Development of small and medium industries in Egypt

Date: 01 - 05 - 2024


Source: Al-Wafd newspaper

Dr. Ali Mohamed Al-Khouri

The role of SMEs in the Egyptian economy cannot be overestimated, but their potential is often obscured by many systemic and operational challenges that require not only government policies, but also strategic rethinking from within the sector itself, to solve the problems they face and improve their production efficiency. And innovation in its products and services. The economic footprint of SMEs in Egypt is large, contributing approximately 43% of the national GDP and employing more than 75% of the workforce. These numbers emphasize the pivotal role that the sector plays in economic stability and growth and its potential as a catalyst for reducing unemployment and enhancing societal well-being. But the ability of SMEs to transform the economic landscape is hampered by a set of persistent challenges, especially in access to finance, as many SMEs struggle to secure the capital needed to expand and innovate. High interest rates and stringent requirements imposed by traditional banking institutions often make small businesses particularly vulnerable, which hinders growth and innovation in this sector. In addition, the bureaucracy and regulatory environment that companies and entrepreneurs must navigate is a heavy burden. It drains their resources and shifts their focus from core business activities to administrative compliance. The need for regulatory reform is therefore clear to simplify procedures, reduce bureaucratic red tape, accelerate the growth of existing SMEs and encourage the emergence of new ones.

Technological integration represents another important axis for the development of SMEs. The global economy is increasingly dependent on digital transformation, and Egyptian SMEs are no exception. The lack of digital infrastructure and expertise limits the ability of these companies to compete on a global scale, reach new markets, and streamline their operations. Therefore, investing in digital capabilities, from fast and reliable Internet access, to e-commerce platforms and enterprise technology systems, In addition, the ability of the SME sector to advance the development and economic path is closely linked to its ability to innovate and adapt. Here the importance of creating a supportive ecosystem for innovation appears to move the sector forward through tax incentives for research and development, partnerships with academic institutions, and startup incubator programs. Such initiatives can help SMEs move up the value chain and take advantage of the most profitable market sectors, both locally and internationally.

In conjunction with all of this, policymakers should adopt multifaceted strategies that address these issues comprehensively. To include reforming financial and regulatory frameworks to support the growth of small and medium-sized companies, and investing in human capital and technological infrastructure to enhance the ability of this sector to compete and gain flexibility. Furthermore, promoting a culture of innovation and sustainability within SMEs can support their impact on the economy and society as a whole.

In general, although the challenges facing small and medium-sized companies in Egypt are great, the opportunities for transformation are greater. Hence, a coordinated approach that includes policy reform, capacity building and innovation can open new horizons for the potential of SMEs to contribute more to economic prosperity and social development in Egypt. This requires the government, the private sector, and international partners to cooperate to reimagine and revitalize this vital sector, and place it at the heart of Egypt’s economic strategy.