Since the launch of its previous issue on Wednesday 19th of August this year, the Middle East Observer has been striving – under deteriorating economic conditions in many Egyptian villages – to break through the case of poverty and unemployment, one of the most serious and problematic issues creating a crisis that hinders the progress and advancement recently witnessed in Egypt, and sustained by the determination and defiance of Egyptians under the wise leadership and sound directives of President Abdel-Fattah El-Sisi. Having a belief in the role of the press and media in societal development and prosperity, we embark today upon the first part of the press campaign series that we promised our readership to launch, to promote awareness and disseminate the culture of challenging and resolving problems among citizens. This will support every Egyptian aspiring to improve his/her living standards, and would alleviate the suffering endured by the residents of poor villages, particularly those who live below the poverty line. This follows our recent review of the model of “Tafahna El-Ashraaf” village, which is one of the most unique and outstanding economic development models.
In only six months, some Egyptian villages managed to get back on track with progress, economic development, and prosperity. Since last March, the previous Prime Minister, Ibrahim Mahlab, witnessed the launch of the national project for community, local, and human development by the Ministry of Local Development – operationally called “Mashroo’ak” [your enterprise]. This came after the Economic Conference “Egypt the Future”, held in Sharm al-Sheikh, which was called for by the late Saudi King Abdullah Bin Abdel-Aziz, who was eager to help Egypt overcome its economic crisis after successive political changes in the country.
The Start
Mashroo’ak was one of the most distinctive economic initiatives launched after the concluding events of “Egypt the Future” Conference 2015. The Ministry of Local Development established a board of trustees for the project, chaired by the PM and run by representatives from the Ministry of Interior, Armed Forces, universities, media, banks, civil society, and the youth, with the aim to tackle the crisis of unemployment and the exacerbating problem of poverty. The Central Agency of Public Mobilization and Statistics (CAPMAS) announced this year that unemployment in Egypt recorded a significant rate of 13.3% in the 2nd Quarter of 2014 (Moving to 12.7% over the 2nd Quarter of 2015), concentrated among women and young people, particularly those under 40 years of age. Unemployment is more widespread among graduates from universities and middle-level education.
In this regard the previous Local Development Minister, Major General Adel Labib, stressed that the economic, political and social development in Egypt depends on small enterprises success. According to him, these enterprises could be called the feeding industries, which are the mainstay of the economy of major industrial countries; such as USA, France, and England.
Therefore, Mashroo’ak was initiated to encourage young people to establish small and micro enterprises, which are the provenance of any economic development, as they could be later transformed into medium and large enterprises. Small and micro enterprises can also greatly contribute to the development process, as they rely on younger labour and tend to have a more equitable income distribution, compared to larger enterprises. They also play a significant role in generating job opportunities; hence, alleviating poverty as they often provide jobs in return for reasonable incomes for workers from poor households, and for women lacking alternative income sources.
Issues of Heartache
It is quite obvious that the high poverty rate is concentrated in the governorates of Upper Egypt, especially in Suhag and Assiut, as they have the most deprived villages. Thus, Mashroo’ak had to focus particularly on Upper Egypt from the beginning, in an attempt to redeem them to production-yielding villages. This would be done by eliminating the idea of internal migration among the youth and the dream of moving to the capital and other urban governorates, and by stopping many persons having recourse to illegal emigration that has its toll on a large number of our youth. Those who manage to reach other countries live an inhuman life and face the threat of deportation by the officials of these countries.
Mashroo’ak was launched to provide services to eleven governorates concentrated in Upper Egypt and bordering governorates. Then, it could cover all Egypt, starting in the governorates of Qena, Minya, Assiut, Suhag, Luxor, Aswan, Giza, Red Sea, New Valley, North Sinai, and Matrouh. Soon after, other governorates joined Mashroo’ak, such as Fayoum, Beni Suef, Port Said, Cairo, Alexandria, Qalubeya, Beheira, Menufeya, Gharbeya, Kafr al-Sheikh, Damietta, Suez, Daqahleya, Ismailia, South Sinai, and recently Sharqeya where a major enterprise for a beauty centre was opened in the town of Kafr Saqr. It is the biggest enterprise so far in the governorate, with $ 125,000 in investment capital, and many job opportunities. It includes a garment store, an atelier for wedding dresses, a ladies’ coffee shop, gym, and beauty centre comprising a hairdresser, a spa, a sauna, a Jacuzzi, and an integral health club under the supervision of two specialized plastic surgeons. The 15 members of staff earn monthly salaries ranging from $125 to 500, and housing facilities are provided to those who come from other governorates.
What soothes such heartaches and raises hopes is the high development rate recorded by six governorates – including those in Upper Egypt – as they spent more than $2.5 million on enterprises in each governorate, namely: Suhag, Qena, Assiut, Minya, Daqahleya, and Sharqeya.
