Micro, small and medium-sized enterprises in Egypt

Micro, small and medium-sized enterprises (MSMEs) play a fundamental role in the Egyptian economy – they drive more than 80% of GDP growth and 40% of total employment – but they face considerable risks that hinder their ability to thrive. Insurance could bolster MSMEs’ resilience but, at present, it does not sufficiently fulfil this role.

Drawing on our work in Ghana and Uganda, this study sets out to apply, test and demonstrate the commercial viability of a value-driven and customer-centric approach to risk solutions in the Egyptian context.

Working with AXA (a multi-national insurance company) and FSD Africa, we were able to develop and test an approach that rethinks the role of insurers and the types of non-insurance risk managing services that can be bundled with insurance to drive value for MSMEs uptake. We focused on value chains in three sectors: retail/fast-moving consumer goods, dairy, and tomatoes.

The findings contained in this report draw on extensive consumer research and stakeholder interviews and, by making these findings available to the Egyptian industry more broadly, this study aims to catalyse other industries and players to similarly innovate to better serve MSMEs.

Some of the findings from this project include:

• Steady cashflow is a key cross-sectoral risk: In most cases, this challenge manifests itself in terms of being unable to pay for inputs or supplies while existing produce/stock is unsold and access to affordable credit is unavailable.
• Climate events are notably challenging for agricultural sectors: The vulnerability of these farmers is highlighted by the lack of coping strategies to proactively manage, rather than purely responding to, climate risks.
• Insurance not used by MSMEs to cope but positive perceptions suggest untapped opportunity: Although none of the sampled MSMEs owned an insurance policy, many MSMEs across the three sectors were aware of its availability and reportedly trusted insurance companies, albeit those primarily owned by the government.
• Digital and tech solutions are already present and offer potential for insurers to leverage: Platforms most popularly used by MSMEs (particularly in retail) include digital payment services like Fawry and Vodafone Cash, and retail solutions such as MaxAb and Cartona.
• Simple risk management solutions that meet clearly defined risks and needs resonate with MSMEs: The sampled MSMEs were most likely to purchase the most intuitive solutions and those that are already established or known.
• MSMEs are interested in conventional insurance but recognise enhanced value of bundled offerings: Consumer research found that, when offered the option of purchasing preferred insurance policies with preferred risk management solutions, the majority of MSMEs saw the enhanced value of this option relative to purchasing a risk mitigation and risk management solution individually.

You can read the full findings from this study, including a detailed discussion of the characteristics, key risks and opportunities for holistic resilience solutions for each of the three priority sectors.

If you are interested in discussing our work on MSME value chain resilience or how our findings can inform product design, please contact Jeremy Gray.