Startup

Ecosystem
Report
Egypt

V.1.0 – December 2019

Chief Editor: Jan Lachenmayer (V.i.S.d.P.)
Authors: Khadiga Embaby, Ahmed Mostafa, Aalaa Halaka, Essam Sharaf
Editing: Heather Dannyelle Thompson
Design Support: Joan Saló

Publisher:
enpact e.V.
Albrechtstr. 10
10117 Berlin

Contact:
info@enpact.org
www.enpact.org

ISBN:978-3-96604-010-5

Registration Court: Amtsgericht Charlottenburg (Berlin)

Registration Number: VR 32765 B

Cover photo: Sophia Valkova

Supported by: In partnership with:

Table of Contents

The Startup Friendliness Index (SFI) 6

Research Design 7
Country Brief 8
Executive Summary 9
Domains and Indicators 16
Human Capital 17
Finance 25
Startup Scene 33
Infrastructure 41
Macro-Political and Legal Framework 50
Market 59
Sector In Focus: FinTech 66
Policy Recommendations 72
Acknowledgments 79
References 80
Sources and Indicators 81
STARTUP ECOSYSTEM REPORT EGYPT 2019

The Startup
Friendliness Index
(SFI)

In the field of entrepreneurship, startup ecosystems play an

important role. A startup ecosystem is formed by entrepreneurs,
startups in their various stages, and numerous other entities
such as universities, investors, accelerators, co-working
spaces, legal and financial service providers, and government
agencies. Through the complex interaction of these players, a
startup ecosystem has the capacity to empower entrepreneurs
to develop new ideas and bring innovation to the market.
The composition and maturity level of startup ecosystems are
essential components of the success rate for entrepreneurs and
new enterprises. A good understanding of ecosystem states,
strengths, and weaknesses enables specifically-targeted
policies, enhances investment decisions, and improves the
impact of development cooperation.

The Startup Friendliness Index (SFI) analyses the potential for

cities to advance entrepreneurship by measuring six key features
(domains) of the startup ecosystem: Human Capital, access
to Finance, the liveliness of the Startup Scene, Infrastructure
quality, Macro framework, and Market conditions. Together,
these six domains interact to form an urban environment that
can champion or hinder entrepreneurship.

SFI SCORES

80%

70%

60%

50%

40%

30%

20%

10%

0%
Singapore
Berlin
Kuala Lumpur
Bangkok
Bangalore
Mumbai
Delhi
Ho Chi Min City
Jakarta
Chennai
Hyderabad
Hanoi
Tunis
Manila
Pune
Amman
Beirut
Mexico City
Sousse
Lima
Sfax
Buenos Aires
Jaipur
Cairo
Alexandria
Tashkent
Caracas
Nairobi
Salvador
Managua
Rabat
Accra
Mansoura
Kairouan
El-Gouna
Assuit
Baghdad
Sohag
Suez
Arbil
Suleimaniyah
Khartoum
Basrah
Mosul

6
STARTUP ECOSYSTEM REPORT EGYPT 2019

Research Design

The SFI analyses data on 80 key indicators within the six Scores are generated simultaneously and reflect essentially the
domains representing core elements of a startup ecosystem, same point in time for all cities. In this report, Egyptian cities
utilising a novel methodology that reflects the importance of are contrasted with 37 other cities across the globe.
interconnectedness between domains.
As a final step, the data is aggregated. Drawing from best
The SFI relies on data procured from a combination of primary practices in composite indicator-building[1], we utilise a
data, collected through surveys and interviews, and secondary combination of the familiar arithmetic mean as well as the
data from established sources such as the World Bank and geometric mean, resulting in an index which accurately reflects
World Economic Forum. the importance of balance (having relatively even levels of
maturity across all domains) within an ecosystem.
In terms of primary data-gathering, eight indicators are
collected through surveys from entrepreneurs and experts The logic behind this method is simple; imbalances in an
living in the measured cities. In Egypt, approximately 220 survey ecosystem have a negative impact, because deficiency in even
respondents contributed to our research. one area may slow or impede entrepreneurship completely. For
example, excellent infrastructure is of limited use if there are
Additionally, 10 interviews with relevant stakeholders in no funding opportunities available to initiate a new venture. In
Egypt’s startup ecosystem were conducted to complement the other words, there are no substitution effects between domains.
information from the surveys and secondary data. [2]

Once gathered, the data is normalised so that the index values The final SFI scores can be used both as a tool to compare
can be used to compare the cities in the SFI. The normalised cities on common indicators, and also offer a structured lens
indicator values range from 0 (for a city that has the lowest to evaluate areas of strengths and weaknesses within individual
performance relative to the others) to 100 (for the city that has cities.
the best relative performance). Where relevant, normalised
scores are adjusted to the population of the city.

Primary data Secondary data

PayScale UNESCO KPMG CrunchBase

Data Sources DoingBusiness.org World Economic Forum
online surveys
Numbeo GSMA intelligence ITU
Anel List World Bank Coworker

Indicators (80) e.g. Skilled Workers

City Normalized
and Arithmetic
mean
Subdomain (14) Talentpool

Arithmetic mean

Domain (6) Human Capital

e.g. Geometric mean

SFI Score
48,5 / 100

7
Country Brief

ALEXANDRIA
MANSOURA
SUEZ
CAIRO EL-GOUNA
ASSUIT
SOHAG

Egypt is the most populous country in the Middle East with gas extractives and construction1. Despite relative growth in
over 100 million people and is home to 21% of the population GDP over the past two years, poverty still persists (particularly
of the Middle East and North African (MENA) region. The Afro- compounded by the cuts to subsidies for energy sources) and is
Asian country is located in the northeast corner of Africa and posing more challenges to the country’s sustainable economic
is bordered by Libya, Palestine, the Mediterranean Sea to the growth.
North and Sudan on its southern border. Given its strategic
location between three continents, Egypt has traditionally The overall startup ecosystem in Egypt is still in its early stages
been a meeting point for trade and cultural exchange. Since but has great potential, especially in Cairo and Alexandria given
the 1990s, Egypt has been reforming its economy to be more the sheer size of their population. This report will review the
market oriented. Moreover, the country has been experiencing startup ecosystem of Egypt by examining seven Egyptian cities
major economic reforms since the approval of a $12 billion loan including Cairo, Alexandria, Sohag, Assuit, Suez, Mansoura and
from the IMF in 2016. Egypt’s traditional industries are mainly in El Gouna, with Cairo, in particular, being central to the entire
the textiles, tourism and chemicals. More recently, the country’s ecosystem of the country.
economy has been expanding to include more sectors such as
information and communications technology (ICT), natural 1. https://www.worldbank.org/en/country/egypt/publication/economic-monitor-april-2019
STARTUP ECOSYSTEM REPORT EGYPT 2019

Executive
Summary

This report compares the startup ecosystem of seven Egyptian With a population of over 25 million, Cairo is found to have
cities (Cairo, Alexandria, Sohag, Assuit, Suez, Mansoura and El the most mature startup ecosystem with an overall SFI score
Gouna) to 44 global cities in Asia, Africa, the Middle East, Latin of 37.7 out of 100. In the global SFI, Cairo ranks 24th out of
America and Germany. the 45 researched cities and 6th in the MENA region. Cairo’s
strengths are namely the Human Capital, Finance and Startup
The report focuses on the Startup Friendliness Index (SFI). SFI Scene domains, where city specific data is collected. Given the
scores are determined by examining 80 indicators for 45 global concentration of resources in the city, Cairo has an advantage
cities in six domains: Human Capital, access to Finance, the over other Egyptian cities in access to resources. Conversely,
liveliness of the Startup Scene, Infrastructure quality, Macro domains that account for the country’s progress significantly
framework (describing the political and legal system), and weigh down Cairo’s SFI score. In that sense, the domains that
Market conditions (such as trade balance and economic growth). are perceived obstacle Cairo’s flourishing startup ecosystem
Cities with relatively even scores across domains receive a are the Macro and the Market domains and some indicators in
higher overall score than a city with strong performance in the infrastructure domain as well.
one area, and weak performance in another. SFI scores range
from 0 to 100, with a score of 0 for the city with the weakest
performance, to 100 for the strongest.

Cairo
HUMAN CAPITAL
49.4 of 100

MARKET FINANCE
27.8 of 100 41.6 of 100

MACRO STARTUP SCENE

45.2 of 100 11.5 of 100

INFRASTRUCTURE
City
56.7 of 100
Global Average

9
STARTUP ECOSYSTEM REPORT EGYPT 2019

Alexandria

Alexandria is the second most mature startup ecosystem in

Egypt. Alexandria’s overall SFI score is 32.80 ranking 25th
globally and 7th in the MENA region. Finance and Infrastructure
are the most promising domains for Alexandria, followed by
Human Capital and Startup Scene. Ease of mobility inside the
city and the relatively high presence of qualified labour gives
the city significant potential. Additionally, Alexandria’s startup
ecosystem has the potential to be as competitive as Cairo given
its relatively large population. Accelerators and incubators exist
in Alexandria as well but are not adequate for the needs of the
city. Alexandria also has a remarkable score in the Finance
domain, owed to the ease of access to loans. Similar to Cairo,
the Macro and the Market domains are the main obstacles to
the city’s startup ecosystem development.

HUMAN CAPITAL
46.6 of 100

MARKET FINANCE
25.0 of 100 39.4 of 100

MACRO STARTUP SCENE

44.3 of 100 10.6 of 100

INFRASTRUCTURE
City 58.1 of 100
Global Average

10
STARTUP ECOSYSTEM REPORT EGYPT 2019

Mansoura

Mansoura is the third best performing city after Cairo and

Alexandria with a score of 28.9 out of 100 score ranking 33rd in the
global SFI and 11th in the region. It is the strongest performing
city in Egypt for Human Capital. Given its strategic location, the
city is considered a hub for other neighbouring villages and
cities, giving it a competitive advantage. Infrastructure also
holds potential for Mansoura. Finance is a challenge, but given
the high score for loan accessibility, there is great potential for
it. In terms of liveliness of the startup scene, co working spaces
in Mansoura provide a space for creating more hubs for startup
founders and would-be entrepreneurs, however, the city could
still use more. The city also lacks incubators and accelerators
that function beyond Mansoura’s public university. Like Cairo
and Alexandria, the weakest domains for Mansoura are the
Macro and the Market domains.

HUMAN CAPITAL
54.8 of 100

MARKET FINANCE
21.3 of 100 34.6 of 100

MACRO STARTUP SCENE

43.0 of 100 6.1 of 100

INFRASTRUCTURE
City
55.0 of 100
Global Average

11
STARTUP ECOSYSTEM REPORT EGYPT 2019

Sohag and Assuit

For Upper Egypt, Sohag and Assuit perform similarly for each
domain with some minor differences. Both cities struggle in
many of the domains by ranking towards the bottom of the
SFI, 38th and 36th respectively. The Infrastructure domain is
the main strength for both cities, while Sohag performs well
in Finance. Even though it scored slightly below the global
average, there’s a definitive chance for improvement with
proper communication between investors and startups. On the
other hand, Assuit fares better — though below global averages
— in the Startup scene domain. Overall, the cities score well in
all the indicators assessing collateral costs given the extremely
low salaries there. This in turn, minimizes real estate, utilities,
and internet costs which are much higher in the capital city.
Interview data also suggests that both cities have witnessed
large improvements when it comes to introducing the startup
culture for youth and would-be entrepreneurs. Nonetheless,
Human Capital is still one of the main challenges for the cities’
startup ecosystem.

