The Industrial Modernisation Centre (IMC) is an industrial development agency affiliated with the Ministry of Trade and

Industry (MTI) with a mandate to provide business development support to Egyptian industrial enterprises to reinstate them
competitively in Egypt's global markets in the bid to enhance job creation and secure prosperity for all. IMC's mandate focuses
on industrial enterprises employing more than 10 workers, and aims at addressing the needs of more than 14,000 such
enterprises. Since its foundation, the IMC has been fostering ties with different international organisations of similar mandates.
A number of initiatives have been launched as a result of bilateral and multilateral agreements in the different areas of
sustainable industrial development and the IMC is currently expanding its capacity of cooperation in multiple fields with both
local and international donors, development agencies, business resource organisations, NGOs, and other relevant organisations.
The evolving vision is to promote industrial growth and development via novel approaches built on solid partnerships with the
private sector to revitalize the parameters of industrial global competitiveness in full transparency. A unique model of public
private partnership is now in progress.

Contact information:
The Industrial Modernisation Centre Website: www.imc-egypt.org
1195 Corniche El Nil (Federation of Egyptian Industries' Building) Tel: +202 0800 462 0462; Fax: +20 (2) 577 2870
nd
Ramlet Boulak, 2 floor, Cairo, Egypt E-mail: info@imc-egypt.org

The Egyptian Junior Business Association (EJB) is a dynamic organisation that works as a forum for business people committed
to developing an outstanding culture of excellence while taking an active part in the overall development of Egypt. Its vision is to
be the leading business association enhancing the business environment and positively impacting the Egyptian society towards
sustainable development. The EJB hosts almost 600 members, the majority being between 25 and 45 years old, who are either
business owners or executives in local and multinational companies. The main activities of the association are geared toward
the business environment, business affairs and community development.

Contact information:
The Egyptian Junior Business Association (EJB) Tel: +202 252 840 94; Cell: +2 010 3234 555 - 666
Al Salam Tower Beside Al Salam Int Hospital Fax: +202 252 840 95
Corniche El Nile St., Maadi, Cairo, Egypt Website: www.ejb.org.eg
Email: ejbgroup@ejb.org.eg

The British University in Egypt (BUE) officially opened to Egyptian students in September 2005 on a state-of-the-art campus in
El-Sherouk. It focuses on encouraging personal integrity and academic excellence in its students, alongside developing
Additional copies of this report can be obtained from: enterprising graduates who can envision opportunities and harness the resources to bring them to fruition. Currently, the
university has four faculties - Business Administration, Economics and Political Science; Computer Science; Engineering; and
Nursing, as well as a Department of English that provides the requisite language training. It operates within the framework of
The Industrial Modernisation Centre (IMC)
the UK Quality Assurance Agency and provides degrees in a similar style and to an equivalent standard to UK programmes. The
1195 Corniche El Nil (Federation of Egyptian Industries' Building) BUE is validated by Loughborough and Queen Margaret Universities in the UK and successful students receive a British as well as
nd
Ramlet Boulak, 2 floor, Cairo, Egypt an Egyptian qualification. Having graduated its first students in 2009, the BUE is now firmly established and well placed to
Tel : +202 0800 462 0462 establish a global reputation as a high quality teaching and research institution.
Fax: +20 (2) 577 2870
Email : info@imc-egypt.org Contact information:
The British University in Egypt Tel: +202 2689 0000; Fax: +202 2687 5897
The British University in Egypt Cairo-Suez Desert Road – El Sherouk City, Egypt Website: www.bue.edu.eg
Email: info@bue.edu.eg
Cairo-Suez Desert Road – El Sherouk City, Egypt
Tel: +202 2689 0000 The Middle East Council for Small Business and Entrepreneurship (MCSBE) was formed in 2008 as an affiliate of the
Fax: +202 2687 5897 International Council for Small Business (ICSB) with a mandate to develop members and activities in Egypt, Jordan, Saudi Arabia
Email: hala.hattab@bue.edu.eg and Morocco. Its mission is to advance entrepreneurship and small business in these countries and to develop linkages with the
ICSB global network of affiliates and members from 70 countries around the world. Members include representatives from
It is also downloadable from: government bodies, universities, business associations, banks, venture capital companies, donors, consulting companies, large
corporations and entrepreneurial companies, business development service providers, and development NGOs. MCSBE’s
The website of the Global Entrepreneurship Monitor at: www.gemconsortium.org/national_reports.aspx objectives are to: advocate the formation and growth of small businesses as a mechanism for economic growth and
development by encouraging research, improving relevant knowledge and skills, promoting the free exchange of ideas and
experiences, and partnering with governmental institutions and other stakeholders involved in encouraging and supporting the
The IMC website at: www.imc-egypt.org
development of entrepreneurship and small businesses.

The BUE website at: www.bue.edu.eg Contact information:

The Middle East Council for Small Business and Entrepreneurship Website: www.mcsbe.org
Publication Date: October 2009 Cairo, Egypt Email: info@mcsbe.org
Global Entrepreneurship Monitor

Egypt Entrepreneurship Report 2008

Hala Hattab, PhD

The British University in Egypt

GEM Egypt Team Members

Mr. Amr Gohar
Dr. Hala Hattab
Ms. Lois Stevenson
Prof. David Kirby
Mr. Ahmed Nafie
Mr. Adel Noureldin
Dr. Paul D. Reynolds

Disclaimer: This report is based on data collected by the GEM consortium and the GEM-Egypt team;
responsibility for analysis and interpretation of the data is the sole responsibility of the authors. The
authors have attempted to ensure the accuracy and completeness of the information contained in this
publication, however, no responsibility can be accepted for any errors and inaccuracies that may
occur.
 Foreword by His Excellency The Minister of Trade and Industry

First of all, let me congratulate the Egyptian Junior Business Association (EJB) and the British
University in Egypt (BUE) for their pioneering efforts to engage Egypt’s partnership in the
Global Entrepreneurship Monitor (GEM) Project and for initiating the GEM Egypt 2008 study.
They did so with the full endorsement and support of the Ministry of Trade and Industry
(MTI) and the Industrial Modernisation Centre (IMC) and we are very pleased to have been a
sponsor of this important work.

It is obvious from this inaugural benchmarking report that Egypt is a country with millions of
aspiring and active entrepreneurs. The GEM Egypt 2008 report has been able to quantify the
level of entrepreneurial activity in the country and provide a profile of early-stage
entrepreneurs and their enterprises. Entrepreneurial activity is taking place in all socio-
economic strata of Egyptian society – the GEM Egypt 2008 report demonstrates that people
of all ages, educational backgrounds, household income levels, and urban-rural
environments are actively engaged in some phase of entrepreneurial activity. However,
there are many variances in entrepreneurial activity rates in different segments of society. In
this regard, the report presents many interesting, and even surprising, results. Compared to
other countries participating in the GEM research project, Egypt is performing well on some
indicators and not so well on others. Obviously, there are areas where we need to make
considerable improvements in order to address discrepancies and gaps.

In full recognition of the critical role of entrepreneurs in job creation, innovation, growth,
and national prosperity, the Government of Egypt is committed to creating an enabling
environment for entrepreneurship to flourish in the country. We have made much progress
in recent years to improve the investment environment and to reduce the cost and
complexity of registering new businesses. Our laudable performance on the World Bank
“Doing Business” reports is indicative of the outcome of the Government’s reform efforts.
However, Egypt is still a developing economy and we know that much more needs to done
to improve our competitiveness in the global marketplace.

The Egyptian economy is expanding and we need to ensure that Egyptians have every
opportunity to develop new business ideas, enter new markets, and produce new and
innovative products and services to meet the needs of businesses and consumers in both
local and foreign markets.

Page | iii
We cannot afford to build our future growth on foreign direct investment alone. We need to
broaden our base of domestic investors and entrepreneurs to develop a more diversified
and dynamic economy. Investing in this and the next generation of entrepreneurs,
particularly our young people, is critical. The GEM-Egypt 2008 clearly states that Egypt’s
large youth population gives us a strong “entrepreneurial advantage” and we need to build
on this.

The GEM Egypt 2008 report offers a rich and credible evidence-base to underpin policies and
measures to enhance entrepreneurial activity levels. We have to take very seriously actions
to improve our global position among other GEM countries and I, along with my colleagues
in the Government of Egypt, will be carefully reviewing the report and its policy
recommendations.

Once again, congratulations for an outstanding effort and I invite all readers of this report to
consider what actions they might take to create a more supportive environment for
entrepreneurs to pursue their aspirations and to help Egypt to, indeed, become a regional
hub for entrepreneurship!

Minister

Page | iv
 Message from the President of The British University in Egypt

Entrepreneurship has been an important contributor to the modernisation of the Egyptian

economy in recent years and, as the 21st century knowledge economy progresses, it will
play an increasingly important role, creating not just new businesses but new opportunities
and new innovations. This inaugural Global Entrepreneurship Report for Egypt is particularly
timely, therefore, not least as it demonstrates what needs to be done if entrepreneurship is
to be developed in the economy.

In particular, the report demonstrates the critical role of education in the promotion of an
entrepreneurial culture and there is much that Egyptian universities can and must do if the
country is to compete effectively in a highly entrepreneurial and innovative global economy.
Not only is there a need for more research on Entrepreneurship in Egypt, to aid policy
formulation, but importantly there is a need, also, for more entrepreneurship education in
our universities, colleges and schools to help promote a culture of enterprise.

Hence I was delighted to support Professor Kirby and his team when he proposed that the
British University in Egypt should be the lead Egyptian university in this important
international research project. Although the Global Entrepreneurship Monitor project has
been in existence for over 10 years, it is the first time that Egypt has been included. This
means we can now monitor the level of Entrepreneurship in the Egyptian economy,
compare our performance against other competing economies and identify what needs to
be done to strengthen our performance.

In my view it is particularly appropriate that the British University, a modern private

institution, should be taking the lead in this exercise. Not only has British Higher Education
played a significant role in creating a more entrepreneurial culture in the UK in the last 30
years or so, enabling us to learn from their experience, but importantly the founder and
Chairman of the Board of Trustees, Mr.Mohamed Farid Khamis, is one of the country’s
leading entrepreneurs. Accordingly, we in the British University in Egypt will do all that we
can to learn from the results of this research and help promote entrepreneurship in Egypt
through the education and training of our young people, working with early-stage
entrepreneurs and aiding higher education colleagues to better understand what support is
needed and how it can be provided.

Page | v
We will also continue to undertake research in this field and I congratulate all of those
involved in this project for recognising the importance of this research to the country,
undertaking the research and delivering this inaugural and timely benchmarking report.

I commend the research to you and believe it will contribute significantly to the creation of
policy that will help create a more entrepreneurial and competitive Egyptian economy.

Prof. Ahmed Amin Hamza

Professor of Physics
CPhys FInstP, FRMS
President
The British University in Egypt

Page | vi
 Acknowledgements

It took many people and organisations to make the GEM-Egypt 2008 project possible. A
considerable amount of gratitude goes to the Minister of Trade and Industry, H. E. Rachid M.
Rachid, who recognised the potential of the GEM research to produce valuable policy
insights to the Government of Egypt and endorsed the initiative. The project’s main sponsor
was the Industrial Modernisation Centre (IMC). Mr. Helmy Aboule’ish, Chairman of the
Management Board of the IMC, deserves particular accolades for believing in the value of
researching entrepreneurial activity in Egypt for the insights it could bring to designers of
both policy and entrepreneurship support programmes, and for the instrumental role played
by the IMC in facilitating the publication of this report. The Middle East Council for Small
Business and Entrepreneurship (MCSBE) is also acknowledged for its role in promoting
dissemination of the important research results.

Two special people were critical in bringing the concept of a GEM-Egypt study to fruition.
The first is Mr. Amr Gohar, Vice-Chairman of the Egyptian Junior Business Association (EJB),
who championed EJB’s vision of an Egyptian partnership with the Global Entrepreneurship
Monitor (GEM) and relentlessly pursued its realisation. The second is Prof. David Kirby, Dean
of the School of Business and Economics at the British University in Egypt (BUE), who offered
to be the university partner with GEM and to provide the research resources for the GEM
Egypt National Team. In the launch of the GEM Egypt research, Prof. Kirby was joined by Dr.
Mohamed Eid and Dr. Nagwa Ibrahim who both made a valuable contribution to the
formative stages of the project design.

The efforts of The Nielsen Company, Egypt must also be acknowledged. The Nielsen team
took great care in conducting the survey of entrepreneurial orientations and perceptions of
a nationally representative sample of over 2,500 adults across the country, achieving a high
level of quality and precision according to GEM international standards. Funding of the
project was supplemented by corporate social responsibility contributions of the Nielsen
Company and the British University in Egypt, for which the GEM-Egypt team is highly
grateful.

During the research analysis stage, the project benefited greatly from the input and advice
of Dr. Paul Reynolds, Distinguished Visiting Professor in the George Mason University School
of Public Policy. Dr. Reynolds led the entire GEM global project during its early formative
years and happily agreed to assist the BUE research team with some critical analysis of the
GEM Egypt data files. Gratitude is also extended to Lois Stevenson, Visiting Research Fellow
at the International Development Research Centre (IDRC) in the Middle East/North Africa
Office (MERO), who was particularly helpful in providing guidance during the process of
analysing the data findings as well as offering detailed and value-added input on the earlier
drafts of this report.

Finally, appreciation is extended to the thousands of Egyptians who took time to participate
in the adult population survey and the survey of national experts. The result has been a very
rich dataset about the level of entrepreneurial activity in the country and the environment
and conditions for the emergence of new entrepreneurs.

Page | vii
Page | viii
 Executive Summary

Entrepreneurship is a critical component of growth in any society. Entrepreneurs create

jobs, innovate with new products and services, and, through the starting of new businesses,
they positively impact on the level of productivity in a sector or the economy. The
fundamental aim of the Global Entrepreneurship Monitor (GEM) research is to provide a
strong foundation for an informed policy debate about the relationship between
entrepreneurship and economic growth and help governments identify what needs to be
done to enhance the level and quality of entrepreneurship in their countries.

The GEM, an international research initiative that measures the level of entrepreneurial
activity by assembling harmonised data from several participating countries on an annual
basis, is the largest social science research project in the world. The GEM research project
has three main objectives:

x To measure differences in the level of early-stage entrepreneurial activity among

countries;
x To uncover factors determining the national levels of entrepreneurial activity; and
x To identify policies that may enhance the national level of entrepreneurial activity.

Egypt joined the GEM consortium of countries in 2008. The GEM Egypt 2008 research is the
first comprehensive study to address the issue of entrepreneurship in Egypt. To gather data,
the study utilised two types of surveys, the Adult Population Survey (APS) and the National
Experts Survey (NES). The APS was administered to 2,600 Egyptians in the summer of 2008,
selected from a nationally-representative sample of the adult population. The 36 national
experts participating in the NES were selected on the basis of their knowledge and
experience related to the set of entrepreneurial framework conditions known to have an
impact on entrepreneurial activity levels at the country level. The outcome of GEM Egypt
2008 is a systematic, reliable, and internationally comparable study that measures the level
of entrepreneurial activity in Egypt and describes its key characteristics. Key issues emerging
from the study will serve to better inform policymakers and concerned stakeholders about
what needs to be done to elevate the level of entrepreneurial activity in Egypt, and the
quality, sustainability, competitiveness and growth of new businesses.

Key findings from the GEM Egypt 2008 are summarised below.

Entrepreneurial activity rates (pp. 9–14)

x In the summer of 2008, 13.1% of adults in Egypt (18-64 years old) were either actively
trying to start a new business (7.9%) or already owned and managed a business that
was less than three and half years old (5.5%). This indicator is referred to as the Total
Entrepreneurial Activity (TEA) rate. On this indicator, Egypt tanked 11th among 43
countries.
x These early-stage entrepreneurial activity rates converted to an estimated three
million nascent entrepreneurs, i.e. Egyptians who were actively trying to start a new
business, and about two million entrepreneurs with young businesses.
x With an average start-up team of 2.21 people, the three million nascent
entrepreneurs were in the process of trying to start 1.34 million new enterprises.

Page | ix
x With an average number of 1.83 new jobs created per start-up (not including the
owners), these new ventures, if actually launched, would have a substantial impact on
job creation — over 2.4 million new jobs.
x Young businesses in Egypt (less than three and half years old) had an average
ownership team of 2.19 persons. Thus, the total number of young businesses
represented by the estimated two million Egyptian entrepreneurs in this category
tallies to almost 940,000.
x Finally, 8.8% of the adult population reported being the owner of established
businesses that were more than three and a half years old.
x Egypt’s TEA rate falls below the U-shape curve that appears to represent the
relationship between country-level TEA rates and per capita GDP. This means that
there is scope for more entrepreneurial activity in the country.
x Four out of five Egyptian early-stage entrepreneurs were motivated to start a business
because they wanted to pursue a market opportunity, combined with a desire for
independence and better income prospects (“opportunity-entrepreneurship”). The
remaining 20% indicated they were primarily driven by the need to earn a livelihood
(“necessity-entrepreneurship”). The share of “opportunity-entrepreneurship” in Egypt
is higher than in most other countries at a similar level of economic development.

Demographics and entrepreneurial activity rates (pp. 14–26)

x Demographic groups of the adult population with the highest TEA rates were: 1) those
in the 25-34 year age group; 2) those with post-secondary education; 3) those in the
household income group of LE 1,501-2,000; 4) those living in Cairo; and 5) men.
x Overall, women are underrepresented as early-stage entrepreneurs in Egypt, with an
average rate of entrepreneurial activity less than a third that of men. Six percent of
adult females were engaged in early-stage entrepreneurial activity versus 19% of adult
males. The gender gap in TEA rates in Egypt is one of the largest in all GEM countries.
x Although TEA rates are highest among Egyptians with post-secondary or higher level
of education, the majority of early-stage entrepreneurs have a secondary education or
less. Egyptian early-stage entrepreneurs are less likely than in most GEM countries to
have university degrees.
x GEM studies find that the TEA rate tends to be higher (by varying degrees) among
adults in the top third of household income brackets. In Egypt, this pattern seems to
hold, especially for men. At the lowest household income levels, the decision to start a
business is more driven by necessity than opportunity.

Characteristics of nascent and early-stage businesses (pp. 27-37)

x The businesses of early-stage entrepreneurs are more likely to be in retail and service
sectors than established Egyptian enterprises and less likely to be in manufacturing.
x The vast majority of the nascent and start-up businesses are small ventures. The
majority of Egyptian early-stage entrepreneurs were financing their start-ups with less
than LE 50,000 (60%) but the amount ranged from LE 100 to LE 10 million (31%
needed between LE 50,000 and LE 500,000 and 9% over LE 500,000).
x Most new entrepreneurs finance their start-ups from their personal resources, which
means that the scale of the venture has to be commensurate with how much money
they can pull together. However, over half of the nascent entrepreneurs were

Page | x
 planning to attract external financing and the remainder to finance start-up costs from
their own resources.
x Nascent entrepreneurs in the oldest age group (55-64), highest education group, and
households with annual incomes in excess of LE 4,000 have estimated average start-
up capital requirements greater than the mean for all nascent entrepreneurs (thus,
larger and more capital, intensive start-ups) and expect to have significantly more
start-up financing/investment from others.
x Nascent and young businesses have a potentially strong impact on unemployment
reduction through their growth orientations. The employment growth expectations of
early-stage entrepreneurs would result in a 25% growth in average firm size over the
coming five years. However, only 11.4% of Egyptian entrepreneurs expect to create
more than 10 jobs in five years, ranking Egypt in the bottom half of GEM countries.
x Early-stage entrepreneurs in Egypt are more likely than established entrepreneurs to
be using, or planning to use, new technologies as a market expansion strategy, and to
be employing the latest technology in their business. In fact, the percentage of
Egyptian early-stage entrepreneurs indicating they are doing this is higher than in
most developed GEM countries. But the level of innovativeness of their products and
product market combinations is very low compared to GEM countries.
x Early-stage entrepreneurs also contribute to external trade activity — almost 40% of
early-stage businesses have customers outside of Egypt.

The prevalence of informal investors – “business angels” (pp. 38–40)

x In Egypt, 2.5% of the adult population has been involved as informal investors in the
early-stage start-ups of others over the past three years. These “business angels” play
a large role in helping to get new businesses off the ground.
x Although the average investment is small (mean of LE 8,700 a year) and almost half of
the business angels are investing in start-ups of close family members and relatives,
the estimated amount of their annual investments is close to 1% of (2008) GDP.
x Relative to other GEM countries, Egypt’s angel prevalence rate compares with the
average for EU GEM countries, but is low compared to the OECD GEM countries
(average of 3.5%), the US (5.2%), and well below other developing countries..

Attitudes of the population towards entrepreneurship and self-efficacy (pp. 41–43)

x The general Egyptian population is favourably disposed towards entrepreneurship.

Almost three-quarters perceive it as a desirable career choice and express a low fear
of failure, factors associated with positive attitudes towards entrepreneurship in a
society. These percentages are well above average for GEM countries.
x About a third of Egyptians expect to start a business within the next three years.
x However, only 40% of Egyptians saw good opportunities for starting a business “within
six months”, lower than in many GEM countries, and just slightly over half perceived
they had the required knowledge and skills to start a business, lower than in countries
at a similar level of economic development, but higher than in more developed
countries.
x Egypt has the second lowest rate for the percentage of the population that has
received any exposure to entrepreneurship in the education and training system. Only
7.5% of Egyptians reported ever having taken any courses on starting a business as
part of school-based activity, or participating in related training after leaving the

Page | xi
 formal education system. Of the non-entrepreneurially-active population, adults who
have never received start-up training were much less likely to perceive that they had
the skills, knowledge, and experience to start a business than those who had.

Assessment of Entrepreneurial Framework Conditions (EFC) (pp. 45–70)

The GEM research also includes an assessment of nine entrepreneurial framework

conditions considered to be the main determinants of a nation’s entrepreneurial
environment in support of new and growing firms: 1) availability of financial support; 2)
government policy support; 3) extent and quality of government support programmes; 4)
the presence of entrepreneurship in the education and training system; 5) accessibility of
R&D and technology; 6) the extent, quality, and cost of commercial services available; 7) the
degree of market openness and dynamism to make room for the entry of new firms; 8) ease
of access to physical infrastructure (e.g. ICT, utilities, transportation systems, land); and 9)
the extent to which existing social and cultural norms encourage or discourage individual
actions leading to entrepreneurial activity (e.g. entrepreneurial culture, respect for
entrepreneurs).

x The Egyptian national experts were quite negative about the strength of many of the
EFCs. Their poorest assessment was of the state of R&D and technology transfer
support. Financial support for new and growing firms to acquire new technology;
access to research and technology; commercialisation support to engineers and
scientists with market potential technologies or applications; and the transfer of
knowledge and technology from universities and public research centres to new and
growing firms, were all viewed as being extremely weak.
x Weaknesses in the education system with respect to entrepreneurship were
reinforced by the national experts and reflected in Egypt’s poor comparative standing
relative to other GEM countries on the Education and Training EFC (last place). The
education system in Egypt was assessed by national experts as being very weak in this
area, at all levels of schooling, unlike the case in many other GEM countries where the
government has made entrepreneurship education a priority.
x There was little consensus amongst the national experts that sufficient financing was
available for new and early-stage growth firms, particularly equity and venture capital
financing. Their assessment placed Egypt 21st among the 43 GEM countries.
x Other framework items with very poor assessments related to: 1) difficulty for new
and growing firms in coping with government bureaucracy, regulations, and licensing
requirements; 2) lack of availability and accessibility of government programmes to
support anyone who is developing a new or growing business; and 3) lack of effective
support for new and growing firms provided by science parks and incubators.
x National experts were moderately in agreement that support for new and growing
firms is a high priority at the national government level (less so at the local
government level). One of their concerns, however, was the lack of a comprehensive
government-wide and formally-adopted entrepreneurship policy document,
articulating a strategy to specifically promote the development of new entrepreneurs
and the start-up of new and growth-oriented enterprises. They perceived existing
initiatives to promote entrepreneurship and support start-ups as fragmented and
disintegrated.
x On the other hand, Egypt ranked very well among GEM countries on experts’ opinions
about access to physical infrastructure and the level of market dynamism (e.g.

Page | xii
 changing and expanding markets create opportunities for new firm entries), although
not quite so well on the ease with which new firms can enter established markets (e.g.
unfair competition, ineffective anti-trust legislation).
x National experts in Egypt were quite positive about the extent of opportunities to
start new businesses in the country. They felt that opportunities for new firms have
increased considerably over the past five years, and that a rapidly changing and
dynamic market for consumer and business goods and services is a contributing
factor. However, they were less positive that individuals can easily pursue
opportunities or react quickly to them. They also did not have much confidence that
people in the country generally possessed the necessary know-how and experience to
start and manage a small business, and particularly a high-growth business, placing
Egypt in the bottom half of GEM countries.

Some policy implications of GEM Egypt data (pp. 71–75)

x The 25-34 age group has the highest entrepreneurial activity rates, true for all GEM
countries. So this is the most significant pool of potential entrepreneurs from which
the majority of new enterprises and jobs will be created in coming years. The age
group with the second highest TEA rate in Egypt is among the 18-24 year olds, which is
not the case in most GEM countries. Thus, Egypt’s young population gives it a strong
“entrepreneurial” advantage.
The policy implication is that considerable efforts should be made in Egypt to foster the
development of entrepreneurial skills, ability, and know-how of young Egyptians. This
should start early in the education system as part of the formal curriculum and
extracurricular activities. Preparing them early will have an impact on developing
entrepreneurial potential and on the quality of the enterprises eventually started. It
should follow through with dedicated programmes to support young entrepreneurs in
the start-up and early-stage growth process, such as exist in many other countries.

x TEA rates in the population generally rise with the level of education. So countries
with large cohorts of highly-educated people may have an “entrepreneurial”
advantage. Although Egypt basically follows the pattern of GEM countries — TEA rates
are highest among adults with post-secondary education or higher — unfortunately,
the average education level in Egypt is relatively low, so the better educated people
with higher TEA rates are in the minority. GEM studies have also found that
entrepreneurs with higher levels of education are more likely to be innovative and
growth-oriented.
The major implication of this result is that the low level of education of Egyptians
generally is a barrier to growth of the entrepreneurial population. In the medium-term,
Egypt must continue to raise the average education level of the population. In the
short- and medium-term, efforts should be made to reform the education approach to
foster creativity, self-sufficiency, personal initiative, and independent thinking, as well
as to integrate entrepreneurship-related content into teaching materials and
classrooms at all levels of the education system.

x GEM studies conclude that rapid gains in start-up rates can be achieved by increasing
the participation of women in the entrepreneurial process, and provide evidence that
countries with the highest start-up rates tend to have a higher level of female
participation. This suggests that more efforts should be made to target the

Page | xiii
 entrepreneurial development of women. Egypt’s large gender gap in the
entrepreneurial activity rates of men and women is thus an area of concern.
The policy implication is that Egypt should engage more aggressively in efforts to
promote women’s entrepreneurship and launch supporting initiatives.

x Upgrading the level of technology in use by Egyptian enterprises is critical to

improving product quality, efficiency and competitiveness. The vast majority of early-
stage entrepreneurs in Egypt are not particularly technology-oriented or differentiated
in their product market combinations.
As reinforced by the national experts, proper attention to R&D, its transfer to the
entrepreneurial sector, and support for all forms of innovation are crucial policy issues.

Recommendations (pp. 76–81)

Based on the input from national experts and analysis of the adult population interviews, the
GEM Egypt 2008 study offers a number of recommendations for consideration by
policymakers and other stakeholders.

A: Education and training: Undertake reforms in the education system to enable it to

become a main driving factor in the development of entrepreneurship. This will involve:

1. Restructuring the educational system to foster creativity and independent thinking;

reviewing the design of school curriculum at the elementary and secondary levels to
incorporate entrepreneurship principles; accelerating the teaching of
entrepreneurship materials in more schools and classes; integrating
entrepreneurship classes on how to start a business as part of vocational or
technical training programmes/courses; introducing entrepreneurship as a major in
the universities; and encouraging a career advisory system in universities to
embrace the idea of students starting-up their own businesses.

2. Introducing management skills modules at secondary schools, vocational institutions

and universities; establishing non-degree programmes to enhance the level of skills
and capabilities necessary in starting-up and growing a business; and dramatically
expanding the offer of flexible entrepreneurship orientation, training and mentoring
programmes through business resource centres, youth centres, Social Fund for
Development (SFD) Regional Offices, the Industrial Modernisation Centre (IMC), and
qualified NGOs and business associations throughout the country.

3. Setting up enterprise incubators and entrepreneurship centres on university and

college campuses to promote entrepreneurship, provide counselling and mentoring
services, and provide linkages between the centres of knowledge creation and
potential entrepreneurs.

B: Financing support: It is crucial to develop a stronger financial-support environment in

Egypt in order to enhance the creation and development of entrepreneurial start-ups and
growth ventures. Improving the situation can be assisted by:

Page | xiv
 1. Providing incentives and training to encourage banks to extend loans to new start-
ups, and making more microfinance funds available for enterprises in the start-up
stage.

2. Providing incentives and the appropriate regulatory framework to stimulate more

private equity and venture capital investment in seed capital funds for new and
early-stage, innovative and high growth potential enterprises that have limited
access to traditional funding sources, including the offer of management advice.

