Thomas White Global Investing
Entrepreneurship boom in Egypt’s new dawn
Entrepreneurship boom in Egypt’s new dawn Stamp
October 26, 2012
A Postcard from the Middle-East & Africa
Entrepreneurship boom in Egypt’s new dawn

Cairo

The dazzling Cairo skyline is not the only bright spot in Egypt today. The country is in the midst of an entrepreneurship boom.

Ancient Egypt is a study in entrepreneurship. The civilization worshipped a large pantheon of gods, and each had an animal totem. For instance, cats were considered an incarnation of the protective goddess Bastet. It was customary for Egyptians to mummify the animal associated with their favorite god and place the mummy in a temple crypt. Not surprisingly, there were many clever people who made a fortune selling mummified animals. There was a flourishing market too for fake mummies of animals hard to find, like a baboon. Similarly, on the banks of the Nile, enterprising grain cultivators didn’t just relax in the off season. They provided funerary services at nearby burial sites.

And today in Egypt, in the wake of the Arab Spring, this culture of finding business opportunities is being resurrected.

There is quite literally a mad rush among Egyptians to start an enterprise. Since the revolution in the country last year, several foreign businesses have fled, office/commercial space has become cheaper, and soaring unemployment has created a large pool of educated workers. So, many have jumped on the entrepreneurship bandwagon to take advantage of the situation. According to The Daily Beast, Flat6Labs, a Cairo-based firm that gives seed money to aspiring businesspersons, has been receiving hundreds of applications, and over the past year, has launched 18 technology firms. An executive of Egypreneur, a networking platform for budding business types, told Reuters that the number of public conferences for entrepreneurs in Egypt has risen at least eightfold lately.

This newfound entrepreneurial streak in Egypt is so strong that it even got a mention in America’s final presidential debate recently. Explaining the U.S.’ role in Egypt’s chaotic transition last year, President Obama said his administration organized entrepreneurship conferences in the African nation to help rebuild its economy. He was referring to the NexGen IT Entrepreneurs Boot Camp the U.S. State Department held in Cairo last June in collaboration with the governments of Denmark and Egypt. Now the boot camp has selected four technology startups for mentoring in the U.S. and Denmark. According to The New York Times, one of them is developing an app called Bey20llak, “which will let users warn each other about traffic routes,” and the other is creating an app called Inkezny to help users “locate hospitals anywhere in the world.”

In fact, most new businesses in Egypt have been set up in the software and information technology (IT) domain — for obvious reasons. For one, engineering and computer science courses have always been popular in Egyptian universities. What’s more, thanks to its role in the ‘Arab Spring’ of 2011, social media as a vocation has risen in profile, especially among the youth. But more importantly, an IT-related business requires very little capital. The new ventures in this field that are already on the media’s radar include yadaweya.com, an e-commerce portal that will sell the work of Egyptian artisans, and SuperMama.me, an Arabic language site for women. But it’s not just IT businesses that have taken off. Mashaweer, a personal service company that employs 600 people, runs errands for clients, from taking pets to the vet to grocery shopping.

This entrepreneurship boom certainly augurs well for Egypt, both in the short term and the long run. As the country makes a fresh beginning, its economy is in disarray. The all-important tourism industry is yet to see a notable uptick, and according to unofficial estimates, one in every four Egyptian is unemployed. So, when new businesses hire educated young people, even in small numbers, it certainly helps. Moreover, as is common in MENA countries, Egypt’s economy is badly skewed toward large state-owned companies. In fact, it is widely believed that the Egyptian Army alone accounts for 8%-15% of the nation’s GDP. No wonder then, that some of the largest Egyptian firms are not even listed on the Cairo stock exchange. Therefore, if this trend of starting businesses intensifies in the long term, Egypt may well create a strong mass of small and medium enterprises that will boost employment as well as pay taxes.

Indeed, Egyptians, who are no doubt proud of their glorious rich past and the heritage of the Pharaohs, may one day bask in the limelight of a newfound business resurgence.

 

Image Credit: archer10 (Dennis) on Flickr under a Creative Commons License

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