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As Egypt faces growing foreign currency shortages and increasing bureaucratic pressure, its government is launching a bold new initiative to reverse a troubling trend: the exodus of its tech talent and startups to more accommodating global hubs.
The General Authority for Investment and Free Zones (GAFI) has announced the creation of specialized tax-free zones for technology startups, particularly those in artificial intelligence (AI), software exports, and fintech. The move is designed to retain local entrepreneurial talent, attract regional investors, and boost Egypt’s image as a regional innovation powerhouse.
What the New Free Zones Offer
Under this new policy, qualifying startups will benefit from:
- Complete customs and tax exemptions
- Simplified and expedited business registration
- Access to key support services, including legal, consulting, and marketing assistance
These zones will be designated areas where economic activity is stimulated by favorable tax and administrative treatment, mirroring successful models in countries such as the UAE, Bahrain, and Morocco.
GAFI CEO Hossam Heiba states that about 9,000 square meters will be explicitly dedicated to tech startup operations. “This move matches the needs of startups, which demand quick document processing and access to international markets,” he said. “We are also collaborating with the EU, Saudi Arabia, and Morocco to prevent double taxation and encourage cross-border expansion.”
GAFI’s efforts include a fast-track online registration platform, allowing entrepreneurs to register a single-person company in under two hours, drastically reducing the red tape often associated with doing business in Egypt.
Why Now?
The initiative comes when many Egyptian startups are considering or have already pursued relocation to more startup-friendly environments. Obstacles like foreign exchange limitations, funding gaps, and regulatory complexity have made it difficult for startups to scale or attract venture capital.
Yet, despite these challenges, Egyptian startups have shown resilience. In Q1 2025, they collectively raised $61 million, up 15.1% from last year’s period. Sectors like logistics ($23.5M) and e-commerce ($22.5M) led the funding activity, according to data from Africa: The Big Deal.
Learning from the Gulf
Egypt’s model draws heavily from established startup zones across the Middle East. For instance:
- The UAE’s Dubai Silicon Oasis and RAKEZ offer flexible licenses, low operating costs, and investor matchmaking.
- Bahrain’s FinTech Bay grants tax breaks and subsidized startup packages to facilitate GCC-wide growth.
- Morocco’s Technoparks offer incubation spaces and mentoring, driving youth-led digital enterprises.
These ecosystems have demonstrated that tax incentives alone aren’t enough. The ecosystem makes free zones successful: access to funding, ease of doing business, availability of skilled talent, and supportive legal frameworks.
Expert Perspectives
Dr. Heba Medhat Zaki, Director of the Egypt Center for Entrepreneurship and Innovation, believes this is a long-overdue step. “A free zone for startups has been discussed for years. The challenge is ensuring it delivers more than just tax breaks; founders need real growth support.”
Rafiq Dalal, co-founder of Intercap Capital, echoed that sentiment: “If these zones can include integrated VC networks and provide real operational freedom, they could become a magnet not just for local founders but also regional talent.”
Economic analyst Ahmed Khattab emphasized the practical advantages: “Reducing import and export costs through these zones could give Egyptian startups a serious edge in global markets. This signals a green light for expansion.”
What’s Next?
Later this year, GAFI proposes legislation to create dedicated “financial and business zones” targeting venture capital inflows and multinational collaborations. The government hopes this next phase will cement Egypt’s status as a launchpad for regional tech ventures.
While implementation will be key, Egypt’s new free zone policy reflects a renewed effort to retain homegrown innovation and signal that the country is serious about fostering a competitive startup ecosystem.
Whether this ambitious move will truly stem the tide of talent migration remains to be seen, but for now, the message is clear: Egypt wants its tech future built at home.
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