biotechnology following idea generation and hackathon components.
The Ministry of Industry Technology and Innovation Centres have many incubators and are always open to co-operate with the private sector and NGOs in these incubators.
Starting in 2024, the MCIT CREATIVA Innovation Hubs began hosting the CREATIVA Incubation Programme, a nine-month cohort programme for university students and graduates with innovative ideas or start-ups. The programme focuses on projects in educational technology, renewable energy, e-commerce, electronics, embedded systems, manufacturing technology, agri-tech, healthcare, environmental technology, and smart cities, among others.
University incubators and accelerators
A growing number of business incubators are housed and managed by universities. The Venture Lab (V-Lab) at the American University in Cairo (AUC) School of Business was the first university-based incubator in Egypt. Established in 2013, the V-Lab offers three programmes: the 4-month Start-up Accelerator, the 9-week Start-up Launch Pad for idea-stage entrepreneurs15, and the 4-month Fintech Accelerator. The V-Lab has supported over 1 000 entrepreneurs by providing entrepreneurial leadership skills, growth strategies, business building insights, investment-readiness support, and access to mentors, investors, and the AUC Angels network.
A large number of other universities support campus-based business incubators. Some of these have been supported by government programmes, such as the ASRT, the MPEDIC and NilePreneurs Incubate; others, such as the business incubator at the Cairo University Faculty of Economics and Political Science (FEPS)16, the first Egyptian public university to have a business incubator, operate without any specific government support. Other notable university-based incubators in Egypt are the Nile University Business Incubator and the Innovation Hub (iHub) at Ain Shams University.
Developing an inventory of private, public and university incubators would enhance transparency among aspiring entrepreneurs
Given the large and growing number of business incubators and pre-incubation programmes, aspiring entrepreneurs may have difficulty in obtaining information on opportunities for their participation. A complete mapping of incubation programmes by type, geographic location, sector priorities, and timelines is not readily available to assist with this search.
The MSMEDA platform includes an icon for business incubators and accelerators, but the list of institutions is yet to be developed. The EEIC Egypt Observatory for Sustainable Entrepreneurship and Innovation is a possibility for including a mapping of incubation programmes. MSMEDA should partner with the key ministries and agencies to begin the process of mapping the various incubator programmes and making this information publicly available.
Building the capacity of business incubator managers and staff would improve the effectiveness and performance of incubator programmes
University-based incubators and accelerators are growing in number, with many universities in the process of launching their incubators. However, many of the newly-established incubators, university-based or otherwise, lack know-how on how to manage effective incubation and acceleration programmes (Ismail, 2022). To respond to this need, in 2021, the MPEDIC Rowad 2030 project (2017-2022) partnered with the AUC V-Lab to deliver a capacity building programme to improve the effectiveness of incubator and accelerator managers, based on the good practice experience of the AUC’s incubator. The training programme helped participants in the design of new business incubators and in the improvement of existing ones. It comprised three basic units on programme design, delivery and sustainability. In 2021, the training was delivered to more than 170 incubator and accelerator managers (African Development Bank, 2022[10]), indicating that demand for this capacity building support is high.
Efforts to improve the competency levels of Egyptian incubators evolved further in 2024 with the launch of the Incubator Management Bootcamp by the NilePreneurs Initiative. The objective of this 5-day bootcamp training is to expand the knowledge, skills and good practice procedures and insights needed by incubator management teams to start and operate an innovation incubator programme, including university incubators.17 The bootcamp programme includes one-to-one mentoring of the incubator management teams by the Nilepreneurs team.
Improving the management and performance of business incubators should go further by working with the AUC V-Lab and other experienced incubators to develop a set of standards and certification processes for incubators. The Brazilian Reference Centre for Supporting New Ventures (CERNE) competency improvement programme for business incubator management serves as an illustrative approach (Box 5.3). One of the first steps in the CERNE approach is to categorise business incubators by their level of development and capacity. This categorisation of incubators would be a useful first step in Egypt, allowing targeted capacity building to strengthen the performance of early-stage incubators, for example through tailored training for their managers and mentors, and assistance with the implementation of operational standards and the expansion of service offerings.
The creation of a monitoring and evaluation framework to follow the activity of the incubators and the performance of tenant enterprises would also help maximise the impact of existing and future business incubators.
Description of the approach
The Brazilian government created the Reference Centre for Supporting New Ventures (CERNE) to reinforce the training and professional development of incubator managers and staff. CERNE aims to enhance the ability of incubators, pre-incubators, accelerators, and innovation hubs to generate successful innovative ventures and reduce variations in the performance of different incubators (Garcia et al., 2015). It was developed as a joint initiative of the Brazilian Micro and Small Business Support Service (SEBRAE) and the (government agency) Brazilian Association of Science Parks and Incubators (ANPROTEC) in 2009.
Incubator manager and consultants are trained on managing and organising an incubator, building and managing professional networks, and generating innovative companies. The CERNE training certifies incubators at four levels of maturity:
CERNE 1 – concerns the processes and practices related to the creation of an incubator and the selection of incubating enterprises.
CERNE 2 – focuses on how to effectively manage an incubator organisation, including strategic management, service provision and the monitoring of results and impacts.
CERNE 3 – deals with building a strategic network of partners to expand the incubator’s operations, according to established performance indicators, and strengthen its role in the local entrepreneurial ecosystem.
CERNE 4 – concentrates on building the capability of the incubator to support the further growth and internationalisation of the incubated enterprises.
CERNE has produced a set of documents outlining the requirements for obtaining certification at each of the four levels. The documents include:
An Executive Summary, which is intended for incubator managers and presents an overview of the principles and advantages of implementing the CERNE model.
A Terms of Reference, which is intended for managers, consultants and auditors, and presents the principles, structure and details of the CERNE model, including all key processes and practices that must be adopted by incubators.
An Implementation Manual that clarifies and facilitates the CERNE implementation process, including the planning, logistics, details of practices and the evidence to be presented during the certification process.
Success factors
By 2021, CERNE had certified 75 incubators at one of the CERNE levels. An evaluation of the impacts of CERNE certification on the management of incubators and of incubated and graduated companies revealed that certified incubators outperformed non-certified incubators on a number of metrics (ANPROTEC, 2021[11]). CERNE-certified incubators had more organised structures, generated more jobs and income locally, maintained better contact with their graduated firms, and were recognised in the market as being more innovative. They were also more likely to demonstrate good monitoring of the evolution process of their incubated companies and were better able to report statistics on the three-year survival rates of their graduated enterprises. Furthermore, CERNE certified incubators offered more services and of higher quality, provided more financial support to incubated firms, had a higher likelihood of helping their incubated companies with internationalisation, and generated more revenue from the services offered.
Obstacles and responses
Conducting a maturity assessment of incubators can be a time-consuming and difficult process. This can be facilitated by first collecting information through online surveys with individual incubators, which is potentially supplemented by subsequent site visits or interviews with incubator managers.
There are over 400 business incubators and accelerators in Brazil and in 2021, only 75 had been CERNE-certified. It takes time to convince incubator managers of the need for incubator management training and certification. This requires ongoing promotion of the available benefits, for both the incubator and the wider economy impact. Training is also needed to accredit institutions in carrying out the CERNE model and evaluation processes, which ANPROTEC has put into place.
Relevance for Egypt
There is a growing policy emphasis in Egypt on business incubators and accelerators, particularly those focused on technological innovations. Egypt’s incubators have varying levels of maturity, performance, scaling potential and impact. University-based incubators, in particular, lack capacity and capability to deliver effective programmes. Developing a training programme or platform for incubator managers and staff to enhance their understanding of good incubator practices and metrics and advance their knowledge and skills in incubator management would produce improved performance and outcomes for the incubator system. The programme could be delivered on a tailored-basis according to the maturity level of the incubator or accelerator, similar to the CERNE programme in Brazil.
The concept of certifying incubators is of utmost importance in Egypt as incubators vary greatly in quality as each operates by its own direction. Having a governing body/umbrella to ensure the quality and relevance of the curriculum content and service provision would better ensure the best possible impact for the costs incurred, avoid duplication and enhance integration between entities.
Sources: (ANPROTEC, 2021[11]; ANPROTEC, 2015[12])
There would be merit in creating an umbrella association or network of Egyptian incubators and accelerators
Egypt does not have an overarching national business incubator policy or strategy, nor is there a national association of business incubators that can provide an umbrella for incubation activity and a forum for knowledge-sharing and exchange and capacity building for incubator managers. Such associations are common practice in many countries.18 The Rowad 2030 project (2017-2022) noted the absence of a clear system for management of business incubators under one network and initiated discussions with the AUC V-Lab on developing an Egyptian incubator association. The model of such an umbrella association or network may be informed by the example of the Association of Thailand Business Incubators and Science Parks, which is profiled in Box 5.4.
Description
The Association of Thailand Business Incubators and Science Parks (BISPA) was formed in 2009 as a partnership between the National Science and Technology Development Agency (NSTDA), the Office of the Higher Education Commission (OHEC) and Office of SMEs Promotion (OSMEP). BISPA seeks to strengthen the management of business incubators and their service offerings, and help them to become ecosystem builders with shared platforms, knowledge exchange, and networking.
In addition to providing policy input to the government, THAI-BISPA focuses on four pillars of activity:
1. Learning, including conferences, workshops and seminars, knowledge-sharing.
2. Resources, including the provision of facts and figures, news updates, business incubator toolkits.
3. Professionalisation, through the provision of service standard guidelines and accreditation for business incubators and business incubator managers.
4. Community ecosystem development, through the development of a business incubator directory, mentor network, angel and investor networks, and co-incubation platforms to facilitate exchange and information sharing between domestic and international incubators.
Only business incubators are “full” members of BISPA. However, the association also offers three other membership categories for founding organisations, for organisations that support or fund BISPA, and for organisations that would like to be part of the ecosystem. Through its advisory board, BISPA includes representation from the Federation of Thai Industries, the Venture Capital Association, universities, and government bodies.
In mid- 2021, BISPA had 36 business incubator members, 22% of which were public incubators, 53% were university-based/academic incubators, and 25% were private. An important goal of BISPA is to attract more business incubators into its membership and to professionalise the provision of incubator services. This requires the strengthening of existing incubators, particularly university-based incubators (UBIs), so that they can meet the minimum standards for membership. It also requires efforts to convince incubators of the value that membership can bring them. The entry of new incubators into the ecosystem and the high level of turnover of incubator staff necessitates the ongoing provision of training and certification programmes.
To become a full BISPA member, business incubators must pay a membership fee and meet certain criteria. Many UBIs do not currently meet these criteria and do not have the required minimum maturity level. To assess the capabilities and quality level of business incubators, BISPA uses the results of a self-assessment tool. This tool assesses an incubator’s strategy and organisational structure, financial capacity, knowledge body, human resource development, infrastructure, network, and services.
BISPA offers a Business Incubator Accreditation, a process that involves collecting and reviewing data on the business incubator and its incubator model, and preparation of a customised report for each incubator indicating areas for improvement to achieve accreditation status. The BISPA Certification programme focuses on the training of incubator managers and staff.
BISPA also provides a “Co-incubation platform”, which aims to accelerate the scaling up and internationalisation of incubated firms, including through soft-landing programmes and other supports to help companies enter new markets more effectively. In this regard, BISPA maintains relationships and alliances with a number of international business incubator organisations, such as InfoDev and the European Business and Innovation Centre Network (EBN).
BISPA has also developed the “Inno-Peer Platform”, which is a virtual community platform for incubators and other business development entities to connect with members of the innovation ecosystem. A feature of the platform is integration of the “InteGreat” platform (www.integreat.in.th/), which aims to facilitate the work processes of business incubators, increase their management efficiency and raise the standard of sustainable business operations for the incubated entrepreneurs. The InteGreat feature enables business incubator members, paying an annual licensing fee, to enter and monitor their incubator client data and receive quarterly reports on this data. This is a useful resource for incubators, many of which may face challenges in implementing their own systems for collecting and monitoring data on their client activity and performance.
OSMEP is also an important player in supporting business incubators in Thailand, predominantly university-based incubators. To address the lack of financial resources within universities to fund the activities of their incubators, OSMEP makes efforts to secure budget support for the university business incubators in the government’s Integrated Budget Plan. OSMEP also uses its own budget to contract some services from the university business incubators, mainly technology-matching services for SMEs.
Sources: (OECD, 2021[13])
Egypt’s Export Development Strategy 2018-2020 included a range of supports for SMEs, including export development services such as technical assistance programmes, export incentives, and trade facilitation, with a particular focus on developing the export market and opportunities within Africa. However, there has been slow progress in implementing this strategy. Meanwhile, the MSMEs and Entrepreneurship National Strategy 2017-2022 aimed to facilitate the export-readiness of SMEs in targeted sectors and facilitate access to value chains through a variety of support measures including information packages, export-readiness training and capacity building, matchmaking, the expansion of industrial zones and the strengthening of clusters, incentives for larger or FDI firms to engage with SMEs, and the development of a comprehensive quality management system infrastructure. However, there is limited reporting on the implementation progress of the strategy and the impact of the programme and service interventions.