3. Encouraging business angels to play a more active role in supporting

entrepreneurship, especially high growth start-ups.

C: Regulatory framework: Reducing barriers to the start-up and growth of an enterprise is

basic to increasing the level and nature of entrepreneurial activity. In this regard, the
government should:

1. Ensure that competition policy and anti-trust legislation are effective and well
enforced so as to create fair, equal, and open opportunities for the competitive
entry of new and growing firms in sectors of the market.

2. Make provisions in the labour laws to allow self-employed persons to participate in

social security schemes (medical insurance, pension, etc.).

3. Amend bankruptcy laws to international standards with flexible procedures for

closing down a business in cases of insolvency. The legal consequences of “failure”
should not prevent entrepreneurs from having a second chance.

D: Culture and awareness building: While the Egyptian population has quite favourable
attitudes towards entrepreneurship and its role in society, national experts pointed to the
lingering of some traditional cultural attitudes. GEM studies confirm that the perceived
social legitimacy of entrepreneurship makes a difference to TEA rates, and clearly there
would be economic and social benefits from higher TEA rates in Egypt. Promoting role
models is one of the effective ways to inform and motivate more positive attitudes and
action. This can be achieved by:

1. Celebrating success stories of entrepreneurs, encouraging self-employment and

fostering an entrepreneurial-promoting culture, stimulated by sufficient social
support from family, friends and peers; and improving the social image of
entrepreneurs through media efforts focused on “achieving entrepreneurs” as
credible role models.

E: Women’s entrepreneurship: Women in Egypt represent a large untapped source of

entrepreneurial potential and an economic force if that potential is encouraged and
supported more fully. This could be achieved through:

1. Articulating women’s entrepreneurship as an economic issue rather than as a

gender or social issue; and recognising the contribution of women entrepreneurs as
economic and wealth-creating agents.

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 2. Launching cultural awareness campaigns to address the social and cultural
impediments facing women who would like to play a more active role in economic
activity by starting their own business, and implementing special initiatives in post-
secondary institutions and universities to promote entrepreneurship to female
students.

3. Implementing initiatives to promote entrepreneurship for women, including a

systematic network of entrepreneurship and business support services to help
transfer the knowledge and skills needed to develop business ideas and new
ventures (e.g. special programmes to mentor and coach women on starting up
businesses, expanded women’s enterprise centres, entrepreneurship training
opportunities for women who are trying to break into the labour market, financial
intermediaries and special loan products dedicated to women (e.g. less rigid
collateral requirements, tailored pay-back mechanisms).

F: Government policy and programme support: Governments have an important role to play
in nurturing entrepreneurial activity. They do this indirectly through their fiscal policies, tax
policies, regulatory policies, competition policies, education and technology policies,
regional development policies, labour market policies and so on, and directly through
targeted programme measures and interventions — the establishment of business
incubators, information and business resource centres, enterprise development centres, and
R&D subsidies, as examples. The GEM Egypt 2008 study revealed several areas where the
government can add value in the fostering of entrepreneurship and, thus, position and
promote Egypt as a regional hub of entrepreneurial activity.

1. Formulate a comprehensive entrepreneurship policy and framework for actions to

serve as a cross-government roadmap for the development and implementation of
measures to accelerate the development of entrepreneurship and to address needs
and gaps of different types of entrepreneurs at each stage of the entrepreneurial
process. An important objective of the policy would be to foster higher-quality start-
ups with more growth potential and competitive advantages.

2. Appoint a high-level public-private National Entrepreneurship Council with

representatives from the policy community, business associations, universities, and
development organisations as a vehicle for raising the policy profile of this key
economic growth issue.

3. Implement policies that reduce tax burden, further streamline procedures for
starting a business, and reduce the bureaucratic, legal and regulatory barriers (and
costs) to establishing and operating enterprises. Lower taxes and simplified and
unified new business registration and licensing procedures are factors in the
creation of a more favourable environment for entrepreneurship, new business
entries, and growing firms. Effective one-stop shops, combined with streamlined
steps and procedures, could contribute to an increase in the attractiveness of
pursuing formal entrepreneurial activities in Egypt as well as the competitiveness of
early-stage enterprises.

4. Align government support programmes towards enhancing entrepreneurial activity

in Egypt.

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 5. Expand government support for research and development by allocating more
resources and public investment to encourage R&D efforts (e.g. encouraging
research centres in the universities, especially the public ones, to innovate through
dissemination of knowledge, facilitating access to funds, increasing exposure to
advanced technologies, and facilitating the commercialisation of innovative ideas
developed in these centres by building bridges with entrepreneurs).

6. Establish a larger network of business incubators to support the setting up of new

entrepreneurial ventures and provide the appropriate business support needed to
increase their chances of survival and growth.

7. Establish a Technology Acquisition Fund that can be used by new and young firms to
secure financing for the acquisition of the latest technologies or to develop new
technologies with market potential.

8. Invest in development and integration of entrepreneurial attributes and principles at

all levels of the education and training system, as well as specifically targeting the
development of young entrepreneurs.

9. Facilitate the trade process for new and established entrepreneurial ventures by
developing plans, policies and programmes to increase their export potential.

10. Improve the infrastructure (e.g. transportation, telecommunications, community

services) in the country, lowering the cost of services provided to entrepreneurial
ventures, and improving the quality in the delivery of the services.

In conclusion, this report highlights some of the major findings of the GEM Egypt research.
More in-depth analysis of the many variables in the survey database is possible and would
shed light on other interesting aspects of early-stage entrepreneurship in Egypt. Critically
important is that the GEM-Egypt 2008 study has, for the first time, established baseline
information on the entrepreneurial behaviour of Egyptians. Tracked through annual
updates, this will provide a substantial evidence base to inform policymakers. This will better
enable the refinement and development of effective policies, measures and actions to foster
entrepreneurship as part of a growth agenda. Other countries have found that conducting
the GEM research on an annual basis has produced a unique and invaluable set of data for
monitoring trends and changes over time and provided a much richer understanding of the
entrepreneurial dynamics taking place in the economy and the environment for
entrepreneurship. This has led to many policy improvements and assisted in the evaluation
of the impact of different policy measures on the performance of entrepreneurial indicators.

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Page | xviii
 Table of Contents

Foreword by His Excellency The Minister of Trade and Industry ........................................iii

Message by the President of the British University in Egypt ...............................................v
Acknowledgements .................................................................................................... vii
Executive Summary......................................................................................................ix
Table of Contents ...................................................................................................... xix
List of Tables .............................................................................................................. xx

Part I: Introduction to Global Entrepreneurship Monitor- Egypt 2008 .................................1

The GEM Conceptual Model ..........................................................................................2
Research Methodology..................................................................................................7

Part II: Adult Population Survey (APS) Findings.................................................................9

Early-Stage Entrepreneurial Activity Prevalence Rates in Egypt ..........................................9
Motives for Becoming an Entrepreneur.........................................................................12
Demographics and Entrepreneurial Activity in Egypt.......................................................14
Gender and Entrepreneurial Activity ......................................................................14
Age and Entrepreneurial Activity ...........................................................................15
Education and Entrepreneurial Activity ..................................................................18
Household Income and Entrepreneurial Activity......................................................22
Labour Force Status and Entrepreneurial Activity ....................................................24
Regional Variations and Entrepreneurial Activity .....................................................26
Characteristics of the Nascent and Early-Stage Enterprises ..............................................27
Enterprise Sectors................................................................................................27
Employment Prospects.........................................................................................28
Start-up Capital and Requirements ........................................................................29
Export Orientation...............................................................................................32
Innovation and Growth Expectations .....................................................................34
Business Discontinuances .....................................................................................37
Business Angels ...................................................................................................38
Egypt’s Entrepreneurial Orientation: Entrepreneurial Attitudes and Perceptions of the
Population..............................................................................................................41

Part III: National Expert Survey (NES) Findings – Entrepreneurial Framework Conditions.....45
Expert’s Perceptions of the Strength of Entrepreneurial Framework Conditions.................45
1. Financial Support .............................................................................................46
2. Government Policies.........................................................................................48
3. Governmental Programmes ..............................................................................50
4. Education and Training .....................................................................................52
5. R&D Transfer ...................................................................................................55
6. Commercial and Professional Services Infrastructure ...........................................57
7. Internal Market Openness.................................................................................58
8. Accessibility of Physical Infrastructure ................................................................60
9. Social and Cultural Norms .................................................................................62
Experts’ Views on Other Aspects of the Entrepreneurial Environment ..............................63
Start-up Support to Women..................................................................................63
Opportunities to Start Up .....................................................................................65
Abilities and Knowledge to Start Up.......................................................................66

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Experts’ Views on Areas Constraining and Fostering Entrepreneurial Activity in Egypt ........68

Part IV: Policy Implications and Recommendations.........................................................71

Policy Implications ......................................................................................................71
Recommendations......................................................................................................76
Education and Training.........................................................................................76
Financing ............................................................................................................77
The Regulatory Environment.................................................................................77
Culture and Awareness Building ............................................................................78
Elevating the Level of Women’s Entrepreneurship...................................................78
Government Policy and Programme Support ..........................................................79

Annex 1. GEM2008 National Teams – Global..................................................................83

Annex 2. GEM Egypt National Team..............................................................................89
Annex 3. List of National Experts - Egypt* ......................................................................93

List of Tables

Table 1. Glossary of GEM Terminology and Main Indicators...............................................6

Table 2. Prevalence Rates of Entrepreneurial Activity in the Adult Population in GEM
Countries, 2008.......................................................................................................10
Table 3. Motives for Early-Stage Entrepreneurial Activity - GEM Countries ........................13
Table 4. Percentage of the 18-64 Population that Received Voluntary or Compulsory Training
in Starting a Business During or After Schooling..........................................................21
Table 5. Start-up Money for Nascent Enterprises – Egypt, 2008........................................30
Table 6. Variations in Start-up Money Requirements by Demographic Variables ................31
Table 7. Innovation and Growth Expectations of TEA Businesses ......................................35
Table 8. Comparing TEA and Established Businesses on Expansion, Innovation and
Competitive Aspects – Egypt, 2008............................................................................36
Table 9. Angel Prevalence Rates among Demographic Groups – Egypt, 2008 .....................40
Table 10. Entrepreneurial Attitudes and Perceptions in the 43 GEM Countries by Phase of
Economic Development, 2008 ..................................................................................42
Table 11. Summary of Egypt's Relative Performance in Assessment of EFCs.......................45
Table 12. Areas Constraining Entrepreneurial Activity in Egypt - Experts' Opinions .............68
Table 13. Areas Fostering Entrepreneurial Activity in Egypt - Experts' Opinions..................69
Table 14. Experts' Recommendations to Improve the Level of Entrepreneurial Activity in
Egypt .....................................................................................................................70

List of Figures

Figure 1. GEM Conceptual Model ...................................................................................3

Figure 2. The Entrepreneurial Process .............................................................................5
Figure 3. Early-Stage Entrepreneurial Activity (TEA) ........................................................11
Figure 4. Early-Stage Entrepreneurial Activity Rates by Per Capita GDP, 2008 ....................12
Figure 5. Opportunity and Necessity TEA Rates - Total, Male, Female - Egypt 2008.............14
Figure 6. Early-Stage Entrepreneurial Activity Rates by Gender - GEM Countries, 2008 .......15
Figure 7. Early-Stage TEA Rates by Age Group and Phase of Development, 2008 ................16
Figure 8. TEA Rate by Age Group - Egypt, 2008...............................................................16

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Figure 9. Age Distribution of Early-Stage Entrepreneurs Compared to all Respondents –
Egypt, 2008 ............................................................................................................17
Figure 10. Male-Female Share of Early-Stage Entrepreneurs by Age Group – Egypt, 2008 ...17
Figure 11. Entrepreneurial Activity Rates by Age and Phase of Entrepreneurial Process –
Egypt, 2008 ............................................................................................................18
Figure 12. TEA Prevalence Rates by Education and Gender – Egypt, 2008..........................19
Figure 13. Distribution of Adult Population and Early-Stage Entrepreneurs by Level of
Completed Education – Egypt, 2008 ..........................................................................19
Figure 14. Male-Female Share of Early-Stage Entrepreneurial Activity by Education ...........20
Figure 15. TEA Prevalence Rates by Household Income and Gender - Egypt, 2008..............22
Figure 16. Household Income Distribution of Early-Stage Entrepreneurs Compared to all
Respondents...........................................................................................................23
Figure 17. Male-Female Share of Early-Stage Entrepreneurs by Household Income Group -
Egypt, 2008 ............................................................................................................23
Figure 18. TEA Prevalence Rates by Labour Force Status and Gender - Egypt, 2008 ............24
Figure 19.Labour Force Attachment of Early-Stage Entrepreneurs – Egypt, 2008................25
Figure 20. Male-Female Share of Early-Stage Entrepreneurs by Labour Force Attachment ..25
Figure 21. TEA Prevalence Rates by Region and Gender - Egypt 2008................................26
Figure 22. Male-Female Share of Early-Stage Entrepreneurial Activity by Region................27
Figure 23. Sector Distribution of Early-Stage and Established Businesses - Egypt, 2008 .......28
Figure 24. Current Number of Jobs by Stage of Enterprise Development - Egypt, 2008 .......29
Figure 25. Jobs Expected in 5 Years - Egypt, 2008 ...........................................................29
Figure 26. Return on Investment Expected by Nascent Entrepreneurs - Egypt, 2008...........32
Figure 27. Number of Customers outside Egypt..............................................................33
Figure 28. Number of Customers Outside the Country, GEM 2008 Countries .....................33
Figure 29. Reasons for Business Discontinuance, GEM Countries, 2008.............................37
Figure 30. Business Angels by Investment Size - Egypt, 2008............................................38
Figure 31. Relationship of Business Angel to Investee – Egypt, 2008 .................................39
Figure 32. Investment Returns Expected by Business Angels in 10 Years............................39
Figure 33. Financial Support – Cross-National Comparison...............................................46
Figure 34. Perceptions of the State of Financial Support in Egypt .....................................47
Figure 35. Government Policies – Cross-National Comparison..........................................48
Figure 36. Perceptions of the State of Government Policies in Egypt.................................49
Figure 37. Government Programmes – Cross-National Comparison ..................................50
Figure 38. Perceptions of the State of Government Programmes in Egypt .........................51
Figure 39. Entrepreneurial Education at Primary and Secondary Schools – Cross-National
Comparison............................................................................................................52
Figure 40. Education and Training – Cross-National Comparison ......................................53
Figure 41. Perceptions of the State of Entrepreneurial Education and Training in Egypt ......53
Figure 42. R&D Transfer – Cross-National Comparison ....................................................55
Figure 43. Perceptions of the State of R&D Transfer in Egypt ...........................................56
Figure 44. Commercial & Professional Services Infrastructure – Cross-National Comparison57
Figure 45. Perceptions of the State of Commercial & Professional Infrastructure in Egypt ...58
Figure 46. Internal Market Dynamics – Cross-National Comparison ..................................59
Figure 47. Internal Market Burden – Cross-National Comparison.....................................59
Figure 48. Perceptions of the State of Internal Market Openness in Egypt........................60
Figure 49. Accessibility of Physical Infrastructure – Cross-National Comparison ................61
Figure 50. Perceptions of the State of Accessibility of Physical Infrastructure in Egypt ........61
Figure 51. Social and Cultural Norms – Cross-National Comparison .................................62

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Figure 52. Perceptions of the State of Social and Cultural Norms in Egypt .........................63
Figure 53. Start-up Support to Women – Cross-National Comparison ...............................64
Figure 54. Perceptions of Support for Women’s Entrepreneurship in Egypt .......................64
Figure 55. Availability of Good Start-Up Opportunities  Cross-National Comparison..........65
Figure 56. Perception of Opportunities to Start up in Egypt .............................................66
Figure 57. Abilities and Knowledge to Start and Manage a Business – Cross-National
Comparison............................................................................................................67
Figure 58. Perception of Abilities and Knowledge to Start and Manage a Business in Egypt .67

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 Part I: Introduction to Global Entrepreneurship
Monitor- Egypt 2008

Egypt, commonly known as “The Motherland of the World” and “Land of Civilisations”
because of its distinct and world famous 7,000-year-old record of civilisation, is endowed
with natural and human resources and a varied economic system.

The rise of economic growth under a liberalised regime is considered the most distinguishing
feature of the modern Egyptian economy. A series of economic reforms, particularly since
2004, has placed Egypt among the 10 most reformist countries in the world in 2008.1 1F

Numerous measures have been taken in recent years to strengthen the role of the private
sector in diversified sectors of economic activity. Many Egyptians have pursued
entrepreneurship as a means of creating employment and income generation, instead of
being employed by others and/or unemployed. Others have started businesses with the
goal of creating wealth. These entrepreneur-led enterprises are responsible for producing
the bulk of employment growth in the Egyptian economy in the past two decades. However,
little is known about the population of entrepreneurs in Egypt, that is, their demographic
profile, their motivations, their perceptions and attitudes, and their expectations for the
future. In addition, little is known about the level of entrepreneurial activity and the specific
external and internal influences affecting the emergence of entrepreneurs in society.

Although there is no concise universally accepted definition of entrepreneurship2, it has

2F

been gaining interest at the national and international levels because it symbolises
innovation and dynamism in the economy 3. Since its inception in 1998, the Global
3F

Entrepreneurship Monitor (GEM) has made a substantial contribution to filling the

knowledge gap regarding entrepreneurship and economic development and providing cross-
country benchmarking indicators to compare the level and performance of entrepreneurial
activity.

GEM is an international research programme aimed at measurement of the national level of

entrepreneurial activity by assembling relevant harmonised data from a number of countries
on an annual basis. A partnership between the London Business School (UK) and Babson
College (USA), it was initiated in 1999 with 10 countries, expanded to 21 countries in 2000,
and in 2008, included 43 countries. See Annex 1 for information on the GEM teams in the 43
countries.

GEM examines the factors that contribute to an entrepreneurial climate and the links
between entrepreneurship and economic growth. Each year, a team of researchers from
participating countries in the GEM cycle conducts its own independent investigation of
domestic entrepreneurship using the same investigation methods, to ensure quality and
comparability of the data, in order to study the complex relationships between new venture
creation, economic growth, culture, government policies, and national prosperity.

Page | 1
Egypt participated in the GEM research project for the first time in 2008. This national
initiative, supported by the British University in Egypt (BUE), the Industrial Modernisation
Centre (IMC) of the Ministry of Trade and Industry (MIT), and the Egyptian Junior Business
Association (EJB) (see Annex 2 for information on the GEM-Egypt 2008 team members),
positions Egypt on the global map of entrepreneurship, and benchmarks its entrepreneurial
performance against that in 42 other developed and developing economies. This research
allows an investigation of the motivations behind entrepreneurial activity (necessity or
opportunity), the socioeconomic characteristics of entrepreneurs, and the perceptions and
expectations of the general population, entrepreneurs, and national experts regarding the
environment for entrepreneurship.

The GEM Conceptual Model

According to the GEM conceptual model, traditional analysis of economic growth and
competitiveness tended to neglect the role played by new and small firms in the economy. 4
GEM takes a comprehensive approach and considers the degree of involvement in
entrepreneurial activity within a country and identifies different types and phases of
entrepreneurship.

The GEM research project has three main objectives: 5

x To measure differences in the level of early-stage entrepreneurial activity among

countries;
x To uncover factors determining the national levels of entrepreneurial activity; and
x To identify policies that may enhance the national level of entrepreneurial activity.

These objectives are explored in the context of a theoretical model illustrated in Figure 1.

The GEM 2008 report has adopted the country classifications outlined by the 2008-2009
Global Competitiveness Index (GCI). According to the GCI, countries are classified into factor-
driven economies, efficiency-driven economies and innovation-driven economies based on
their stage of economic development. 6 This is a useful categorisation for GEM participating
countries in view of the relationship between entrepreneurship and economic development
at different phases of development. Each country has to give emphasis to certain conditions
and requirements in order to nurture entrepreneurship depending on where it is in the
development process. The role played by entrepreneurial activity also varies depending on a
country’s level of development.

Entrepreneurial activity takes place within a broader economic system that must provide the
necessary “oxygen” of resources, incentives, markets, and supporting institutions to the
growth of new firms. In this regard, global economic institutions play an important role.
Within the GEM conceptual model, this is captured by the Entrepreneurial Framework
Conditions (EFCs), which are considered to be the main determinants of a nation’s
entrepreneurial environment. 7 These conditions specifically, and variously, influence the
level of entrepreneurship in an economy and combined with entrepreneurial opportunity
and entrepreneurial capacity determine the rate of entrepreneurial activity. In turn,
entrepreneurial activity contributes to economic growth and prosperity. Definitions for each
of the nine EFCs are presented in Box 1 (page 4).

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 Figure 1. GEM Conceptual Model
Basic requirements
- Institutions
- Infrastructure
- Macroeconomic Established Firms
stability
(Primary Economy)
- Health and primary
education

Efficiency enhancers
New branches, firm
- Higher education & growth
training National
Economic
- Goods market
Growth
efficiency Entrepreneurship
(Jobs and
Social, - Labour market Technical
Cultural, efficiency Attitudes:
Perceived opportunities Innovation)
Political - Financial market
Context Perceived capacity
sophistication
- Technological
readiness Activity:
- Market size Early-stage
Persistence
Exits

Innovation and
entrepreneurship Aspirations:
Growth
- Entrepreneurial finance Innovation
- Government Social value creation
entrepreneurship
programs
- Entrepreneurship
education
- R&D transfer
- Commercial, legal
infrastructure for
entrepreneurship
- Entry regulation

Source: Global Entrepreneurship Monitor, 2008 Executive Report, p. 10.

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 Box 1: GEM Entrepreneurial Framework Conditions

The nine Entrepreneurial Framework Conditions (EFCs) considered in the GEM research are outlined
8
below . They are not listed in any assumed order of importance.
EFC1: Financial Support: The availability of financial resources, equity, and debt for new and growing
firms, including grants and subsidies.
EFC2: Government Policies: The extent to which government policies, reflected in taxes or regulations
or the application of either, are either size-neutral or encourage new and growing firms. Subsequent
empirical studies have shown that there are two distinct dimensions, or sub-divisions of this EFC. The
first covers the extent to which new and growing firms are prioritised in government policy, generally.
The second is about regulation of new and growing firms.
EFC3: Government Programmes: The presence and quality of direct programmes to assist new and
growing firms at all levels of government (national, regional, and municipal).
EFC4: Education and Training: The extent to which training in creating or managing small, new, or
growing businesses is incorporated within the educational and training system at all levels.
Subsequent empirical studies have shown that there are two distinct sub-dimensions to this EFC:
primary-and secondary-school level entrepreneurship education and training, and post-school
entrepreneurship education and training.
EFC5: Research and Development (R&D) Transfer: The extent to which national R&D will lead to new
commercial opportunities and whether or not these are available for new, small, and growing firms.
(The relative level of R&D and estimates of the stock of accumulated knowledge is covered under
“Technology” as a General National Framework Condition.)
EFC6: Commercial and Professional Services Infrastructure: The presence of commercial, accounting,
and other legal services and institutions that allow or promote the emergence of new, small, or
growing businesses.
EFC7: Internal Market Openness: The extent to which commercial arrangements undergo constant
change and redeployment as new and growing firms compete and replace existing suppliers,
subcontractors, and consultants. Subsequent empirical studies have shown that there are two distinct
sub-dimensions to this EFC: Market Change, that is, the extent to which markets change dramatically
from year to year, and Market Openness, or the extent to which new firms are free to enter existing
markets.
EFC8: Physical Infrastructure: Ease of access to available physical resources—communications,
utilities, transportation, land or space—at a price that does not discriminate against new or growing
firms. (Presence and quality of these physical resources are covered as a General National Framework
Condition.)
EFC9: Cultural and Social Norms: The extent to which existing social and cultural norms encourage, or
do not discourage, individual actions that may lead to new ways of conducting business or economic
activities and may, in turn, lead to greater dispersion of personal wealth and income. Subsequent
empirical studies have shown that there are two distinct sub-dimensions to this EFC: National
Entrepreneurial Culture, or the extent to which the national culture encourages entrepreneurship,
and Respect for Entrepreneurs, or the extent to which entrepreneurs have high status.
Source: Global Entrepreneurship Monitor, 2007 Executive Report, p. 41. Revised to reflect adaptations to the list
of EFCs as per the National Experts Survey (NES) in the 2008 GEM research cycle.

GEM research is based on the recognition that entrepreneurship is a complex phenomenon

that spans a variety of contexts. The varied definitions in the entrepreneurship literature
reflect this complexity. In line with its objectives, GEM takes a broad view of
entrepreneurship and focuses on the role played by individuals in the entrepreneurial
process. Unlike most entrepreneurship data sets that measure newer and smaller firms,
GEM studies the behaviour of individuals with respect to starting and managing a business.
This differentiates GEM from other data sets, most of which record firm-level data on (new)
firm registrations. New firms are most often started by individuals, and individuals typically
determine the entrepreneurial orientation and behaviour of established businesses,
regardless of size.

Page | 4
An important guiding principle for GEM research is that entrepreneurship is a process. It
considers people in entrepreneurial activity in different phases, from the very early phase
when businesses are in gestation to the established phase and possibly discontinuation of
the business. An individual entrepreneur who has succeeded in maintaining a business has
gone through a process, and the characteristics of his or her actions are a very useful way to
study entrepreneurial behaviour. The entrepreneurial process starts before the firm is
operational. Someone who is just starting a venture and trying to succeed in a very
competitive market is an entrepreneur in spite of not having high-growth aspirations. On the
other hand, a person may be an established business owner who has been in business for
quite a number of years and still be innovative, competitive, and growth-minded. This
person is also an entrepreneur.

GEM provides an umbrella under which a wide variety of entrepreneurial characteristics,

such as motivations, innovativeness, competitiveness, and high-growth aspirations, can be
systematically and rigorously studied. Within this context, the GEM data collection covers
the life cycle of the entrepreneurial process and looks at individuals at the point when they
commit resources to start a business they expect to own themselves (nascent
entrepreneurs); when they currently own and manage a new business that has paid salaries
for more than three months but not more than 42 months (new business owners); and when
they own and manage an established business that has been in operation for more than 42
months (established business owners). Figure 2 summarises the entrepreneurial process.
GEM’s operational definitions are elaborated in Table 1.

Figure 2. The Entrepreneurial Process

Early-stage Entrepreneurial Activity (TEA)

Potential Nascent Owner-manager Owner-manager

entrepreneur: entrepreneur: of a new business of an established
opportunities, involved in setting (up to business (more
knowledge, and skills up a business 3.5 years old) than 3.5 years old)

Conception Firm birth Persistence

Source: Global Entrepreneurship Monitor, 2008 Executive Report, p. 11.

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 Table 1. Glossary of GEM Terminology and Main Indicators
Defined terms and Description
indicators
Nascent entrepreneur A person between 18-64 years of age who is actively trying to start a new venture
and has done something during the previous 12 months to help start a new
business that he or she will own, at least in part. Activities such as organising the
start-up team, looking for equipment, saving money for the start-up, or writing a
business plan would all be considered active commitments to starting a business.
Wages, salaries or any other payment have not been paid to the owner/co-owner
from the business for more than three months.
New firm entrepreneur An entrepreneur aged 18–64 years, who, at least in part, owns and manages a new
business that is between four and 42 months old and has not paid salaries, wages
or any other payments to the owner/co-owner for more than three months but not
more than 42 months.
Established business In addition to those adults who are currently involved in the early stages of a
owner business, there are also many individuals who have set up businesses that they
have continued to own and manage for a longer time. Established business owners
are owner-managers of an existing established business that has paid salaries,
wages or other payments to the owner/co-owners for more than 42 months.
Nascent Percentage of the 18-64 adult population who is currently a nascent entrepreneur
entrepreneurship rate (as defined above).
New business ownership Percentage of the 18-64 adult population who is currently an owner-manager of a
rate new business (as defined above)
Early-stage Percentage of the 18-64 adult population who is either a nascent entrepreneur or a
entrepreneurial activity new firm entrepreneur (as defined above). In some instances, this rate is less than
(TEA) rate the combined percentages for nascent and new firm entrepreneurs; in
circumstances where respondents qualify as both a nascent and a new firm
entrepreneur, they are counted only once.
Established business Percentage of the 18-64 adult population who is currently an owner-manager of an
ownership rate established business that has paid wages, salaries or other payments to the owner-
manager(s) for more than 42 months (as defined above).
Overall entrepreneurial Percentage of the 18-64 adult population who are involved in early-stage
activity rate entrepreneurial activity plus owner-managers of established businesses (as defined
above).
High-growth expectation Percentage of the 18-64 adult population who is either a nascent entrepreneur or
early-stage owner-manager of a new business (as defined above) and expect to employ at least
entrepreneurial activity 20 employees five years from now.
(HEA) rate
Business discontinuance Percentage of the 18-64 adult population who have, in the past 12 months,
rate discontinued a business, either by selling, shutting down, or otherwise
discontinuing an owner/management relationship with the business.
Potential Percentage of the 18-64 adult population (individuals involved in any stage of
entrepreneurial activity entrepreneurial activity excluded) who are not involved in entrepreneurial activity,
rate but have a positive perception of their own entrepreneurial capabilities and the
entrepreneurial opportunities in the area where they live.

