Egypt's small businesses struggle with red tape

The owner of a new upmarket Cairo cafe popular with celebrities says that if the Egyptian government intends to encourage small businesses, he has yet to see the results.
"Being able to operate depends a lot on who you know and how much you can pay... The situation is mayhem and not at all encouraging for small businesses," he says.
Egyptian officials say it is vital for the Arab world's most populous nation to encourage the growth of small to medium-sized companies to raise living standards and employ the thousands of young people entering the job market every year.
Business owners, however, say that the government has not translated its words into action and that official agencies themselves are the biggest hurdle to establishing and running small businesses.
Non-governmental organisations working to encourage small business say traditional employment opportunities are disappearing as the number of job seekers increases.
"Around 800,000 people enter the job market every year as the government shrinks the public sector and employment opportunities in the Gulf become scarce," said Mazen Bouri, project manager for a small business development project funded by the Canadian International Development Agency.
The oil-boom years of the 1970s drew thousands of Egyptians to Gulf Arab states but many of those countries are now placing restrictions on foreign labour in an effort to provide jobs for their own growing number of young job seekers.
Analysts and business owners say Egypt's sprawling civil service, through corruption and inefficiency, is the biggest hindrance to business growth.
The government is estimated to employ between four and five million people, a legacy of job creation schemes in the 1950s and 1960s when Egypt had a centrally planned economy.
But reforming the civil service is a complex task, said a US consultant working with the Ministry of Foreign Trade.
He explained that Egypt needs economic growth rates of around eight percent to create alternative jobs for civil servants. But the economy will not grow until the government sheds jobs.
The International Monetary Fund (IMF) expects real economic growth for the year to June 2004 to be about four percent.
A government specialist working to encourage small businesses said the government is considering setting up 'one-stop-shops' to ease business owners' dealings with the authorities but admits it will not be enough.
"What is needed is reform of the civil service. But that has to be done centrally and carefully as the government doesn't want to make thousands of people unemployed," said the ministry of foreign trade's Mohamed Abdel Aziz.
The stalled situation results in bottlenecks of sometimes ridiculous proportions, says Tarek Mansour, senior country partner at PricewaterhouseCoopers Egypt.