Notwithstanding these gaps in the implementation of strategies, there are several instruments and programmes provided by the government and international co-operation partners and donor organisations to support SME exporters and SMEs seeking to integrate as suppliers in international value chains. The leading entities (public and private) involved in SME export promotion and development include the Ministry of Investment and Foreign Trade), the Export Development Authority (EDA), the IMC, MSMEDA, the Egyptian Exporters Association, and the sector Export Councils19, with MSMEDA playing an increasing role in promoting SME exports. Table 5.1 provides a brief description of the activities of these, and other entities, involved in SME export promotion in Egypt.
The Hub for Advisory, Finance and Investments for Enterprises (HAFIZ) is an AI-powered platform established by the former Ministry of International Cooperation, which has now been merged to become the Ministry of Planning, Economic Development and International Cooperation. The platform, launched in December 2023, connects development partners, international institutions, the government, and the business community to enhance the benefits of international partnerships.
HAFIZ aims to enhance the role of the private sector, including SMEs, by facilitating international partnerships, offering business support, and simplifying the process of finding relevant international tendering opportunities for businesses of all sizes. The platform provides over 85 financial and technical support services from 32 development partners.
Key features of the Hafiz platform include:
Integrated Support: Offers 85+ financial and non-financial services from +35 development partners.
Comprehensive Services: Provides consulting, capacity building, and financing solutions for various types of private sector companies, including large, medium, small, and emerging companies.
Enhanced Communication: Bridges the information gap that previously prevented many private sector companies from accessing available services.
Accessibility: Available in both Arabic and English, making it accessible to a wider audience.
Information on tenders and other international opportunities can be accessed through the HAFIZ website at: https://privatesector.moic.gov.eg/en/
The Export Support (Rebate) Programme provides an effective incentive for increased export activity
The Ministry of Finance’s new 3-year Export Support (Rebate) programme came into effect in July 2023, replacing the previous version of the scheme. The programme aims to boost exports by reimbursing certain expenses of exporting firms. It also seeks to boost the ratio of local components in exported products by stipulating that exporters are only eligible for the rebates if the manufactured goods use at least 40% local components. For SMEs that have succeeded in signing deals for their products abroad, the standard rebate is topped up by an additional 1% to 2%. Exporting firms are also eligible for additional rebates if their products target African markets within the African Continent Free Trade Area. The level of support provided has been scaled up significantly in the new iteration of the programme. Indeed, a dedicated budget of EGP 30 billion was allocated for the new programme in 2023-2024. This compares to a budget of EGP 8 billion for the previous year.
Better co-ordination between different export-related institutions may lead to improved performance impact at the SME level
Despite the existence of several trade and export-related institutions that help SMEs, only a very small minority of SMEs in Egypt (approximately 6%) export (International Labor Organization, 2022[14]). This raises questions regarding the capacities, connectedness and performance of these different stakeholders. The former Minister of Trade and Industry had directed trade bodies to intensify collaboration to give momentum to export growth. Although examples of collaboration between stakeholders exist in pockets of the system, such as in the delivery of export training to SMEs (MSMEDA, the IMC and the FTCC), provision of export development support as a whole remains fragmented. A more comprehensive and integrated export development approach towards the SME sector and better co-ordination between the different institutions may lead to improved outcomes in this area.
Faced with a similar co-ordination failure, the Korean Ministry of Start-ups and SMEs established the Support Centre for SME Exports. This is tasked with providing information, advice and training on international opportunities, and supporting SMEs to conduct export procedures, access trade financing and negotiate international business contracts. The centre also facilitates improvement in the design and quality of export products and assesses the capacity of SMEs to engage in international trade (UN ECLAC, 2021[15]). There are 13 physical centres across Korea, as well as a unified website (www.exportcenter.go.kr) that guides SMEs through the major support projects and services of the SME Export Support Centre, including an online Export Consultation Room. This integrated approach to providing SMEs with access to the full package of export support programmes on offer may be a model for Egyptian export support bodies to emulate.
A significant new development in this area is the agreement between the Ministry of Planning, Economic Development and International Cooperation, the Egyptian Exporters Association, and the Foreign Trade Training Centre (FTTC) to implement the “Export Academy” project. This is supported by funding from the International Islamic Trade Finance Corporation.20 Established in January 2024, the strategic goal of the academy is to establish a unified entity for training exporters and providing export advisory services, with the ultimate aim of supporting Egypt's direction to double the size of Egyptian exports, enhance regional economic integration, and increase intra-trade, which helps drive economic growth and create job opportunities. The academy also serves as a business platform in Egypt to foster economic integration and regional trade between Arab and targeted African countries and strengthen Egypt's position as a regional trade hub. While the establishment of the Egypt Export Academy is a positive step in consolidating the support offerings of different institutions, attention must also be paid to easing trade facilitation for SMEs, improving the quality of SMEs’ products to meet international standards, and ensuring SMEs have adequate access to export and supply chain financing.
There is a potential gap in the availability of export financing schemes for SMEs
The availability of export financing schemes may be one of the limiting factors in the participation of SMEs in exporting activity in Egypt. Although the Ebank promotes the SME sector in its offers of export financing, special products for exporting SMEs are not readily evident. However, one recent example of a targeted effort is the co-operation protocol agreement between the IMC and Ebank in 2023, which aims to boost exports from industrial SMEs as one of its objectives. Under the agreement, Ebank will support industrial exporters through financing programmes, with special attention to SMEs and green economy projects. The IMC will assist Ebank clients in obtaining the required ISO certifications to meet international standards and ready the SMEs for the Ebank export financing. It will also assess and support the training needs of Ebank to enhance the skills of its staff in lending to SME exporters. Also notable is the EBRD loan of EUR 23.2 million to the Ebank in 2024 for on-lending to SME exporters, complemented by EBRD’s Advice to Small Business Programme whereby Ebank will offer export training sessions to its SME clients.
MSMEDA also plays a role in the financing of SME exporters. For example, in September 2024, it signed a USD 3 million contract with the Enmaa Finance Company to provide financial support to SMEs engaged in export activities. Funding for this initiative came to MSMEDA through the World Bank’s “Catalysing Entrepreneurship and Job Creation Project”.
A further development on the horizon is the establishment of an export risk guarantee company by the CBE to provide strategic support for Egyptian industrial and export services to the African continent and to help Egyptian companies, including SMEs, take advantage of promising trade opportunities within the context of the AfCFTA agreement. In November 2023, Egypt’s legislature passed a bill enabling the creation of the Egyptian Export and Investment Guarantee Agency (Law No. 178 of 2023), replacing the former Export Credit Guarantee Company of Egypt. The share of exporting SMEs supported by the export risk guarantee company remains to be seen.
The delivery of BDS to SMEs and entrepreneurs in Egypt is distributed across many public institutions, each one targeting various subsets of the SME and start-up population, according to the mandate and objectives of the organisational entity.
MSMEDA provides a range of non-financial services to MSMEs through its network of 33 regional offices covering all governorates. Through this network of offices, MSMEDA’s BDS services have the greatest reach into rural areas of Egypt. The support provided includes information, basic guidance and advice, entrepreneurship training, technical support and training in areas such as e-marketing, exporting and feasibility studies, business-to-business collaborations, local and international exhibitions, public procurement support, mentoring and advice programmes, and business development training programmes certified by the ILO. MSMEDA reports that, between July 2014 to October 2023, 78 642 young men and women participated in its entrepreneurship skills and start-up training (MSMEDA, 2023[16]). During this period, MSMEDA also organised 1 237 internal and external exhibitions with more than 28 000 exhibitors who achieved sales and contracts worth EGP 1 billion. Each regional office has a designated Consulting Officer responsible for organising non-financial support services to meet the needs of client SMEs and start-ups. MSMEDA also refers clients to external BDS providers for more sophisticated consultancy. However, this is limited by the supply of external BDS providers, which is very small in some governorates. MSMEDA does not currently seek to attract medium enterprises, but has plans to do so in the future.
The CBE-initiated NilePreneurs BDS Hubs provide a range of advisory and counselling services in 24 governorates. There are 116 hubs in total, which are situated within CBE-partner bank branch offices, youth centres in the governorates, and universities. The BDS Hubs provide nine business advisory services ranging from guidance on establishing a new business to facilitating access to training programmes and financial services to offering data and information about the market and providers of specialised consulting services. From July 2019 to October 2024, the hubs delivered a total of 600 878 advisory services to 226 000 clients (of which 37.3% were female),21 supporting early-stage entrepreneurs as well as start-ups and growing small businesses. Further, the hubs facilitated financing for 9 000 projects totalling EGP 6.7 billion. These data suggest a high demand for BDS services when they are made available. Going forwards, the CBE plans to increase the number of BDS Hubs, expand their presence across Egyptian governorates, and make all advisory services available online.
A distinctive feature of the NilePreneurs BDS Hubs initiative is the training of its business advisors, who run the BDS Hubs. The NilePreneurs BDS Hubs deploy 150 certified business advisors. To ensure a consistent quality and delivering of advisory services, the CBE partnered with the Egyptian Banking Institute (EBI), which in collaboration with the International Labour Organization (ILO), developed a BDS training toolkit curriculum to train the advisors. The EBI has trained more than 20 trainers to train the advisors. Upon completion of the training programme, the business advisors receive an EBI BDS Specialist Certificate or an ILO BDS Certificate. Close to 400 BDS Hub advisors have received certification to date.
The TIEC provides one-to-one consultancy services to start-ups and SMEs in the IT sector. The TIEC contracts with a list of professional consultants who deliver services in the domains of finance, marketing, sales, business development, and intellectual property and other legal issues. The consultancy services are funded by the TIEC and free of charge to the user. The service is confined to technology-based start-ups with a commercial registration number and a client base.
GAFI’s Entrepreneurship Development Unit offers an integrated package of BDS services that covers legal advice, consulting and mentoring. These services can be delivered on an individual or group basis. The target group is entrepreneurs with high growth potential and innovative start-ups.
The IMC is a major BDS services provider for manufacturing enterprises. Over the past 20 years, the IMC has served 9 000 enterprises by providing more than 97 000 services. It currently serves more than 700 enterprises annually with more than 2 000 services. In addition, the IMC has a customised programme for industrial clusters of SMEs, as well as one for Local Suppliers Development. To access the services, SMEs are required to register in the IMC as a beneficiary for funded services. The main types of support relate to human capital development, planning, training, marketing, export development, financial management, market access, innovation, product and website design, and support in the green transition. Although the IMC employs business development officers, the BDS services are often provided by external service providers. On a largely user-pay basis, the IMC helps SMEs to access local and international markets (e.g. with participation in exhibitions and matchmaking), and offers services to help manufacturing enterprises automate their production processes.
Other sources of BDS services in Egypt include the Ministry of Industry’s Technology and Innovation Centres and the NCW Women Business Development Centres focal points. The business and technology incubators also provide a targeted form of BDS services to their start-up clients. This is delivered by incubator staff, external consultants, and mentors. However, there is no standard for the scope and nature of BDS services across the network of incubators.
The ecosystem for business advisory services could be more cohesive, transparent and inter-connected. The ILO and USAID have attempted to address this by working with MSMEDA to develop a national BDS co-ordination framework and strategy (see discussion below).
Demand side factors limit the uptake of BDS services
Demand-side factors may limit the uptake of BDS services among SMEs. These include a lack of awareness among SMEs of the importance of BDS services, the lack of information about available services and providers, and the poor accessibility of BDS services in terms of convenience and location, with BDS providers generally more available in Greater Cairo than elsewhere (USAID, 2023[17]; MSMEDA, 2023[18]). In addition, many SMEs have a low perception of the credibility of service providers and the value of the services provided. As a result, SMEs have limited willingness to pay for services, with affordability being a major factor holding firms back from accessing BDS from private sector providers. Furthermore, micro and smaller enterprises have a low capacity to engage in the consulting process or to implement the ensuing recommendations.
Some Egyptian stakeholders point to a growing demand for BDS services from new start-ups and the next generation of family-owned SMEs. However, to increase BDS take-up from existing SMEs, it is necessary to disseminate information on the availability and value of BDS services. The provision of risk-free opportunities for SMEs to trial BDS services could also help to boost demand. This could be facilitated by issuing BDS vouchers to SMEs that they can use to access external business advisory services, a common practice in many countries to help drive demand (OECD, 2021[19]). The assumption is that once SMEs see value from the trial intervention, they will be more likely to become a more regular user of BDS. These are among the actions to be undertaken by MSMEDA to build demand among SMEs for external business advice and guidance, which are already recommended in the draft BDS strategic action framework for MSMEDA (MSMEDA, 2023[20]).