Page | 6
 Research Methodology

The main data collection methods used in the GEM research are:

1. The Adult Population Survey (APS), conducted with a randomly-selected sample of a

minimum of 2,000 adults, aged 18-64 years old, and

2. The National Experts Survey (NES), conducted with 36 experts (key informants) on
various aspects of entrepreneurship, selected on the basis of their knowledge and
experience with respect to the nine entrepreneurial framework conditions.

The APS is the primary research tool of GEM. Each national team must survey at least 2,000
adults in their country using best practice in social science survey techniques. To ensure
consistency and cross-country comparability, each country conducts exactly the same survey
of its adult population at the same time of the year using the same methodology. The
individual country surveys are then harmonised into one master dataset. The 2008 GEM
global study was based on analysis of APS results from 43 countries and more than 150,000
adults across the world.

The 2008 APS survey questionnaire included a series of over 80 questions organised in seven
thematic areas to assess the attitudes and perceptions of the adult population towards
entrepreneurship, their level of engagement in entrepreneurial activity, the characteristics
of their enterprises, and their expectations for the future. The survey includes:

1. Questions to all respondents re: a) their activity related to trying to start a business
(nascent entrepreneur), ownership of a business less than 42 months old (young
business), ownership of a business more than 42 months old (mature business), and
ownership of a business that has been closed down; b) their exposure to other
entrepreneurs, perception of good opportunities for starting a business, self-
perception of their knowledge, skills and experience required to start a business,
and whether fear of failure would prevent them from starting a business; and
perceptions about the value of entrepreneurship in society (i.e. desirable career
choice, respect for entrepreneurs, and public media coverage of entrepreneurship).

2. Questions for people trying to start a business (e.g. the number of people involved
in the start-up, etc.) and for people with a young business (i.e. year in which first
wages, profits or payments in kind were received by the entrepreneur); the type of
business; innovativeness of the product or service; number of competitors; use of
new technologies or processes; percentage of customers outside the country (level
of export orientation); number of employees; motivations for starting the business;
start-up capital, where capital came from; expected return on their investment;
number of businesses they currently have or have had in the past.

3. Questions for all people who own a business: a) number of owners involved; year of
start-up; type of business; number of employees now, start-up capital, expectations
for employment five years from now; motivations for being in business; and other
questions asked in 2 above.

Page | 7
 4. Questions to people who have invested equity in someone else’s business (i.e.
business angels): personal equity invested in the business (es); the relationship to
the owner; and expected return on investment in the next 10 years.

5. Questions to people who had a business in the past but left the business (closed it,
sold it, left); reasons for the leaving the business and whether the business
continued in some form.

6. Questions on training received on starting a business: nature of the training,

whether part of formal education or official schooling, voluntary or compulsory,
provided by a college or university, provided by a local business association,
provided by a government agency, provided by a past or present employer; informal
learning from reading books, working in someone else’s business, gained from
online sources, etc.

7. Demographic questions of all respondents: gender, age, education, main

employment status, household income level, household size, city or rural location.

The Nielsen Company, a leader in market information and research, conducted the APS
survey process and collected data from different governorates in Egypt during the months of
July-August, 2008. The survey team consisted of English and Arabic interviewers. Survey data
was collected from a nationally-representative sample of 2,602 adults9, using a combination
of phone and face-to-face interviews.

The NES collected perceptions from a total of 36 national experts regarding the nine
Entrepreneurial Framework Conditions. Largely, they were asked to indicate the degree to
which they agreed with the veracity of a series of statements on a scale of 1 (completely
false) to 5 (completely true). They were also asked to state the three topics/areas that are
constraining entrepreneurial activity in Egypt, the three topics/areas that are fostering it,
and their top three recommendations for improving the level of entrepreneurship in the
country. The list of experts is presented in Annex 3.

Part II of this report presents the major findings from the APS survey, including comparisons
with the results from the other 42 countries in GEM 2008. Part III presents the views of the
experts from the NES survey, and Part IV discusses the policy implications of the GEM
research findings and concludes with recommendations to strengthen the scale and scope of
entrepreneurial activity in Egypt.

Page | 8
 Part II: Adult Population Survey (APS) Findings

GEM defines early-stage entrepreneurship as including “entrepreneurially-active” adults

who are in the process of setting up a business that they will own (wholly or in part) and/or
who currently own and manage an operating young business. The following section presents
the APS findings regarding these entrepreneurially-active adults in Egypt.

Early-Stage Entrepreneurial Activity Prevalence Rates in Egypt

The early-stage entrepreneurial activity (TEA) prevalence rate of the Egyptian adult
population (proportion of people aged 18-64 who are involved in entrepreneurial activity as
a nascent entrepreneur and/or as an owner-manager of a new business) is 13.1%. This
means that 13.1% of adults are either actively trying to start a business (7.9%) or own a
young business that is less than 42 months old (5.5%). Extrapolated to the total population,
an estimated 5.0 million Egyptians are engaged in early-stage entrepreneurial activity — 3.0
million in nascent activity and just over 2.0 million as owners of young businesses. In
addition, another 8.0% of the adult population owns and manages an established business
that has been in existence for more than 42 months. In total, 20.2% of adults in Egypt either
own a young or established business or are actively trying to get a new business started.

On average, 2.21 adults are involved in the start-up of each nascent enterprise, and 2.19
adults in the ownership of each new firm that is less than 42 months old. This suggests that
the 3 million nascent entrepreneurs were trying to start 1.34 million new enterprises in
2008; and the other 2 million early-stage entrepreneurs owned 938,000 young enterprises.
Over half of the nascent entrepreneurs are developing their enterprises in teams; almost
40% of them in teams of two or three. Entrepreneurs with young businesses are slightly
more likely to be operating as solo entrepreneurs, but again, almost 40% have two or three
co-owners. On the other hand, owners of established businesses are much more likely to be
sole owners — only a third of them are in co-ownership situations.

The total incidence of entrepreneurial experience in the adult population is quite high —
about a quarter of working age adults is either currently involved in some level of
entrepreneurial activity or has been in the past (37% of men and 13% of women). Serial
entrepreneurs (i.e. those previously involved in business creation) are well represented
among those currently involved in business creation, at about a third of nascent
entrepreneurs, about one in five of new business owners, and about one in six of established
business owners.

Results on the key entrepreneurial activity rate indicators for the 43 countries are compared
in Table 2. Egypt ranks 11th among the 43 countries on the early-stage TEA rate (third
column).

Page | 9
 Table 2. Prevalence Rates of Entrepreneurial Activity in the Adult Population in GEM
Countries, 2008
Country Nascent New Early-Stage Established Overall Business Sample GDP
Entrepre- Business Entrepre- Business Entrepre Discon- size per
neurial Owner- neurial Owner- -neurial tinuance Capita
Activity Managers Activity Managers Activity Rate (PPP
(%) (%) (TEA) (%) (%) (%) $US)
(%)
Bolivia 17.4 14.3 29.8 19.1 45.6 10.5 1,879 $4,333
Peru 19.7 6.8 25.6 8.3 32.7 10.4 1,990 8,585
Colombia 13.8 11.7 24.5 14.1 36.7 7.1 2,000 8,337
Angola 19.3 4.1 22.7 4.1 26.0 23.4 1,490 6,443
Dominican 11.7 9.8 20.4 8.2 27.9 11.3 2,013 8,559
Ecuador 8.7 9.1 17.2 11.9 28.1 5.9 2,142 7,518
Argentina 8.5 8.5 16.5 13.5 29.6 10.2 1,731 14,354
Jamaica 9.0 7.1 15.6 9.1 24.3 8.9 2,399 7,876
Macedonia 7.2 7.7 14.5 11.0 24.8 5.3 1,746 9,128
Chile 8.6 5.8 14.1 6.8 20.2 5.8 4,068 14,688
Egypt 7.9 5.5 13.1 8.0 20.2 6.3 2,603 5,904
Mexico 9.3 4 13.1 4.9 17.8 13.6 2,433 14,382
Brazil 2.9 9.3 12.0 14.6 26.4 3.5 2,000 10,298
Uruguay 7.7 4.4 11.9 7.9 19.3 9.1 1,645 12,707
India 6.9 4.9 11.5 16.5 27.6 10.1 1,919 2,787
United States 5.9 5.0 10.8 8.3 18.7 4.4 3,441 47,025
Iceland 6.5 3.6 10.1 7.1 16.7 3.4 2,002 39,665
Korea Republic 3.5 6.5 10.0 12.8 22.6 4.7 2,000 26,341
Greece 5.3 4.6 9.9 12.6 22.0 2.9 1,962 30,661
Iran 5.9 3.4 9.2 6.8 15.7 5.2 3,119 11,209
Bosnia &
6.4 2.7 9.0 8.7 17.1 5.0 1,586 7,618
Herzegovina
Norway 5.0 4.0 8.7 7.7 15.8 3.4 1,614 55,199
South Africa 5.7 2.1 7.8 2.3 9.9 5.8 2,719 10,187
Croatia 4.9 2.8 7.6 4.8 12.3 2.9 1,696 16,474
Serbia 4.0 3.6 7.6 9.3 16.5 3.7 1,813 10,911
Ireland 3.3 4.3 7.6 9.0 16.3 3.6 1,924 42,780
Finland 4.1 3.3 7.3 9.2 16.0 2.1 2,011 36,844
Spain 3.3 3.9 7.0 9.1 14.8 1.3 30,879 30,757
Hungary 3.8 2.8 6.6 5.3 11.8 1.1 1,994 19,830
Latvia 3.9 2.8 6.5 3.0 9.4 1.7 2,011 17,801
Israel 3.5 3.1 6.4 4.5 10.6 3.2 1,778 28,245
Slovenia 4.1 2.4 6.4 5.6 11.8 1.3 3,019 28,894
Turkey 3.2 3.0 6.0 4.8 10.7 3.9 2,400 13,447
United Kingdom 3.1 2.9 5.9 6.0 11.7 2.1 5,892 36,571
France 3.8 1.9 5.6 2.8 8.2 2.2 1,573 34,262
Japan 3.2 2.3 5.4 7.9 12.7 1.0 1,879 34,501
Netherlands 2.1 3.2 5.2 7.2 12.3 1.6 2,534 40,434
Italy 2.0 2.7 4.6 6.5 11.0 1.8 2,970 30,705
Denmark 2.3 2.3 4.4 4.4 8.4 1.9 2,012 38,208
Romania 2.5 1.6 4.0 2.1 5.9 2.2 1,667 12,698
Germany 2.4 1.5 3.8 4.0 7.7 1.8 4,751 35,552
Russia 1.7 2.0 3.5 1.1 4.4 1.1 1,660 16,161
Belgium 2.0 0.9 2.9 2.6 5.3 1.5 1,997 36,322
Source: Global Entrepreneurship Monitor, 2008 Executive Report.

Page | 10
A cross-national comparison of the data reveals significant variation in the level of early-
stage entrepreneurial activity among GEM-2008 countries by phase of economic
development (Figure 3). Here, Egypt ranks 5th on the TEA rate among the factor-driven
economies. Factor-driven economies are defined by the World Economic Forum as those
competing on the basis of their factor endowments, primarily low-wage and unskilled labour
and natural resources (see endnote 6 for more explanation).

Figure 3. Early-Stage Entrepreneurial Activity (TEA)

% of adult population between 18-64 years

35%

30%

25%

20%

15%

10%

5%

0%
Egypt

Mexico

Jamaica
Ecuador

Greece
Brazil

Belgium

Slovenia
Iran

Bolivia
Russia

Uruguay

Macedonia

Denmark

Japan

Ireland
Peru

France

Spain
Finland
Romania
Turkey
Latvia
Hungary
Serbia

Iceland
Angola
Colombia

Chile

Argentina

Norway
Croatia

Dominican Rep.

Germany

United States
India

Netherlands

United Kingdom
Israel
South Africa
Bosnia and Herz.

Italy

Korea Rep.
Factor-driven Efficiency-driven economies Innovation-driven economies
economies

Note: The mid-point on the vertical bar is the mean rate of entrepreneurial activity for each country. The vertical
bars around the average value represent the confidence interval, a measure of the precision of the estimates. If
the vertical bars do not overlap, then the differences are statistically significant at the 0.5 level.

Although the level and nature of entrepreneurial activity differs across countries, the
importance of entrepreneurship for economic development is widely acknowledged. Earlier
GEM reports demonstrated a systematic, U-shaped relationship between a country’s level of
economic development and its level and type of entrepreneurial activity. 10 Figure 4
illustrates this U-shaped curve relationship between per capita GDP and early-stage
entrepreneurial activity for the 43 countries in GEM 2008, a pattern that has been consistent
in GEM data over the years. 11

As a matter of explanation, in countries with low levels of per capita income, the national
economy is characterised by the prevalence of many very small businesses.12 As per capita
income increases, industrialisation and economies of scale allow larger and established firms
to increase their relative role in the economy as they satisfy growing market demand. An
important factor for achieving growth is the presence of macroeconomic and political
stability, which is reflected in the development of strong institutions. The increasing role of
large firms may be accompanied by a reduction in the number of new businesses, since a
growing number of people are able to find stable employment in large industrial plants.
Thus, for countries with low levels of per capita income, a decreasing prevalence rate of
entrepreneurial activity may be a good sign, especially if this is accompanied by economic

Page | 11
growth and political stability. As further increases in income are experienced, the role played
by the entrepreneurial sector may increase, as more individuals can access the resources to
go into business for themselves in an economic environment that allows the exploitation of
opportunities.

Figure 4. Early-Stage Entrepreneurial Activity Rates by Per Capita GDP, 2008

30%
BO
Prevalence rate of early-stage entrepreneurial

25% PE
CO
AO

20% DO

EC AR
activity

15% JM
MK MX
EG CL
BR UY
10% IN US
KR GR IE
BA IR FI
ZA HR SI NO
YU IL ES
5% TR LV HU FR JP UK NL
RO RU IT DE DK
BE
0%
0 10,000 20,000 30,000 40,000 50,000 60,000
GDP per Capita, in Purchasing Power Parities (PPP)

Source: GEM APS, and IMF: World Economic Outlook Database (October 2008 edition).

Although the annual snapshot of early-stage entrepreneurial activity consistently shows a U-

shape of the fitted line over the years, it does not imply that all countries follow this pattern
over time. There are also other important national conditions that determine the rate of
early-stage entrepreneurial activity, such as demographic, cultural, and institutional
characteristics. Figure 4 reflects some of these dimensions. For example, it shows that
countries with similar geographic backgrounds and traditions are grouped together. A group
of EU-15 countries is clustered close together on the right-hand side below the lowest dip of
the curve. Countries in Eastern Europe and Central Asia are situated on the left-hand side,
below the curve, and people in these countries are not as much engaged in entrepreneurial
activity as in Latin American countries with similar levels of per capita GDP. Wealthier
countries above the curve on the right-hand side are industrialised countries outside of the
EU – with Ireland as a notable exception. Japan’s rate of early-stage entrepreneurial activity
has, over the years, been consistently lower than the fitted curve, but has been increasing in
recent years. It is noted that Egypt also falls below the line of best fit.

Motives for Becoming an Entrepreneur

GEM makes a distinction between “necessity entrepreneurship” (having to become an

entrepreneur because there are no better employment options) and “opportunity
entrepreneurship” (choosing to start an enterprise based on pursuit of an unexploited or
underexploited business opportunity). 13 Table 3 presents the share of opportunity and
necessity entrepreneurship in TEA rates for all GEM countries.

Page | 12
 Table 3. Motives for Early-Stage Entrepreneurial Activity - GEM Countries
“Opportunity” “Necessity” Ratio of
Country (listed in
share of TEA share of TEA “Opportunity” to
descending GDP per capita)
(%) (%) “Necessity”
Norway 93 7 13.3:1
United States 87 13 6.7:1
Ireland 80 20 4.0:1
Netherlands 90 10 9.0:1
Iceland 94 6 15.7:1
Denmark 93 7 13.3:1
Finland 87 13 6.7:1
United Kingdom 85 15 5.7:1
Belgium 89 11 8.1:1
Germany 73 27 2.7:1
Japan 77 23 3.3:1
France 89 11 8.1:1
Spain 85 15 5.7:1
Italy 84 16 5.3:1
Greece 69 31 2.2:1
Slovenia 88 12 7.3:1
Israel 76 24 3.2:1
Korea Republic 59 41 1.4:1
Hungary 70 30 2.3:1
Latvia 78 22 3.5:1
Croatia 71 29 2.4:1
Russia 78 22 3.5:1
Chile 76 24 3.2:1
Mexico 85 15 5.7:1
Argentina 61 39 1.6:1
Turkey 60 40 1.5:1
Uruguay 74 26 2.8:1
Romania 60 40 1.5:1
Iran 67 33 2.0:1
Serbia 65 35 1.9:1
Brazil 67 33 2.0:1
South Africa 79 21 3.8:1
Macedonia 51 49 1.0:1
Peru 68 32 2.1:1
Dominican Republic 69 31 2.2:1
Colombia 58 42 1.4:1
Jamaica 52 48 1.1:1
Bosnia & Herzegovina 57 43 1.3:1
Ecuador 71 29 2.4:1
Angola 57 43 1.3:1
Egypt 81 19 4.3:1
Bolivia 71 29 2.4:1
India 76 24 3.2:1
Source: GEM 2008.

The main motive for starting a business for four out of five early-stage Egyptian
entrepreneurs is to pursue a market opportunity. Only 19% reported that their involvement
is based on necessity motives. Thus, Egypt had 4.3 times more opportunity motivated

Page | 13
entrepreneurial activity than necessity motivated. This is much higher than in other GEM
countries with low levels of GDP per capita (i.e. the factor-driven economies). This is a
somewhat unexpected feature for a developing economy. Normally, a large proportion of
people in developing countries become entrepreneurs because they have no other choice
due to a lack of employment alternatives and social safety nets, few resources, and the need
to improve life conditions and alleviate poverty. In innovation-driven economies,
opportunities are expected to be more abundant and individuals have more alternatives to
make a living. As countries advance in GDP per capita, the rate of necessity
entrepreneurship generally decreases with a rise in the share of opportunity TEA. In this
respect, Egypt performs more like a developed country than a developing one.

Demographics and Entrepreneurial Activity in Egypt

The TEA rate for Egypt was calculated for different gender, education, age and household
income groups. The following sections highlight the results of this demographic analysis for
early-stage entrepreneurs.

Gender and Entrepreneurial Activity

Men are more than 3 times as likely as women in Egypt to be engaged in early-stage
entrepreneurial activity. Compared to the average TEA rate of 13.1%, the TEA rate for
Egyptian adult men is 19% and only 6% for adult women (Figure 5). On an absolute basis,
men make up just over 80% of early-stage entrepreneurs in Egypt, and women comprise the
remaining just less than 20%. This is more or less consistent with the proportion of women-
owned micro and small enterprises (MSEs) as a percentage of all MSEs reported in the 2006
Egyptian Labour Market Population Sample (ELMPS).14

Figure 5. Opportunity and Necessity TEA Rates - Total, Male, Female - Egypt 2008
#/100 adult persons (99% confidence levels)

25

20

15

10

Source: GEM APS, 2008.

Note: M = Male; F = Female.

Page | 14
There is significant variation between male and female TEA rates across countries (Figure 6).
To a great extent, this reflects the different prevailing cultures and customs regarding female
involvement in economic activities. Relative to the other 42 GEM countries, the female TEA
rate in Egypt is about three-quarters of the average rate. Accordingly, Egypt has the second
largest TEA rate gender gap, preceded by Turkey and followed by Iran.

Figure 6. Early-Stage Entrepreneurial Activity Rates by Gender - GEM Countries, 2008

Percentage of (fe)male popualtion

35%
Male
30%
between 18-64 years

Female
25%
20%
15%
10%
5%
0%

Israel
Ireland
Iran

Greece
Egypt

Brazil

Peru

Denmark

Iceland
Turkey
Bosnia and Herz.

Jamaica
Angola

Croatia

Chile
Mexico

Japan
Argentina

United Kingdom

Spain
Germany
Ecuador

Russia
Latvia
Hungary
Serbia

Uruguay

Belgium

Norway
Colombia
India

Dominican Rep.

Italy
Bolivia

South Africa
Macedonia

Netherlands
Romania

France

Finland
Korea Rep.
Slovenia

United States
Source: GEM APS.

The status of women in Egypt is complex and contradictory. In many regards, women have
made a number of significant achievements in recent decades; nevertheless women
constitute only 23.9% of the total labour force and occupy 25.9% of legislative and
managerial positions. 15 This reflects to a large extent the societal perception of women as a
mother and housewife.

According to the Ministry of Finance (2007), Egyptian women face two major challenges. The
first is the emergence of a cultural, social and economic environment that is more
favourable to the emergence of women as
When national experts were asked
entrepreneurs and the second is having adequate
about their perceptions of women’s
access to the resources and support needed for entrepreneurship and the level of its
sustainability and growth. 16 Lack of assistance with support in their countries, Egypt
th
product development, marketing and access to ranked 28 among 31 countries
business information are considered among the participating in the NES.
main growth constraints facing women-owned and
operated businesses in Egypt. 17

Age and Entrepreneurial Activity

The cross-national comparison of the GEM 2008 countries reveals that the 25-34 age group
has the highest early-stage entrepreneurial activity prevalence rate regardless of the

Page | 15
countries’ phase of economic development (Figure 7). Populations in the three categories of
countries show a decline in early-stage entrepreneurial activity prevalence rates after the
age of 35.

Figure 7. Early-Stage TEA Rates by Age Group and Phase of Development, 2008

30% 18-24 YRS

25-34 YRS
25%
35-44 YRS
TEA (% of adult population)

45-54 YRS
20%
55-64 YRS

15%

10%

5%

0%
Factor-driven economies Efficiency-driven Innovation-driven
economies economies

Source: Global Entrepreneurship Monitor, 2008 Executive Report, p. 26.

In Egypt, this pattern is also evident. An average of just over 15% of the 25-34 age group is
engaged in early-stage entrepreneurial activity, followed by 12.3% of the 18-24 age group
and 11.6% of the 35-44 age group (Figure 8), although it is noted that these rates are lower
than the average for factor-driven economies.

Figure 8. TEA Rate by Age Group - Egypt, 2008

20
#/100 persons (99% confidence intervals)

18
16
14
12
10
8
6
4
2
-
18-24 Yrs:TEA 25-34 yrs:TEA 35-44 yrs:TEA 45-54 yrs:TEA 55-64 yrs:TEA

Note: The mid-point on the vertical bar is the mean rate of entrepreneurial activity for each age group. The
vertical bars around the average value represent the confidence interval, a measure of the precision of the
estimates. If vertical bars do not overlap, then the differences are statistically significant at the 0.5 level.

Page | 16
In terms of actual numbers, over 60% of the early-stage Egyptian entrepreneurs are under
35 years of age and over 80% are under 44 (Figure 9), on average younger than the overall
adult population. They are over-represented in the 18-24 and 25-34 age groups, which
account for about 62% of early-stage entrepreneurs but less than 53% of the adult
population. On the other hand, the 45-64 age group comprises about a quarter of the adult
population but less than 18% of the early-stage entrepreneurs.

Figure 9. Age Distribution of Early-Stage Entrepreneurs Compared to all Respondents –

Egypt, 2008

35%
30%
25%
20%
15%
10%
5%
0%
18-24 25-34 35-44 45-54 55-64

Age distribution of adult population Age distribution of early-stage entrepreneurs

Source: GEM APS Egypt, 2008.

The TEA rate, for both men and women, is highest in the 25-34 age group. This may be an
indication that young people are drawn to entrepreneurship as a means to circumvent
unemployment and or underemployment. However, because TEA rates are much higher for
men than women in all age categories, the women’s share of the actual number of
entrepreneurially-active persons is lower (Figure 10). The female share of early-stage
entrepreneurs is highest in the 55-64 age group; almost 40% of the early-stage
entrepreneurs in this age group are women.

Figure 10. Male-Female Share of Early-Stage Entrepreneurs by Age Group – Egypt, 2008
TEA entrepreneurs (% of age group)

100%

80%

60%

40%

20%

0%
Total 18-24 25-34 35-44 45-54 55-64

Age groups
Male share Female share

Source: GEM APS 2008.

Page | 17
Finally, it is interesting to compare the pattern of entrepreneurial prevalence rates in the
different age groups for the three phases of entrepreneurial activity: as nascent
entrepreneurs, owners of baby businesses (less than 42 months old), and owners of
established businesses (more than 42 months old) (Figure 11). This shows that the total rate
of involvement in any kind of entrepreneurial activity in Egypt is highest in the 45-54 age
group. In this group, 12.5% are established business owners, 3.4% own baby businesses, and
7.0% are nascent entrepreneurs actively trying to get a business started. Adults in the 25-34
age group have the third highest overall rate of engagement in some form of
entrepreneurial activity, but their pattern of engagement is somewhat different. They are
more likely to be involved in nascent activity (10.2% of them) than as an owner of a baby
(5.4%) or established business (5.2%). Compared to the 55-64 age group, the 25-34 age
group is more likely to be trying to start a business - 10.2% versus 3.3%. The bottom line is
that older age groups have a higher level of involvement as established business owners,
and the younger age groups have a higher level of involvement in early-stage
entrepreneurial activity, particularly as nascent entrepreneurs.

Figure 11. Entrepreneurial Activity Rates by Age and Phase of Entrepreneurial Process –
Egypt, 2008

25%
% of adult population in age

20%
category

15%

10%

5%

0%
18-24 25-34 35-44 45-54 55-64
Age group

Nascent entrepreneurs Baby business owners Established business owners

Education and Entrepreneurial Activity

TEA rates vary considerably according to the level of completed education of the Egyptian
adult population. Overall, the TEA rate is lowest among adults that have not completed
elementary education (“none”) and highest among those with a post-secondary education18
(8.9% and 17.3% respectively) (Figure 12). However, it should be noted that the post-
secondary education cohort made up only 3.3% of the adult population and less than 5% of
the early-stage entrepreneurs (see Figure 13). The second highest TEA rate is for university
degree holders (16.5%), but again this group makes up only 12.7% of the adult population
and 17.6% of the early-stage entrepreneurs. While this pattern of lowest and highest TEA
rates by level of education holds for women, the lowest TEA rate for men is found in the
group with “some secondary” education.

Page | 18
 Figure 12. TEA Prevalence Rates by Education and Gender – Egypt, 2008

30%

25%
% (of adult population)

24.0%
22.7%
20% 19.8%
16.9% 17.3% 16.5%
15% 14.6%
13.1%
10% 10.2%
8.9% 8.5% 7.8%
5% 4.0% 4.3% 4.5%

0%
None Some secondary Secondary degree Post-secondary University
Bachelor's degree
Mean TEA rate Male TEA Female TEA or higher

Although TEA rates are lower for members of the adult population with less than a
completed secondary education, this group makes up more than a third of early-stage
entrepreneurs — a quarter of early-stage entrepreneurs has not completed elementary
school and 10% has only some secondary education (Figure 13). Early-stage male
entrepreneurs with a completed secondary education are the most populous group – almost
45% of the men. Among women, the most populous group has not completed elementary
education; over 35% of the female early-stage entrepreneurs are in this group.

The fact that the higher educated groups in Egypt have a higher propensity towards
entrepreneurial activity suggests that the overall low level of education is a barrier to the
growth of entrepreneurship in the country.

Figure 13. Distribution of Adult Population and Early-Stage Entrepreneurs by Level of

Completed Education – Egypt, 2008

45% None
40%
35% Some secondary
30%
25% Secondary degree
20%
15% Post-secondary
10%
5%
University Bachelor's degree or
0% higher
population

entrepreneurs

entrepreneurs

entrepreneurs
% of adult

% of female
early-stage

early-stage
% of early-
sample

% of male
stage

Page | 19
Women’s share of early-stage entrepreneurs is highest in the group with the lowest level of
education (almost 30%), followed by those with post-secondary education (Figure 14).

Figure 14. Male-Female Share of Early-Stage Entrepreneurial Activity by Education

100%
% of early-stage entrepreneurs

80%

60%

40%

20%

0%
None Some secondary Secondary Post-secondary University
degree Bachelor's
degree or
higher

Male share of early stage entrepreneurs Female share of early-stage entrepreneurs

Compared to other GEM countries, Egypt’s has a lower representation of early-stage

entrepreneurs with university degrees, and a relatively higher proportion with less than a
secondary education.

The 2008 GEM APS included a special topic section to explore the extent to which the adult
population in GEM countries had participated in any form of education or training in starting
a business during, after or outside of school, whether on a compulsory or voluntary basis.
The results by country groups are presented in Table 4.

The proportion of the working age population with ANY training in starting a business ranged
from a low of 6.3% in Turkey to a high of 47.9% in Finland. In all factor-driven economies,
just over half of efficiency-driven economies and almost three-quarters of innovation-driven
economies, men were significantly more likely to have received training than women. This
possibly reflects differences in school attendance and workforce participation rates among
males and females at different levels of economic development, as well as differences in
entrepreneurial attitudes, aspirations and activity rates. 19

Only 7.5% of the Egyptian adult population reported having taken any start-up training, the
second lowest of the GEM countries. Only 4.7% had received training on starting a business
as part of any school-based activity at the primary and secondary levels, and less than 1% in
any such compulsory activity. Very few adult Egyptians had participated in any training in
starting a business after leaving elementary or secondary school.

