Egypt remains one of the emerging economies in the Gulf Cooperation Council region. There are an estimated 45 million Egyptians under 35 years of age and though much has been reported of the political uncertainty and economic challenges the country faces, these events are affecting young people who are just entering the workforce in a way that may have benefits in the future.
While 74% of the unemployed in Egypt are aged 15 to 29, the limited job opportunities are inciting many young Egyptians to start their own business. Entrepreneurs may be facing unprecedented challenges in Egypt, but the long-term prospects for start-up businesses look promising.
The 2011 revolution was undoubtedly a disaster for some businesses, but it also created opportunities for some entrepreneurs. As reported in Reuters, while large, established Egyptian firms are struggling with poor security, labor unrest, fuel shortages and difficulties in obtaining foreign exchange, some smaller entrepreneurial firms are growing.
Funding has become difficult for large corporations to secure due to a slow down in the capital markets and the banks exercising more caution in their lending, but entrepreneurs are able to raise capital either through formal or informal channels because of the moderate amount required during the initial years. Some entrepreneurs are also able to find better deals, such as obtaining business loans with more attractive repayment terms.
Many start-up businesses involve investments in new technologies and markets and new business models to help address issues such as traffic congestion, vocational training and jobs for young people and fuel shortages in Egypt. For example, KarmSolar is a start-up business that designs solar-powered water pumping systems and solar-powered buildings to help businesses and villages to operate off the national power grid and without using diesel fuel.
According to the 2012 Africa Attractiveness Survey conducted by Ernst and Young, Egypt remains an appealing destination for investors, ranking second among the top African destinations for foreign direct investment between 2003 and 2011. Though 2013 has seen extreme political developments since this survey was conducted, there is a good chance long-term structural reform could actually boost the economy and help to encourage investment and enhance growth.
Further, Egyptian entrepreneurs have become risk-takers after the revolution and those who take proactive risk tend to become more resilient. The fact that entrepreneurship flourishes in the current uncertain political and economic environment suggests that the economy will resume rapid growth once the political climate eventually stabilizes. Entrepreneurship will become increasingly important in satisfying untapped demand, creating jobs for people and saving Egypt’s post-revolution economy.
So despite political strife, Egypt continues to be an attractive market with a large and fast-growing population of 80 million, the second largest in the Middle East and North Africa (MENA). Egypt’s strategic geographic location remains unchanged by recent events and is likely to draw in local entrepreneurs and international investors to tap into the massively under-serviced economy, as it has done successfully in the past.