Bedaya Centre for Entrepreneurship & SMEs Development was established in 2010 to support small and medium enterprises in Egypt. It provides business development services like business clinics and consultations. It also works to improve access to finance through referrals to banks and a private equity fund. Bedaya aims to promote entrepreneurship and formalize informal businesses. It faces challenges like lack of sustainability of services and scattered entrepreneurship support. Key policy priorities include a national SME strategy and incentives to commercialize research and development.
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2013 cambridge case study of bedaya centre for entrepreneurship & sm es development,mahi al-jazzar project coordinator
1. 1Mahi Al-Jazzar - June 21st
, 2013
Case Study of Bedaya Centre forCase Study of Bedaya Centre for
Entrepreneurship & SMEsEntrepreneurship & SMEs
DevelopmentDevelopment
3. I-Bedaya Centre Profile
3
ďą Establishment:
â Bedaya Centre for Entrepreneurship and SMEs Development was
established in January 2010 according to GAFI Board statement, in order to
implement the strategy of supporting and developing small & medium
investments
ďą Mission:
â To support the growth and development of the SMEs in Egypt; in line with
the National strategy toward raising the economic development indicators.
4. Key Pillars
4
Improve Business ClimateImprove Business Climate
Perfect
Place for
SMEs
Business
Developme
nt Services
Informal To
Formal
Entreprene
urship
programs
Access to
Finance
5. 5
II-Business Development Services
Business Clinics Program
ďą Providing free-of-charge consultations from professional volunteer
consultants in various business disciplines including but not limited to:
ďźLegal
ďźFinancial
ďźHR
ďźPlanning
ďźManagement
ďźMarketing
ďźBusiness
Improvement
ďźIT
ďą Consultations are provided through one-to-one
meetings between the SME and the consultant or
through workshops.
ďą Until May 2013, Bedaya has provided 552
consultations to entrepreneurs and SMEs
6. 6
III- Access to Finance
Financing gap: SMEs sector accounts for 80% of the active
economic units in Egypt; however, can access only 10% of the
available finance from banks.
1.Conventional Financing:
â˘Referrals to banks
â˘Credit Guarantee Company
Only 5 SMEs have got the required funding out of total
Number of 43 files that were submitted through Bedaya Centre
2.Non- Conventional Financing:
â˘âBedaya 1â Private Equity Fund
7. 7
III- Access to Finance
Bedaya Private Equity Fund
ďą Established according to the provisions of the Capital Market Law no. 95/1992
ďą Main objective is to provide -SMART CAPITAL- and know-how support
required to promote the growth of the Egyptian SMEs
ďą âBedaya 1â fund has been launched in 18th
February 2013; licensed with total
size of EGP 134 Million and fixed term of 10 years.
ďą It invests in companies registered under the provision of Egyptian laws, with
capital not less than EGP 2m and do not exceed EGP 50m
ďą âBedaya 1â fund is managed by Al-Ahly for Development & Investment (ADI)
one of the most competent and experienced local fund managers in Egypt
ďą âBedaya 1â invests in all sectors except in Tobacco, Alcohol, gambling, import
and real estate
ďą Investment policy considers sectors and geographic diversification, with
majority of the fund portfolio dedicated to investments outside Greater Cairo
(60%)
ďą 10% of the fund portfolio is VC, with special focus on innovative start-ups
ďą âBedaya1â has already invested in 3 companies; another 3 companies are
about to sign the terms sheets shortly and other 8 projects are currently in the
8. 8
IV- Entrepreneurship
Bedaya Center designed its entrepreneurship program to promote the entrepreneurial culture
among youth and transfer their mindset from job seekers to job creators. Meanwhile, acting as
a catalyst, building and integrating with other entrepreneurship initiatives and programs.
9. 9
V- Informal Sector
ďą Studies have shown that:
â Number of the informal economic units in Egypt was estimated by around 1.5 million in
2010 (MBDI â EIB 2010)
â Informal employment was estimated at 8 million workers excluding agricultural activities
according to ILO statistics in 2009.
10. V- Informal Sector
Pilot Project
10
ďą GAFI Bedaya launched an initiative to formalize the informal units in cooperation with
key government stakeholder
ďą Two key areas were selected for the pilot project namely âMasheyet Nasser and Ezbet
El Nakhlâ
⢠The high volume of working entities estimated at
around 4,300 in both areas with an annual turn-
over rate ranging from EGP 1 â 2 million each
ďą A working group was formed under the leadership of
GAFI and Bedaya Centre and including several governmental stakeholders.
