Roundtable Discussions

Upgrading Small and Medium Enterprises: The Case of Egypt

Date : 4/24/2012

Speakers : Markus Loewe (D.I.E), LEAD, Iman Al-Ayouty (ECES), Annegret Altpeter (D.I.E), Lisa Borbein (D.I.E), Marc Chantelauze (D.I.E), Maximilian Kern (D.I.E), Elisabeth Niendorf (D.I.E), and Malak Reda (ECES)

In recognition of the potential role that small and medium enterprises (SMEs) stand to play in driving Egypt’s economic growth, ECES has been conducting collaborative research with the German Development Institute) Deutsches Institut für Entwicklungspolitik (DIE)( on the factors determining the upgrading of SMEs in Egypt. Like in many other developing countries, business activities in Egypt are largely dominated by both “micro to small” and “large” enterprises, thus posing the so-called “missing middle” problem.

This roundtable discussion presented the findings of the research team. The results indicated that many small enterprises find it very difficult to innovate towards growing into the segment of medium size enterprises. Nevertheless, a considerable number of companies was able to go through a process of upgrading even at times of difficulty such as the present environment. Some have even more than doubled in size (by employment criteria) within the last five years. The main factors explaining differences in growth and upgrading are: (i) education, work experience and international experience of the company owner, (ii) access to finance, (iii) investment into human resource development and market research and (iv) efficiency in the application of existing laws such as taxation and licensing.