The Egyptian government announced a comprehensive roadmap that aims to revolutionize the defective economic system that Egypt has been stuck at, for the past seven decades. This new policy, particularly, offers a golden opportunity to the large community of startups and entrepreneurs, who should race to hunt.
In a press conference, held on Sunday 16th of May, the Egyptian Prime Minister, Mostafa Madbouly, clarified that the overwhelming uncertainties on the global stage, as a result of the ongoing Russia-Ukraine war is putting the Egyptian economy under a huge stress that no one can tell when it is going to end.
“The war in eastern Europe on the global supply chains of food and energy is burdening the Egyptian economy with 130 billion Egyptian pounds in direct cost, in addition to 335 billion Egyptian pounds to handle the indirect consequences;” Madbouly noted. These amounts total as more than 2 billion U.S. dollars, which is a substantial drain from the government budget.
The Egyptian government realized that depending on loans from the International Monetary Fund (IMF) or generous deposits from the Arab Gulf Countries, is not enough to patch the existing flawed economic system, which, in essence, is a distorted hybrid of the failed socialism project of former President Gamal Abdel Nasser and the incomplete liberalism project of assassinated President Anwar Al-Sadat.
Time has come for the Egyptian state to build a whole new economic structure that is in harmony with the global economic system. One important step in that direction is encouraging local and foreign private investors to return to the Egyptian market.
In the press conference, the Prime Minister, Madbouly, explained that the lack of security and stability that defined the political scene in Egypt, after 2013, pushed foreign investments out of the Egyptian economy. Therefore, the state had to compensate by pouring substantial government investments into mega national projects, that targeted rebuilding infrastructure and improving housing and health conditions for the underprivileged citizens.
“Over the period from 2015 to 2021, the state-led national projects created more than five million jobs for the Egyptian youth and re-empowered the local private sector companies by inviting them to act as contractors in these projects;” Prime Minister Madbouly explained. “That is not to say that these national projects are to be postponed or slowed down, in the coming period. They remain a priority and we will continue working on them as they proved to be of great importance to the Egyptian citizens, and are also paving the way for the return of foreign investments.”
The government’s main goal out of the economic transformation plan is to increase the participation of the Egyptian private sector in state-run projects from the current rate of 30% to 65% over the coming four years. Simultaneously, the government has already started to create incentives for the foreign investors that desire to return to Egypt. These incentives are not limited to easing the bureaucratic barriers of acquiring governmental approvals and managing business facilities. The Prime Minister confirmed that investors, either Egyptian or Foreign, will be allowed to invest in state-owned assets, too. The government plans to list stocks that amount to 40 billion dollars over the coming period.
In an Iftar event, in the last week of Ramadan, on April 27th, the Egyptian President, Abdel Fattah El-Sisi, said that he plans to list the companies owned by the Egyptian Armed Forces in the stock market for interested private investors to consider. That is by all means a revolutionary step that will guarantee opening the Egyptian economy to an unprecedented level.
Above all that, the new economic policies are favoring the growing community of entrepreneurs and is equally trying to benefit from dazzling success. Egypt has a tremendous startup community that is expanding across various sectors. According to MagniTT report, the Egyptian startup ecosystem attracted a record total of 491 million dollars from local and foreign venture capital investors, in 2021. The Egyptian startup community is ranked the second in the Middle East and the first in Africa, in terms with the venture capital deals it could successfully seal over that year.
Egypt’s ideal geo-strategic location, and the large number of its population (103 million people, with more than 60% under 35 years-old), are creating a sizable market with unlimited need to innovative solutions. That offers an ideal environment for startups to emerge and many lucrative opportunities for local and foreign investors to seize. The only challenge has always been the government bureaucracy. Registering a company in Egypt is a tedious process that requires a lot of money and time navigating through a long cluster of bureaucratic procedures and months of waiting for the governmental approval and business license.
In another revolutionary step, the Prime Minister clarified that, in the future, all it would take to register a startup company is to “notify the government via a digital platform, and get the license within a maximum period of 20 days.” Madbouly, also, said that some amendments shall be made to the laws regulating the registration of “One Person Company” to involve the entrepreneurs whose runs business in the virtual sphere without the need for a physical office space.
Under the pressure of the compounding global crises of the COVID-19 pandemic and the global standoff around the Russia-Ukraine war, the Egyptian government had to create incentives to involve the local private sector and re-attract the foreign investors. The new proposed policies are very promising and would certainly take the Egyptian economy to the next level of prosperity, especially through empowering the startup ecosystem.
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