Doing ICT business in Egypt and startups communities

Doing ICT business in Egypt, environment

Egypt government claims that the country is open for business and is encourage investments in the ICT sector. According to The World Bank data, the Egypt is in 39 position of 190 countries in ranking of starting a business. It means that the procedures and the environment of doing ICT business in Egypt are favorable for newcomers.  Nevertheless, when it comes about the ease of doing business in Egypt is only in 122nd position.16 The other rankings and indicators could be found on website of The World Bank http://www.doingbusiness.org/rankings.

Political crisis

Before the political crisis, Egypt was a very attractive Middle Eastern destination for FDI (Foreign Direct Investment). The dynamic growth of the Egyptian economy (around 7% before the crisis), its strategic geographical position, low labor costs, skilled workforce, unique tourist potential, substantial energy reserves, large domestic market and the success of the reforms undertaken by the authorities (including many privatizations) all sharply drove up FDI. The regional context must also be taken into account, as Egypt benefited from abundant liquidity coming from the Gulf States.

What does it take to start a business in Egypt?

According to data collected by Doing Business, starting a business there requires 4. procedures, takes 6 days. In the last 5 years the reform of making starting business easier was implemented. Egypt reduced the cost to start a business. Also Egypt made starting a business easier by merging procedures at the one-stop shop by introducing a follow-up unit in charge of liaising with the tax and labor authority on behalf of the company. The summary of time, cost and procedures for starting a business in Egypt is provided in the table below.

Procedure Time to Complete Associated Costs
Obtain a Certificate of Non-Confusion from the Commercial Registry to reserve the company name
Agency: General Authority for Free Zones and Investment (GAFI)
1 day EGP 25
1. Obtain a Bank Certificate from an authorized bank
Agency: Any authorized Bank
1 day EGP 100
2. Submit documents to the Department of Companies, obtain invoice and pay fees
Agency: General Authority for Free Zones and Investment (GAFI) The founder submits the company documents at the reception desk of GAFI, where they are reviewed immediately by a lawyer. Fees for company establishment:
•  Notary public fee: 0.25% of capital ( minimum of EGP 10 and a maximum of EGP 1,000 )
•  Establishment fees: 0.1% of capital (minimum of EGP 100 and maximum of EGP 1,000 according to Article 17 (d) of the Companies Law)
•  Commercial Syndicate fee: EGP 125 (for capital less than or equal to EGP 500,000) or EGP 250 (for capital more than EGP 500,000)
•  Publication fee: EGP 150 (for a limited liability company in Arabic) or EGP 300 (for a limited liability company in Arabic and English)
•  Chamber of Commerce fees: 0.2% of capital (minimum of EGP 24 and maximum of EGP 2,000)
•  Commercial registration: EGP 56
•  Issuance of operation certificate: EGP 29
1 day Depend on the services
3. Obtain the certificate of incorporation
Agency: General Authority for Free Zones and Investment (GAFI) After the fees are paid, the company submits the articles of association to the GAFI follow up unit. On March 2016, the government of the Arab Republic of Egypt introduced the Follow- up Unit at the one-stop shop. The unit is responsible for notarizing the company’s contract in addition to liaising with the tax office and the labor authority on behalf of the company.
3 days no charge
4. Obtain husband’s permission to leave the home
The wife has to obey her husband. She loses her right to maintenance if she leaves the marital home. According to the Personal Status law of 1985, Maintenance is not due to the wife who leaves the marital home without her husband’s permission. However, she does not lose her right to alimony if she leaves the domicile in the cases that are permitted by the legislature on the grounds of custom or necessity.
1 day No charge

The startup market in Egypt has been quietly growing over the last decade. The startup market in Cairo is not new, but has recently seen an explosion in growth and support. The entrepreneurs who are turning to innovation in the last few years have generally migrated to the tech startup fields or the rapidly growing fields of science and healthcare. As the leading internet market in Africa, Cairo leads Egypt in the number of connected web users, bandwidth and web services.

List of start-up incubators in Egypt 

  1. Nahdet El Mahrousa (specialized in social enterprise),
  2. Misr El Kheir Foundation’s GESR initiative
  3. Flat6Labs
  4. Venture Lab at the American University in Cairo (specialized in technology and innovations)
  5. The Greek Campus (specialized in technology)
  6. icecairo (specialized in green tech innovation)
  7. TIEC (Technology Innovation and Entrepreneurship Center)
  8. Egypreneur
  9. Shekra
  10. Sustaincubator (specialized in food, renewable energy and water)

The start-ups investors in Egypt

Vodafone Ventures Egypt, Alexandria Angels, Mercy Corps Egypt, N2V, Cairo Angels, Ashoka Arabia, Innoventures, Tahrir2, Wamda Capital, Ideavelopers, OT Ventures, KI Angels, Flat6Labs, Tamkeen Capital, Sawari Ventures.20
Most foreign companies operating in Egypt are joint stock or limited liability companies. Regardless of what type of business you are starting, you will first have to register it with the General Authority for Investment (GAFI). The man GAFI office is located in Nasr City in Cairo, but there are also branches in Ismailia, Assiut and Alexandria.21
How to Register a Company in Egypt: The Complete Process is on the WAMDA22 website https://www.wamda.com/2011/05/how-to-register-a-company-in-egypt-the-complete- process.

Free zones in Egypt

  • Alexandria Public free Zone
  • Damietta Public Free Zone
  • Ismailia Public Free Zone
  • Keft Public Free Zone
  • Media Production City Free Zone
  • Nasr City Public Free Zone
  • Port Said Public Free Zone
  • Shebin El Kom Public Free Zone
  • Suez Public Free Zone

Egyptian Free Zones are also regulated by the Investment Law. For almost three decades, the government has been establishing and promoting free zones to capitalize on Egypt’s strategic geographical location, seeking to attract foreign investors. Most goods and materials imported to a Free Zone project are not subject to import duties or customs regulations. Goods and materials exported from Egyptian Free Zones are also not subject to export duties or regulations. There are two types of Free Zones: Public Free Zones: the Investment Authority has established public Free Zones in Alexandria, Suez, Port Said, and Nasr City. There is also a new Media City Free Zone, similar to that in Dubai.
 
This is our seventh and last post from series about analysis of Egypt IT/ICT market and Doing ICT business in Egypt. Stay tuned for more or subscribe to our mailing list. Here is a plan of our posts in this series:

Sources:

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