12
STARTUP ECOSYSTEM REPORT EGYPT 2019

SOHAG

HUMAN CAPITAL
41.8 of 100

MARKET FINANCE
19.5 of 100 31.8 of 100

MACRO STARTUP SCENE

45.1 of 100 1.7 of 100

INFRASTRUCTURE
56.1 of 100

ASSUIT
HUMAN CAPITAL
40.8 of 100

MARKET FINANCE
19.7 of 100 28.3 of 100

MACRO STARTUP SCENE

45.1 of 100 5.2 of 100

INFRASTRUCTURE
City 56.0 of 100
Global Average

13
STARTUP ECOSYSTEM REPORT EGYPT 2019

Suez

The city of Suez scores 21.1 and ranks 39th in the global SFI. On
a national level, Suez scored the lowest in the global SFI score.
Though the city has average (or slightly below global average)
scores in most domains, the liveliness of the startup scene is
the weakest aspect in the ecosystem of Suez. Expert interviews
explain this by a number of challenging factors such as the lack
of startup culture among youth, the lack of entrepreneurship
education and the absence of active hubs to create a startup
momentum. Finance and Infrastructure are the most promising
domains for the city given its low cost of living. On the other
hand, Suez falls short in utilising its full capacity. The presence
of the Suez Canal and the relative accessibility to sources of
finance indicate a promising future for businesses, especially
those that serve other businesses (B2B). .

HUMAN CAPITAL
47.1 of 100

MARKET FINANCE
19.6 of 100 41.4 of 100

MACRO STARTUP SCENE

46.5 of 100 0.8 of 100

INFRASTRUCTURE
City 56.8 of 100
Global Average

14
STARTUP ECOSYSTEM REPORT EGYPT 2019

El-Gouna

El Gouna is a peculiar city that differs on so many levels

from any other researched city in Egypt. Even though its
low population could discourage many entrepreneurs from
starting a business there, it is a contained community, making
it ideal to serve as a hub for techies and travel and tourism
entrepreneurs. Infrastructure and Macro domains are the main
strengths of El Gouna, whereas Finance and Market domains
are quite challenging. According to interview data, the city
has the potential for being a live startup hub especially in the
coming years. With more government attention, structural
changes in the city’s administration and its strategic location on
the Red Sea, El Gouna could be attractive for both investors and
entrepreneurs. At the moment, El Gouna struggles the most
with access to finance alongside with a relatively high cost of
living as a touristic city. To make the startup scene livelier in
El Gouna, more entrepreneurship and tech events need to take
place there in order to bring attention to the potential of the city.

HUMAN CAPITAL
44.6 of 100

MARKET FINANCE
19.6 of 100 27.2 of 100

MACRO STARTUP SCENE

46.5 of 100 7.3 of 100

INFRASTRUCTURE
City
56.9 of 100
Global Average

15
STARTUP ECOSYSTEM REPORT EGYPT 2019

Domains and
Indicators

16
1. Human Capital

CAIRO 49.40 out of 100

ALEXANDRIA 46.65

MANSOURA 54.86

EL-GOUNA 44.68

ASSUIT 40.68

SOHAG 41.85

SUEZ 47.13

The Human Capital domain attempts to assess the availability of qualified labour and the ability

for the Egyptian startup ecosystem to access it. Given the centralized nature of cities in Egypt,

this indicator is relatively strong for cities such as Cairo and Alexandria and Mansoura, but more

challenging for cities in upper Egypt, namely Sohag and Assuit.

Human Capital consists of two subdomains: Talent Pool and Labour Market, both featuring national

and city level indicators. The Talentpool subdomain presents an opportunity for the researched

Egyptian cities, with each of them scoring well above the global average and performing within the

regional average. However, there are significant differences between Egyptian cities. The Labour

Market subdomain, in contrast, shows potential for growth but with room for improvement: all cities

fared slightly below the global average and little above regional average. Sohag and Assuit ranked

the lowest in both subdomains, indicating a real challenge in the overall domain.
STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Human Capital Domain

The Egyptian economy has been witnessing steady GDP growth up ecosystems, Egyptian cities face a considerable challenge
since the 2011 revolution which, according to the IMF, has when it comes to the availability and quality of entrepreneurial
more than doubled despite political instability and the various education.
economic shocks that followed2. Nonetheless, the Egyptian
1

private sector struggles still with creating enough jobs that But a promising aspect of Egyptian Human Capital is the
match the skills and magnitude of the growing supply of highly availability of a fairly strong technical education, mainly in
educated youth entering the labour force. This ‘skills mismatch’ large cities like Cairo, Alexandria and Mansoura. The challenge
results in higher unemployment among young graduates, instead lies in the fact that most talented technical workers
especially women. As such, addressing youth unemployment either migrate internally (from small cities like Suez to the
and skill-mismatches has directed considerable attention capital for instance) or leave the country looking for better
toward fostering entrepreneurship, especially among young opportunities and a higher standard of living abroad. This
graduates. “brain-drain” effect stifles startups’ ability to attract and retain
talented workers.
With Egypt’s young and educated population, the Human Capital
domain has the potential to be one of the main drivers to shift Lastly, female participation in the ecosystem shows potential
the Egyptian startup ecosystem to a more advanced stage from for improvement, especially considering the increasing share
where it currently stands. However, the same general national of educated women. According to World Bank data, female
trend of stagnant job creation is reflected in startup ecosystems graduates exceed male graduates by 1%3.Despite this, Egypt
2

across researched cities where there is a significant gap struggles to better integrate women in the labour market,
between the available talent and the required skills. As such, where female participation in all Egyptian cities scored well
these cities score much higher in the Talentpool domain than in below the global average.
labour Market and, much like most cities with developing start-

2. Source: IMF (2019) ‘Arab Republic of Egypt’, Retrieved 9 Oct 2019. 3. The World Bank. “Women Economic Empowerment Study”. May 2018.

19
STARTUP ECOSYSTEM REPORT EGYPT 2019

Talent Pool
Human Capital Subdomain

The Talent Pool subdomain addresses the availability of Two indicators in the Talentpool subdomain, Tertiary Education
educational resources and whether those in the workforce have and Research and Development (R&D) Expenditure are
the necessary skills to meaningfully contribute to modern start- measured on a national level. The remaining indicators are all
up ventures. Cairo, Egypt’s capital city and home to the majority discussed on a city-by-city basis.
of the country’s startups, ranked 6th globally and 2nd regionally.
Surprisingly, however, Mansoura scored even higher in this
subdomain, ranking 4th globally and 1st in the MENA region.
Meanwhile, Assuit and Sohag ranked lowest in the country, and
32nd and 26th globally, respectively.

Human Capital

Talentpool

Workforce Constraint

Skilled workers

Universities Score

Universities Students

Teritary Education

R&D Expenditure

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

20
STARTUP ECOSYSTEM REPORT EGYPT 2019

According to the World Bank, 34.4% of recent Egyptian high The Workforce Constraint indicator is partially affected by the
school graduates receive tertiary education, putting the country quality of education at local and private universities. With that
slightly ahead of the global and regional averages. Though this said, Mansoura, Suez, Gouna and Cairo scored the highest
could be translated into the availability of a higher number of based on the national level, with 12.6% of total firms in
skilled workforce, tertiary education in Egypt still lacks much Mansoura identifying the lack of skilled workforce as a hiring
of the necessary skills and disciplines needed in the startup challenge, 13.8% of firms in both Suez and Gouna, and 14%
ecosystem, including entrepreneurial and technological in Cairo. Finally, 17.6% of firms in Alexandria expressed the
education. limited access to skilled workforce. This may be due to internal
migration pattern referenced earlier, where talented labour
As for the R&D expenditure, Egypt’s spending on this indicator migrate to bigger markets.
is just above global SFI average and slightly higher than the
regional average. When compared with recent years, World Following the same trend, Sohag and Assuit seem to be
Bank data shows that the country’s spending on R&D has struggling in this specific indicator with over 78% of firms lacking
dropped from 0.7% in 2017 to 0.6%. With less than 1% of the
1
the needed skills to perform their businesses. Accordingly,
country’s total GDP, Egypt ranks 19th in the global SFI and 7th both cities ranked towards the bottom of both the Global and
regionally. the regional SFI. On this issue, Amira Taher, researcher at
the General Authority for Investment and Free Zones (GAFI)
On a city level, four indicators are assessed: Workforce expresses that “our youth have a serious problem in receiving
constraint (the percentage of firms that identify an inadequately entrepreneurial education and training in related fields like
educated workforce as a major constraint to doing business), marketing, branding and exports management”.
the proportion of skilled workforce in the economy, and two
indicators on the quality of universities and enrolment.

4. https://knoema.com/atlas/Egypt/RandD-expenditure

WORKFORCE CONSTRAINT VS SKILLED WORKERS

Workforce Constraint Skilled Workers

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

21
STARTUP ECOSYSTEM REPORT EGYPT 2019

cities, where Cairo was ranked 1st regionally and 6th globally
“Our youth have a serious compared to a city such as Gouna which pulled a rank of 15th
regionally and 32nd in the global SFI. Though these ranks might
problem in receiving seem counterintuitive when compared with the workforce

entrepreneurial education and constraint indicator discussed above, this might be a result of
internal migration patterns from Cairo and other neighboring
training in related fields like cities to Gouna. The remaining cities are mostly ranked at or
slightly below average in the global SFI with Alexandria and
marketing, branding, and exports Sohag ranking 20th, Assuit ranking the 28th and Suez and
management.” Mansoura ranking the 17th. With this indicator, it is worth
noting that universities are rated on the overall average quality
of all disciplines, which are often strong for traditional technical

Amira Taher faculties like engineering and medicine and still developing in
tech and entrepreneurial disciplines.

Comparing the workforce constraint and the skilled workers The final indicator is the total number of university students
indicators, we find all of the cities score much higher in as a proportion of the population. Surprisingly, Sohag, Assuit
terms of the availability of educated workers but most cities and Mansoura hold the highest global ranks of 2nd, 4th and 1st
firms generally find it much harder to find the right skills for respectively where as Cairo and Alexandria are placed in the
the available jobs. Interestingly, we find a discrepancy in this middle and Suez and Gouna are at the bottom of the global SFI.
pattern in Assiut and Sohag, two of the lower scoring cities on This could be explained by the fact that the overall population of
the SFI, where the skilled workers indicator scores almost as cities like Cairo and Alexandria are much larger with numerous
high as the workforce constraint, which alludes to a substantial inhabitants moving from other cities to the capital, deflating the
skill-mismatch between the supply and demand of jobs. final numbers.

University quality is based on ratings from world university

ranking. On this indicator, there is significant variance between

SOFTWARE DEVELOPER SALARY

CAIRO 736

ALEXANDRIA 294

MANSOURA 285

EL-GOUNA 620

ASSUIT 299

SOHAG 218

SUEZ 276

22
STARTUP ECOSYSTEM REPORT EGYPT 2019

Labour Market
Human Capital Subdomain

The Labour Market Subdomain measures systematic factors The Labour Market subdomain consists of two national level
that impact entrepreneurs and their ability to find and retain indicators: unemployment rate and female participation. The
the best employees. This subdomain covers salary information, remaining indicators regarding labour regulations, salary
unemployment rate, the extent to which regulations are a information and rates of female entrepreneurship are city
hindrance for a business and female participation in the based.
economy. For Egyptian researched cities, this subdomain has
much room for improvement. All Egyptian cities fared poorly in
at least three out of six indicators in this subdomain with Cairo
holding the highest rank nationally of 26th in the global SFI and
Assuit ranking the 30th marking the lowest in the country.

