Egypt: Creating Jobs by Improving the Regulatory Environment for Investors

Launched in 2016, the Equal Access and Simplified Environment for Investment (EASE) program in Egypt has laid the foundations for making it quicker and easier for local and foreign investors to obtain operating licenses from local governments to set up businesses and secure land for industrial use, such as factories for manufacturing goods.

EASE ended in 2021 but it has made its mark on the General Authority for Investments and Free Zones’ (GAFI) One Stop Shops that act as a window for would-be investors. It also helped the Industrial Development Authority (IDA) to simplify, automate, and de-centralize industrial regulations in line with international good practice. And it helped the Egyptian Regulatory Reform and Development Authority expand its capacity to manage reform.

In a country like Egypt, where a large population of school and college graduates enter the job market each year, having an investor-friendly business environment is crucial for allowing the private sector to become an engine for more jobs—and better jobs. 

The US$5 million World Bank program helps lay the foundations for this by supporting the implementation of a number of bold government reforms – turning them from laws on paper into practice. This includes the transformative Investment Law, the Industrial Licensing Law, the Industrial Development Authority Law, Amendments to the Company Law, the Modernization of the Investors Service Center, and the First Digital Investment Map of Egypt.

For investors, the implementation of these laws has meant a 91% improvement in the average length of time it takes to get a business license. Previously, this was 320 days; now it is only 28. An investor can register with GAFI in less than a day, compared to eight days before the start of the program. The licensing-by-notification system introduced at IDA has helped reduce the number of days taken to issue even a high-risk industrial license from 640 to 55. 

More than 2,080 industrial land plots were allocated through the new GAFI investment map while the program was in place. The investment map also started taking tenders online. The first e-tender, launched by Egypt’s North Sinai Governorate, led to 1,141processed bids for agricultural projects. 

“GAFI is the main reason we were able to start our business,” said Mohamed Salama, CEO of Tulima Farms, one of Egypt’s first climate-positive agribusinesses. Based in Beheira governorate, Tulima aims to challenge the belief that nutritious, healthy and pesticide-free produce must be expensive. It also aims to improve local familiarity with environmentally friendly farming techniques. “Being new in the market, not everyone was aware of what we do. GAFI’s policy committee was well-informed and helped us start.”

GAFI also helped Tulima overcome any hurdles with government agencies. “It took us only two days to register our business, as opposed to the average three weeks it used to take before. We can really sense the higher efficiency and quick turnaround time.”

An additional World Bank grant of US$1.746 million in 2020 expanded GAFI’s initial role of working alongside the new investment law as the main point of entry for companies and a one stop shop for investors needing licenses and permits. A digital system was developed to streamline procedures, with easy access to the system set up in the various geographical areas involved. The grant also funded: i) electronic coordination and the synchronization of the system between line ministries, local authorities in different governorates, and public entities involved in granting business licensing and permits; ii) the establishment of a quality control system to guarantee efficiency and effectiveness; and iii) improved GAFI’s organizational structure and developed its staff’s IT capacity to run the upgraded system. 

El Gameya, which runs a mobile application for digitizing informal savings, is another startup that used GAFI’s one stop shop. “It took us only five days to register,” said Ahmed Mahmoud Abdeen, Founder and Chief Executive Officer of El Gameya. “Before working in El Gameya, I worked for corporations and saw first-hand how bureaucratic and time consuming the business registration process was.” The average age of El Gameya’s employees is 28, and the app has about 50,000 clients and is seeking to fundraise to grow and expand its client base and workforce by the end of 2022.

Sohaila El Noweehi, the owner of Egymix woodcraft factory, is among the recipients of the industrial licenses simplified by EASE. “It took about eight days to renew our license. Previously, there were a lot of bureaucratic hurdles, which would lead to the process taking more than two months.” The average age of its employees is also low, at 25. Sohaila owns another factory and wants to expand her business. 

Al Araby Group, one of Egypt’s largest manufacturers of electric appliances is also amongst beneficiaries of the EASE program. “IDA’s new procedures mean it takes under a month to renew our licenses,” said Mohamed El Araby, who heads the cooking appliances division. “Renewing licenses used to involve sending several different employees to several different governmental entities. Now one employee does the renewal with a visit to the one stop shop.” 

“IDA also helped by evaluating the capacity of the Egyptian electric part suppliers whom we deal with and raising it to meet the expectations of our European partners. Our products are currently made up of 70% locally made components. One of our dreams is for them to be 100% local.”

The EASE program is amongst a wider group of ongoing World Bank operations and analytics which aim to support Egypt’s private sector led job creation. To ensure continuous support in this area, the bank’s upcoming Country Partnership Framework with Egypt for FY 23-27 also puts a special emphasis on more and better private sector jobs.