When turmoil strikes and everyone around you is losing their head (and money), it’s hard to stay calm and find solutions. Egypt is one such place where entrepreneurs have had to breathe in deep and think smart while revolution and financial turmoil increased unemployment and caused businesses to think hard about their economic future.
Faced with unemployment, many Egyptians have rolled up their sleeves, started their own business, and tried to make things work. But what about the SMEs that existed before the revolution and the financial crisis broke out?
Here are some of the problems they’ve faced, and how they’ve handled them.
Finding funds
Finding someone who believes in your business and is willing to invest in it is always tough. This has especially been the case for SMEs in Egypt, as banks apply lending criteria that suit multinationals more than SMEs, forcing the latter to miss out. Furthermore, SMEs don’t always have the confidence of banks, which see them as less profitable and worry that they’re being run incompetently. Lending to SMEs is expensive to banks, so they avoid taking the risk of giving loan to a potential defaulter and losing money.
Nevertheless, SMEs haven’t given up on banks or on borrowing money. They prefer it, in fact. Time is money and tough times call for tough measures. Business owners don’t always have time to lock horns with investors over downsizing, strategy changes, re-investing money, etc. Lenders argue less. Between the banks and state lending schemes, SMEs have been able to find extra capital.
Getting in the know
Another big problem, according to business analysts, is that lots of SMEs in Egypt need to become more sophisticated. The lack of business sophistication is a real problem considering that more than 90% of businesses in Egypt are SMEs or microenterprises. Financial literacy for business is an issue — this includes producing financial statements and sourcing legal assistance where required, which, if the business runs into legal problems, is when a good liabilities insurance policy can help.
Thankfully, the Egyptian Government has lent a hand by setting up one-stop-shops (OSSs). Although geared towards startups, OSSs help businesses that wish to expand or relocate within Egypt, by providing advice on acquiring properties for business operation.
Getting priorities straight
One thing that SMEs have acknowledged in Egypt is the importance of business development assistance, placing this on an equal par with long-term funding, for business success. Young SME owners especially believe in this. Meanwhile, business analysts and seasoned entrepreneurs have highlighted SMEs as the key to improving Egypt’s economic situation. This awareness-raising has favored SMEs, which are seeing more cooperation between the Egyptian Government and countries like the US on providing business grants.
What has become clear is that, despite some of the chaos that revolution and the international financial crisis have caused the economy, Egypt’s SMEs refuse to take it all lying down. They find solutions. They ask for help. They make themselves heard. It’s that or let the economy steamroller over everything they’ve worked for, but as any businessperson will tell you: failure is not an option. It never was.
If you’re thinking of starting a business in Egypt and want some advice on legal requirements and registration, you may wish to visit Egypt’s General Authority for Investment website.
