A recent World Bank report has shed light on the state of innovation in Egypt, revealing that only 9% of companies in the country have introduced new products or services over the past three years. This figure is significantly lower than the average of 23% recorded in similar lower-middle-income economies. Furthermore, a mere 3% of Egyptian companies have improved their processes, compared to 14% in similar economies.
The World Bank report also highlighted a broader trend in the Middle East and North Africa region, where 16% of companies have introduced new products or services, and 9% have improved processes. In contrast, companies in emerging markets and developing economies outside the region have recorded significantly higher rates, with 29% introducing new products and 19% improving processes.
The report emphasized that investment in research and development is a crucial driver of innovation, yet only 9% of companies in the Middle East and North Africa region, including Egypt, invest in this area. This is compared to 11% in emerging markets and developing economies outside the region. The World Bank noted that this gap is particularly pronounced in Egypt, where companies face significant challenges in terms of innovation.
In comparison, Saudi Arabia has recorded higher rates of innovation, with 11% of companies introducing new products and 4% improving processes. However, these rates are still significantly lower than those recorded in high-income economies, which average 36% and 22% respectively. The World Bank report highlighted the need for Egyptian companies to invest more in research and development to drive innovation.
Despite the challenges, the World Bank has raised its growth forecast for Egypt's economy to 4.3% for the current fiscal year, up from 4% in its previous forecast. The bank expects Egypt's economy to grow at a rate of 5.1% in the 2025-2026 fiscal year, driven by the country's resilience in the face of regional conflicts.
The World Bank report also noted that the impact of regional conflicts on Egypt's economy has been relatively limited, compared to oil-exporting countries in the Gulf region. The bank highlighted the risks associated with the closure of the Strait of Hormuz, which has had a significant economic impact on Gulf countries.
The World Bank sees opportunities for Egypt's economy to benefit from emerging technologies such as artificial intelligence, which could boost productivity and drive growth. However, the bank notes that this will require addressing structural gaps, including limited use of AI tools, inadequate human capital and infrastructure, and restricted private sector dynamism.
Key points
- Only 9% of Egyptian companies have introduced new products or services over the past three years.
- Egypt's innovation gap is significant compared to similar lower-middle-income economies.
- The World Bank expects Egypt's economy to grow at a rate of 5.1% in the 2025-2026 fiscal year.
