The Mediterranean Middle East and North Africa 2018

Chapter 7. Egypt

The foundations of SME policy: definitions, statistics and institutions

Egypt is in the process of redesigning its institutional and policy framework for SME and entrepreneurship and is starting to address one of the key recommendations of the SME Policy Index 2014 – which noted that the country should address the fragmentation of the institutional framework by defining the role of the various institutions and government agencies, co-ordinating support instruments and developing synergies among programmes.

As part of these efforts the Ministry of Trade and Industry and the Central Bank of Egypt (CBE) are working towards the development of a unified SME definition, which is expected to be included in the upcoming SME law. Currently, there are three definitions, i.e. those of 1) the Central Agency for Public Mobilisation and Statistics (CAPMAS) the Establishment Census; 2) the Egyptian Small Enterprise Law No. 141 of 2004; and 3) the CBE. Each institution applies a different definition (see Table 7.1).

Table 7.1. SME definitions in Egypt

Class	Existing companies		Newly established companies
	Annual revenues (EGP Mn.)	Number of employees	Paid-up capital (EGP Mn.)	Number of employees
Micro	< 1	<10	< 0.5	<10
Small	1 : 50	< 200	Industrial companies 0.05 : 5 Non-industrial companies 0.05 : 3	<200
Medium	50 : 200		Industrial companies 5 : 15 Non-industrial companies 3 : 5

Source: Central Bank of Egypt, http://www.cbe.org.eg/ar/BankingSupervision/Pages/Circulars.aspx?p=4.

In terms of SME statistics, the main source of information is the Establishment Census undertaken by CAPMAS. This census is usually conducted every ten years, and the latest was issued on 2017. According to the Census, there are 3.8 million micro enterprises and 67 600 small and micro enterprises in Egypt. In 2010-2011, the Egyptian Banking Institute (EBI), the financial development arm of the Central Bank of Egypt, and CAPMAS conducted an SME survey, which was expanded by the Economic Census of CAPMAS in 2013. There are plans to create an SME Observatory in the context of the new SME agency.

Egypt’s overall economic policy framework is being shaped by a number of important structural reforms, including those launched in November 2016 in the context of the International Monetary Fund’s (IMF) Extended Fund Facility. These reforms have been mostly oriented at redressing macroeconomic imbalances and structural challenges (such as low growth and investment rates, rising inflation, high government debt and an overvalued exchange rate) that had negative effects on the current account deficit and international reserves. The implementation of these reforms has yielded positive results such as increased economic growth and declining inflation (despite the negative immediate effects of the floatation of the currency and the removal of subsidies). Yet, as noted by the IMF in its latest Article IV Consultation for Egypt, the state continues to play a prominent role in the economy, either as the employer of choice given the better job conditions and security it offers, or through its direct participation through state-owned enterprises in sectors such as banking, energy, manufacturing, agriculture, transport, tourism and services.1

Another important initiative guiding the overall economic, social and environmental orientations is the Sustainable Development Strategy: Egypt Vision 2030. The economic development pillar of Vision 2030 focuses on mega infrastructure projects, notably the expansion of the Suez Canal, the construction of a new administrative capital and the development of a 4 million-acre project. Vision 2030 also includes a series of reforms designed to improve the investment climate and the regulatory environment for businesses, but it makes no direct reference to SME and entrepreneurship policy.

According to the SME Policy Index 2014, the institutional SME policy framework in Egypt was highly fragmented, with a blurred separation between the functions of policy development and policy implementation. The Social Fund for Development (SFD) was in charge of micro and small enterprises, while the General Authority for Investment and Free Zones (GAFI) focused on SMEs with high growth potential. The Ministry of Trade and Industry, through the Industrial Modernisation Centre (IMC) and other affiliated organisations, supported small-to-large enterprises operating in industrial sectors. Policy development responsibilities were split between different ministries: Trade and Industry, Investment and Finance, and Planning. Some form of co-ordination took place through cross-board representation in the implementation agencies (SFD, GAFI, IMC), but co-ordination remained difficult in the absence of a comprehensive SME development strategy. In 2013, the SFD was mandated to co-ordinate the development of the new SME strategy with other stakeholders and work had already started in parallel with the launching of a wide consultation process.