Page | 20
 Table 4. Percentage of the 18-64 Population that Received Voluntary or Compulsory
Training in Starting a Business During or After Schooling
School - School - School - After After After Any
*
voluntary compulsor any schooling** schooling - schooling training
y - voluntary compulsory - any
Factor-driven economies
Bolivia 8.2 2.4 10.6 10.3 3.9 14.2 19.1
Bosnia &
12.7 0.8 13.5 8.1 2.5 10.6 19.9
Herzegovina
Colombia 19.2 4.0 23.2 20.7 8.7 29.4 40.0
Ecuador 16.1 4.3 20.4 8.3 7.3 15.6 27.2
Egypt 3.8 0.9 4.7 2.1 2.1 4.2 7.5
India 3.3 1.7 5.0 3.8 7.0 10.8 13.1
Iran 8.9 6.6 15.4 9.2 10.3 19.5 28.9
Average 10.3 3.0 13.3 8.8 6.2 14.9 22.2
Efficiency-driven economies
Argentina 6.4 3.2 9.6 7.3 3.6 10.9 17.4
Brazil 4.5 0.8 5.3 1.6 5.0 6.6 9.4
Chile 16.8 8.5 25.3 18.9 13.8 32.7 42.5
Croatia 8.6 11.1 19.7 8.0 7.6 15.6 27.6
Dominican
4.7 0.6 5.3 1.9 2.1 4.0 7.7
Republic
Hungary 2.8 14.2 17.1 1.4 8.6 10.0 24.4
Jamaica 6.8 9.2 16.0 2.9 6.4 9.3 21.0
Latvia 6.1 8.4 14.5 9.0 10.1 19.1 28.0
Macedonia 10.3 2.3 12.6 7.2 3.7 10.9 19.1
Mexico 5.8 3.6 9.5 3.6 5.9 9.5 15.5
Peru 11.5 2.9 14.4 12.2 12.5 24.7 29.6
Romania 3.3 2.2 5.5 2.8 1.8 4.6 8.0
Serbia 1.5 1.5 3.0 2.6 4.9 7.6 10.2
South
6.6 2.7 9.3 3.8 5.2 9.0 13.8
Africa
Turkey 1.9 0.6 2.5 1.9 2.3 4.2 6.3
Uruguay 9.7 1.0 10.7 9.5 8.9 18.4 24.1
Average 6.7 4.6 11.3 5.6 6.3 12.3 19.0
Innovation-driven economies
Belgium 17.8 7.0 25.0 3.0 15.2 18.2 33.3
Denmark 2.4 7.1 9.5 2.1 11.9 14.0 22.0
Finland 10.1 7.8 17.9 19.6 20.8 40.4 47.9
France 5.3 4.9 10.2 5.9 6.6 12.5 18.1
Germany 10.3 2.0 12.3 8.4 4.7 13.2 21.0
Greece 5.0 1.2 6.1 6.4 6.5 12.9 17.0
Iceland 6.5 5.3 11.8 11.3 6.5 17.8 26.7
Ireland 8.1 5.8 14.0 9.9 7.6 17.5 26.1
Israel 4.1 1.7 5.8 4.5 4.1 8.6 12.8
Italy 6.0 4.2 10.2 5.3 3.7 9.1 16.5
Japan 2.8 2.1 4.9 10.1 5.6 15.7 17.4
Korea Rep. 2.7 3.2 5.9 3.8 5.4 9.2 13.6
Slovenia 13.0 11.3 24.3 10.3 12.3 22.6 35.7
Spain 9.5 3.0 12.5 7.9 6.8 14.7 21.9
United
5.8 3.1 8.9 7.7 6.1 13.8 19.5
Kingdom
Average 7.3 4.6 11.9 7.7 8.3 16.0 23.3
Note: *“Voluntary” includes those reporting voluntary training or a mix of voluntary and compulsory training.
**“After schooling” refers to after they officially ended their primary or secondary schooling.

Page | 21
Participation in entrepreneurship education and training is an important indicator because
exposure through education and training influences not only the level of entrepreneurial
activity but the quality of businesses started. Of the non-entrepreneurially-active population
in Egypt, adults who had never received any start-up training were much less likely than
those who had to believe that they had the skills, knowledge and experience to start a
business (51% for the former group compared to 75% for the latter group), especially if that
training was compulsory.

Household Income and Entrepreneurial Activity

Early-stage entrepreneurial activity prevalence rates and established business ownership

rates also vary by household income groups, but generally rise with increases in annual
household income. TEA rates are the highest among adults in households with annual
income of LE 1,501-2000 and lowest among adults living in the lowest income households
(Figure 15). This appears to be the case for both men and women, although the TEA pattern
for women is quite different than that for men. The lower TEA rates among the lowest
household income groups may be attributed to a lack of financial resources to support daily
life, shortage (or absence) of collateral in the case of seeking loans, etc., factors that would
hinder their ability to pursue entrepreneurial activity.

Figure 15. TEA Prevalence Rates by Household Income and Gender - Egypt, 2008

35%
% (of total population)

30%
25%
20%
15%
10%
5%
0%
1+
0

0
0

0
00

50

00

00
50

70

00

00
-3

1-

1-

1,

2,

4,
1,

4,
1-

1-

1-
0

1-
30

50

LE
00

50

00
70
LE

LE

LE

1,

1,

2,
LE

LE

LE

LE

Mean TEA rate Male TEA rate Female TEA rate

On an absolute basis, early-stage entrepreneurs are more likely than the general population
to live in households with an annual household income of more than LE 700, and are
significantly under-represented in households with annual incomes of less than LE 300
(Figure 16). Just over 4% of the adult population sample lives in households with income of
more than LE 4,000 per year, but over 8% of the early-stage entrepreneurs.

Page | 22
 Figure 16. Household Income Distribution of Early-Stage Entrepreneurs Compared to all
Respondents

30%

25%

20%

15%

10%

5%

0%

30
0 00 00 00
0 5 00 0 00 0 00 01
+
0- 0 1-5 0 1-7 1 -1, 1 -1, 1 -2, 1 -4, 4, 0
LE L E3 L E5 70 , 00 , 50 , 00 LE
LE LE
1
LE
1
LE
2

Income distribution of all respondents Income distribution of early-stage entrepreneurs

Women’s share of early-stage entrepreneurs is highest in the lowest annual household

income groups, making up more than half of those from households with less than LE 301 of
annual income, and over 40 percent of those from households with less than LE 501 of
annual income (Figure 17). It should be noted, however, that only a very small portion of
early-stage entrepreneurs come from the lowest household income group – less than 3%.

Figure 17. Male-Female Share of Early-Stage Entrepreneurs by Household Income Group -

Egypt, 2008

100%
% of early-stage entrepreneurs

80%

60%

40%

20%

0%
LE 0-300 LE 301-500 LE 501-700 LE 701- LE 1,001- LE 1,501- LE 2,001- LE 4,001+
1,000 1,500 2,000 4,000

Male share of early-stage entrepreneurs Female share of early stage entrepreneurs

Page | 23
Labour Force Status and Entrepreneurial Activity

Entrepreneurial activity rates in Egypt vary among groups with different types of attachment
to the labour force (Figure 18). On this dimension, the highest TEA rate group is women who
are working part-time. Over 30% of women who are working part-time indicated that they
were either trying to get a business started or already owned a young business; much higher
than the 20% TEA rate for men who are working part-time. The second highest TEA rate of
28% is among men who are students. The TEA rates for women who are not in the labour
force (e.g. students, homemakers) are very low. It is also very low for people who are retired
or disabled.

Figure 18. TEA Prevalence Rates by Labour Force Status and Gender - Egypt, 2008
#/100 Persons [95% Confidence Intervals]

50

40

30

20

10

0
er

ed
ed

er

nt
e

er
nt

er
m
m

im
im

ak

th

ak

th
de
de

bl
bl

-ti
-ti

l-t
l-t

,O

,O
sa
sa

em

em

tu
tu
t

t
ul
ul

ar

ar
ng

ng
di
di

:S
S
om

om
:F
:F

:P
:P

d/
d/

W
M

ki
ki

W
M

W
M

or
or

ire
ire

:H

:H
W

W
M

W
et
et

:R
:R

ot
ot

W
M

:N

:N
M

Note: M = men; W = women.

There are several interesting observations about the distribution of early-stage

entrepreneurs by labour force status (Figure 19). Over three quarters of the early-stage
entrepreneurs are employed on a full- or part-time basis. Although male students have a
high TEA rate, they make up only about 11% of the male early-stage entrepreneurs. There is
a high TEA rate among women who are working part-time and they make up almost a
quarter of the female early-stage entrepreneurs. Homemakers, on the other hand, have a
low TEA rate, but make up 44% of the early-stage women entrepreneurs and almost 9% of
all early-stage entrepreneurs. Female students have a very low TEA rate and account for only
4% of female early-stage entrepreneurs.

High TEA rates among various sub-groups of the population suggest there are opportunities
to target efforts with the aim of increasing the actual start-up of the enterprise from among
these early-stage entrepreneurs. Low TEA rates, such as among homemakers and female
students, suggest there may be equal opportunities to promote entrepreneurship as an
employment or career option.

Page | 24
 Figure 19. Labour Force Attachment of Early-Stage Entrepreneurs – Egypt, 2008

100%

80%
% of early-stage entrepreneurs

Not working; other

60%
Student
Homemaker
Retired/disabled
Working part-time
40%
Working full-time

20%

0%
All early-stage Male Female
entrepreneurs

On a gender basis, apart from the fact that women make up all of the homemakers, the
female share of early-stage entrepreneurs is highest among those who are working part-
time or are not in the labour force (Figure 20).

Figure 20. Male-Female Share of Early-Stage Entrepreneurs by Labour Force Attachment

100%

80%
Female share of early-stage
60% entrepreneurs

40% Male share of early-stage

entrepreneurs

20%

0%

Page | 25
Regional Variations and Entrepreneurial Activity

There are moderate differences in TEA rates on a regional basis. The average TEA rate ranges
from a high of 14.3% of the adult population in Cairo to 10.7% in Upper Egypt (Figure 21).
Being the major commercial centre in the country and hosting about a quarter of its
population 20, Greater Cairo inhabitants have more access to opportunity and markets, in
addition to availability of the required infrastructure, banks, professional services, and
telecom companies. Moreover, less densely populated regions in Egypt have poorer access
to markets, business services and basic infrastructure. In addition, they are still heavily
dependent on agriculture.

The most dramatic difference in regional TEA rates is gender-based. Women in Alexandria
and the Delta have the highest early-stage entrepreneurial activity rates (6.2% and 6.0%
among women respectively), followed by Cairo (5.1%), but very low TEA rates in Upper Egypt
(1.9%) and the Canal Zone/Frontier (0.8%).

Figure 21. TEA Prevalence Rates by Region and Gender - Egypt 2008

25%
%
.7
21

%
.8

%
19

.8

%
18

20% %

.4
% of adult population

.0

17
17
%
.3

%
14

.4

15%
13

%
.5

.5

.7
11

11

10
10%
2%

0%
1%

6.

6.
5.

5% 9%
8%

1.
0.

0%
Cairo Alexandra Delta Canal Upper Egypt
Zone/Frontier

TEA Male TEA Female TEA

The impact of this is demonstrated in Figure 22, which shows that women comprise a larger
share of early-stage entrepreneurs in the Delta (30%), Alexandria (22%) and Cairo (16%),
than in Upper Egypt (8.0%) and the Canal Zone/Frontier (2.4%).

Page | 26
 Figure 22. Male-Female Share of Early-Stage Entrepreneurial Activity by Region

100%
% of early-stage entrepreneurs

80%

60%

40%

20%

0%
Canal Zone/ Upper Egypt Cairo Alexandra Delta
Frontier

Male share of early-stage entrepreneurs Female share of early-stage entrepreneurs

Characteristics of the Nascent and Early-Stage Enterprises

This section highlights the major characteristics of the nascent and young enterprises being
developed by early-stage entrepreneurs, including findings on sectors of operation,
employment impacts, levels of start-up capital, nature of the markets in which they (will)
operate, innovation aspects, and growth expectations (including for high-growth
enterprises). Some comparisons are made with established enterprises that are more than
three and half years old. It also reports on the nature of informal investors and their
investments in other people’s early-stage enterprises.

Enterprise Sectors

The sector distribution of early-stage enterprises is somewhat different than that of

established businesses (Figure 23). In the case of nascent enterprises, they are more likely to
be in the retail trade, hotel/restaurants and wholesale trade sectors and less likely to be in
the manufacturing sector than established businesses. This makes sense because the
barriers to entry are lower in the trade and services sectors and the growth in all modern
economies is in services. Nascent enterprises are also less dominant in the primary sectors
than established businesses and have a greater tendency to start up in the business services
sector. Interestingly, they are not very likely to be planning new enterprises in the personal
and consumer services sector.

Baby businesses also have a different sector profile than established businesses, with a
higher percentage in business services and the transport, storage & communications sectors
and a lower percentage in the primary sectors and in manufacturing.

Page | 27
 Figure 23. Sector Distribution of Early-Stage and Established Businesses - Egypt, 2008

50%

40%

30%

20%

10%

0%
Nascent businesses Baby businesses Established businesses

Agriculture, forestry, hunting, fishing Mining, construction

Manufacturing Utilisation, transport, storage & communications
Wholesale trade Retail trade, hotels & restaurants
Financial intermediation, real estate activities Business services
Government, health, education, social services Personal/consumer service activities

Source: APS, 2008.

Note: Nascent enterprises are less than 3 months old or not yet launched, Baby businesses are up to 42 months
old, and Established businesses are more than 42 months old.

Employment Prospects

One of the main reasons for the heightened policy interest in the phenomenon of new
business creation is its impact on employment. GEM findings reveal that the average early-
stage enterprise is creating 1.83 jobs (excluding the owners); compared to an average of 2.1
jobs in an established enterprise. Thus, it is projected that the nascent enterprises in
gestation in Egypt (an estimated 1.34 million) would create jobs for about 2.44 million
workers, if actually launched.

The majority of early-stage and established businesses are very small. Fewer than 10% of
them have more than 20 workers; the vast majority are microenterprises with fewer than 5
workers (Figure 24). Well over a third does not have any workers except the owner(s).
However, within five years, the entrepreneurs involved in these enterprises plan to increase
their employment base. Although a quarter of the entrepreneurs still do not plan to have
any employees five years from now (Figure 25), that will be an improvement over the
current situation.

The nascent entrepreneurs appear to be more optimistic about their employment growth
than entrepreneurs with young businesses, but both groups have ambitious plans to add
workers. The net effect of these plans would be more than a 25% growth in average firm size
for the early-stage enterprises (from 1.8 jobs to 2.3) and a 13% growth in the size of
established enterprises (from an average of 2.1 jobs to 2.4).

Page | 28
 Figure 24. Current Number of Jobs by Stage of Enterprise Development - Egypt, 2008

50%

40%

30%

20%

10%

0%
Nascent Baby businesses Established All
businesses
None 1-5 jobs 6-19 jobs 20+ jobs

Figure 25. Jobs Expected in 5 Years - Egypt, 2008

50%

40%

30%

20%

10%

0%
Nascent Baby businesses Established All
businesses

None 1-5 jobs 6-19 jobs 20+ jobs

Start-up Capital and Requirements

This section reports findings regarding the start-up capital requirements of the nascent
businesses. Start-up capital is the money needed to launch a business and includes costs
associated with everything essential for bringing the idea to the market. The median start-up
money required to start an Egyptian nascent enterprise is LE 50,000. The median is a more
appropriate indicator than the mean amount because of the effect of a few very large
investments. Most of these new start-ups are small. Thirty percent of nascent enterprises
require LE 10,000 or less of start-up capital and 60% require LE 50,000 or less (Table 5).
Overall, 91% can be started with LE 500,000 or less. Only 9% of the enterprises will require
start-up capital of more than LE 500,000.

About 44% of the nascent entrepreneurs indicated that they would be personally financing
the whole amount needed to start their enterprise. The median investment expected to be
made by nascent entrepreneurs from their own resources is LE 20,000. Just over a third plan

Page | 29
to invest only up to LE 5,000 of their own money (average of LE 2,700), 42% plan to invest up
to LE 10,000 of their own money, and almost 80% to invest up to LE 50,000.

Table 5. Start-up Money for Nascent Enterprises – Egypt, 2008

Start-up money Percentage Average Nascents Average Nascents Average
size groups of nascents amount of investing amount of requiring start-up
with total start-up only their nascents’ start-up money
start-up money per own money own start-up money needed from
needs per size group per size money per from others per
size group group size group others per size category
size group
LE 15 - LE 5,000 14.6% LE 3,206 34.6% LE 2,700 20.2% LE 2,151
LE 5,001 –
15.5% LE 9,085 8.4% LE 10,000 12.7% LE 8,827
LE 10,000
LE 10,001 -
10.2% LE 19,130 15.0% LE 18,062 9.6% LE 18,500
LE 20,000
LE 20,001 -
19.5% LE 32,954 20.6% LE 36,409 20.2% LE 19,565
LE 50,000
Subtotal 59.7% LE 20,731 78.5% LE 15,237 62.7% LE 18,199
LE 50,001 -
20.4% LE 119,347 10.3% LE 95,909 19.7% LE 111,711
LE 200,000
LE 200,001 -
11.1% LE 390,000 7.5% LE 363,750 10.5% LE 391,667
LE 500,000
LE 500,001 -
4.9% LE 1.0 million 3.7% LE 1.1 million 4.8% LE 1.1 million
LE 1.25 million
LE 1.25 million -
4.0% LE 3.1 million 0.0% 0 2.2% LE 3.8 million
LE 10 million
Total 100.0% LE 273,062 100.0% LE 89,828 100.0% LE 231,393
Median start-up
LE 50,000 LE 20,000 LE 38,000
money needed
Range of start-up LE 100 - LE LE 15 - LE 0 - LE 10
money needed 10 million 1.25 million million

Fifty-five percent of the nascent entrepreneurs indicated that they will need external
sources of financing to supplement their start-up capital needs. The median amount of
external financing expected is LE 38,000. Just over 60% of the start-up money required from
others is LE 50,000 or less (average of LE 18,199), but over half of this requirement is for LE
10,000 or less (average of LE 4,129). Only 7% of the projects require more than LE 500,000 of
external financing.

The enterprises of male nascent entrepreneurs have on average 2.2 times the start-up
capital requirements of those being planned by female nascent entrepreneurs. Not only are
the men’s planned enterprises larger, they are expecting 3.6 times more than women in
external financing or investment. This means that women are investing a higher proportion
of their own money in their businesses, even if they are smaller. On average, male nascent
entrepreneurs plan to invest only 28% of their own money towards the start-up costs,
whereas female nascent entrepreneurs plan to personally invest 81% of the costs.

Looking at other demographic variables, nascent entrepreneurs in the oldest age group (55-
64), highest education group, and households with annual incomes in excess of LE 4,000

Page | 30
have estimated average start-up capital requirements greater than the mean for all nascent
entrepreneurs (thus, larger and more capital, intensive start-ups) and expect to have
significantly more start-up financing/investment from others (Table 6).

Table 6. Variations in Start-up Money Requirements by Demographic Variables

Start-up
Start-up
money
Total start-up money
invested by
money invested by
nascent
others
entrepreneur
LE 273,062 = LE 89,828 = LE 231,393 =
Mean value (as benchmark)
1.00 1.00 1.00
Gender
Female 0.50 1.23 0.31
Male 1.10 0.94 1.14
Age
18-24 0.70 0.98 0.61
25-34 0.86 0.45 0.94
35-44 1.00 1.35 0.92
45-54 0.95 2.33 0.88
55-64 4.06 0.70 4.74
Education level
Low level of education 0.26 0.39 0.24
Intermediate level of education 0.88 1.52 0.77
High level of education 2.63 0.53 3.01
Household income*
LE 0 – LE 300 0.01 0.01 0.01
LE 301 – LE 500 0.15 0.15 0.15
LE 501 – LE 700 0.16 0.13 0.16
LE 701 – LE 1,000 1.68 0.30 1.92
LE 1,001 – LE 1,500 0.30 0.53 0.28
LE 1,501 – LE 2,000 0.44 0.57 0.42
LE 2,001 – LE 4,000 1.35 1.04 1.45
LE 4,001 + 2.78 4.36 2.45
Past entrepreneurial experience
Previously owned a business in the past 0.95 1.54 0.89
Have not own a business in the past 1.04 .73 1.08
Discontinued a business in the past 12 months 1.01 1.08 1.03
Have not discontinued a business in the past 12
1.00 0.98 0.99
months
Note: Calculations are based on the distance of averages for each group from the overall average funding
amounts. The overall average is given a value of 1.00. For example, the average start-up money required by
women was only half of the overall average amount, so the score for women is 0.50.

Page | 31
The nascent entrepreneurs are very optimistic about the returns they will generate on the
money they invest in their new enterprises over the next 10 years. Over three-quarters
expect to at least double their investment and over 20% to increase it at least ten-fold
(Figure 26). Their expectations are considerably higher than those of the business angels, a
topic to be discussed later in this report (page 39).

Figure 26. Return on Investment Expected by Nascent Entrepreneurs - Egypt, 2008

None

Half of the investment

About as much as the investment

1.5 times the investment

Twice the investment

5 times the investment
10 times the investment

20 times the investment

0% 5% 10% 15% 20% 25% 30%

% of nascent entrepreneurs

Export Orientation

Entrepreneurs in the survey were asked whether they have (or will have) customers outside
of Egypt. The results indicate that close to 60% of both early-stage entrepreneurs and
established business owners do not export and have no customers outside of Egypt (Figure
27). On the other hand, approximately 40% of these businesses do have out-of-country
customers. For 7% of the enterprises, out-of-country customers make up over three-
quarters of their customer base. Early-stage entrepreneurs indicate a slightly higher
propensity to exporting activity than established businesses.

Comparing Egypt with the rest of the GEM 2008 countries, it is noticeable that early-stage
entrepreneurs in all economies depend primarily on a local customer base, but this
percentage is higher in the factor-driven economies (Figure 28). Egypt’s share of early-stage
entrepreneurs with no out-of-country customers is comparable to the other factor-driven
economies (about 60%). However, a larger proportion of those who do, have upwards of
26% of their customers living outside the country (over a quarter versus less than 15% in
other factor-driven economies). In fact, 18% of early-stage and established businesses in
Egypt have more than 50% of their customers in other countries, placing Egypt first on this
indicator compared with the other 42 countries.

Page | 32
 Figure 27. Number of Customers outside Egypt

70%
60%
50%
40%
30% TEA Businesses
20% Established Business
10%
0%
76-100% of 26-75% of 1-25% of No
customers customers customers customers
outside outside outside outside
country country country country

Figure 28. Number of Customers Outside the Country, GEM 2008 Countries

70%

60% Factor-driven economies

50%
40% Efficiency-driven economies

30%
Innovation-driven economies
20%

10%
Egypt
0%
No 1-25% of 26-75% of 76-100% of
customers customers customers customers
outside outside outside outside
country country country country

Page | 33
Innovation and Growth Expectations

Table 7 compares Egypt to other GEM countries on a number of dimensions related to

innovation and the growth expectations of early-stage entrepreneurs. Their growth
expectations provide some indication of the economic impact of their enterprises over time.
With 11.4% of Egypt’s early-stage entrepreneurs indicating that they expect to create more
than 10 jobs in five years, Egypt ranks in the bottom half of GEM countries and 5th among
the eight factor-driven economies.

Only 6.5% of TEA enterprises in Egypt are in the medium to high tech sectors, and this places
Egypt in the top third of GEM countries. However, Egypt performs much less well in terms of
the percentage of TEA enterprises that are based on new product market combinations,
where it is placed among the bottom 4 countries.

Early-stage TEA businesses have slightly different characteristics than Egyptian enterprises
that have been established for more than 42 months (Table 8). A higher percentage of early-
stage TEA businesses are planning to undertake market expansion based on new
technologies; are using technologies that are less than one-year old; are in the medium to
high-tech sectors; show indications of new product market combinations; and are competing
in markets with few or no competitors with the same product. On the other hand,
established businesses are more likely to have customers who consider their products new
or unfamiliar. Overall, the vast majority of all Egyptian businesses are not particularly
technology-oriented or differentiated in their product market combinations.

Page | 34
 Table 7. Innovation and Growth Expectations of TEA Businesses
Country Involved in TEA, TEA: Expected job TEA: new product TEA: Technology
expects more than growth > =10 market sector (medium
19 jobs in 5 years persons and > =50 combination high and high-tech
percent, in 5 years sectors)
% of all 18-64 % of TEA % of TEA % of TEA
Factor-driven economies
Angola 0.7% 12.8% 16.0% N/A
Bolivia 1.0% 8.8% 11.9% 4.8%
Bosnia and
0.7% 15.3% 8.5% 2.0%
Herzegovina
Colombia 4.3% 30.6% 19.5% 7.4%
Ecuador 0.6% 11.0% 14.5% 5.8%
Egypt 1.1% 11.4% 9.0% 6.5%
India 0.1% 3.1% 5.3% 0.8%
Iran 0.9% 14.9% 9.6% 4.6%
Efficiency-driven economies
Argentina 2.3% 24.1% 30.0% 3.0%
Brazil 0.8% 8.8% 3.8% 3.3%
Chile 2.4% 32.6% 36.5% 1.6%
Croatia 0.9% 19.7% 9.1% 3.1%
Dominican Republic 2.3% 19.5% 16.1% 5.2%
Hungary 0.2% 5.2% 4.5% 6.0%
Jamaica 0.2% 2.0% 11.4% 1.2%
Latvia 1.1% 25.2% 24.4% 6.2%
Macedonia 1.2% 18.0% 13.0% 4.7%
Mexico 0.2% 4.7% 25.7% 3.8%
Peru 2.2% 17.6% 37.0% 6.2%
Romania 0.5% 20.4% 15.7% 1.8%
Russia 0.7% 13.0% 11.5% 4.7%
Serbia 0.5% 20.2% 12.4% 3.9%
South Africa 1.0% 20.5% 23.5% 4.5%
Turkey 1.1% 26.6% 18.1% 6.2%
Uruguay 1.2% 19.9% 35.7% 7.5%
Innovation-driven economies
Belgium 0.3% 18.1% 28.9% 12.1%
Denmark 0.3% 20.4% 28.7% 16.3%
Finland 0.4% 13.5% 15.4% 2.2%
France 0.3% 17.4% 23.6% 3.7%
Germany 0.3% 11.2% 24.3% 2.0%
Greece 0.5% 6.0% 22.7% 4.3%
Iceland 1.9% 26.0% 31.6% 7.7%
Ireland 1.7% 22.5% 23.0% 14.1%
Israel 0.9% 17.5% 21.2% 1.2%
Italy 0.4% 15.2% 10.8% 12.5%
Japan 0.9% 25.7% 13.3% 2.2%
Korea Republic 1.4% 20.7% 13.8% 8.1%
Netherlands 0.2% 4.6% 20.3% 10.1%
Norway 1.0% 16.6% 26.5% 10.2%
Slovenia 0.7% 17.3% 28.1% 9.2%
Spain 0.4% 7.6% 18.6% 6.0%
United Kingdom 0.6% 16.5% 23.6% 11.7%
United States 2.3% 29.2% 20.2% 7.3%

Page | 35
 Table 8. Comparing TEA and Established Businesses on Expansion, Innovation and
Competitive Aspects – Egypt, 2008
TEA businesses Established businesses
(%) (%)
Market expansion mode
No market expansion 58.7% 61.6%
Some market expansion (no new technologies) 16.6% 20.4%
Some market expansion (new technologies) 22.3% 16.1%
Profound market expansion 2.3% 1.9%
Innovation
Number of (potential) customers who consider
products new/unfamiliar
All 12.3% 20.9%
Some 15.8% 10.4%
None 71.9% 68.7%
Use of technologies that were available more
than a year ago
Very latest technology (newer than one year) 24.6% 18.0%
New technology (1-5 years old) 28.7% 19.4%
No new technology (more than 5 years old) 46.7% 62.6%
Technology level of the sector
No or low technologies 93.1% 96.2%
Medium-tech 0.3% 0.0%
High-tech 6.6% 3.8%
New product market combination
No indication 90.8% 97.2%
Indication 9.2% 2.8%
Competition - Other businesses offering the
same products
Many 67.3% 73.9%
Few 25.8% 19.4%
None 6.9% 6.6%

Page | 36
Business Discontinuances

Another important indicator of entrepreneurial dynamism in an economy is the rate of

business discontinuance. GEM respondents are asked if they have had a business in the past
in which they are no longer active, as well as whether that business is still active or not, and
why they discontinued their involvement in the business. The business discontinuance rates
for GEM countries were presented in Table 2 (page 10). This revealed that 6.3% of the
Egyptian adult population has owned an enterprise in which they are no longer active,
placing Egypt in the top quarter of GEM countries for high discontinuance rates, a feature of
factor-driven economies 21. However, in 31% of the Egyptian cases, the business continued to
operate with a new owner-manager.

