The defeat ended Baby Bafana's 2012 Olympic dream as they ended bottom of Group B with this result preceding consecutive 1-1 draws with Ivory Coast and Gabon.
Mashaba told SAPA on Sunday: "We got to see what it takes to play here (at this level).
"In all there were two issues, the physical fitness and also match intelligence.
"Like Gabon, maybe we needed to play with more purpose and with Egypt you got a feeling of comfort with one another.
"It was tough. Even though I thought we did well, but our problem was finishing (off opportunities at goal).
"We needed to be prepared to take risks and not chicken out because if you miss you will be in trouble."
Without the likes of Thulani Serero, Andile Jali, Kamohelo Mokotlo, Darren Keet and Bongani Ndulula as Mashaba had to make due with a hastily arranged squad meant that his side were always up against it.
But after doing so well in the lead up to their last round of matches, hopes were high following some impressive performances.
The coach added: "To see all the effort that we put in the previous rounds go up in smoke at this stage ... it would have been okay had we lost in the other rounds.
"I agree that we would have been better off with five or six more players, I believe we would have walked this group.
"The biggest thing at home (South Africa) is that we down play the process of preparation. There is more to it then getting a team together."
Senegal will now face Gabon in the semi-finals in Tangiers on Tuesday while Egypt will play hosts Morocco in Marrakech on Wednesday.
The top three will qualify for next year's London Games, with the losing semi-finalist sent to a play-off against an Asian nation.