Description
With this description around youth perspectives on entrepreneurship in egypt barriers to entrepreneurship.
D
evelopment programs in Egypt often
encourage entrepreneurship as a means
of combating the high level of youth
unemployment. However, while over half
of Egyptian youth say that they would prefer having
their own business to a waged job, very low rates
of entrepreneurship are actually observed among
young people. Using a combination of quantitative
and qualitative data, this brief examines a range
of factors that youth perceive to be barriers to
starting their own business, including high risk,
limited access to finance, complexity of micro-credit
schemes, lack of business and marketing training,
and need for connections to succeed. These factors
combine to create the view among many youth that
entrepreneurship is not a viable means of labor-
market entry. Rather, youth see entrepreneurship
as either a supplemental income-generating activity
while also having a “regular” job, or as a later-life
employment option once they have established
themselves financially or professionally. To promote
entrepreneurship as a means of combating youth
unemployment, financial and entrepreneurship
education, and integrated loan, business information,
and marketing services should be promoted.
Key Messages
• While many youth see self-employment as
attractive, few actually start a business.
• Financing is seen as a major difficulty facing
youth who want to start a business.
• Youth do not see entrepreneurship as a viable
means of labor-market entry, but as something
to be done later in life.
• Integrated loan, business, and marketing
services are needed for young entrepreneurs.
• Financial and entrepreneurship education
should be promoted to reduce fear and
misunderstanding of loans, and to help change
attitudes toward risk.
Data and methodology
The recommendations presented in this brief
are based on quantitative and qualitative data on
youth’s perspectives regarding entrepreneurship
in Egypt. The quantitative analysis draws on the
2009 Survey of Young People in Egypt (SYPE)
1
, a
nationally representative survey of 15,000 youth
aged 10–29. The analysis in this brief is restricted
1
SYPE was conducted in cooperation with the Egyptian
Cabinet’s Information and Decision Support Center (IDSC) and
funded by multiple donors.
to youth aged 15–29, because questions regarding
entrepreneurship were not addressed to the younger
age group. SYPE included a range of questions
regarding entrepreneurial activity among youth,
barriers to starting a business, and attitudes toward
entrepreneurship. The qualitative analysis is based
on focus-group discussions and in-depth interviews
conducted with male and female youth aged 15–29,
of varying education levels and employment statuses,
in Cairo and the three Upper Egyptian governorates
of Fayoum, Minya, and Qena.
2
Entrepreneurship is attractive to
many youth in the abstract…
Entrepreneurship is seen as an attractive employment
option by many youth. Just over half of all youth
aged 15–29 (53.8%) said they would prefer to have
their own business rather than working for pay.
Males were more likely to prefer self-employment;
60.0% said this would be their preference versus
47.4% of females. The gender gap in preference for
self-employment was slightly larger among those
currently in the labor force; 61.4% of males and
44.0% of females in the labor force said they preferred
self-employment (58.4% overall). The preference for
having a business was remarkably consistent across
education, residency, and age.
As shown in Figure 1, entrepreneurship is also an
attractive option to many youth engaged in other
forms of economic activity. Fifty-eight percent of
current wage workers said that they would prefer to
have their own business. Male wage workers were
more likely to prefer having a business, whereas
female wage workers and the female unemployed
were the least likely to prefer entrepreneurship.
The preference for self-employment was also stated
among 51.0% of the unemployed and 71.3% of
unpaid family workers. Not surprisingly, the majority
of those who were self-employed or employers
preferred their current status. Half of youth who
were still in school at the time of the survey also said
that they would prefer having a business to a waged
job, indicating that entrepreneurship is attractive to
future cohorts of labor-market entrants.
2
The author would like to thank Nahla Hassan for carrying
out the qualitative study of youth entrepreneurship in Upper
Egypt.
Figure 1: Percent of youth who prefer having a
business to working for pay, by gender and current
employment status
O
L
F
i
n
s
c
h
o
o
l
O
L
F
o
u
t
o
f
s
c
h
o
o
l
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Note: OLF stands for out of labor force.