The adult population was also screened for entrepreneurs who had discontinued a business
in the past year. Fifteen percent of the adults who were currently involved in
entrepreneurial activity (as nascent, early-stage or established business owners) indicated
that they had discontinued with a business in the previous 12 months. The business
continued to operate in about a third of the cases but with different owner-managers; the
remaining businesses were closed down by the entrepreneur (i.e. business closure rate of
just over 10%). This business closure rate is high compared to most other GEM countries.

Egyptian entrepreneurs differ somewhat from entrepreneurs in other GEM countries in their
reasons for exiting from the business (Figure 29). They are somewhat more likely to have
discontinued with the business because it was not profitable, they had problems getting
financing, or due to an incident, and less likely to because they had another job or business
opportunity or because they retired.

Figure 29. Reasons for Business Discontinuance, GEM Countries, 2008

100%

90%
Incident
80%
Personal reasons
70%
Retirement
60%
Exit was planned in advance
50%
Other job or business opportunity
40%
Opportunity to sell
30%
Problems getting finance
20%
Business not profitable
10%

0%
Factor- Efficiency- Egypt Innovation-
driven driven driven
economies economies economies

Page | 37
Business Angels

“Business angel” is the term used to refer to people who make informal investments in
someone else’s business venture. Usually, the business angel is closely acquainted with the
owner of the enterprise as a family member, relative, friend, neighbour or work colleague,
but occasionally they might invest in a stranger’s business if an introduction is made and the
opportunity sounds promising. In GEM countries, business angels have been found to be a
major source of capital for nascent and early-stage enterprises.

The APS identified people who had, in the past three years, personally provided funds for a
new business started by someone else. In Egypt, 2.5% of the adult population answered yes
to this question; 3.2% of the adult males and 1.7% of the adult females. Women make up
about a third of the business angels.

Egyptian business angels provided an average of LE 26,200 (median of LE 7,500) to business

start-ups in the past three years (average per year of about LE 8700). In most cases, the
investment size is very small – about 37% of angels invested LE 5,000 or less; almost 70% of
investments were LE 10,000 or less (Figure 30). Women are smaller investors – the average
female angel investment was only a third of the average male angel investment.

Figure 30. Business Angels by Investment Size - Egypt, 2008

LE 200,001 - LE 500,000

LE 50,001-LE 200,000

LE 20,001-LE 50,000

LE 10,001-LE 20,000

LE 5,001-LE 10,000

Under LE 5,000

0% 5% 10% 15% 20% 25% 30% 35% 40%

% of business angels

The significance of angel investment should not be underestimated. Given that 2.5% of the
Egyptian adult population (almost a million people) is investing an average of LE 8,700 a year
in early-stage entrepreneurial ventures, the estimated size of angel financing approximates
LE 8.13 billion, which is close to 1% of 2008 GDP.

The majority of business angels had close relationships with the owner of the business in
which they invested (Figure 32). A third of the business angels were related to the investee
as a close family member, and almost 30% were friends or neighbours. It is interesting that
they were as likely to have invested in the business of a stranger as in one owned by a
relative other than a close family member. Gender differences are noted. Female angels are
much more likely than men to invest in the business of a close family member and male
angels to invest in a friend/neighbour’s business.

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 Figure 31. Relationship of Business Angel to Investee – Egypt, 2008

Stranger

Friend/neighbour

Work colleague

Other relative

Close family

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

All business angels Male angels Female angels

Business angels in Egypt have quite modest expectations for the return on their investments.
Over 35% do not expect any return at all (Figure 32). This suggests that a large number of
the angel investments fall into the category of “love money” — money invested in a close
family member’s business idea with no real expectation of seeing a return. However,
another third expects returns of 2 to 20 times their investment, so clearly see growth
potential in the new enterprises of their investees.

Figure 32. Investment Returns Expected by Business Angels in 10 Years

None

Half of the investment

About as much as the investment

1.5 times the investment

Twice the investment

5 times the investment

10 times the investment

20 times the investment

0% 5% 10% 15% 20% 25% 30% 35% 40%

The demographic characteristics of business angels are presented in Table 9. They are found
in all age groups; but the highest prevalence rate (4.1%) is in the 55-64 age group. Angels in
this age group also made the highest average informal investment of any age group during
the past three years. The business angel prevalence rate in the 25-34 age group is 2.5%, but
because of the sheer size of this group in the total population, there are more angels in this
age group than in others.

Education level is also a variable. University degree holders have a relatively high angel
prevalence rate (5.8%) compared to angels with lower education levels and made the largest
average investments over the past three years by education level. However, the share of

Page | 39
university degree holders in the total population is low. The largest total amount of angel
investment came from the secondary certificate holders.

Although informal investors are found in all household income groups (above LE 300 a year),
the prevalence rate varies considerably. Only 1.8% of people with annual household incomes
of LE 301-LE 500 have made informal investments, increasing to 5.0% in the LE 701-LE 1,000
group, and to 6.8% for the household groups with income of over LE 4,000. With minor
exceptions, as might be expected, the average amount invested over the past three years
increases with household income level. Although the average investment level of angels in
the LE 701–LE 1,000 per annum household income group is much less than the overall
average, with a prevalence rate of 5.0% and a significant share of the population, this group
is a large source of start-up capital. It appears that lower household income groups are most
likely to invest in the entrepreneurial activities of family members and close relatives and
the higher income angels more likely to invest in the activities of non-relatives. Those in the
LE 4,001+ per annum groups make the largest average investments.

Table 9. Angel Prevalence Rates among Demographic Groups – Egypt, 2008

Demographic Prevalence Average Demographic Prevalence Average
rate investment rate investment
(% of - past 3 (% of - past 3
population) years population) years
Age group Gender
18-24 2.1 LE 6,133 Male 3.2 LE 36,405
25-34 2.5 LE 14,126 Female 1.7 LE 10,952
35-44 1.9 LE 20,779 Household income
44-54 3.1 LE 37,123 LE 0 - 300 0 0
55-64 4.1 LE 61,561 LE 301 – LE 500 1.8 LE 8,221
Education level LE 501 - LE700 2.3 LE 4,707
None 1.5 LE 8,511 LE 701 – LE 1,000 5.0 LE 7,641
Some secondary 2.5 LE 5,738 LE 1,001 - LE 1,500 4.8 LE 20, 891
Secondary
2.2 LE 24,535 LE 1,501 - LE 2,000 4.3 LE 58,920
completion
Post-secondary 3.5 LE 12,808 LE 2,001 – LE 4,000 3.9 LE 32, 435
Bachelor’s degree
5.8 LE 50,516 LE 4,001 + 6.8 LE 105,258
or higher
Overall average 2.5 LE 26,200 Overall average 2.5 LE 26,200

Page | 40
 Egypt’s Entrepreneurial Orientation: Entrepreneurial Attitudes
and Perceptions of the Population

It is increasingly apparent that widespread entrepreneurial activity is central to the

development of a market economy and economic growth. For many individuals, the
entrepreneurial process starts with a personal assessment dealing with attitudes and
perceptions towards entrepreneurship. 22 The level of entrepreneurial activity depends upon
the willingness of individuals to start new firms, to work for new firms, and to encourage
those who do both, and this is reflected in their attitudes towards entrepreneurship. These
attitudes can be influenced by the extent to which people think there are good opportunities
for starting a business and the degree to which they attach high status to entrepreneurs, as
examples. These issues, explored in the GEM research, are the topic of this section.

Although entrepreneurship is a universal phenomenon23, there are differences in

entrepreneurial attitudes and perceptions across different countries24. Table 10 presents
scores on several indicators reflecting individuals’ perceptions towards entrepreneurship in
each of the 43 GEM 2008 countries, grouped by their phase of economic development.

The Egyptian population has a relatively positive attitude towards entrepreneurship. It ranks
12th among the 43 countries in the percentage of the adult population that considers
entrepreneurship as a desirable career choice (73%). This reflects a favourable mindset
towards entrepreneurship which may lead to ultimate engagement in entrepreneurial
activity. A relatively high percentage of the population is also confident that they have the
required knowledge and skills to start a business; 53% were definite that they have these
skills, ranking Egypt in 14th place. However, only 40% of the surveyed population confirmed
that they see good opportunities for starting a business in the next 6 months (surveys
completed in July-August of 2008), ranking Egypt 27th among the 43 countries.

Regardless of whether it relates to an entrepreneur starting a new venture or innovating in

an existing business, the fear of failure can be a major inhibiting factor preventing people
from pursuing their ideas. When Egyptians were asked whether a fear of failure would
prevent them from starting a business, only a quarter agreed with the statement. In this
regard, Egypt ranked in 2nd place among the 43 countries, just behind Iran. This suggests that
Egyptians have a low fear of failure and are ready to risk things going wrong and handle
setbacks without being deterred.

Role models are important in promoting the concept of entrepreneurship in society.25

Knowing someone who started a business has been shown to have an influence on
entrepreneurial intentions. Both the presence of role models and the perception of the
merits of an entrepreneurial career transmitted by those role models generally have positive
effects on attitudes towards entrepreneurship, inspiring people to start their own
businesses. 26 On the other hand, a lack of positive examples of entrepreneurs (role models)
and limited networks are among the most critical barriers restraining entrepreneurship. 27
Two in five people in Egypt reported that they personally know someone who started a
business in the past 2 years. This is close to the average for all GEM countries, but ranks
Egypt in 18th place.

Page | 41
 Table 10. Entrepreneurial Attitudes and Perceptions in the 43 GEM Countries by Phase of
Economic Development, 2008
Sees good Fear of Personally Has the Expects to Country attitudes
opportunities failure knows required start a perceived by individuals
for starting a would someone knowledge business Entrepre- Media
business in prevent who and skills in the neurship attention
the next 6 to start a started a to start a next 3 considered for
months business business in business years desirable entrepren
(%) (%) the past 2 (%) (%) career -eurship
years (%) choice (%) (%)
Factor-driven economies
Angola 74 45 71 44 27 49 46
Bolivia 52 49 38 67 38 81 60
Bosnia &
Herzegovina 50 26 39 62 25 82 60

Colombia 65 41 34 54 60 92 78
Ecuador 50 35 33 66 37 79 57
Egypt 40 25 40 53 35 73 57
India 58 46 56 45 33 67 81
Iran 35 22 45 58 36 57 53
Efficiency-driven economies
Argentina 48 40 30 53 15 69 80
Brazil 44 43 44 49 26 68 78
Chile 30 34 41 54 29 80 44
Croatia 53 36 51 56 10 70 61
Dominican Republic 58 31 54 70 30 92 64
Hungary 26 47 26 43 6 48 19
Jamaica 52 26 46 65 17 81 71
Latvia 37 37 33 23 7 75 71
Macedonia 47 35 46 52 39 80 66
Mexico 59 31 50 55 26 66 52
Peru 60 38 50 66 34 82 71
Romania 45 52 36 21 9 n.a. 56
Russia 39 66 33 14 3 60 50
Serbia 56 28 52 60 31 72 67
South Africa 60 38 41 31 13 65 69
Turkey 47 39 27 44 21 72 63
Uruguay 57 33 40 58 17 71 67
Innovation-driven economies
Belgium 23 30 28 34 6 47 38
Denmark 69 43 43 30 5 57 32
Finland 54 32 46 30 5 46 71
France 34 53 33 25 13 63 48
Germany 35 49 29 30 4 56 50
Greece 35 55 35 46 13 76 55
Iceland 38 36 60 45 12 61 81
Ireland 35 37 33 42 6 55 65
Israel 39 43 35 35 14 58 57
Italy 35 48 30 35 7 68 40
Japan 13 44 21 9 4 26 59
Korea Republic 20 32 32 23 17 69 67
Netherlands 54 33 32 30 4 85 61
Norway 46 28 34 33 7 61 71
Slovenia 55 33 50 44 7 58 67
Spain 32 52 36 43 5 68 43
United Kingdom 41 38 23 45 5 52 54
United States 44 28 33 48 7 63 73
Source: Global Entrepreneurship Monitor, 2008 Executive Report, p. 16.

Page | 42
The level of media attention to entrepreneurship in a country or region can also be
important in shaping attitudes towards entrepreneurship in the society. Profiling stories
about local entrepreneurs creates more public awareness of their role in society and signals
that the achievements and contributions of entrepreneurs are socially valued. In Egypt, 57%
of adults responded affirmatively to the statement “you often see stories in the public media
about successful entrepreneurs”. This is slightly below the average positive response rate for
all GEM countries, but places Egypt on par with countries like Ecuador, Israel, and Romania,
in the bottom 40%, compared to countries like India and Iceland, where over 80% of the
population often sees stories in the media about successful entrepreneurs.

It is interesting to note that Egyptians express more positive attitudes and perceptions
towards entrepreneurship than populations in most of the high income, innovation-driven
countries. In fact, just over a third of the Egyptian adult population stated that they expect
to start a business in the next three years. This is a higher percentage than in all but five
other GEM countries (mostly factor-driven economies). This is a good base on which to build
a stronger entrepreneurial economy.

Page | 43
Page | 44
 Part III: National Expert Survey (NES) Findings –
Entrepreneurial Framework Conditions

The second major objective of the GEM research is to uncover factors determining national
levels of entrepreneurial activity – those factors that specify what makes a country more or
less entrepreneurial. In this section, an emphasis is placed on the different aspects of the
national context expected to enhance entrepreneurial activity in Egypt. This is examined
through the lens of the nine Entrepreneurial Framework Conditions (EFCs), which were
outlined in the GEM Model in Figure 1 and defined in Box 1 (page 4).

In 2008, 31 of the 43 countries participating in the GEM project conducted the National
Experts Survey (NES). In the NES, a minimum of 36 professionals deemed to be in a position
to express expert opinions were asked to comment on the strength of factors related to the
nine EFCs in their respective countries. They each indicated their level of agreement with
the veracity of 54 statements in the nine areas, using a Likert scale from 1-5 with 1 indicating
the statement was completely False and 5 indicating the statement was completely True.
They also provided their perceptions regarding a number of other factors, including the
start-up abilities and knowledge of people in the country, the social image of entrepreneurs,
the state of intellectual property rights, support to start-ups by women, the attention paid to
high-growth firms, and the level of interest in innovation. Finally they were asked to state
three issues or factors constraining entrepreneurial activity in the country, three that are
fostering it, and three recommendations to improve it.

Expert’s Perceptions of the Strength of Entrepreneurial

Framework Conditions

A cross-national comparison of NES responses reveals a number of country variations in the

perceived strengths and weaknesses of the nine EFCs. The mean scores for Egypt are
summarised in Table 11, along with its rankings among GEM countries.

Table 11. Summary of Egypt's Relative Performance in Assessment of EFCs

Entrepreneurial Framework Condition Mean score for Egypt Rank (of 31 countries)
1. Financial Support 2.27 21
2. Government Policies 2.71 11
3. Government Programs 2.19 22
4. Education and Training 1.79 31
5. Research and Development (R&D) and Transfer 1.65 31
6. Commercial & Professional Services Infrastructure 2.68 25
7. Internal Market Openness
Internal market dynamics 3.57 4
Internal market burden 2.47 15
8. Physical Infrastructure 3.82 7
9. Cultural and Social Norms 2.40 22
Note: Mean scores are based on scale of 1 to 5.

Page | 45
Egypt performs comparatively very well on assessments of its internal market dynamics and
physical infrastructure, and very poorly on education and training and R&D transfer.

The remainder of this section presents and analyses the responses from the 36 Egyptian
experts and compares the overall results with those of expert assessments in the other
participating GEM countries.

1. Financial Support

The role played by financial support was explored in the NES using six survey items (Box 2).

When comparing the assessment

Box 2. Financial Support
of the Egyptian experts with
In my country, there is:
those from other countries about 1. sufficient equity funding available for new and growing firms.
the adequacy of financial support 2. sufficient debt funding available for new and growing firms.
in their countries, Egypt ranked 3. sufficient government subsidies available for new and growing
firms.
21st, although experts in all of the 4. sufficient funding available from private individuals (other than
countries expressed the view that founders) for new and growing firms.
the level of funding availability for 5. sufficient venture capitalist funding available for new and
the new and growing firms in growing firms.
6. sufficient funding available through initial public offerings
their countries is insufficient (IPOs) for new and growing firms.
(Figure 33).

Figure 33. Financial Support – Cross-National Comparison

3
2.27

0
Dominican R.
Ecuador

Brazil

Chile

Greece
Iran

Peru

Mexico

Spain

Denmark
Ireland

Finland
Argentina

Bolivia
Colombia
Uruguay

Jamaica
Bosnia
Egypt

Russia
Turkey

Italy

Macedonia

Korea

Slovenia
Serbia

South Africa

Croatia

Germany
USA

Norway

Note: Based on the average for experts’ responses in each country.

Finance continues to be one of the basic impediments facing new and growing firms in Egypt.
According to a study conducted by the World Bank, only 13% of small businesses in Egypt
borrow from banks, compared to 36% of large businesses 28. Furthermore, the study found
that only 7% of new investments and working capital is financed through the banking sector
and that only 3.8% of new investments are financed by capital markets.

Page | 46
 Although several venture capitalist (VC) and private equity (PE) firms are operating in Egypt,
venture capital funding (a type of private equity capital typically provided to early-stage,
high-potential, growth companies) is not perceived by experts as being highly available to
new and growing firms (Figure 34), garnering the lowest mean response score for this set of
items. This is largely attributed to high transaction costs and low returns. Furthermore, the
legal and regulatory environment is a major impediment to the growth of the VC/PE industry
in Egypt. 29 Experts were most likely to agree that sufficient debt funding was available for
new and growing firms, but the mean score of 2.5 out of a possible 5 is not impressive.

Figure 34. Perceptions of the State of Financial Support in Egypt

Sufficient venture capitalist funding available for new

2.03
and growing firms

Sufficient funding available through initial public

2.11
offerings (IPOs) for new and growing firms

Sufficient government subsidies available for new and

2.31
growing firms

Sufficient equity funding available for new and

2.31
growing firms

Sufficient funding available from private individuals

2.36
(other than founders) for new and growing firms

Sufficient debt funding available for new and growing

2.50
firms

0 1 2 3 4 5

Nevertheless, many steps have been taken towards improving access to financial support for
new and growing firms in Egypt, especially for microenterprises and SMEs. Banks in Egypt,
for example, have begun serious efforts to expand their lending to SMEs. In 2008, the
Central Bank of Egypt authorised the setting up of an SME Unit in the Egyptian Banking
Institute. This unit is now providing training to bank lending officers on developing the SME
market. The establishment of the I-Score credit bureau may also eventually assist banks in
better assessing the risks of new and small business clients. Early in 2009, the new regulation
that exempts Egyptian banks from the reserve requirement (14%) for
“Limited access to loans to SMEs became effective.
external sources
of financing is a
constraining
Another active financial supporter is the Social Fund for
factor– banks Development (SFD), the governmental institution with a mandate to
don’t do much support micro and small enterprises (MSEs) and entrepreneurship. In
lending to new addition to a range of other MSE support services and initiatives, the
firms or micro and
small firms, SFD offers loan products for small projects. Most of the debt
limited VC in financing offerings, however, are in the form of micro finance loans,
country. Most and the majority of this is available to existing MSEs, rather than to
sources are
new start-ups. The same is the case for other microfinance providers
family, friends
and savings.” in Egypt, of which there are many. 30

- Expert - In 2007, the government launched the SME bourse on the Cairo and
Alexander Stock Exchange, the “Nile Stock Exchange (NILEX).” This
SME Exchange has less rigorous listing requirements for eligible

Page | 47
SMEs, and has encouraged a few SMEs to pursue expansion financing through public
offerings.

2. Government Policies

A major contextual factor affecting entrepreneurship activity in Egypt is government policies,

including legislation, regulations, business permit and licensing requirements, taxation and
other procedures and rules affecting new and growing firms. The effect of this factor in
enhancing entrepreneurship was investigated in a set of seven survey items in the NES (see
Box 3). The majority of experts in the 31 Box 3. Government Policies
countries are dissatisfied with their In my country:
1. government policies (e.g. public procurement)
governments' policies regarding legislation, consistently favour new firms.
taxation, regulation and licensing (Figure 35). 2. the support for new and growing firms is a high
Well over half of the countries have mean priority for policy at the national government
scores of less than 2.5. With a mean score of level.
th 3. the support for new and growing firms is a high
2.7, Egypt ranked 11 on this EFC, placing it priority for policy at the local government level.
between Russia and Iran. 4. new firms can get most of the required permits
and licenses in about a week.
5. the amount of taxes is NOT a burden for new and
Egypt is known for its mixed economic
growing firms.
system. The government still heavily 6. taxes and other government regulations are
subsidises food, energy and other applied to new and growing firms in a predictable
commodities. The open door policies and the and consistent way.
7. coping with government bureaucracy,
macro economic reforms have helped regulations, and licensing requirements is not
increase the private sector share of the unduly difficult for new and growing firms.
economy. According to "the ease of doing
business index" produced by the World Bank and the International Finance Corporation
(IFC), the business environment in Egypt is highly unfavourable, although aggressive reforms
in the past two years have resulted in a considerable improvement in Egypt’s Doing Business
ranking – from 165 in 2006, to 147 in 2007, to 114 in 2007. Reforms are increasing
regulatory transparency and reducing bureaucratic burdens.

Figure 35. Government Policies – Cross-National Comparison

3 2.71

0
Dominican R.
Brazil

Greece
Ecuador

Chile
Peru

Iran

Mexico
Spain

Denmark
Ireland

Finland
Uruguay
Argentina

Croatia

Russia

South Africa
Bolivia

Bosnia

Italy

Norway
Slovenia
Jamaica

USA

Egypt

Colombia
Serbia

Macedonia

Germany

Korea
Turkey

Page | 48
The Egyptian national experts were somewhat satisfied with
“Government policies for
the level of government policy priority in favour of new and promoting entrepreneurial
growing firms at the national level (mean score of 3.1), activity are very weak, non-
although less satisfied with this at the local government level constructive, bureaucratic,
confusing, financially and
(Figure 36). They were least likely to agree with the truth of
administratively too
statements that “new and growing firms do not find it demanding. There are no clear
unduly difficult to cope with government bureaucracy, or consistent policies that an
regulations and licensing requirements” (mean score of 1.7) entrepreneur may follow, new
policies and procedures are
and that “new firms can get most of the required permits made every day and others are
and licenses in less than a week” (mean score of 2.0). cancelled. Government policies
that are promoted in the
According to the Doing Business 2009 report, it takes up to newspapers always sound
excellent, but the facts are
7-9 days to register a limited liability company in Egypt, but always totally the opposite.
much longer to obtain the necessary permits and licenses to There is no trust in tomorrow
actually operate the business. In fact, it takes up to 249 days or transparency.”
to acquire the required permits to build a warehouse, not a -Expert-
good indicator. 31

Figure 36. Perceptions of the State of Government Policies in Egypt

Coping with government bureaucracy, regulations,

and licensing requirements is not unduly difficult for 1.75
new and growing firms

New firms can get most of the required permits and

2.03
licenses in about a week

Government policies (e.g. public procurement)

2.28
consistently favour new firms

Support for new and growing firms is a high priority

2.66
for policy at the local government level

Taxes and other government regulations are applied

to new and growing firms in a predictable and 2.91
consistent way

The amount of taxes is NOT a burden for new and

2.91
growing firms

Support for new and growing firms is a high priority

3.14
for policy at the national government level

0 1 2 3 4 5

Experts’ perceptions about the tax treatment of new and growing firms and the absolute tax
burden on them were moderate (mean scores of less than 3.0). There is evidence that the
tax burden on SMEs is substantial. The Doing Business 2009 report states that the taxes and
mandatory contributions that an Egypt-based limited liability company (with more than 60

Page | 49
employees) must pay is 46.1%. This includes social security contributions (28.9% of profit),
corporate income tax (13.6% of profit) and administrative taxes (3.6%).

3. Governmental Programmes

Another main factor affecting the level of entrepreneurial activity is the government's
involvement in encouraging new and growing firms through support programmes. The
contribution of government Box 4. Governmental Programmes
programmes to entrepreneurship In my country,
support was assessed in the NES by 1. a wide range of government assistance for new and growing
six items (see Box 4). firms can be obtained through contact with a single agency.
2. science parks and business incubators provide effective
support for new and growing firms.
Except in a few countries, experts 3. there are an adequate number of government programmes
did not indicate a high level of for new and growing businesses.
4. the people working for government agencies are competent
positive agreement with statements and effective in supporting new and growing firms.
reflecting the state of government 5. almost anyone who needs help from a government
programme support (Figure 37). programme for a new or growing business can find what
Egypt ranked 22nd on the availability they need.
6. government programmes aimed at supporting new and
and efficacy of its governmental growing firms are effective.
support programmes for new and
growing firms.

Figure 37. Government Programmes – Cross-National Comparison

3
2.19
2

0
Dominican R.
Greece

Brazil
Chile
Ecuador

Mexico
Iran
Peru

Finland
Denmark
Spain

Ireland
Uruguay

Korea
Bolivia

South Africa

Argentina

Russia
Egypt
Jamaica

Italy

Croatia
Bosnia

Serbia

Macedonia

Slovenia
Colombia
USA

Norway

Germany
Turkey

Basically, Egyptian experts do not hold a high degree of credence that government
programmes are adequately available to anyone who needs help with a new or growing
business. This item received the lowest mean score for this EFC (Figure 38). This suggests a
lack of availability/accessibility of assistance to new and growing firms provided by
government programmes. The next lowest scored EFC item regards the effective support
provided by science parks and business incubators (mean score of 1.9). There are several
initiatives in Egypt to establish science parks (i.e. Mubarak City for Scientific Research and
Technology Applications) and business and technology incubators (i.e. SFD incubators, Smart
Village, Technology Transfer and Innovation Centres), yet the impact of these efforts is still
felt on a relatively small scale. Furthermore, the experts generally perceived that there is not

Page | 50
an adequate number of government programmes and that people working for government
agencies lack competence and are generally ineffective in supporting new and growing firms
(mean scores just over 2.0).

Figure 38. Perceptions of the State of Government Programmes in Egypt

Almost anyone who needs help from a government

programme for a new or growing business can find 1.85
what they need

Science parks and business incubators provide

1.97
effective support for new and growing firms

People working for government agencies are

competent and effective in supporting new and 2.17
growing firms

Adequate number of government programmes for

2.17
new and growing businesses

Government programmes aimed at supporting new

2.36
and growing firms are effective

Wide range of government assistance for new and

growing firms can be obtained through contact with 2.51
a single agency

0 1 2 3 4 5

Over the last two decades, the Government of Egypt has launched several programmes to
support entrepreneurship, either directly or in cooperation with the private sector and
donors, with the main focus on SMEs. A primary example is the SFD, which operates one-
stop shops in each governorate to facilitate the business registration and licensing processes
for owners of micro and small enterprises, and offers advice, counselling , export assistance,
and financing through its network of SFD Regional Offices. The Industrial Modernisation
Centre (IMC), established by a Presidential Decree in 2000 under the Ministry of Trade and
Industry, offers programme support (primarily) to firms with 10 or more employees,
including growth firms, and has launched an Entrepreneurship Development Programme
aimed at developing and supporting entrepreneurship. The General Authority for Investment
and Free Zones (GAFI) has a one-stop shop to facilitate licensing processes for new investors
and the Ministry of Communications and Information Technology (MCIT) also offers
programme support to innovative enterprises in the information technology sector.

Page | 51
4. Education and Training

The attitudes of experts towards the framework conditions affecting education and training
were explored through eight survey statements aimed at assessing to what extent the
educational and training system
encourages and supports
entrepreneurial behaviour and
management skills (see Box 5).
The majority of experts in 31 GEM
countries assessed the level of
attention to and inclusion of
entrepreneurship in the education
system in their countries as low
(Figures 39 and 40). Egypt ranks in
last place with a mean score of 1.3
on experts’ perceptions of the
extent of entrepreneurial education
at primary and secondary schools
and about 1.8 on experts’
perceptions of the adequacy of
education and training support for
new and growing firms.
Box 5. Education and Training
In my country,
1. teaching in primary and secondary education encourages
creativity, self-sufficiency, and personal initiative.
2. teaching in primary and secondary education provides
adequate instruction in market economic principles.
3. teaching in primary and secondary education provides
adequate attention to entrepreneurship and new firm
creation.
4. colleges and universities provide good and adequate
preparation for starting up and growing new firms.
5. the level of business and management education provide
good and adequate preparation for starting up and growing
new firms.
6. the vocational, professional, and continuing education
systems provide good and adequate preparation for starting
up and growing new firms.
7. entrepreneurs in general need external assistance of their
plans prior to start-up.
8. there are enough public and/or private centres or agencies
that can provide persons with adequate education and
training on entrepreneurship independently of the
educational formal system.

Figure 39. Entrepreneurial Education at Primary and Secondary Schools – Cross-National

Comparison

2
1.31

0
Dominican R.
Brazil

Greece
Chile

Ecuador

Finland
Ireland
Mexico

Iran

Peru

Spain

Denmark
South Africa

Jamaica
Colombia

Uruguay
USA

Croatia

Korea

Russia

Norway
Egypt

Bolivia

Italy
Germany

Bosnia
Turkey

Serbia

Argentina

Macedonia

Slovenia

Page | 52
 Figure 40. Education and Training – Cross-National Comparison

2 1.79

Dominican R.
Greece

Brazil
Ecuador

Chile
Ireland
Peru

Mexico
Denmark
Iran

Spain

Finland

Korea

Uruguay
Egypt

South Africa

Bolivia

Italy

Slovenia

USA
Colombia

Russia
Bosnia

Turkey

Macedonia
Germany

Croatia

Norway
Jamaica

Serbia

Argentina
Except for strong agreement among the Egyptian experts that entrepreneurs need external
assistance prior to start-up, they gave very low scores to other items in this EFC (Figure 41).