Egypt has taken important steps to address the fragmentation of the SME policy framework. First, in November 2016 the Ministry of Trade and Industry launched a National Strategy for Enhancing Industrial Development and Foreign Trade until 2020, which had been developed with support of the EU.2 This strategy includes a thematic pillar on developing SMEs and entrepreneurship, under which the “National MSME & Entrepreneurship Development Strategy & Operational Plan 2018-2023” is developed with the support of Global Affairs Canada (GAC) and the International Labour Organization (ILO).

• In April 2017, a Prime Ministerial Decree established the new MSME Development Agency (MSMEDA) under the direction of the Minister of Trade and Industry. MSMEDA absorbs the responsibilities of the SFD, the Industrial Training Centre (ITC) and the IMC’s responsibilities related to entrepreneurship and SME support. One of the main role of MSMEDA will be to ensure co-ordination among the different government structures dealing with SMEs. MSMEDA is in charge of:

• Developing SME and entrepreneurship policy and strategic planning;

• Putting in place the necessary frameworks for implementing, co-ordinating and monitoring SME support initiatives;

• Designing and executing support programmes on skills, supply chain, marketing, participation in trade fairs, collective negotiation for suppliers, etc;

• Facilitating access to finance for MSMEs; and

• Working with concerned and relevant authorities to facilitate and streamline license issuance procedures for MSMEs to start up activity.

MSMEDA is working on finalizing the Performance Measurement Framework (PMF) of the National MSME and Entrepreneurship Strategy. It has also developed a new National Strategy for MSME Development 2020 and its Operation Plan, which was endorsed by its board and should be officially approved in the next months. The new National Strategy for MSMEs is divided into six pillars, and the Operational Plan includes 115 measures. The European Union (EU) is supporting the implementation of the strategy through the “Support for the Implementation of Strategies to Foster MSME Development in Egypt” (MiSMESIS) project. The project is developing a corporate strategy for MSMEDA to implement the National Strategy around three main pillars: 1) knowledge and centre of excellence; 2) business environment; and 3) enterprise-level support. The project has also undertaken a donor mapping exercise to identify ongoing activities within the six pillars of the strategy.

The seven “government directions” regarding SMEs are influenced by the SBA principles and their adaptation to the MED region through the SME Policy Index assessments. These are:

Creating an environment in which entrepreneurs and SMEs can thrive and where entrepreneurship is rewarded – in particular for future entrepreneurs – by fostering entrepreneurial interest and talent, particularly among young people and women, and by simplifying the conditions for business transfers.

Ensuring that honest entrepreneurs who have faced bankruptcy quickly get a second chance. The government will promote a positive attitude in society towards giving entrepreneurs a fresh start, making it easier and quicker to apply for non-fraudulent bankruptcy, and ensuring re-starters are treated on an equal footing with new start-ups.

Designing rules according to the “think small first” principle, in particular by:

Ensuring that the impact of all government legislation and regulation on small businesses are carefully considered before they are introduced;

Making public administrations responsive to SMEs’ needs; and

Adapting public policy tools to suit SME needs and facilitate SMEs’ participation in public procurement, and to make better use of small-business support programs.

Facilitating small business access to finance and developing a legal and business environment that supports timely payments in commercial transactions. In particular, the government will facilitate the promotion of risk capital, microcredit and mezzanine finance and develop a legal and business environment supportive to timely payment in commercial transactions.

Promoting the upgrading of skills in SMEs and all forms of innovation by encouraging investment in research by SMEs and their participation in research and development (R&D) support programs, transnational research, and clustering and active intellectual property management by SMEs.

Enabling MSMEs to turn environmental challenges into opportunities by providing more information, expertise and financial incentives to help small businesses exploit opportunities of new “green” markets and increased energy efficiency, partly through the implementation of environmental management systems in SMEs.

Encouraging and supporting SMEs to benefit from the growth of international markets. The government will facilitate the provision of market-specific support and business training activities.

Concerning public-private dialogue (PPD), as in 2014, there is a large number of private sector organisations in Egypt, including the Federation of Egyptian Chambers of Commerce; the Federation of Egyptian Industries; the Egyptian Business Association; the Egyptian Junior Business Association; the Egyptian Federation of Investors; the Alexandria Business Association; and the Women Business Association. According to this interim assessment, private sector organisations are considering establishing departments for SMEs and the establishment of the MSMEDA is expected to lead to increased PPD. Of the three boards in the MSMEDA (Advisory Board, Board of Directors, and Board of Trustees), the first two include representatives from the private sector and from non-governmental organisations (NGOs).

