Cluster-based Development for Job Creation & Poverty Reduction in EgyptTuesday, September 6th, 2016
Governmental Efforts for Boosting SMEs in Egypt- with Special Focus on Clusters
Contents
• Status-quo: SMEs & Clusters• SMEs Challenges• Needed System & Governmental Efforts• Specific Examples
Date:
Status-quo: SMEs & Clusters in Egypt
Status-quo: SMEs in Egypt
Food
Beverag
e
Tobacc
oTe
xtile
Wearing a
pparel
Leath
er and re
lated products
WoodPap
er
Printing a
nd reproducti
on of recorded m
edia
Coke an
d refined petro
leum products
Chemicals
Pharmace
uticals
Rubber
Other non-m
etallic
mineral products
Basic m
etals
Fabric
ated m
etal products
Computer, electr
onic and optical
products
Electr
ical e
quipment
Machinery
and equipment n
.e.c.
Motor vehicle
s
Other tran
sport equipment
Furnitu
re
Other man
ufacturin
g0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Large enterprises
Medium enterprises
Small enterprises
Very Small enterprises
Micro enterprises
4
Distribution of Firm Size Across Different Industries
Micro enterprises Very small enterprises Small Enterprises Medium Enterprises Large Enterprises0
200000
400000
600000
800000
1000000
1200000
Firm Size
Tota
l num
ber o
f wor
kers
in fi
rms
5
Status-quo: SMEs in Egypt
Distribution of Total Number of Workers Across Different Sizes
Status-quo: SMEs in Egypt
Missing Middle in Egypt Compared to Other Countries
UK
Japan
Spain
Italy
MENA
Egypt
Less than 10
10 - 99
100 - 499
More than 500
0 % 20 % 40 % 60 % 80 % 100 %
7
Status-quo: SMEs in Egypt
% Share of Small and Medium Enterprises in Country's Exports: Egypt in Comparison with Other Countries
Turkey Italy Spain South Africa Morocco Egypt
60
4944
3631
4
8
Status-quo: Clusters in Egypt (Broad Definition)
Organic clusters
Other types of firm
interlinkages
Government initiated clusters
Status-quo: Clusters in Egypt
• 145 organic clusters in Egypt (Source: SFD)
• Distributed across 25 governorates
• 79 % of organic clusters are informal
• Main Sectors: Agro-industry, Food, Wood, Leather, Textile, Chemicals, Metallurgical, Mining & Building products.
• No study quantifying non-organic clusters (Robeiki, Merghem, Mahala …etc)
• Handicrafts
• Other models (new)
Status-quo: Clusters in Egypt
Organic Clusters ” are defined as industrial interdependent concentrations, located in a geographical proximity, developed and/or expanded without government planning/intervention, producing similar or complementary products with distinct characteristics or competitive edge, having the experience or capacity to sell beyond their geographic boundaries, and with a minimum of 30 enterprises/employees
Date:
SMEs Challenges & Government Efforts
SMEs Challenges in Egypt
SMEs Challenges
Gov. lengthy complicated procedures
to start Difficulties in fund Raising
Access to credit
Scattered & competing initiativesLack of
technical & financial support
systems for SMEs facing
problems
Strong disconnect between
entrepreneurs and accelerator and incubation
programs
Lack of mentorship and support
at the ideation phase
Needed System & Government’s Efforts
SMEs Challenges
Gov. lengthy complicated procedures
to start Difficulties in Fund
Raising Access to
Credit
Scattered & Competing InitiativesLack of
Technical & Financial Support
Systems for SMEs facing
Problems
Strong disconnect between
Entrepreneurs and Accelerator and Incubation
Programs
Lack of Mentorship and Support
at the Ideation Phase
CBE Initiative+
New MSMEs Definition
General Adoption for
Unified Definition
+SMEs
Regulator and
Coordinating Body
Technology Platform
Simplification of Licensing
Procedures
New Definition Adopted by the CBE
Existing Firms New Established Firms
No. of Employees
Annual Sales Revenue
No. of Employees Paid-in Capital
Micro Enterprises Less than 10 Less than 1 mn EGP
Less than 10 Less than 50,000 EGP
Very Small Less than 200 1 mn to less than 10 mn EGP
Less than 200 50,000 – 5 mn EGP for industrial sector
50,000 – 3 mn EGP for other sectors
Small Less than 200 10 mn to less than 20 mn EGP
Less than 200
Medium Less than 200 20 mn to less than 100 mn EGP
Less than 200 5 mn – 10 mn EGP for industrial sector
3 mn – 5 mn EGP for other sectors
CBE Initiative
• Announced in January 2016
• Amount of finance devoted to SMEs to reach 20 % of each bank’s loan portfolio over the next four years. This amounts to a total of 200 billion EGP.
• Interest rate 5% for categories: very small and small
• Interest rate 7% for machine & equipment for medium sized, not to exceed 20 mn EGP and maximum maturity 10 years (agricultural and industrial firms only)
Date:
Specific Examples
Old ClustersDamietta
Abou Kabeer
Meet Ghamr
New Clusters “Qalyubia” (small industrial cluster linked to sector specific value chain)
30 acres
Toukh
Chemical Industries
50 acres
Kafr Shoukr
Food Industries
Your Job Next Your Home
Your Job Next Your Home
Your Job Next Your Home
Your Job Next Your Home
Your Job Next Your Home
Clusters have a lot of potential in Egypt that remain untapped …….
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