A Clear Path for Small Business Growth in Egypt

Tax cuts and a streamlined registration process are just some of the measures that reflect a new attitude toward small and medium enterprises (SMEs) in Egypt. Support from IDRC and the Canadian International Development Agency have helped Egypt’s Ministry of Finance pave the way for these improvements.

Encouraging small business is a crucial element in Egypt’s social and economic development agenda.

The ministry’s SME Development Unit can point to many success stories. Take businesswoman Yomna El Sheridy. Ten years ago she knew little about olives except that Egypt produced a lot of them — about 450,000 tons annually. Today her fast-growing company, Special Foods Industry International, is Egypt’s leading manufacturer and exporter of olives, olive oil, and pickled vegetables. Starting small, by 2008 El Sheridy had 80 employees and annual sales of CA$4 million.

“The amount of time and the cost of starting a business is way down,” says Mohamed Youssef, who was the SME Unit manager between 2006 and 2008.

“Taxes for businesses were cut in half, and special treatment and accounting standards were enacted in a new tax law for small businesses.”

Equally significant, rules were changed to require that at least 10% of government purchasing should be from SMEs. Youssef, now assistant deputy minister in the Finance ministry, says today’s business environment is a marked improvement over 10 years ago.

The goal: more jobs

Researchers sought to encourage Egypt’s thousands of SMEs to grow, create new jobs for unemployed youth, and boost the sluggish economy. They quickly found that there was much to be done. Wouldbe entrepreneurs faced an almost impenetrable wall of rules and regulations. Egypt ranked 141 out of 155 countries on the World Bank’s 2006 “Ease of Doing Business” index.

Support from policymakers made the job easier. Youssef Boutros-Ghali, Egypt’s Minister of Finance, summed up the government’s position in 2008: “The
development of SMEs is considered to be one of the most crucial components of the government’s social and economic development agenda for Egypt.”

Many of the recommendations that came out of the research were put into laws and by-laws. A series of workshops for entrepreneurs, investors, and non-governmental organizations helped to raise awareness about the new government attitude toward entrepreneurship.

A Pro-business attitude

The new spirit has caught on. A group of Egyptians created the Middle East Council for Small Business and Entrepreneurship to encourage research on small
businesses and advocate for their growth; it is affiliated with the International Council for Small Business. By 2010, Egypt had moved up to 106 out of 183 countries in the Ease of Doing Business index.

Published: 15 Dec 2011

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