The Total Entrepreneurship Activity rate (TEA) in Egypt is only 7.82%, a slight increase from the 2010 rate of 7%, according to a report by Global Entrepreneurship Monitor (GEM) issued in December. The TEA is for those who are actively trying to start a business or already own and manage a business that is less than 3.5 years old.
The report pointed out that the TEA rate was 13.1% in 2008.
The report highlighted different demographic groups comprising of adult populations who had the highest TEA rates. Those include men aging between 25 and 34 years old, adults with a post-secondary degree, adults with household’s income of EGP 8,001 and 10,000, self-employed adults and adults who are living in Cairo.
The study, which was comprised of a team from the British University in Egypt (BUE), the International Development Research Centre and Silatech, used a sample of 2,500 individuals to conduct the Adult Population Survey and 36 experts, who work in fields related to entrepreneurship, for the National Experts Survey.
Nascent entrepreneurs, who are actively trying to start a business, account for 3.1% while managers and owners of new businesses which have been established for a period ranging between four and 42 months, represent 4.87%. Owners of businesses that have existed for more than 42 months account for 4.16%.
The study indicated that in 2012, 11.5% of adults in Egypt were actively trying to start a business or are already owners of young established businesses.
The report, titled “GEM Egypt Report 2012”, showed that adults between 18 and 64 years of age have a positive attitude towards entrepreneurship, with 85% believing that it is a desired career choice. The report added that 60% of Egyptian adults think that they have the required skills and knowledge to start their own business, with 42% stating that they have intentions to start a business in the future.
However, nearly a third of the surveyed adults expressed a moderate fear of failure upon starting a business.
The study reported that, compared to other factor driven economies, Egypt has the lowest business discontinuation rate with 5.8%.
“Almost 40% of Egyptian discontinued businesses did so because the business is not profitable,” the report read.
On the nature of business entrepreneurship in Egypt, the report said: “Necessity-driven entrepreneurship is the main motive to early stage entrepreneurs in Egypt, a common feature of a factor-driven economy; and an expected outcome of the transition period the country passed through since 25 January 2011.”
The report discussed that the early stages of enterprises established by entrepreneurs are concentrated in consumer oriented services such as hotels, restaurants and retail trades.
These enterprises are very small, with fewer than five workers employed, but with an expectation that they would create between five and 19 jobs during the coming five years. The report added that they are locally-oriented business which serve the national marker and have low export orientation.
The study also stated that these entrepreneurial enterprises have a high to medium involvement with technology sectors.
Not all of these enterprises are registered with legal authorities, as some operate informally.
According to report, however, women’s participation in Egyptian entrepreneurship is low.
“Very few women in Egypt are engaged in early stage entrepreneurial activities, whereas the gender gap in Egypt is among the highest in the countries participating in the GEM 2012,” the report stated, adding: “Compared to previous cycles, the women’s share of all entrepreneurs is lowest.”
The study mentioned that Egyptian women represented only 14% of those who were either trying to start a business or are currently managing a business that is younger than 42 months. It also stated that 12 % of the women own or had started a business that has been established for longer than 42 months.
After 25 January
The report indicated that the majority of Egyptian adults and entrepreneurs felt that the condition to start and grow business improved after the 25 January uprising. It added, however, that new firm owners were less content with these conditions than nascent entrepreneurs.
“Egyptian adults were least satisfied with the security situation and economic situation after the revolution; 49% and 48% respectively expressed their dissatisfaction with the two situations,” the report read.
The adult population is now more satisfied with the national conditions that influence entrepreneurship activities, such as intellectual property rights, available opportunities for starting a business, education and training, the entrepreneur’s social image, favourable cultural and social norms as well as available financing instruments and tools.
Aside from the access to physical infrastructure such as land, utilities, Information Communication Technology (ICT), the report said that Egyptian national experts expressed their dissatisfaction with the business environment’s ability to support the growth of their businesses.
“The experts perceived the role played by the government in supporting the new and growing firms as weak, whether through the policies or programmes,” the report said, adding that “experts believed that government programmes are insufficient and ineffective”.
Regarding governmental policies, the report stated that they are not tailored to assist or meet the needs Egyptian entrepreneurs when starting and growing their businesses.