For further action: Egypt is moving forward in terms of one of the key recommendations of the SME Policy Index 2014: the need to address the fragmentation of the SME institutional framework. The creation of the MSMEDA as an authority with policy co-ordination and direct support powers is a concrete step, although there are still no details on the precise role and responsibilities of the agency: the institutional strategy of MSMEDA and the national SME strategy are still under development and there is no clarity on when and how they will be approved and implemented. Furthermore, although the consultations for this interim assessment pointed to plans for establishing a formal public-private dialogue mechanism for SME policy, there is no concrete evidence on how these plans will be developed and implemented. Similarly, there is talk of the development of an SME Law and an official SME definition, but no evidence on how and when that would happen. Hence, Egypt could continue and increase its efforts to develop and implement its new legal and institutional framework for SME policy beyond its initial plans and steps.

Improving business environments for SMEs and entrepreneurs

Since 2008 (albeit with a temporary suspension from 2012 to 2013) Egypt has undertaken an ambitious, comprehensive multi-year regulatory reform programme, the Egyptian Regulatory Reform and Development Activity (ERRADA).3 The initiative is supervised by the Ministry of Trade and Industry and is set as a priority in the governmental agenda for business climate reform.

The current activities of ERRADA include an inventory of all regulations related to the business environment and their publication in the e-registry for free consultation;4 and the participation in the review of laws such as the Franchise Law, the Agency Law and the Bankruptcy Law and the law on Joint Stock and Limited Liability Companies. According to the consultations for this assessment and to the ERRADA website, Regulatory Impact Analysis (RIA) has been applied in some cases, such as the revision of the Franchise Law, the allocation of arable land and shipping agencies.5 However, there is no evidence of the consistent application of RIA on business regulations. Furthermore, although the SME test and the “think small first” principle are said to be fully reflected in the SME Strategy that is under preparation, there is not yet evidence of its actual implementation.

A new Law on the Simplification of Industrial Licensing Procedures was issued in May 2017 as a response to outdated industrial laws from the 1950s. According to the Law, the license of the Industrial Development Authority (IDA) became the sole license required for establishing and operating an industrial facility. The EU’s MiSMESIS project includes a component on regulatory simplification as well as the enhancement of single windows and one-stop shops. In addition, the Ministry of Investment introduced reforms at the Investor Service Centre, which extends the necessary approvals, certifications and licences needed for the establishment, operation and dissolution of a company. Those reforms include new windows, the introduction of a tool to measure users’ satisfaction and new centres in different governorates.

Concerning reforms to facilitate the creation of new enterprises, in 2014 Egypt was working on introducing a single identification number through its extensive network of one-stop shops, managed by GAFI, SFD, IDA and the chambers of commerce, throughout the country. The consultations under this interim assessment note that the new Investment law no. 72 of 2017 states (in Article 51) that “each facility or company, regardless of its legal form, shall have a unified national number to be used for all the investor’s dealings with all the different authorities and bodies in the state once it is activated.” There are ongoing discussions for the EU to support a project to activate the single identification number.

In terms of online registration, the 2014 report noted that online registration facilities were available, albeit on a limited scale. The responses to this interim assessment note that companies can be created online by uploading the necessary documents. The entrepreneur is nonetheless requested to physically sign the documents at GAFI’s premises in order to obtain the tax card and the social insurance number. These steps are done in a single step, while the relevant fees can be paid online. Furthermore, according to Doing Business, in 2016 Egypt improved its one-stop shop for business registration by introducing a unit to liaise between the tax and labour authorities on one the hand, and the firm on the other.6 This means that the investor (or entrepreneur) now obtains the certificate of incorporation and the tax card, and registers for social insurance, in one window and one step.

In terms of bankruptcy procedures, a new law was approved by parliament on 28 January 2018. The Law, according to the consultations for this assessment, effectively decriminalises bankruptcy by abolishing prison sentences and allows companies more time and options for restructuring by introducing mechanisms to help settle commercial disputes outside the courtroom and simplify bankruptcy proceedings. The Law also mandates the formation of special bankruptcy courts within the Economic Courts system, which would mediate and arbitrate cases. Under the Law, a restructuring plan must be completed within 60 days of filing for a standstill, and bankruptcy court judges will have the right to extend that period at their discretion. The Bankruptcy Law also reduces the liquidation period for companies to nine months, instead of the current average of more than two years.

