To achieve Egypt Vision 2030 goals, “technology and innovation” are listed in the strategy document as the second-most important “enablers.” “By 2030, according to the strategy’s blurb, Egypt aims to have a competitive, balanced and diversified economy, based on knowledge and innovation … with a sustainable and diverse ecosystem.” 

Building the country’s innovation ecosystem began in 2010 (five years before Egypt Vision 2030 launched), when the ICT Ministry (MCIT) founded the Technology Innovation and Entrepreneurship Center (TIEC), a startup incubator.  

In 2015, the government announced its Egypt Makes Electronics strategy to attract large-scale foreign direct investment (FDI) and the latest technologies to produce components for electronic devices.  

In 2017, the Ministry of Investment and International Cooperation launched the Fekratak, Sherketak (Your Idea, Your Company) initiative, providing financial and technical support to entrepreneurs. 

In 2023, the Information Technology Industry Development Authority launched the Egypt Entrepreneurship and Innovation Center, the government’s second startup incubator.  

In February, the TIEC launched the EgyptInnovate platform, a “national innovation map” that includes a list of startups and their sectors, the investor ecosystem, and even locations of coworking spaces, which serve as temporary offices for entrepreneurs. 

Despite these efforts, a May report from the Organization for Economic Co-operation and Development (OECD) titled “Review of Innovation Policy: Egypt 2026” stressed the local innovation ecosystem still needs work. “While Egypt has made strides in expanding digital infrastructure and fostering entrepreneurship, emerging technologies and global trends are … disrupting traditional sectors and exposing gaps and shortcomings in [local] framework conditions, institutional government co-ordination, industry-science links, innovation skills, private research and development, and innovation capacity.” 

 Numbers matter 

Egypt is well positioned among emerging economies to achieve solid, resilient GDP growth. “In the recent past, Egypt’s growth outperformed many peers in … MENA, as well as emerging economies Brazil and Malaysia,” the report said. This creates new avenues and potential for innovation in a growing market.   

Another factor is Egypt’s age demographic. It “presents both opportunities and risks,” the OECD said. In the short term, Egypt’s “large working-age population offers potential economic gains.”   

Yet that advantage is dwindling as “the share of youth from 0-14 years of age is declining (32% of the population in 2024, compared to 40.2% in 1990).” That trend will intensify as total population growth has dropped from a decades-long average of 2.5% annually to about 1.34%, according to data platform Statistica.  

Gender participation is the third dynamic impacting innovation. “Egypt exemplifies the ‘MENA paradox’: while enrollment in universities reached near parity … with females representing 49.5% of all enrollments, women’s participation in the labor force has continued to stagnate, with only 18% being active … compared to 73% for men,” said the OECD. 

Innovation ecosystem 

The report highlighted several factors that might encourage entrepreneurs to turn their innovative ideas into startups.  

First, the OECD report said, Egypt’s ongoing “macroeconomic stabilization [efforts] and reforms that favor the investment climate” are key. Second, the rise in exports of locally developed innovative products, solutions, and services should enable easier scaling. 

Third, “Egypt’s economy is slowly diversifying,” OECD noted. That means opportunities to innovate across more sectors. The report emphasized government plans to expand sustainable and environmentally friendly investments, which require innovative solutions to overcome decades-old environmentally unfriendly business practices. 

Lastly, the government has been talking up reforming and developing education to close the skills gap between academia and the workplace.  

It will be a long journey for Egypt to put its education system on a par with comparable economies. “Student performance ranks low internationally at the secondary level, with a significant gap in science results and very large class sizes,” said the OECD. That deficiency continues in higher education. “University graduates face unemployment rates double the national average,” the report added.  

The Ministry of Education has taken steps to “address class congestion through the addition of 98,000 classrooms in the 2024/25 academic year, a presidential directive to hire 30,000 teachers annually and striving to reduce class sizes,” the OECD noted. Also, the government is enacting “a range of policy initiatives seeking to more closely link post-secondary and university education to local industry demands.” 

Nevertheless, the report stressed “more must be done to enhance … knowledge-driven sectors [and] create a more attractive innovation-friendly investment climate.” 

Egypt’s innovators 

“Egypt’s startup ecosystem is one of the largest in MENA’s entrepreneurial scene,” said the OECD report. “Egypt boasts three unicorns (startups with a market capitalization exceeding $1 billion) and holds a significant position within the MENA region in terms of the number of deals and volume of funding received by startups.” 

However, not all local startups are innovators. “The fintech sector is particularly developed and accounts for about half of this investment,” the report said. “In contrast, the deep-tech sector, characterized by firms that perform R&D rather than those whose business model is based solely on technology, remains underdeveloped, [resulting] in low levels of patent activity.” 

“Although Egyptian adults demonstrate strong entrepreneurial intentions in terms of both opportunity-based and needs-based entrepreneurship, significantly fewer engage in total early-stage entrepreneurial activity than in comparable emerging economies, and even fewer start their business with new products or services or intend to expand globally.” 