Youth value the independence of self-employment
Youth who said they preferred self-employment to
a waged job were asked why this was the case. Three
reasons dominated their responses. Sixty-eight percent
mentioned the greater independence entailed in having
a business, while 15% said that a business would provide
a higher income than a regular job, and 9% mentioned
the lack of other job opportunities. Male youth were
somewhat more likely to mention greater independence
as a reason for preferring entrepreneurship, whereas
female youth were more likely to mention more flexible
working hours (4.3%) and greater career satisfaction
(4.9%). Less than 2% of male youth mentioned working
hours or career satisfaction. Overall these responses
suggest that youth value the independence and
opportunity that they see in self-employment.
…but very few youth have actually established a
business
Despite the widespread view that starting a business
is an attractive option, relatively few youth are actually
entrepreneurs or have taken steps toward becoming
entrepreneurs. When asked if they had ever thought
about establishing a business, 15.5% said yes, although
this rose to 27.9% among those currently in the labor
force. Twenty-three percent of all males had ever
thought about establishing a business, compared with
30.0% of those who were currently in the labor force.
The corresponding figures were 7.7% and 17.9% among
female youth, respectively. The difference between all
youth and those in the labor force may be attributable
to the fact that a large percent of the former group is still
in school and may have thought less about work options.
The low labor-force participation rate among female
youth may also contribute; deciding to enter the labor
market at all is an important first step for young women
in thinking about whether or not to start a business.
A considerably smaller percentage of youth, a mere
1.2% (3.0% of those in the labor force), actually had a
business at the time of the survey. Two percent of all
male youth had a business, or 3.2% of male youth in the
labor force. Although only 0.3% of female youth had a
business, this rose to 2.2% of female youth who were
currently in the labor force. Comparing the figures for
youth who have thought about starting a business and
those who actually have suggests, first, that there is a
large pool of male youth who are interested in the idea
of starting a business but have thus far not been able
to do so. Second, while interest in entrepreneurship is
certainly lower among female youth, general barriers to
labor-force participation among this group also appear
to play a role in reducing entrepreneurial activity.
The motivations of youth who have actually started a
business match closely with the advantages that other
youth see in self-employment (Figure 2). Approximately
a third of youth entrepreneurs opened a business because
they could not find wage work, indicating that high
unemployment and difficult labor-market conditions
do push some youth into entrepreneurship. More than
half of male entrepreneurs cited greater independence,
compared with 36% of female entrepreneurs. Nine
percent of female entrepreneurs mentioned more
flexible hours, a reason that was also more commonly
given among female youth who said they prefer self-
employment. This suggests that owning a business may
be an attractive way for some female youth to balance
work and family responsibilities.
Figure 2: Why youth entrepreneurs chose self-
employment, by gender
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Financing is a major concern for
youth interested in starting a
business
Why are there so few youth entrepreneurs if so many
find the idea attractive? The answer lies in the barriers
that youth perceive and experience in starting a business,
particularly in terms of financing.
All youth surveyed in SYPE were asked what might
prevent them from starting a business. Whereas less
than 2% of youth mentioned strong competition or
lack of demand for their product as a barrier, and
only 5% the workload, 84.9% mentioned the inability
to find financing. In addition, 18.7% mentioned
the fear of losing money or not being able to pay
back a loan, 14.6% lack of skills or experience, and
13.7% concerns with licensing requirements. These
responses suggest that lack of financing, training,
and information on how to start a business are
perceived as serious problems for youth interested
in entrepreneurship.
Youth in the Urban Governorates were particularly
likely to be worried about losing money (27.0%),
but less concerned with finding finance to start
the project (80.4%) than youth in other regions.
Meanwhile, youth in Urban Lower Egypt (20.8%),
Rural Lower Egypt (18.2%), and the Frontier
governorates (19.4%) were most likely to be worried
about lack of skills and experience. Female youth
in Lower Egypt (20.4% in urban areas and 19.8%
in rural areas) were also particularly concerned
about being disadvantaged in starting a business
because of their gender. Female youth in the Urban
Governorates were least likely to be concerned about
this issue (7.8%). Overall, 14.7% of female youth
were concerned that their gender would serve as a
disadvantage in starting a business. These concerns
may contribute to the low rate of entrepreneurship
among female youth and indicate that gender
considerations should be taken into account when
designing entrepreneurship support programs.