Labour Market

Labour-regulation constraint

Graduate’s salary

Software developers’ salary

Female Participation

Unemployment rate

Female Entrepreneurship

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

23
STARTUP ECOSYSTEM REPORT EGYPT 2019

One of the main causes for Egypts poor performance in this of an employer who may be seeking to start a new venture and
subdomain is the low scores for the national indicators: struggling to afford high wages and therefore favour low values.
unemployment rate and female participation. Egypt is nearly 25 In this context, a low average salary is beneficial to startups,
points behind the global average when it comes to unemployment who often rely on lower wages as part of their cost structure.
of available workforce seeking jobs. Though unemployment is a As expected, Cairo, Alexandria and Gouna were much less
common issue among the entire MENA region, Egypt still is not affordable on a national level with Cairo recording the highest
faring at the regional average. State agencies, however, expect average salaries for recent graduates ($276 USD/month) and
current unemployment rates to decline by nearly 5% by 2024.5 1
software developers ($736 USD/month). For Sohag, Assuit and
Suez, salaries for recent graduates started from as low as $93
Low Female participation in the economy is also a hindrance for USD/month to ($138 USD/month being the highest) and $218
Egypt’s overall performance in this subdomain. Low scores on USD/month ($299 USD/month being the highest) for Software
this indicator may reflect the relatively large informal economic developers. This is likely a result of the difference in the cost of
activities still taking place on a national level, where women are living among the cities, as well as the level of skills and education
more likely to be employed. On this indicator, Egypt’s female available there.
participation in the labour market is only 22.8%.
The final city based indicator is the percentage of female business
On the city-based indicators, small variances among the scores ownership. There are considerable differences among the scores
of the researched cities in the labour regulations constraint of this specific indicator. Cairo, Alexandria and Mansoura have
indicator were found with the exception of Sohag and Assuit. the lowest ranks nationally where the percentages of female
Cairo, Suez, Alexandria, Mansoura and Gouna’s scores ranged entrepreneurship are as low as 0.10% in Mansoura and 1% in
slightly around the global SFI and the regional averages. Sohag Cairo and Alexandria. Conversely, Gouna had the highest ranks
and Assuit on the other hand had extremely low scores on this with 8.4% of its firms owned by women followed by Sohag, Assuit
indicator both globally and regionally, with over 52% of firms and Suez whose percentage fluctuated between 7.2% and 8%.
identifying labor regulations as a hindrance to their businesses.

The indicators pertaining to salary information aim to estimate

the average salaries of recent graduates and software
developers. These indicators are weighed from the perspective

5. CEIC. “Egypt Forecast: Unemployment Rate”. Accessed 26 Nov 2019.

24
2. Finance

CAIRO 41.62 out of 100

ALEXANDRIA 39.41

MANSOURA 34.61

EL-GOUNA 27.22

ASSUIT 28.38

SOHAG 31.86

SUEZ 41.41

Accessing adequate financial resources is a critical challenge to overcome for entrepreneurs around

the world, in all stages of operation. The Finance domain measures the availability of different

funding sources and the systematic factors such as loan requirements that impact the wider funding

environment in two subdomains: Sources and System.

Despite the discrepancies found among Egyptian cities in this domain, overall ranks of cities

fluctuate between slightly above to way below the global average. Out of 45 cities, Cairo was ranked

13th, only 6 points above the global average, whereas Assuit and El Gouna held the lowest ranks

of 33rd and 35th respectively. Even though the sources subdomain looks more optimistic for most

cities, especially in Cairo, Alexandria, and Assuit, the majority of Egyptian cities are struggling in the

system subdomain, bringing down the overall ranks for the Finance domain.
STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Finance Domain

Despite the relatively low ranks in the System Subdomain, The top 20 tech startups in terms of money raised are all based
startup funding is drawing the attention of both the government out of Cairo, which falls in line with the centralization of Egypt
and investment community who have adapted their investment in its capital.
philosophy and efforts. The Ministry of Investment has founded
Egypt Ventures, a state-sponsored venture capital firm and an INVESTMENT INVESTOR TYPE INVESTMENTS
instrument of direct provision of venture capital, out of the INSTITUTION
understanding that the traditional debt financing approach is no
longer suitable for innovative high growth companies. Flat6Labs Cairo Accelerator 90
Innoventures VC 29
When it comes to fundraising, now is one of the best times in Cairo Angels Angel Group 17
Egypt’s history to start a technology company. The past two Algebra Ventures VC 16
years have witnessed a surge in startup financing, with Startup Pride Capital VC 11
Accelerators and Venture Capital Firms having invested a total
of $84 Million in 2018 and $69 Million in 2019 to date.

More cash than ever before is available for young tech

companies, following years of accelerators and venture capital
firms coming to market. Flat6Labs, a private accelerator, has
funded 90 startups since 2010, which exceeds other investors
by a wide margin, capturing a little over a third of all startup
investments to date.

STARTUP NAME INDUSTRY BUSINESS TYPE TOTAL FUNDING

Swvl Delivery & Transport B2C $ 80,500,000

Cequens IT Solutions B2B $ 54,000,000
Vezeeta Healthcare B2C $ 24,100,000
Si-Ware Systems Technology B2B $ 10,000,000
BasharSoft HR & Recruitment Platform $ 7,700,000

INVESTMENT AMOUNT AND NUMBERS OF DEALS

Milions Deals Total Funding

Deals
80$ 100

70$

60$ 75

50$

40$ 50

30$
Source: MAGNITT

20$ 25

10$

0$ 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

27
STARTUP ECOSYSTEM REPORT EGYPT 2019

Sources
Finance Subdomain

The sources subdomain captures how entrepreneurs finance

their ventures. This subdomain is informed by survey data, where
startup founders are asked to reflect on the relative availability
of different funding sources in their city’s start-up ecosystem on
a scale from 1 (for very challenging) to 5 (for easily accessible).
The findings of this subdomain are all on city-by-city basis. With
the exception of El Gouna, the remaining Egyptian cities scored
above both regional and global averages in this subdomain with
Cairo ranking 5th globally and 3rd in MENA.

Finance

Sources

Bank Loan

Business Angels (BA)

Accelerators & Incubators

VC Funds

Public Funds

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

28
STARTUP ECOSYSTEM REPORT EGYPT 2019

Entrepreneurs in the Egyptian cities were asked about the Though angel investment is still not as accessible as traditional
availability of five potential funding sources: Bank Loans, funding sources like loans and public financing, business
Public Financing, Business Angles, VCs, and Accelerators and angels investment over the past 7 years has boomed for Egypt.
Incubators. These survey questions aimed to estimate how According to the African Business Angel Network (ABAN), Cairo
accessible these funding sources are for entrepreneurs in a Angels is the second most active Angel group in Africa16. For
particular city, though the resources do not necessarily need to Egyptian cities, Suez and Cairo had the highest scores nationally
be located there. thereby ranking 6th and 7th in the MENA region and 11th and
12th globally. The scores of the remaining cities of Mansoura,
Variance among the five sources of finance for each city are Gouna and Alexandria seem to be slightly higher than the global
relatively small with the exception of Cairo’s and El Gouna’s averages and accordingly placed in the middle of both the global
scores. For entrepreneurs in Mansoura and Sohag, Bank Loans and regional SFI.
seem to be the most accessible among the five sources with
scores of 3.12 and 3.06 out of 5. In Cairo, Alexandria, Suez and Despite the founding of “Nile Angels” in Upper Egypt, Sohag
Assuit, Bank loans are still an option but not the most favorable. and Assuit still hold the lowest scores on this indicator ranking
On this indicator, Suez ranks 8th globally, followed by Assuit, the 24th and 26th globally and 14th and 16th in the region.
Alexandria and Cairo ranking 10th, 15th and 22nd respectively. According to Amira Taher, this is largely due to two main issues.
Conversely, Gouna scored the lowest on this indicator with a First is the lack of proper communication between the investors
score of 1.75 out of 5 ranking 32nd in the global SFI. It is worth and the entrepreneurs in Upper Egypt. And second, is the lack
mentioning that for most cities bank loans are preferred due of branding and marketing skills among the entrepreneurs.
to the lack of other funding sources. This has been confirmed Consequently, entrepreneurs in Sohag and Assuit are unable to
by our interviewees’, who state that even though high interest attract investors in spite of their high performing startups.
rates are deterring their business growth, sometimes it’s their
only available source of funding. Funding through accelerators and incubators in general
constitutes a huge potential for Egyptian researched cities with
the exception of El Gouna. Not surprisingly, Cairo has the highest
rank on this indicator ranking 2nd globally and regionally. Suez,
Mansoura and Alexandria also scored well on this indicator
with a range of 20 to 30 points higher than the global average
“Our interviewees indicate that, ranking 6th, 5th and 9th on the global SFI. Upper Egypt has
though high interest rates on also witnessed a rise in this indicator with over 10 points higher
than the global and regional averages. On the other hand, El
bank loans are a deterrent to Gouna seems to be struggling in this indicator ranking 33rd
their business’ growth, they are globally. This discrepancy could be justified by the fact that
the startup model of doing businesses in El Gouna is still in an
sometimes their only available embryonic phase. On this, Ahmed Zidan, manager of the first
and sole coworking space in El Gouna explained, “The majority
source of funding. of our clients here are still established business owners not
entrepreneurs who want to expand their businesses.”
6. Wadhwa, Priya. “Egyptian startups increasingly backed by angel” investors. 31 July 2019.
SME10x

29
STARTUP ECOSYSTEM REPORT EGYPT 2019

“The majority of our clients here

are still established business
owners, not entrepreneurs who
want to expand their businesses.”

Ahmed Zidan
In line with the accelerators and incubators indicator, Egyptian
cities fair well in the funding through Venture Capital Funds. In
Alexandria, this indicator has huge potential since it ranks 1st in
the MENA region and 8th globally, followed by Cairo ranking 2nd
and 10th. On a regional level, all Egyptian cities were ranked
between the 1st and the 7th with the exception of El Gouna,
ranking 11th regionally and 25th in the global SFI.

Public Funding indicator scores suggest that it is the least

favorable for the majority of Egyptian cities. In this indicator,
Suez has the highest national score of 2.46 out of 5, followed
by Cairo, Sohag, Alexandria, and Mansoura all scoring between
2.37 and 2.15. Assuit and Gouna had the lowest scores,
nationally, regionally and globally ranking 25th and 31st in the
global SFI and 14th and 15th in the MENA region.

30
STARTUP ECOSYSTEM REPORT EGYPT 2019

System
Finance Subdomain

The System Subdomain discusses the fundamental factors and

institutions that create the funding environment. This includes
indicators on loan availability, resources such as the total
number of VCs and Business Angels, and FDI. This indicator
is a challenge for all Egyptian cities with some considerable
differences among the cities. Alexandria scores the highest on
a national level followed by Cairo both ranking 27th and 29th
in the global SFI. Conversely, Sohag struggles the most with a
score of 17.8 out of 100.

In this subdomain, FDI net flow is the only national indicator, the
rest are all city levels.