A first step for MSMEDA is to quantify the demand for BDS by SMEs. This could be achieved by conducting a survey of SMEs to determine their current usage of BDS services (from which organisations, what type of service, their assessment of the usefulness and quality of services, etc.), their reasons for not having accessed any BDS services, and their willingness to pay for such services. This survey data, categorised by the business size (micro, small or medium-size) and geographic location of the respondents, could be very useful to MSMEDA in identifying policy actions to better meet the BDS needs of SMEs.
Strengthening MSMEDA’s role as a facilitator of BDS services could improve access and quality of BDS to SMEs and entrepreneurs
The EU-funded ILO Business Development Services for Growth (BDS4GROWTH) project (2018-2020), delivered in partnership with MSMEDA, sought to address the needs of SMEs in Egypt by shifting the BDS paradigm towards a market-based approach, while addressing constraints and gaps in both the supply and the demand side of BDS. The project also aimed to build the capacity of MSMEDA to become a BDS market facilitator to ensure that SMEs across the country have access to good quality, relevant and sustainable BDS services from public and non-governmental institutions. This included a component to identify BDS providers and to assist MSMEDA in building their capacity. It further recommended that MSMEDA develop a digital platform for BDS delivery to expand reach to more SMEs, for example by enabling them to book appointments and attend meetings with business advisors online. The project also recommended the development of a database of BDS providers and consultants for uploading onto the MSMEDA platform, as well as the provision of digital tools to support the operations of BDS providers. The latter recommendation is geared towards helping BDS providers to enhance their productivity and sustainability, for example through the use of Customer Relationship Management, Enterprise Resource Planning, programme management, accounting and marketing software, and e-payments systems. This would serve the dual role of supporting the BDS provider while also supporting SME clients in their own digitalisation efforts.
MSMEDA has been offered support from the ILO and USAID to develop a national strategy for the delivery of co-ordinated BDS services in Egypt (International Labour Office, 2020[21]; MSMEDA, 2023[18]). The objective of the draft BDS framework and strategy developed by MSMEDA (not yet approved by the MSMEDA Board) is to “ensure all MSMEs in the country gain access to good quality, relevant and sustainable business services” (MSMEDA, 2023[20]). In a role as a facilitator rather than provider of BDS, MSMEDA’s main concerns would be stimulating the supply and demand of BDS, building the capacity of BDS service providers, and ensuring BDS best practices are observed in the design, delivery, follow-up and monitoring of BDS services. However, transitioning to a BDS facilitation role will require changes in MSMEDA’s institutional structure, which may be a factor in the delays of the board in approving the BDS framework proposal.
A fundamental action to address the BDS supply and demand gap is to develop an integrated referral system of BDS providers, especially at the governorate level outside of Greater Cairo. This can be achieved by building a “referral” network of BDS providers. Box 5.6 provides a useful example of how this was done in Thailand, which may provide inspirational guidance for MSMEDA and partner agencies in piloting such an approach by working through the MSMEDA regional offices to develop a database of BDS providers in different parts of the country.
Description of the approach
The aim of the Regional Integrated SME Promotion (RISMEP) project was to improve the quality of BDS provision to start-ups and SMEs in Thailand’s provinces. The pilot project was funded by the Japan International Co-operation Agency (JICA) under an agreement with the Thailand Ministry of Industry (2009-2018). By the end of the project in 2018, the RISMEP system was implemented in 21 of the 76 provinces.
The RISMEP approach brought together government officials, BDS-providing organisations, private sector business counsellors and consultants, university lecturers, R&D centres, financial institutions, chambers of commerce and industry, and industry and SME associations into a “collaborative” Business Development Service Provider (BDSP) network in each province, whereby members could refer clients to each other. Service providers and business advisors interested in joining the network are required to complete a written and an oral test to demonstrate their knowledge and performance quality. They are also subjected to follow-up assessment on the quality of services provided to clients. The creation of these networks produced a more horizontal, integrated approach to servicing the BDS needs of start-ups and SMEs. In provinces that have created a BDSP network, SMEs and entrepreneurs can approach any one of the one-stop shop (OSS) “consultation counters”, have their questions answered, and based on a simple diagnostic assessment, be referred to the most appropriate partner organisation for follow-up BDS support.
The RISMEP model employed three key personnel in each province: 1) Facilitators, who promoted and led the process of developing a co-ordinated services delivery system in the province; 2) Co-ordinators, who were responsible for planning, arranging, and implementing support services according to the needs of the individual SME clients; and 3) Assistants, who accepted SME clients at the consultation counters and conducted preliminary interviews before referring them to an advisor or consultant. A Japanese-developed tool promoted by the RISMEP approach, the Shindan “awakening tool” (simple enterprise diagnostics and advice) was used to diagnose business needs.
The impact evaluation of the RISMEP project concluded that by establishing a formal network of BDS providers, RISMEP provinces reduced the major supply-side constraints to the take-up of BDS services (by reducing the cost of search), resulting in increased demand for BDS services. Relative to control group provinces, BDS providers in RISMEP provinces increased the number of SMEs they assisted, the number of participants in their training programmes, and the number they referred to other BDS providers (Japan International Cooperation Agency, 2017[22]). By developing websites and accepting online consultations, the BDS providers in the RISMEP networks also expanded the availability of their services and became more demand-driven.
Factors for success
One of the keys to success was organising information on the public, private and independent BDS providers and their services into a database system. This required a mapping of all BDS-providers according to their specialties and service offerings and mobilising the network to become familiar with the range and scope of network member’s focus, capability and areas of competency. This facilitated referrals to the appropriate local service providers and services based on the needs of SME clients.
Through the creation of the entry-point “consultation counters” and an integrated system of referrals, the RISMEP project enabled start-ups and SMEs to take advantage of varied expertise within the network to help resolve their problems. SMEs can also access RISMEP services via an online format on both website and mobile applications. The consultant sessions can take place online using chat, voice call, or video call. Use of the “Shindan” diagnostic tool (also made available online to be accessed by SMEs) was fundamental to the consultation counters in matching of the SME clients with the suitable BDS service and advisor.
In recognising the level of experience and ability of BDS service providers, the system of certification for BDS providers was also a key success factor in enhancing the quality of BDS provision. The certification committee of representatives from the Ministry of Industry, the SMEs Promotion agency, and experts, reviews applications for certification based on ability standards, the ethical code and an evaluation system.
Obstacles and responses
The training of the RISMEP co-ordinators and network members was one of the initial obstacles. To deal with this, RISMEP developed a compendium of Collaborative Support Models to be used by counsellors at the consultation counters. The guidance manual describes team formation, the roles of team members and various RISMEP network members in responding to clients’ needs in a co-ordinated manner according to their area of specialisation and expertise, and includes more than 20 modules dealing with various kinds of counselling and BDS issues.
The project provided training in basic counselling and coaching skills and effective techniques to develop the capabilities of RISMEP network members, including public SME support organisations, and enable them to be more effective in delivering quality BDS services. Seminars were delivered to increase awareness among network members of all available support programmes and the competences of all BDS providers in order to improve their knowledge base to make appropriate referrals. The project also exposed members to promotional activities that RISMEPs could use to build the service, such as bringing new BDS providers into the network and creating more awareness among SMEs about the co-ordinated service delivery.
The maintenance and expansion of the RISMEP networks was a critical challenge when the JICA funding ended. This was resolved by the commitment of the Thai government to allocate budget funding for the expansion of the RISMEP mechanism to all provinces by 2023.
Relevance for Egypt
Prior to introduction of the RISMEP project, few SMEs in Thailand had used BDS services. The low demand was attributed to insufficient awareness of BDS, the perceived low effectiveness of BDS, the low level of organisation of BDS providers, inadequate quantity and quality of service providers, and the lack of an overall system to link SMEs and BDS (Japan International Cooperation Agency and UNICO International Cooperation, 2011[23]). The lack of such a system meant that SMEs had to be able to diagnose their own problems and search for the BDS provider that could best address them. Moreover, since information about the available types of BDS was not mapped, the cost of search was very high, which further reduced the demand for BDS (Japan International Cooperation Agency, 2017[22]).
These issues are very much shared by Egypt at present. In particular, follow-up assessment on clients to assess the actual impact of the BDS provided to SMEs, especially training services, is missing in the Egyptian ecosystem. This is crucial for two purposes: to re-visit the quality and details of the provided services in case corrective actions are needed; and to re-visit the criteria for approving beneficiaries in the first place. Adopting a RISMEP approach would assist in alleviating these concerns. As well, creating an integrated SME support system at the local level would produce significant benefits to MSMEDA in serving the collective needs of SMEs and demonstrate its role as a facilitator of quality BDS services.
A further action MSMEDA could initiate to add value to the BDS delivery system is working with stakeholders to encourage and support the formation of an association of BDS providers. This would aid in fostering a network of BDS providers (organisations and individual SME consultants) that could be a forum for BDS providers to exchange information, experience and good practices. The association could be a partner to MSMEDA in formulating policy improvements and supply arrangements to develop the BDS sector. The example of the Association of Business Development Services Indonesia illustrates the importance of amassing a membership of qualified BDS consultants and how it can aid the objectives of an SME agency (Box 5.7).
Description
The Association of Business Development Services Indonesia (ABDSI) was founded in 2000. It is a professional association of institutions providing business assistance services, including those affiliated with government programmes, as well as NGOs, universities, and private sector and not-for-profit organisations. ABDSI also manages professional individuals (“BDS consultants”) with competencies in business consulting services. Its membership is comprised of 165 489 BDS consultants and 254 BDS institutes, which have collectively assisted more than 2 million SMEs.
To improve the quality of BDS provision in Indonesia, the Ministry of Co-operatives and SMEs, together with the ABDSI, developed a four-level competency standard for BDS providers. This was informed by a review of experiences in other countries, and resulted in a national qualification for BDS consultants. This is complemented by a national training programme for future business advisors and coaches implemented through the ABDSI BDS Academy, which is a capacity building centre for business consultants and training instructors. The Academy learning method includes a minimum of two hours of independent learning using materials shared on the Academy platform; a series of scheduled online classes; online discussions with resource persons; practice assignments that must be completed; and an online theory test (limited to no more than 12 hours). Consultants who complete the programme and meet the professional graduation capacity standards are certified as a Registered (ABDSI) Business Consultant.
The ABDSI has a network of regional co-ordinators in 30 provinces who can mobilise BDS consultants and trainers to support the needs of the Ministry of Co-operatives and SMEs and other government agencies in delivering programmes and services to SMEs. This capacity makes the ABDSI a good partner for government institutions in providing qualified consultants to support their BDS activities, as it did, for example, in delivering the ILO SCORE programmes in Indonesia.
The Ministry of Co-operatives and SMEs collaborates with the ABDSI to provide business consultancy service to SMEs in parts of the country that do not have one of its Business Centres for Co-operatives and SMEs. Drawing from the ABDSI’s membership of qualified business consultants, the Ministry can be assured of the delivery of quality BDS services in these areas.
Source: ABDSI website at: https://abdsi.id/.
Digital tools and services can strengthen BDS for SMEs and entrepreneurs
Digital diagnostic tools
Governments are increasingly using digital technologies in support of BDS services. To be able to deliver the most appropriate advisory and training services, MSMEDA could develop an online self-assessment diagnostic tool to help SMEs assess their current strengths and areas for improvement. This in turn would aid business advisors in identifying the appropriate advisory support for the business and working with the SME owner on an action plan to address the areas of weakness. (See Box 5.8 for examples of self-assessment diagnostic tools in use in various countries.)
Adopting such a diagnostic service would allow the MSMEDA Regional Offices and BDS providers to better tailor programme assistance to individual needs, including referrals to consultancy advice and technical assistance in areas not offered by the regional offices. This effort should be complemented by the mapping of government support available at the national and local levels and by the publication of such information on MSMEDA’s online platform.
In the Egyptian context, the EBRD Business Lens self-diagnostic tool has been used to deliver business consultancy services to SMEs as part of funded programmes. The tool, which can be completed online, provides a score to businesses on seven dimensions (financial management, market knowledge, marketing and sales, human resources management, strategy and organisation, risk management, and operations), based on their responses to a series of questions. This approach might be an option for MSMEDA to consider.
