Making start-ups succeed

The number of entrepreneurs and start-ups do not match the potential of the Egyptian economy, businessmen and experts said at a recent seminar, entitled “Entrepreneurship in Egypt: From Local Individual Successes to Becoming an African Hub”, on the challenges facing start-ups in Egypt, blaming the lack of appropriate legislation for some of the problems.

Khaled Ismail, founder and chairman of KIAGEL, a company investing in 20 emerging companies, pointed to problems of taxes and monopoly in the country. Companies prefer to start up outside Egypt to escape the bureaucracy inside it, he told participants at the seminar organised by the Egyptian Centre for Economic Studies (ECES), a Cairo think tank.

Ismail said that many companies choose to set up abroad not to avoid paying taxes but rather to avoid related paperwork. Closing a company’s tax file could also last five years even if the company is already out of business, he said. In addition, he said, big players may acquire successful start-ups in Egypt unfairly.

Egyptian technology developers sometimes exit Egypt to go abroad, he warned, saying that German companies were known to be interested in attracting Egyptian developers by offering unmatched salaries.

Mary Trez, a representative of the first business accelerator in Egypt, explained that investors from abroad sometimes requested that start-ups be established outside Egypt as a stipulation for finance. The reason was the complexity of procedures, she said.

However, Nermine Tahiri, an assistant under-secretary at the Central Bank of Egypt (CBE), said that there was an increasing understanding of start-ups in the market. She pointed out that LE2 billion had been set aside to encourage financing start-ups, adding that the commercial banks in Egypt could not have provided such funding in the past.

The banks were working to provide a certificate in entrepreneurship for bank employees to promote the culture of start-ups, she said, adding that as of next year there would be contact points in the branches of various banks to help assist entrepreneurs.

Egypt also has some successes in the field, one being the former AUC Greek Campus, Cairo’s first technology and innovation park, which offers office space to start-ups in Downtown Cairo.

The Greek Campus had become an incubator for entrepreneurship and other projects, a study by the ECES recently concluded. According to the study, which included 55 per cent of the companies in place, companies benefit from being together in an incubator and having shared office space in the heart of Cairo.

Ahmed Al-Alfi, chairman of the Greek Campus, told Al-Ahram Weekly that “people get recycled at the Greek Campus”, since anyone in between jobs can find another one among the many companies present.

“A culture is being learned at the campus and spread all over Egypt. This is a real spill-over effect,” Al-Alfi said, adding that there were plans to establish similar places in other governorates.

Experts have recommended replicating the experiment of the Greek Campus in other areas, and the seminar participants drew attention to the idea that the Mogamaa Al-Tahrir could be transformed into “Technology Tahrir Oasis” after the government offices that it currently houses are moved to the New Administrative Capital.

Abla Abdel-Latif, executive director of the ECES, pointed out that institutions like the Greek Campus incubator are widely available in China, including 1,000 in Shenzhen alone, she said.

The complexes are owned by the municipalities and space is leased to citizens for token amounts with no interference from the government, she said, adding that this was a model that should be replicated in Egypt.