System

Funding Constraint

Loans Rejected

Collateral Required

Total VCs / PEs

FDIs Net Inflows

Total Business Angels

Female Entrepreneurship

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

31
STARTUP ECOSYSTEM REPORT EGYPT 2019

Despite the fact that Egypt’s score in the FDI net inflow indicator of rejected loan applications on a country level most firms
is still below the global average, Egypt was ranked the best cited difficulties in meeting the collateral requirements for a
in the MENA region while ranking the 18th in the global SFI. loan application. Alexandria had an outstanding score on this
Given the relative political stability in 2016, FDI net inflow has indicator with only 3.7% of loans rejected,followed by Cairo with
increased by more than 1%7. 1
25% of loans rejected. Following the overall pattern among
cities’ performance, Sohag and Assuit are struggling the most
On a city level, the funding constraint indicator provides a when it comes to these two indicators with over 57% of loans
summary of the funding environment. This indicator measures rejected and nearly 100% of firms identifying with high collateral
the proportion of firms that identify access to funding as a major requirements. As for Suez, Gouna and Mansoura the three cities
constraint for their businesses. had minor variances among the loan rejection indicator with
over 40% of firms confirming a rejection in their loan application
Given the dynamic start-up ecosystem of Cairo as opposed to while approximately 73% of firms in Gouna and Suez cited high
other researched cities in the country and region, Cairo had collateral requirements.
the lowest number of firms identifying funding as a hurdle with
only 12.6% of total firms referred to this as an issue. Regionally, The final two indicators in this subdomain measure the number
Cairo is the second best in this indicator after Sfax, Tunis, even of VCs and Business Angels located physically in each city. At
though it ranks 11th in the global SFI. Both Suez and El Gouna first sight, it could be surprising to conclude that there are
scored equally in this indicator with 18.1% of total firms being 11 business angels in Cairo, one in Alexandria and zero in the
constrained because of funding. It should be taken into account, remaining cities. Additionally, there are 17 venture capitalist
however, that the nature of businesses in these cities is quite firms in Cairo and none in the remaining cities. Once again, this
different from the startup model in question. For Upper Egypt, is owing to the centralized nature of Cairo as the capital city—
Sohag and Assiut are lagging behind in this indicator with over on an administrative and financial level—with an extremely
29% struggling to find access to funds. Mansoura, on the other high population. Nonetheless, the Egyptian business angels
hand, had the poorest performance with over 44% of firms and venture capitalists do not limit their activities to Cairo and
struggling with funding and ranking towards the bottom of the Alexandria only. On global and regional levels, Cairo has an
global SFI. average performance in these two indicators ranking 28th and
8th for the Business Angels indicator, and 29th and 8th in the
For loans, there are two indicators measuring the total number VCs indicator.
of applications rejected and the collateral requirements when
applying. Though Cairo and Alexandria had the lowest numbers

7. Egypt Net FDI inflows, 1960-2018. (n.d.). Retrieved from https://knoema.com/atlas/Egypt/

topics/Economy/Balance-of-Payments-Capital-and-financial-account/Net-FDI-inflows. 1

FUNDING CONSTRAINTS

CAIRO 13.00 out of 100

ALEXANDRIA 28.00

MANSOURA 45.00

EL-GOUNA 18.00

ASSUIT 29.00

SOHAG 29.00 % of firms that identify access to

funding as a major constraint for their
SUEZ 18.00 businesses

32
3. Startup Scene

CAIRO 11.49 out of 100

ALEXANDRIA 10.61

MANSOURA 6.19

EL-GOUNA 7.32

ASSUIT 5.29

SOHAG 1.75

SUEZ 0.88

The startup scene measures the maturity and liveliness of a city’ startup ecosystem
and overall entrepreneurial culture. Cities with a more vibrant startup scene not only
support existing start-ups through networking and learning, but also provide resources
for potential new founders and bring people into the community by encouraging
entrepreneurship.

Egypt’s performance on this domain is certainly still developing. In spite of the large
differences between the researched cities in this domain, all of them scored below
global average whereas only Cairo and Alexandria scored slightly higher than the
regional average ranking 9th and 11th regionally and 24th and 28th in the global SFI.

There are two subdomains in the startup scene domain: Hubs and Activeness. The latter
subdomain is a challenge for all cities except Cairo which fares more optimistically in
the Hubs subdomain.
STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Startup Scene Domain

The startup scene measures the maturity and liveliness of a city’ Egypt is also home to emerging solar power companies due to
startup ecosystem and overall entrepreneurial culture. Cities entrepreneurs taking advantage of its large deserts. Solarize
with a more vibrant startup scene not only support existing has B2B and B2C solar turnkey solution offerings, while
start-ups through networking and learning, but also provide KarmSolar is leveraging solar power to help access one of the
resources for potential new founders and bring people into the largest beds of fresh water that lies underneath Africa to bring
community by encouraging entrepreneurship. the water to farmers to make new areas of land arable.

Egypt’s performance on this domain is certainly still developing. Incubators and accelerators represent major components in
In spite of the large differences between the researched cities startup ecosystems. Because Egypt’s startup ecosystem is still
in this domain, all of them scored below global average whereas at its infancy, accelerator programmes have been favoured at
only Cairo and Alexandria scored slightly higher than the the expense of incubators for numerous reasons, including
regional average ranking 9th and 11th regionally and 24th and limited bootstrapping abilities and education in entrepreneurial
28th in the global SFI. subjects.

There are two subdomains in the startup scene domain: Hubs One such accelerator, Flat6Labs, was established in 2011 by a
and Activeness. The latter subdomain is a challenge for all venture capitalist firm, Sawari Ventures. Moustafa Khater, the
cities except Cairo which fares more optimistically in the Hubs Director of Growth and Development at The Greek Campus, a
subdomain. regional coworking and office space headquartered in Cairo,
says Flat6Labs “paved the way for other Egyptian accelerators.”
Egypt is one of the largest startup hubs in the Arab World. Since “Sawari Ventures started out as a conventional VC fund, and the
2010, 278 startups have been founded and funded. founders identified numerous innovative companies they would
have invested in, but at the time, startups were still not ready to
Many of these companies are tied to a social mission to better take on large amounts of funding,” he explains, “This led them
Egypt and the Middle East, especially after the 2011 uprisings. starting Flat6Labs with their own capital, and Flat6Labs Cairo
Among them are startups that have emerged as specialized has gone to raise EGP 100 million from top-notch international
recycling companies such as Recyclobekia, and apps addressing investors, including the IFC and the Egyptian American
Cairo traffic like Bey2ollak, Halan, Swvl, and Raye7, a carpooling Enterprise Fund. They have expanded their accelerator model
startup. to five other geographies and have a portfolio of more than 180
companies.”

FOUNDED STARTUPS

2010 5.00

2011 16.00

2012 23.00

2013 28.00

2014 15.00

2015 28.00

2016 37.00

2017 78.00

2018 40.00

2019 8.00

35
STARTUP ECOSYSTEM REPORT EGYPT 2019

To work around centralization, Egypt Ventures also established,

Fekretak Sherketak which gives entrepreneurs technical
and financial support in underserved parts of the country.
International organizations are also starting to test the Egyptian
“[Flat6Labs has] paved the way accelerator space. In 2019, Pride Capital, a newly formed VC
for other Egyptian accelerators.” firm, launched Startupbootcamp’s Fintech track in a partnership
between Egyptian investment bank Pharos, and Kamelizer, an
Egyptian angel investment group, among other backers such as
Moustafa Khater AlexBank.

The lion’s share of coworking/incubation spaces goes to the

Greek Campus, which has recently focused on national and
On a national level, the Egyptian government has prioritized regional expansions. Their second largest campus is in Assiut, in
the promotion of entrepreneurship in the past few years. This which a consortium between multiple stakeholders was formed
manifests itself in the creation of TIEC and Egypt Ventures, an to boost entrepreneurship in Upper Egypt. That consortium
Egyptian VC and Fund of Funds that has launched the renowned includes Assiut University, Flat6Labs, Rise Up Summit, and
accelerator programme Falak. Currently in its third cycle, Falak Injaz among others. Recently, the Greek Campus has also
has churned out 30+ companies and established a FinTech track partnered with the Central Bank of Egypt to establish a Fintech
with leading Egyptian Investment Bank EFG Hermes offering hub in an old historic building, a long-held asset of the bank.
over $100,000 for early stage companies.
In spite of efforts to boost entrepreneurship in different parts
of the country, the big players in startup support remain
centralized in Cairo.

COWORKING SPACE SEATS PER 100.000 RESIDENTS

20 20 49 59 42 12 6

Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

36
STARTUP ECOSYSTEM REPORT EGYPT 2019

Hubs
Startup Scene Subdomain

The Hubs subdomain measures the availability of institutional

resources such as incubators and co working spaces. A higher
capacity of such resources supports the continued development
of the startup scene by offering services for entrepreneurs,
facilitating networking and creating an entrepreneurship culture
. El Gouna is the best performing city in this subdomain ranking
17th in the global SFI and 6th in the MENA region. Mansoura and
Assuit were the next top performers in this subdomain ranking
21st and 25th globally followed by Cairo and Alexandria ranking
37th and 33rd. Finally Sohag and Suez ranking the lowest both
nationally and globally.

All indicators in this subdomain are city specific

Startup Scene

Hubs

Accelerators

Incubators

Coworking Spaces

Technology Parks

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

37
STARTUP ECOSYSTEM REPORT EGYPT 2019

There are four indicators in the Hubs subdomain measuring As for coworking spaces, Cairo and Alexandria have the largest
the number of accelerators, incubators, co-working spaces and number. Nonetheless, Gouna, Mansoura and Assuit scored best
technology parks as a proportion of the population. in this indicator proportionally. In other words, the number of
coworking spaces per capita is higher than in large cities. Suez
According to research, only Cairo and Alexandria have is struggling the most in this indicator scoring more than 25
accelerators and incubators. These accelerators and incubators points less than the global average. Proportionally speaking,
operate in almost all the other researched cities except El Cairo, Alexandria and Sohag need more spaces given the sheer
Gouna. In Suez for instance, “Khaleha Swaissy” is an incubation size of their population.
program produced by “Nahdet El-Mahrousa”, one of the leading
incubators in Cairo. In Sohag, Mansoura, and Assuit, the main A bird’s eye view on this subdomain would suggest that Cairo
incubator and accelerator often referred to was the “Technology and Alexandria possess the institutions necessary to support
Innovation and Entrepreneurship Center” TIEC, a programme startups. However, the gap between the available institutions
supported by the Ministry of Communication and Information and the demand from startups and would be entrepreneurs
Technology, which has its own incubator space that accepts still needs to be narrower both in Cairo and the rest of the
applications year-round and reviews them every three months. researched cities.
Cairo and Alexandria lie in the middle of the global SFI with
Cairo ranking 22nd for the accelerator indicator and 28th for
incubators where as Alexandria held the 27th and the 21st
position in both indicators.

38
STARTUP ECOSYSTEM REPORT EGYPT 2019

Activeness
Startup Scene Subdomain

The Activeness subdomain covers indicators related to events, Cairo is the only city performing above global average in the
number of start-ups and if there are high equity cases. The Activeness subdomain ranking 18th globally and 6th on the
more events and start-ups there are in the ecosystem, the more MENA region, followed by Alexandria ranking 24th globally and
visibility and cultural impact a city can have. Success cases also 9th regionally. The rest of the cities rank toward the bottom of the
play a sizeable role, as they can provide a blueprint for success global SFI, with Suez, for example, ranking 40th out of 44 cities.
to others, attract investment and often their employees go on
to begin ventures of their own, exponentially increasing the The indicators in the Activeness subdomain are all measured
scaling capacity of a city. on a city level.

Activeness

Startup Events

Total Startups

High Equity Funding Startups

(over 5 mil USD)

High Equity Funding Startups

(over 1 mil USD)

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

39
STARTUP ECOSYSTEM REPORT EGYPT 2019

There are four indicators in the Activeness subdomain as well: 5th place in the MENA region. On average, Cairo holds around
The number of startups, startup events, and what proportion 17 events per month, whereas Alexandria has an estimated 15
of the total startups are High Equity Funding Startups (Over $1 events. Nationally, Mansoura is the next top performer on this
Million USD or $5 Million USD). indicator with over 12 events taking place per month according
to survey data. Sohag, Assuit and Gouna follow with an estimate
There’s a big discrepancy among the scores of the researched of approximately 9 events while Suez has the lowest number
cities in this Subdomain. In terms of the number of startups, of startup events in the country ranking 37th in the global SFI.
Cairo had the highest number as expected with over 530
startups by 2018. This positions Cairo in the 15th rank in the Alexandria and Cairo are the top performers when it comes to
global SFI and 2nd in the region. Alexandria had the second the scores of high equity startups indicator, both scoring much
largest number of startups nationally, but still scored a little higher than global and regional averages. As it has been the
below the global average with only 53 startups. The rest of the case for some of the indicators above, the rest of the cities do
cities all had less than 10 startups, thereby ranking among the not have any startups reaching the high equity indicators due to
lowest in both the global and the regional SFI. their small scale and limited reach. This shouldn’t come as a
surprise when startups outside large cities struggle with access
Despite the considerably large number of startups in Cairo to finance, lack channels to network and communicate while
and Alexandria, the number of startup events taking place to they still struggle with cultures that are not conducive to the
further strengthen the startup scene in Egypt is still below development of startups and tech adoption.
global average. In this indicator, Cairo and Alexandria rank
12th and 16th in the global SFI while holding the 3rd and the

40
4. Infrastructure

CAIRO 56.71 out of 100

ALEXANDRIA 58.14

MANSOURA 55.07

EL-GOUNA 56.90

ASSUIT 56.02

SOHAG 56.15

SUEZ 56.87

High quality infrastructure is a necessity for running successful business efficiently. The

infrastructure domain is assessed by analyzing a city’s quality of transportation, utilities and IT

factors such as Internet availability and smartphone penetration. The indicators in the domain pay

particular attention to the associated costs of accessing these services and the ease with which they

can be accessed.

