Michel Assaad is a startup mentor and the vice president of Europe, Middle East and Africa strategy at Citi Bank.The views expressed below belong solely to him and not his employer.
A couple of months ago, I landed in Cairo for the first time in nearly two years. My last visit to Egypt - or anywhere outside of England, where I live - was in pre-Covid times. Since then, I tried to remain as connected as ever to the Egyptian economic, business and entrepreneurial developments but that did not quite prepare me for what I experienced when I landed.
I only spent one day in Cairo before making it to my hometown, Alexandria, but that day was enough for me to realise the extent to which things have changed in the past couple of years. Walking around the streets of Cairo, you cannot go a few minutes without seeing Fawry's colourful and distinctive logo on either side of the street. Of course, I knew how successful Fawry has been in scaling its businesses and reaching more and more customers - I even reported on it in my review of Egyptian Fintech in 2020 for Wamda. Yet, the acceleration of Fawry’s presence on the ground still hit me. This continued to be the case wherever I went in Egypt.
Friends and family that I spoke to that day were asking me how I planned on going to Alexandria. Swvl - or "Swifel" as my mother would pronounce it - was recommended several times. The name came up again and again in the following few days – predominantly followed with a question on what SPACs were.
Throughout the weekend, I saw Lucky app's yellow logo for the first time in real life - as opposed to online, I got asked about Orascom's new fintech venture by a cousin (referencing Klivvr), and ended up discussing Vezeeta's business model with a friend that was never interested in anything "startups”.
These are probably things that hardly surprise anyone living in Egypt today but they highlight a significant development in the state of the Egyptian entrepreneurial ecosystem in recent years. A decade ago, and even much more recently than that, I almost always had to explain what Egypt's most promising startups at the time were doing. They had never made it big enough for people to widely recognise them. This is no longer the case. The likes of Fawry, Vezeeta and Swvl have become household brands by reaching a wide client base, clearly solving nagging problems and adding value.
But does this mean that the Egyptian entrepreneurial ecosystem has “made it”? Not quite.
There have certainly been very positive developments in recent years. We continue to see more ventures than ever before. More funding rounds and funding amounts by an increasing number of investors. A growing talent pool and a noticeable trend of experienced professionals making the switch (and sometimes coming back to Egypt after working for prestigious employers abroad). We continue to see more government initiatives and - uneven - glimmers of hope on the regulatory front. The support environment has also been improving along the journey, with more mentors, more events, more co-working spaces and accelerators than ever before. All these factors helped create more success stories and cannot be taken for granted.
But these flashy success stories can overshadow areas where we still need to develop. For example, we still have a lower funding to gross domestic product (GDP) proportion compared to other more “developed” countries. Many startups with merit struggle to get the right levels of support, education, mentorship and access to funding to scale and flourish. Bureaucracy and slow moving regulations in several areas still negatively impact the pace of development of Egyptian ventures. The very successful Egyptian startups still decide to move their HQ to other countries (e.g., the UAE) for better financial and operational prospects. I have spoken to several investors who have decided to tread carefully in Egypt. These are all things that need to be addressed.
The current momentum will help propel further growth and take care of some of these issues. But it has to be coupled with strategic interventions to accelerate the process and address the shortcomings of the ecosystem.
There is no magic wand or silver bullet but a few priorities stand out. There is a need for more streamlined, transparent policy and regulatory environments that foster innovation and incentivise – the right type of – capital and investors to bet on our growing startups. Additionally, there is an opportunity to harmonise our legal framework to allow local startups to expand beyond Egypt, to the wider, more attractive Middle East and Africa markets. On the other hand, all stakeholders need to work to create a growth culture that allows our startups to flourish and grow beyond the early stages. This includes focusing on attracting growth capital – with the right risk appetite to make big bets, supporting entrepreneurs on their journeys to scale their businesses beyond the early stages, attracting top talent to propel this growth and encouraging more corporate initiatives and involvement.
Let's continue to celebrate the positive developments of recent years and the brilliant, hard-earned, success stories that inspire others to build their dream ventures. But at the same time, we need to critically assess our progress and limitations to ensure that these success stories do not mask development needs.