Egypt mission report – DRAFT

What follows is an account of a round of interviews organized by UNDP Egypt and held in Cairo on 2, 3 and 4 June 2015. The interviews were meant to get Future Makers Global in sync with the way Egyptian institutional actors and their main stakeholders think about employment, social cohesion and data for accountability. The interviews were run by myself and  @hegazy. The account is driven by the need of the project to get a bird’s eye view of the main trends unfolding in Egypt, boiled down to a degree of simplicity such that it enables cross-country comparisons within the time and budget constraints of FMG. This makes it impressionistic and sketchy. It will be checked against official policy documents. Please do not quote until the process of collaborative editing is done. 

Policy priorities and trends 

Egypt runs on a hyper-Schumpeterian ideology. Entrepreneurship is seen as the silver bullet that will solve everything. Social problems will be solved by social entrepreneurship. There are even talks to teach entrepreneurship in schools, in the curriculum.

Treating entrepreneurship as the critical tool towards improving Egypt’s overall social and economic health appears to be, according to interviewees, a logical move. Every year, 600,000 (CAPMAS, 2013) Egyptians join the labour market. The public sector is already bloated with more people than it can use, and cannot absorb but few of those young people. 70% of job creation is driven by the private sector; and private sector has its own labor needs, which are similar to those of most countries: more “cream of the crop” highly qualified people with specific skills that happen to be in need at this point in time, not so many middle-of-the-road graduates. Labour demand – supply matching and retraining policies can help a little, but it is already being done. That leaves new business as the most likely candidate for creating new jobs.

Two labour policy asides (not directly relevant to the project, but useful as part of the background):

  1. Labour policies seem to be, in some cases, overengineered. A scheme that was reported to us is a scheme of demand-supply matching for apprenticeships and internships directed to boys and girls who are still in school, and therefore are _unqualified_. The thinking behind it is that having a summer job can help youth develop personal and relational skills that will be useful when applying for, or holding, a job. But is there really any need to match schoolboys with farms, and paying the overhead cost of the matching structure?
  2. Entrepreneurship policies have reached the point where they risk distorting the incentives for the budding entrepreneurs. One of the interviewees reported that some young, obviously smart people perceive it as viable to just go from competition to competition, from grant to grant, and stop business when the grant or award dries up. 

The Egyptian government appears to be working with the main stakeholders to build an ecosystem conducive to entrepreneurs reaching their full potential. Many efforts are directed towards building funnels that find entrepreneurial ideas and bring them to market in the form of startups. We heard of several startup programs (Injaz Startup Incubator Programme, Misr el-Kheir’s Gesr Programme, Nile University’s NU100 competition). Microsoft offers online coaching for startuppers. The main tools in use seem to be competitions, mentoring, coaching, and incubators. Most of this effort focuses on nano-bio, ICT, greentech.

There are many remaining challenges for the full potential of entrepreneurship to bear fruit. Specifically:

  • the regulatory environment for new business is stiff and unfriendly. 
  • regulation on key areas pertaining to startups (patents, IPR, data protection, openness of public sector information) is still missing.
  • university research is subpar. 
  • services for tech startups are expensive or missing. There are only two law firms serving startups; no accountants; few consultants on the specifics.
  • angel investors are there, but they do not appear to be having a large impact.
  • private sector companies get involved in entrepreneurship competitions, but they tend to recruit the smartest competitors rather than invest in their business.
  • incubated firms struggle to move forward and scale.

As a consequence, the funnel is missing pieces both at the beginning (pre-idea) and at the end (second and third round, post-incubator). There are signals that the government is working on improving regulation to make Egypt more business-friendly, but some of the interviewees expected that this would not really accelerate until a parliament is elected.

Social entrepreneurship/social innovation is attracting attention, but it does not feature as prominently in Egyptian policy as it does in Europe. We know of one already active pipeline for social entrepreneurship (Misr el-Kheir), and of another one being considered. (Injaz). The active one, however, insists on “high profitability”, so that the term “social” becomes a bit diluted (and could even be interpreted as a constraint). The Egyptian legal system does not have a specific legal form designed for social entrepreneurs, like the CIC in the UK and the cooperativa sociale in Italy.