Qualitative research similarly revealed that financing
is seen as a major barrier to entrepreneurship
among youth in Upper Egypt. Many youth in these
areas simply do not have the financial resources to
start a business. Micro-credit schemes, while well
known, were poorly understood by some youth and
were also widely seen to have several disadvantages,
including the small size of the loans, the complexity of
the loan process, and the risk entailed in taking a loan
in general. Furthermore, while micro-credit schemes
were perceived as being largely for women, many
female youth in Upper Egypt saw the risk of taking out
a loan and starting a business as inappropriate for girls.
On the one hand, youth’s concern with financing
a new business appears to be well-founded. Only
6.2% of youth entrepreneurs in SYPE did not need
financing to start their business, and only 4.4%
received financing from a source other than personal
connections. None had received a loan from a bank
or the Social Fund for Development (SFD). The vast
majority of youth entrepreneurs therefore relied on
personal financing: 58.9% took money from their own
savings, 31.0% from their family’s savings, and 24.7%
took a loan from a family member or friend (multiple
sources were possible). Youth entrepreneurs thus
appear to have little access to funding for their start-
up businesses and have to rely primarily on personal
networks and family resources.
The qualitative research also makes clear, however,
that there are some misunderstandings on the
part of youth as to how business financing works,
which may prevent them from applying for the
credit opportunities that are available. In addition
to the confusion about micro-credit, some youth
in Upper Egypt thought that in order to take a loan
from SFD they would be required to sign a paper
forfeiting their right to any future government
employment, a step few were willing to take. Officials
from SFD explain that this is not the case, however
it is true that Egypt’s social insurance law makes it
impossible for a recipient of an SFD loan to take a
government position while he or she is running the
business. Lack of clarity regarding such conditions,
as well as conditions related to micro-credit loans,
discourages youth from taking advantage of existing
entrepreneurship support.
Youth entrepreneurs also need business
information and marketing services
In addition to financing, current youth entrepreneurs
cited business information, marketing services, and
the need for counseling as the three greatest problems
they face in running their business (Figure 3). Male
entrepreneurs were particularly likely to mention the
need for financial services (31.2%), whereas female
entrepreneurs were most likely to say that they lacked
business information (24.7%). The gender gap in the
need for business information (only 12.4% of male
entrepreneurs mentioned this factor) further indicates
the need for business support targeted toward female
entrepreneurs. Lack of management training was also
noted as an impediment to entrepreneurship in the
qualitative research.
Figure 3: Most important problem faced by youth
entrepreneurs, by gender, percent mentioning each
reason
0% 5% 10% 15% 20% 25% 30% 35%
Youth do not see entrepreneurship
as a secure means of labor-market
entry
As revealed by the qualitative research, the perceived
barriers to entrepreneurship in Egypt contribute to
the fact that many youth do not see starting a business
as a viable means for starting a career. Rather, they see
entrepreneurship as either a supplemental activity
to having a regular job or as a later-life employment
option once they have established themselves
financially or professionally.
Youth were found to make a strong distinction
between entrepreneurship, or starting a “project,”
and regular wage employment, and do not necessarily
see these as alternatives to one another. Interviews
with youth in Upper Egypt revealed that many
saw entrepreneurship not as a substitute for wage
employment, but rather as an income-generating
activity that could be carried out alongside a job.
Notably, some said that this would provide a back-up
means of repaying a loan should the business fail.
Youth in Cairo were also concerned with establishing
a business before establishing themselves in their
field. They saw prior connections in their area of work
as essential to the success of any business endeavor.
As one young, unemployed female university
graduate explained, “I could open a business, but that
takes relationships…. To do that, I’d need to work
somewhere for two or three years, know where the
work comes from and where it goes, and then start
something for myself.” Likewise, one male university
graduate, age 29, who had established a small trading
company, attributed his success to the fact that he had
worked as a wage employee in the field for several
years before launching his own business. Thus, many
youth in Cairo, and particularly young men, said that
starting a project is something they would like to
do in middle age when they are more established.
Such projects were seen as a way to build an income-
generating venture to provide themselves and their
families with a continued source of income in older
age, as well as to be more independent than one is as
a wage employee.
Policy recommendations
Unemployment in Egypt is well known to be
primarily a youth problem, and particularly a
problem of youth labor-market entry (Assaad 2008).
Entrepreneurship has been promoted by many
development programs as a way to help youth bypass
what is often a long and difficult search for wage
employment. Entrepreneurship could thus combat
youth unemployment while encouraging economic
growth. However, many youth do not appear to see
starting a business as a viable means of achieving
a secure position in the labor market. According to
prevailing youth perspectives, entrepreneurship
cannot be a solution for unemployment because
experience and stability as a wage employee is a
prerequisite for successfully starting a business.
