The Egyptian government has adopted a strategic initiative to enhance the business environment for startups in Egypt. For the first time, the General Authority for Investment and Free Zones (GAFI) has announced a decision to host service-sector startups focused on exports within free zones.
These startups will now be able to operate under the free zone regime, enjoying simplified procedures and full exemptions from customs duties and taxes. This step is expected to strengthen startups’ operational and financial paths and significantly improve their success rates in scaling and entering international markets.
According to the Authority, around 9,000 square meters have been allocated for the administrative and operational headquarters of these startups. GAFI aims to attract investment from companies specializing in software exports and artificial intelligence applications, while ensuring the presence of support institutions like consulting, marketing, and legal services firms to build a comprehensive and sustainable working environment. This will help startups develop advanced and tailored business strategies.
This new investment advantage is one of the most effective tools used globally and regionally to attract startups. Establishing a startup within a free zone is an ideal choice, as companies operating in these zones fall under the jurisdiction of specialized authorities responsible for oversight and licensing. Additionally, full exemption from customs duties means companies can benefit from zero taxes on imports and exports.
A Fast Track for Entrepreneurs
Experts have described this step as a foundational pillar for the growth of Egypt’s startup sector. It aligns well with startups’ need for expedited business processes and high-quality infrastructure, such as advanced facilities and strong road networks, in addition to tax and customs incentives tailored to startups’ financial realities.
GAFI has also launched a fast-track process for entrepreneurs, allowing the online registration of single-owner companies in just two hours. Entrepreneurs will receive VIP services at investor service centers at no extra cost. These strategies are expected to directly enhance the entrepreneurship ecosystem by providing a comprehensive support structure for startups, removing barriers, and offering updated incentives in line with global and regional developments.
Startup investments in Egypt reached approximately $61 million in Q1 2025, a 15.1% increase compared to the $53 million recorded in the same period of 2024, according to Africa: The Big Deal platform. Funding volumes jumped by 125.93% compared to Q4 2024, which saw $27 million in investments.
In 2024, Egyptian startups raised about $400 million, capturing 84% of North Africa’s total startup investments. The fintech sector led with $237 million, followed by logistics with $23.5 million, and e-commerce with $22.5 million. Remaining investments were distributed across sectors such as healthtech, edtech, AI, proptech, software services, and agritech.
GAFI’s Unprecedented Action
Hossam Heiba, CEO of GAFI, announced that free zones will, for the first time, host headquarters for service-export-oriented startups to benefit from the streamlined operations and full exemptions these zones provide.
Heiba noted that 9,000 square meters have been allocated for these headquarters, with a focus on attracting investments in software and AI application exports. He emphasized the importance of support institutions; consulting, marketing, and legal firms, which can boost the chances of success for startups expanding internationally.
Development of the Entrepreneurship Ecosystem
He also outlined GAFI’s efforts in improving the entrepreneurship ecosystem, starting with the establishment of the “Bedaya” Center for Entrepreneurship and SME Development 15 years ago, followed by the launch of “Egypt Ventures” investment company, and culminating in hosting the permanent Entrepreneurship Unit and joining the ministerial entrepreneurship committee.
These entities have helped unify national efforts and build a supportive umbrella for startups, aiming to remove obstacles and develop incentive structures that keep pace with this rapidly evolving sector.
GAFI has allocated a fast track for startup establishment and operations. The incorporation of a single-owner company takes no more than two hours online, and entrepreneurs receive VIP treatment at investor service centers without incurring additional fees.
Heiba also highlighted collaboration efforts with the European Union, Saudi Arabia, and Morocco to facilitate the expansion of Egyptian startups into these markets, mitigating risks like double taxation or protectionist policies, and providing administrative and promotional support during market entry. He also mentioned efforts to attract new investments from those countries into Egypt.
On the legislative side, Heiba revealed that a new law governing the establishment of “Financial and Business Zones” is expected this year. The law aims to position Egypt as a regional hub for investment funds—especially venture capital funds—by attracting both local and foreign financing to support startup growth.
International Models of Free Zones for Startups
Several international models illustrate the integration of startups within free zones. In the UAE, the Ras Al Khaimah Economic Zone (RAKEZ) supports startups, SMEs, and industrial firms by offering a wide range of business licenses, visa services, customizable facilities, and value-added services such as accounting, translation, banking, hiring, procurement, and marketing.
Umm Al Quwain Free Trade Zone launched the “Soul” incubator for fast-growing tech startups, targeting sectors such as AI, blockchain, fintech, edtech, proptech, regtech, and robotics. It provides services including business setup, specialized mentorship, market access, funding channels, product evaluation, equipped workspaces, training programs, and networking opportunities. Other free zones such as Dubai Silicon Oasis also offer robust support for startups.
In Bahrain, the Bahrain FinTech Bay and TechnoPark focus on blockchain, fintech, and AI innovations. They offer income tax exemptions, low startup costs, and expansion assistance across the GCC.
Expert Views
Heba Medhat Zaki, Director of the Egypt Center for Entrepreneurship and Innovation (part of the National Institute for Governance and Sustainable Development), stated that the creation of a free zone for startups has long been a proposed idea due to its flexible procedures and facilitation of foreign dealings and exports, along with tax and fee exemptions, critical incentives for startups.
She described the recent announcement as an encouraging and significant move, although its real impact will become clear once the official decision is issued and its incentives are detailed. Nevertheless, it represents a crucial step in supporting startups.
Zaki emphasized the need to listen to the demands of startups and present them clearly to decision-makers to expedite the adoption of supportive measures. The goal is to provide real value and a strong return on investment that makes operating in free zones attractive.
She also noted positive expectations for Egypt’s startup sector in 2025, especially following key decisions like forming the ministerial committee on entrepreneurship. This will help promote investment in startups, particularly in high-growth areas like agtech, clean energy, deep tech, and AI, as well as thriving sectors like e-commerce and logistics.
Investor Perspective
Rafik Dallala, co-founder of Intercap Capital, called the initiative a strategic move toward eventually creating free zones specifically tailored to startups. He noted previous plans to establish a tech park in Egypt to host startups, GAFI, and other relevant authorities, along with investment firms.
He added that having free zones with specific legislation for startups would allow entrepreneurs to incorporate affordably, give venture capital firms direct access to startups, and significantly ease company formation and growth. This would also help retain startups in Egypt by enabling them to secure investment without relocating abroad, improving the business climate and ultimately benefiting the Egyptian economy.
Economic Impact
Economist Ahmed Khattab stressed the importance of integrating startups into free zones. It would enable easy and tax-free import of raw materials for local manufacturing and subsequent export, significantly lowering production costs. This step represents a governmental green light for startups to expand into exports, supporting the state’s goal of boosting national exports.
He added that startups in free zones would also benefit from international agreements and proximity to major companies within these zones, fostering collaboration. The business-friendly environment in free zones aligns with international trade standards and makes them ideal for startup growth.
Khattab highlighted that these zones offer access to global markets thanks to their strategic locations and trade agreements. They also attract venture capital and financial support, providing startups with the necessary funding. Furthermore, tax incentives reduce operational costs, encouraging startup sustainability and expansion.