A Dream Coming True
The owner of a Sharqeya enterprise, Nirvana Muhammad Abdelfattah, expressed overwhelming joy at the opening of her enterprise, and said about her experience with Mashroo’ak: “I received a loan from Mashroo’ak covering 25% of the cost of my project, which I added to the $93,750 sum I spent at its onset. A year ago, I was in the process of developing my project, and as I was about to finalize it, when I encountered financial shortages upon which I resorted to some banks to secure a loan, but it was in vain. I submitted an application to join Mashroo’ak, which was quickly accepted. I established my enterprise without any difficulties or hindrances during the execution process.” She recommended the genuine support, and fruitful assistance received by Mashroo’ak in her governorate.
Nirvana’s testimony of the facilitation of all procedures and the removal of all hindrances comes as no surprise; as the Government stressed to all governors the need to facilitate and expedite all procedures related to Mashroo’ak. In this context, it mandated all governors to issue five-year provisional permits for all small enterprises executed under Mashroo’ak and that they should be directly responsible regarding the implementation of the project, and that they are required to remove all obstacles and difficulties that might hinder borrowers from receiving the necessary funding for their enterprises. The Government also advised for the speedy reply and processing of the applications, which would need only 7 days from the submitted of the application and notifying applicants whether they met the requirements or not. It should take one month to start executing the approved enterprises.
The Central Operation Room
To ensure the best execution of the initiative, the PM Engineer Ibrahim Mahlab has recently inaugurated the central operation room for the national project for community, local, and human development (Mashroo’ak) at the premises of the Ministry of Local Development, after the completion of the database system, and linking the operation room to the existing 352 offices of Mashroo’ak in the cities and villages of all governorates. A website was then developed for Mashroo’ak last April, costing $857,000, for the registration of all executed enterprises and the promotion of the Mashroo’ak initiative through its Networks, of which the most important was to develop a bank for new and innovative ideas to establish new enterprises. This should provide every citizen with the right and freedom to choose the enterprises they see fit, and grant a base for creative, preparatory, and developmental ideas to support future self-employed businesses, and to contribute to the formation of a large number of young investors who would become successful businessmen.
Define the Path for Your Enterprise
With respect to the nature of the enterprises financed by the Mashroo’ak initiative, a member of the Board of Trustees, Mr. Mahmoud Farag, stated that there are three paths for these enterprises. The first path is related to the already existing enterprises whose owners wish to expand. The lenders in this path should have feasibility studies of their existing enterprises carried out. The funding ranges between EGP 1,000 to 25,000 – equivalent to $143 – 3,572 In such a case, banks grant a one-year loan to the enterprise owners who are not required to provide any financial contribution to the enterprises in this path.
The second path of the initiative relates to customary environmental enterprises, such as craft industries appropriate to the resources of each governorate. Examples include palm crafts, textiles, and wood crafts, as well as traditional and non-traditional enterprises in the fields of agriculture, agro-business, petrochemicals, agricultural and solid waste recycling, eco-industries and crafts, handicrafts, and service provision, such as maintenance centres. The Ministry of Local Development offers hundreds of feasibility studies for those who wish to set up such enterprises. Funding varies between EGP 20,000 and 100,000 – equivalent to $2,857 – 14,285, and in such a case, lenders must contribute 10% of the enterprise’s value.
The third path has two categories: one for those projects that need funding between EGP 100,000 and 250,000 – equivalent to $14,285 – 35,714, where lenders must contribute 15%; while the other category includes large funded enterprises, from EGP 250,000 to 2,000,000 – equivalent to $ 35,714 – 286,000, where lenders must contribute 35%. Bank interest rates range between 12% and 13% for the enterprises of the second and third path; in such a case, the loan term is 5 years.
Enterprise Funding Bodies
The Executive Manager of Mashroo’ak, Ambassador Mahmoud El-Said, emphasized that public participation is an essential requisite for granting loans to young people in this initiative. Its execution was carried out with four banks: Misr Bank, National Bank of Egypt, Nasser Social Bank, and Principal Bank for Development and Agriculture Credit (PBDAC), with $430 million investments as a first phase. He also mentioned that Banque du Caire has recently joined the initiative.
Commenting on this note, the Minister for Local Development, Major General Adel Labib, denied that only that amount was allocated for the enterprises, asserting that such a modest amount is merely the first installment for the execution of small and medium enterprises for young people across the governorates and in various fields; as it could reach $13 billion. He further mentioned that one of the objectives of Mashrooak was to provide funding without ceiling. Upon communicating with the banks participating in the initiative, he found out that they were able to provide funding as high as $ 26 billion – or its equivalent in Egyptian pounds, with what they have available in deposits and liquid local currency.