ďą Key outcomes:
⢠70 economic units were formalized
⢠Tax law is being reviewed to exempt formalized units from the previous tax due
⢠Streamlining government procedures (Registration, Licensing, land allocation âŚ)
11. VI- Underway Efforts to Commercialize R&D
11
ďą MoU has been signed between âBedaya 1â investment Fund and the Academy for
Scientific Research & Technology ASRT to:
1. Cooperate in supporting innovative and technology-based entrepreneurs and SMEs
2. Establish an intermediary corporation similar to the Malaysian model âMTDCâ, which
provides funds, mentoring and incubation; in addition to other value added services for
technological and scientific research in order to travel to the market
ďą The Companyâs objectives revolve around:
⢠Facilitating patency and IPR registrations for scientific & technological researches,
⢠Guiding entrepreneurs through all the technical support and consultations required
for their businesses
⢠Selecting the best qualified entrepreneurs to run and manage new ventures based
on the transformation of scientific researches into market applicable products and
services
⢠Facilitating licensing of universities techno-researches through various means such
as alliances, joint ventures or through new ventures
13. 13
Challenges
ďą Ecosystem Challenges:
⢠No unified definition for SMEs in Egypt
⢠Lack of a champion responsible for SMEs
⢠Lack of information on number of SMEs and their contribution to GDP
⢠Weakness of the legislative environment especially the bankruptcy law
ďą SMEs Challenges
⢠Access to equipped, feasible priced lands
⢠Licensing (no central mechanism, high cost for hiring legal representative)
⢠Weak competitive advantage in front of larger businesses
⢠Access to Finance
⢠Access to BDS (on both levels, the supply and the demand)
14. 14
Challenges
ďą Bedaya Centre Challenges
⢠Sustainability of the provided BDS (mainly depending on volunteers consultants)
⢠Entrepreneurship support efforts are scattered and not embedded officially in the national
economic agenda
ďą Commercializing R&D Challenges
⢠Complete separation between academia and industry (an innovation study on Egypt has
shown that less than 6% of companies go to universities when they face problems)
⢠Earning the trust of researchers is a challenge, as they may not believe in the possibility
of real commercialization and may be skeptical in working with business.
⢠Academia is not oriented towards commercialization, as commercialization does not go in
the promotion process along with publication. Therefore, its not applicable to have applied
research and clear IP strategy
⢠Financing early start-ups is very challenging
⢠No formal networking between the academia and the private sector; also between
entrepreneurs and potential investors (no mechanism of finding the right match)
⢠Lack of ability to assess the feasibility of the idea traveling to market
15. 15
Policy Priorities
ďą General Policies
⢠National Strategy for the development of SMEs and Entrepreneurship that would
advocate Bedaya Centre as the champion in this concern
⢠Creating the link between BDS and access to finance in a structured mechanism
⢠Drafting a law for SMEs with a set of incentives, which some efforts are currently
underway.
ďą Commercializing R&D Policies
⢠Government to interfere in early financing for entrepreneurs, especially that private sector
is skeptic in this phase
⢠Develop an incentive scheme for companies spending on R&D
⢠R&D financing policy, with an eye on commercialization
⢠IP policies and its enforceability
⢠Establish and properly structure university incubators where R&D could be
commercialized
Mentorship Program Currently developing a new model for mentorship, through recruiting a network of mentors from the business community and selecting committed entrepreneurs or start-ups projects. The program aims to: Facilitate the relationship and business linkages between mentors and mentees. Ensure the collaboration between mentors and mentees to satisfy the need for more market-focused entrepreneurs
Definition: Any economic activity that is neither taxed nor monitored by the government or included in the calculation of the GDP. Key drivers for growth: Avoiding government control and bureaucracy Tax Evasion. Using government utilities at a lower rates compared to commercial/industrial rates Easier access and exit from the market. No quality, environmental, health, patents, copy rights and other forms of control Working in residential areas proximate to their respective markets Challenges facing informal economic units: Different forms corruption and lack of transparency Fines continuously levied due to lack of proper licensing Unable to export or access big markets such as government procurements and multinational corporations Difficulty to attract skilled labor who would prefer formal sector with proper social insurance Lack of access to finance through financial institutions
Government stakeholders Cairo and Qalyoubeya governorates Industrial Development Authority Environmental Affairs Agency Tax Authority Spirit of Youth Association and a Group of workshops specialized mainly in paper and plastic recycling Capacity Building: Providing financial and non-financial consultancy services to assist them in obtaining required financing. Organizing workshops focusing on vital areas such as financial management, book-keeping, tax filing, marketing plans and human resources management. Access to Finance: Facilitate obtaining finance through: Financial institutions and the SFD through assisting them in preparing the relevant documents and business plans. Private Equity Fund âBedaya Iâ Awareness Campaigns, trough: Website of Bedaya Center Workshops and seminars in various governorates Talk-Shows and interviews Hot-line for receiving inquiries and complaints.