By Dr Hala Hattab
CAIRO: It might seem farfetched to encourage people to go entrepreneurial and start businesses given the current status of Egypt, with a general state of political and economic unrest.
In general, people are either pushed into entrepreneurship by negative situational factors or pulled by an attractive opportunity. The former is the prevailing fact as the economy is now characterized by freezing employment, closure of the stock market, discontinuation of production and strikes hitting almost all operating sectors. The situation is least described as negative — compounded by the problem of unemployment (bearing in mind that within the coming three to four months, a wave of thousands of graduates will set out in the market).
Question is: How can this be a drive to start a business?
Before the revolution, one of the main constraining factors to entrepreneurial activity in Egypt was corruption and lack of transparency. Small business owners suffered most from long bureaucratic procedures due to lack of “connections” as well as limited financial resources, which made paying facilitation fees an extra burden.
Fighting corruption was one of drivers for the January 25 Revolution and the general mood in the country now is aligned with this objective. At the same time, there is the general recognition of the need to support small entities — with many calls to stand by small business owners — coupled with a state of dissatisfaction with big businessmen whose names were connected with corruption.
In addition, companies, especially large ones, are rationalizing their expenditures and looking for the most economical solutions for services such as IT, best represented by outsourcing these services to small and less costly entities — which presents an opportunity for small businesses.
Due to the slowdown in the market, sellers/merchants are offering products at competitive prices, which in turn relatively decreases start-up or operational costs for new business.
With these factors playing in the favor of start-ups, there are many opportunities in the market for small players.
However, similar to entrepreneurs worldwide, Egyptian entrepreneurs need money to start, hence the idea of a microfund is strongly suggested. One idea is to establish a fund pooled from minimum contributions which would serve as a source of start-up capital with NGOs playing the role of coaching entrepreneurs on how to start and run a business. In itself, this role would also serve as a way to keep NGOs themselves operational.
At a time like this, Egypt needs more entrepreneurs to create wealth for themselves and others, stimulate the economy by providing jobs and products as well as taking risks and spurring innovation in the market.
Another point to consider is that numerous laws are under revision for improvement/amendment. For entrepreneurs, several laws have worked against them for many years, hindering efforts to start businesses, including bankruptcy laws, minimum start-up capital requirements, required collateral, paperwork, etc.
A significant number of entrepreneurs need to join forces in order to lobby for these laws to be changed to make it more favorable to start a business.
Dr Hala Hattab is a lecturer of Business Administration at the British University in Egypt. She is specialized in entrepreneurship and small business management.