A range of policy measures to improve the regulatory
environment and support services for youth
interested in entrepreneurship have been put
forward (see IDRC and PEPRI 2009; UNDP and INP
2010). The findings discussed in this brief emphasize
the importance of some of these recommendations,
and also suggest others. The findings from this
survey suggest that providing youth with solid
business skill sets and developing services for young
entrepreneurs are two important steps not only in
improving the success rate of new enterprises but
also in increasing confidence among youth interested
in starting a business. The knowledge that they
have the skills needed to start a business and that
support services exist to provide them with the skills
they do not possess can help reduce the fear of risk
and instability that many youth associate with self-
employment. It can also help reduce the sense that
success in business depends primarily on preexisting
networks and financial resources.
An important step toward changing youth’s attitudes
regarding entrepreneurship is to integrate financial
education into intermediate stages of the schooling
system for all young people. In addition to providing
a valuable life skill, financial education can improve
youth’s understanding of how loans and other
financial services work. This will help reduce
misunderstandings and apprehension about using
these types of services. In addition, entrepreneurship
education should be implemented in universities
and post-secondary technical institutes, as well
as in vocational secondary schools where many
students do not continue on to higher education.
Evidence from developed countries indicates that
entrepreneurship education at the secondary and
post-secondary levels can improve attitudes toward
entrepreneurship (GEM 2010).
As noted elsewhere (UNDP and INP 2010), a great
need exists for marketing, business information, and
management-training support services for youth.
The Egyptian government did, in fact, enact a law to
support such services: Law 141 of 2004 to promote
micro and small enterprises (MSEs). This law tasked
the SFD with providing MSEs support in terms of
P
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t
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i
g
h
t
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d
v
.
identifying investment opportunities and preparing
feasibility studies, as well as information on regulations,
potential risks, and marketing channels (Attia 2009).
However, the fact that youth surveyed in 2009 continue
to cite financing and financial risk, skills development,
and business information as the main factors that
may prevent them from opening a business—and that
current youth entrepreneurs do in fact face problems
in these areas in addition to that of marketing—clearly
suggests that Law 141 has fallen short of its goals.
The results of the survey indicate that in addition to
continued efforts to improve business support for MSEs,
it is imperative that these types of services be integrated
with financial services for youth entrepreneurs.
Furthermore, organizations providing business
support and financial services should seek to link
youth entrepreneurs to local trade unions and business
associations, in order to help them build their networks.
Targeted services for female entrepreneurs, with a
particular focus on business information and peer-to-
peer mentoring systems, should also be developed in
order to encourage female youth to start businesses.
Combining financial services with business information,
training, and networking in a single package can help
create the supportive environment needed to encourage
youth entrepreneurship in Egypt. In the early stages
of a new venture, this integrated package of support
can help ensure the success of a nascent business.
The knowledge that these services exist can also help
reduce fear of failure among youth interested in starting
a business, and perhaps reduce the sense that labor-
market security necessarily means a formal waged job.
References
Assaad, Ragui. 2008. “Unemployment and Youth
Insertion in the Labor Market in Egypt.” In
The Egyptian Economy: Current Challenges
and Future Prospects. Ed. Hana Khayr al-Din.
Cairo: American University in Cairo Press. Pp.
133–178.
Attia, Sayed M. 2009. The Informal Economy as an
Engine for Poverty Reduction and Development
in Egypt. MPPRA Paper No. 13034.http://mpra.
ub.uni-muenchen.de/13034.
Global Entrepreneurship Monitor (GEM). 2010.
GEM Special Report: A Global Perspective on
Entrepreneurship Education and Training.
International Development Research Center
and Palestine Economic Policy Research
Institute (IDRC and PEPRI). 2009. Global
Entrepreneurship Monitor: GEM-MENA Regional
Report 2009.
United Nations Development Program and the Institute
of National Planning (UNDP and INP). 2010.
Egypt Human Development Report 2010 Youth in
Egypt: Building our Future.
