Abla Abdellatif ã 2016 IFPRI Egypt Seminar Series in partnership with ECES: Cluster-based development in Egypt

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  IFPRI Egypt Seminar Series provides a platform for all people striving to identify and implement evidence-based policy solutions that sustainably reduce poverty and end hunger and malnutrition. The series is part of the United States Agency for International Development (USAID) funded project called “Evaluating Impact and Building Capacity” (EIBC) that is implemented by IFPRI.
  • 1. Cluster-based Development for Job Creation & Poverty Reduction in Egypt Tuesday, September 6th, 2016 Governmental Efforts for Boosting SMEs in Egypt- with Special Focus on Clusters
  • 2. Contents • Status-quo: SMEs & Clusters • SMEs Challenges • Needed System & Governmental Efforts • Specific Examples
  • 3. Date: Status-quo: SMEs & Clusters in Egypt
  • 4. Status-quo: SMEs in Egypt 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Large enterprises Medium enterprises Small enterprises Very Small enterprises Micro enterprises 4 Distribution of Firm Size Across Different Industries
  • 5. 0 200000 400000 600000 800000 1000000 1200000 Micro enterprises Very small enterprises Small Enterprises Medium Enterprises Large Enterprises Totalnumberofworkersinfirms Firm Size 5 Status-quo: SMEs in Egypt Distribution of Total Number of Workers Across Different Sizes
  • 6. Status-quo: SMEs in Egypt Missing Middle in Egypt Compared to Other Countries UK Japan Spain Italy MENA Egypt Less than 10 10 - 99 100 - 499 More than 500 0 % 20 % 40 % 60 % 80 % 100 %
  • 7. 7 Status-quo: SMEs in Egypt % Share of Small and Medium Enterprises in Country's Exports: Egypt in Comparison with Other Countries 60 49 44 36 31 4 Turkey Italy Spain South Africa Morocco Egypt
  • 8. 8 Status-quo: Clusters in Egypt (Broad Definition) Organic clusters Other types of firm interlinkages Government initiated clusters
  • 9. Status-quo: Clusters in Egypt • 145 organic clusters in Egypt (Source: SFD) • Distributed across 25 governorates • 79 % of organic clusters are informal • Main Sectors: Agro-industry, Food, Wood, Leather, Textile, Chemicals, Metallurgical, Mining & Building products. • No study quantifying non-organic clusters (Robeiki, Merghem, Mahala …etc) • Handicrafts • Other models (new)
  • 10. Status-quo: Clusters in Egypt Organic Clusters ” are defined as industrial interdependent concentrations, located in a geographical proximity, developed and/or expanded without government planning/intervention, producing similar or complementary products with distinct characteristics or competitive edge, having the experience or capacity to sell beyond their geographic boundaries, and with a minimum of 30 enterprises/employees
  • 11. Date: SMEs Challenges & Government Efforts
  • 12. SMEs Challenges in Egypt SMEs Challenges Gov. lengthy complicated procedures to start Difficulties in fund Raising Access to credit Scattered & competing initiatives Lack of technical & financial support systems for SMEs facing problems Strong disconnect between entrepreneurs and accelerator and incubation programs Lack of mentorship and support at the ideation phase
  • 13. Needed System & Government’s Efforts SMEs Challenges Gov. lengthy complicated procedures to start Difficulties in Fund Raising Access to Credit Scattered & Competing InitiativesLack of Technical & Financial Support Systems for SMEs facing Problems Strong disconnect between Entrepreneurs and Accelerator and Incubation Programs Lack of Mentorship and Support at the Ideation Phase CBE Initiative + New MSMEs Definition General Adoption for Unified Definition + SMEs Regulator and Coordinating Body Technology Platform Simplification of Licensing Procedures
  • 14. New Definition Adopted by the CBE Existing Firms New Established Firms No. of Employees Annual Sales Revenue No. of Employees Paid-in Capital Micro Enterprises Less than 10 Less than 1 mn EGP Less than 10 Less than 50,000 EGP Very Small Less than 200 1 mn to less than 10 mn EGP Less than 200 50,000 – 5 mn EGP for industrial sector 50,000 – 3 mn EGP for other sectors Small Less than 200 10 mn to less than 20 mn EGP Less than 200 Medium Less than 200 20 mn to less than 100 mn EGP Less than 200 5 mn – 10 mn EGP for industrial sector 3 mn – 5 mn EGP for other sectors
  • 15. CBE Initiative • Announced in January 2016 • Amount of finance devoted to SMEs to reach 20 % of each bank’s loan portfolio over the next four years. This amounts to a total of 200 billion EGP. • Interest rate 5% for categories: very small and small • Interest rate 7% for machine & equipment for medium sized, not to exceed 20 mn EGP and maximum maturity 10 years (agricultural and industrial firms only)
  • 16. Date: Specific Examples
  • 17. Old Clusters Damietta Abou Kabeer Meet Ghamr
  • 18. New Clusters “Qalyubia” (small industrial cluster linked to sector specific value chain) 30 acres Toukh Chemical Industries 50 acres Kafr Shoukr Food Industries
  • 19. Your Job Next Your Home
  • 20. Your Job Next Your Home
  • 21. Your Job Next Your Home
  • 22. Your Job Next Your Home
  • 23. Your Job Next Your Home
  • 24. Clusters have a lot of potential in Egypt that remain untapped …….
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