MICRO, SMALL AND MEDIUM ENTERPRISES IN EGYPT Entrepreneurship, Business Procedures and Value Chain Analysis Creative Associates International | August 2014 MICRO, SMALL AND MEDIUM ENTERPRISES IN EGYPT Special Focus on Entrepreneurship, Streamlining Business Procedures and Value Chain Analysis AUGUST 2014 REPORT SUBMITTED BY ACCELERATE CONSULTING AND DEVELOPMENT 5 AMMAN SQUARE, DOKKI SUITE 21, FLOOR 2 CAIRO, EGYPT 1 Table of Contents Executive Summary ............................................................................................................... 4 Introduction .......................................................................................................................... 5 CHAPTER 1: DEPICTING THE MICRO, SMALL AND MEDIUM ENTERPRISE ECOSYSTEM IN EGYPT ................................................................................................................................................................................................ 6 1. Macroeconomic Outlook .............................................................................................................................................. 6 2. The Role of Micro, Small and Medium Enterprises in Economic Growth................................................ 9 3. Key Challenges ............................................................................................................................................................... 11 4. Recent Developments ................................................................................................................................................. 12 A. Government Efforts to Enhance the Micro, Small and Medium Enterprise Ecosystem ............. 12 B. Banking-Sector Reforms ....................................................................................................................................... 13 C. Donors Efforts to Enhance the Micro, Small and Medium Enterprise Ecosystem ........................ 14 D. Private-Sector Initiatives to Promote the Micro, Small and Medium Enterprise Ecosystem ……………………………………………………………………………………………………………………………………………………………………17 5. Business Development Services Provision Support....................................................................................... 17 6. Conclusions and Recommendations ..................................................................................................................... 20 CHAPTER 2: UNDERSTANDING THE ENTREPRENEURSHIP ECOSYSTEM IN EGYPT ................... 22 1. Overview of the Current Entrepreneurship Ecosystem ............................................................................... 22 A. Entrepreneurship Regions in Egypt ................................................................................................................. 24 B. Entrepreneurial Gender Gap in Egypt ............................................................................................................. 25 C. Egyptian Entrepreneurship Ecosystem Strengths, Weaknesses, Opportunities and Threats Analysis ................................................................................................................................................................................. 25 2. Key Challenges, Potential Risks and Means of Mitigation............................................................................ 26 3. Facilitating Access to Finance .................................................................................................................................. 28 A. Banks and Debt Financing.................................................................................................................................... 28 B. Venture Capitalists .................................................................................................................................................. 28 C. Angel Investors ......................................................................................................................................................... 29 D. Crowdfunding ............................................................................................................................................................ 29 4. Access to Nonfinancial Services to Entrepreneurs ......................................................................................... 30 A. Accelerators and Incubators ............................................................................................................................... 30 B. Mentoring and Coaching ....................................................................................................................................... 30 5. Stakeholders on the Map ........................................................................................................................................... 31 6. Conclusion and Recommendations ....................................................................................................................... 32 CHAPTER 3: STREAMLINING BUSINESS PROCEDURES ........................................................... 35 1. General Authority for Investment and Free Zones ......................................................................................... 35 2. Social Fund for Development One-Stop-Shop Service .................................................................................. 36 3. Tamayouz Centers ........................................................................................................................................................ 36 A. CAIRO 2010 ................................................................................................................................................................. 36 B. ALEXANDRIA 2012 .................................................................................................................................................. 37 C. OTHERS ......................................................................................................................................................................... 37 4. Suggested Reforms and Recommendations ...................................................................................................... 38 A. Reforms to Existing One-Stop Shops and Replications ............................................................................. 38 B. General Recommendations .................................................................................................................................. 39 CHAPTER 4: VALUE CHAIN ANALYSIS .................................................................................... 41 2 1. Textile Sector in Egypt ................................................................................................................................................ 41 1.A Sector Overview ........................................................................................................................................................ 41 1.B Sector Positioning .................................................................................................................................................... 41 1.C. Sector Value Chain and Linkages .............................................................................................................................. 44 1.D. Sector Linkages ................................................................................................................................................................. 46 1.E. Sector Recommendations……………………………………………………………………………………………………………………46 2. Information and Communications Technology Sector ................................................................................. 47 1.A Sector Overview ................................................................................................................................................................. 47 1.B. Information and Communications Technology Sector: Current Developments and Potential Growth ................................................................................................................................................................................... 48 1.B.1. Information and Communications Technology Infrastructure Development ..................... 48 1.B.2.Information and Communications Technology Value Added in the Egyptian Economy 49 1.B.3. Number of Information and Communications Technology Companies, Issued Capital and Revenues ............................................................................................................................................................................... 50 1.B.4. Employment in the Information and Communications Technology Sector ........................ 52 1.B.5. Investments, Exports and Value Chain Linkages ................................................................................ 53 i. Investments ................................................................................................................................................... 53 ii. Small and Medium Enterprises Value Chain/Business Linkages ........................................... 54 iii. Exports .......................................................................................................................................................... 59 1.B.6. Projected Information and Communications Technology Sector Growth .......................... 59 1.B.7. Policy Support for Small and Medium Enterprises and Entreprenurship Development