10.17.12

Silicon Valley on the Nile?

With Egypt stuck dangling between its past and future, a growing number of entrepreneurs are trying to propel the nation forward despite its troubled economy.

On a recent morning in Qena, a poverty-stricken region a few hundreds miles south of Cairo, Usama Ghazali sped through the dusty landscape in his village’s communal truck. It was a busy day for the tall indefatigable 34-year old. After taking caring of his elderly mother, he met with a group of his workers—women weaving scarves in the thick summer heat. Then he was off to figure out an unreliable train schedule back to Cairo, where he was set to show the scarves to someone who had taken an interest in his business:  Hillary Clinton, the American secretary of state. “I’m going to tell Hillary I have an idea,” he says, smiling. “And I think it will change Egypt.”

Nearly two years after a popular uprising, and with the country stuck dangling between its past and future, Ghazali is part of Egypt’s growing number of entrepreneurs who want to propel the nation forward, despite a dire economy, high unemployment and only a vague political will for change. The odds are stacked against them.

In her visit to Egypt last summer, Clinton made time between meetings with the country’s military junta and the Muslim Brotherhood to visit a group of entrepreneurs mentored by Flat6Labs, a Cairo-based firm that provides seed money and support to aspiring business owners. The two-year old startup has been receiving hundreds of applications for about six spots in the program, which open up every three months. They’ve launched 18 technology firms this past year and 10 have already found investors.

Ghazali and his two friends--Flat6Lab’s first group from rural Egypt--are building the Egyptian version of Etsy, a popular website that showcases and sells the work of independent artists and craft workers. Their company Yadaweya, or “handmade” in Arabic, will sell the work of artisans across Egypt, and simultaneously tell the story of their lives. Their hope is to use e-commerce to preserve jobs for Egypt’s craft workers, who still comprise a large proportion of the country’s labor force, but now face an uncertain future in a globalized world.

“We’re trying to help producers get direct access to markets,” says Ghazali. “A whole swath of Egypt doesn’t have any access, and opportunities are lessening due to their lack of technology and business skills. We need to empower these nontraditional markets and level the playing field.”

In a way, Ghazali is really talking about himself. Most of Flat6Labs’ budding entrepreneurs grew up outside of Cairo’s rarified circles and made their way through the country’s crumbling public school system. “These are the people who can’t just pack up and move to the West,” says Ahmed Al Alfi, the creator of Flat6Labs.

Lacking role models and business networks, many like Ghazali have become empowered by the revolution to forge their own path. But it hasn’t been easy. “There are no courses on entrepreneurship at Egyptian universities,” says Elmira Bayrasli, a Forbes columnist and author of the upcoming book Steve Jobs Lives in Pakistan: Extraordinary Entrepreneurs in the Developing World.  “There are very few incubators and accelerators, few venture capitalists and investors to truly build out the ecosystem.”

The U.S. is trying to lend a helping hand, but in subtle ways—sponsoring entrepreneurship programs and mentoring new business owners. More direct U.S. economic involvement is controversial. A Gallup poll released in September showed that Egyptians increasingly oppose American economic assistance and see the U.S. as interfering in their internal affairs. More than 80 percent of Egyptians oppose U.S. aid—nearly twice the percentage who reject Egypt’s peace treaty with Israel. At a time when the State Department is trying to figure out the nature and extent of its aid to Egypt, some believe that promoting entrepreneurship could be a good way to help Egyptians help themselves. “All the chess pieces are there in Egypt,” says Scott Gerber, an entrepreneur, who traveled to Egypt last year with the U.S. State Department to help lead a post-revolution business boot camp. “But they’re still working without a board.”

Egypt entrepreneurs
Amira Sayeed, 20, weaves a tapestry at the Nubian Cultural Center in Luxor, Egypt. Ghazali hopes to showcase and sell handicraft likes Sayeed's on his website "Yadaweya," or Handmade in Arabic, next month. (Courtesy of Lauren Bohn)

Gerber and others points to a dangerous deficit in political will for entrepreneurship, with tax and permits laws that make starting a small business difficult. In the World Bank’s annual 2012 rankings for ease of doing business, Egypt ranked 110 out of 183 economies. “There needs to be a political will that matches the populist will,” says Gerber. “Or else the latter will face increasing challenges.”