Marketing “Mashroo’ak”
On another level, it is worth mentioning the important role played by Mashroo’ak, in coordination with the Arab Egyptian Federation, in marketing these enterprises across the Arab and African countries.
The transfer and exchange of information and the establishment of effective communication between university students and graduates who are participating in the project would be achieved by the fruitful cooperation with Egyptian universities for the execution of the initiative in various governorates, after the participation of provincial universities in the local committee responsible for the nationwide management of the project, and after the agreement with university presidents to announce and introduce the project on the faculty websites and link them with the website of the Supreme Council of Egyptian Universities.
The Role of Universities
Universities will provide and process data and statistics related to the initiative. The academic expertise of staff in each university will also be used, by establishing task forces to search for innovative ideas, and transform them into emerging enterprises by providing young people with full technical support. An announcement had already been made for technical and vocational courses to be held for young people by members of staff who are qualified and certified by the International Labour Organisation (ILO) in the field of entrepreneurship, in a keen attempt to provide participants with the necessary skills to begin self-employment businesses and establish emerging companies.
Some universities provided the technical support needed to execute enterprises and conduct eco-print studies through the various units in the faculties. Provincial universities will also communicate with emerging companies, provide them with assistance, and market and develop their products. They will also offer them technical advice and expertise. Pioneering enterprises executed by universities and scientific research centres are expected to be beneficial for replication under Mashroo’ak; such as the project of using the sun, sea, and sand in water desalination, which was presented in a forum for the management of the agricultural water shortage crisis.
Protocols of Cooperation
The Cairo University President, Dr. Gaber Nassar, has recently signed a protocol of cooperation between the Faculty of Agriculture in Cairo University and the municipalities, with the aim to qualify students and graduates and develop their skills for the self-employment market which will certainly produce outstanding young investors, in their individual fields, who would have received full free-of-charge academic training.
Qualifying Students and Graduates
In this context, an integrated awareness campaign for Mashroo’ak was launched in the various districts, villages, and hamlets, by holding educational seminars to introduce the initiative and discussing the obstacles and problems facing young producers and owners of small enterprises; such as bank interests not commensurate with their resources, particularly among craftsmen, and taking into account the need to provide soft loans and credit facilities for such enterprises.
In one of those seminars held in Cairo, the Consultant of the ILO – Dr. Maha Mahgoub – urged young people to take part in development, pointing out the need for having enterpreneurial attributes. She highlighted the successful stories of rural women who began their enterprises with capital of no more than $3; and recommended what they accomplished.
The Outcome of Already Executed Enterprises
This monumental project is one of the most significant fast-moving economic development projects that yield results on the short term, which is evident from the statement made by the Executive Manager of the initiative, Ambassador Mahmoud El-Said, regarding the achievements fulfilled so far. He said that Mashroo’ak could realize 7,500 enterprises across the governorates, in only six months from the day of their onset, with a lending sum of $42.5 million. There are currently 2,200 new enterprises under study requiring a lending sum of $21.50 million, as the number of citizens who wish to take part in the programme Mashroo’ak reached 12,000. By the end of this year, the value of granted loans is expected to exceed $250 million, especially with a permit issued to grant a $250,000 loan for one of the applicants in Cairo governorate.
Farewell to Bureaucracy
Mashroo’ak is a true application of decentralization in the governorates, especially with the adoption of the “one-window” system that ensures that it facilitates application submittals and meetings between applicants and bank representatives to introduce their proposals, so that a decision and a reasonable comparison can be made. In the case of turning down a proposal, the staff of Mashroo’ak would help the applicant satisfy the required documents, or suggest a change in the type of enterprise to avoid subsequent rejection.
Mashroo’ak Wherever You Are!
The Alexandria Governor, Dr. Hany El-Messiry, took the initiative to decide on providing service outlets for Mashroo’ak, with the cooperation of the Minister for Communications, Engineer Khaled Negm, at 156 post offices in the governorate, and they became operational for the public once the decision was made.
Together We Preserve the Environment
The Sharqeya Governor, Dr. Reda Abdelsalam, called upon young people to set up garbage collection companies through Mashroo’ak; as an announcement was made to begin receiving applications for the establishment of garbage collection companies to collect garbage from houses in return for nominal fees charged to the residents. He mentioned that every 5-6 young persons could partner to set up a company, and recruit drivers and garbage collectors, after providing them with appropriate and hygienic uniforms and equipment. He pointed out that a company could allocate and define its geographic scope, so that more companies are set up to cover other areas. He also promised that he would grant immediate approval for the submitted applications and would provide them with due care.
Air Pollution Control
Mashroo’ak pays special attention to environmental Projects, as it has recently included an executive plan to control air pollution spells, under the aegis of the Ministry of Environment, by setting up small enterprises in this field, upon the completion of studying them. The Middle East Observer expects that the execution of such enterprises would start in the governorates of Kafr Elsheikh, Gharbeya, Beheira, Sharqeya, Qalyubeya, and Daqahleya; and that Mashroo’ak would provide the necessary loans to purchase equipment and machinery for compressing and recycling agricultural waste and rice straw.
