Egypt - Support to Micro, Small and Medium Enterprises in Organic Clusters Project

MSMEs are important drivers for poverty reduction and job creation, as they represent over 99.7% of all private non-agricultural enterprises in Egypt, account for 85% of non-agricultural private sector employment, and almost 40% of total employment. MSMEs have been the primary absorber of labor force entrants over the past years and contribute significantly to employment generation, albeit mostly in the informal sector. MSMEs are also the major provider of products and services for local markets, particularly for lower-income segments with limited purchasing power. It is widely believed that the MSMEs and the informal sector at large have acted as a solid buffer, attenuating the impact of the crisis on Egyptians, particularly the vulnerable groups. Despite its potential, the MSME sector faces a multiplicity of constraints that hinder its performance and affects the outcome of its role as an economic catalyst. In addition to the well-known financial constraints, MSMEs face a myriad of non-financial obstacles such as obtaining the required inputs, producing and marketing a competitive product, obtaining knowledge on the latest know-how and on market requirements, in addition to an inadequate institutional, legal and regulatory environment.