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The Middle East @ Work

Egyptian start-ups battle red tape

Amy Scott Mar 6, 2008
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The Middle East @ Work

Egyptian start-ups battle red tape

Amy Scott Mar 6, 2008
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TEXT OF STORY

Scott Jagow: I’m standing in front of the mother of all government buildings, the Mugamma, on Cairo’s Tahrir Square. For decades, this is where Eygptians have come to do just about everything. They’ll stand for hours in hot, cramped hallways to get a passport or a marriage license. The government is trying to decentralize this symbol of bureaucracy. But it’s still kind of a nightmare to get certain things done, like start a business. Here’s Amy Scott.


Amy Scott: The Cairo headquarters of Speed Send feel like any start-up in San Francisco or London. Techno music thumps as young men and women sit at computer terminals, processing customer orders. A spiral staircase connects one floor to the next. And for this business, it’s been an uphill climb.

Thirty-three-year-old Ahmed El Sherif co-founded Speed Send six years ago. The company sells office supplies to businesses online. When it came time to draw up a business plan, El Sherif couldn’t even estimate his potential customer base.

Ahmed El Sherif: The number one thing that’s not available in this market is data. On anything. You don’t even know what the illiteracy rate is for god’s sake. So you can’t really do research.

Finding money was even tougher. To this day, El Sherif says his company can’t get a bank loan. Banks only lend to profitable businesses.

El Sherif courted a series of investors for the cash. Then, he found himself buried under paperwork. He says just to register the business took ages.

In Dubai, you can start a company in 48 hours. In Egypt, pfft, at the time it took quite a few months. We started spending before we were even legally incorporated.

El Sherif has all the advantages: an MBA from Europe, a well-off family. But like all Egyptians, he’s up against powerful cultural forces. Bankruptcies are published in the criminal pages of the newspaper. Egypt’s long guarantee of government employment lowered the ambitions of generations of workers and their families.

Amr El Abd: If I want to start a business and I go talk to my parents or my friends, they tell me, Amr, you’re crazy, go find a job.

Amr El Abd is co-founder of the Entrepreneurs Business Forum. At just 29 years old, he’s devoted to changing those attitudes.

El Abd sees entrepreneurship as a solution to Egypt’s soaring unemployment. Research suggests people are most likely to start new ventures before they hit 35.

El Abd: So when we look at Egypt, that’s the majority of our population right now. So if we prepare them to start their business instead of seeking a job, then we will have unprecedented number of start-ups in our history.

Egypt is taking steps in that direction. A recent report by the United Nations graded countries on the ease of starting a business. It ranked Egypt the second-biggest reformer, after Saudi Arabia. Four years ago in Cairo, it took 43 days to officially launch a business.
Now, just nine days.

Sherif Kamel teaches management at the American University in Cairo. He says Egypt’s opening new one-stop-shops for setting up businesses. They require just seven steps.

Sherif Kamel: The bureaucracy, the red tape, has been dramatically minimized over the last maybe four or five years.

Back at Speed Send, workers load boxes of copy paper into a minivan for delivery. Ahmed El Sherif says he’s heard a lot of talk from the government about promoting start-ups. But he says Egypt’s got a long way to go.

El Sherif: When you come to ask for anything, you get nothing. Nothing. It’s only gotten easier because we’ve gotten better at what we’re doing.

So much better that Speed Send is now one of Egypt’s largest online companies. El Sherif expects his business to turn its first profit next year.

In Cairo, I’m Amy Scott for Marketplace.

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