The Population Council confronts critical health and development issues—from stopping the spread of HIV to improving
reproductive health and ensuring that young people lead full and productive lives. Through biomedical, social science,
and public health research in 50 countries, we work with our partners to deliver solutions that lead to more effective
policies, programs, and technologies that improve lives around the world. Established in 1952 and headquartered in
New York, the Council is a nongovernmental, nonprofit organization governed by an international board of trustees.
www.popcouncil.org
© 2012 The Population Council, Inc.
doc_710399638.pdf
With this description around youth perspectives on entrepreneurship in egypt barriers to entrepreneurship.
D
evelopment programs in Egypt often
encourage entrepreneurship as a means
of combating the high level of youth
unemployment. However, while over half
of Egyptian youth say that they would prefer having
their own business to a waged job, very low rates
of entrepreneurship are actually observed among
young people. Using a combination of quantitative
and qualitative data, this brief examines a range
of factors that youth perceive to be barriers to
starting their own business, including high risk,
limited access to finance, complexity of micro-credit
schemes, lack of business and marketing training,
and need for connections to succeed. These factors
combine to create the view among many youth that
entrepreneurship is not a viable means of labor-
market entry. Rather, youth see entrepreneurship
as either a supplemental income-generating activity
while also having a “regular” job, or as a later-life
employment option once they have established
themselves financially or professionally. To promote
entrepreneurship as a means of combating youth
unemployment, financial and entrepreneurship
education, and integrated loan, business information,
and marketing services should be promoted.
Key Messages
• While many youth see self-employment as
attractive, few actually start a business.
• Financing is seen as a major difficulty facing
youth who want to start a business.
• Youth do not see entrepreneurship as a viable
means of labor-market entry, but as something
to be done later in life.
• Integrated loan, business, and marketing
services are needed for young entrepreneurs.
• Financial and entrepreneurship education
should be promoted to reduce fear and
misunderstanding of loans, and to help change
attitudes toward risk.
Data and methodology
The recommendations presented in this brief
are based on quantitative and qualitative data on
youth’s perspectives regarding entrepreneurship
in Egypt. The quantitative analysis draws on the
2009 Survey of Young People in Egypt (SYPE)
1
, a
nationally representative survey of 15,000 youth
aged 10–29. The analysis in this brief is restricted
1
SYPE was conducted in cooperation with the Egyptian
Cabinet’s Information and Decision Support Center (IDSC) and
funded by multiple donors.
to youth aged 15–29, because questions regarding
entrepreneurship were not addressed to the younger
age group. SYPE included a range of questions
regarding entrepreneurial activity among youth,
barriers to starting a business, and attitudes toward
entrepreneurship. The qualitative analysis is based
on focus-group discussions and in-depth interviews
conducted with male and female youth aged 15–29,
of varying education levels and employment statuses,
in Cairo and the three Upper Egyptian governorates
of Fayoum, Minya, and Qena.
2
Entrepreneurship is attractive to
many youth in the abstract…
Entrepreneurship is seen as an attractive employment
option by many youth. Just over half of all youth
aged 15–29 (53.8%) said they would prefer to have
their own business rather than working for pay.
Males were more likely to prefer self-employment;
60.0% said this would be their preference versus
47.4% of females. The gender gap in preference for
self-employment was slightly larger among those
currently in the labor force; 61.4% of males and
44.0% of females in the labor force said they preferred
self-employment (58.4% overall). The preference for
having a business was remarkably consistent across
education, residency, and age.
As shown in Figure 1, entrepreneurship is also an
attractive option to many youth engaged in other
forms of economic activity. Fifty-eight percent of
current wage workers said that they would prefer to
have their own business. Male wage workers were
more likely to prefer having a business, whereas
female wage workers and the female unemployed
were the least likely to prefer entrepreneurship.
The preference for self-employment was also stated
among 51.0% of the unemployed and 71.3% of
unpaid family workers. Not surprisingly, the majority
of those who were self-employed or employers
preferred their current status. Half of youth who
were still in school at the time of the survey also said
that they would prefer having a business to a waged
job, indicating that entrepreneurship is attractive to
future cohorts of labor-market entrants.
2
The author would like to thank Nahla Hassan for carrying
out the qualitative study of youth entrepreneurship in Upper
Egypt.
Figure 1: Percent of youth who prefer having a
business to working for pay, by gender and current
employment status
O
L
F
i
n
s
c
h
o
o
l
O
L
F
o
u
t
o
f
s
c
h
o
o
l
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Note: OLF stands for out of labor force.