For further action: Egypt continues to perform relatively well in this policy area, although the overall business environment remains challenging. The reactivation of ERRADA is an important opportunity to enhance the regulatory environment, especially if RIA and the SME test are formally introduced. Furthermore, the implementation of a single identification number, mandated by the new Investment Law, should facilitate dealings with different public agencies; nonetheless, there is no information of how and when this would be implemented. There is also work ahead regarding the implementation of the reforms to the bankruptcy framework, especially given Egypt’s rather low performance on resolving insolvency in Doing Business (ranked 115 and a distance to frontier of 38.89).

Fostering access to finance

The SME Policy Index 2014 noted that Egypt had a relatively good performance on the legal and regulatory framework for access to finance, especially given the existence of both a credit registry and a credit bureau. The credit bureau, I-Score, issues credit reports based on data provided by banks and by the credit registry of the Central Bank of Egypt (CBE). I-Score has increased the coverage of the adult population since the last assessment from 19.6% to 25.3% and has introduced a credit rating system. Furthermore, on September 2017 the Financial Supervisory Authority (EFSA) awarded I-Score the contract for the creation of a registry of moveable assets, addressing in principle one of the shortcomings identified by the SME Policy Index 2014. The initiative for a registry of moveable assets builds on efforts undertaken after the SME Policy Index 2014, in particular the issuance of a law governing secured transactions over movable assets (Moveable Security Law), which was enacted in December 2016.7 The Movable Security Law regulates the pledging of movable assets and specifies the types of assets that can be taken as collateral. It aims to facilitate the granting of funds and to reduce the risks of small and medium-sized projects. Also, a new leasing law is being developed.

In terms of the availability of sources of finance, by 2014, credit guarantee schemes were both publicly and privately funded and the Credit Guarantee Company (CGC) was the main actor, with nine commercial banks and one insurance company as stakeholders. However, there were no monitoring mechanisms measuring the impact of the schemes.

Since then, the CBE has bought the shares of banks in the CGC and has injected money into the company for the purpose of incentivising banks to disburse loans under the CBE MSME lending initiative. The Board of Directors of the Central Bank approved on December 2017 a guarantee of 2 billion Egyptian pounds for the CGC and modified capital adequacy ratio rules.

Egyptian authorities are also trying to stimulate the supply side of finance and to establish tailored funding schemes. In 2016, the CBE launched an initiative to increase finance for SMEs and mandated national banks to dedicate at least 20% of their total loans to SMEs.8 In 2017 the Central Bank also launched an initiative to stimulate financing for microbusinesses by injecting a total financing of EGP 30 billion (EUR 1.4 billion) into the banking sector, which would benefit 10 million customers over the next few years.9 In addition, in 2018 the CBE launched an initiative of EGP 200 billion (EUR 9.3 billion) to finance SME projects over the next four years. The CBE also started three plans to support SMEs by 1) exempting banks from the reserve requirement for specific credit facilities; 2) creating financing facility for medium enterprises in the industrial, agricultural & renewable energy sectors to invest in equipment; and 3) with short term facilities for working capital.

In order to stimulate access to finance, the EBI, part of the Central Bank, has developed the Small and Medium Enterprises Portal summarising a number of financial instruments and other support available to SMEs and banks. The portal gathers information regarding financing instruments, training programs, studies and research, as well as SME statistics. The goal of the portal is to inform SME managers in their decision making.10 The portal seems to be a useful source for SMEs to learn about different sources of support available.

In terms of access to equity, a number of platforms continue to operate including Cairo Angels, Flat6labs, Sawari Ventures and others. Furthermore, the MSMEDA, in collaboration with the World Bank and the International Finance Corporation (IFC), is working on the establishment of a venture capital programme for early-stage entrepreneurs.

In addition, on May 2017 the Ministry of Trade and Industry announced the creation of Misr Venture Capital Company, a private fund with a capital of EGP 150 million (EUR 7.1 million), which aims to help distressed but viable SMEs through the provision of short-term financing mechanisms.11

For further action: This interim assessment finds that Egypt has achieved incremental progress on the legal and regulatory framework for access to finance, notably through the new Moveable Security Law and the initial steps to set up a registry of moveable assets by I-Score, the already well-established credit bureau. These initiatives are positive, although too recent to show any results yet. Furthermore, over the past few years, government actors, notably the Central Bank and the MSMEDA, have initiated a number of initiatives to increase SME access to credit and equity. However, there are no details and evidence on the characteristics, targets and results of these initiatives and hence their impact is unknown. This indicates that Egypt could do much more in terms of tracking and reporting the results of efforts by public actors. There is also no evidence on an increasing role of private sector actors in providing funding for SMEs and entrepreneurs.