There are several examples of self-assessment diagnostic tools for use by entrepreneurs and SMEs, either generic or domain-specific. Examples include:
the Business Productivity Benchmarking tool (Canada),
an online diagnostic tool to gauge the ambition and readiness of SMEs and start-ups for change (Estonia),
the Business Excellence tool to enable SMEs and start-ups to assess their organisational performance against an internationally-benchmarked framework (Singapore),
the Future SME Capability Diagnostic Model (Europe),
the IMP3rove Approach diagnostic tool for assessing the digital and innovation management capabilities and performance of firms against the average score of direct and indirect competitors (Germany),
the Advanced Digital Self-Diagnostic Tool to assess the level of readiness and maturity to begin a digital transformation towards Industry 4.0 (Spain),
the online Innovation Scoring diagnostic tool to self-assess the SME’s innovation performance (Portugal), and
the BpiFrance Internationalisation Metric that allows SMEs to assess their maturity in exporting or establishing themselves internationally (France).
Source: (OECD, 2021[19])
Digital advisory services
Implementing digital advisory services could also increase the possibilities for SMEs to access BDS. In keeping with its pivotal role in promoting and developing the SME sector in Egypt and the importance of activating all SME support services through the internet, MSMEDA has taken the initiative to create an interactive electronic platform (www.msme.eg). When fully developed, this will provide information on all SME support services, programmes and initiatives provided by government agencies and institutions as well as supporting bodies, such as civil society associations, business associations, and the private sector that are willing to provide information and links to their support. The platform is operational but still under development. The site currently features the “Your Smart Advisor” page that asks the user some simple questions about the type of service they would like and refers them to options for further exploration. Eventually, the platform will be able to feature more service providers, including private sector consultants and advisors. Service providers and consultants are invited to register on the platform (https://id.msme.eg/Account/Register) and submit information on their professional experience. If accepted, the service provider/consultant will be sent a confirming email to join the platform. A simple mechanism for how SMEs can access BDS services online is demonstrated by the “MeetMe” digital advisory service example implemented by the SME Corporation Malaysia (Box 5.9).
Description
“MyAssist MSME” is an online one-stop business advisory platform operated by SME Corporation. Malaysia. It is designed to assist SMEs through the provision of business advisory and information, digital marketing opportunities and guidance, technology and business innovation support facilitation, and business matching services. It is also a gateway to the various other initiatives of different implementing agencies.
Through the platform’s “MeetMe” button, SMEs can schedule a meeting (online or in-person) with a business counsellor. SMEs can also access the “100 Go Digital Coaching” programme via the platform, a programme offered through the Malaysia Digital Economic Corporation to help SMEs identify their digital needs and provide hands-on guidance on the steps involved in adopting digital solutions. Registered SMEs benefit from weekly “Open Day” sessions to obtain advice and basic information on digital business solutions and periodic mentoring sessions to help them understand the preparations, processes and steps required in digitising their business.
Sources: SME Corporation Malaysia website at : https://myassist-msme.gov.my/en; https://myassist-msme.gov.my/meet-me/; https://titan.mdec.my/100-godigital/
Entrepreneurship education in schools
Entrepreneurship education is not embedded in the core curriculum of public schools…
Currently, entrepreneurship education is not integrated as a core subject in the curriculum of the Egyptian public school system, which is under jurisdiction of the Ministry of Education and Technical Education (METE). However, there have been some large-scale initiatives to introduce and promote a culture of entrepreneurship among school students. Most notably, the Rowad 2030 project (2017-2022, now ended) ran an entrepreneurship awareness-raising campaign that reached more than 300 000 school students in 27 governorates and trained around 1 250 teachers and public mentors. In total, the awareness sessions reached out to 4.5 million young people.22 Another element of the Rowad 2030 project, the “One Million Egyptian Entrepreneurs” initiative, provided a fully-online training programme to teach entrepreneurship to school students and equip them with the basic required skills.
…but entrepreneurship education at the technical secondary school level is more well-developed
Technical secondary education in Egypt, which is provided by theme-based academies with a focus on occupational learning, provides an alternative to the traditional academic pathway. The Ministry of Education and Technical Education (METE) has made great strides in infusing entrepreneurship into the curricula of technical secondary schools. In partnership with the ILO, the ministry has adopted the Know About Business (KAB) curriculum across the technical education system. This provides students with knowledge on starting an enterprise and also prepares them to become better employees. The KAB programme includes training of technical school instructors in delivering the KAB curriculum and providing career guidance for students.
The KAB curriculum is now reaching the 1.6 million students enrolled in the technical secondary schools each year.23 However, this is only one element of Egypt’s wider Technical and Vocation Education and Training (TVET) system. Consideration should be given to integrating entrepreneurship as a component of the curriculum of all TVET programmes. A challenge here is that the TVET system in Egypt is highly fragmented. While the METE is the main government institution for basic, secondary and TVET education, at least 17 line ministries are involved in technical and vocational training, mostly through their own training centres. For example, the Ministry of Industry has its own Vocational Training Centres (VTCs) and Technical Competence Centres, which deliver training in industrial skills and competencies. Meanwhile, the Ministry of Local Development has 79 VTCs in 27 governorates offering training programmes to youth, and the Ministry of Manpower delivers vocational training to semi-skilled and unemployed persons through 43 VTCs. The METE does participate in all aspects of TVET governance but does so with the support of other line ministries. It may be challenging for the METE to influence line ministries to adopt an entrepreneurship curriculum in all programmes offered through their VTCs, but in line with the priorities of Egypt Vision 2030, this may be a worthy pursuit.
Entrepreneurship education in universities
Currently, there is no mandatory requirement for universities to integrate entrepreneurship courses or programmes in their curriculum. The Ministry of Higher Education and Scientific Research (MHESR)’s new strategy, however, takes a stronger position on the importance of entrepreneurship and includes “innovation and entrepreneurship” as one of its seven strategic pillars. Under this pillar, the MHESR includes provisions for all universities to establish an entrepreneurship and innovation centre, which are to be united under one umbrella. An approach to introducing entrepreneurship in the academic curriculum of Egyptian universities is also to be considered.
Several universities, such as the American University in Cairo (AUC), the British University in Egypt (BUE), Nile University, Houris University and the German University in Cairo (GUC) have already integrated entrepreneurship courses as part of their curriculum in certain faculties. Furthermore, entrepreneurship-related extracurricular activities, such as entrepreneurship clubs, exist in most of the universities in Egypt, while several universities already also have an Entrepreneurship and Innovation Centre.
The ILO has trained a number of university professors as national KAB key facilitators, which included training for delivery of the online version of the KAB programme. Thousands of university undergraduates have accessed the online KAP curriculum. Blended use of the online version with face-to-face training can reduce the number of classroom-based training hours and make the programme more accessible to a larger number of students.
Lessons learned from Egyptian universities that have successfully integrated entrepreneurship into the curriculum would be very helpful to the MHESR, in particular the AUC, the BUE, and Nile University. Given this, the MHESR should commission a baseline study of the state of entrepreneurship education in all universities in Egypt. Governments in a number of countries have commissioned similar baseline studies, including Canada, where the results of the study provided concrete evidence of the gaps and opportunities and led to transformative policy changes to strengthen the entrepreneurial and innovation roles of universities.
In the meantime, actions have been implemented to strengthen the integration of entrepreneurship within the curriculum at Egyptian universities. For example, in co-operation with the AUC and the University of Cambridge, a project of the Ministry of Planning, Economic Development and International Cooperation launched a Master’s in Entrepreneurship and Innovation Management, with the first class of students graduating in 2020. In addition, the project implemented a fully funded "Professional Certificate in Entrepreneurship" (Mastering Business Skills for Entrepreneurs) programme, in co-operation with the the German University in Cairo, with 100 young people graduating from the first class in 2020.
The Academy of Scientific Research and Technology (ASRT), an arm of the MHESR, has supported many initiatives at the university level to provide entrepreneurship education and support programmes, such as the Entrepreneurship and Innovation Centres and university-based business incubators. The ASRT National Programme for Technological Incubators also incorporates the Entrepreneurship Club Programme, which supports the establishment of entrepreneurship clubs in universities. This has so far led to the creation of 65 clubs. Effective implementation of specific targets and action plans under the “innovation and entrepreneurship” pillar of the MHESR’s new strategy will be key to its success in enhancing the role of universities as drivers of innovation and entrepreneurship in Egypt.
Entrepreneurship training
The ILO’s “Start and Improve Your Business (SIYB)” training is one of the most prevalent entrepreneurship and small business management training programmes in Egypt. Over several years, more than 10 000 Egyptians have taken the training, with a 36% success rate in starting a business. MSMEDA is a long-term partner in delivering the SIYB training curriculum through its Regional Offices. The partnership was formalised in 2019 with the signing of a Memorandum of Understanding (MoU) between the ILO and MSMEDA, which allowed MSMEDA to become an independent provider of SIYB training, with the capacity to complement the training with start-up loans to youth across Egypt. The ILO trained and certified 60 MSMEDA lead trainers to deliver the programme and set up a Master Training programme so MSMEDA staff could deliver the ILO Train the Trainer programme to other SIYB trainers. Through the MoU, the ILO will be better able to scale up the implementation of the SIYB programme in Egypt. The ILO also collaborates with the National Council for Women (NCW) to deliver the Gender and Entrepreneurship Together (GET) Ahead training to women, with the use of ILO trained facilitators.
Meanwhile, the NilePreneurs Initiative, funded by the CBE and the banking sector, has provided entrepreneurship and innovation capacity building to 13 000 youth from all over Egypt over the past five years. The NilePreneurs Professionals programme offers technical and non-technical upskilling capacity building solutions for university students, fresh graduates, post graduates, career builders and entrepreneurs.
The TIEC EgyptInnovate platform is an example of providing online access to educational content and practical tools related to entrepreneurship and technology and innovation management. The platform is an online innovation hub for Egypt that exposes Egyptian innovators and start-ups to collaborative communities in the innovation and entrepreneurship ecosystem. In 2022, the site reported over 5 000 registered users, 85% of which were students.24
The greater deployment in Egypt of Massive Open Online Courses (MOOCs) has been advocated by Egyptian stakeholders. With the recent announcement of MOOCs Arabic-language portal, universities in Egypt should prepare their own interactive web-based entrepreneurship and innovation courses covering a wide range of topics and featuring prominent professors and lecturers.
Box 5.10 presents the case of Türkiye’s Online Entrepreneurship Training (E-Academy) and Entrepreneurship Support Programme”, which is a good example of an entrepreneurship support programme that provides tailored training as a pre-requisite for the receipt of financial support in the form of grants.
Description of approach
The “Online Entrepreneurship Training (E-Academy) and Entrepreneurship Support” programme is operated by KOSGEB, the Small and Medium Enterprises Development Organization in Türkiye. Based in the capital city Ankara, KOSGEB has offices throughout the country and is a key actor for the development of entrepreneurship culture in Türkiye. The programme is a two-phase initiative, with completion of the online entrepreneurship training a pre-requisite for participation in the entrepreneurship support component. The aim of the training component, which is provided free of charge via the e-Türkiye portal, is to increase the knowledge and skills of entrepreneurs in relation to business establishment, development and operation. The entrepreneurship support programme provides grants to entrepreneurs in certain sectors, with a 50-100% uplift in the grant size for women entrepreneurs in order to promote inclusive entrepreneurship. Indeed, businesses established up to one year ago can receive TL 20 000 (approximately EUR 547) from KOSGEB, rising to TL 30 000 (approximately EUR 820) if the entrepreneur is a woman. If the beneficiary is an individual rather than a business, the amount of support is TL 10 000 (approximately EUR 273), rising to TL 20 000 (approximately EUR 547) for women.
The programme has two streams:
Traditional: This stream targets entrepreneurs who intend to operate primarily in the services sector. In order to benefit from the “traditional support programme”, it is necessary to complete the “traditional entrepreneurship training”, which comprises eight modules including entrepreneurship opportunities and idea creation and development, feasibility analysis, business models, customers, value propositions and revenue sources.
Advanced: This stream targets entrepreneurs who aim to operate in the field of manufacturing. To access the “advanced support programme”, the entrepreneurs must complete the tailored “advanced entrepreneurship training”, consisting of eight modules covering topics such as networking, professional and strategic management, access and management of finance, and business plan development.
Entrepreneurs who complete the aforementioned trainings are rewarded with an on-line certificate. Those issued with certificates can then apply for financial support through the relevant stream of KOSGEB’s Entrepreneurship Support Programme.
Success factors
An important success factor for the initiative is the two-phase design, which ensures that those in receipt of financial support from KOSGEB have benefitted from the training needed to successfully deploy these resources into a new entrepreneurial venture. This helps to ensure that the public funds are used more efficiently. In addition, the programme offering is adapted depending on the type of activity that the entrepreneur wishes to pursue, which ensures that the training content is relevant to the particular needs and challenges faced by businesses in the services and manufacturing sectors respectively.