Youth value the independence of self-employment
Youth who said they preferred self-employment to
a waged job were asked why this was the case. Three
reasons dominated their responses. Sixty-eight percent
mentioned the greater independence entailed in having
a business, while 15% said that a business would provide
a higher income than a regular job, and 9% mentioned
the lack of other job opportunities. Male youth were
somewhat more likely to mention greater independence
as a reason for preferring entrepreneurship, whereas
female youth were more likely to mention more flexible
working hours (4.3%) and greater career satisfaction
(4.9%). Less than 2% of male youth mentioned working
hours or career satisfaction. Overall these responses
suggest that youth value the independence and
opportunity that they see in self-employment.
…but very few youth have actually established a
business
Despite the widespread view that starting a business
is an attractive option, relatively few youth are actually
entrepreneurs or have taken steps toward becoming
entrepreneurs. When asked if they had ever thought
about establishing a business, 15.5% said yes, although
this rose to 27.9% among those currently in the labor
force. Twenty-three percent of all males had ever
thought about establishing a business, compared with
30.0% of those who were currently in the labor force.
The corresponding figures were 7.7% and 17.9% among
female youth, respectively. The difference between all
youth and those in the labor force may be attributable
to the fact that a large percent of the former group is still
in school and may have thought less about work options.
The low labor-force participation rate among female
youth may also contribute; deciding to enter the labor
market at all is an important first step for young women
in thinking about whether or not to start a business.
A considerably smaller percentage of youth, a mere
1.2% (3.0% of those in the labor force), actually had a
business at the time of the survey. Two percent of all
male youth had a business, or 3.2% of male youth in the
labor force. Although only 0.3% of female youth had a
business, this rose to 2.2% of female youth who were
currently in the labor force. Comparing the figures for
youth who have thought about starting a business and
those who actually have suggests, first, that there is a
large pool of male youth who are interested in the idea
of starting a business but have thus far not been able
to do so. Second, while interest in entrepreneurship is
certainly lower among female youth, general barriers to
labor-force participation among this group also appear
to play a role in reducing entrepreneurial activity.
The motivations of youth who have actually started a
business match closely with the advantages that other
youth see in self-employment (Figure 2). Approximately
a third of youth entrepreneurs opened a business because
they could not find wage work, indicating that high
unemployment and difficult labor-market conditions
do push some youth into entrepreneurship. More than
half of male entrepreneurs cited greater independence,
compared with 36% of female entrepreneurs. Nine
percent of female entrepreneurs mentioned more
flexible hours, a reason that was also more commonly
given among female youth who said they prefer self-
employment. This suggests that owning a business may
be an attractive way for some female youth to balance
work and family responsibilities.
Figure 2: Why youth entrepreneurs chose self-
employment, by gender
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Financing is a major concern for
youth interested in starting a
business
Why are there so few youth entrepreneurs if so many
find the idea attractive? The answer lies in the barriers
that youth perceive and experience in starting a business,
particularly in terms of financing.
All youth surveyed in SYPE were asked what might
prevent them from starting a business. Whereas less
than 2% of youth mentioned strong competition or
lack of demand for their product as a barrier, and
only 5% the workload, 84.9% mentioned the inability
to find financing. In addition, 18.7% mentioned
the fear of losing money or not being able to pay
back a loan, 14.6% lack of skills or experience, and
13.7% concerns with licensing requirements. These
responses suggest that lack of financing, training,
and information on how to start a business are
perceived as serious problems for youth interested
in entrepreneurship.
Youth in the Urban Governorates were particularly
likely to be worried about losing money (27.0%),
but less concerned with finding finance to start
the project (80.4%) than youth in other regions.
Meanwhile, youth in Urban Lower Egypt (20.8%),
Rural Lower Egypt (18.2%), and the Frontier
governorates (19.4%) were most likely to be worried
about lack of skills and experience. Female youth
in Lower Egypt (20.4% in urban areas and 19.8%
in rural areas) were also particularly concerned
about being disadvantaged in starting a business
because of their gender. Female youth in the Urban
Governorates were least likely to be concerned about
this issue (7.8%). Overall, 14.7% of female youth
were concerned that their gender would serve as a
disadvantage in starting a business. These concerns
may contribute to the low rate of entrepreneurship
among female youth and indicate that gender
considerations should be taken into account when
designing entrepreneurship support programs.