This domain constitutes an opportunity for all researched Egyptian cities. Alexandria scored the

highest when it comes to the quality of infrastructure as opposed to its costs scoring 58.14%, 8

points higher than the global average. Gouna, Suez and Cairo also performed well; ranking among

the top 5 cities in the MENA region while ranking 12th, 13th and 14th in the global SFI. In terms of

subdomains, Egyptian cities score well in the transport subdomain ranking 15th globally and 2nd in

the region, after Morocco. The Utilities subdomain is also a plus for the researched cities, especially

Alexandria and Gouna. For the ICT subdomain, the cities do not score as high as in the other two

subdomains, however, when compared with global and regional scores, Egyptian cities rank among

the top 20 on the global SFI.

STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Infrastructure Domain

Compared to other developing countries and countries in

the region, Egypt’s infrastructure has witnessed substantial
improvements over the past 15 years, especially in the
transportation and communications sectors8. Nonetheless, 1

the current government’s economic aspirations do not match

the needed investments in infrastructure, especially in power
generation and transportation.

Egypt’s natural strategic geographic location in the heart

of global trade routes is a huge advantage that allows for
an expansion and diversification of trade. As such, proper
investment in the transportation sector will arguably allow
business to flourish, while gaining Egypt an international
presence in global value and supply chains9. In order to balance2

the burden on public sources proposed by investing more in

this sector, the government has allowed private investment to
participate in the modernization of the sector through Build,
Operate and Transfer (BOT) and Build, Own, Operate, and
Transfer (BOOT) projects10. 3

With regards to ICT, private investments have been crucial to

the communications sector in Egypt since 2005. According to
an analysis made by BALTMODUS research department, it is
expected that the ICT sector will represent 8.83% of the total
GDP11. This, in turn, presents the entire sector as a huge
4

opportunity for start-up ecosystem in Egypt, especially tech

start-ups. It is important to mention, however, that the internet
speed is a major weakness in the sector for Egypt.

8. Loayza, Norman V.; Odawara, Rei. 2010. Infrastructure and economic growth in Egypt (English).
Policy Research working paper; no. WPS 5177; Public expenditure review (PER). Washington,
DC: World Bank. http://documents.worldbank.org/curated/en/693911468022759281/
Infrastructure-and-economic-growth-in-Egypt
9. Ragab, A., & Fouad, H. (n.d.). ROADS AND HIGHWAYS IN EGYPT REFORM FOR ENHANCING
EFFICIENCY. Retrieved from http://www.eces.org.eg/MediaFiles/Uploaded_Files/
{0658974D-F591-4913-81A2-510D315DCE41}_ECESWP152-E.pdf
10. Ibid
11. Baltusis, T. (2017, July 4). The analysis of IT/ICT sector in Egypt. Retrieved from http://
baltmodus.com/the-analysis-of-itict-sector-in-egypt/.

43
STARTUP ECOSYSTEM REPORT EGYPT 2019

Transportation
Infrastructure Subdomain

The transport subdomain considers the quality of transportation

infrastructure such as roads, railroads, ports and air travel
quality and capacity. Given the national nature of much transit
infrastructure and data limitations, this subdomain is composed
entirely of country level indicators.

Infrastructure

Transport

Overall Quality

Roads Quality

Railroad Quality

Ports Quality

Air Transport Quality

Air Transport Capacity

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

44
STARTUP ECOSYSTEM REPORT EGYPT 2019

On a National level, Egyptian cities score 42.8%, 4 points above SFI. On the same note, national scores of indicators pertaining
the global average of 38%. Egypt scores above average in to air transport and ports quality were among the highest in
almost all of the indicators that comprise this subdomain with the overall subdomain. Egypt held the 5th position when it with
the exception of air transport capacity, where Egyptian cities fall regards to the indicator measuring the quality of ports indicator
more than 15 points shorter than the global average. in the global SFI and was ranked 2nd in the MENA region.
Similarly, for the Air transport quality indicator. Egypt placed
The transport subdomain begins with an indicator on the 6th globally and 2nd regionally.
overall quality of transport as measured by the world economic
forum’s global competitiveness index. Egypt ranks 16th globally Even though Egypt topped the regional ranking for the air
in this indicator, while it maintains the 4th position in MENA. transport capacity indicator, it scored below global average,
The indicators that measure the quality of roads and railroads ranking 19th in the global SFI.
are almost identical, scoring slightly above global average in
both indicators. Egypt’s quality of roads and railroads is up to
par. Cities researched in Egypt rank 18th in the roads quality
indicator and 15th in the railroads quality indicator in the global

45
STARTUP ECOSYSTEM REPORT EGYPT 2019

Utilities
Infrastructure Subdomain

The Utilities subdomain considers quality indicators for respect to the indicators assessing average utility costs and
electricity and water supply, how long it takes to access cost of living. Alexandria, Gouna and Suez were among the top
electricity and how common outages are, air pollution and costs performers in this subdomain ranking 2nd, 5th and 6th globally
associated with co working spaces, general living expenses and whereas Mansoura scored the lowest among the researched
utilities. cities, ranking 23rd. Cairo, Assuit and Sohag scored slightly
above the global average ranking 7th, 12th and 13th in the
There is great variance between the Egyptian cities in their global SFI.
performance of accessibility to electricity and water as well
as pollution indicators, with some scoring much better than All indicators in this subdomain were assessed on a city level
global averages and others scoring way below. Nonetheless, with the exception of the indicator assessing the quality of
all Egyptian cities scored higher than global averages with electricity.

Utilities

Water Supply Quality

Electricity Access

Electrical Outages

Pollution Index

Coworking Space Cost

Cost of Living

Electricity Quality

Utilities’ Cost

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

46
STARTUP ECOSYSTEM REPORT EGYPT 2019

There are three indicators concerning electicity in this The pollution index indicator is a major struggle for all Egyptian
subdomain. First, is the overall quality of electricity on national cities but to varying degrees in each city. Perhaps unsurprisingly,
level. Egyptian cities score well in this indicator,13 points higher Cairo had the lowest score — indicating the highest pollution
than the global average. The second and third indicators are city- level — among all cities ranking 43rd (out of 44) in the global
level indicators measuring the number of outages per month SFI. El Gouna, Mansoura and Alexandria were among the best
and the average time needed to set up an electrical connection. performers, nationally speaking, ranking 5th, 15th and 20th
respectively. The rest of the cities still scored below global
Egyptian cities are performing relatively well in the overall quality average ranking 27th in the global SFI.
indicator, with Alexandria having approximately one outage per
month, followed by Cairo, Sohag and Assuit reporting 1.5 to 1.9 The remaining indicators in this subdomain measure the costs
outages. The lowest performers on a national level were Suez, associated with utilities, renting a co-working space and the
El Gouna and Mansoura with an average of 2-2.8 outages per general cost of living. Overall, these indicators are all favorable
month. In terms of accessibility, Mansoura struggled the most for Egyptian cities with some considerable variance among
in this indicator reporting more than 200 days on average until the cities themselves. El Gouna is the most expensive among
an electrical connection is set up. This places Mansoura at the researched cities, ranking 21st in the cost of living with an
very bottom of the global SFI, ranking 44th. Similarly, Sohag estimated average of $677 per month. Cairo and Alexandria
and Assuit were ranked 40th since it took more than 120 days were the second most expensive with an average of $538 and
to access electricity. Suez and Gouna also reported a long $481 respectively. Cairo ranked 15th in the global SFI while
estimated average of 76 days placing them in the second half Alexandria held the 9th place. The rest of the cities proved to
of the global SFI. On the other hand, Cairo and Alexandria held be the cheapest in the global SFI ranking 1st with $333 as an
much higher ranks, 15th and 22nd globally, due to the lower average cost of living per month.
number of days needed to access electricity.

The water supply quality indicator does not measure the quality
of water but rather its availability. Cairo, Sohag, Assuit and
Mansoura all scored equally with an average of 0.1 shortages
per month, ranking 14th in the global SFI. Suez and El Gouna
performed less favorably in this indicator both tying at the 25th
global position. Finally, Alexandria held the lowest ranking of
32nd in the global SFI.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

ICT
Infrastructure Subdomain

The ICT subdomain measures the availability and affordability subdomain, it is worth noting that the indicators pertaining the
of Internet mobile connection. For Egyptian cities, ICT is an cost of Internet and mobile subscriptions is the main driver
opportunity since the majority of the cities scored slightly for the high score. However, the indicators pertaining internet
above global average placing them in the first half of the global speed and smartphone usage, Egyptian cities still have a long
SFI rankings. Alexandria is the best performing city in this way to go.
subdomain with a score of 48.4 out of 100 and ranking 8th in
the global SFI. Mansoura, Sohag and Cairo place 10th, 12th and Many indicators in this subdomain were measured on a national
14th respectively. El Gouna scored well in this subdomain but level due to restrictions in data availability. The only indicators
still held the lowest rankings among all 7 cities ranking 17th measured on city level are the ones concerned with the internet
globally. Despite having relatively high scores in the overall speed and cost and mobile subscription costs.

ICT

Internet Cost

Mobile Internet Cost

Mobile Subscription Cost

Mobile Broadband Penetration

Internet Speed (Down)

Internet Speed (Upload)

Smartphone Penetration

Internet Penetration

Prepaid Subscriptions

Mobile Subscriptions

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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The indicators assessing internet and mobile internet costs Egyptian cities score poorly in the indicators assessing download
and mobile broadband penetration suggest high potential for and upload internet speeds. In both indicators, Egyptian cities
Egyptian cities. In the Internet Cost indicator, all cities scored ranked in a range between 27th and 44th with Cairo ranking
somewhere between 82 and 86 out of 100, benchmarked the lowest in the global SFI. The indicators on Smartphone and
against a global average score 68.2. The same pattern can be Internet Penetration also have room for improvement. Egypt’s
observed in the Mobile Internet Cost and Mobile Subscription smartphone penetration average was estimated at 27.2, roughly
Cost indicators where Egyptian cities topped the global SFI 3 points below the global average. The same would be applied
ranking 2nd and 1st respectively. Egypt also ranked 6th in the to the Internet penetration and Mobile subscriptions where
Mobile Broadband Penetration indicator. Egypt scored 26th and 19th in the global SFI with slightly below
average scores.

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5. Macro-Political and Legal Framework

CAIRO 45.27 out of 100

ALEXANDRIA 44.36

MANSOURA 43.08

EL-GOUNA 46.55

ASSUIT 45.17

SOHAG 45.17

SUEZ 46.55

Fair and reliable legal systems, political stability and low crime are important fundamentals for

creating an environment that is conducive to starting a new business. The Macro domain Measures

these factors through three subdomains: Political stability, legal framework and crime. Given the

national nature of many political and legal systems, the first two subdomains are composed entirely

of country level indicators. The crime subdomain has indicators from both the city and the country

levels.

This domain constitutes a challenge for Egyptian cities despite recent improvements. The overall

scores in this domain are slightly below the global average due to low performance in the political

and legal subdomains. Conversely, Egyptian cities performed much better in the crime subdomain

with only two indicators slightly below global average. Egyptian cities rank somewhere between 29th

and 35th in the global SFI where Gouna is the best performer nationally and Alexandria the worst.
STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Macro-Political and Legal Subdomain

Political stability has been a challenge for many countries

in the MENA region since the beginning of the Arab Spring in
2011. Egypt, however, has witnessed relatively higher political
stability since 2016. Nonetheless it still scores poorly on
indicators pertaining to democracy and accountability. On the
other hand, the legal developments accompanied by Egypt’s
economic reforms paints an optimistic image for the startup
ecosystem in Egypt. Three main laws have been reformed to
make Egypt more attractive for investors: Investment Law,
Bankruptcy Law and the Value-Added Tax (VAT) Law. The three
laws came in response to the conditions of the IMF’s $12 billion
loan. According to a report by the Tahrir Institute for Middle
East Policy, the investment law offers tax breaks up to 50% for
companies operating in underdeveloped and remote regions. In
addition, the law expands its scope to include new services and
industries like education, sports and recycling12.

