Entrepreneurship is increasingly recognised as a fundamental pillar of competitive and dynamic economies. It is as a key driver of job creation, economic growth, and resilience, as well as a catalyst for the green and digital transition, writes Yara Shawky Shahin.
Egypt is one of the countries experiencing rapid growth in entrepreneurship programmes, aiming to position itself as a regional start-up hub, particularly in fintech, e-commerce, and sustainable solutions. This expansion has been fuelled by a vibrant start-up ecosystem and increasing support from both the government and the private sector. Various international development organisations offer funding, mentorship, and training to early-stage entrepreneurs. However, despite these efforts, challenges persist in effectively implementing these programmes to bridge the widening social and economic inequality gap.
Defining an entrepreneur
One of the challenges facing entrepreneurship programmes is the paradox of defining an ‘entrepreneur’. Although the core features defining an entrepreneur include risk-taking, innovation, and change, the Global Entrepreneurship Monitor (GEM) distinguishes between ‘necessity-driven entrepreneurs’ and ‘opportunity-driven entrepreneurs’.
The latter tend to pursue innovation, employ new technological solutions, and are strongly motivated by growth. In contrast, necessity-driven entrepreneurs, who are predominant in Egypt, are driven primarily by the lack of viable employment opportunities and alternatives. They use traditional technological solutions and processes, work in marginal sectors, and in many cases operate in the informal economy.
The challenge of defining what constitutes an entrepreneur directly impacts the design of entrepreneurship development programmes led by donors, funders, and development organisations. These programmes often aim to support innovative, risk-taking entrepreneurs; however, during the implementation phase of the programmes, the selected beneficiaries usually differ significantly from this ideal.
Enterprise sustainability or job creation?
The paradox of defining an entrepreneur becomes more complex when the goals overlap between ‘sustaining an enterprise’, ‘creating jobs for unemployed youth and women’, or simply ‘generating income’ without any direct employment responsibilities being considered.
For example, in Egypt, high unemployment among youth has fuelled the expansion of funding for entrepreneurship programmes. However, the evidence supporting the impact of a growing entrepreneurship ecosystem on unemployment remains mixed. This adds another layer of expectation for implementing organisations to not only support early-stage start-ups and Small and Medium Enterprises (SMEs) but also to increase job opportunities for the unemployed.
Due to challenges such as the high drop-out rate, limited access to funding, fear of failure, and insufficient business and management skills, the sustainability of the enterprise often becomes the primary focus of the programmes for the implementing organisations. Nonetheless, they are often expected to report on the number of jobs created by those start-ups. The same applies to not-for-profits and NGOs supporting social enterprises, with the primary focus on sustaining the social enterprise’s business model while supporting targeted vulnerable groups, such as women heads of households or rural youth, to generate income.
Quality vs quantity
The discussion around decent work and job quality in the start-up and entrepreneurship landscape in Egypt remains limited. The Egypt GEM Report 2022 asked entrepreneurs in Egypt about their awareness of the social implications of their enterprises, including safety at the workplace, inclusive work environment, quality of life at work, and other aspects of decent work guided by the Sustainable Development Goals (SDGs). The results have shown that entrepreneurs’ awareness of the SDGs, including decent work, is way below the global average. A study by the American University of Cairo Public Policy Hub identified Human Capital Management (HCM) as a significant challenge for Egyptian start-ups. It found that start-ups struggle with high employee turnover due to micromanagement, long working hours, unfriendly work culture, and stressful jobs.
Empowering women & youth
The entrepreneurship development programmes in Egypt were launched in 2016 to address youth unemployment. Since then, these programmes have become more inclusive by adopting an intersectional gender approach and targeting the urban-rural divide.
Nonetheless, women still face many challenges, aggravated by cultural barriers, such as limited mobility and unrecognised domestic labour including caring for children and the elderly. Programmes focused on targeting the most vulnerable women in rural areas, often also target necessity-driven entrepreneurs, with extremely limited prospects for growth. Many of these entrepreneurs lack social security or health insurance.
Without childcare facilities, rural women often prefer working from home, further restricting the mobility and growth prospects of their micro-enterprises. Cultural barriers such as lack of affordable childcare facilities, safe and reliable transportation, and a safe workplace impede younger educated women in urban centres from joining the workforce or starting businesses.
The recent digital transformation and expansion of the digital economy have contributed to social and cultural changes shaping the concepts of ‘work’ and ‘employment’, especially among youth. There is a growing preference for ‘self-employment’ and flexible short-term work opportunities known as ‘gigs’. This cultural shift has contributed to the rise of early-stage start-ups as many young people pursue entrepreneurship, seeking flexibility and new forms of work. However, the legal framework for labour relations has yet to be adapted to include these new forms of work.
The motivation and rate of growth of those young entrepreneurs remain very limited. Capacity building programmes usually target those between 16-24, or in some cases between 18-30 years of age. However, these age groups tend to be more risk-taking in establishing a start-up and at the same time less likely to grow or transition into an established business quickly.
Policy recommendations
To create a more inclusive and supportive environment for entrepreneurs, fostering sustainable economic growth and social equity, the following policy recommendations are suggested for funders:
Design Entrepreneurship Development and Job Creation Initiatives for Youth as Separate yet Connected Programmes.
Provide Training on Human Capital Management (HCM) Skills.
Support Advocacy for a New Legal Framework Adapting to New Forms of Work.
Encourage Innovative Ideas for Early-Stage Start-Ups, Incubators, and Accelerators to Provide Basic Employment Benefits.
Design Women-Friendly Programs, Recognising Care Responsibilities & Cultural Barriers.
Connect Start-Ups for Collective Action to Effectively Influence Policy & Create Channels for Negotiations with Both the Government and the Private Sector.
Entrepreneurship programmes contribute to economic growth and have a strong potential to create job opportunities. However, the dilemmas in designing and implementing these programmes are complex and interconnected. Therefore, they cannot be addressed separately or immediately. The issues discussed highlight the need to address intersecting factors—gender, age, geography, social status, and level of education. There is an urgent need for complementarities across approaches. This can be achieved by combining advocacy for new legislation to respond to emerging forms of work with the localization of programs to suit community needs.
This blog was originally published by LSE’s International Inequalities Institute
Photo credit: Pexels
