Proposals put forward to tackle unemployment in Egypt

Small- and medium-sized enterprises are the main driver of job generation, especially in the formal sector

  
An employee of the Egyptian Ministry of Health wears a protective mask as he walks near the House of Representatives, following an outbreak of the coronavirus disease (COVID-19), in Cairo, Egypt March 26, 2020.

An employee of the Egyptian Ministry of Health wears a protective mask as he walks near the House of Representatives, following an outbreak of the coronavirus disease (COVID-19), in Cairo, Egypt March 26, 2020.

REUTERS/Amr Abdallah Dalsh

The Alternative Policy Solutions Project has issued a new policy paper to identify mechanisms to address Egypt’s unemployment, alleviate poverty, and enhance social justice.

Many local authority stakeholders participated in the session, including: banks; the Industries Modernisation Center; the Small, Medium and Micro Enterprise Development Agency (MSMEDA); and international bodies such as the International Labor Organization (ILO).

Small- and medium-sized enterprises (SMEs) are the main driver of job generation, especially in the formal sector. Over the past few decades, the manufacturing sector’s share in the total number of jobs has declined, including those in SMEs affiliated with the manufacturing sector.

It was recognised that the limited or zero access to finance is one of the main obstacles facing SMEs. Consequently, the Central Bank of Egypt (CBE) launched several initiatives to provide financial support to this sector.

Despite the existence of several initiatives, there is no evidence of financing reaching SMEs in the manufacturing sector, or proof of their impact on the growth and sustainability of employment in these enterprises.

The policy paper was prepared by researchers Mona Amer and Irene Silwans. It suggested giving priority to financing SMEs, as well as targeting innovation and research and development projects. 

This would also put a focus on enhancing movable assets as guarantees and easing collateral requirements, whilst enhancing non-banking services such as factoring and financial leasing.

The paper also proposes recommendations to monitor and evaluate financing initiatives and encourage, design, and implement training programmes for SMEs and bank employees.

The Alternative Policy Solutions Project is a research project at the American University in Cairo (AUC) that is concerned with submitting general policy proposals to deal with some of the challenges facing Egyptian society. These proposals would be created through an in-depth and accurate research process, and extensive consultations with various concerned sectors.

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