The Bankruptcy law also supports private business through

eliminating prison sentences for business owners who
declare bankruptcy13. Finally, the new VAT law replaces what
2

was previously known as the sales tax, where despite the tax
rate increase from 13% to 14% for 2018, the new law exempts
56 basic goods and services for the sake of affordability to
economically vulnerable individuals14. 3

12. Tahrir Institute for Middle East Policy. (2018). Economic Trajectory: Assessing Egypt’s
Economic Reform. Economic Trajectory: Assessing Egypt’s Economic Reform. Retrieved from
https://timep.org/wp-content/uploads/2018/10/TIMEP-EET-report_10-29-18-mks-edits-
new-1.pdf
13. Ibid.
14. Ibid.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

Political
Macro-Political and Legal Subdomain

The Political subdomain measures general political stability and

government effectiveness, the level of democracy in the country,
and finally the quality of regulatory system. On a country level,
Egypt is still lagging behind in this subdomain compared to the
rest of the countries in the SFI. Egypt ranks 31st in the global
SFI and 10th in the MENA region.

Macro

Political

Stability

Effective Governance

Regulatory Quality

Democracy Level

Mobile Subscriptions

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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The best indicator for Egypt in this subdomain is political The Regulatory Quality indicator aims to capture perceptions
stability indicator where, despite scoring 12 points below about the ability of the government to formulate and implement
the global average, our data suggests an improvement in sound policies that permit and promote private sector
comparison to previous years. Egypt ranks 32nd in the global development. Egypt ranks 30th globally and 10th regionally in
SFI, while holding the 10th place in the MENA region. The this indicator, roughly 11 points below the global average score.
Effective Governance indicator measures the perceptions
of the quality of public services, the quality of civil services The final indicator in this subdomain is the Democracy level, in
and the degree of its dependence from political pressures. which Egypt is also struggling. With more than 25 points below
In addition, it also assesses the quality of policy formulation the global average score, Egypt ranked 34th in the global SFI and
and implementation and the credibility of the government’s 10th in MENA.
commitment to such policies. According to the World Bank,
Egypt still struggles in this indicator with an overall score of
21.8 out of 100 — 11 points below the global average.

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Legal Framework
Macro-Political and Legal Subdomain

The Legal framework looks at tax rates, options for resolving

insolvency, how well contracts are enforced and what’s involved
with starting a business in terms of time and cost. Egypt also
lags in this indicator, with an overall global ranking of 30 out
of the 45 cities and 10th in the MENA region. The relatively low
overall score could be largely attributed to the poor performance
on two of the indicators; namely the contract enforcement and
the cost of business registration.

Legal Framework

VAT

Corporate Tax

Contract Enforcement

Resolving insolvency

Business registration (time)

Business registration (cost)

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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The first two indicators in the Legal Framework are concerned

with taxes: one for VAT and the second measures Corporate
Tax. Egypt’s VAT is estimated at 14%, slightly higher than the
global SFI average of 13%. On the other hand, Egypt’s corporate
tax rate of 22.5% seems rather favourable in comparison to the Most startup founders and would-
global SFI average which is estimated at 25%.
be entrepreneurs prefer to start
The Contract Enforcement indicator is the most challenging in
the entire domain. Egypt scores 25 points lower than the global
informally until they’re able to go
average, thereby ranking 31st in the global SFI and 16th in the through the registration process
MENA region. Conversely, Egypt scored much better in the
insolvency resolution indicator, ranking 15th globally and 6th in
due to the high cost of business
the MENA region. registration.
The final two indicators are concerned with business registration
time and cost. According to the World Bank, it takes around 11
days to register a new Business in Egypt, much less than the
global average. The cost of business registration, however, was
estimated at 40% of total per capita annual income which lowers
Egypt’s ranking to 36th in the global SFI and 15th in the region.

According to interview data, most startup founders and would-

be entrepreneurs prefer to start informally until they’re able
to go through the registration process. Some expressed that
the bureaucracy is the main reason why they do not prefer
registering at the beginning, whereas others maintained
that they couldn’t afford the required documents needed for
registration, such as feasibility studies.

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Crime
Macro-Political and Legal Subdomain

The Crime subdomain measures the impact of violent crime,

corruption and informality on business and everyday life.
Three indicators (violent crimes, corruption perception, and
corruption control) are measured at the country level, the rest
of the indicators are measured on a city-by-city basis.

Crime

Violent Crime

Crime as a constraint

Informality as a constraint

Bribery Depth

Corruption Perception

Corruption Control

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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The overall scores of Egypt in this subdomain seem to be On corruption, there are three indicators measuring bribery
favourable. Suez and Gouna were ranked the highest in this depth, the perception of corruption and corruption control,
subdomain ranking 7th in the global SFI. Cairo followed, ranking which are measured at the national level. The first indicator
16th whereas Sohag and Assuit ranked 17th. Poorest performing tries to estimate the percentage of public transactions where a
among researched cities was Alexandria and Mansoura ranking gift or an informal payment was requested. With the exception of
24th and 27th respectively. Mansoura, most Egyptian cities scored above global averages.
Sohag and Assuit were the best performing cities, ranking 2nd
The first indicator in this subdomain aims to capture perceptions in the global SFI. Gouna and Suez also scored well ranking 9th.
of the likelihood of violent crime in the country.Egypt has an Alexandria followed in the 13th place then Cairo and Mansoura,
outstanding performance in this indicator, ranking 2nd only ranking 23rd and 35th,respectively.
after Singapore in the global SFI and 1st in the MENA region.
Even though Egyptian cities scored slightly below the global
The second two indicators assess constraints to doing business averages in the corruption perception and corruption control
in terms of crime and informality. On the Crime as a constraint indicators they still ranked in the first half of the global SFI,
indicator there’s a considerable divergence between the cities 22nd and 24 respectively. The first indicator assesses the
with the highest score belonging to Cairo (ranking 16), followed Public’s perception of the extent of corruption in their country
by Suez and Gouna (ranking 19th). Sohag and Assuit had slightly whereas the second indicator is based on perceptions of the
below average scores ranking 28th in the global SFI, whereas extent to which public power is exercised over private gain. It
Alexandria and Mansoura held the lowest ranks among the also examines public perception of the ‘capture’ of the state by
cities holding the 32nd and 33rd places globally. Following a the elite and private interests.
similar pattern as the crime constraint, the informality indicator
is much less of a constraint to business in Suez and Gouna, with
the highest scoring cities ranking 5th in the global SFI. Cairo
still ranks above average in the global ranking, holding the 17th
place, followed by Sohag and Assuit ranking 25th. Alexandria
and Mansoura are the cities struggling the most in this indicator
ranking 30th and 33rd respectively.

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6. Market

CAIRO 27.89 out of 100

ALEXANDRIA 25.07

MANSOURA 21.33

EL-GOUNA 19.69

ASSUIT 19.72

SOHAG 19.51

SUEZ 19.58

The state of the economy has a direct impact on entrepreneurs’ success. A strong open market with

consistent growth and smooth logistic performance helps startups to start, scale and reach new

markets. The Market domain assesses Macroeconomic conditions in terms of two subdomains:

Performance and Connectedness. The essential goal is to describe the size of the economy and how

active and dynamic it is within a city.

Egypt could do a lot better in this domain since it scored below average in almost all indicators, both

the national as well as the city-by-city indicators. Suez and Sohag are the lowest performing cities

in this domain, ranking 43rd and 44th in the global SFI. Assuit and Gouna also were ranked at the

bottom of the global SFI ranking 40th and 41st. Mansoura, Alexandria and Cairo had slightly better

performance but still were ranked in the second half of the global SFI holding the 37th, 32nd and

the 26th places.

STARTUP ECOSYSTEM REPORT EGYPT 2019

National Overview
Market Domain

Egypt currently has some of the world’s highest yielding T Bills

and bonds. Global debt investors have been pouring money
into the Egyptian market since 2016 when the country signed
a $12bn loan deal with the IMF, floated the pound currency and
enforced rapid austerity measures with the hopes of restoring
fiscal balances.

With the economic growth rate of 5.6%, economic expansion is

the fastest in the region. Egypt needs to sustain a growth rate of
8%, driven by the private sector, in order to create jobs for the 2.5
million people entering the workforce every year. The economy
is largely based on extractive industries. Startups will play a key
role in transitioning the country to a knowledge-based, creative
economy that provides high quality jobs for the future

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Performance
Market Subdomain

The Performance subdomain measures GDP per capita,

economic growth, trade balance, and interest rates on a
national level. The capacity utilization indicator is measured
independently for each city.

Market

Performance

GDP PPP per capita

Economy Growth

Deposit Interest Rate

Capacity Utilization

Trade Balance

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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Despite the underperformance of most cities, the ranks of

Alexandria, Mansoura and Cairo look more optimistic. The
Capacity Utilization indicator is the main driver behind the
divergence of each city’s ranks, where the three cities scored
slightly below the global average. In the overall subdomain,
Alexandria held the 31st place, followed by Mansoura and Cairo
ranking 33rd and 37th in the global SFI. At the very bottom of
the global rankings came the rest of the cities ranking between
40th and 43rd.

The indicator assessing economic growth in the country is

relatively optimistic. Even though Egypt scored below the
global average in this indicator, it held the 24th rank globally.
Given the economic reforms that have been taking place over
the past 2-3 years, Egypt’s GDP growth rate for 2018 was the
highest in a decade15. This is reflected in GDP per capita, which
was estimated at $12,390. Though it is somehow lower than the
global estimated average of $14,940, Egypt ranked 16th globally
this indicator.

The trade balance indicator on goods and services is also a

challenge. Egypt scored approximately 12 points less than the
global average thereby ranking 30th.

The Deposit Interest Rate indicator assesses the rate paid by

commercial banks for demand, time or savings deposits. In
spite of the fact that interest rates fluctuate according to the
Central Bank of Egypt, World Bank data suggests an estimate
of 12.3% which is a lot higher than the global average of 7%. As
a result, Egypt ranked 35th globally.

The final indicator in this subdomain measures the percentage

of current output as opposed to the full potential of the city.
Alexandria is the top performing city in the study, ranking 27th.
Next in line are Mansoura and Cairo ranking 32nd and 33rd.
Finally, Soha, Assuit, Suez and Gouna scored lowest in global
rankings, positioned at 38th and 40th respectively.

15. “Egypt Economic Outlook”. African Development Bank Group. Accessed 26 Nov 2019.

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Connectedness
Market Subdomain

The Connectedness subdomain considers openness to trade,

tourism, and international relationships. With the exception of
Cairo and Alexandria, this subdomain also presents a challenge
for Egyptian cities.

All indicators in this subdomain are measured on a country

level, except for the sister cities indicator.

Connectedness

Trade openness

Tourism

Sister Cities

Logistic Performance Index

Scores Ranges from 0-100 Cairo Alexandria Mansoura El-Gouna Assuit Sohag Suez

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The trade openness indicator is measured as the total On the city level, sister cities are cities that can have an
percentage of imports and exports from the GDP. Egypt ranks influential effect on a city’s international ties and economic
25th globally in this indicator. As for the Tourism indicator, social development. There’s a large variance among Egyptian
Egypt is in the top half of the global SFI, ranking 19th. This cities in this indicator where Cairo has 32 sister cities around
indicator measures the number of arrivals per 100 habitants. the world, placing it in the 5th place globally and 2nd in the
MENA region. Alexandria also scored favourably in this
The final national indicator is the Logistic Performance Index, indicator with 15 sister cities, ranking 13th globally and 4th
which assesses trade logistics performance. Once again, this in the region. Conversely, Sohag and Mansoura had no sister
indicator suggests an optimistic stance where Egypt is ranked cities whereas Suez and Gouna had 2 cities, while Assuit had
20th in the global SFI and 2nd in the MENA region. only one sister city.