Approximately 1 million people have completed entrepreneurship training of KOSGEB in the last 5 years, out of whom 17 % have gone on to establish their business. 30% of these founders are women, indicating that the efforts to encourage female engagement in the programme are having some effect.
Relevance for Egypt
Türkiye’s E-Academy and Entrepreneurship Support programme offers a potential approach that could address many of the entrepreneurship development challenges in Egypt. The provision of easy and accessible to training to potential entrepreneurs with business ideas could help to strengthen the entrepreneurship culture in Egypt. The provision of small grants could also promote a shift towards the formal economy. Indeed, in Türkiye, the E-Academy supports individuals who already are engaged in small-scale commercial activities to help them to become “official entrepreneurs”. Türkiye’s programme also provides a model for increasing women entrepreneurs’ engagement with public support initiatives, through the 50-100% uplift in available grant sizes. In the Egyptian context, this could be supplemented by targeted messaging and outreach activities to ensure that women entrepreneurs are aware of the opportunities attached to the programme. The E-Academy is a also good example of an entrepreneurship support initiative delivered via a digital platform, which can significantly increase accessibility and affordability both for the delivery entity and the participant entrepreneurs. Finally, to receive support from KOSGEB, enterprises must be registered in KOSGEB’s database of SMEs and entrepreneurs, illustrating how public support programmes can also be a vehicle for improving the quality of data on SME and entrepreneurship activity.
Source: KOSGEB, Türkiye
Public support for workplace-based training in SMEs is limited in Egypt
Governments can use multiple approaches to support the skills upgrading of SMEs’ workers. Common among these approaches are information and guidance mechanisms, tax incentives for workforce training, and other subsidies, such as training vouchers. In Egypt, there is a death of public support programmes to support the training and skills upgrading of SMEs’ workers. Notably, for example, the Ministry of Manpower does not offer any special skills upgrading programmes for existing employees, instead focusing on employability skills of the unemployed and marginally-employable individuals, such as persons with disabilities. Moreover, the current TVET system is geared more towards providing basic skills to labour market entrants and the unemployed than towards upgrading the skills of employed workers in response to the expressed needs of SMEs. The MSMEs Law does provide a cost-sharing incentive for SMEs in certain sectors to implement technical training for their workers. However, the Egyptian government lacks a targeted programme to support SMEs in upgrading the skills of their workers.
There are some programmes targeting productivity improvements in SMEs on a sectoral basis. For example, the IMC’s “Creative Egypt” Programme was established in 2015 to support sustainable development for Egyptian artisans. The programme provided technical assistance for more than 40 artisan clusters in 17 governorates and contributed to the sustainable development of more than 10 000 Egyptian artisans and craftsmen in the targeted industrial and handicraft communities, with a major focus on women, youth, and marginalised groups.
A number for donor-funded initiatives have sought to improve the ability of the technical secondary system to meet the needs of the labour market through linkages with the private sector. For example, the USAID Workforce Improvement and Skills Enhancement (WISE) project (2015-2019) aimed to better meet the needs of the Egyptian job market by establishing partnerships between TVET institutions, business associations and SMEs in order to understand the skills needed for employment, reduce the skills mismatch, create a pool of qualified candidates, and link students with jobs. The WISE project provided market-relevant skills and work-readiness training for more than 25 000 unemployed young people who were placed in jobs or in on-the-job training programmes, with participating employer-firms guaranteeing employment for the job seekers who successfully completed the on-the-job training or in-company internship. WISE also provided in-house training and improved human resource strategies to SMEs in the manufacturing and services sectors to develop skills of their current workers, enhance productive capacity, and reduce worker turnover. However, the scale of this project component was much smaller, as only about 40 companies participated in formal agreements with WISE to undertake training needs assessments and implementation plans. A major issue with donor-funded projects is the lack of sustainability of the programme once the funding ends.
One way in which the national TVET system could become more attractive to SMEs is by supporting more demand-led, enterprise-based training to upgrade the skills of employed workers. The SkillNet Ireland provides an example for Egypt on how to implement an institutionalised skills-based programme involving SMEs, their representative associations and the training system (Box 5.11). This example may also be particularly relevant to the Ministry of Industry, which should develop a strategy that emphasises collaboration with SMEs to identify specific skill gaps and training needs to ensure that workforce training is aligned with industry demands.
Another option is to implement targeted programmes to support SMEs in upgrading their workers, such as the ILO Sustaining Competitive and Responsible Enterprises (SCORE) Programme piloted in Egypt in 2018, which benefited 30 SMEs and their workers (see Box 5.12). Smaller firms are less likely to engage in formal management practices to improve the productivity of their workers, such as Total Quality Management or Lean Production. The SCORE project has found that training of SME managers and workers on workplace co-operation and the principles of lean manufacturing and continuous improvement contributes to cost reductions, improved product quality and other efficiencies in the production process (OECD and ILO, 2022[24]). The future challenge is to promote the sustainability and scalability of the SCORE programme across a wider range of manufacturing and service sectors, which is dependent on the co-operative efforts of the IMC, MSMEDA and other national entities.
Description of the approach
Skillnet Ireland, established in 1999, is a national agency responsible for the promotion and facilitation of enterprise-led workforce training and upskilling. The Skillnet programme funds groups of companies in the same region or sector with common training needs, through training networks that deliver subsidised workforce training to address their future needs, and including the skills upgrading of their current workers.
Once the training network proposals have been approved by Skillnet Ireland, Skillnet contracts with the sponsoring organisation, a role played by industry federations, business associations and membership-based professional bodies, and Skillnet Ireland assists in co-ordinating the design, sourcing and delivery of the training to SMEs in collaboration with industry training providers and higher educational institutions.
Skillnet Ireland provides joint funding for delivery of the training plans and programmes, which is partly state-funded through the National Training Fund* of the Department of Further and Higher Education, Research, Innovation and Science, and partly financed from network members’ contributions. Each training network appoints a Network Manager who manages the delivery of the network training and development plan. Trainees may include employees of the member firms, and also prospective workers.
In 2022, 72 Skillnet Learning Networks operated across sectors such as ICT, pharma, financial services, agriculture, hospitality, sustainable finance, green tech, construction, retail and transport, representing over 57 industry or sectoral representative bodies, Chambers of Commerce, and employee representative groups. Training was provided to 92 489 workers in 10 966 training programmes (representing 676 400 training days). Of the 24 747 member companies participating in the training programmes, 93% were SMEs (52% micro, 27% small, and 14% medium enterprises) (Skillnet Ireland, 2022[25]).
Skillnet Ireland has been recognised by the European Commission and the OECD as a best practice example of workforce skills development and a good example of active collaboration between public and private actors to facilitate enterprise-led workforce training and upskilling (OECD, 2019[26]; European Commission, 2019[27]).
Factors for success
Skillnet Ireland’s greatest strength is its wide partner base of industry and trade associations, sectoral groups, chambers of commerce and professional bodies, which provides direct access to thousands of SMEs. By working closely with businesses and training providers (including TVET and higher educational institutions), the Skillnet Networks deliver upskilling programmes that are very closely aligned with the demands of the labour market. A key success factor is that Skillnet produces value-added for member firms. Much of the training undertaken through the Skillnet Networks would not have occurred without the programme, and the vast majority of employers would not have found training of similar quality. One of the greatest advantages of the Skillnet model is that it reduces the administrative costs of training, which is particularly helpful for SMEs.
Obstacles and responses
Considerable time and resources are required to establish the necessary infrastructure and processes for the development and growth of strong Skillnet Learning Networks. The establishment of Skillnet Ireland as an agency was guided by a clear financing model, supported by the government, as well as clear procedures for setting up new networks, which were key to overcoming these challenges.
One of the obstacles for network member companies, especially SMEs, is encouraging their employees to participate in the training. This requires strong communication about the benefits of upskilling. SMEs may also have a low motivation to pay a contribution fee to the Network. This can be overcome by demonstrating that the networks add value for the participating businesses.
Relevance for Egypt
Skillnet Ireland provides an example of a needs-driven training programme that is centred on SMEs and that hinges on a network approach to training delivery. This approach has become increasingly popular among SMEs because it allows them to pool resources and access training of higher quality at lower per-capita costs, in addition to encouraging peer learning. The engagement of the Egyptian government with industry federations, such as the Federation of Egyptian Industries (FEI) and the Federation of Egyptian Chambers of Commerce, and with business associations, such as the Alexandria Business Association, and other membership-based professional bodies would provide access to a significant number of SMEs that would benefit from skills upgrading programmes in concert with TVET and other training providers. This could be an efficient and effective institutionalised approach to upskilling the existing workforce to meet the current and future skills demands of Egyptian SMEs.
Note: * The National Training Fund (NTF) is a dedicated fund to support the training of those in employment and those seeking employment, financed through a levy on employers of 1% on reckonable earnings of employees, collected via the income tax/social security collection method, and transferred monthly to the Department of Further and Higher Education, Research, Innovation and Science. Over 90% of the NTF allocation to SkillNet Ireland is for in-employment training.
In 2018, the ILO partnered with the Federation of Egyptian Industries (FEI) and its Chambers of Engineering and Chemical Industries to pilot the Sustaining Competitive and Responsible Enterprises (SCORE) training programme in Egypt. The SCORE programme was delivered to 30 SMEs with between 30 and 275 employees. The median size of the selected SMEs for the pilot was 70 employees, indicating that the programme catered to larger SMEs. The aim of the programme is to improve the productivity and working conditions of businesses, through the involvement of owners, supervisors, managers and workers. To implement the SCORE approach, each SME first sets up of an “enterprise improvement team” in different divisions of the business to ensure the engagement of all workers in application of the training content.
The SCORE programme comprises five modules, each delivered in two-day classroom-based training sessions for managers and workers, followed by on-site consultations with industry experts to assist in applying the training:
1. Workplace co-operation module, which unites owners, management and workers in setting common targets and ensures the involvement of all parties in continuous improvement efforts.
2. Continuous quality improvement module, which focuses on improving company performance by identifying consumer needs, developing a culture of quality assurance, and systematically reducing the number of defects. A key approach is implementing the 5S system of organising the production floor (Sort, Set in Order, Shine [clean up], Standardise and Sustain).
3. Cleaner production module, which helps increase productivity and save costs by systematically reducing waste and energy consumption.
4. Human resource (HR) management module, which supports the development of HR strategies in recruiting, motivating and developing the right people to do the right jobs.
5. Occupational safety and health in the workplace module, which focuses on eliminating or reducing many types of health and safety risks in the workplace.
The SCORE programme built the skills of over 250 workers and managers in the 30 pilot SMEs. Moreover, 3 246 employees benefited from the workplace improvements. After completing the SCORE programme, participating enterprises reported cost savings, an increase in their productivity, and a decrease in the rate of product defects (International Labor Organization, 2020[28]). Companies also experienced an improvement in workers’ morale and decreased absenteeism, largely due to increased communication between management and workers. Based on the positive outcomes of the pilot programme, the Industrial Modernization Centre (IMC), MSMEDA, and the MTI Technical Centres have expressed interest in promoting and scaling the programme in Egypt to strengthen local manufacturing industries and improve working conditions for employees.
Public procurement has the potential to significantly expand market opportunities for SMEs. As a result, governments around the world are increasingly taking actions to improve SMEs’ access to public procurement markets (OECD, 2018[29]). This entails addressing the specific characteristics of government contracts that may adversely affect SMEs, such as the complexity of procedures or high technical and financial capacity requirements.
In Egypt, the public sector is a major goods and services market. In 2017, the Egyptian government spent an estimated USD 42 billion on good and services, amounting to 17.9% of GDP (Open Contracting Partnership, 2020[30]). Egypt’s New Public Procurement Law 182/2018 seeks to provide an enabling environment for SMEs to compete in the procurement process. Article 9 of the Law states that at least 20% of the value of procuring entities’ purchases is to be awarded to SMEs. Moreover, the MSMEs Law states that 40% of public procurement is to be awarded to MSMEs (20% of public procurement is to be awarded to micro and small enterprises and a further 20% to medium enterprises). Public procuring entities must also submit annual plans for their procurement requirements and make this approved information available on the Public Procurement Portal. In addition, local tenders not exceeding EGP 2 million are reserved for MSMEs located in the governorate. Procuring entities are to give notice for local tenders to MSMEDA to inform SMEs in the governorate and encourage them to register and/or update their information in the Public Procurement Portal.
Thus, the legal and regulatory framework for MSME access to public procurement contracts is in place. However, the new Public Procurement Law does not apply to the procurement activity of state-owned enterprises (SOEs), potentially hampering MSMEs’ access to parts of the market. In addition, given their generally lower capacity, many MSMEs may still have difficulty with obtaining information about opportunities and participating in the procurement process. These challenges may be remediated by expanding the scope of e-procurement and competitive tenders to a wider range of government projects and providing specialised support to encourage the participation of MSMEs.
