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27.4% rise in company establishment in Q1/2013: AlMal

Businessmen and entrepreneurs focused on service and construction companies, while retracting from the tourism, agriculture and finance sectors.
About 3,250 new companies were founded in the first four months of 2013 in Egypt, with an issued capital of LE11448.19 million, a source from the Investment Ministry told AlMal newspaper. This indicates an almost 30% rise in company establishment compared to the first four months in 2012.

AlMal also reported that the number of companies in the industrial sector has increased by 93.8%, reaching 1,099 compared to 567 in Q1/2012. Businessmen and entrepreneurs retracted from the tourism, agriculture and finance sectors, and focused on founding businesses that dealt with services, information technology and construction.

So far, about 80% of Egypt’s economy is made up of Small and Medium-sized Enterprises (SMEs), according to the General Authority for Investment. Although only 25% of them contribute to the country’s GDP, the rise of company establishment indicates a rise in the entrepreneurial sector – and 50% of Egypt’s entrepreneurs feel that establishing their own business is a necessity.

Michael Hay, professor of Management Practice in Strategic and International Marketing and Entrepreneurship at London Business School, recently held a seminar on the concept of how entrepreneurship is more than just an opportunity: “You need to distinguish between those people who pursue entrepreneurship out of a sense of opportunity and those who are pushed into it out of economic necessity.” Although the number of the latter is very low in Europe, according to the Global Entrepreneurship Monitor, it is extremely high in Egypt, where 50% of entrepreneurs pursue this career out of necessity.

Hay explains: “They’d rather have a job, but in absence of a job, they are being pushed into entrepreneurship.”

From January to April 2012, 2,551 companies were founded with an issued capital of LE4432.02 million.