Waleed GHALWASH: The need of Egyptian Silicon Valley

Waleed GHALWASH: The need of Egyptian Silicon Valley

The Middle East has long been looking for a regional Silicon Valley, but it’s been searching for the wrong ecosystem under the wrong name. To understand the idea of a Silicon Valley we need to understand its core component by inspecting others success stories, as it is not as simple as it might be seen, and it is not down to chance; it is not just the idea of encounter between tech-savvy and an investor, in contrary it is a well-planned ecosystem.


Egypt Macro-economy outlook

In 2014, the Government started implementing a strong and transformational reforms program, aimed at boosting the economy, enhancing the country’s business environment and staging a balanced and inclusive growth. it started with rebalancing the macroeconomic factors, which included adoption of different aggressive policies simultaneously; such as liberation of the Egyptian Pound, introducing VAT Law, reducing energy subsides and containing the high growth of the wage bill.

According to World Bank in its economic outlook in October 2017; Egypt’s Macroeconomic conditions are showing signs of stabilization following the liberalization of the exchange rate. Important fiscal reforms are underway, with energy subsidy cuts and containment of the wage bill contributing to fiscal consolidation. Egypt’s economy is estimated to have grown at 4.1 percent in FY2016/17 (July/June).

According to the World Economic Forum’s website, a report from BMI research reveals that Egypt among ten countries that will cumulatively add USD 4.3 trillion to global GDP by 2025, becoming new drivers of economic growth.

Silicon Valley’s success story

Startup ecosystem

Startup ecosystem

Looking to the Silicon Valley’s success story we can highlight and relate the potentiality of Egyptian Silicon Valley over six critical factors.
Government subsidies:
The original Silicon Valley’s nucleus was the Moffett Federal Airfield, which was the region’s main military airfield after the end of the Second World War. These funds were critical for the concept to even exist. These governmental funds caused new startups to have financing possibility for their ideas even without the existence of venture capital.

looking to the Egyptian adaptation, after the announcement of the major macroeconomic reformation, one of its tools was enabling the entrepreneurial ideas by either introducing tailored facilities with extremely lower interest through banks or by allocating funds through the government official channels like Central Bank of Egypt and ITIDA. In January 2016, the Central Bank of Egypt launched a program to finance 350,000 small-to-medium enterprises for EGP 200 billion (US $11.5 billion) over the following four years, with a declining interest rate of 5% annually, and introduced policies that enforce banks to commit around 20% of their total loan portfolio to small-to-medium enterprises. But in spite of these recent policies, the government still lacks a systematic and methodical approach to address entrepreneurship and its success factors in terms of subsidies required to gain momentum needed for a Silicon Valley to exist, which, is one of the factors to fostering a climate for the inception of the model.

Egypt Location on world maop

Egypt Location on world maop

Available space

One of the founding fathers of Silicon Valley was Frederick Terman conceived the idea of making it easier for people to start businesses by providing capital and allowing them to use the university’s large unused tracts of land. Hewlett Packard company was conceived as two students were among the first beneficiaries of this program. Terman had moved from Boston to the West Coast in the 50s because it offered conditions which other regions had tried to implement but with far less success.

Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. it has a unique geo-location that act as a bridge to link two continents Africa and Asia, more over Egypt is a country linking northeast Africa with the Middle East. Egypt is bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula. Egypt area is more than one million square kilometers that approximately 95% of the population lives within 20 km of the Nile River and its delta; vast areas of the country remain sparsely populated or uninhabited which is a great opportunity for development, it has a costal line of 2,450 Kilometers.

All of the above showing the great availability of unused land that is an opportunity for startup ecosystem giving the moderate weather that is excellent for around the year activity.


With two large airports, its proximity to the coast and major universities such as Stanford, San José and Berkley, Silicon Valley offers the perfect infrastructure for innovation and growth. A carefully selected region and infrastructure, with enough room for innovations to grow yet small enough to create density and energy.

