Small Business

1. SMEs Challenges in Egypt
Regulatory and legal Hindrances:
Regulatory constraints mean the role played by government agencies
starting from control, supervision, follow-up to the registration and
licensing procedures; as for the Legal obstacles means the laws and
regulations that regulate the activity of projects small and medium-sized
enterprises, and their complementary regulations.
These challenges are considered the main obstacle to the establishment
of these projects and impede their growth, as these procedures are
complex and high costs, starting with obtaining a license to establish the
project, then a license of operation...etc., even during project work.

2. One of the most important of these obstacles Regulatory and legal:
 Excessive regulations and laws,
 insufficient transparency and
 unnecessary governmental and administrative restrictions.
 The high cost of implementing Businesses
Where it is estimated that about 40% to 60% of the doing business costs
arises from organizational burdens, so many SMEs prefer to work
informally, despite the informality deprives them of the advantages of
applying for official loans, or obtaining business development services,
which limits the possibility of its growth. Moreover, there is no clear,
consistent and tight general policy towards small projects. This is
noteworthy that the establishment of MSMEDA - medium, small and
micro enterprises development agency - may represent an opportunity
in the future to address these hindrances.

3. Ease of doing business rank
according to The World Bank Classification
S Country 2018 2019
1 Hong Kong 5 4
2 Korea 4 5
3 UAE 21 11
4 Japan 34 39
5 Tunisia 88 80
6 KSA 92 90
7 Egypt 128 120
8 Algeria 166 157

4. Egypt's ranking on the sub-indicators of the business environment
according to The World Bank Classification
Index 2018 2019 Direction
EDBR 128 120 (8)
Start Commercial activity 103 109 (6)
Obtain Licenses 66 68 (2)
Obtain Electricity 89 96 (7)
Property registration 119 125 (6)
Obtain Credit 90 160 (70)
Investor rights protection 81 72 (9)
Paying Taxes 161 159 (2)
Cross Border Trade 170 171 (1)
Enforcement of Contracts 160 160 --
Insolvency cases 115 101 (4)

5. SMEs Financing
 According to the Global Competitiveness Index issued by the World Economic
Forum
 Egypt ranks 73 out of 137 countries in the availability of financial services in
general.
 85th in the ability to bear the costs of financial services.
 66th in terms of ease of obtaining a loan.
 95% of companies in Egypt rely on internal financing for their fixed assets and
working capital instead of dealing with banks.

6. The Doing Business index.
 Decline in the obtaining credit index in Egypt by about (70) degrees, as
Egypt’s rank decreased from rank (90) in 2018 to rank (160) in 2019, and rank
121 in 2021
160
90
121
0
20
40
60
80
100
120
140
160
180
1
2
3

7. SMEs Financing share
2017 Vs 2020
 The share of financing small and medium enterprises in total bank loans in
Egypt is estimated at only 1.2% in 2017 and 5.7% in 2020, Increasing to 20% in
2030.
1.2%
5.7%
20%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%

8. Factors hinder the Financing.
 There are a number of factors that always stand in the way of obtaining the
required funding for small and medium enterprises, including:
Lack experience in dealing with banking
The high risk in financing these projects
due to the lack of sufficient guarantees.
High cost of lending
High cost of evaluation and supervision