Qualitative research similarly revealed that financing
is seen as a major barrier to entrepreneurship
among youth in Upper Egypt. Many youth in these
areas simply do not have the financial resources to
start a business. Micro-credit schemes, while well
known, were poorly understood by some youth and
were also widely seen to have several disadvantages,
including the small size of the loans, the complexity of
the loan process, and the risk entailed in taking a loan
in general. Furthermore, while micro-credit schemes
were perceived as being largely for women, many
female youth in Upper Egypt saw the risk of taking out
a loan and starting a business as inappropriate for girls.
On the one hand, youth’s concern with financing
a new business appears to be well-founded. Only
6.2% of youth entrepreneurs in SYPE did not need
financing to start their business, and only 4.4%
received financing from a source other than personal
connections. None had received a loan from a bank
or the Social Fund for Development (SFD). The vast
majority of youth entrepreneurs therefore relied on
personal financing: 58.9% took money from their own
savings, 31.0% from their family’s savings, and 24.7%
took a loan from a family member or friend (multiple
sources were possible). Youth entrepreneurs thus
appear to have little access to funding for their start-
up businesses and have to rely primarily on personal
networks and family resources.
The qualitative research also makes clear, however,
that there are some misunderstandings on the
part of youth as to how business financing works,
which may prevent them from applying for the
credit opportunities that are available. In addition
to the confusion about micro-credit, some youth
in Upper Egypt thought that in order to take a loan
from SFD they would be required to sign a paper
forfeiting their right to any future government
employment, a step few were willing to take. Officials
from SFD explain that this is not the case, however
it is true that Egypt’s social insurance law makes it
impossible for a recipient of an SFD loan to take a
government position while he or she is running the
business. Lack of clarity regarding such conditions,
as well as conditions related to micro-credit loans,
discourages youth from taking advantage of existing
entrepreneurship support.
Youth entrepreneurs also need business
information and marketing services
In addition to financing, current youth entrepreneurs
cited business information, marketing services, and
the need for counseling as the three greatest problems
they face in running their business (Figure 3). Male
entrepreneurs were particularly likely to mention the
need for financial services (31.2%), whereas female
entrepreneurs were most likely to say that they lacked
business information (24.7%). The gender gap in the
need for business information (only 12.4% of male
entrepreneurs mentioned this factor) further indicates
the need for business support targeted toward female
entrepreneurs. Lack of management training was also
noted as an impediment to entrepreneurship in the
qualitative research.
Figure 3: Most important problem faced by youth
entrepreneurs, by gender, percent mentioning each
reason
0% 5% 10% 15% 20% 25% 30% 35%
Youth do not see entrepreneurship
as a secure means of labor-market
entry
As revealed by the qualitative research, the perceived
barriers to entrepreneurship in Egypt contribute to
the fact that many youth do not see starting a business
as a viable means for starting a career. Rather, they see
entrepreneurship as either a supplemental activity
to having a regular job or as a later-life employment
option once they have established themselves
financially or professionally.
Youth were found to make a strong distinction
between entrepreneurship, or starting a “project,”
and regular wage employment, and do not necessarily
see these as alternatives to one another. Interviews
with youth in Upper Egypt revealed that many
saw entrepreneurship not as a substitute for wage
employment, but rather as an income-generating
activity that could be carried out alongside a job.
Notably, some said that this would provide a back-up
means of repaying a loan should the business fail.
Youth in Cairo were also concerned with establishing
a business before establishing themselves in their
field. They saw prior connections in their area of work
as essential to the success of any business endeavor.
As one young, unemployed female university
graduate explained, “I could open a business, but that
takes relationships…. To do that, I’d need to work
somewhere for two or three years, know where the
work comes from and where it goes, and then start
something for myself.” Likewise, one male university
graduate, age 29, who had established a small trading
company, attributed his success to the fact that he had
worked as a wage employee in the field for several
years before launching his own business. Thus, many
youth in Cairo, and particularly young men, said that
starting a project is something they would like to
do in middle age when they are more established.
Such projects were seen as a way to build an income-
generating venture to provide themselves and their
families with a continued source of income in older
age, as well as to be more independent than one is as
a wage employee.
Policy recommendations
Unemployment in Egypt is well known to be
primarily a youth problem, and particularly a
problem of youth labor-market entry (Assaad 2008).
