Nubia Capital
We are committed to investing in tech-enabled startups across Africa and helping founders grow extraordinary businesses.
Published Oct 27, 2023
If while climbing a tree you insist on going beyond the top, the earth will be waiting for you. ~ African proverb
In the journey of building a successful startup ecosystem, Egypt has insisted on going beyond the top and this is reflected in her blooming startup ecosystem.
With a population of 111 million people, Egypt is ranked number one in Northern Africa and number 67 globally. This ranking was measured by quantity, quantity and business environment. While quantity measures the number of startups/startup business meetings and/or accelerators, quality measures the startups that are doing very well, and being invested in or reaching unicorn value. The business environment criteria measures the environment’s like tax, survival rate, policies, level of corruption etc
Earlier in the year, MNT-Halan, an Egyptian-based fintech startup was valued at $1B reaching unicorn level. Founded in 2018 and headquartered in Cairo, it was created to digitally bank the unbanked and substitute cash with electronic solutions.
As an emerging ecosystem, Egypt has succeeded in combining private and public sector collaboration to advance the ecosystem. One of them is the establishment of Egypt Ventures, the first government-backed venture capital vehicle in Egypt, to enhance the entrepreneurial ecosystem. Ahmed Gomaa, Chairperson and Managing Director of Egypt Ventures, highlighted that the company was established by the Ministry of International Cooperation, the General Authority for Investment and Free Zones (GAFI), and the Saudi Fund for Development.
Established in September 2017 with a paid-up capital of EGP 451m, Egypt Ventures is doing more than investing in tech-based businesses to facilitate their access to financing. According to Dr Rania Al Mashat, Egypt; ‘s minister of international cooperation since December 2019, “the company aims to achieve its short-term goals of providing alternative financing opportunities for Egyptian entrepreneurs, and opening the doors for local investments for Egyptians living abroad but amongst this, it also aims to exchange knowledge and strengthen international cooperation with Egyptian counterparts, whilst supporting startups to expand on the regional and international levels. At the same time, it aims to support these startups in building up their portfolios, which in turn will catalyse GDP growth”
Egypt Ventures formed a committee of experts to propose legislative reforms and ways of enhancing the ecosystem of tech startups.
This is the result of a great collaboration between both sectors.
This collaboration is vital for catering to the human capital in Egypt. The human capital domain consists of a talented pool and the labour market (its ability to cater to the talented pool of individuals). According to the startup ecosystem report of Egypt in 2019, the Egyptian private sector still struggled with creating enough jobs that match the skills and magnitude of the growing supply of highly educated youth entering the labour force. However, the Disrupt Africa report of 2021 showed that almost 13,000 individuals were employed by 562 startups in Egypt with the average number of employees per startup being 23. In 2019, it was also recorded that there was a high brain drain in the economy with talented technical workers either migrating internally (from small cities like Suez to the capital for instance) or leaving the country to look for better opportunities abroad. Accelerators, Incubators and firms like Egypt ventures have challenged themselves to reduce brain drain.
Just like many emerging startup climates in Africa, Egypt has a young population. According to Salma AlBarkouky, co-founder of Fatura, a B2B platform for retailers, he noticed that the population is young and ambiguous. Young people out of university are actively trying to create solutions and build their startups. Omar Shoukry Sakr, founder and CEO of Nawah Scientific, which is helping to spark startups in growth sectors including healthtech, medtech and biotech also said that Egypt has a lot of bright-minded graduates.
We have highlighted the essence of a good collaboration between the private and public sectors. We have also highlighted Egypt’s strong talent pool and young population. However, we have to ask why all these are important.
A thriving ecosystem for startups is the result of a symbiotic partnership between various sectors, including corporations, government entities, and educational institutions. To foster this synergy, we need to examine three foundational elements.
The first element revolves around knowledge acquisition, whether through formal education or informal learning avenues. It’s essential to equip entrepreneurs with the skills and guidance they need to transform their concepts into thriving enterprises. Moreover, we should focus on nurturing a continuous stream of skilled individuals who can join these businesses and contribute to their growth. Adaptation of the educational curriculum to meet the ever-evolving demands of the modern, technology-driven economy is of paramount importance.
The second element relates to streamlining the process of business initiation and operation, ensuring that the resources necessary for a successful launch are readily available. Entrepreneurs should not be entangled in bureaucratic red tape when engaging with their initial customer base. Adequate infrastructure and easy access to funding are crucial to support business expansion.
The third element involves examining how local regulations impact business growth. Are businesses encouraged to create more job opportunities within their respective communities? Do they enjoy the freedom to conduct transactions seamlessly across borders?
Egypt is working hard to create a thriving startup ecosystem by building on these three factors. Although there is still a long way to go, the answers to the challenges Egypt faces and other African countries lie in the collaboration of a diverse array of stakeholders, including government bodies, educational institutions, and corporate entities. By working together to address these fundamental aspects, Egypt’s startup ecosystem can flourish and contribute to the nation’s economic growth and innovation in the years to come.