Experiences in other countries reveal that establishing targets for awarding procurement contracts and holding information sessions may be insufficient to improve MSMEs’ access to procurement opportunities. Adaptation of existing public procurement systems is often needed to reduce barriers to the participation of new and small firms, such as high fixed cost administrative burdens, lack of transparency, large contract sizes, and a bias towards selection of established large firm suppliers. Egypt has overcome some of these issues but could place more emphasis on working with business associations, chambers of commerce, the Federation of Egyptian Industries and MSMEDA networks to provide instructions to MSMEs on the process of accessing and preparing proposals for tender bids, creating opportunities for MSMEs to meet with public procurement officials regarding opportunities, and, especially, building the capabilities of MSMEs to meet the requirements for becoming qualified bidders.
The example from the Korea Public Procurement Service (PPS) illustrates the type of supports to SMEs that can be put into place by a public procurement agency to facilitate the participation of SMEs in public procurement activities (Box 5.13).
In addition to its current role in encouraging MSMEs to pursue public procurement markets by disseminating information on tender opportunities and providing a list of certified MSMEs, MSMEDA could implement more proactive approaches. This could include an initiative to “prequalify” individual SMEs as capable public procurement suppliers (such as exist in other countries) and co-operating with the General Authority for Government Services (GAGS) to deliver capacity building information and training to SMEs on how to navigate the procurement system and improve their ability to meet procurement standards.
Description
The Korean Public Procurement Service (PPS) co-operates with the Ministry of SMEs and Start-ups to reflect SMEs as a priority in its policies and operations. Correspondingly, the PPS has taken several actions and initiatives to increase SME participation in government procurement:
The Korean Online E-Procurement System (KONEPS), an electronic procurement platform enables e-bidding, e-contracting, e-payment, and also includes an online “shopping mall”. This improves transparency in doing business with the government and provides easy access to tender information and broader bidding opportunities, which helps to boost SME participation.
A set-aside policy for certain contracts to be exclusively procured from SMEs.
Providing bid preferences to SMEs in the form of additional point allocations in the eligibility tests.
Providing for advance payments of as much as 70% to qualifying SMEs for delivery of goods contracts exceeding USD 30 000 and service contracts exceeding USD 5 000.
An SME network loan programme, through which SMEs can obtain loans from one of 10 partner banks to cover the costs of contract execution. SMEs that qualify for the PPS Surrogate Payment Programme can access loans of up to 80% of the relevant contract price, at low interest rates. In 2017, 13 385 network loans worth USD 412 million were awarded to SMEs.
Procurement-related service fees collected by the PPS (from procuring authorities) through a revolving fund are applied to ensure early or timely payments to SMEs during contract execution.
Waiving of SMEs’ fees for various bidding procedures as part of the integrated PPS scheme to decrease SME barriers to entry.
The annual “SME Excellent Government Supply Products Award”, which aims to increase the visibility of SMEs’ products among government suppliers, contractors and consultants. Under this award programme, high quality performance and innovative technology products provided by SMEs are included in the KONEPS product catalogue accessed by government suppliers of goods, works and consulting services.
The Multiple Award Schedule (MAS) contracts for SMEs, which provides a simplified process for the procurement of recurring, high volume purchases at more competitive pricing associated with volume buying through use of indefinite delivery contracts. SMEs are given an opportunity to provide continuing orders, assuming satisfaction of MAS bidding requirements, within the duration of the relevant indefinite delivery contract.
The PPS runs training for all suppliers through its Public Procurement Training Institute to provide information on framework contracts, quality management policies and how to use the e-procurement platform. The PPS also holds an annual Korea Public Procurement Expo (KOPPEX), which provides an opportunity for SMEs to make inroads into both domestic and overseas public procurement markets. During the COVID-19 pandemic, the PPS also implemented diverse policies for struggling SMEs, such as the alleviation of penalties and removal of various bond surcharge rules.
Sources: (OECD, 2018[29]; Seo, 2011[31])
The national agenda Egypt Vision 2030 aims to transform the country into a modern sustainable knowledge-based and sustainable economy and puts equity and inclusion among the core objectives. This signals an ambition to ensure that the economic and social benefits of the economic transformation are shared by all. The government and international donors deliver a wide array of support programmes to strengthen inclusion in entrepreneurship. These schemes largely focus on increasing the share of women among entrepreneurs and business owners, creating pathways to work for young people and boosting regional development through business creation.
This emphasis on inclusion is consistent with policy objectives in OECD countries, although policies and programmes related to inclusive entrepreneurship are less developed in Egypt. SME and Entrepreneurship Ministers from OECD countries recently committed to promote diversity and equality of opportunity in entrepreneurship, notably by increasing support for people from under-represented groups such as women, youth, migrants and indigenous populations (OECD, 2023[32]). This reinforces the objectives outlined in the OECD Recommendation on SME and Entrepreneurship Policy (OECD, 2022[33]).
There is a very large gender gap among entrepreneurs
There are significant gender gaps in business creation and business ownership rates in Egypt. International survey data from the Global Entrepreneurship Monitor (GEM) show that women are only 39% as likely as men to be involved in starting and managing new businesses (Figure 5.1). This is the largest gap among similar economies, and also larger than the gap observed in all G7 countries except Japan. Similarly, there is also a large gender gap among business owners. Data from the GEM survey show that men are more than three times as likely as women to be owners of an established business (Figure 5.1). This gap is similar to the gap observed in Morocco and Tunisia but is substantially larger than the gap in most G7 countries. Moreover, business ownership data from the World Bank show that the gender gap in business ownership has increased in recent years (Figure 5.2).
Early-stage entrepreneurship and established business ownership rates in G7 and comparator countries, 2022
Note: Early-stage entrepreneurship rates are an estimate of the proportion of the adult population who are actively working on a new start-up or managing a new business that is up to 42 months old. Established business ownership rates are an estimate of the proportion of the adult population who own and manage a business that is more than 42 months old.
Source: (GEM, 2023[34])
Proportion of business owners in Egypt
Note: The World Bank Entrepreneurship database is based on owners of registered, incorporated companies (limited liability companies or equivalent).
Source: (World Bank, 2023[35])
These gaps are due to a range of market and institutional failures faced by women in entrepreneurship, as well as a range of challenges stemming from social attitudes. In Egypt, many of the obstacles that women entrepreneurs face directly and indirectly stem from discouraging social attitudes towards female participation in entrepreneurship and paid work more generally. For example, findings from a 2019 survey of 1 542 Egyptians illustrates these attitudes: 77% of respondents believe that men are to be prioritised in times of job scarcity; 40% of respondents think it’s inappropriate for women to work in places far from their residence; and 92% of respondents think that a woman’s biggest achievement is well raising her children and building her family (Osman, 2019[36]). These social attitudes affect not only self-perceptions and motivations for entrepreneurship, but also access to assets and external resources. Many women have difficulties accessing family assets (e.g. land) that can be used as collateral because many families transfer assets (e.g. inheritance) through males who become the owners of assets. This hinders access to formal loans, pushing many women entrepreneurs into informal lending markets. Other barriers include skills gaps and a lack of suitable professional networks, both the result of low labour market participation and a lack of work experience.
The government has implemented a wide array of supports with international donors…
Overall, business regulations and support programmes are gender-neutral in Egypt. However, the government uses a two-pronged approach to support women entrepreneurs that includes offering dedicated programmes – often in collaboration with international donors – and by improving access to general entrepreneurship programmes. This is sometimes achieved by offering additional support as an incentive in some cases. MSMEDA and the National Council for Women (NCW) are largely responsible for managing and implementing programmes to support women entrepreneurs, although the Ministry of Communications and Information Technology and Central Bank also run programmes for women entrepreneurs. Other key partners include international donors such as UNDP, EBRD and USAID who provide financial support to women’s entrepreneurship programmes and also help to design and implement schemes.
Women entrepreneurs can access a wide variety of programmes. These include a large variety of dedicated training schemes for different profiles of women (e.g. university graduates, crafts), financial support that is often delivered through financial intermediaries, matchmaking with angel investors, exhibitions to showcase products and services, and support with formalising informal activities. These schemes typically require that businesses are registered and schemes that offer finance often require that the entrepreneur is at least 21 years old. For example, the “She Trades” initiative is being implemented through the International Trade Centre, with support and financing from the International Islamic Trade Finance Corporation and the Islamic Development Bank through the Aid for Trade Programme for Arab Countries “AFTIAS”. Its objectives are consistent with the direction and efforts of the Egyptian state to achieve the economic empowerment for women. The programme supports women entrepreneurs in the handicraft sector to enhance their capabilities to integrate into global value chains.
…but more is needed to achieve a systemic impact
The number of women operating micro- and home-based businesses has increased (CAPMAS, 2020[37]) but many of these businesses are informal and not picked up in many of the business statistics. Many stakeholders attribute this growth to the availability of entrepreneurship support schemes for women. However, few of the schemes have measured their impact and there has not been an evaluation of the full support system. While it is likely that schemes have contributed to the increase in business creation by women, there have also been large investments in women’s education and the number of female university graduates has increased. This investment in education has also likely contributed to the increase in business creation by women.
Despite the increase is the number of micro- and home-based businesses operated by women, the support system could increase its impact by providing more support to help more women develop and grow their businesses. The biggest blockage is currently a lack of access to external finance. The vast majority of women entrepreneurs operate micro businesses out of their homes because they can be set up easily and require very little capital (UNDP and MoPED, 2021[38]). The main barrier to accessing finance for women entrepreneurs in Egypt is a lack of collateral. Women entrepreneurs are commonly disadvantaged in this respect because many families put the ownership of assets in the name of – and transfer assets through – the male heads of families. This puts women entrepreneurs at a disadvantage when seeking debt financing because they cannot provide collateral. As a result, many women entrepreneurs with larger businesses often obtain equity financing, which supports the growth of the businesses but diminishes the ownership stake held by women entrepreneurs.
Another area for improvement is to bring a greater level of cohesion to the support system, which is characterised by a dispersed collection of schemes and initiatives. This includes MSMEDA regional offices, the Central Bank Business Development Services (BDS) Hubs and the Ministry of Communications and Information Technology’s Technology Innovation and Entrepreneurship Centre (TIEC), as well as an array of projects supported by international donors. Moreover, the availability of support schemes varies across governorates. This uneven support system has many entry points so it can be difficult for women entrepreneurs to identify appropriate support initiatives. In addition, there appears to be some duplication of offers across schemes and some stakeholders report an over-supply of some types of support. Moreover, women’s entrepreneurship support schemes are not well-connected with broader entrepreneurship schemes. The government has taken some steps to address these issues such as overlap and duplication of activities, including for example GAFI’s Entrepreneurship Development Unit that includes representation of many stakeholders (e.g. representatives from the cabinet, several ministries such as Planning and Economic Development, Finance, Communications and Information Technology, and Trade and Industry, MSMEDA and the Central Bank of Egypt). This could be further improved by have a stronger policy on women’s entrepreneurship. Many OECD countries have developed a strategies and action plans to address the gender gaps in entrepreneurship. This helps to signal the importance of the issue and secures resources over the medium-term for implementing support. Canada’s Women Entrepreneurship Strategy is a good example of how this can be co-ordinated (Box 5.14).
One of the main challenges faced by government in strengthening women’s entrepreneurship support is that it is not always viewed as an important issue within ministries and many parts of the business support system. This could be addressed by strengthening the influence of entities such as MSMEDA’s gender unit and the National Council for Women and by increasing awareness of gender issues within MSMEDA and other public actors involved in designing or delivering support to entrepreneurs.
The Government of Canada launched the Women’s Entrepreneurship Strategy (WES) in 2018. This CAD 7 billion strategy is built on four pillars:
WES Inclusive Women Venture Capital Initiative to build a more inclusive risk and venture capital environment;
Women Entrepreneurship Loan Fund to provide loans to diverse women entrepreneurs;
WES Ecosystem Fund to support women in starting and scaling their businesses
Women Entrepreneurship Knowledge Hub to improve access to entrepreneurial knowledge, data and best practices.
The approach signals the political significance of supporting women entrepreneurs, outlines the methods of reducing the gender gap and provides direct support to a range of actors. First, women entrepreneurs can access direct financial support through the first two pillars of the strategy. The third pillar provides funding to business support organisations that provide business development services to women entrepreneurs. The final pillar funds research and data development to improve the measurement and understanding of women’s entrepreneurship.
The Strategy is under the responsibility of the Minister of International Trade, Export Promotion, Small Business and Economic Development and was developed with many partners, including the Business Development Bank of Canada, Export Development Canada and several other federal government agencies. The development of the strategy also involved consultation with women’s entrepreneurship researchers and women’s entrepreneurship networks and support organisations.