Another major problem facing Egyptian entrepreneurs is cultural. New business owners need to take risks, says Ziad Mokhtar, a partner at Ideavelopers, the venture capital arm of Cairo-based EFG-Hermes, one of the Middle East’s leading investment banks. But this is a hard concept to embrace given the current economic conditions.Unemployment, one of the engines of the revolution, is estimated to be as high as 25 percent among young Egyptians ages 25 to 29. And tourism revenues have fallen sharply. According to the United Nations, some 40 percent of Egyptians live below the poverty line; 14 million people subsist on less than $1 a day. Institutions are chronically weak and corruption is endemic.

More than 80 percent of Egyptians oppose U.S. aid—nearly twice the percentage who reject Egypt’s peace treaty with Israel.

“We’re always taught to be an engineer, a doctor,” says Sabrine Assem, 24, a Flat6Labs participant who’s developed a research network that brings togetherprofessionals from the private, government and non-profit sectors. “Those are solid, steady jobs. ‘What is entrepreneurship?’ people ask. There’s not even a word for it in Arabic.”

When traversing the country, one of Ghazali’s main challenges is convincing Egyptians to try something new -- that “entrepreneurship” is a viable route. Three-quarters of Egypt’s 80 million people live outside Cairo in rural areas; they are disconnected from the televised revolution that was Tahrir Square. Over time, he says, villages like his will show the true reach of the revolution, and its limits. “After decades of dictatorship, we need a way to show people that creativity is OK,” he says.

In a country with a 96 percent television penetration rate, the living room might be the way to do it. Four years ago, with the help of the United States Agency for International Development, Bamyan Media launched a reality show in Afghanistan called Dream and Achieve. An Afghan version of The Apprentice, the show pitted Afghan men and women with business ideas against one another and audience members chose the winner:  a man who used the $20,000 prize to start a plastic recycling plant that would run on renewable energy. The show’s finale drew seven million viewers, making it the top-rated program of the season in Afghanistan. The company hopes to replicate the same success in Egypt. “We want these young, spirited, talented Egyptians who want to do something, who want to make something of themselves, to say, ‘I want to be an entrepreneur,’” says David Elliot, a board member at Bamyan Media.

The Egyptian diaspora is perhaps another potential boon for business. Following the uprising, a trickle of ex-pats living in California and New York began returning to Egypt to start their own businesses. One example: Negma, a non-profit established by seven Egyptian and Egyptian-American graduates from Harvard and MIT. Last year, the group received scores of proposals for call centers, youth groups, and green technology firms in Egypt.  In its first competition, the group decided to fund Nada Ramadan of Georgetown University who hopes to combat with an Egyptian version of the popular “Teach for America” program, in which ambitious college graduates commit to two years of teaching in underprivileged schools,” abysmal education system.

Mokhtar, who’s in charge of investing in new start-ups, says the challenge ahead for entrepreneurship in Egypt will be for innovators to tap into similar areas and develop products that cater to an array of classes and cultures in Egypt, not just the elite.

“A lot of people are coming to me with tech ideas like Mashaweer, which means errands in Arabic, a personal-service company. But the next challenge will be how to extend products to the middle class,” he says. “Scaling is an issue.”

Gerber too worries about a potential entrepreneur-echo chamber. “Ninety percent of projects I see out of Egypt are mobile applications… this doesn’t create job growth, you need to expand your ideas,” he says. “If you really want entrepreneurship to change a nation, which is what you need in a country like Egypt, you need a wider scope.”

Back in Qena, far from Cairo’s emerging start-up scene – and even farther from Silicon Valley– Osama feels good about his meeting with Clinton. Yet as he folds the colorful scarves he hopes to sell when Yadaweya’s website goes live next month he knows the country has a long way to go. “Part of the revolution needs to be in each of us,” he says. “And that’s why it’s so hard to complete.”

****

This reporting was made possible in part by a grant from the Pulitzer Center on Crisis Reporting.

Lauren E. Bohn is a 2010-2011 Fulbright fellow and multimedia journalist. She's a Pulitzer Center grantee and a 2012 Overseas Press Foundation fellow with the Associated Press in Jerusalem. She has reported from Egypt, Syria, Israel, the Palestinian Territories, Bahrain, Tunisia, Turkey, and the United Arab Emirates. You can follow her at @LaurenBohn.