Figure 41. Perceptions of the State of Entrepreneurial Education and Training in Egypt

Primary & secondary education provides adequate

1.28
attention to entrepreneurship & new firm creation

Primary & secondary education provides adequate

1.31
instruction in market economic principles

Primary and secondary education encourages creativity,

1.36
self-sufficiency, and personal initiative

Colleges and universities provide good and adequate

1.47
preparation for starting up & growing new firms

The level of business & management education provide

good and adequate preparation for starting up & growing 1.97
new firms

Vocational, professional & continuing education systems

provide good & adequate preparation for starting up & 2.00
growing new firms
Enough public and/or private centres or agencies can
provide persons with adequate education & training on
2.06
entrepreneurship independently of the educational
formal system

Entrepreneurs in general need external assistance of their

4.28
plans prior to start-up

0 1 2 3 4 5

Page | 53
The lowest mean scores were given to efforts in the elementary and secondary education
system to encourage creativity, self-sufficiency and personal initiatives (i.e. entrepreneurial
attributes), teach market economic principles, and expose students to entrepreneurship and
new firm creation knowledge. Experts believe that the system does not provide anything
close to adequate attention to these issues. This was also the case with experts’ views on the
preparation for starting and growing new firms provided by colleges and universities.
Although slightly more agreeable regarding efforts of vocational, professional and continuing
education systems in providing good and adequate preparation for start-up and growing new
firms, the mean score of experts on this item was only 2.0.

This is certainly an area which is need of attention if the goal is to foster

80% of national
stronger entrepreneurial activity in Egypt. Some efforts do exist to expose experts were agreed
young people and students to entrepreneurship. The SFD, supported by that the education
donors, has recently launched an Entrepreneurship Education Programme system is one of the
to introduce entrepreneurship curriculum in selected universities and top three areas
colleges across the country. In 2008, the Ministry of Education announced constraining
a new initiative to introduce the International Labour Organisation (ILO) entrepreneurship in
“Know About Business” curriculum in 10 secondary schools on a pilot Egypt.
basis. Ultimately, over 50,000 students annually are projected to
participate in this entrepreneurship programming when fully
implemented.

There are a number of extracurricular entrepreneurship programmes as well. INJAZ-Egypt, an

affiliate of Junior Achievement (JA), that began operations in Egypt in 2006, delivers market
economy and entrepreneurship classes in schools, colleges and universities. The Egyptian
Junior Business Association (EJB) actively promotes entrepreneurship as a career options to
university students through its KEY Career Development Programme, and the IMC has
developed strong alliances with several Egyptian universities to expose students to
entrepreneurship. Several entrepreneurship training classes were offered to thousands of
Egyptian students during 2008 Global Entrepreneurship Week in Egypt, organized by the
Middle East Council for Small Business and Entrepreneurship (MCSBE) with its many
organizational partners. A number of other non-government organisations (NGOs) and
business associations offer entrepreneurship and management skills training, but this is on a
small scale and not systematic. In spite of these efforts, as revealed in the APS findings, a very
small percentage of Egyptians have presently been exposed to entrepreneurship education
and training, in or out of school.

Page | 54
5. R&D Transfer

Another framework condition enhancing entrepreneurship in any country is an environment

that nurtures research and development, transfers it to new and growing firms, and enables
the access of these firms to new Box 6. R&D Transfer
technology. Six statements were used In my country,
to assess this EFC (see Box 6). 1. new technology, science, and other knowledge are
efficiently transferred from universities and public research
centres to new and growing firms.
A comparison of the judgements 2. new and growing firms have just as much access to new
made by the experts in all GEM research and technology as large, established firms.
countries indicated a low level of 3. new and growing firms can afford the latest technology.
4. there are adequate government subsidies for new and
belief that R&D and technology
growing firms to acquire new technology.
support is being provided to new and 5. the science and technology base efficiently supports the
growing firms in their countries creation of world-class new technology-based ventures in
(Figure 42). Egypt ranks in last place at least one area.
6. there is good support available for engineers and scientists
among the 31 countries with a mean to have their ideas commercialised through new and
score on experts’ views of 1.6 out of a growing firms.
possible 5.

Figure 42. R&D Transfer – Cross-National Comparison

2 1.65

0
Dominican R.
Brazil
Ecuador

Chile

Greece
Peru

Iran

Mexico

Spain
Denmark
Finland

Ireland
South Africa
Egypt
Bolivia
Bosnia

Macedonia

Jamaica

Croatia
Turkey

Colombia
Argentina
Italy

Russia

Slovenia
Uruguay

USA
Serbia

Germany
Norway

Korea

This particular EFC earned the lowest mean scores of experts in Egypt, who clearly do not
believe that R&D and technology support is very advanced in the country (Figure 43). Their
lowest assessment is of the efficient transfer of new science,
“To improve
entrepreneurial technology and knowledge from universities and public research
activity, there centres (mean score of less than 1.5). The next lowest score
must be proper relates to the affordability of the latest technology to new and
consideration
growing firms. Experts expressed the view that acquisition of the
and attention to
R&D.” latest technology is in fact a burden for new and growing firms
due to its high capital investment requirement and their limited
- Expert - access to formal financing. Thus, these firms do not have as much
access to new research and technology as large, established firms

Page | 55
with greater financial resources. Experts have a negative perception of the adequacy of
government subsidies for new and growing firms to acquire new technology. Although this
item received the highest mean score for the items in this EFC, it was lower than 2.0. They
particularly referred to the lack of investment of public money in R&D grants that would
reduce risk and equity gaps for innovative projects. This is resulting in a lack of knowledge
transfer and commercialisation of R&D and innovation.

Targeting scientists and engineers with support to facilitate the commercialisation of their
ideas and innovations is seen as inadequate, as is the level of support for world-class new
technology-based ventures in at least one area of competence. The closest Egypt may come
to the latter is in the area of ICT applications. The Ministry of Communications and
Information Technology (MCIT) has a slate of support programmes to foster innovation in
this field (e.g. the Technology Development Fund, Annual IT Business Plan Competition,
network of Technology Transfer and Innovation Centres) with some success stories.

Figure 43. Perceptions of the State of R&D Transfer in Egypt

New technology, science, and other knowledge are

efficiently transferred from universities and public 1.46
research centers to new & growing firms

New and growing firms can afford the latest technology 1.58

New and growing firms have just as much access to new

1.61
research and technology as large, established firms

Good support available for engineers and scientists to

have their ideas commercialised through new & growing 1.64
firms

The science and technology base efficiently supports the

creation of world-class new technology-based ventures 1.78
in at least one area

There are adequate government subsidies for new and

1.85
growing firms to acquire new technology

0 1 2 3 4 5

Even though the majority of Egypt's research institutions and centres are government-
owned32 , the development of a dynamic and knowledge-based society is one of the hardest
challenges that the Government of Egypt faces. To the extent that owners of new and
growing firms cannot access the latest technology, science and other knowledge from
universities and public research centres, they are deprived of potential commercialisation
opportunities and the country is deprived of the employment creation, innovation and
export potential of high-growth enterprises.

Page | 56
6. Commercial and Professional Services Infrastructure

The sixth Entrepreneurial Framework

Box 7. Commercial & Professional Services
Condition shaping entrepreneurial activity Infrastructure
is the level, scope, distribution, In my country,
accessibility, and affordability of 1. there are enough subcontractors, suppliers, and
consultants to support new and growing firms.
commercial and professional services in any
2. new and growing firms can afford the cost of using
country. The affect of this EFC on new and subcontractors, suppliers, and consultants.
growing firms was explored using five 3. it is easy for new and growing firms to get good
statements (see Box 7). subcontractors, suppliers, and consultants.
4. it is easy for new and growing firms to get good,
professional legal and accounting services.
Experts' opinions on the strength of the 5. it is easy for new and growing firms to get good
commercial and professional services banking services (checking accounts, foreign
infrastructure vary across countries, yet are exchange transactions, letters of credit, and the
like).
generally quite low (Figure 44). Egypt
ranked 25th.

Figure 44. Commercial & Professional Services Infrastructure – Cross-National Comparison

3 2.68

0
Dominican R.
Brazil

Greece
Chile

Ecuador
Iran

Mexico

Peru

Spain

Denmark

Ireland
Finland
Bolivia

Colombia

Korea
Bosnia
Egypt

Croatia

South Africa

Jamaica

Argentina

Slovenia

Uruguay
USA
Italy

Turkey

Serbia

Macedonia

Germany
Russia

Norway

The lowest scored item by Egyptian experts is the affordability of using subcontractors,
suppliers, and consultants (mean of 2.1) (Figure 45). They believe that the new and growing
firms cannot afford the cost and thus find it difficult to get good ones. Access to good
banking, legal and accounting services, and the availability of subcontractors, suppliers and
consultants each had a mean score of 3.0, indicating a slightly favourable view of experts
about the strength of these factors.

Page | 57
 Figure 45. Perceptions of the State of Commercial & Professional Infrastructure in Egypt

New & growing firms can afford the cost of using

2.11
subcontractors, suppliers, and consultants

Easy for new and growing firms to get good

2.36
subcontractors, suppliers, and consultants

Easy for new & growing firms to get good banking

services (checking accounts, foreign exchange 3.00
transactions, letters of credit, and the like)

Easy for new and growing firms to get good,

3.00
professional legal & accounting services

Enough subcontractors, suppliers, and consultants to

3.06
support new and growing firms

0 1 2 3 4 5

7. Internal Market Openness

The strength of internal market openness was assessed through six statements (see Box 8). It
is divided into two sub-dimensions: a) internal market dynamics (statements 1-2), and b)
internal market burden (statements 4-6).

The first sub-dimension has to do with Box 8. Market Openness

the opportunities for new and growing
firms created from expanding markets
for products and services. The second
has to do with barriers to market entry
created by high entry costs and blocked
competition.
A cross-national comparison shows
variation in experts' perceptions of the
In my country,
1. the markets for consumer goods and services change
dramatically from year to year.
2. the markets for business-to-business goods and services
change dramatically from year to year.
3. new and growing firms can easily enter new markets.
4. the new and growing firms can afford the cost of
market entry.
5. new and growing firms can enter markets without being
unfairly blocked by established firms.
6. the anti-trust legislation is effective and well enforced.

dynamism of the markets in their

countries (Figure 46). Egypt ranks 4th among the 31 countries (mean score of 3.5), indicating
the perception of a comparatively dynamic market for goods and services.

Page | 58
 Figure 46. Internal Market Dynamics – Cross-National Comparison

4
3.57

Dominican R.
Greece

Brazil
Ecuador

Chile

Mexico
Denmark
Finland

Spain

Ireland
Peru

Iran
Uruguay

Croatia
Norway
Argentina
Bolivia

Jamaica

South Africa
Colombia
Italy

Germany
Russia

USA
Macedonia
Slovenia
Bosnia

Egypt

Korea
Turkey

Serbia
Experts in the GEM countries are clearly less optimistic about the degree of open market
competition, and the ease with which new firms and growing firms can enter into new
markets (Figure 47). Egypt ranks 15th on internal market burden with a mean score of 2.4.

Figure 47. Internal Market Burden – Cross-National Comparison

3
2.47

0
Dominican R.
Brazil

Greece
Ecuador

Chile
Iran

Mexico

Finland
Ireland
Spain

Peru

Denmark
Croatia

Uruguay
Bosnia
Serbia

Bolivia
Macedonia
Colombia
Russia
South Africa
Italy

Slovenia
Egypt

Argentina

Jamaica
Korea

Norway
Germany
USA
Turkey

The Egyptian experts believe that the markets for both consumer goods and services and
business-to-business goods and services change dramatically from year to year (Figure 48),
indicating high dynamics.

Page | 59
 Figure48 . Perceptions of the State of Internal Market Openness in Egypt

Anti-trust legislation is effective and well enforced 2.3

New & growing firms can enter markets without

2.42
being unfairly blocked by established firms

New & growing firms can afford the cost of market

2.5
entry

New & growing firms can easily enter new markets 2.57

Markets for business-to-business goods and

3.46
services change dramatically from year to year

Markets for consumer goods and services change

3.69
dramatically from year to year

0 1 2 3 4 5

On the other hand, experts also believe that new and growing firms in Egypt cannot easily
enter new markets, that the cost of market entry is high, that new and growing firms are
being unfairly blocked by established firms, and that the anti-trust legislation is not effective
and well enforced.

8. Accessibility of Physical Infrastructure

The ease with which new and growing
firms can access physical infrastructure
was assessed using five statements
(see Box 9).
Experts rated their countries highly on
the scale of development, distribution
and accessibility of physical
infrastructure (Figure 49). Egypt ranks
7th, reflecting the positive perceptions
of Egyptian experts relative to those in
other GEM countries.
Box 9. Physical Infrastructure
In my country,
1. the physical infrastructure (roads, utilities,
communications, waste disposal) provides good support
for new and growing firms.
2. it is not too expensive for a new or growing firm to get
good access to communications (phone, Internet, etc.).
3. a new or growing firm can get good access to
communications (telephone, internet, etc.) in about a
week.
4. new and growing firms can afford the cost of basic
utilities (gas, water, electricity, sewer).
5. new and growing firms can get good access to utilities
(gas, water, electricity, sewer) in about a month.

In Egypt, this EFC has the highest mean score (3.8) of the nine, indicating that Egyptian
experts hold highly favourable views of the state of physical infrastructure in the country –
both in terms of affordability of basic utilities (water, gas, electricity
“Cheap and easy and sewer) and communications (phone, internet) and timely access
access to utilities (Figure 50). They gave a somewhat lower assessment of the general
is a fostering support provided to new and growing firms by physical
factor for
entrepreneurship
infrastructure, such as roads, communications, and waste disposal.
in Egypt.”
-
Expert -

Page | 60
 Figure49 . Accessibility of Physical Infrastructure – Cross-National Comparison

3.82
4

Greece
Iran

Peru

Denmark
Ireland
Brazil

Korea
Norway
South Africa

Serbia

Turkey

Uruguay
Croatia

Germany
Argentina
Ecuador

Egypt

Chile
Finland
Mexico

Spain

Dominican R.
Jamaica

Russia

Slovenia
Italy

Bosnia

Bolivia

Macedonia
Colombia

USA
Figure 50. Perceptions of the State of Accessibility of Physical Infrastructure in Egypt

Physical infrastructure (roads, utilities,

communications, waste disposal) provides good 2.94
support for new & growing firms

New and growing firms can get good access to

utilities (gas, water, electricity, sewer) in about a 3.91
month

New or growing firm can get good access to

communications (telephone, internet, etc.) in 3.92
about a week

Not too expensive for a new or growing firm to get

good access to communications (phone, Internet, 4.06
etc.)

New & growing firms can afford the cost of basic

4.10
utilities (gas, water, electricity, sewer)

0 1 2 3 4 5

In the meantime, more steps are being taken to increase the accessibility of physical
infrastructure for companies, especially SMEs. For example, The Ministry of Trade and
Industry is amending energy prices so SMEs in the six industrial sectors listed in energy-
intensive projects will be exempt from a rise to $3 per mbtu for natural gas. The mobile
services companies are offering SMEs telecom solutions and packages for their businesses.
The road transportation system, however, is still in need of upgrading to enhance the
movement of goods and services.

Page | 61
9. Social and Cultural Norms

The degree to which cultural and social norms foster entrepreneurial attributes and
attitudes and favour entrepreneurship was assessed using five statements (see Box 10).

Some countries are perceived by their

Box 10. Social and Cultural Norms
national experts to have a very positive In my country,
societal attitude towards entrepreneurship, 1. the national culture is highly supportive of
the United States being the strongest individual success achieved through own personal
efforts.
example (Figure 51), while in others, the 2. the national culture emphasises self-sufficiency,
prevailing social and cultural norms are not autonomy, and personal initiative.
seen as so supportive of entrepreneurship 3. the national culture encourages entrepreneurial
and fostering of entrepreneurial attributes. risk-taking.
4. the national culture encourages creativity and
innovativeness.
On this EFC, Egypt ranks 22nd, placing it 5. the national culture emphasises the responsibility
among the countries perceived to have less that the individual (rather than the collective) has
in managing his or her own life.
favourable cultural and social environments
for entrepreneurship.

Figure51 . Social and Cultural Norms – Cross-National Comparison

3
2.40

0
Dominican R.
Greece

Brazil
Ecuador
Chile
Mexico

Denmark
Iran

Spain

Finland
Peru

Ireland
Uruguay

Croatia
Bolivia
Bosnia

Slovenia

Egypt

Russia

Jamaica
Serbia

Italy
Germany

South Africa

Macedonia

Norway

Argentina

Colombia

Korea
USA
Turkey

Although the experts in Egypt were somewhat confident that the national culture is highly
supportive of individual success (mean score of 3.1), they were much less confident that it
encourages entrepreneurial risk-taking, creativity and innovation
(Figure 52). Their perceptions of the strength of cultural support “To improve
emphasising individual responsibility, self-sufficiency, autonomy and entrepreneurial activity
in Egypt, it is essential
personal initiative were also not very favourable (mean scores of less
to change the culture
than 2.4). and stimulate an
entrepreneurial spirit
within the society.”

-Expert-

Page | 62
 Figure 52. Perceptions of the State of Social and Cultural Norms in Egypt

National culture encourages entrepreneurial risk-

2.00
taking

National culture encourages creativity and

2.14
innovativeness

National culture emphasises the responsibility that

the individual (rather than the collective) has in 2.31
managing his/her own life

National culture emphasises self-sufficiency,

2.36
autonomy, and personal initiative

National culture is highly supportive of individual

3.14
success achieved through own personal efforts

0 1 2 3 4 5

Experts’ Views on Other Aspects of the Entrepreneurial

Environment

National experts were asked to present their views on other dimensions of the
entrepreneurial environment in their countries. This section shares findings on three of
these dimensions: support for the entrepreneurial activity of women; the availability of good
start-up opportunities; and the degree of knowledge and ability of citizens to start and
manage their own businesses.

Start-up Support to Women

Support for the entrepreneurial activity of women and their start-up efforts was assessed
using five statements (see Box 11).

It is obvious that some countries have

quite positive attitudes towards
women entrepreneurs and are
encouraging the start up of
entrepreneurial ventures by women,
for example, Finland and Norway,
which ranked highest among GEM
countries on the level of support
provided to women (Figure 53). Some
other countries are not as accepting of
the start-up of a business as a career
option for women. Iran, Turkey, Bosnia
Box 11. Women’s support to start up
In my country,
1. there are sufficient social services available so that
women can continue to work even after they start a
family.
2. starting a new business is a socially acceptable career
option for women.
3. women are encouraged to become self-employed or
start a new business.
4. men and women get equally exposed to good
opportunities to start a new business.
5. men and women have the same level of knowledge and
skills to start a new business.

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and Egypt (in 28th place) were perceived to have the most negative attitudes towards
women’s entrepreneurship, resulting in inequality of opportunity.

Figure 53. Start-up Support to Women – Cross-National Comparison

3 2.70

Dominican R.
Brazil
Chile
Greece

Ecuador
Iran

Spain

Peru
Mexico

Ireland

Denmark

Finland
Egypt
Croatia

Uruguay
Turkey
Bosnia

Bolivia

Italy

USA

Jamaica
Serbia
Germany
South Africa

Macedonia

Korea

Argentina

Colombia

Slovenia

Russia
Norway
Egyptian experts expressed moderate agreement that starting a new business is a socially
acceptable career option for women (mean score of 2.9) (Figure 54). However, overall, they
felt that women are not equally exposed to good opportunities to start a new business as
men (mean score of 2.4), not encouraged to start a business, and not provided with
sufficient social services to enable them to work after they start a family. These factors will,
of course, affect women's level of engagement in entrepreneurship/self employment. This is
borne out in the APS findings, which showed that men are more than 3 times as likely as
women in Egypt to be engaged in early-stage entrepreneurial activity.

Figure 54. Perceptions of Support for Women’s Entrepreneurship in Egypt

Men and women get equally exposed to good

2.42
opportunities to start a new business

Women are encouraged to become self-employed

2.67
or start a new business

Sufficient social services available so that women

2.71
can continue to work even after they start a family

Men and women have the same level of

2.72
knowledge and skills to start a new business

Starting a new business is a socially acceptable

2.97
career option for women

0 1 2 3 4 5

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Opportunities to Start Up

Country experts were asked to provide their assessment of the availability of start-up
opportunities using five statements (see Box 12).

Their perceptions of this varied Box 12. Opportunities to start up

across countries (Figure 55). Egypt In my country,
ranked in 6th place. Its good relative 1. there are plenty of good opportunities for the creation of new
firms.
placement on this indicator is
2. there are more good opportunities for the creation of new
consistent with the finding of the firms than there are people able to take advantage of them.
APS study that the main motive to 3. good opportunities for new firms have considerably
start a business for 81% of Egyptian increased in the past five years.
4. individuals can easily pursue entrepreneurial opportunities.
early-stage entrepreneurs is to 5. there are plenty of good opportunities to create truly high
pursue a market opportunity. growth firms.

Figure 55. Availability of Good Start-Up Opportunities  Cross-National Comparison

4
3.50

0
Dominican R.
Greece

Ecuador

Chile

Brazil
Spain

Iran

Mexico
Denmark

Ireland
Finland

Peru
Uruguay

Italy

Serbia

Slovenia

Bolivia

Colombia
Germany
Bosnia
Jamaica
Argentina
Russia

USA
Croatia
Korea
Norway
Egypt
Turkey

Macedonia

South Africa

The Egyptian experts believe that the opportunities for the creation of new firms have
considerably increased in the past five years, but also that there are more good
opportunities than there are people to take advantage of them (Figure 56). They are not
very convinced that individuals can easily pursue the entrepreneurial opportunities.

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 Figure 56. Perception of Opportunities to Start up in Egypt

Individuals can easily pursue entrepreneurial

2.88
opportunities

Plenty of good opportunities to create truly high

3.29
growth firms

Plenty of good opportunities for the creation of new

3.50
firms

More good opportunities for the creation of new firms

3.61
than there are people able to take advantage of them

Good opportunities for new firms have considerably

4.19
increased in the past five years

0 1 2 3 4 5

Abilities and Knowledge to Start Up

Assessments of the level of knowledge,

skills and capacity of the population in
GEM countries to start-up and manage
businesses were sought on the basis of
five statements (see Box 13).
The majority of experts do not believe
that people in their countries generally
possess the necessary know-how and
experience (Figure 57). Egypt ranked
21st , placing it in the bottom third of
GEM countries.
Box 13. Abilities and knowledge to start up
In my country,
1. many people know how to start and manage a high-
growth business.
2. many people know how to start and manage a small
business.
3. many people have experience in starting a new
business.
4. many people can react quickly to good opportunities for
a new business.
5. many people have the ability to organise the resources
required for a new business.

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 Figure 57. Abilities and Knowledge to Start and Manage a Business – Cross-National
Comparison

3
2.21

Dominican R.
Brazil

Greece
Ecuador

Chile
Iran

Mexico

Finland
Peru
Spain

Denmark

Ireland
South Africa

Uruguay

USA

Russia

Korea
Slovenia

Norway
Bosnia
Germany
Bolivia

Egypt
Croatia

Jamaica
Serbia

Macedonia

Argentina
Italy
Colombia
Turkey

Experts in Egypt do not believe that many Egyptians are equipped with the knowledge and
ability to start and manage a business (Figure 58) and even less so that many of them know
how to do this for a high-growth business (mean score of 1.7). They rated the ability of the
population to react quickly to good opportunities for a new business as very low as well
(2.4), although this item had the highest mean score for this group of items.

Figure 58. Perception of Abilities and Knowledge to Start and Manage a Business in Egypt

Many people know how to start and manage a

1.76
high-growth business

Many people have the ability to organise the

2.14
resources required for a new business

Many people have experience in starting a new

2.25
business

Many people know how to start and manage a

2.39
small business

Many people can react quickly to good

2.46
opportunities for a new business

0 1 2 3 4 5

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 Experts’ Views on Areas Constraining and Fostering
Entrepreneurial Activity in Egypt

Finally, the NES asked the national experts to itemise three areas/issues constraining
entrepreneurial activity and three areas/issues fostering entrepreneurial activity in Egypt.
Their categorised and tabulated open-ended responses are presented in Tables 12 and 13.

Most significantly, national experts held strong views that the education system and lack of
entrepreneurial orientation and training is a major area/issue hindering entrepreneurship in
Egypt (Table 12). The majority concurred that reforming the education system, integrating
entrepreneurship programmes in high school/university curricula, and moving from
theoretical education to analytical and applied education would influence positively the level
of entrepreneurship in Egypt. Social traditions and inadequate access to finance were also
high on the list of the top three most mentioned constraints.

Table 12. Areas Constraining Entrepreneurial Activity in Egypt - Experts' Opinions

% of responses
1. Education system in schools and universities; lack of entrepreneurial training. 29.0
2. Culture of people, social traditions and risk aversion. 16.0
3. Inadequate access to finance. 13.0
4. Cumbersome licensing processes and long bureaucratic procedures. 8.0
5. Insufficient public, technical and financial support. 7.0
Lack of entrepreneurial know-how and the knowledge, skills and abilities
6. 6.0
needed to start a new venture.
Insufficient coordinated government support for new high-growth
7. 6.0
entrepreneurial ventures.
8. Corruption and lack of market transparencies that leads to a lack of trust. 5.0
Absence of social security services (e.g. medical insurance and pensions) for
9. 4.0
self-employed business.
10. Weak marketing. 3.0
100.0%

In spite of the constraints, national experts expressed the view that Egypt has great potential
to be a hub for entrepreneurship. There are many fostering factors promoting entrepreneur-
rial activity in the country (Table 13). The perception among Egyptians that self-
employment/ entrepreneurship improves the quality of life is increasing, accompanied by
cultural changes. Transitionally, people were seeking to be employed by the government,
but gradually are turning to the private sector to pursue employment and opportunities.

The Government in Egypt is moving forward on efforts to create a more favourable and
business-friendly environment. Although some experts criticised the Government’s weak
and bureaucratic policies with respect to promoting entrepreneurial activity in Egypt, many
also praised the current reforms to reduce legal and regulatory barriers and costs of
establishing and operating enterprises. Many experts believed that the Government's more

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recent attention to the importance of entrepreneurship and SMEs for creating sustainable
socio-economic development is an important fostering factor that will enhance
entrepreneurship in the country. The growth in sources and types of investment capital is
also seen as a positive factor.

Table 13. Areas Fostering Entrepreneurial Activity in Egypt - Experts' Opinions

% of responses
1. Looking for a better quality of life. 20.0
The cultural change to accept entrepreneurship concept and self-
2. 15.0
employment.
Government’s recent efforts to reduce the legal and regulatory barriers and
3. 11.0
costs to establishing and operating enterprises.
Growth in sources of capital, i.e. International and regional Investment flows,
4. 11.0
new financing models, etc.
5. Human resources are available for development and utilisation. 9.5
6. Infrastructure is available for the creation of new businesses. 9.5
Large unexploited market with untapped potential, which creates huge
7. 7.5
demand.
A growing number of events (conferences, seminars, workshops) on the
8. topic of entrepreneurship, which act to raise awareness and interest in the 5.5
issue.
9. Growth of the economy. 5.5
10. Technological developments; high tendency of Egyptians to be innovative. 5.5
100.0%

Each expert offered their top three recommendations for improving the level of
entrepreneurial activity in Egypt (see summary categorisations in Table 14).

By far, the highest number of mentions was to reform the education system, consistent with
the view of experts that this is the top constraint to entrepreneurship in Egypt. Making
finance more available; providing information on how to start a business and sign-posting to
procedural requirements and sources of assistance; promoting an entrepreneurial culture
(e.g. more media focus on entrepreneurship and celebration of success stories); and
achieving greater efficiency and transparency in government polices and regulatory
environments to support growth, innovation, R&D, and the creation of new businesses were
also recommended.

This provides a segue to the final section of this report, which presents the major
conclusions of the GEM-Egypt findings, the policy implications, and the set of overall
recommendations for future actions.

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 Table 14. Experts' Recommendations to Improve the Level of Entrepreneurial Activity in
Egypt
% of responses
1. Reform education system starting from basic education. 25
Create and develop new ways to access finance, whether from banks,
2. 13
government or donor bodies.
Disseminate clear, user-friendly instructions for new businesses on how to
3. set up operations (e.g. required paperwork, available financing, training 12
opportunities). This requires more government coordination.
4. Promote awareness and support an entrepreneurial culture. 10
A more accountable government that develops sound plans and follows
them through, while being truly accountable to an effective and
5. 10
democratically elected legislative authority that formulates policies and
monitors implementation.
6. Give proper consideration and attention to R&D and support for innovation. 10
Reduce the bureaucratic and non-constructive procedures that hinder
7. 8
growth, and develop (and honour) policies and procedures that promote it.
Focus the media more on entrepreneurship (e.g. continuous media
8. 7
campaigns, books, TV programs, etc.) and celebrating success stories.
Improve infrastructure to lower the costs of doing business and increase
9. productivity (i.e. less expensive transportation, higher employee 4
productivity with less time spent in traffic, fewer power failures… etc.).
Review bankruptcy laws in order to encourage the creation of businesses.
10. Currently the laws and regulation make entrepreneurs risk-averse because 1
of the legal consequences of failure.
100.0%

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 Part IV: Policy Implications and
Recommendations

This section lays out the policy implications from the findings presented in this report and
makes recommendations geared to enhance the level and quality of entrepreneurial activity
in Egypt.