These dynamics lead to “limited … funding for early-stage entrepreneurship,” the OECD noted. That is a never-ending loop, as low available finance deters entrepreneurs from starting innovative companies. “Resilience is low, as measured by a low rate of start-ups continuing their businesses for a certain period and an exit rate which is higher than the start-up rate itself,” the report said. 

Money and ideas 

The OECD report stressed insufficient funding for research activities and researchers’ salaries is holding back R&D activity. While “Egypt’s R&D spending rose sharply from 0.24% of GDP in 2005 to 1.02% in 2022, [that is] well below the OECD average (2.7%).”  

Compared with similar economies, Egypt’s R&D spending as a share of GDP is higher than that of India, Indonesia, and some OECD countries, but these countries’ economies are significantly larger than Egypt’s, meaning they spend more in dollar terms.  

Also, Egypt’s “per capita levels remain modest,” the report noted. For example, South Africa trails Egypt in R&D spending as a percentage of GDP and in dollar terms, but has higher per-capita R&D spending.  

Meanwhile, “researchers’ salaries [are] low, which pushes many academics to seek complementary income outside the research sector,” the OECD noted. It was only “in 2024 that the government introduced a fiscal package to raise wages for university and research staff alongside doctors and nurses.”  

Private sector R&D spending is also subpar. “Businesses’ investment and innovation performance needs to catch up,” the OECD report stressed. “At 0.2% of GDP in 2022, business expenditure on R&D would need to expand tenfold to catch up with the OECD average.” 

Despite the lack of R&D funding, Egypt’s “exports of high-tech manufactured goods have progressed,” the report said. Nevertheless, regional comparisons show the country “remains below benchmark [economies], such as Indonesia, Morocco, Tunisia and Vietnam, among others.” 

To capitalize on Egypt’s true innovation potential, the OECD stressed, “data suggest a pressing need for policies and initiatives to stimulate innovation across all sectors and firm sizes, focusing on addressing the large innovation gap between SMEs and large firms.”  

Money and researchers 

Despite low innovation investments from large companies and the government, “the number of researchers in Egypt’s business sector per million inhabitants has significantly increased over the years,” the report said. However, compared with similar economies, “it still represents only 1/8th of the level observed in Türkiye and 1/40th-1/20th of the level observed in Korea or Western Europe,” the OECD explained.   

Closing that gap will be difficult due to brain drain, as researchers leave the country, the report said.   

Accordingly, “patenting activity is low and stagnant,” OECD said. Regionally, “the number of Patent Cooperation Treaty applications in Egypt per million inhabitants is 1/30th-1/20th of the level observed in Saudi Arabia and … the U.A.E., and it has shown no growth over the past decade.” That suppresses innovation and further shrinks the pool of researchers. 

In coming years, the brain drain could worsen as Egypt’s improving education system and youth’s increased exposure to global innovation might further encourage them to relocate to more innovation-friendly countries.   

Way forward 

The OECD outlined “recommendations to strengthen [Egypt’s] science, technology and innovation ecosystem, and align it with its national development goals.” 

First, the government needs to “articulate a structured vision of how science, technology and innovation will underpin Egypt’s economic transformation, as a major driver of productivity growth,” said the OECD report. That would enable a “forward-looking science, technology and innovation (STI) Egypt 2050 Strategy … based on stocktaking of the achievements of the Egypt 2030 Vision.” 

Achieving the goals of such long-term planning requires alignment among government agencies. They would be directed by a “five-year coordinated action plan with performance indicators and designated institutions ensuring whole-of-government coordination for STI policies through the National Council for Education, Research and Innovation,” the report said. These steps require “collecting reliable STI data as an evidence base for policymaking.” 

The resulting solutions must “leverage STI to address societal challenges,” the report stressed. At that point, governments must “diffuse [this new] knowledge throughout the innovation ecosystem to maximize social benefit [via] research centers.” 

For large private-sector companies to enter Egypt’s innovation foray, the government needs to offer “business innovation beyond startups [by] reinforcing incentives for patenting and intellectual property protection.” 

The OECD paper also recommends “supporting creation of startups by academics [to] support … university and research.” That requires “legal reforms to empower researchers as entrepreneurs.” 

Success of that setup is contingent on “further strengthening scientific research,” the report stressed. “In particular, applied research needs improvement through targeted instruments.”  

Also, Egypt needs stronger links to foreign institutions, research centers, companies and scientific facilities. “A system-wide strategy, institutional support, regional leadership and data-tracking mechanisms are proposed to enhance Egypt’s global STI role,” the OECD report said.  

That needs to come in tandem with effective efforts to “address brain drain and foster brain circulation,” the report stressed. “Incentives for retention, diaspora engagement and international recruitment strategies are recommended to promote brain circulation and build domestic capacity.” 

Ultimately, implementing these recommendations would “transform Egypt’s STI landscape into a cohesive, impactful and globally competitive system, supporting sustainable development and innovation-led growth.”