65
Sector in Focus:
Fintech*

*The following excerpt is part of a proposal to the Central Bank of Egypt by The
Greek Campus.

Research carried out by the Greek Campus team as part of its proposal to set up
a Fintech Hub with the Central Bank of Egypt. Content and graphics by Moustafa
Khater, Ahmed Mostafa, and Moataz Morsi
STARTUP ECOSYSTEM REPORT EGYPT 2019

Africa

The African Venture Capital market has seen $725M Nigeria (34 fintech deals), South Africa (30 as well) plus Kenya
investments across 458 deals in 2018. This is 4 times the (11) hold 72% of the total investments of FinTech. The rest is
investment size compared to the previous year, over 1.25x scattered.
increase in deal amounts, and a 3.2x increase in ticket size. The
top ten investments account for around $450M or 60% of the full Financial Services led the way with 24 deals and $100+M.
continental investment amount. Payments follows in volume with 16 deals but further tops
Financial Services with a notable $110M deployed. Both
The growth ratio compared to previous years is creating an combined occupy 75% of the fintech industry activity.
exponential growth pattern worth noting. Grants and Prize
Money occupy the top slot in addition to some series A deals The Micro Lending fintech sub-sector is also becoming a
being on the rise. Fintech leads the pack in terms of deal volume fully blown phenomenon. It attracted in third place $32.2M of
as well as deal value. Nigeria bags the highest number of deals, investments over 13 deals (11% of total capital deployed; 14%
while South Africa received maximum investment. of deal traffic of the African Fintech sector). Notably, Nigeria
and Kenya representing West and East Africa respectively are
25 Funds were launched through Africa last year with a globally seen as pioneers of financial inclusion and becoming a
monumental corpus of over $1B and pushing seed level amounts center of attraction for many lenders around the globe.
to a higher ticket size expectancy. 22 Mergers and Acquisitions
were observed in 2018. It is also worth noting that 7 out of the Egypt received a total venture capital injection of $84M over 100
top 12 deals were in FinTech, none of which are Egyptian. deals through 2018. This positions Egypt as #4 in Africa in terms
of both deal flow and capital deployed.
The African FinTech sector is leading the storyline of the startup
innovation and investment ecosystem with a total of 40% of Most of investments into Egypt were pulled by Vezeeta in a
investments or $285M over 93 deals; highest both in deals series C round totaling $12M, SWVL in a series A round of $8M
struck and capital deployed compared to any other sector. and $6M for BasharSoft, owner of Forasna and Wuzzuf. The top
Healthcare comes second with 43 deals struck and Cleantech, three recipients of investment occupy the lion’s share of capital
with $143M invested, comes in second by capital deployed, so deployed in Egypt. None of them in FinTech.
FinTech is not only leading but double ahead from the trailing
sectors.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

While 4th rank in Africa sounds bearable, Egypt is still far

lagging behind the following ranks:

1. Nigeria ($133M; FinTech ranks #1 in transactions with 34

out of 136 total deals)
2. South Africa ($241M; FinTech ranks #1 in transactions with
30 out 108 total deals) and
3. Kenya ($111M; FinTech ranks #1 in transactions with 11 out
of 77 total deals)

The largest Kenyan deal of the year is in FinTech for $47.5M or

42% of capital deployed in country.

The FinTech sector in Egypt is very narrow in ratio and size

relative to top ranking African countries who have revolutionized
the sector remarkably, creating immense impact on financial
inclusion, digital transformation and a more economic lifestyle,
propelling growth across sectors into macro-economic positivity
and sentiment.

AFRICA MENA
$725 M $693 M

$241 M $133 M $111 M $84 M $30 M $90 M $416 M

27% 36% 42% <3% 6% 7% 13%

FINTECH
ALLOCATION

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STARTUP ECOSYSTEM REPORT EGYPT 2019

MENA

The African Venture Capital market has seen $725M In MENA, Across the Middle East, FinTech is focused on technology-
$693M was invested across 366 deals in 2018, putting it almost enabled innovation that improves existing financial services,
at par with the African VC investments. This is an increase of but also provides routes for unbanked populations to access
31% in total funding and an increase of 3% in number of deals financial services.
compared to 2017.
The FinTech market in Egypt is still boutique with only 40 players
1. UAE ($416M, FinTech ranks #1 in transactions with 18 out - including startups, financial institutions and microfinance
of 110 total deals providers, as well as incubators, accelerators and investors.
2. KSA ($65M, FinTech ranks among the lowest in transaction Its ecosystem has attracted significant investment over recent
volume and deal sizes) years, but declining in transaction and investment amount
3. Egypt ($84M, FinTech ranks among the lowest in transaction being un-hubbed from the rest of the startup ecosystem. There
volume and deal sizes) are some nascent FinTech startups in Payments, Crowdfunding,
Insurance, Saving and Financing, a few of which have started to
UAE accounts for the lion’s share (60%) of startup investments mature, but many opportunities remain untapped: Credit Score
with $416M deployed capital, followed by KSA which invested & Analytics, Personal Finance & Wealth Management, Retail
$65M in startups. Egypt saw an increase of 12% in startup Investments, Accounting & Bookkeeping, AI-driven FinTech,
investments last year, making it the fastest growing startup Digital Banking, Real Estate Investing and Blockchain.
market in the region and placing the country, with the $84M
invested in startups, at the #3 spot. As per The GrEEK Campus analysis, Egypt invested at large
an estimate of less than 3% of all its startup capital in FinTech
The largest industry by number of deals in the MENA region was while Saudi Arabia invested approximately 7%. None of the
FinTech, accounting for 12% of all deals and driven mainly by Egyptian FinTech Startups listed in Appendix (9) of a later stage
UAE allocation and volume. received series A investment or above in 2018. The GrEEK
Campus’ analysts also conclude that in 2018, only micro-
1. The rise of MENA’s FinTech is driven by four opportunities: sized companies received seed fund investments or angel
86% of adults don’t have a bank account investments respectively. On average, these investments rarely
2. SME lending stands at half of the global average exceed $50,000 per ticket. Having validated the numbers with
3. The volume of ecommerce is set to quadruple over five startups and industry experts, there were no more than 5
years startups that received $50,000 seed investments or less in 2018
4. 1 in 2 bank customers is interested in new digital services doing fintech related activity, putting total capital injection in the

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STARTUP ECOSYSTEM REPORT EGYPT 2019

FinTech industry at a $250,000 (0.6%), or a highly conservative Yet investments do not reflect the continental and regional
estimate of 3%. (adjusted from 0.6% intel estimate in unmapped trend. Digital FinTech economy, especially entrepreneurship
economy) enablement, is still at infancy stage. There is more need for
access to knowledge and data. There is also more room for a
While overall economic growth more than doubled in the past vaster and more engageable private sector to participate. This
five years leading up to 2017 and with Egypt being deemed will grow the fintech sector in size and ratio versus current state
the fastest-growing MENA startup market in 2018, the fintech of the entrepreneurship ecosystem and prepare the nation for a
ecosystem is at the inception stage, mostly due to fragmentation solid platform to innovate, using fintech as a cornerstone and
of services. platform for economic growth. Further there is more desire
for academic collaboration and an opportunity to create an
The FinTech market is playing an important role in transitioning exemplar central model that could scale in its impact across
Egypt from cash to electronic payments at all levels of the Egypt.
financial services sector, from the high-level, centrally
coordinated national banking system to the grassroots level,
where fintech providers target the unbanked.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

Recently in the
news

Egypt has the makings of a booming fintech industry, says IMF:

Egypt has tremendous potential to expand in fintech due to its
large economy, mature banking industry, young population,
and wealth of human capital, IMF Middle East and Central Asia
Director Jihad Azour said during a seminar at the American
University in Cairo on February 12, 2019. He also suggested that
the industry has a long way to go in banking small businesses,
noting that only 50% of SMEs are participants in the formal
banking sector, despite startups and SMEs accounting for 75%
of Egypt’s labor force (higher than the MENA average of 50%).
Supporting the companies will be key to promoting financial
inclusion in the region, and this can be done through fintech
and non-banking financial services, he said. Azour’s statements
come amid efforts by his organization to convince SMEs to join
the formal economy in Arab states.

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Policy
Recommendations
STARTUP ECOSYSTEM REPORT EGYPT 2019

Human Capital
Recommendations

In a fast growing economy with an increasing supply of

highly educated young graduates, Egypt’s strongest potential
certainly lies in its human capital. In order to best capitalize
on this component, efforts should be made to facilitate its
improvement on both the supply as well as the demand side:

1. Quality over quantity: In order to better address the skill

mismatch between the supply of educated graduates
and the available jobs, better mapping of the required
skills is essential to better align educational and training
programs with the job market. In addition to technical
skills such as software development and design, most
startups also require business-related skills to manage
their day-today business activities; these include sales,
marketing/communication, and finance. Targeting
entrepreneurial education and technical skill needs
should be a priority for both public and private actors.

2. Entrepreneurial capacity-building: In concurrence with a

strong educational basis, young entrepreneurs can become
exponentially more successful when engaged in a support
environment where they are easily able to acquire skills
and mentorship beyond their technical knowledge to help
them manage their startups better. While this environment
is fairly developed in the bigger cities, it still lags behind
to a large extent in the more nascent ecosystems.
Mentorship providers should thus expand to more cities to
help deliver knowledge and skills to entrepreneurs in the
form of courses, and to establish a basis for networking
and peer-sharing among the entrepreneurs themselves.

3. Local specialization: Startup ecosystems are most

successful where they can capitalise on positive
agglomeration effects, where there are innovative
entrepreneurs that are able to easily find specialised and
skilled labour to help them scale-up better and faster and
where high mobility actually fosters a more dynamic and
competitive ecosystem. There is a potential scope for the
government to strategically align its larger developmental
goals with entrepreneurship, where certain entrepreneurial
specialisations could be promoted around growing
industries, where startups would help both innovate and
streamline the industry through filling market gaps. As
such, these areas/cities could foster stronger linkages with
local universities or technical training as required by the
industry.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

Finance
Recomendations

1. Ease restrictions on setting up new funds: FRA Executive c) The government can affect the regulations controlling
Decision 35 Article 4 states that in order to set up a types of venture capital investors.
new fund, 25% of capital needs to stem from financial
institutions (as opposed to individuals, funds of funds, 3. Egyptian Banking Institute (EBI) to continue promoting its
international development banks). program to train commercial bankers on startup financing.

2. Promote pension funds and other public funds to consider Fill funding gaps at certain stages of the market.
VCs as an asset class: Globally, pension funds are moving 4. Indicators show that that there is a surplus of seed stage
into riskier corners of the markets in search of yields. This (USD 0-100, 000) and late stage (USD 500,000+) funding.
is sensible as long as they know what they are getting Support and fund financiers focused on “the valley of
into and understand the risks and hidden costs of these death” ticket sizes between USD100,00 and USD500,000
investments. It is advisable for the Egyptian Government
to follow suit and open up more public funds to VCs as an
asset classes or ease capital inflow into VCs.

a) The government to directly supply capital to venture

capital firms or new startups (open up pension funds to
consider VCs as an asset class)
b) The government can provide financial incentives that
would encourage investors to invest in venture capital
funds or small firms.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

Startup Scene
Recommendations

Promote and facilitate three way partnerships between

universities, corporate venture capital, and coworking office
/ incubation spaces. That will allow entrepreneurs to test
their ideas and gain traction faster with corporates. It would
also provide university students with practical components
typically missing at schools. Students can choose to work at
a startup to complete graduation projects at startups instead
of writing a dissertation, or transform their academic findings
into profitable business solutions. As an innovation agent with
abundant resources, the development community and startup
ecosystem builders alike could undertake several roles that
will have a significant impact on building corporate and startup
partnerships, as partners, facilitators, matchmakers, enablers,
and donors.