The strategy was an important policy instrument during the COVID-19 pandemic because the government could quickly disburse additional support and funding to women entrepreneurs and support organisations through this framework. This allowed for a rapid response.
The strategy has demonstrated to successfully support a high number of women entrepreneurs. For example, the WES Ecosystem Fund has helped support more than 10 000 women in business creation and an additional 12 000 women grow their existing businesses.
Source: (ISED, 2022[39])
Support for other groups of entrepreneurs is uneven, leaving gaps in the inclusion agenda
While gender issues receive substantial attention in the inclusion agenda, youth and people in lower income governorates are also often targeted by inclusion policies. Support for youth entrepreneurship is anchored in the education system. The Supreme Council of Universities mandated entrepreneurship in the second year of university studies for all students and many universities have student entrepreneurship clubs and technology transfer offices to support the commercialisation of research. However, the impact of these activities is not clear. There are some successful initiatives such as the EBRD Youth in Business programme but many stakeholders note that a greater shift in mindsets is needed as not all role models (e.g. parents, teachers) support entrepreneurship as a potential career for young people. This calls for a stronger policy on youth entrepreneurship and a clear champion to help drive the change in social attitudes towards entrepreneurship.
Geography is often noted by entrepreneurship support actors as an important element of the inclusion agenda. However, it is not currently an explicit dimension of entrepreneurship policy. Each of the main public actors such as MSMEDA, the MCIT and the Central Bank have a network of support centres that deliver entrepreneurship support across all governorates. This decentralised approach gives visibility to available services across the country and allows for targeted support to meet the needs of each governorate. However, the current approach relies heavily on specialised staff to drive outreach efforts to attract entrepreneurs into the support offers. This works well when front-line staff are motivated and active in the community, but risks creating an uneven system where awareness levels among entrepreneurs and take-up rates are low when front-line workers are less active or have too many responsibilities. This could reinforce inequalities in the business environments across governorates. International donors have a role in mitigating this risk because they often provide targeted financial support to initiatives in lower income governorates to reduce the extent to which exclusion in entrepreneurship is driven by geography.
International donors and business support organisations operate a small number of initiatives to support the inclusion of other groups in entrepreneurship, including people with disabilities, immigrants, refugees and job seekers. However, the scale of support offered to these groups is very limited. They may help improve the well-being of individual participants but at the current scale, they are unlikely to have a wider impact on increasing diversity in entrepreneurship.
The OECD Recommendation on SME and Entrepreneurship Policy highlights the importance of governments enabling SMEs and entrepreneurs to participate in the green transition. This can be achieved both through supporting the greening of SMEs’ operations and by tapping into the potential of entrepreneurs as a source of innovative green technologies and solutions.
SMEs and entrepreneurs have a critical role to play in addressing environmental challenges in Egypt
Egypt is a country that faces numerous environmental challenges, including water scarcity, waste management issues, and threats arising from rising sea levels and extreme weather events (Switchmed, 2020[40]) (Euro-Mediterranean Economists Association, 2023[41]). Moreover, the Ecological Threat Report ranks Egypt as the 76th most vulnerable country to ecological threats, out of a total of 224 countries (Institute for Economics and Peace, 2023[42]).
SMEs and entrepreneurs can play a key role in addressing these environmental challenges. Indeed, entrepreneurs can accelerate the green transition through their propensity to develop innovative solutions to environmental challenges (OECD, 2022[43]). Meanwhile, although the individual environmental footprint of SMEs may be small, their aggregate impact is substantial. Data are not available on the environmental impact of SMEs in Egypt, but at the EU-level, SMEs are estimated to account for 37-45% of business-driven greenhouse gas emissions and 64% of industrial waste production (OECD, 2023[44]). SMEs face particular challenges relating to the green transition, including regulatory hurdles, limited access to resources and networks, and a lack of information and awareness of opportunities and support options. Meanwhile, green entrepreneurs need support in overcoming long development timelines and uncertainty surrounding future market conditions, technologies and regulations, which can deter private investors (OECD, 2022[43]).
Regulatory factors are a barrier for SMEs and entrepreneurs in many green sectors of the Egyptian economy
A review by the Egyptian Regulatory Reform and Development Activity (ERRADA) found that regulatory barriers constrain the development of many green SMEs and entrepreneurs. For example, there are reported challenges in obtaining licenses to operate in the fields of recycling or biofertilisers. The former stems from the multiple government entities that are required to approve the operations, while the latter is attributed to the incomplete implementation of relevant laws. Furthermore, gaps in the legislative framework also constrain green SMEs. For example, the management of electronic waste is not covered in the Waste Management Law No. 202 of 2020. An inadequate enforcement of environmental regulations, particularly in sectors with high informality rates, may also be restricting the ability of green SMEs and entrepreneurs to maintain a competitive advantage over other (less sustainable) firms operating in the market (Euro-Mediterranean Economists Association, 2023[45]).
There are ad-hoc support programmes to foster SME greening and green entrepreneurship…
Initiatives to facilitate the greening of Egyptian SMEs are often implemented in co-ordination with international donors and partners. For example, the United Nations Industrial Development Organization’s (UNIDO) Inclusive Green Growth in Egypt (IGGE) initiative is being implemented in collaboration with the Ministry of Trade and Industry (MTI), the Ministry of Environment, MSMEDA, local government entities, as well as private sector and civil society associations. The IGGE focuses on the sustainable agriculture and food production, waste management, and sustainable energy sectors in the governorates of Luxor and Qena. The project is providing technical assistance to service providers and financial institutions to improve the quality of support offered to green SMEs. As part of the IGGE, UNIDO is also working with the MTI to improve registration and licensing procedures for green businesses. Another relevant initiative is the Egypt National Cleaner Production Centre (ENCPC), which was established in 2005 by UNIDO in close co-operation with the Ministry of Foreign Trade and Industry. The ENCPC works regularly on issues surrounding SME greening and green entrepreneurship, including through implementing the Industrial Waste Management & SME Entrepreneurship Hub (IWEX).
UNIDO is also working with the Ministry of Environment and MTI to create markets for sustainable plastic products, including through efforts to raise awareness of the benefits of single use plastics and the provision of technical assistance to SMEs in the deployment of relevant technologies. Furthermore, UNDIDO is currently assisting MSMEDA to enable it to better support green SMEs and raise awareness of green SMEs’ particular needs.
The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) was hosted in Egypt in November 2022, which provided some policy momentum in the area of green entrepreneurship promotion. For example, the Ministry of Youth and Sports, in partnership with the United Nations Development Programme (UNDP) and the British University in Egypt ran the COP27 Simulation Initiative, which was a mock climate conference for youth held in the build up to the COP27 event. This initiative introduced students to green entrepreneurship and innovation topics, including through a capacity building programme. COP27 was also the catalyst for the National Initiative for Smart and Green Projects. The initiative, which is organised by the MCIT, the Ministry of Planning, Economic Development and International Cooperation (MPEDIC) and the UNDP, aims to raise awareness of climate change issues and the role of green entrepreneurs in developing solutions to environmental challenges. The first round of the initiative received applications from 6 200 projects, 162 of which were selected (six from each governorate). The 18 strongest projects were then selected to be showcased at the COP27 in Sharm El-Sheikh. The second round of the initiative was launched in March 2023, and will select the next cohort of green projects based on a range of criteria including environmental impact, energy efficiency, economic feasibility, and level of innovation. The MCIT is raising awareness of the initiative through its Creativa Innovation Hubs (see the SME and Entrepreneurship Programmes chapter of this report for further information), and is seeking to attract large IT companies to provide financial and technical support to shortlisted projects.
In addition, MSMEDA’s Environmental and Social Conservation Strategy outlines a range of important steps to incentivise and support green entrepreneurship. In particular, the strategy sets out the integration of environmental and social considerations into all programmes, projects and activities that MSMEDA carries out or finances. The strategy also focuses on implementing environmental protection infrastructure projects in the different governorates of Egypt and on strengthening inter-governmental co-operation on the implementation of environmental regulations. The latter point is key to strengthening demand for green SMEs and entrepreneurs’ products and services in Egypt.
Despite these important initiatives, there is an overall shortage of policy supports and incentives for SME greening and green entrepreneurship. Although, some of the largest banks in Egypt, including the National Bank of Egypt and the Agricultural Bank of Egypt, do have green financing facilities, more support is needed to enable SMEs and entrepreneurs to fund their green investments. There is also a lack of sector-specific accelerators and other support services that offer tailored and targeted assistance to green SMEs and entrepreneurs.
…but Egypt lacks a comprehensive policy framework to support green SMEs and entrepreneurs
At the recommendation of Egypt’s National Climate Change Council, which is the national authority in Egypt concerned with climate change, the Ministry of Environment published the Egypt National Climate Change Strategy (NCCS) 2050 in 2022. The strategy presents a roadmap for addressing the challenges of climate change, with a focus on five pillars:
Achieving sustainable economic growth and low-emission development in various sectors;
Enhancing adaptive capacity and resilience to climate change and alleviating the associated negative impacts;
Enhancing climate change action governance;
Enhancing climate financing infrastructure, and;
Enhancing scientific research, technology transfer, knowledge management and awareness to combat climate change.
The strategy provides a strong framework for climate change actions, with objectives, actions and performance indicators specified for each of the five pillars. However, the strategy has only a limited focus on SMEs and entrepreneurs, with few objectives and actions targeting the greening of SMEs or the fostering of green entrepreneurship. Similarly, the Egypt Vision 2030 Sustainable Development Strategy, which was launched in 2016, also has a strong focus on environmental challenges but, as is the case with the NCCS, there are limited dedicated initiatives targeting SMEs and entrepreneurs.
Egypt therefore lacks a comprehensive policy framework for supporting SME greening and green entrepreneurship. It would therefore be beneficial for the new MSME and Entrepreneurship Strategy, which is currently being developed by MSMEDA, to include a comprehensive set of objectives, policy actions (with responsible entities) and key performance indicators relating to the promotion of green SMEs and green entrepreneurship. Consideration could also be given to adding the green transition as a separate thematic pillar of the strategy.
Evidence of programmes and support schemes responding to the list of OECD Recommendations on SME and Entrepreneurship Policy highlighted in the introduction section of this chapter are found in this review of the Egyptian support landscape, although in some instances, programme support could be further developed or enhanced. This may particularly apply to enabling SMEs to transition to the green economy, facilitating the transition of informal enterprises to the formal economy, and support SMEs to invest in the skills of their workers.
The use of legislative and regulatory mechanisms of the CBE and the FRA have done much to increase the supply of loan and micro credit financing of MSMEs through banks and non-bank financial institutions, although many micro and small businesses are not able to secure appropriate financing from these sources. The CGC is a well-established credit guarantee entity to reduce the risk of banks in lending to SMEs, but consideration should be given to expanding its capital base to enable the issuance of more guarantees and to, especially, increase the share of micro and small enterprises in its guarantee portfolio. In addition, the CGC should develop a greater diversity of guarantee products to accelerate the bank financing of innovative and technology-based start-ups and SMEs, and the digital and green transformation of SMEs, in line with the government’s national priorities.
Considerable improvements have been made in recent years to expand and professionalise the microfinance industry, resulting in significant growth in the number of active borrowers and portfolio size, especially the licensing of Microfinance Companies and involvement of banks in issuing micro-credit loans. On the other hand, many of the NGOs involved in micro-credit at the local level, although licensed by the FRA, lack scale, efficiency, and the capacity to implement good microfinance organisational and management practices. Efforts are underway to upgrade the capacity, capability and professionalism of the smallest micro-credit-providing NGOs, and this initiative should continue, but the FRA and the CBE might consider other options to ensure effective delivery to micro and small enterprises in the governorates, such as the expanded use of digital products by the Microfinance Companies. To fill the financing gap between banks and MFIs, consideration could be given to either establishing a dedicated SME Bank or accepting proposals from the Microfinance Companies to become deposit-taking MicroBanks, issues currently being discussed by the CBE and the FRA. More could also be done to increase opportunities for SMEs to access leasing and factoring as financing options, an area of financing for SMEs that is underdeveloped in Egypt.
There is an impressive number of initiatives and programmes to foster the innovation ecosystem and support innovative start-ups, especially among young Egyptians and the research community. However, more focus could be placed on programmes to encourage and support innovation activity among existing SMEs. The delivery of business development support (BDS) services to SMEs is fragmented across public institutions. Creating a national BDS platform to match BDS providers to start-ups and SMEs would create more transparency for SMEs, reduce their cost of search, and potentially increase the demand.
