Gedety was too good to be true. Yasser El Zahhar, its founder, had the idea to start a social business that would employ non-working Egyptian women to make products that working Egyptian women could use to make quick, but healthy meals for their families. All he would need to do is buy his agricultural products from small farmers who protect the environment and this would have been the trifecta of social business.
Gedety never became a social business; not yet, anyway. The story of how it became the business it is today says a world about how inclusive entrepreneurship can be in Egypt.
Inclusiveness motivates entrepreneurship. Most eyes looking at the Egyptian economy, before and during the current economic crisis, see that enterprise development is key for Egypt’s growth, economic and social. Businessmen, small and large, financiers and economic analysts all share this view. Egypt needs stronger competition, innovation and job creation, and so Egypt needs enterprises.
Change the perspective and the answer is still the same; it is the time to heavily support entrepreneurship, innovation, and the emergence of fast-growing small enterprises. Many, though perhaps not most, add the importance of encouraging female economic participation and protecting the environment.
Gedety graduated from concept to operational in one year. When it was showcasing its products at the Rise Up summit, Egypt’s first major entrepreneurial summit celebrating the success of Egyptian entrepreneurs, its kitchen had been serving small and medium business with in-house healthy catering for five months.
When developing Gedety, Yasser’s original idea was to provide semi-cooked and healthy products in the grocery store that would shorten cooking times for working women while employing some of Egypt’s female dormant labour force. He wanted there to be a healthy and different kind of fast food.
Getting these products in grocery stores, however, means that he must pay grocery stores to carry the products. The smaller markets he approached demanded EGP 5000 per month ($723 in nominal terms) to display his products. He imagined that larger chains like Carrefour would only demand more. And he just did not have that kind of working capital as a start-up.
His other concern was whether Egyptian household cooks would change their cooking and purchasing behaviours to substitute his fresh chopped veggies and sauces for what they are accustomed to making as their everyday meals.
Gedety then evolved into a healthy food catering service business. With it, it lost its idea of employing low-skilled Egyptian women and its potential social impact. Those types of unemployed women will instead continue to maintain their survival enterprises, like sitting on street corners in downtown Cairo selling freshly chopped veggies to working women, but it will not be through a business like Gedety.
Gedety now caters healthy food in-house for small and medium businesses, emphasising the value of healthy food to a productive day and potential efficiency gains to employers by having food on-site.
It considered pursuing big companies for potential big profits, but it did not have the big type of capital it needed. Gedety’s kitchen was set up with funds invested by Yasser’s family. Its capacity serves 200 daily, much less than it takes to win a contract to cater for a larger company. He also found that big companies are not very keen on contracting start-ups, typically preferring to do business with more mature businesses for catering services.
Yasser is not one of Egypt’s elite. The amount invested in Gedety by his family represents a non-trivial part of his family’s personal combined savings, insurance and retirement informal account. His participation in the entrepreneurial space is reassuring and is one of the kinds of inclusiveness that Egypt needs.
Financing and business know-how will unfortunately remain obstacles to that kind of inclusive entrepreneurship for the short-term, although many people in and out of Egypt work hard every day to solve these problems.
As an entrepreneur, Yasser has been able to connect with potential investors and some business development services. He was even able to catch a session or two at the Rise Up summit, although not many since he was busy being the face of his business at the trade fair.
Doing business in Egypt for Yasser was also made easier through the government’s investment services. Yasser quickly and easily registered his business and received his tax certificate through GAFI’s (General Authority for Investment) one-stop shop. This kind of efficiency was why Egypt had in 2008 topped the list of reformers and was the most improved in the Doing Business ranking globally.
Unfortunately, he still faced other “governmental business obstacles”. While it took days to get the official paperwork he needed to legally begin outfitting his kitchen, once his kitchen was set up and his personal financial investment paid in, it took the Ministry of Health about four months to give him the inspections and paperwork he needed to start working. This delayed his business launch and cost Gedety revenues.
It is easy to see the practical need for the local business modus operandi of informal payments to speed up these government delays, with all of the financial payouts that means for civil servants. Many work on the solutions for these and other remaining obstacles to enterprise development.
Hopefully, a different kind of inclusiveness will also emerge, an “inclusive growth”. This is the kind of enterprise development and economic growth that benefits more in society through the availability of goods and services, job creation and a higher standard of living.
Enterprises, innovations, and competition can create more equality of opportunities for consumption, production, and employment. Many see this as exactly what Egypt now needs.
Gedety and other promising social businesses in Egypt eventually evolved into ordinary for-profit businesses for very practical and understandable reasons. Some are still fighting the good fight, so to speak, trying to include more in Egypt’s society through the nature of the business, either as an employer or a provider of valuable goods and services.
It seems to me that while promoting entrepreneurship in Egypt, we should keep both kinds of inclusiveness in mind.