More Egyptians are starting a new business, primarily driven by the COVID-19 pandemic. This is one of the findings from the latest GEM Egypt National Report.
Total early-stage entrepreneurial activity (TEA; the percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business) in 2020 was 11.3% in Egypt. This was slightly lower than the GEM 2020 global average of 14.5%, ranking 23rd out of 43 countries. Compared to the pre COVID-19 (2015-2019) TEA figure of 9.3%, Egypt’s TEA in 2020 was considerably higher, indicating that amid the disruptions caused by COVID-19, more people are seeking entrepreneurial opportunities. Of note is that more entrepreneurs are starting businesses in the consumer services sector and fewer in the transformative (manufacturing) sector.
The number of established businesses in Egypt also increased. The percentage of Egyptian individuals aged 18–64 who are currently owners/managers of established businesses (older than 3.5 years) increased to 5.2%, compared to 4.2% in pre COVID-19 years. However, this figure remains lower than the global average of 7.5%.
Egyptian entrepreneurs had significantly lower job creation projections and growth expectations, driven by COVID-19. For example, 32.7% of early-stage entrepreneurs did not expect to add any new jobs to their businesses within the next five years, compared to 10.8% before COVID-19 (2015-2019). Internationalization also declined significantly.
Also of concern is that more businesses discontinued, primarily driven by COVID-19. Egypt’s business discontinuation rates have increased from pre COVID-19 years, moving from 5.6% to 8.6%. With a global average of 5.0%, Egypt has one of the highest discontinuation rates, ranking the 6th out of 43 participating countries. Factors include the sudden market uncertainties and financing issues.
However entrepreneurial intention remains extremely high, with 56.9% of Egyptian non-entrepreneurs surveyed indicating interest or intentions to start a business within the next three years. This score was fifth among all GEM countries surveyed. Entrepreneurship is perceived as a good career choice by 71.5% of Egyptians and successful entrepreneurs are perceived as having high social status by 75.7% of Egyptians. While these figures are slightly lower than the pre COVID-19 figures, they remain high.
Recommendations for Policy and Practice
The authors of the report – Ayman Ismail, Ahmed Tolba, Thomas Schott, Hakim Meshreki, Shima Barakat and Seham Ghalwash – provided some recommendations for policy and practice to maintain the continuous growth and expansion of entrepreneurial activities in Egypt, with the potential to support inclusive growth and competitiveness:
- Deepen and accelerate the institutional and regulatory reforms to improve the business environment.
- Continue to expand the base through entrepreneurial education.
- Create sector specific policies to support growth and resolve bottlenecks in each sector. - Expand funding for new and growing firms to enhance both resilience and growth.
- Expand the acceleration of digital transformation driven by COVID-19.
- Focus on creating and promoting “champions” and success stories to create a pull effect.
Learn more by accessing the complete report.
The American University in Cairo — School of Business is the lead institution for GEM Egypt. The sponsors of the National Report are The American University in Cairo - School of Business and the Drosos Foundation.