Nurturing entrepreneurship and SME growth

As reflected in the SME Policy Index 2014, Egypt had a well-developed market for business development services. The main service providers were government bodies including the SFD through technical support programmes, the IMC through its business development programmes, and GAFI’s Bedaya Centre for Entrepreneurship and SME Development. This interim assessment finds that government bodies and donor initiatives continue to be the main actors in this area, including recent initiatives such as:

• The United States Agency for International Development (USAID) Strengthen Entrepreneurship & Enterprise Development programme, which runs from 2015 to 2019 and mobilises USD 22.9 million (EUR 19.3 million) to improve the quality, availability and accessibility of business development services for SMEs.

• GIZs’ Promotion of Small and Medium Enterprises Programme (PSME) running from 2015-2020 to increase SME competitiveness by developing a services marketplace and helping the Ministry of Trade and Industry to strengthen the services of its technology and innovation centres.

• The “Nilepreneurs” initiative by the Central Bank, Nile University and the MSMEDA to develop business development services centres in all governorates. The Nilepreneurs programme has a training service unit, a BDS hubs, a media service unit, a design house focusing on product design, a caravan unit for on-the-ground events, an innovation challenge unit, a growth program unit, and mainstreams women empowerment

• The EU launched a new initiative, Promoting Inclusive Growth in Egypt, to improve access of SMEs to different business development services, including in terms of regional coverage.

• MSMEDA launched an Electronic MSME Platform,12 which will become fully operational by end of 2018. The platform will function as an Enterprise Hub providing comprehensive information and data on all types of services offered by the Agency and by the other entities involved in enterprise financing and business development.

• The ministry of investment has launched in 2017 a new initiative to support entrepreneurs and start-ups entitled "Your idea, your company “Fekratek Sherkatek and one of its main pillars is to establish the “Entrepreneurship Service Centre” based in GAFI, that provides BDS for SMEs and entrepreneurs

These initiatives aim at fostering the availability and access of SMEs to different business development services and eventually to strengthen the market of these services across the country. It will therefore be important to track their results over their five years of implementation. No concrete results of these programmes are publicly available or provided in the responses to the consultations for this interim assessment.

In terms of facilitating SME access to public procurement, the SME Policy Index 2014 noted that although there were some legal provisions on this area (e.g. splitting tenders into lots, a suggested quota of 10% for SMEs in procurement contracts, deadlines on payments, etc.) the enforcement of these provisions was not common. This interim assessment finds that Egypt recently reduced by 50% the guarantee bond required from SMEs during the application to a public tender. Also, a protocol expected to be signed between the MSMEDA and the Authority for Government Services for facilitation of SME access to public procurement. However, no details on the nature and characteristics of the protocol have been published.

The SME Policy Index 2014 also pointed to the absence of e-procurement in Egypt. This has been addressed through the creation of a portal where interested parties can consult information on opened, closed and awarded tenders. Interested parties can also use the portal to bid for tenders and consult the status of applications for projects. There is no information on the use of the portal by SMEs though.

Concerning SME internationalisation, the SME Policy Index 2014 highlighted that Egypt was developing a new export strategy for 2014-2018 although political events were expected to slow the process. This interim assessment finds some progress in this regard, notably the development and implementation of three internationalisation strategies:

• The Ministry of Trade and Industry Strategy 2016-2020, which involves a pillar for export development. The strategy focuses on export promotion, trade facilitation and agreements, logistics and infrastructure, quality control and inspection procedures, competitiveness, and export regulations and procedures.

• Egypt Export Development Strategy 2017-2020, aligned with the above mentioned strategy, including the required institutional reform, potential sectors, target markets, export incentives, export development services, trade facilitation and economic integration policy. The strategy aims to support 200 new exporters.

• Egypt Export Development Strategy to the African Markets, which determined potential products, target markets, market entry support services, logistics centres, export finance services, and trade agreements.