Policy Implications

Entrepreneurship is a critical component of growth in any society. Entrepreneurs create jobs,

innovate with new product and service ideas, and through the starting of new businesses
can positively impact the level of productivity in a sector or the economy. The fundamental
aim of the GEM research is to provide a strong foundation for an informed policy debate
about the relationship between entrepreneurship and economic growth and help
governments identify what needs to be done to enhance the level, and quality, of
entrepreneurship in their countries.

In analysing the factors that explain differences in the level of entrepreneurial activity across
countries, several patterns have been noted in GEM country comparisons. 33

a) The importance of demographic structure has been one of the most fundamental of
these patterns. Consistently, across countries, the 25-34 age group has the highest
entrepreneurial activity rates. So this is the most significant pool of potential
entrepreneurs from which the majority of new enterprises and jobs will be created
in coming years. Adults in this age group also has the highest TEA rate in Egypt,
although not as high as the average for other factor-driven economies. But in
addition, the age group with the second highest TEA rate in Egypt is among the 18-
24 year olds, which is not the case in most GEM countries. In this respect, Egypt’s
young population is giving it a strong “entrepreneurial” advantage. The median age
of the Egyptian population in 2008 was 24.5, and almost 60% of the total population
is younger than 25. The policy implication is that considerable efforts should be
made in Egypt to foster the development of entrepreneurial skills, ability, and know-
how of young Egyptians, starting early in the education system as part of the formal
curriculum and extracurricular activities. Preparing them early will have an impact
on the quality of the enterprises they eventually start.

b) The education level of the population matters greatly. GEM studies have concluded
that policies geared to enhancing entrepreneurial capacity (i.e. the skills and
motivation to pursue opportunity) may have the greatest impact on the level of
entrepreneurial activity. TEA rates in the population generally rise with the level of
education. So countries with large cohorts of highly-educated people may have an
“entrepreneurial” advantage. Although Egypt basically follows the pattern of GEM
countries — TEA rates are highest among adults with post-secondary education or
higher — unfortunately, the average education level in Egypt is relatively low, so the
better educated people with higher TEA rates are in the minority. GEM studies have
also found that entrepreneurs with higher levels of education are more likely to be

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 innovative and growth-oriented. The major implication of this result is that the low
level of education of Egyptians generally is a barrier to growth of the entrepreneurial
population. In the medium-term, Egypt must continue to raise the average
education level of the population.

GEM 2008 also examined the extent to which adults had taken any formal
education and training related to entrepreneurship and starting a business. On this
indicator, Egypt had the second lowest score of GEM countries, just above Turkey.
Very few Egyptians have had any formal education or training related to developing
entrepreneurial attributes or starting a new business. Even though over half of the
Egyptian adults agreed with the APS statement that they had the knowledge, skill
and experience required to start a new business, it is likely that many have had to
learn the hard way, and some may be overly confident. The national experts, for
example, did not agree that many people have the ability to organise the resources
required for a new business and even less so, that they knew how to do this in the
case of a high-growth firm. People who had received entrepreneurship education
and start-up training were much more confident that they had the skills and
knowledge to be able to start a business, which increases the probability that they
will become an entrepreneur. Male students in the GEM Egypt study have a very
high TEA rate (about 30%), yet have very little opportunity to take credit classes in
entrepreneurship and new venture creation or to learn any skills that will help them
identify more viable business ideas or to start and grow their enterprises. Much
more needs to be done in and around the education system to nurture
entrepreneurial skills.

Weaknesses in the education system with respect to entrepreneurship were

reinforced by the national experts and reflected in Egypt’s poor comparative
standing relative to other GEM countries on the Education and Training EFC. The
education system in Egypt was assessed by national experts as being very weak in
this area, at all levels of schooling, unlike the case in many other GEM countries
where the government has made entrepreneurship education a priority. In the
short- and medium-term, efforts should be made to reform the education approach
to foster creativity, self-sufficiency, personal initiative, and independent thinking, as
well as to integrate entrepreneurship-related content into teaching materials and
classrooms at all levels of the education system.

c) Household income is a factor in entrepreneurial activity rates. GEM studies find that
the TEA rate tends to be higher (by varying degrees) among adults in the top third of
the household income brackets. In Egypt, this pattern seems to hold, especially for
men. At the lowest household income levels, the decision to start a business is more
driven by necessity than opportunity. In fact, much of the policy support for
entrepreneurship in Egypt is targeted towards the poorest segments of the
population to encourage them to pursue necessity entrepreneurship. In many
instances, small income-generating activity contributes to poverty alleviation and
gives marginally-employable people an option to make a living. This issue is worthy
of more analysis using the GEM data, as it may have important policy implications.

d) The under-representation of women in early-stage entrepreneurial activity. On

average, the TEA rate for men is about twice that for women, although there is

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 variance across countries. For example, the ratio is much closer to one in some of
the developing countries in Latin and South America (e.g. Argentina, Bolivia, Peru)
and South-East Asia. On this indicator, Egypt stands out. With a male-female TEA
ratio of 3.4:1, it has one of the largest entrepreneurial gender gaps of the GEM
countries. Women’s participation in entrepreneurial activity is similar to that of their
labour force participation generally. Egyptian women are slowly becoming more
involved in economic life as traditional social and cultural values change. The
Government of Egypt’s latest National Development Plan set a target to increase
women’s labour force participation to 25% (from 19%). However, women have
difficulty finding formal private sector employment and the unemployment rate for
women is at least 4 times higher than for men. The GEM study found that women
who work part-time have a very high TEA rate (30%), which indicates that women in
certain situations are highly predisposed to starting a business.

GEM studies conclude that rapid gains in start-up rates can be achieved by
increasing the participation of women in the entrepreneurial process, and provide
evidence that countries with the highest start-up rates tend to have a higher level of
female participation. This suggests that more efforts should be made to target the
entrepreneurial development of women; the policy implication being that Egypt
should engage more aggressively in efforts to promote women’s entrepreneurship
and launching supporting initiatives.

e) The extent to which individuals perceive there are good opportunities to start a
business is an important influencing factor. GEM studies have found a strong
association between TEA rates in a country and the proportion of the population
who “sees good opportunities for starting a business in the next 6 months”. On this
indicator, 40% of Egyptians said they did. This is somewhat low for the factor-driven
economies but higher than in many of the efficiency- and innovation-driven
economies. Egyptian national experts gave a quite favourable assessment of the
opportunities to start new businesses in the country. The current economic climate
has influenced the opportunity perception of populations; countries participating in
the GEM research for several years note a significant decline in the percentage of
people who answered yes to this question in 2008. On the other hand, national
experts in Egypt were quite positive about the extent of opportunities to start new
businesses in the country. They felt that opportunities for new firms have increased
considerably over the past five years, and that a rapidly changing and dynamic
market for consumer and business goods and services is a contributing factor.
However, they were less positive that individuals can easily pursue opportunities or
react quickly to them. The other “entrepreneurial advantage” for Egypt as a
developing country is that early-stage entrepreneurs are much more opportunity
than necessity motivated. The GEM studies have concluded that opportunity
entrepreneurship has a higher association with economic growth.

This leads to the final two reflections to be made in this section on policy implications —
access to financing and the business regulatory environment, which are related more to
the set of entrepreneurial framework conditions than individual and demographic
characteristics.

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 f) The availability of early-stage financing, from both public and private sources is a
critical framework condition. Lack of access start-up capital can be a major deterrent
to start-up actions. Banks traditionally have not been that eager to finance new
businesses, unless they can properly assess the risk. This is most problematic in
developing countries. Most new businesses start with rather small amounts of
money that they are able to pull together from personal resources. GEM studies
have found that informal investors play a large role in the financing of new and
early-stage ventures, and that formal venture capital is a critical form of financing
for high-growth enterprises. The majority of Egyptian early-stage entrepreneurs
were financing their start-ups with less than LE 50,000 (60%) but the amount ranged
from LE 100 to LE 10 million (31% needed between LE 50,000 and LE 500,000 and 9%
over LE 500,000). Remembering that 3 million Egyptians were trying to start 1.34
million enterprises, this amounts to a significant investment. Over half were
expecting to seek external financing. In their assessment of the Financial Support
EFC, national experts were not much in agreement that sufficient financing was
available for new and growing firms, particularly equity and venture capital
financing. Their assessment placed Egypt 21st among the 43 GEM countries.
Improving the financing environment to encourage more start-ups and growth firms
would appear to be a policy imperative.

Informal investors are a major source of start-up financing. In Egypt, 2.5% of the
adult population has been involved as informal investors in early-stage start-ups
over the past three years. Although the average investment is small and almost half
are investing in start-ups of close family members and relatives, the estimated
amount of their annual investments is close to 1% of GDP. Relative to other GEM
countries, Egypt’s angel prevalence rate compares with the average for EU GEM
countries, but is low compared to the OECD GEM countries (average of 3.5%), the US
(5.2%) and well below other developing countries in other parts of the world.

g) The central features of the economic system, including the degree of presence (and
role) of government in the economy, taxation levels, labour market rigidities,
regulations and red-tape, etc., influence the level and nature of entrepreneurial
activity. GEM has adopted the grounded position that efforts to improve the
general economic and institutional climate for business will benefit the
entrepreneurial sector, but that this is insufficient to accelerate development and
growth of new and high-growth ventures. Key factors include the availability of
financing, cost and access of commercial and professional services, provision of
suitable education and training, R&D support, and other important dimensions
covered in the nine EFCs. In other words, specific policies to promote
entrepreneurship and support new start-ups and growth firms are needed.

The national experts were quite negative about the strength of many of the EFCs.
Their poorest assessment was of the state of R&D and technology transfer support.
Financial support for new and growing firms to acquire new technology; access to
research and technology; commercialisation support to engineers and scientists with
market potential technologies or applications, and the transfer of knowledge and
technology from universities and public research centres to new and growing firms,
were all viewed as being extremely weak.

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 Economists might advise that, as a factor-driven economy, Egypt should be focusing
on importing technologies from elsewhere and adopting them for use in Egypt, as
opposed to trying to create and develop new technologies in-house that can be later
exported to the world. Regardless, upgrading the level of technology in use by
Egyptian enterprises is critical to improving product quality, efficiency and
competitiveness. Early-stage entrepreneurs in Egypt are more likely than established
entrepreneurs to be using, or planning to use, new technologies as a market
expansion strategy, and to be employing the latest technology in their business. In
fact, the percentage of Egyptian early-stage entrepreneurs indicating they are doing
this is higher than in most developed GEM countries. But the level of innovativeness
of their products and product market combinations is very low compared to GEM
countries. As reinforced by the national experts, proper attention to R&D, its
transfer to the entrepreneurial sector, and support for all forms of innovation are
crucial policy issues.

Other framework items with very poor assessments related to: 1) difficulty for new
and growing firms in coping with government bureaucracy, regulations, and licensing
requirements; 2) lack of availability and accessibility of government programme
support to anyone who is developing a new or growing business; and 3) lack of
effective support for new and growing firms provided by science parks and
incubators.

On the positive side, Egypt has several factors weighing in its favour. GEM studies reveal that
the level of cultural and societal support for entrepreneurial activities is a critical factor
influencing entrepreneurial activity rates. It appears from the GEM Egypt 2008 results that
the attitudes of the Egyptian population towards entrepreneurship are quite favourable.
Egypt compares reasonably with GEM countries on the percentage of the population
agreeing that entrepreneurship is a desirable career choice; the fear of failure is lower than
in most countries; almost 8% of the population is currently trying to start a business; more
than third of the adult population expects to start a business in the next three years; and
there appears to be a high level of serial entrepreneurship in the country.

Although the national experts were less positive about the level of cultural support for
entrepreneurs in the country, this all sounds good. It actually poses the question of why
Egypt does not have a higher TEA rate than it does. As it is, Egypt needs more entrepreneurs
starting businesses. The TEA rate is low for a country at its level of development, meaning
that the density of entrepreneurs and businesses is lower than its potential. One of the key
reasons for this could be the low participation of women in entrepreneurial activity but
another concern should be the actual start-up rates of the nascent companies. How many of
them will actually make it into the market? How many of them will be impeded by lack of
finance, difficult registration and licensing requirements, or other market entry barriers?
How many of them will not survive very long in the market because they were pursuing a
marginal business opportunity, or because they lacked the knowledge or skill to make the
right business decisions? How many of them will be able to gain the resources and know-
how to realize their growth expectations? These are all critical policy questions.

Page | 75
 Recommendations

Promoting entrepreneurship in Egypt entails the collective efforts of different constituencies

and stakeholders from around the country. Based on the results of GEM Egypt 2008, a
number of recommendations are offered for consideration. These are based on the input
from national experts and analysis of the adult population interviews.

Education and Training

Education was identified as one of the main constraining factors to entrepreneurship

development in Egypt. With some reforms, the education system in Egypt can become a
main driving factor in the development of entrepreneurship. This can be achieved through:

1. Restructuring the educational system to foster creativity and independent thinking.

2. Reviewing the design of school curriculum at the elementary and secondary levels to
incorporate entrepreneurship principles and accelerate the teaching of
entrepreneurship materials in more schools and classes.

3. Integrating entrepreneurship classes on how to start a business as part of any

vocational or technical training programmes/courses.

4. Capitalising on the high entrepreneurial activity prevalence rates of university

students by encouraging a career advisory system in universities to embrace the
idea of students starting-up their own businesses.

5. Introducing entrepreneurship as a major in the universities.

6. Introducing management skills modules at secondary schools, vocational institutions

and universities.

7. Establishing non-degree issuing programmes to enhance the level of skills and

capabilities necessary in starting-up and growing a business.

8. Setting up enterprise incubators and entrepreneurship centres on university and

college campuses to promote entrepreneurship, provide counselling and mentoring
services, and provide linkages between the centres of knowledge creation and
potential entrepreneurs.

9. Dramatically expanding the offer of flexible entrepreneurship orientation, training

and mentoring programmes through business resource centres, youth centres, SFD
Regional Offices, the IMC, and qualified NGOs and business associations throughout
the country.

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Financing

It is crucial to develop a stronger financial-support environment in Egypt in order to enhance

the creation and development of entrepreneurial start-ups and growth ventures. Experts’
assessment of the availability of debt and equity financing for new and growing firms in
Egypt were quite low, even more so in the case of equity and venture capital financing for
start-ups and early-stage growth firms. Improving the situation can be assisted by:

1. Increasing the extent to which banks extend loans to new start-ups, matching the
terms of these loans with the needs and capacities of the venture (e.g. soft pay-back
policies).

2. Making more microfinance funds available for enterprises in the start-up stage.

3. Increasing the active role played by private equity and venture capital funds in
responding to the seed capital needs of new and early-stage, innovative and high
growth potential enterprises with limited access to funds from traditional sources,
including the benefit of management advice. This may involve offering incentives to
private sector investors to share some of the risk in diverting funds to early-stage
ventures with limited track records but high growth-potential.

4. Ensuring that the appropriate regulatory environment for the functioning of venture
capital companies is in place.

5. Engaging business angels to play a more active role in supporting entrepreneurship,

especially high growth start-ups, by raising funds from non-traditional sources and
providing mentoring to new entrepreneurs.

The Regulatory Environment

Reducing barriers to the start-up and growth of an enterprise is basic to increasing the level
and nature of entrepreneurial activity.

1. Ensuring that competition policy and anti-trust legislation are effective and well
enforced to ensure fair, equal, and open opportunities for the competitive entry of
new and growing firms in sectors of the market.

2. Making provisions in the labour laws to allow self-employed persons to participate in

social security schemes (medical insurance, pension, etc.).

3. Amending bankruptcy laws to international standards with flexible procedures for

closing down a business in cases of insolvency. The legal consequences of “failure”
should not prevent entrepreneurs from having a second chance.

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Culture and Awareness Building

Egypt needs more entrepreneurs. While the population expresses quite favourable attitudes
towards entrepreneurship and its role in society, national experts pointed to the lingering of
some traditional cultural attitudes. GEM studies confirm that the perceived social legitimacy
of entrepreneurship makes a difference to TEA rates. The role of elevated and ongoing
media support and other forms of high-level promotion activity cannot be underestimated.
Promoting role models is one of the effective ways to inform and motivate more positive
attitudes. This can be achieved by:

1. Celebrating success stories of entrepreneurs, encouraging self-employment and

fostering an entrepreneurial-promoting culture, stimulated by sufficient social
support from family, friends and peers.

2. Honouring entrepreneurship in social traditions and practices to assign value and

high social status to starting up a business and becoming an entrepreneur.

3. Encouraging creativity and more openness to new products and services through
awareness campaigns.

4. Improving the social image of entrepreneurs through media efforts to focus on

“achieving entrepreneurs” as credible role models.

Elevating the Level of Women’s Entrepreneurship

Women in Egypt represent a large untapped source of entrepreneurial potential. The TEA
rate for some groups of women is very high, although their overall participation in
entrepreneurial activity is low compared to that of men, and to that of women in many
other GEM countries. Women represent an economic force if their potential is supported
and encouraged more fully. This could be achieved through:

1. Viewing and articulating women’s entrepreneurship as an economic issue rather

than as a gender or social issue; recognising their contribution as economic and
wealth-creating agents.

2. Launching cultural awareness campaigns to address the social and cultural

impediments facing women who would like to play a more active role in economic
activity by starting their own business.

3. Launching a campaign to promote entrepreneurship for women, including a

systematic network of entrepreneur and business support services to help transfer
the knowledge and skills needed to develop business ideas and new ventures (e.g.
special programmes to mentor and coach women on starting up businesses,
expanded women’s enterprise centres, etc.).

4. Making entrepreneurship training opportunities more available to women who are

trying to break into the labour market.

Page | 78
 5. Implementing special initiatives in post-secondary institutions and universities to
promote entrepreneurship to female students.34

6. Establishing financial intermediaries or special loan products dedicated to providing

loans to women (e.g. less rigid collateral requirements, tailored pay-back
mechanisms).

Government Policy and Programme Support

Governments have an important role to play in nurturing entrepreneurial activity. GEM

global reports have stated in the past that “any government committed to economic
progress must ensure that all aspects of its economic system are conducive to and
supportive of increased levels of entrepreneurial activity” 35. They do this indirectly on a
routine basis through their fiscal policies, tax policies, regulatory policies, competition
policies, education and technology policies, regional development policies, labour market
policies and so on. In many cases, the intent of these policies is not specifically to nurture
entrepreneurship; in fact, they may even have an unintended adverse effect on the level of
entrepreneurial activity by creating disincentives. Often, consideration of the possible
impact of these policies on entrepreneurial activity is totally overlooked by policymakers.
Governments also directly influence the level of entrepreneurial activity through programme
measures and interventions — the establishment of business incubators, information and
business resource centres, enterprise development centres, and R&D subsidies, as examples.

National experts were moderately in agreement that support for new and growing firms is a
high priority at the national government level (less so at the local government level). One of
their concerns, however, was the lack of a comprehensive government-wide and formally-
adopted entrepreneurship policy document, articulating a strategy to specifically promote
the development of new entrepreneurs and the start-up of new and growth-oriented
enterprises. Initiatives to promote entrepreneurship and support start-ups do exist but they
are fragmented and not part of a comprehensive approach. One of the important things
government could do to accelerate the development of entrepreneurship would be to
formulate such a comprehensive entrepreneurship policy and framework for actions to
serve as a cross-government roadmap for the development and implementation of
measures. Such a policy should focus on addressing needs and gaps of different types of
entrepreneurs at each stage of the entrepreneurial process. An important objective of the
policy would be to foster higher-quality start-ups with more growth potential and
competitive advantages.

In working towards a more coordinated approach to the development of entrepreneurship,

national experts also recommended that the government engage the private sector.
Appointing a high-level National Entrepreneurship Council, with representatives from the
policy community, business associations, universities, and development organisations was
suggested as a vehicle for raising the policy profile of this key economic growth issue.

In the meantime, the GEM Egypt 2008 study revealed several areas where government can
add value in the fostering of entrepreneurship and, thus, position and promote Egypt as a
regional hub for entrepreneurship. These include:

Page | 79
 1. Implementing policies that reduce tax burden, further streamline procedures for
starting a business, and reduce bureaucratic, legal and regulatory barriers (and
costs) to establishing and operating enterprises. Lower taxes and simplified and
unified new business registration and licensing procedures are factors in the
creation of a more favourable environment for entrepreneurship, new business
entries, and growing firms. Effective one-stop shops, combined with streamlined
steps and procedures, could contribute to an increase in the attractiveness of
pursuing formal entrepreneurial activities in Egypt as well as the competitiveness of
early-stage enterprises.

2. Aligning government support programmes towards enhancing entrepreneurial

activity in Egypt. Establishing networks in collaboration with the private sector to
respond to the needs of new entrepreneurs, reducing impediments to the creation
and development of businesses, and supporting established businesses in ways that
will enhance their sustainability.

3. Expanding government support for research and development by allocating more

resources and public investment to encourage R&D efforts. This could be achieved
by encouraging research centres in the universities, especially the public ones, to
innovate through dissemination of knowledge, facilitating access to funds, increasing
exposure to advanced technologies, and facilitating the commercialisation of
innovative ideas developed in these centres by building bridges with entrepreneurs.

4. Establishing a larger network of business incubators to support the setting up of new

entrepreneurial ventures and provide the appropriate business support needed to
increase their chances of survival and growth.

5. Establishing a Technology Acquisition Fund that can be used by new and young firms
to secure financing for the acquisition of the latest technologies or to develop new
technologies with market potential.

6. Investing in development and integration of entrepreneurial attributes and

principles at all levels of the education and training system, as well as specifically
targeting the development of young entrepreneurs.

7. Facilitating the trade process for new and established entrepreneurial ventures by
developing plans, policies and programmes to increase their export potential,
facilitating linkages with other countries whose markets have high potential for
Egyptian products, reducing tariffs, and providing assistance in the transportation of
products out-of-country.

8. Improving the infrastructure (e.g. transportation, telecommunications, community

services) in the country, lowering the cost of services provided to entrepreneurial
ventures, and improving the quality in the delivery of the services.

In conclusion, this report highlights some of the major findings of the GEM Egypt research.
More in-depth analysis of the many variables in the survey database is possible and would
shed light on other interesting aspects of early-stage entrepreneurship in Egypt. Critically

Page | 80
important, however, is that the GEM-Egypt 2008 study has, for the first time, established
baseline information on the entrepreneurial behaviour of Egyptians. Tracked through annual
updates, this will provide a substantial evidence base to inform policymakers. This will better
enable them to refine and develop more effective policies, measures and actions to foster
entrepreneurship as part of a growth agenda. Other countries have found that conducting
the GEM research on an annual basis has produced a unique and invaluable set of data for
monitoring trends and changes over time and provided a much richer understanding of the
entrepreneurial dynamics taking place in the economy and the environment for
entrepreneurship. This has led to many policy improvements and assisted in the evaluation
of the impact of different policy measures on the performance of entrepreneurial indicators.

Page | 81
Page | 82
 Annex 1. GEM2008 National Teams – Global

Factor-driven Institution Financial Sponsors

economies

ƒ Universidade Cat˴lica de Angola

(UCAN)
Angola ƒ Sociedade Portuguesa de Inovaço ƒ Banco de Fomento S.A.
(SPI)

ƒ Fundaci˴n Nuevo Norte

ƒ USAID/Bolivia
Bolivia ƒ Maestrias para el Desarrollo,
ƒ Fundacion Avina
Universidad Catolica Boliviana
ƒ Red Bolivia Emprendedora
ƒ Fundaci˴n para la Producci˴n
ƒ Entrepreneurship Development
Center Tuzla
ƒ Entrepreneurship Development
Bosnia & Herzegovina ƒ Government of Tuzla Canton
Center from Tuzla in partnership
ƒ City of Tuzla
with Tuzla University
ƒ Government of Brcko District of
Bosnia and Herzegovina
ƒ Universidad de los Andes
ƒ Universidad ICESI
ƒ Universidad del Norte ƒ SENA
Colombia
ƒ Pontificia Universidad Javeriana ƒ Comfenalco Valle
Cali

ƒ Escuela Superior Politécnica del

Litoral (ESPOL)- ESPAE, Graduate ƒ Escuela Superior Politécnica del
Ecuador
School of Management Litoral (ESPOL)

ƒ The British University in Egypt

ƒ Industrial Modernization Center,
(BUE)
Ministry of Trade & Industry
Egypt ƒ Egyptian Junior Business
ƒ The Nielsen Company
Association (EJB)
ƒ The British University in Egypt

India ƒ Pearl School of Business, Gurgaon ƒ Pearl School of Business, Gurgaon

Iran ƒ University of Tehran ƒ Ministry of Labor and Social Affairs

Page | 83
Efficiency-driven
Institution
economies
ƒ Center for Entrepreneurship, IAE
Argentina Management and Business
School, Universidad Austral
ƒ IBQP - Instituto Brasileiro da
Brazil
Qualidade e Produtividade
ƒ Universidad del Desarrollo
ƒ Universidad Adolfo Ib˲ϝez
ƒ Univ. Cat˴lica del Norte
ƒ Univ. Cat˴lica del Norte
Chile
ƒ Univ. Técnica Federico Santa
Marϱa
ƒ Univ. del Desarrollo
ƒ Univ. de la Frontera -INCUBATEC
ƒ J.J. Strossmayer University in
Croatia
Osijek
ƒ Pontificia Universidad Cat˴lica
Dominican Republic
Madre y Maestra (PUCMM)
Page | 84
Financial Sponsors
ƒ Center for Entrepreneurship, IAE
Management and Business School,
Universidad Austral
ƒ Banco Santander Rio
ƒ Subsecretarϱa de Desarrollo
Econ˴mico, Ministerio de Desarrollo
Econ˴mico - Gobierno de la Ciudad
de Buenos Aires
ƒ Prosperar, Agencia Nacional de
Desarrollo de Inversiones
ƒ Instituto Brasileiro da Qualidade e
Produtividade – IBQP
ƒ Serviço Brasileiro de Apoio às
Micro e Pequenas Empresas –
SEBRAE
ƒ Serviço Nacional de Aprendizagem
Industrial - SENAI / PR
ƒ Serviço Social da Ind˸stria - SESI /
PR
ƒ Universidade Positivo
ƒ InnovaChile de CORFO
ƒ Universidad Cat˴lica del Norte,
DGIP.
ƒ Gobierno Regional, Agencia
Regional Desarrollo Productivo.
ƒ Universidad Cat˴lica del Norte,
DGIP.
ƒ Gobierno Regional, Agencia
Regional Desarrollo Productivo.
ƒ Departamento de Industrias
ƒ Y Centro de Ingenierϱa de
Mercados, CIMER,
ƒ de la Univ. Técnica Federico Santa
Marϱa
ƒ El Mercurio de Valparaϱso
ƒ UDD-Facultad de Economϱa y
Negocios.
ƒ Direcci˴n de Innovaci˴n y
Transferencia
ƒ Tecnol˴gica de la Universidad de La
Frontera
ƒ Ministry of Economy, Labour and
Entrepreneurship
ƒ SME Policy CentreCEPOR, Zagreb
ƒ J.J. Strossmayer University in
Osijek – Faculty of Economics,
Osijek
ƒ Grupo Vicini
ƒ International Financial Centre of
the Americas
ƒ Consejo Nacional de
Competitividad
 ƒ Ministry for National Development
and Economy
ƒ University of Pécs, Faculty of
Hungary ƒ University of Pécs, Faculty of
Business and Economics
Business and Economics
ƒ Ohio University (USA)
ƒ Faculty of Business and
Jamaica ƒ University of Technology, Jamaica Management, University of
Technology, Jamaica
ƒ The TeliaSonera Institute at the
Latvia Stockholm School of ƒ TeliaSonera AB
ƒ Economics in Riga
ƒ University “Ss. Cyril and
ƒ Macedonian Enterprise
Methodius” – Business
Development Foundation (MEDF)
ƒ Start-Up Centre
Macedonia ƒ Austrian Development Agency
ƒ Macedonian Enterprise
ƒ Macedonian Agency for Promotion
Development Foundation
of Entrepreneurship
ƒ (MEDF)
Mexico ƒ Tecnol˴gico de Monterrey ƒ Tecnol˴gico de Monterrey
ƒ Centro de Desarrollo
Peru ƒ Universidad ESAN
Emprendedor, Universidad ESAN
ƒ Pro Oeconomica Association
ƒ Faculty of Economics and
ƒ Babes-Bolyai University, Faculty of
Romania Business Administration, Babes-
Economics and Business
Bolyai University
Administration
ƒ Saint Petersburg Team
ƒ Graduate School of Management
ƒ Graduate School of Management,
at Saint Petersburg State
Saint Petersburg
Russia University
ƒ Moscow Team
ƒ State University - Higher School of
ƒ State University - Higher School of
Economics
Economics, Moscow
ƒ Executive Council of Vojvodina
ƒ The Faculty of Economics,
Serbia Province, Department for
Subotica
Economy
ƒ Department of Trade and Industry
ƒ Swiss South Africa Cooperation
ƒ University of Cape Town - Initiative
South Africa
Graduate School of Business ƒ South African Breweries
ƒ Standard Bank
ƒ SEDA
ƒ Endeavor, Turkey Country Office
Turkey ƒ Yeditepe University
ƒ Akbank
ƒ Instituto de Estudios
ƒ IEEM Business School -
Uruguay Empresariales de Montevideo
Universidad de Montevideo
(IEEM)