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STARTUP ECOSYSTEM REPORT EGYPT 2019

Infrastructure
Recommendations

Despite the bold agenda that prioritizes infrastructural reform

and pumps both domestic — public and private — as foreign
investment into different sectors, there still remains a large
discrepancy in the quality of infrastructure across Egyptian
cities. Based on our research findings, the following areas
require attention:

1. Availing consistent and reliable utility services is one of

the cornerstones for a healthy business environment.
This remains a challenge whether in over crowded cities
that encounter the occasional outages, or remote cities
that receive lower priority in service provision. In light of
scarce resources, the government should strategise more
alternative energy projects, possibly in collaboration with
international organisations who are already pushing for a
wider spread of green fuels. Not to mention, this in turn
opens up more opportunities for startups in the energy
sector.

2. Following the government’s ongoing ICT development

policy that aims to foster the country’s digital economy, our
findings suggest that there is much room for improvement
in internet services; which is -naturally- essential for
high-tech businesses to thrive. The current state of
public-private competition in the market doesn’t seem
to be keeping up with the rate of growth internet usage
all over the country. The recommendation here is for the
government to concentrate its effort into modernizing
the existing infrastructure, in keeping apace with the
increasing usage rate, as well as forging more strategic
partnerships with private competition to make use of the
improved infrastructure to provide better services.

3. Strategically planning for startup ecosystems to

complement industrial and transport hubs, where startups
can be very beneficial in streamlining processes by
innovatively addressing market gaps and capitalizing on
local skills.

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Macro
Recommendations

The egyptian economy faced a dire growth challenge in the midst

of political upheaval, and indeed the government has managed
to almost double the GDP growth rate since 2012. However, this
growth is burdened with a myriad of structural problems that
stifle its economic functioning on the micro level. As pertains to
startup ecosystems, our main recommendations are:

1. Streamlining bureaucratic processes: Unlike the case

in other developing countries, it is actually rather easy
to formally incorporate a new company -albeit a bit
costlier. However, Egyptian red tape remains notoriously
challenging, in terms of bureaucratic efficiency as well
as navigating legal bodies and processes. Following the
efforts of the Ministry of Investment (MOI), which has been
advertising for a more simplified process as part of the
overall agenda to attract foreign investment; startups could
benefit from a tailored campaign to facilitate the navigation
of the relevant administrative and legal spheres.

2. Decreasing the cost of business registration: One of

the caveats of the high cost required to register a small
business in Egypt, is that they opt to start informally;
which one of the main reasons for the considerable
growth in Egypt’s informal sector. The informal economy
is particularly precarious, not only for businesses that
operate with no legal rights, but also opens the door for
masked unemployment, resulting inaccurate accounting
of national indicators. The government could thus benefit
from revisiting the costly requirements of business
registration through devising a system that differentiates
the required documentation and fees based on the type and
size of the company.

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Market
Recommendations

1. In 1979, when the relaxation of investment rules for U.S.

pension funds led to historically large inflows to the venture
capital asset class, many forward-looking tech companies
were funded, whose revenue today is equivalent to one fifth
of the country’s GDP, while only 1% of GDP was invested in
those startups.

The role of the Egyptian government in the economy could

be refined - funding not only the rate of innovation, but also
steering its direction. Venture capital plays an important
role, specializing in screening risk and uncertainty, thereby
connecting idea-rich entrepreneurs with cash-rich funds,
including those in the public sector.

Countries that transformed their economies through

‘smart’ innovation-led growth have benefited from long-
term, comprehensive ‘mission-oriented’ policies aimed
directly at moving away from extraction to creation.

Governments did not only invest in venture capital, but also

in education, R&D and the emerging technologies that feed
into venture backed companies. They created a network of
decentralized public and private actors and devised special
tax credits that favored creative activities more than others.

2. Focus on strategic verticals that fill a dire market gap,

such as Fintech, Mobility, and Cleantech. These sectors
contribute to longer-term improvements in productivity and
performance of companies and industries in other sectors,
facilitation in payments and mobility with ripple effects
on time savings and productivity, reduction in pollution,
shifts from extractive to creative sectors, institutional
knowledge and its contribution to developing and training
the workforce as well as the resulting ripple effects.

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Acknowledgements

Partners:

Ice Alex and Kites Business Space

Sohag “General Authority for Investment and free zones GAFI”
Cloud
Shamia Coworking space in Suez
Space (Coworking) and Team Yeah in Mansoura
G Space Gouna

We would like to express our gratitude and appreciation to the

entrepreneurs and professionals involved in entrepreneurship
projects in Egypt for taking the time to provide us with the
necessary information and knowledge about startup ecosystems
in the city.

We especially thank our interviewees:

Mohamed Mahfouz, Founder of Shamsia Coworking Space

Amira Taher, Researcher at GAFI
Ahmed Zidan, Manager of G Space
Shahd, Entrepreneur at Ice Alex.

Hagar, Manager at Dv Circles

Ibrahim, Founder at Space Workhub
Fatma, Employee at Ideaspace Coworking Space
Safi El Essawy, Khaleha Swaissy
Aya El Deghedy, Career Counselor

Special thanks to the many photographers whose work

enhanced our report: Sherif Moharram, Sophia Valkova, Manuel
Jiménez, and Alejandro Garcia. Photos sourced from Unsplash
and Freepix.

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References

1. OECD. (2008). Handbook on Constructing Composite Indicators: Methodology and UserGuide.

2. Iacob, N., Lachenmayer, J., & Friederici, N. (2019). Operationalising Relational Theory of Entrepreneurial Ecosystems at City-
Level in Africa, Asia and the Middle East. German Journal of Economic Geography.

3. The World Bank. “Egypt’s Economic Update”. April 2019.

4. IMF (2019) ‘Arab Republic of Egypt’, Retrieved 9 Oct 2019.

5. The World Bank. “Women Economic Empowerment Study”. May 2018.

6. https://knoema.com/atlas/Egypt/RandD-expenditure

7. CEIC. “Egypt Forecast: Unemployment Rate”. Accessed 26 Nov 2019.

8. (Wadhwa, Priya. “Egyptian startups increasingly backed by angel” investors. 31 July 2019. SME10x.

9. “Egypt - Net foreign direct investment inflows in current prices”,.Knoema. Retrieved 26 Nov 2019. (n.d.)

10. Loayza, Norman V.; Odawara, Rei. 2010. Infrastructure and economic growth in Egypt (English). Policy Research working
paper; no. WPS 5177; Public expenditure review (PER). Washington, DC: World Bank.

11. Ragab, A., & Fouad, H. (n.d.). “Roads and Highways in Egypt Reform for Enhancing Efficiency”..

12. Ibid

13. Baltusis, T. The analysis of IT/ICT sector in Egypt. 4 July 2017

14. Tahrir Institute for Middle East Policy. (2018). Economic Trajectory: Assessing Egypt’s Economic Reform. Economic Trajectory:
Assessing Egypt’s Economic Reform.

15. Ibid

16. Ibid.

17. “Egypt Economic Outlook”. African Development Bank Group. Accessed 26 Nov 2019.

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Sources and Indicators

INDICATOR NAME SOURCE

Workforce Constraint World Bank, Enterprise Survey

Skilled workers World Bank, Enterprise Survey
University Score TopUniversity.com; 4icu.org; Own Research For the Missing Data
TopUniversity.com; 4icu.org; Own Research For the Missing Data; Berlin
University Students Business Location Center.
Tertiary Education World Bank - Gross enrollment ratio, tertiary, both sexes
R&D Expenditure World Bank - Research and Development Expenditure / OECD Database
Labour Regulation Constraint World Bank, Enterprise Survey
Graduates’ salaries Own Research, Berlin Startup Survey
Software Developers’ Salaries Payscale.com, Averagesalarysurvey.com
Female Participation World Bank, Modeled on ILO estimate
Unemployment Rate International Labour Organization, ILOSTAT database.
Female Entrepreneurship World Bank, Enterprise Survey
Bank Loan Own Research - Enpact Survey
Business Angels Own Research - Enpact Survey
Accelerators and Incubators Own Research - Enpact Survey
VC Funds Own Research - Enpact Survey
Public Funding Own Research - Enpact Survey
Funding Constraint World Bank, Enterprise Survey
Loans Rejected World Bank, Enterprise Survey
Collateral Required World Bank, Enterprise Survey
Total VCs / PEs MENA PEA, Adapted through own research
FDIs Net Inflow World Bank
Business Angels (total number) Angel List
Accelerators Own Research, Expert Consultation
Incubators Own Research, Expert Consultation
Co-working Spaces Own Research, Expert Consultation
Technology parks Own Research, Expert Consultation
Startup Events Own Research - Enpact Survey
Total Startups Crunchbase Pro
High Equity Funding Startups
(over $5 mil USD) Crunchbase Pro

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STARTUP ECOSYSTEM REPORT EGYPT 2019

High Equity Funding Startups

(over $1 mil USD) Crunchbase Pro
Transport Overall Quality World Economic Forum
Roads Quality World Economic Forum
Railroad Quality World Economic Forum
Ports Quality World Economic Forum
Air Transport Quality World Economic Forum
Air Transport Capacity World Economic Forum
Water Supply Quality World Bank, Enterprise Survey
Electricity Access World Bank, Enterprise Survey
Electrical Outages World Bank, Enterprise Survey
Pollution Index Numbeo
Co-working Space Cost Coworker
Cost of Living Numbeo
Electricity Quality WeForum
Utilities’ Cost Numbeo
Internet Cost Numbeo
Mobile Internet Cost Own Research
Mobile Subscription Cost Numbeo
Mobile Broadband Penetration GSMA intelligence
Internet Speed (Download) Startup Meter Survey and testmynet.com
Internet Speed (Upload) Startup Meter Survey and testmynet.com
Smartphone Penetration Multiple sources; see country comments for more details.
Internet Penetration ITU
Prepaid Subscriptions GSMA intelligence
Mobile Subscriptions ITU
Stability World Bank
Effective Governance World Bank
Regulatory Quality World Bank
Democracy Level The Economist Intelligence Unit’s Democracy Index
VAT World Bank Doing Business Report
Corporate Tax KPMG Corporate income tax tables
Contract Enforcement World Bank Doing Business 2017
Resolving insolvency World Bank Doing Business 2017
Business registration (time) World Bank Doing Business 2017
Business registration (cost) World Bank Doing Business 2017
Violent Crime Econoimc Intelligence Unit (EIU) analysts
Crime as a constraint World Bank, Enterprise Survey
Informality as a constraint World Bank, Enterprise Survey
Bribery Depth World Bank, Enterprise Survey
Corruption Perception Transparency International
Corruption Control Worldwide Governance Indicators

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GDP PPP per capita World Bank

Economy Growth World Bank
Deposit Interest Rate World Bank
Capacity Utilization World Bank, Enterprise Survey (under Performance)
Trade Balance World Bank
Trade openness World Bank
Tourism World Bank
Sister Cities Multiple Sources
Logistic Performance Index World Bank, Logistic Performance Index

83
enpact is a Berlin-headquartered non-profit organisation
empowering entrepreneurs, ecosystems and international
cooperation. enpact is one of the world leaders in the
cultivation of startup ecosystems as a means to promote
international cooperation and development. Through a
variety of products and services, enpact supports founders
and startups in Europe, Africa, Asia, Latin America and
the Middle East. The goal is to create a global network
of startup ecosystems that facilitates the exchange of
ideas, solutions and support. At present, enpact’s network
consists of 600+ startups, 200+ mentors and 50+ support
organisations in 20+ countries. 2500+ jobs have been
created as a result of enpact’s work with startups.

www.enpact.org ISBN 978-3-96604-010-5