Glad Tidings
As a result of the achievements made by the Mashroo’ak initiative, the endeavors recently exerted by officials could result in cooperation with the World Bank (WB), with the aim to realize comprehensive development across the governorates. It was agreed to develop 1,000 of the most deprived villages, which will be operational within the coming period, in the framework of the plan adopted by the Ministry of Local Development and intended to develop 1,153 villages.
The WB has successful and unique experiences in India, Brazil, Mexico, and China, as it could develop the most deprived areas and transform them into small productive industrial settlements, which resulted in considerable economic shifts in those countries.
In Egypt, the WB will provide funding for sanitation projects in three governorates: Beheira, Daqahleya, and Sharqeya. The cost is estimated at $68,750,000, targeting 170 households in these governorates; i.e. around one million citizens.
Young Investor Award
In another step forward by Mashroo’ak, Major General Labib expressed his wish to give out an incentive award of appreciation for the most outstanding enterprise executed through the initiative. The award is to be granted to the most outstanding and successful enterprise, after at least two months from the day of its establishment. He also showed special attention to the so-called Family Enterprises that are jointly set up and run by the members of one family, commending the achievements made by these types of enterprises, especially among female single parents in Upper Egypt, and emphasizing that such micro enterprises are the most successful enterprises, where their owners could also repay the loan granted to them.
The Chairman of Misr Bank (one of the participating banks), Mr. Muhammad El-Atreby, agrees with that opinion, as he confirms that these family enterprises have a high loan repayment rate of 99%, owing to the customary nature of Upper Egyptians who do not accept leaving unpaid debts. He also commended those enterprises as they establish family interdependence on one enterprise, instead of wasting their efforts on several separate ones.
Aswan Comes First
The governorate of Aswan was ranked first among all governorates, regarding the youth turnout rate of participating in Mashroo’ak so far. The number of applicants was 3,606 young investors wishing to set up small and micro enterprises, where 551 enterprises were already executed, at a total lending sum of $550,000, including loans granted to 508 enterprises – varying between $125 and $6,250. This figure is growing, with another 43 enterprises that have been financed.
Appeals of Participating Investors
A number of investors from the Egyptian Industrial Union criticized the performance of the local municipality in Giza, where the governorate of Giza turned down 100 self-employed and commercial enterprises that could provide 1,000 job opportunities under Mashroo’ak!.
Some of them made an appeal to the Giza Governor for the speedy approval of enterprises to be set up on a land parcel allocated by the Ministry of Transport through a public tender, according to an agreement concluded. However, the local municipality of Elbadrashein city – part of Giza governorate – postponed execution until the governor signs the relevant documents for approval. This stirred up disapproval among young investors who submitted their applications, especially after they were notified that the Deputy Giza Governor, Mr. Ossama Sham’a, refused the establishment of such enterprises. They see that such a refusal has no legal bearing; hence, they said that they did not want to face such obstinacy; otherwise, they would be obliged to submit a formal complaint to the regulatory authorities.
A number of young people from Gharbeya governorate also expressed their dissatisfaction with the initiative’s course of actions. The Chairman of Gharbeya Tradesmen, Mr. Muhammad El-Zanaty, said that he applied for a loan for an electric generator through Mashroo’ak, and was surprised by some excessive requirements; such as an interest rate of 15% for his enterprise, and the request to provide two guarantors although he has a tax card and all types of guarantees! He pointed out that this would complicate the application of the announced programme, as long as these stated requirements exist.
Ihab Hantirah, an applicant to Mashroo’ak in Tanta, added that he hoped to develop his garment workshop, but was disappointed as soon as he saw the stated requirements.
A Final Word
To all young investors… We hope you manage to select a successful idea for your enterprise that is appropriate with your individual abilities, skills, and potential. We invite you to take part in the initiative of Mashroo’ak. We wish you good luck in earning an additional and steady income that would provide you with a better life.
You can stay in touch with the initiative of Mashroo’ak through many channels, ensuring easy interaction between those in charge of the project and the applicants, so that it is beneficial to everyone, considering the varying cultural and educational backgrounds. You can also be informed of the required documents, the outlet service locations, the electronic registration links of Mashroo’ak, and the telephone numbers provided by those tasked with answering your queries; and you can consult the official page of Mashroo’ak at the social communication websites. By visiting our newspaper’s official website at https://meobserver.org/2015/09/mashrooak/, you can check out all these issues and much more, by clicking on the related links.
With us, dear investor, you can consult with one click the links that allow you to take part in Mashroo’ak, so that you can easily and safely acquire an additional income and a new gain.