Entrepreneurship has been promoted by many
development programs as a way to help youth bypass
what is often a long and difficult search for wage
employment. Entrepreneurship could thus combat
youth unemployment while encouraging economic
growth. However, many youth do not appear to see
starting a business as a viable means of achieving
a secure position in the labor market. According to
prevailing youth perspectives, entrepreneurship
cannot be a solution for unemployment because
experience and stability as a wage employee is a
prerequisite for successfully starting a business.
A range of policy measures to improve the regulatory
environment and support services for youth
interested in entrepreneurship have been put
forward (see IDRC and PEPRI 2009; UNDP and INP
2010). The findings discussed in this brief emphasize
the importance of some of these recommendations,
and also suggest others. The findings from this
survey suggest that providing youth with solid
business skill sets and developing services for young
entrepreneurs are two important steps not only in
improving the success rate of new enterprises but
also in increasing confidence among youth interested
in starting a business. The knowledge that they
have the skills needed to start a business and that
support services exist to provide them with the skills
they do not possess can help reduce the fear of risk
and instability that many youth associate with self-
employment. It can also help reduce the sense that
success in business depends primarily on preexisting
networks and financial resources.
An important step toward changing youth’s attitudes
regarding entrepreneurship is to integrate financial
education into intermediate stages of the schooling
system for all young people. In addition to providing
a valuable life skill, financial education can improve
youth’s understanding of how loans and other
financial services work. This will help reduce
misunderstandings and apprehension about using
these types of services. In addition, entrepreneurship
education should be implemented in universities
and post-secondary technical institutes, as well
as in vocational secondary schools where many
students do not continue on to higher education.
Evidence from developed countries indicates that
entrepreneurship education at the secondary and
post-secondary levels can improve attitudes toward
entrepreneurship (GEM 2010).
As noted elsewhere (UNDP and INP 2010), a great
need exists for marketing, business information, and
management-training support services for youth.
The Egyptian government did, in fact, enact a law to
support such services: Law 141 of 2004 to promote
micro and small enterprises (MSEs). This law tasked
the SFD with providing MSEs support in terms of
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identifying investment opportunities and preparing
feasibility studies, as well as information on regulations,
potential risks, and marketing channels (Attia 2009).
However, the fact that youth surveyed in 2009 continue
to cite financing and financial risk, skills development,
and business information as the main factors that
may prevent them from opening a business—and that
current youth entrepreneurs do in fact face problems
in these areas in addition to that of marketing—clearly
suggests that Law 141 has fallen short of its goals.
The results of the survey indicate that in addition to
continued efforts to improve business support for MSEs,
it is imperative that these types of services be integrated
with financial services for youth entrepreneurs.
Furthermore, organizations providing business
support and financial services should seek to link
youth entrepreneurs to local trade unions and business
associations, in order to help them build their networks.
Targeted services for female entrepreneurs, with a
particular focus on business information and peer-to-
peer mentoring systems, should also be developed in
order to encourage female youth to start businesses.
Combining financial services with business information,
training, and networking in a single package can help
create the supportive environment needed to encourage
youth entrepreneurship in Egypt. In the early stages
of a new venture, this integrated package of support
can help ensure the success of a nascent business.
The knowledge that these services exist can also help
reduce fear of failure among youth interested in starting
a business, and perhaps reduce the sense that labor-
market security necessarily means a formal waged job.
References
Assaad, Ragui. 2008. “Unemployment and Youth
Insertion in the Labor Market in Egypt.” In
The Egyptian Economy: Current Challenges
and Future Prospects. Ed. Hana Khayr al-Din.
Cairo: American University in Cairo Press. Pp.
133–178.
Attia, Sayed M. 2009. The Informal Economy as an
Engine for Poverty Reduction and Development
in Egypt. MPPRA Paper No. 13034.http://mpra.
ub.uni-muenchen.de/13034.
Global Entrepreneurship Monitor (GEM). 2010.
GEM Special Report: A Global Perspective on
Entrepreneurship Education and Training.
International Development Research Center
and Palestine Economic Policy Research
Institute (IDRC and PEPRI). 2009. Global
Entrepreneurship Monitor: GEM-MENA Regional
Report 2009.
United Nations Development Program and the Institute
of National Planning (UNDP and INP). 2010.
Egypt Human Development Report 2010 Youth in
Egypt: Building our Future.
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