Case study of bedaya centre for entrepreneurship & sm es development,mahi al jazzar project coordinator

1Mahi Al-Jazzar - June 21st, 2013

Case Study of Bedaya Centre for Case Study of Bedaya Centre for

Entrepreneurship & SMEs Entrepreneurship & SMEs

DevelopmentDevelopment

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ContentContent

I-Bedaya Centre Profile

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Establishment:– 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

Mission:– To support the growth and development of the SMEs in Egypt; in

line with the National strategy toward raising the economic

development indicators.

Key Pillars

4Improve Business Climate Improve Business Climate

Perfect Place for

SMEs

Business Developm

ent Services

Informal To Formal

Entrepreneurship

programs

Access to Finance

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II-Business Development Services

Business Clinics Program

Providing free-of-charge consultations from professional volunteer

consultants in various business disciplines including but not limited to:Legal

Financial

HR

Planning

Management

Marketing

Business Improvement

IT

Consultations are provided through one-to-one

meetings between the SME and the consultant

or through workshops.

Until May 2013, Bedaya has provided 552

consultations to entrepreneurs and SMEs

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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:

•Referrals to banks

•Credit Guarantee CompanyOnly 5 SMEs have got the required funding out of total

Number of 43 files that were submitted through Bedaya Centre

2.Non- Conventional Financing:

•“Bedaya 1” Private Equity Fund

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III- Access to Finance

Bedaya Private Equity Fund Established according to the provisions of the Capital Market Law no.

95/1992

Main objective is to provide  -SMART CAPITAL- and know-how support required to promote the growth of the Egyptian SMEs

“Bedaya 1” fund has been launched in 18th February 2013; licensed with total size of EGP 134 Million and fixed term of 10 years.

It invests in companies registered under the provision of Egyptian laws, with capital not less than EGP 2m and do not exceed EGP 50m

“Bedaya 1” fund is managed by Al-Ahly for Development & Investment (ADI) one of the most competent and experienced local fund managers

in Egypt

“Bedaya 1” invests in all sectors except in Tobacco, Alcohol, gambling, import and real estate

Investment policy considers sectors and geographic diversification, with majority of the fund portfolio dedicated to investments outside Greater

Cairo (60%)

10% of the fund portfolio is VC, with special focus on innovative start-ups

“Bedaya1” 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 pipeline

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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.

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V- Informal Sector

Studies have shown that:

– Number of the informal economic units in Egypt was estimated by around 1.5 million in 2010 (MBDI – EIB 2010)

– Informal employment was estimated at 8 million workers excluding agricultural activities according to ILO statistics in 2009.

V- Informal Sector

Pilot Project

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GAFI\ Bedaya launched an initiative to formalize the informal units in cooperation with key government stakeholder

Two key areas were selected for the pilot project namely “Masheyet Nasser and Ezbet El Nakhl”

• The high volume of working entities estimated at

around 4,300 in both areas with an annual turn-

over rate ranging from EGP 1 – 2 million each

A working group was formed under the leadership of

GAFI and Bedaya Centre and including several governmental stakeholders.

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 …)

VI- Underway Efforts to Commercialize R&D

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MoU has been signed between “Bedaya 1” 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 “MTDC”, 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

The Company’s 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

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VII- Challenges & Key Policy Priorities

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Challenges

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

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)

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Challenges 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

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

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Policy Priorities

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.

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

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Thank You