Egypt has always had to work overtime to ensure that infrastructure capacity keeps up with demand. lately Egypt has aggressively prioritizing the completion of major infrastructure projects as part of his policy agenda. The most visible evidence of this is the expansion of the Suez Canal, a project that was completed in record time and entirely financed by the local market. Egypt is working to overhaul its transportation platform and establish itself as major transit corridor for both air and sea transportation. Cairo Airport is the second-busiest in Africa, after O R Tambo International Airport in South Africa. Cairo International Airport is currently undergoing a major expansion that will have a significant impact on Egypt’s air transportation capabilities.
Scale model of Egypt’s planned new capital

Egypt New Capital

Egypt New Capital

May be the most ambitious project is the New Utopian capital city of five million people that would be home to 660 hospitals, 1,250 mosques and churches, and a theme park four times the size of Disneyland – and all of that is planned to be completed within five years according to The Guardian notes that would make it the largest pre-planned capital in history.

In technology, infra structure; Egypt’s current internet penetration rate of is 40% (growing exponentially), an astonishing 103M mobile phone users/clients, and about 14% of the population holding bank accounts, the future for mobile and web commerce looks very bright with a positioned growth rate of 35% within the coming two years.


Original American government subsidies attracted experts, scientists and the early pioneers were joined by professional venture capital. By the end of the 70s, the government subsidies were increasingly cut back, paving the way for the development of what is now the world’s strongest venture ecosystem. Most valuable brands are now based in the Silicon Valley due to no coincidence but the result of systematic infrastructure management.

Egypt’s Banking sector is one of largest and most diverse banking sectors in the Middle east where 40 banks operating 3,690 branches. More over informal “angel” Funds for those who operate in the informal sector are still dependent on pooling resources from family and friends, and due to limited banking penetration, loans from merchants and more traditional self-help financial groups like gam’iyyat remain deeply entrenched. The World Bank’s 2014 Global Index Database estimates that only 14% of the Egyptian adult population has a bank account, and it is estimated that, although less than 2% of adults have credit cards.

In January 2017 fundraising for Egyptian startups jumped 105%, according to the report from Disrupt Africa, making the country the fourth most popular tech investment destination on the continent of Africa.

Talents and Highly fluid workforce

Established professionals and university graduates are attracted by the unique conditions in Silicon Valley. The knowledge transfer process first is crucial for acceleration. it served great potentials working in such a small area. It offers an ideal environment where people can easily switch between the best companies in the world.

Egypt is a readily available pool of talented developers, techies, and aspiring entrepreneurs who are hungry for work, with massive opportunity to penetrate already-existing markets and create new ones. With a bustling population almost 100 million, 50% of which are below the age of 30 and tech savvy, Egypt is suddenly staking a claim as one of the fastest growing entrepreneurial hubs in the world.


In the IT industry’s very own heart center predominates a culture of start-up and failure, knowledge is naturally shared, and innovations originate through cooperation and networking – day by day, you learn from the best.

Since the 2011 Arab Spring revolution, homegrown companies in Egypt have been created to provide a wide services and solutions in a form of platform rather than a product. Some of these companies, have even been fully absorbed by Silicon Valley accelerators, establishing offices in San Francisco. This boom, some say, is directly linked to the popular and largely nonviolent demonstrations that rocked the country in 2011.
“There has been a much more deliberate building up of the ecosystem since 2011 and from then on, the momentum has only increased so that we’ve really seen the ecosystem start to take a more coherent shape.”. And even though the drive for democracy largely failed, Waleed Abd El Rahman managing director of the MIT Technology Review Arab Edition says it left many young people with the chutzpah to start their own businesses and get connected. “One of the biggest wins for the revolution is that it made a lot of people believe in themselves,” he said.

Egypt has more wonders than any other country in the world, and provides more works that defy description. Egypt has all the factors that can contributes to a successful Silicon Valley that serve the Middle East and the whole World, the real pressing factor is the spirit of the young and their determination to succeed.

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