Can Tech Entrepreneurship Be a Solution to Youth Unemployment in Egypt?

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Following the Arab Spring, observers in Egypt have noticed that more and more young people are interested in entrepreneurship and self-employment. Tech entrepreneurship especially is gaining increasing institutional support. Some even see it as a means of mitigating the country’s record-setting unemployment that has largely afflicted Egypt’s youth (80 percent of those unemployed are under 30).

Two attendees of the Maker Faire Africa show the entrepreneurial spirit nascent in Cairo and beyond.

Photo courtesy of Mitch Altman/Flickr

Two attendees of the Maker Faire Africa show the entrepreneurial spirit nascent in Cairo and beyond.

Egyptians have been facing drastic sociopolitical and economic changes,” says Dalia Mohamad Abd-Allah, a young entrepreneur from Cairo. “Since young people have played a role in that change, they are getting a sense of ownership of their own destiny. More and more of them are thinking of becoming entrepreneurs.”

As program coordinator of Danida Business Partnerships, an organization that supports commercially oriented partnerships between Danish companies and Egyptian partners, Abd-Allah helps oversee some of that entrepreneurship spirit. But she also makes sure to note that “the entrepreneurship landscape in Egypt is still being defined.”

That can be seen in the labor market, where traditional means of employment, whether in the public or private sector, is still prevalent in Egypt. This explains why more than half of the Egyptian youth populace sees entrepreneurship as an attractive concept but not as a secure means of labor-market entry. Job security in the tech industry, where bubbles are frequent and consumer trends are shifty, can seem precarious in a place where 36.1 percent of people still work in agriculture.

As Christopher Schroeder, author of “Startup Rising: The Entrepreneurial Revolution Remaking the Middle East,” told Daria Solovieva, an Egypt-based business writer for Co.Exist, “The startup scene [in Egypt] is still nascent, the ecosystem is still building. What they need most of all is a more predictable, stable environment to scale their enterprises.”

Interestingly, that predictably and stability are coming from the tech industry itself.

For example, traffic poses a huge problem in Cairo and Alexandria, so an app called Bey2ollak, an Egyptian word meaning “they say,” emerged. The application enables you to download a traffic map onto your mobile device, so before you leave home, you know exactly which streets are blocked and which are functional. “It is an economic and social problem, and the IT has managed to reduce it,” explains Abd-Allah. In addition to the convenience it provides, Bey2ollak offers peace of mind in post-revolution Egypt. Since many travelers are afraid to make cross-country treks for fear of carjacking or worse, the app created a service that allows a group of drivers to set up convoys to make the journey together.

In a time of recovery, the tech industry is responding to social needs at a speed that cumbersome institutions like local governments cannot match. But it is caught in a Catch-22, where the stability tech entrepreneurship requires might be achievable only through more tech entrepreneurship. This will inevitably delay its emergence as a viable means of employment for young Egyptians.

To help drum up some stability, American University in Cairo and Sawari Ventures, an international venture capital firm that invests in visionary Middle East and North Africa entrepreneurial projects, launched an initiative that should bring some much-needed infrastructure to the tech community. In the same vein as Silicon Valley, the university leased its Greek Campus to Sawari Ventures for 10 years so it can host the Tahrir Alley Technology Park. Sawari Ventures hopes the tech park will help attract tech giants like Microsoft. But its principal purpose is to serve as a home base for domestic startups like Kashef Labs, an organization developing drones that will help clear Egypt’s land mines faster and cheaper than previously possible.

Though entrepreneurship as a whole has steadily risen in Egypt, the tech world seems to be a central focus for the country and the Middle East at large. “At the moment, the most visible sector of entrepreneurship is the IT sector. There has been a boom there, especially in social media,” Abd-Allah says.

Youth entrepreneurship in the tech field is strong in Egypt, as this hacker meetup in Cairo illustrates.

Photo courtesy of Mitch Altman/Flickr

Youth entrepreneurship in the tech field is strong in Egypt, as this hacker meetup in Cairo illustrates.

Bernhard Rohkemper has been in Cairo since April 2013, running GIZ’s Responsible and Inclusive Business Hub for the Middle East/North Africa (or MENA) region. He has observed the entrepreneurial bug that is overtaking the region. People there are “very entrepreneurial, and many just start small businesses to get by,” he says. “It might not be businesses with a potential to grow in the future, but people do find ways to turn themselves into micro-entrepreneurs.” Indeed, as Maia Sieverding’s study “Youth Perspectives on Entrepreneurship in Egypt: Barriers to Entrepreneurship as a Means to Combat Youth Unemployment” reveals, many young Egyptians see entrepreneurship as simply a means to supplement their existing income.

So most aren’t looking to be completely self-sufficient income generators. Not everyone has entrepreneurial traits, and not everyone wants to be an entrepreneur—some are more comfortable having their own business, while others are more comfortable not working for themselves. As for the tech industry, not everyone has the necessary skills to embark on a career in that field. “The important thing is to identify entrepreneurs that have the capacity and skills to start a business and then help them grow. They then will provide jobs later,” Rohkemper explains.

But those would-be “job creators” are being thwarted by a variety of obstacles. Probably the biggest challenge for entrepreneurs in Egypt, like elsewhere, is attracting investment. With the surrounding social and political turmoil, one of the reasons investors are reluctant to invest in Egyptian startups is that they do not know what will happen in the future of a business.

In Egypt, entrepreneurship has a familiar face, such as food delivery by bicycle.

Padmanaba01 / flickr under Creative Commons

In Egypt, entrepreneurship has a familiar face, such as food delivery by bicycle.

In Egypt particularly, says Rohkemper, “there is little planning horizon—people do not plan too much ahead, also because it is very uncertain what [can happen].” In addition, many hopeful entrepreneurs, when asked why they might not start a business, cite a lack of information on business and business regulations, a small pool of marketing channels, inadequate skill development and small and unestablished networks.

This despite the government’s efforts to play a significant role in supporting young entrepreneurs by offering programs or making resources available to them. As Sieverding notes in her study, in 2004 the Egyptian government enacted Law 241, which provides micro and small enterprises, or MSEs, with access to marketing, risk assessment and background information on regulations, and also identifies investment opportunities. All are important tools as a tech company takes its first steps.

Rohkemper says his nongovernmental organization’s main job is to make all the stakeholders across the business hub work together. “We look at what happens and try to connect different players and offer what is still missing, rather than creating something on top of what exists already.” In this sense, they can help build those networks young Egyptians feel they need to start an entrepreneurial venture.

For Rohkemper, “there is a vibrant sustainability and entrepreneurship scene [in Egypt], and the environment is very intense and very positive.” Sawari Ventures is even more enthusiastic, seeing Egypt, and the Middle East as a whole, as the home of a vast number of digital natives who are hungry for consumer tech products and services, with a higher gross domestic product per capita and more disposable income than powerhouses India and China.

The focus in Egypt, and probably elsewhere in the Middle East, is on short-term development and unemployment assuagement, which is made increasingly easier by the tech world’s rapid innovation. But as the country explores tech entrepreneurship as a panacea for youth unemployment, it is crucial that it doesn’t do so at the expense of the millions of young people who think starting a business is swell but not for them. A lack of long-term goals and holistic thinking got this country into its employment problem to begin with. Given the alarming fact that a third of Egypt’s young entrepreneurs started a business because they could not find wage work, it’s clear that youth entrepreneurship, in tech and beyond, might not be a cure as much as a symptom of the ailing job market.

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