Page | 85
 Innovation-driven
Institution Financial Sponsors
economies
ƒ Flemisch Government, Steunpunt
ƒ Vlerick Leuven Gent Management
Belgium Ondernemen en Internationaal
School
Ondernemen (STOIO)
ƒ International Danish
Denmark ƒ University of Southern Denmark
Entrepreneurship Academy (IDEA)
ƒ Ministry of Employment and the
Economy
ƒ Ministry of Education
ƒ The European Union under the
Finland ƒ Turku School of Economics
European Regional Development
Fund and the European Social
Fund
ƒ Turku School of Economics
France ƒ EMLYON Business School ƒ Caisse des Depots
ƒ University of Hannover
ƒ Institute of Labour Market
Germany ƒ Institute of Labour Market
Research, Nuremberg
Research, Nuremberg
ƒ Foundation for Economic and
Greece ƒ Hellenic Bank Association
Industrial Research (IOBE
ƒ RU Centre for Research on
ƒ Reykjavik University
Iceland Innovation and Entrepreneurship
ƒ Prime Minister’s Office
(Reykjavik University)
ƒ Enterprise Ireland
Ireland ƒ Dublin City University ƒ Forfas
ƒ Allied Irish Bank
ƒ The Ira Center of Business, ƒ The Ira Center of Business,
Israel Technology & Society, Ben Gurion Technology & Society, Ben Gurion
University of the Negev University of the Negev
ƒ Ernst & Young
Italy ƒ Bocconi University
ƒ Atradius Credit Insurance
ƒ Keio University ƒ Venture Enterprise Center
Japan ƒ Musashi University ƒ Ministry of Economy, Trade and
ƒ Shobi University Industry
ƒ Small and Medium Business
Republic of Korea ƒ Jinju National University
Administration (SMBA)
ƒ Institute for Entrepreneurship and
ƒ Ministry of the Economy
Small Business
ƒ Slovenian Research Agency
Slovenia ƒ Management, Faculty of
ƒ Smart Com
Economics & Business, University
ƒ Finance – Slovenian Business Daily
of Maribor
Netherlands ƒ EIM Business and Policy Research ƒ Dutch Ministry of Economic Affairs
Norway ƒ Bodo Graduate School of Business ƒ TNS Gallup
ƒ Instituto de Empresa ƒ DGPYMES
ƒ Regional Universities: ƒ Fundaci˴n Cultural Banesto
ƒ Cϝdiz ƒ Fundaci˴n Incyde
ƒ Oviedo ƒ IE Business School
Spain
ƒ Univ. de Zaragoza ƒ Junta de Andalucϱa
ƒ Las Palmas & La Laguna ƒ Gob. de Arag˴n
ƒ Univ. De Cantabria ƒ Gob. del Principado de Asturias
ƒ Le˴n ƒ Gob. de Canarias, Cabildo

Page | 86
 ƒ Castille la Mancha
ƒ Aut˴noma de Barcelona
ƒ Miguel Hernϝndez
ƒ Fundaci˴n Xavier de Salas
ƒ Santiago de Compostela
ƒ Aut˴noma de Madrid
ƒ Univ. de Murcia
ƒ P˸blica de Navarra
ƒ Deusto & Basque Country
ƒ Univ. de Granada & Escuela de
Negocios de Andalucϱa
ƒ Hunter Center for
Entrepreneurship, University of
Strathclyde
United Kingdom
ƒ Economics & Strategy Group,
Aston Business School, Aston
University
ƒ Babson College
United States ƒ Baruch College, City University of
New York
ƒ Fondo Social Europeo
ƒ Gob. de Cantabria
ƒ Centros de Innovaci˴n
ƒ Europeos (Navarra, Murcia, C y
Le˴n)
ƒ Generalitat de Catalunya
ƒ Junta de Extremadura
ƒ Air Nostrum, CEG, BIC Galicia
ƒ IMADE, FGUAM
ƒ Fundaci˴n Caja Murcia
ƒ Eusko Ikaskuntza
ƒ Instituto Vasco de Competitividad
ƒ FESNA
ƒ Universidad de Granada and many
others
ƒ BERR Enterprise Directorate
ƒ InvestNI
ƒ Department of Enterprise, Trade
and Investment (NI)
ƒ Belfast City Council
ƒ Enterprise Northern Ireland
ƒ Hunter Centre for
Entrepreneurship, University of
Strathclyde
ƒ Scottish Enterprise
ƒ Welsh Assembly Government
ƒ One North East
ƒ North West Development Agency
ƒ Yorkshire Forward
ƒ Advantage West Midlands
ƒ East Midlands Development
Agency
ƒ South West of England
Development Agency
ƒ South East Development Agency
ƒ Enterprise Insight
ƒ Wessex Enterprise
ƒ Babson College
ƒ Baruch College
Page | 87
Page | 88
 Annex 2. GEM Egypt National Team

Amr Gohar, MBA

is the Chairman of ECCO, a company specialised in offering
contact centre and business process outsourcing services, and
the CEO & Managing Director for NTCC, a prepaid telephony
Service Provider. Before starting his own companies, he served in
Philips, Siemens and finally Lucent Technologies as Regional
Director, Marketing and Sales in the Middle East. Amr is Vice-
Chairman of the Egyptian Junior Business (EJB) Association,
former Head of the EJB Entrepreneurship Committee, President
of the Middle East Council for Small Business and
Entrepreneurship (MCSBE), and a member of the MTI Industry
Entrepreneurship Council. He is also a member in various other organisations and NGOs,
including Egypt’s ICT Export Council of the Ministry of Trade and Industry (MTI), the National
Telecom Regulatory Authority (NTRA) Industry Committee of the MCIT, the American
Chamber of Commerce in Egypt, and EITESAL, an ICT-specialised NGO.

Hala Hattab, PhD

is a Business Administration Instructor at the British University in
Egypt, based in Cairo, and Programme Manager for GEM-Egypt. She
has 10 years of experience in marketing and business development.
As a graduate of chemical engineering, she started her professional
career as a business development officer in an engineering
consultancy company. Later she obtained her MBA and moved to
work as a marketing manager in a multi-national consultancy
company operating worldwide. By 2004 she was promoted to
“Business Development Manager” leading marketing,
communication and public relations of EMEA region. In 2007, she
obtained her Ph.D. in female entrepreneurship and added to her professional career a new
academic dimension that covers research as well as teaching.

Professor David Kirby

is Vodafone Chair of Business and Founding Dean, Faculty of
Business Administration, Economics and Political Science at The
British University in Egypt (BUE). Prior to joining the BUE, he was
Professor of Entrepreneurship in the School of Management at the
University of Surrey in which capacity he established a pre-incubator
on the University Research Park and had responsibility for
establishing the university’s knowledge transfer activities. He has a
long experience in the field of entrepreneurship and small business
management as a teacher, trainer, researcher and consultant, both
in the UK and overseas. In 2006, he received The Queen’s Award for
Enterprise Promotion in recognition of his pioneering research and
teaching in the field. He is a former Director of the UK Institute for Small Business and

Page | 89
Entrepreneurship and a former Senior Vice President and Director of the International
Council for Small Business. In recognition of his consultancy and training work with small
businesses, he was elected to a Fellowship of the Institute of Business Advisers in 1997 and
to a Fellowship of the Royal Society of Arts (RSA) in 1987, for his contribution to the Society’s
Education for Capability Programme. He has sat on a number of UK Government working
parties and advisory bodies, and as a result of his personal research has published 115
journal articles and 16 books and research monographs, including “Entrepreneurship”
(McGraw-Hill, 2003). In July 2006, he received a Distinguished Scholar award from the
University of Illinois at Chicago for his Research at the Entrepreneurship/Marketing
Interface. He is a Fellow of the UK Institute of Higher Education and an adjunct Professor in
the University of South Australia. He is also a Visiting Professor at the Henley Management
College (University of Reading) and Loughborough University in the United Kingdom.

Ahmed Nafie
is a consultant providing services to SMEs. In 1996, he started his
own business specialising in industry-related services focusing on
laser engraving. From 2004-2009, he served in several leadership
roles in industrial organisations and finally served as General
Manager of the Entrepreneurship Development Programme at
the Industrial Modernisation Centre (IMC), Ministry of Trade and
Industry, a programme providing services to start-up
entrepreneurs. He is a member of the Middle East Council for
Small Business and Entrepreneurship (MCSBE).

Adel Noureldin
is the Director of Regional Development Programmes, Industrial
Modernisation Centre (IMC), Ministry of Trade and Industry. He is
in charge of managing the network of IMC regional branches that
deliver technical assistance to private industrial SMEs to increase
their competitiveness. He also participates in the strategic
development of major national industrial projects such as the
1,000 New Factories Programme (2005 Presidential election
programme), the Upper Egypt Development Programme and the
Specialised Industrial Parks Programme. His key qualifications are
in the field of SME policy development and EU programmes
concerning SME development, entrepreneurship and regional
development, export and general management. Mr. Noureldin has a long history of
experience with national and international enterprises and in the industrial development of
SMEs. He was awarded the Xerox President’s Award for managing the Egyptian
manufacturing plant in a total quality approach and is a Board Member of Worms Alexandria
Cargo Services, a subsidiary of a multinational shipping company.

Page | 90
Paul D. Reynolds, PhD
is a Distinguished Visiting Professor at the George Mason
University School of Public Policy in Virginia, USA. He has held
faculty appointments at the University of California, Riverside;
the University of Minnesota; Marquette University; Babson
College; London Business School, and Florida International
University, and visiting and research appointments at the
University of Michigan, the University of Pennsylvania Wharton
School, INSEAD in France, and Nanyang Technical University in
Singapore. Reynolds completed undergraduate work in
engineering at the University of Kansas (BS; 1960); and
completed all graduate work at Stanford University, with
degrees earned in business (1964; MBA), psychology (1966; MA), and sociology (1969; PhD).
Over the past 20 years he was the coordinating principal investigator of two longitudinal
studies of US business creation (Panel Studies of Entrepreneurial Dynamics, I and II] and the
founding principal investigator of a forty nation comparison of entrepreneurial activity
(Global Entrepreneurship Monitor]. Reynolds currently serves as co-principal investigator of
the second US Panel Study of Entrepreneurial Dynamics. He is the author or co-author of five
books; six edited collections; 42 research reports and monographs; 85 peer review journal
articles and book chapters; seven data sets in the ICPSR archives; and over two hundred
presentations to professional and policy audiences. In 2004, Reynolds received the annual
Swedish International Award for Entrepreneurship and Small Business Research.

Prof. Lois Stevenson

is a Visiting Research Fellow with the International
Development Research Centre (IRDC), based in their Middle
East/North Africa Regional Office in Cairo. She has been
working in the area of small business and entrepreneurship
research and policy for the past 18 years, holding a number
of executive-level positions within the Government of
Canada. Prior to this, Lois was a professor of small business
and entrepreneurship in Canadian universities. She has
conducted many research studies in the field and authored
over 50 published papers and books dealing with
entrepreneurship and related policy issues. Based in Cairo since 2006, Lois was initially the
Project Coordinator for the Small and Medium Enterprise Policy (SMEPol) Development
Project, funded by IDRC and the Canadian International Development Agency (CIDA), in
partnership with the Egyptian Ministry of Finance, and currently leads a Middle East and
North Africa (MENA) region-wide assessment of policy, research and institutional capacities
in private sector and SME development. She is also the GEM-MENA Team Leader for the
IDRC-funded project in seven MENA countries in 2009. Lois is a Past President of the
Canadian Council for Small Business and Entrepreneurship (CCSBE), a Past President of the
International Council for Small Business (ICSB), and a founding member of the Middle East
Council for Small Business and Entrepreneurship (MCSBE).

Page | 91
Page | 92
 Annex 3. List of National Experts - Egypt* 1

NO. Name Job Title Affiliation

Entrust Development &

1. Mr. Tamer El Meehy Managing Director
Management Consultant

2. Ms. Aliaa Soliman Partner AIT Consulting

3. Prof. Matthias Philip Huehn Professor The German University in Cairo

4. Dr. Abdel Monem Omran Managing Director Beltone Capital

5. Mr. Basam Azzab Head of SMEs HSBC

Mr. Ahmed Abou el Yazeid Canadian International

6. SME Technical Advisor
Mohamed Development Agency (CIDA)

International Development
7. Ms. Lois Stevenson Visiting Research Fellow
Research Centre (IDRC)

General Manager, Industrial Modernisation

8. Mr. Ahmed Nafie
Entrepreneurship Program Centre (IMC)

9. Mr. Amr Gohar CEO & Managing Director NTCC

10. Mr. Mohamed Abdel Aziz Manager, SME Policy Unit Ministry of Finance

Advisor for Private Sector Ministry of Investment

11. Ms. Dahlia A. El-Hawary
Development Issues Office of the Minister
Partner & Chief Marketing
12. Ms. Mariam El Hitami Event Egypt
Officer
Chief Investment Officer &
13. Mr. Basel Hussein Roshdy IT Ventures & IT Investments
Deputy General Manager
Director, Regional Industrial Modernisation
14. Mr. Adel Noureldin
Development Program Centre (IMC)
SME Specialist, SME Policy Ministry of Finance
15. Ms. Nerveen Osman
Unit

16. Mr. Amr Hashem Managing Director Nile Ventures

Kreditanstalt fuer
17. Mr. Amr Abou E Azm Senior Programme Officer
Wiederaufbau (KfW)
Entrepreneurs Business Forum-
18. Mr. Yousry El Ghitany Executive Manager
Egypt
19. Mr. Tamer Badreldin General Manager El-Badr Plastic Co

1
Positions held at the time of the survey.

Page | 93
 NO. Name Job Title Affiliation

20. Mr. Ahmed A. Alsharif Deputy Chairman Alsharif Factories

Société Financière et de
21. Mr. Mohamed Osman Chief Operations Officer
Commerce (SOFICO)
Mr. Ahmed Mohamed Business Development Egyptian Company for
22.
Amaal Manager Networks

23. Dr. Yasmine Nader Economist Economic Research Forum

Investment Promotion
Analyst, Investment
Islamic Development Bank
24. Ms. Rasha El-Habashy Promotion Technical
Group
Assistance Programme
(ITAP)
The American University in
25. Dr. Tarek Hatem Senior Research Fellow Cairo, Dubai School of
Government (DSG)
Director, Regional
Industrial Modernization
26. Mr. Adel Noureldin Development Program
Centre (IMC)
Dean of Faculty of
Business Administration,
27. Prof. David Kirby The British University in Egypt
Economics and Political
Sciences

28. Dr. Karim Salem Lecturer The British University in Egypt

29. Eng. Khaled Kamal Owner / Director Sky Tech

Head of Financial Policy Industrial Modernization

30. Mr. Mahmoud Foda
Unit Centre (IMC)

31. Mr. Malik Kotaida Chief Executive Officer Aga Khan Egypt

32. Dr. Mohamed Eid Lecturer The British University in Egypt

33. Mr. Tamer El Naggar Managing Director Synovate North Africa

34. Mr. Walid El-Sherbiny Self-employed

Executive Manager, Small Alexandria Business

35. Mr. Motaz Al Tabaa
& Micro Enterprise Project Association
Lower Egypt Business
36. Mr. Adham El-Sherbini Regional Manager Development Services Support
Project

Page | 94
 Endnotes

1
See World Bank (2007), Doing Business 2008, Washington, DC, USA.
2
See Hisrich, R.D., M.P. Peters, and D.A. Shepherd (2005), Entrepreneurship, Sixth Edition. New York,
NY: McGraw-Hill/Irwin.
3
See, for example, Orhan, M. (2001), “Women Business Owners in France: The Issue of Financing
Discrimination”, Journal of Small Business Management, 39, 95-102.
4
See Bosma, N., Z.J. Acs, E. Autio, A. Coduras, and J. Levie (2009), Global Entrepreneurship Monitor,
2008 Executive Report, Babson College and Universidad del Desarrollo.
5
See Bosma, N., Z.J. Acs, E. Autio, A. Coduras and J. Levie (2009), Global Entrepreneurship Monitor,
2008 Executive Report, p. 7.
6
See World Economic Forum (2008), The Global Competitiveness Report 2008-2009, Geneva,
Switzerland. According to the Global Competitiveness Index (GCI), in the first stage of economic
development the economy is factor-driven and countries compete based on their factor endowments,
primarily unskilled labour and natural resources. Companies compete on the basis of price and sell
basic products or commodities, with their low productivity reflected in low wages. Maintaining
competitiveness at this stage of development hinges primarily on well-functioning public and private
institutions, well-developed infrastructure, a stable macroeconomic framework, and a healthy and
literate workforce. As wages rise with advancing development, countries move into the efficiency-
driven stage of development, when they must begin to develop more efficient production processes
and increase product quality. At this point, competitiveness is increasingly driven by higher education
and training, efficient goods markets, well-functioning labour markets, sophisticated financial
markets, a large domestic or foreign market, and the ability to harness the benefits of existing
technologies. Finally, as countries move into the innovation-driven stage, they are able to sustain
higher wages and the associated standard of living only if their businesses are able to compete with
new and unique products. At this stage, companies must compete through innovation, producing new
and different goods using the most sophisticated production processes. (Taken from WEF, 2008, p. 7.)
7
See Bosma, N., K. Jones, E. Autio, and J. Levie (2008), Global Entrepreneurship Monitor, 2007
Executive Report, Babson College and London Business School, p. 40.
8
For a theoretical derivation of each of the EFCs, see Levie, J., and E. Autio (2007), “Entrepreneurial
Framework Conditions and National-Level Entrepreneurial Activity: Seven-Year Panel Study”. Paper
presented at 3rd GEM Research Conference, Washington, DC, USA, October.
9
For a sample of the Egypt adult population of 2,600 surveys, the maximum error margin with a 95%
confidence level would typically be plus or minus 2%.
10
See the Global Entrepreneurship Monitor reports from 2004-2007, available at:
http://www.gemconsortium.org
11
The theoretical underpinnings of the U-shaped curve are described in Carree, M.A., A. van Stel, R.
Thurik, and S. Wennekers (2002), “Economic Development and Business Ownership: An Analysis using
Date of 23 OECD Countries in the Period 1976-1996”, Small Business Economics, 19, 271-290. In this
article, the researchers identified a U-shaped curve relationship for self-employment and business
ownership rates across OECD countries over a two-decade period.

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12
Much of this discussion of the U-shaped curve analysis is taken directly from the Global
Entrepreneurship Monitor, 2007 Executive Report, p. 13.
13
See Acs, Z.J. (2006), “How is entrepreneurship good for economic growth?” Innovations:
Technology, Governance, Globalization 1 (1), 97-107.
14
The 2006 ELMPS reported that women owned 17.9% of MSEs (enterprises with less than 50
workers).
15
Egypt Human Development Report 2008, United Nations Development Programme and the Institute
of National Planning, Cairo, Egypt.
16
Ministry of Finance (2007), Egyptian Women Entrepreneurs: Profiles of Success, prepared by the
Egyptian Small and Medium Enterprise Policy (SMEPol) Project, Cairo, Egypt.
17
See International Finance Corporation (IFC) and Gender Entrepreneurship Markets (GEM) (2007),
GEM Country Profile – Egypt 2007, Washington, DC, USA.
18
Post-secondary education includes those who completed high school plus some additional
education but have not earned a college or university degree, those who take trade, vocational, or
technical training after completing their secondary education, as well as those who started a college
or university programme but did not complete the requirements.
19
Bosma, N., Z.J. Acs, E. Autio, A. Coduras, and J. Levie (2009), Global Entrepreneurship Monitor, 2008
Executive Report, p. 41.
20
Denis, E. (2008), “Demographic Surprises Foreshadow Change in Neoliberal Egypt”, MERIP Middle
East Report, 246, 32-37, Spring.
21
Global Entrepreneurship Monitor, 2008 Executive Report, p. 23. It can be seen that business
discontinuance rates are relatively high in factor-driven economies.
22
Global Entrepreneurship Monitor, 2007 Executive Report.
23
See Schumpeter, J. (1947). “The Creative Response in Economic History”, The Journal of Economic
History (7)2, 149-159.
24
See for example: Hayton, J.C., G. George, and S.A Zahra (2002), “National Culture and
Entrepreneurship: A Review of the Behavioural Research”, Entrepreneurship Theory and Practice,
Summer; Fitzsimmons. J.R., and E.J. Douglas (2005), “Entrepreneurial Attitudes and Entrepreneurial
Intentions: A Cross-Cultural Study of Potential Entrepreneurs in India, China. Thailand and Australia”,
Babson-Kauffman Entrepreneurial Research Conference, June, Wellesley, MA; Samit, M. (2005),
“Cultural Effects on Entrepreneurial Decision-Making: Why Every Society Can’t be Entrepreneurial”,
presented at AIB-SE (USA) Annual Meeting, Charleston, South Carolina; and Bosma, N., and V.
Schutjens (2009), “Mapping entrepreneurial activity and entrepreneurial attitudes in European
regions”, International Journal of Entrepreneurship and Small Business, 7(2), 191-213. Also GEM
country reports at: www.gemconsortium.org.
25 st
See Kirby, D.A. (2003), Entrepreneurship, 1 Edition, McGraw-Hill Education, UK, p. 57
26
See Davidsson, P. (1995), “Determinants of Entrepreneurial Intentions”, RENT IX Conference
Proceedings, Piacenza, Italy, 23-24 November.
27
See OECD (2003), Entrepreneurship and Local Economic Development: Programme and Policy
Recommendations. Prepared by the Local Economic and Employment Development (LEED)
Programme. OECD: Paris.

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28
World Bank (2008), Access to Finance and Economic Growth in Egypt, Washington, DC, USA, pp. 15-
16.
29
See Miller, J.A.H. (2006), “Promoting Venture Capital Business in Egypt”, Final Report on the
Promoting Venture Capital in Egypt Roundtable, hosted by the Small and Medium Enterprise Policy
(SMEPol) Development Project, the Egyptian Ministry of Finance, and Financial Services Volunteer
Corps, July 2-6, Cairo, Egypt. According to this report, enforcement of Intellectual Property Rights
(IPR), structuring of VC funds, shareholder rights, and other deal terms need to be brought in line with
the laws and regulations of major financial centers, including the British Virgin Islands (BVI),
Luxembourg, Bahrain and Dubai, as well as the US and the UK.
30
For more detail on microfinance in Egypt, see PlaNet Finance (2008), National Impact Survey of
Microfinance in Egypt, prepared with support from the Small and Medium Enterprise Policy (SMEPol)
Development Project; the Egyptian Ministry of Finance; the Canadian International Development
Agency (CIDA); the International Development Research Centre (IDRC); the German Technical
Cooperation (GTZ); the Social Fund for Development (SFD)/the United Nations Development
Programme (UNDP); First Microfinance Foundation (FMF)/Aga Khan Agency for Microfinance (AKAM);
and PlaNet Finance Egypt, Cairo, Egypt, May.
31
See World Bank (2008), Doing Business 2009, Washington, DC, USA.
32
See Korayem, K. (2000), “The Research Environment in Egypt”, in Rached, E. and Craissati, D. (eds),
Research for Development in the Middle East and North Africa, International Development Research
Centre, Ottawa, Canada, pp. 141-160.
33
Reynolds, P.D., M. Hay, W.D. Bygrave, S.M. Camp, E. Autio (2000), Global Entrepreneurship Monitor:
2000 Executive Report, Babson College and London Business School, p. 43. Also see the rest of the
series of GEM Global reports at: http://www.gemconsortium.org.
34
Experiences in other countries suggest this is an effective strategy to build interest in
entrepreneurial activity among young girls and women and to enhance their self-efficacy in
relationship to starting their own business.
35
Reynolds, P. D., M. Hay, W.D. Bygrave, S.M. Camp, and E. Autio (2000), Global Entrepreneurship
Monitor: 2000 Executive Report, Babson College and London Business School, p. 44.

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Page | 98
 The Industrial Modernisation Centre (IMC) is an industrial development agency affiliated with the Ministry of Trade and
Industry (MTI) with a mandate to provide business development support to Egyptian industrial enterprises to reinstate them
competitively in Egypt's global markets in the bid to enhance job creation and secure prosperity for all. IMC's mandate focuses
on industrial enterprises employing more than 10 workers, and aims at addressing the needs of more than 14,000 such
enterprises. Since its foundation, the IMC has been fostering ties with different international organisations of similar mandates.
A number of initiatives have been launched as a result of bilateral and multilateral agreements in the different areas of
sustainable industrial development and the IMC is currently expanding its capacity of cooperation in multiple fields with both
local and international donors, development agencies, business resource organisations, NGOs, and other relevant organisations.
The evolving vision is to promote industrial growth and development via novel approaches built on solid partnerships with the
private sector to revitalize the parameters of industrial global competitiveness in full transparency. A unique model of public
private partnership is now in progress.

Contact information:
The Industrial Modernisation Centre Website: www.imc-egypt.org
1195 Corniche El Nil (Federation of Egyptian Industries' Building) Tel: +202 0800 462 0462; Fax: +20 (2) 577 2870
nd
Ramlet Boulak, 2 floor, Cairo, Egypt E-mail: info@imc-egypt.org

The Egyptian Junior Business Association (EJB) is a dynamic organisation that works as a forum for business people committed
to developing an outstanding culture of excellence while taking an active part in the overall development of Egypt. Its vision is to
be the leading business association enhancing the business environment and positively impacting the Egyptian society towards
sustainable development. The EJB hosts almost 600 members, the majority being between 25 and 45 years old, who are either
business owners or executives in local and multinational companies. The main activities of the association are geared toward
the business environment, business affairs and community development.

Contact information:
The Egyptian Junior Business Association (EJB) Tel: +202 252 840 94; Cell: +2 010 3234 555 - 666
Al Salam Tower Beside Al Salam Int Hospital Fax: +202 252 840 95
Corniche El Nile St., Maadi, Cairo, Egypt Website: www.ejb.org.eg
Email: ejbgroup@ejb.org.eg

The British University in Egypt (BUE) officially opened to Egyptian students in September 2005 on a state-of-the-art campus in
El-Sherouk. It focuses on encouraging personal integrity and academic excellence in its students, alongside developing
Additional copies of this report can be obtained from: enterprising graduates who can envision opportunities and harness the resources to bring them to fruition. Currently, the
university has four faculties - Business Administration, Economics and Political Science; Computer Science; Engineering; and
Nursing, as well as a Department of English that provides the requisite language training. It operates within the framework of
The Industrial Modernisation Centre (IMC)
the UK Quality Assurance Agency and provides degrees in a similar style and to an equivalent standard to UK programmes. The
1195 Corniche El Nil (Federation of Egyptian Industries' Building) BUE is validated by Loughborough and Queen Margaret Universities in the UK and successful students receive a British as well as
nd
Ramlet Boulak, 2 floor, Cairo, Egypt an Egyptian qualification. Having graduated its first students in 2009, the BUE is now firmly established and well placed to
Tel : +202 0800 462 0462 establish a global reputation as a high quality teaching and research institution.
Fax: +20 (2) 577 2870
Email : info@imc-egypt.org Contact information:
The British University in Egypt Tel: +202 2689 0000; Fax: +202 2687 5897
The British University in Egypt Cairo-Suez Desert Road – El Sherouk City, Egypt Website: www.bue.edu.eg
Email: info@bue.edu.eg
Cairo-Suez Desert Road – El Sherouk City, Egypt
Tel: +202 2689 0000 The Middle East Council for Small Business and Entrepreneurship (MCSBE) was formed in 2008 as an affiliate of the
Fax: +202 2687 5897 International Council for Small Business (ICSB) with a mandate to develop members and activities in Egypt, Jordan, Saudi Arabia
Email: hala.hattab@bue.edu.eg and Morocco. Its mission is to advance entrepreneurship and small business in these countries and to develop linkages with the
ICSB global network of affiliates and members from 70 countries around the world. Members include representatives from
It is also downloadable from: government bodies, universities, business associations, banks, venture capital companies, donors, consulting companies, large
corporations and entrepreneurial companies, business development service providers, and development NGOs. MCSBE’s
The website of the Global Entrepreneurship Monitor at: www.gemconsortium.org/national_reports.aspx objectives are to: advocate the formation and growth of small businesses as a mechanism for economic growth and
development by encouraging research, improving relevant knowledge and skills, promoting the free exchange of ideas and
experiences, and partnering with governmental institutions and other stakeholders involved in encouraging and supporting the
The IMC website at: www.imc-egypt.org
development of entrepreneurship and small businesses.

The BUE website at: www.bue.edu.eg Contact information:

The Middle East Council for Small Business and Entrepreneurship Website: www.mcsbe.org
Publication Date: October 2009 Cairo, Egypt Email: info@mcsbe.org