The Egyptian government is very active and has obvious delivery ability. This blessing comes with the risk of taking initiatives that crowd out existing (private- or third sector) initiatives in the country. Examples:

  • Telecenters (late 90s initiative towards computer literacy and online access) could have been run by private entrepreneurs in the form, prevailing elsewhere, of Internet cafés (of which the government could have subsidized some socially oriented, not-for-profit activities)
  • Kenana Online (user-generate knowledge base in Arabic) is in a sense taking the place of Wikipedia. 

Maybe as a result of this, global knowledge-oriented, volunteer-based not for profit  initiative (Open Knowledge Foundation, Wikimedia/Wikipedia, OpenStreetMap) are not very visible in Egypt, and none of our interviewees quoted them.

Thanks to the UNDP country office in Cairo, a community meeting was organised on June 4th 2015. Over 1,000 people registered, but – due to capacity issues – only 60 places were made available, and were allocated on a “first come, first served” basis. Many of the initiatives represented were at pre-testing phases; only 13 of them had been deployed, even on an experimental basis. The most interesting ones have been contacted for some follow-up.

The main finding from the meeting was the following: young changemakers in Egypt are deeply motivated, but report frustration in implementation. The lack of implementation skills was a reason often cited. This was reflected in the event itself, with many participants finding it difficult to come up with short, clear, written descriptions of their own initiatives. This issue was often mentioned in interviews with other partners. Nafham, an a crowdsourced educational platform, meets a lot of volunteers interested in contributing content to its platform. However, much of this effort is reportedly of low quality, and this slows down the growth of the user base.

News from the grassroots scene

The Spot The Future project had revealed two main areas of interests for Egyptian changemakers. One is greentech (solar, water sanitation, waste recycling etc.), which is supposedly cared for by the fledgling ecosystem of policies directed towards entrepreneurship.

The other one is reclaiming and repurposing public spaces for the common good, with the Al-Mutamidiya ring road ramps story being the most impressive example of self-organization we found so far. UNDP itself has been involved in this scene, with a successful initiative to have young people contribute to designing the renovation of a central street in Giza (the governor of Giza turned out to have urban planning background, which makes him a potential champion for these initiatives). This line of work does not appear to be part of the startup ecosystem.

Other examples include the many coworking spaces that flourished in Egypt (many of which do not appear to have a viable business model, but they do signal a drive of youth to claim spaces), like Mesaha, Rasheed 22. Megawra and Cairo Hackerspace (learn more). Of these, at least the first one is fully grant-free, surviving on a very community oriented “pay what you can” model. The Darb al-Labbanah initiative, currently in its planning stages, strives to revitalise Historic Cairo by adaptively reusing long neglected properties as a hub for social enterprises and cultural businesses.

Cairo is also home to Cluster, an urban planning studio that achieved international fame for doing work on informal settlements and “tactical urbanism” – another sign of societal interest in the matter and a reservoir of high-level technical expertise.

There seems to be a space for a work that would

  • Support Egyptian grassroots initiatives, taking care to maximize their employment-generation potential without altering their fundamental incentive-structure. 
  • Rebrand these initiatives as social entrepreneurship. This would generate two advantages. One is to lend structure to these initiatives (enterprises should have a formal reflection on what they do: revenue model, partners and allies, governance structures... ) and, this way, increase their effectiveness, speed of development, replicability. The other advantage is to make them more legible to the authorities. This is needed as, in the post-revolution climate, spontaneous aggregations of citizens are at risk of being misinterpreted.
  • The link to employment and social inclusion can be made via the need for these operations to go sustainable. When you have a space and need resources to maintain it, the logical thing to do is to use the space as a the platform for a service that you can sell. This seems to be happening in the Megawra case, which runs a daycare service for children, and could be encouraged. Interaction with the greentech scene could also be explored: Rasheed 22, for example, seems to have already quite strong ties with it. The link towards data can be made via citizen-built digital maps; maps have always been the weapon of choice of urban planners to organize their thought and communicate with local communities. The OpenStreetMap community could be mobilized to collaborate with the architects.
  • Make the most of a highly positive cultural specificity of the Arab world in the context of social innovation: the Islam-mandated, highly structured system of making donations for the good of the community (zaqat) and respected, senior local leaders to act as trustees of those donations make fundraising, in a way, simpler than elsewhere. This was the social and economic structure underpinning the ring road ramps project in Al-Mutamidiya.