The biggest overall area of improvement in most of the SME programme areas is in co-ordination. This applies to the areas of innovation programmes, incubator programmes, SME internationalisation programmes, the provision of BDS services, and the skills upgrading of SMEs’ workers. Improved co-ordination could be achieved by designating umbrella organisations with responsibility for co-ordinating programme actions and promoting connectivity; encouraging the formation of industry and professional associations, such as an association of business and technological incubators and accelerators, an association of SME business advisors, mentors and consultants; an association of university entrepreneurship and innovation centres; a formal Business Angels Network (BAN), etc. Such associations could become important institutional partners with the government in mobilising public and private sector stakeholders, creating networks of delivery agents, and developing competency standards to assist in the delivery of higher quality services to entrepreneurs, start-ups and SMEs.
Key recommendations
Based on the assessment of SME programmes, the following recommendations are proposed.
Financing programmes
Review the capitalisation base of the Egyptian Credit Guarantee Company (CGC) with a view to considering how an increase could increase the supply of credit among micro and small enterprises.
The CGC to hold consultations with MSMEDA, GAFI, the banking institutions and other relevant stakeholders to discuss diversification of its guarantee product offerings to better align with the special financing needs of innovative start-ups and SMEs and better match government priorities to stimulate innovative start-ups, SMEs in priority sectors, e-commerce/digitalisation, SME greening etc.
The CBE to advance its work on studying the issuance of licensing of Tier II banks as MSME Banks and to deliberate further with the FRA on the merits of allowing conversion of microfinance companies to deposit-taking MicroBanks.
MSMEDA to create more awareness among SMEs of the merits of leasing options for the purchase of capital equipment and of factoring services to improve their cashflow, and create awareness among leasing and factoring companies of the growth potential from targeting SME clients.
The CBE and FRA to continue with the next phase of improving efficiencies of more of the Category C microfinance NGOs through capacity building and oversight on their ability to meet regulatory requirements.
Introduce tax incentives to private investors and venture capital firms to reduce their risks in investing in new start-ups and early-stage enterprises.
Support the establishment of a network platform to create linkages between angel investors and venture capital firms to foster the flow-through of investee enterprises from the seed stage (angel investment) to the next stage of investments from venture capital funds. These actions would aid in addressing gaps in access to equity financing and the ability of start-ups and young firms to move more readily to the larger rounds of financing.
Innovation programmes
Improve cross-government co-ordination of innovation support programmes.
Increase the focus on the innovation activities of existing SMEs.
Establish comprehensive support to spin-offs in universities and research centres, including entrepreneurship training and mentoring and support in the areas of IP, legal procedures, accounting, and market research, potentially drawing inspiration from the Leuven R&D programme in Belgium (OECD, 2025[46]).
Incubation and acceleration programmes
MSMEDA to collaborate with the ASRT, the CBE, the Ministry of Planning, Economic Development and International Cooperation, the MCIT, NilePreneurs, and the AUC Venture Lab on the formation of an Egyptian Business and Technology Incubator and Accelerator Association/Network.
MSMEDA to partner with the key ministries and agencies to begin the process of mapping the various incubator programmes and making this information publicly available in order to create more transparency about the availability of these programmes to aspiring entrepreneurs.
Improve the competency levels of Egyptian incubators by working with experienced incubators to develop a set of standards and certification processes for incubators at different levels of development that ensures quality while still facilitating innovation within incubators.
Promote greater awareness of the NilePreneurs Incubator Management Bootcamp programme as a vehicle for building the capacity of incubator managers and staff.
SME internationalisation programmes
Improve the level of co-ordination between the numerous entities supporting export development activity and the focus on SME exporters by creating an integrated Support Centre for SME Exports with an online presence and links to the programmes and services of all export support agencies.
Improve hand-off of SMEs participating in export training programmes to other programmes to assist them in achieving their export goals.
Design and implement special export and supply chain financing schemes for SMEs to be delivered through the banking system.
Business development services programmes
MSMEDA to adopt and implement a BDS Strategic Action Framework, with specific priority given to:
Conducting a demand survey of MSMEs regarding their use of business advisory and training services to foster a better understanding of the demand for and use of BDS services and the barriers to access.
Implementing an initiative to increase the supply of qualified consultants/advisors who are able to deliver basic consulting services to MSMEs and to otherwise build the capacity of BDS providers, such as a training and certification programme.
Implementing a national BDS platform to promote matching of BDS providers and MSMEs (to include a locational map of BDS providers and the services offered).
Promoting the use of an online diagnostic tool, such as the Business Lens, to help MSMEs identify their critical BDS needs and areas for improvement.
Establishing a cost-shared voucher scheme to augment MSME demand for consultancy services.
Creating an organisational structure within MSMEDA to carry out its functions as a facilitator and co-ordinator of quality BDS services.
MSMEDA to work with Regional Offices to design and implement a roster of qualified business advisors and trainers for use in the provision of local BDS services.
Expand the CBE qualification of business advisors beyond its use for the BDS Hubs, in co-operation with the Egyptian Banking Institute and the ILO.
MSMEDA to work co-operatively with the CBE BDS Hubs to encourage the formation of a national association of MSME business advisors and consultants.
Entrepreneurship education and training programmes
Give due consideration to integrating an entrepreneurship curriculum as a component of all TVET programmes.
The MHESR to commission a baseline study of the state of entrepreneurship education in all universities in Egypt.
Expand opportunities for Egyptians to gain entrepreneurship skills through availability of online training programmes, with appropriate follow-up support to persons completing the training.
SME skills upgrading programmes
Implement a skills training network addressing the training needs of SMEs and their workers.
Introduce a training voucher to be used by SMEs to secure training to upgrade the skills of their workers from training providers.
MSMEDA to negotiate a partnership with the ILO to implement the SCORE Programme to larger small and medium enterprises through co-operation with other government entities, such as the Industrial Modernization Centre.
Public procurement for SMEs
Apply the Public Procurement Law regarding SME procurement to state-owned enterprises.
The General Authority for Government Services (GAGS) to implement more conducive procurement rules to facilitate the participation of MSMEs in the procurement process, such as dividing contracts into smaller lots to make tenders more accessible to MSMEs, implementing an advance payment system for a certain percentage of the contract value, negotiating partnerships with public banks to provide loans to MSMEs so they are more able to fulfil the contract requirements, and meeting with MSMEs on a regular basis to provide information on public procurement opportunities and how to comply with the tendering and bidding processes.
MSMEDA to adopt more proactive approaches to prepare MSMEs for the public procurement process, which could include a programme to build their capacity to compete as qualified suppliers.
Inclusive entrepreneurship programmes
Develop a women’s entrepreneurship strategy within the renewed national MSME development strategy that is under development, outlining the related targeted actions under each pillar of the strategy. The targeted actions should include the digitalisation of women-owned/led MSMEs and the greening of their businesses. This should be done jointly by MSMEDA and NCW.
Provide training to MSMEDA policy officers on gender issues.
Introduce more business development support for women to support them in building more impactful businesses, including for example business consultancy and loans.
Build a network of youth entrepreneurship champions to help shift social attitudes, notably among important role models such as teachers and parents.
Green entrepreneurship and SME greening programmes
Introduce a digital diagnostic tool for SME greening as part of MSMEDA’s supporting offering, and added to the MSMEDA online platform. The tool should allow SMEs to benchmark their environmental performance against peers and identify concrete actions that can be taken to improve performance, with links to available supports.
Include specific policy measures (with objectives, targets, KPIs and responsible entities) relating to the promotion of SME greening and green entrepreneurship in the new National MSME Strategy (potentially including the green transition as a separate thematic pillar of the strategy).
MSMEDA to work with ERRADA to map i) regulations that inhibit SMEs’ and entrepreneurs’ activities in the green economy, and ii) environmental regulations where more effective enforcement is needed, identifying actions for facilitating more green activities and achieving greater enforcement of environmental regulations.
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← 1. See: https://www.oecd.org/cfe/smes/strategy.htm/; https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/smes-and-entrepreneurship/2023-ministerial-documents/SME-Implementation-Toolkit-2023.pdf/
← 2. The 41 NGOs were selected for upgrading based on a field review and evaluation of their governance system, human resources, lending system, risk management, internal audit, performance effectiveness, financing, ownership structure and profitability. The resulting gap analysis determined the required interventions and future training to complete the qualification process (to Category B), such as related to institutional structure, credit portfolios, boards of directors, and financing methods.
← 3. The upgrading training will also include the provision of an automated system for microfinance associations, which will be hosted by the Egyptian Credit Bureau (I-Score). This automated system includes many services (a system for loan management, digital assessment, follow-up and collection, fiscal management, preparation of supervisory and financial reports, etc.).
← 4. Information from MSMEDA officials during OECD mission to Egypt in March 2023.
← 5. To lend money to microfinance NGOs for on-lending to micro-credit borrowers, MSMEDA requires a series of documentation from the requesting NGO, such as financial statements for the past three years and cash flow statement, copy of the NGO’s bylaws with list of board directors or trustees, copy of the microfinance license approved by FRA, verification from the Ministry of Social Solidarity that the NGO has no financial or administrative violations, updated minutes of meetings of the NGO’s board or the board of trustees that includes the approval of obtaining a loan from MSMEDA, ID of the board chairman, statement of the NGO’s previous experience in microfinance and a statement of development activities if financed by other development agencies other than MSMEDA, negative credit and market inquiries, and a photocopy of the ownership, renting or wavering contract (stamped by the official stamp and registered officially and it should cover duration of contract).
← 6. See draft version of the Law of Georgia on the Activities of Micro Banks at the National Bank of Georgia website, https://nbg.gov.ge/en/legal-acts/projects/law-of-georgia-on-the-activities-of-micro-banks/.
← 7. The participating banks and their initial capital investments are Banque Misr ((EGP 100 million), National Bank of Egypt (EGP 300 million), Banque du Caire (EGP 100 million), Ahli United Bank EGP 100 million), Suez Canal Bank EGP 100 million), United Bank (EGP 50 million), and Attijariwafa Bank (EGP 45 million), in addition to the Misr Insurance Holding Company (EGP 100 million) and Avans Capital Group (EGP 10 million).
← 9. Specialised technology and innovation centres deal with: food and agri-business, plastics, mining and marble, engineering, furniture, leather and leather tanning, textile development, fashion and design, jewellery, cleaner production, quality improvement.
← 10. The ECOSAYS+ Platform (http://www.ecosys.eg.net/service-hub/) is a recent EU-funded initiative with the Ministry of Industry and the Academy of Scientific Research and Technology (ARST) that connects innovators and entrepreneurs to innovation supports.
← 13. The individual incubators are sponsored by different Egyptian banks.
← 15. The Startup Launch Pad, delivered by the V-Lab on behalf of the Information Technology Industry Development Authority (ITIDA), aims at growing the technology entrepreneurship ecosystem all over Egypt and helping entrepreneurs learn the practical fundamentals of building a technology start-up and designing solutions for real-world market needs.
← 16. FEPS determined that nurturing the business ideas and start-ups of economics students would help them contribute positively to the economic development of their nation, even if it is on a micro scale. The FEPS incubator provides an entrepreneurship awareness-raising programme for young people, a 16-week incubation programme with intensive coaching, mentoring and seed funding for selected start-ups, and a business clinic programme where consultancy support is offered to established start-ups that have been on the market for more than two years to help overcome technical and operational challenges.
← 18. Examples of national associations or incubator networks include the National Business Incubator Association (USA), the Saudi Business Incubator Network (Saudi Arabia), the Canadian Accelerator + Incubator Network (CAIN), the German Association of Innovation, Technology, and Business Incubation Centres (ADT), the Indian Science and Technology Entrepreneurs Parks (STEP) and Business Incubator Association (ISBA), and the Association of Thailand Business Incubators and Science Parks (THAI-BISPA).
← 19. The 13 Sector Export Councils, established by the former Ministry of Trade and Industry in co-operation with the private sector, include: Food Industries; Medical Industries; Building Materials, Refractories & Metallurgy Industries; Ready Made Garments; Chemicals and Fertilizers; Egyptian Furniture; Engineering; Home Textiles; Agricultural Crops; Handicrafts; Leather Sector. Councils support the export activities of member firms through trade shows and trade missions, and by providing export opportunities and buyers’ lists, training and seminars, marketing studies, and individual consultancy.
← 20. Mohamed Zain, “Egypt launches first export academy to boost trade, economic integration”, Bt Business Today, 11 July 2023, www.businesstodayegypt.com/Article/1/2745/Egypt-launches-first-export-academy-to-boost-trade-economic-integration/.
← 21. https://np.eg/bds-hubs/#branches/, accessed 2 October 2024
← 23. There does not appear to be any data on the percentage of graduates coming out of the technical secondary schools that end up starting their own business. This information would be useful in estimating the impact of the KAB programme on entrepreneurship rates. Another factor that might be considered is follow-up support to those graduates intending to start their own business.