From left to right: Ayman Ismail, Ahmed Tolba and Seham Ghalwash
By Nour Ibrahim
The latest Global Entrepreneurship Monitor (GEM) Egypt National Report, sponsored by USAID, was launched on November 26.
GEM is an annual report that examines entrepreneurial behaviours, attitudes and perceptions, as well as the entrepreneurial ecosystem in Egypt, in comparison to global benchmarks and historical trends. The report also provides insights and recommendations for policy and practice.
The report focuses on the individual scale, making it possible to notice trends in the formal and the informal sectors where many entrepreneurs start.
The authors behind the report are Ayman Ismail, Endowed Chair of Entrepreneurship and Director of Center for Entrepreneurship and Innovation and AUC Venture Lab, Ahmed Tolba, Associate Provost for Strategic Enrollment Management and Associate Professor of Marketing, Shima Barakat, head of Entrepreneurial Learning Programs and Engagement at Judge Business School’s Centre for Entrepreneurial Learning, and Seham Ghalwash, research analyst.
"I am very pleased that we are publishing the GEM Egypt Report for the second year. GEM offers insights into how Egypt’s entrepreneurship ecosystem has evolved, in terms of policy, societal and cultural norms and perceptions as well as economic and legal factors. GEM is of interest to policy makers, researchers and entrepreneurs. With the increasing interest in entrepreneurship in Egypt, the data and recommendations that the annual GEM report provides are vital," said Ismail.
On a global level, 65 countries have participated in this year’s GEM report. That is the equivalent of 40% of the world’s population and 90% of the world’s total GDP. Egypt is among six African and nine Middle Eastern countries that participated this year. This article features the highlights of the 2016-2017 report . The data in report was gathered throughout Summer of the year 2016).
According to GEM, 83.4% of Egyptian non-entrepreneurs consider entrepreneurship to be a great career choice and 87.1% believe that entrepreneurs have a high social status.
More than 60% believe that the attention media provided for entrepreneurship related topics is favorable. The entrepreneurial intention which is the interest or intention to start a business within the next three years in Egypt stands at more than twice the global average.
A. The Entrepreneur
Drive: Some trends among entrepreneurs were outlined in the report. 61.2% of the current entrepreneurs are opportunity-driven. The report defines opportunity-driven entrepreneurs as those who seek to gain advantage of profitable business opportunities. Even though this number shows about 4% progress from the 2015 data, it remains almost 12% behind the global average.
On the other hand, the percentage of necessity-driven entrepreneurs has decreased by about 11% from the previous year yet it remains about 9% above the global average of 23.2%. Entrepreneurs who have no other work alternatives are categorized by the GEM report as necessity-driven ones.
Age: 17.7% of the surveyed sample between 25 and 34 years of age and 15.4% of those between 35 and 44 years of age were early-stage entrepreneurs. These numbers are especially high when compared with the global average for the 25 - 34 year olds.
Gender: GEM’s findings suggest that female entrepreneurs are more necessity-driven compared to male entrepreneurs. They also show that the gender gap is widening between early-stage entrepreneurs and established business owners. While one of every four early-stage entrepreneurs is a female, only one out of every six established business owners is a woman.
During the launch, the authors acknowledged a challenge they faced when it came to gathering data about females as many subjects would not identify with themselves as the main breadwinners or the heads of households.
Industry: Early-stage entrepreneurs are most likely to start in wholesale and retail distribution, agriculture and manufacturing over other industry sectors. The report explains that retail, agriculture and manufacturing are characterized by having low entry barriers, being labor intensive and requiring limited capital and knowledge. They are also sectors that are usually attractive for necessity entrepreneurs.
Job Creation: More than half of the early-stage Egyptian entrepreneurs reported they did not project to create any new jobs (no-growth) while about half of the rest indicated they would create 6 or more jobs (high-growth) within the coming five years.
Internationalization: The internationalization rate, an indicator that measures the entrepreneurs’ aspirations for their business to grow globally, was below the global average for both early-stage entrepreneurs and established business owners.
B. The Ecosystem
The report examined nine factors of the entrepreneurship ecosystem that when improved, can help entrepreneurship in Egypt to grow. These factors were: financing, government policies, government programs, education and training, research and development transfer, commercial and legal infrastructure, market openness, physical infrastructure and cultural and social norms. In addition, the report examined support for women entrepreneurship.
Most of these nine factors have shown improvement with the main exceptions being adopting new technologies, access to and affordability of internet and the status of entrepreneurship education.
Overall, GEM reported observing a generally positive trend of entrepreneurship in Egypt compared to the previous years. “Early-stage entrepreneurship has increased, showing a significant growth in the percentage of the 18-64 population who are pursuing their new business; entrepreneurial intentions are growing, where more individuals intend to start their own business; societal perceptions are improving, where entrepreneurship is better perceived by the population at large; and a higher opportunity recognition, where more individuals recognize good market opportunities for a new business,” wrote the report’s authors in its executive summary.
Experts also rated support for women entrepreneurship as average, highlighting advancements in availability of targeted programs, access to finance opportunities and networks and social acceptance and need for improvements when it came to social services and equal encouragement and exposure.
C. Expert Recommendations
Many of the experts’ recommendations were related to government encouragement and policymaking, the need for better entrepreneurship education, promotion of research and development and university-industry collaborations as well as easing financial support.
Finally, the authors announced at the report’s launch that they would expect to see the effects of this year’s initiatives and the economic changes that the country has been witnessing throughout the following years’ reports. They also expressed their hope to see more data-driven research about entrepreneurship in Egypt in the future.
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AUC launched AUC Venture Lab (V-Lab) in 2013 which is the first university-based incubator in Egypt. It incubates early-stage and growth-stage startups that are chosen through a selection process that judges the novelty of the idea, the team’s track record and cohesion, scalability and potential for commercialization, as well as the team’s tenacity and commitment to success. Once selected, the startups benefit from training sessions, mentors, student internships and their presence at the AUC School of Business. They also play an active role in the AUC community and Egypt, sharing their entrepreneurial experience with students, faculty members, mentors and investors, as well as a global alumni network.