Three things we could do (provisional!)

  • Run an inventory of initiatives around public spaces, and perhaps organize a small event to help this fledgling scene perceive itself as a movement, rather than an archipelago of isolated initiatives.
  • Disseminate knowledge on working with geodata (conducive to asset mapping, thematic maps, coverage of dilapidated areas where the Google car does not go etc.)
  • Collaborate with the entrepreneurship ecosystem (Misr El-Kheir is one obvious candidate) to encourage these projects to focus more on financial sustainability, inevitably creating employment as they get more successful. Perhaps a specific mentoring program could be considered.

Useful links to policy documents

Egyptian government support for Entrepreneurship derives mostly from within the Ministry of Communications & Information Technology (MCIT). Several affiliate organisations assist the MCIT in executing its strategy, such as the Information Technology Industry Development Agency (ITIDA), and  The Technology Innovation and Entrepreneurship Center (TIEC).

  • TIEC (2011)  Technology Innovation & Entrepreneurship Strategy.
  • MCIT (2012) National ICT-Strategy 2012-2017: Towards a Digital Society and Knowledge-based Economy.
  • MCIT (2014) Digitial Economy 2014 presentation.
  • Mohamed Alaa El-Din (2015) TIEC plans to make Egypt new Silicon Valley in Middle East. Daily News Egypt.

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I did some tiny technical changes to the draft above.

This article in the Guardian discusses wether Development has been transforming into supporting the liberalisation of markets and the spreading capitalism. I find it applicable to Egypt, since so many development focused agencies, as well as the government, seem to equate development with job creation!

I disagree with the Hyper-Schumpetrian ideology hypothesis, however. It is true that all the meetings we had support the idea of entrepreneurship for job creation and that the ecosystem in Egypt is thriving and growing. Yet, this purposefully ignores the heavy concentration of capital in the country outside of the agricultural and handicraft sectors. Recent events such as the Egypt Economic Development Conference show the governments heavy commitment towards Big Business and foreign multinationals. Authorities such as GAFI (General Authority for Investment) provide easy access to the Egyptian market for foreign investors, yet such gains are not as realised for local entrepreneurs. Further, Egyptian economists generally agree on observing a crowding out phenomena of SME’s in favour of larger enterprises and the government in financial markets and access to capital.  

I do agree very much with the assertion of the belief in job creation as the cure-all, yet high level support for true entrepreneurship/distruption is lacking. This is most evident in the general aversion/tardiness in changing laws and regulations negatively affecting SME’s, as well as government policies such as for procurement in favour of SME’s.


Egyptian economists generally agree on observing a crowding out phenomena of SME’s in favour of larger enterprises and the government in financial markets and access to capital.

Do you have a reference for this? Thanks!

The concept is widely and repeatedly used in Egyptian media. I quote Hisham Tawfiq, chairman of Arabiya Online and a board member of the stock exchange: “The banking liquidity available to the private sector is ‘very weak’, and does not exceed EGP 450bn out of a total EGP 1.2tn in deposits. And the reason for this is that the government is crowding out the private sector, withdrawing the liquidity of banks, which are underwriting the government’s debt instruments to finance the budget deficit.” See Link here

For an academic reference see here. The researcher concludes in short that: “It concludes that government borrowing from the domestic banks leads to a more than one to one crowding out of private credit. This result implies that government borrowing from banks is not the sole reason behind crowding out private credit.”

Beware ideological issues

This is not about what we think, @Hegazy. We are trying to reverse engineer how Egyptian authorities see the world, so that we can have with them a clear communication. If it is true that they see entrepreneurship as the key to all, then we can point to grassroots initiatives as social entrepreneurship, and they will be more willing to listen.

Based exclusively on the interviews, it seems to me that high-level (cabinet) support for a business-friendly environment is there; what’s missing seems more to be the capacity to deliver at the senior civil service level. Some ministers are willing, but their bureaucracies are slow to respond.

Fair enough

I agree fully.

Interview with Hossam Osman, Acting Manager of TIEC, published in the Daily News Egypt. Interesting read on the aims for TIEC, and lots of free dreaming. Citable?