Egypt also established a new plan for the Export Development Authority (EDA) to implement the export strategies and to coordinate amongst the different entities. EDA is specifically keen to engage SMEs in the development of the export sector.13 EDA for instance launched an export portal (www.expoegypt.gov.eg) which aims to act as a national trade platform that supports (SME) exporters throughout the whole export process.

The SME Policy Index 2014 also noted that several institutions provided export related services and that the online one-stop shop was not yet operational. This is still the case. Although there are plans to implement a national electronic single window through the project EgyTrade (project also mentioned in the SME Policy Index 2014), there have not been significant concrete measures over the past few years. The only activities cited for this interim assessment are the passing of a decree by the Minister of Finance to develop a consolidated customs declaration and a decree by the Minister of Industry and Trade amending import and export regulations to facilitate electronic exchanges.

For further action: This interim assessment does not point to significant progress in this area over the past few years. The provision of business development services continues to be led by government agencies and donors, although ongoing initiatives are geared towards developing the market for these services over the medium term. Efforts towards SME internationalisation are also preliminary, with the adoption of export promotion strategies and the passing of decrees to facilitate international trade through electronic platforms as very initial steps. Hence, Egypt could continue working towards more concrete results directly linked to SME characteristics and needs.

Investing in entrepreneurial human capital

Egypt has undertaken several actions to support entrepreneurial learning in upper secondary education, in line with the country’s “2030” vision to have a knowledge-based economy. Promoting entrepreneurship in upper secondary education is formally addressed in the National MSME Strategy and in the Trade and Development Strategy, but it is not included in vocation education strategic plans. Moving forward, it will be important that general secondary education schools are eventually integrated into the wider entrepreneurship key competence developments.

The IMKAN initiative14, which borrows on the European Entrepreneurship Key Competence Framework has been piloted in vocational schools in the Luxor governorate. It has achieved positive results and could be replicated in other governorates before taking legislative decisions in this regard. The initiative involves curriculum reform and teacher training, including development of learning outcomes. A committee was created comprising international aid organisations to bring forward entrepreneurship as a key competence. Additionally, the Ministry of Education and Technical Education (METE) has proposed to mainstream entrepreneurship as a key competence within all vocational schools.

Regarding women’s entrepreneurship training, Egypt’s “2030” vision includes a strategy for women empowerment which comprises the twin challenges of improved education and work experience, and women’s entrepreneurship. The strategy emphasizes the need to develop digital skills for women, and to promote a culture of entrepreneurship. “Early start” initiatives at schools where girls and boys have exposure to successful women entrepreneurs will be important in tackling social stereotypes. The National Women’s Council is planning to develop an action plan to support the 2030 Women’s Strategy, which could provide an opportunity to develop systematic data on women’s entrepreneurship and related support measures. Research and analysis of women’s entrepreneurship should not be left only to international organisations. National expertise and knowledge networks around government departments, universities and NGOs should fill the gap in critically evaluating both policy and practice. Data and intelligence development, to include good practice build-up on training for women’s entrepreneurship, should interface with a system-wider monitoring and evaluation of women’s entrepreneurship to include assessment of effectiveness of training.

In terms of training for internationalisation of SMEs, the 2016-2020 industry and trade development strategy sets an overall objective of a 10% annual export growth rate. It targets four sectors (chemicals, engineering, textiles and building materials), and includes a skills development pillar within the ecosystem support framework. The strategy aims to increase Egyptian high-value exports, which requires high-level skills and innovation. The strategy also aims to identify the export potential of SMEs already at the start-up phase. This has implications for managerial and trade skills and wider entrepreneurship development. To meet these priorities, the national vocational training network will require significant adaptations to training design, and the necessary involvement of sector consultations.

The BEMT initiative is an excellent example of a joint-venture between training providers and the private sector. It involves four universities, the ITC and the Egyptian Chamber of Engineering Industries and allows university students to be trained on business and manufacturing technologies, quality and ISO standards with a view to facilitate the international competition of Egyptian products. Another good practice includes online export training for SMEs, provided by the Foreign Trade Training Centre through its Centre for Distance Learning. Information on training for SME internationalisation remains scattered, although the Export Development Authority and the Agency for Micro, Small and Medium Enterprise Development plan to cluster data providing an opportunity to monitor developments in the area.

For further action: More actions should be taken to improve entrepreneurship promotion within vocational training programmes by fostering more school-enterprise co-operation and ensuring coherence between the National MSME and technical and vocational education and training (TVET) strategies. The government should develop measures to implement the 2030 Vision in relation with women economic empowerment, and ensure girls’ access to entrepreneurship key competence development through formal and non-formal education. Data collection and the development of statistics and indicators would be particularly important to allow for in-depth analysis and evidence-based policy making and monitoring of training programmes.

