Entrepreneurs in Egypt will soon be able to register their companies online in a bid to shorten the bureaucratic business registration process, according to a statement released on May 15 by Presidential Spokesperson Bassam Rady.
President Abd El Fattah al Sisi’s meeting with Prime Minister Mostafa Madbouly and MCIT Minister Amr Talaat discussed incentives to streamline the application process of tech companies and encourage their registration under a framework of driving tech investments in Egypt.
Incentives discussed include a new digital registration platform, tax exemptions, and an expedited imports process for qualifying companies as well as formally establishing a virtual company, without the need for a physical address.
Companies will be able to register their business through a “digital notification platform,” the statement read. Details on the platform were not released, but it will likely be an online portal for entrepreneurs to record company specifics. This decision will make it easier for single-person entities and virtual companies to register their startup ventures.
Such directives aim to boost interest and activity in the tech sector by encouraging entrepreneurs to launch in Egypt and attracting potential investors. Egypt has been witnessing a year of booming growth in the technology sector. This past year, the sector grew by 176% year-over-year and Egypt ranked second in the region for closing startup deals, according to Magnitt’s 2022 Egypt Venture Report.
As of September 2021, there were over 560 registered startup companies in Egypt, according to a report published by the IT Industry Development Agency (ITDA) and Disrupt Africa. Of these, nearly 94% are located in Cairo.
The option to establish companies as fully virtual entities will not only cut costs for small companies operating on thin margins but will also free space and encourage working from home and across many of Cairo’s collaborative co-working spaces. Most importantly, it is one less administrative box for founders to check when launching their startups.
Tarek Radwan, the co-founder of NearU, a startup that uses unique codes to locate lost items and quickly contact the owner, believes that he and other startup leaders can benefit from a de-regulated startup environment. His team currently operates entirely online from across Cairo.
“The decision to use a digital platform to establish a company further feeds into the direction of cutting red tape for e-commerce solutions,” Radwan said. “It lowers the barriers to entry for new small-sized startups and will encourage the entrepreneurial youth to take the next step with their ideas. I’m already in the process of incorporating the now-old way, but I’d have definitely used the platform if it had been available to me earlier.”
For years, investors have been discouraged by tales of battling red tape, corruption, excessive paperwork between government agencies and the lack of a digitized process to register a business.
“I’m glad that I won’t have to go through as much red tape when the time comes to register my company,” said Radwan, reflecting on the steps his team still needs to take. “We’re operating strictly as an e-commerce solution – as are many startups these days – so it’s a relief that we won’t need to worry about renting an office space, for example.”
Tax exemption, the development of “free investment technological zones” and an expedited import process for companies were among other operational incentives mentioned in Rady’s statement. Tech startups meeting unspecified requirements will be added to a “white list,” which will waive regulations and inspections on certain imported goods, in this case, electronics, the statement notes.
The combination of reduced barriers to entry and startup-friendly legislation means entrepreneurs will find a friendly economic environment in the early stages of their growth and be encouraged to start their businesses in Egypt. Looking forward, this formula will be beneficial from both entrepreneurial and financing perspectives, as the government hopes to attract more international VC funds in the coming years.
“There aren’t many details available yet on the relaxation of import and taxation laws, but the move follows in the footsteps of other tech-forward economies,” remarked Radwan. “We’ll have to see how these laws end up taking shape and if they’ll have retroactive action, but I’m optimistic that they will refresh the already blossoming startup scene.”