Private Sector Development and Innovation (PSI)
Title: Private sector development and innovation (PSI)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: Ministry of Trade and Industry (MTI)
Overall term: 2021 to 2024
Small and medium-sized enterprises (SMEs) are the main employers in the Egyptian labour market, although their share in total economic output is just at around 25 per cent. This is partly because only 10 per cent of SMEs have access to formal financing instruments. Dominant large-scale enterprises (e.g., in the energy sector), on the other hand, exhibit hardly any employment growth or respond very sensitively to crises (e.g., in the tourism industry). Innovations that could contribute to growth and employment can primarily be expected from growth-oriented SMEs. However, the Egyptian economy has a structural innovation problem. Only 5.7 per cent of all enterprises surveyed by the World Bank in Egypt in 2016/17 generated product or service innovations.
The conditions for innovation in the manufacturing sector are improved.
To provide a favorable environment for Egypt’s manufacturing sector, the project works at three different levels:
- directing public development policies and strategies towards innovation (industrial policy)
- expanding and raising skill levels in the advisory structure (industrial business services)
- providing for more effective integration into national and international supply chains (business linkages)
By improving the business conditions for enterprises, the aim is to increase their innovative strength, modernise them, make them more competitive and capable of delivering. This should have a positive impact on growth and employment.
Entrepreneurs should, in future, be able to:
- identify new markets (in Africa, for example)
- align their product development and manufacturing processes accordingly
- successfully harness sales opportunities in international competition, and
- generate new and additional employment by growing their businesses.
Last update: October 2021