The way forward

Egypt has been addressing the main recommendation provided by the SME Policy Index 2014 in terms of adopting a more coherent approach to SME policy and redressing the fragmentation of the institutional framework. The most important initiative or series of initiatives over the past few years have been the establishment of a dedicated SME agency, the MSMEDA, and the ongoing development of a comprehensive SME strategy, which would result in a more intelligible framework for support. However, in contrast to other MED economies also reshuffling their SME institutional framework, Egypt does not seem to be working to establish a structured public-private dialogue platform to improve SME policy making. The SME Law and an official SME definition are expected to be adopted by the end of 2018.

Progress in other areas analysed by this interim assessment seems to be much more modest. In this view, the actions recommended by this report are as follows:

• Continuing and increasing efforts to develop and implement the new legal and institutional framework for SME policy beyond the initial plans and steps.

• Implementing a formal RIA mechanism and SME test, building on the efforts by ERRADA to improve the business environment.

• Moving forward with the implementation of the new bankruptcy framework and the establishment of a registry of moveable assets, which are also in their initial stages.

• Better tracking the results of support schemes for SME access to finance, including credit and equity.

• Promoting a greater role of the private sector in the provision of funding and business support services to SMEs. These markets are currently dominated by public actors and to a lower extent, donors.

• Better tracking the results of support schemes for SME access to public procurement and SME internationalisation.

• Ensuring implementation of high-level strategies regarding human capital development, including developing training programmes for SMEs with high-export potential, in consultation with sectoral associations.

• Elaborate a framework strategy and action plan for women’s entrepreneurship to include data and wider intelligence on training services backed up by data and indicators to measure progress.

• Mainstreaming entrepreneurship in upper secondary education to include further efforts to promote understanding and application of the entrepreneurship key competence across the school network.

Notes

← 1.  IMF (2018), Arab Republic of Egypt: 2017 Article IV Consultation, Second Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Modification of Performance Criteria, IMF Country Reports, International Monetary Fund, Washington.

← 2.  Egyptian Ministry of Trade and Industry (10 November 2016), “Minister of Trade and Industry announces strategy for enhancing industrial development and foreign trade until 2020”, www.mti.gov.eg/English/MediaCenter/News/Pages/Tarek-Kabil-announces-strategy-for-enhancing-industrial-development-and-foreign-trade-until-2020.aspx.

← 3.  Egyptian Regulatory Reform & Development Activity, www.errada.gov.eg/index_en.php.

← 4.  Egyptian Regulatory Reform & Development Activity, “e-registry”, http://eregistry.errada.gov.eg/.

← 5.  Egyptian Regulatory Reform & Development Activity, “Achievements”, www.errada.gov.eg/index_en.php?op=module_page_en&id=10.

← 6.  The World Bank Group Doing Business (2018), “Business Reforms in Egypt, Arab Rep.”, www.doingbusiness.org/Reforms/Overview/Economy/egypt.

← 7.  Law No.115/2015.

← 8.  Oxford Business Group (30 June 2016), “SME financing ramps up in Egypt”, www.oxfordbusinessgroup.com/news/sme-financing-ramps-egypt.

← 9.  Enterprise (24 May 2017), “CBE Microfinance to push out EGP 30 bn in subsidized financing to as many as 10 mn borrowers within four years”, https://enterprise.press/stories/2017/05/24/cbe-microfinance-to-push-out-egp-30-bn-in-subsidized-financing-to-as-many-as-10-mn-borrowers-within-four-years.

← 10.  Central Bank of Egypt, “Small and Medium Enterprises Portal”, http://sme.ebi.gov.eg.

← 11.  Egyptian Ministry of Trade and Industry (29 May 2017), “Misr Venture Capital launched soon”, www.mti.gov.eg/English/MediaCenter/News/Pages/Misr-Venture-Capital-launched-soon.aspx.

← 12.  www.msme.eg

← 13.  Mounir, H. (May 20, 2018), “Egypt adopts three pointed plan to develop exports: EDA chairperson”, Daily News Egypt

← 14.  United Nations Industrial Development Organisation (UNIDO) initiative to support youth employability and entrepreneurship on upper Egypt