ICT Sector in Egypt

An Expert's View about Retail Computer and Software Sales in Egypt

Posted on: 1 Oct 2010

Egypt is an emerging market with a multitude of opportunities for business, and is quickly becoming the regional hub for IT and Communications in the Middle East and North Africa.

Sector briefing Information Communication Technologies (ICT): Opportunities in Egypt Why Egypt? Egypt is an emerging market with a multitude of opportunities for business, and is quickly becoming the regional hub for IT and Communications in the Middle East and North Africa, thanks to its strategic geographic location and its time zone which allows two- operational shifts for call centres (Europe and USA). In addition, Egypt?s developing fibre connectivity with its neighbours makes it a prime location for transient traffic to the region. The ICT sector is a major pillar of the Egyptian 43% and newcomer Etisalat 12%. State-run economy; its growth rate throughout the past Telecom Egypt (TE) has a monopoly on fixed three years amounting to 13%. ICT accounts lines, the number of which has decreased with for 3.3% of the Gross Domestic Product (GDP) the growing popularity of mobile phones. The of Egypt, which equates to as much as LE40 Egyptian market is still dominated by prepaid billion annually. subscribers. Mobile forecasters envisage around 3% of mobile users being regular 3G It is projected that demand for ICT in Egypt service users at the end of 2013. Mobile will reach US$4.9 billion by 2013. Demand is subscriber penetration is expected to pass being fuelled by an expanding population, 100% in 2011. which is expected to rise to 82.8 million by 2013. The market also benefits from a youthful A number of multinational ICT companies use population, recent studies suggesting that 50% Egypt as a base for regional operations, of the population is less than 25 years of age. including Hewlett Packard, Oracle, Siemens, Microsoft, IBM and many others. The public- th Egypt was private partnership (PPP) model has proved recently ranked 12 in an instrumental to growth ? one successful PPP is international comparison of offshore business potential, Smart Village Cairo, a 3 million square meter identifying opportunities in key segments such as IT Park housing a number of global ICT firmsIT services and products; such as Systel, Alcatel Lucent, Microsoft, call centres; business process and knowledge outsourc Ericson, IBM World Trade Corp, Hewlett ing; engineering and technical support Packard, Beltone Financial Holding ; Nokia centres; localisation and language services; content development and management and Siemens and Vodafone. R&D, design and engineering. Egypt?s internet penetration reached 18.4% in The Egyptian mobi 2009, representing 14.04 million users with a le sector has three operators forecast to reach 24 million by 2010 and 44 competing for market share among a million by 2013. Internet costs have dropped subscriber base of 58 million. Mobinil currently has around 45%, with Vodafone hold as a result of the government working with ing about UK Trade & Investment Sector briefing: ICT opportunities in Egypt internet service providers. Arabic content promoting significant investment and growth in online is being promoted via the government?s the ICT sector. They believe that strong e-content program, while e-government has partnership between the public and private been introduced in many state departments. sectors is pivotal to the successful formation of an information society. As part of this belief, providing incentives that foster an attractive Opportunities climate for investors is a primary focus. The current level of computerisation in Egypt is By 2011 the Information Technology Industry low, with PC penetration estimated at around Development Agency (ITIDA) will announce the 10%, and seen as rising to around 17% by IT sector development plan, which aims to 2013. There is therefore considerable growth attract further foreign investments and boost potential for PCs, notebooks and accessories exports and a recent BMI report forecasts that Egyptian spending on ICT will reach US$960 million by Triple play Licenses: the end of this year. Forecast for IT spending suggest an increase from US$ 1.4 billion in At the end of 2009, the Ministry of 2010 to US$ 2.6 billion by 2014. Communications and Information Technology (MCIT) opened bidding for two new triple-play Current Egyptian spend on ICT includes PCs, licenses, which will break the monopoly of TE broadband internet subscription, software Data. The business process outsourcing sector industry and service provision including is performing successfully, and is expected to Business Process Outsourcing (BPO). have a compound annual growth rate of 20% At the end of 2009, the government purchased by the end of 2010. 10,000 notebooks for distribution to students and teachers. Electronic Commerce: Immediate opportunities lie in public data and Egypt?s Electronic Signature Law 15 of 2004 Internet services, wireless local loop networks, established the Information Technology the mobile network, offshore development, and Industry Development Agency (ITIDA) to act e-Egypt. The Egyptian Minister of State & as the E-signature regulatory authority and to Administrative Development has recently further support and empower the IT sector in announced that 200 government services will Egypt. The executive regulations stated that soon be available online through a new e- ITIDA?s first mandate is to build and operate government portal. The portal will offer 70 the Root Certificate Authority (Root CA). The services in both English and Arabic. According Root CA will be the trust anchor for all parties to the Ministry, more than 20 government within that domain. Furthermore, the Root CA agencies currently offer services online. Egypt?s will issue digital certificates to subordinate ICT sector also has potential opportunities in Certificate Service Providers (CSP) to provide sub sectors such as Fibre Optic Cables, Call the proper infrastructure for the use of E- Centres, Equipment/Network Centres, GSM Signature in Egypt. ITIDA?s second mandate is Solutions and Applications, Voice Over Internet to license a limited number of CSPs to issue Protocol (VoIP), Media Convergence, Triple digital certificates and corresponding electronic Play, Wi-Fi, Wi-Max /Wireless Networks and signatures for citizens and private sector Solutions. companies? clients. www.itida.gov.eg Legislation: GPS The Egyptian government has introduced In April 2009, Egypt announced that it was several new laws which are crucial to the long- lifting its ban on the use of GPS devices. The term development of Egypt?s ICT sector ban had previously meant that a wide range of including: the Investment Law 8/1997; mobile phone models could not be sold in Intellectual Property Law 82/2002; Electronic Egypt, which was one of only three countries Signature Law 15/2004; the Labour Law globally to have such a ban. The lifting of the 1/2003 and the Telecommunication Law ban will act as a boost to vendors, as a 10/2003. growing proportion of handset models come with GPS functionality installed. In addition to these laws, the Egyptian government provides excellent financial, legal Reform of ICT sector (Postal Authority) and operational facilities with the aim of UK Trade & Investment Sector briefing: ICT opportunities in Egypt ICT sector reform also includes reform of the IT services revenue is estimated at around postal sector. Egypt is looking at modernizing US$349 million for 2010, accounting for about Egypt?s postal system, making sure that 25% of Egypt's total spending on IT. The connectivity would be provided to the 3,500 Egyptian IT services market is dominated by postal outlets all over the country. demand from the government, financial and telecoms sectors, which account for more than E-Health half of total spending. One key driver is likely to be the continued expansion of Egypt as an ICT for health is an area where Egypt needs to international outsourcing destination. modernise its infrastructure and connect 400 primary healthcare unions all over the country. Broadband The emergency system needs updating particularly around emergency services call There were around 1.1 million broadband centres and wireless services. Tele-health and subscribers at the end of 2009 according to the telemedicine are also among Egypt's priorities. National Telecommunication Regulatory The Ministry of Communication & Information Authority (NTRA), which was largely made up Technology (MCIT) are looking for partners to of ADSL connections. The government has advise on the establishment of an E-health promised to spend US$1 billion to boost service centre. broadband penetration over the next five years to improve not just network reach, but quality Hardware sales of service and greater reliability. In areas where fixed line is unavailable, the provision of Egypt?s computer hardware sales are projected wireless alternatives such as 3G dongles is to hit US$ 862 million in 2010 and are forecast expected to help provide broadband access to reach around US$1.6 billion in 2014. which will also help to provide access to e- Computer penetration is forecast to rise from a healthcare and e-education services. little above 10% currently to about 19% in 2014, and annual computer sales could However, extending broadband coverage in increase to nearly 470,000 in the coming Egypt still remains far from being achieved years. because of the cost. As for the broadband Egypt's IT market will stay hardware sector, while it surpassed its benchmark figure dominated, with spending on PCs sustained by of 1 million at the end of 2009, the sector is MCIT initiatives. Hardware accounted for an yet to show significant levels of growth, but is estimated 61% of Egypt's IT spending last expected to expand by end of 2010 to reach year. Households account for 20-25% of unit 1.320 million subscribers and potentially 3.3 sales, with 1.0-1.5 million households said to million broadband subscribers by 2014. possess a computer at present. Software ICT sector contact points in Egypt: Spending on software is projected to reach H.E. Dr. Tarek Kamel, US$ 197 million in 2010.The domestic software Minister of Communication & Information market is expected to grow at a compound Technology annual growth rate (CAGR) of around 11% by Ministry of Communication & Information 2014. Access to credit remains a barrier for Technology smaller Egyptian companies, but various KM 28 Cairo, Alexandria Road, Smart Village, banking initiatives may help smaller Egyptian Giza companies to invest in IT. Tel: +20 (2) 3534-1010, +20 (2) 3534-1020 The future of the software market will belong Fax: +20 (2) 3537-1111 to vendors that can successfully develop the E-mail: tarek.kamel@mcit.gov.eg SME sector. With more than 50% of the Website: http://www.mcit.gov.eg regional business community comprising SME?s, this sector is likely to emerge as the Dr Amr Badawi main driver of enterprise application spending Chairman over the next few years. National Telecommunication Regulatory Authority NTRA Services Smart Village Tel: (+202) 3534-4000 UK Trade & Investment Sector briefing: ICT opportunities in Egypt Fax: (+202) 3534-4155 E-mail: info@tra.gov.eg URL: www.tra.gov.eg / www.ntra.gov.eg Dr Hazem Y. Abdelazim, MSc, PhD, MBA Chief Executive Officer Information Technology Industry Development Agency (ITIDA), EGYPT Smart Village Km 28 Cairo/Alexandria Road, Giza Tel: 202-35345100/01 Fax: 202-35345102 Web site: www.itida.gov.eg UK Trade & Investment Sector briefing: ICT opportunities in Egypt Major events and activities UKTI contacts Cairo ICT Mona Fahmi (International Telecommunication, It, Senior Advisor, Trade & Investment Networking, Satellite and Broadcasting British Embassy, Egypt Technology Trade Fair of the Arab World) Tel: (+202) 27916000 Venue: Cairo International Convention Centre, Fax: (+202) 27916130 Cairo E-mail: mona.fahmi@fco.gov.uk Time: 20-23 February 2011 Web site: www.ukti.gov.uk Contact: Yomna Samaha PR Manager Wafaa Saad TradeFairs International Advisor, Trade & Investment 24,Menouf St., off Orouba St. British Embassy, Egypt Heliopolis, Cairo, Egypt. Tel: (+202) 27916000 Tel: +202 26910792- 26910794 Fax: (+202) 27916130 Fax: +202 24159852 Email: wafaa.saad@fco.gov.uk Mob: +2012 310 2739 Web site: www.ukti.gov.uk www.cairoict.com www.mercury-com.com Gary Hunt Deputy Director, Trade & Investment Find full details of all events in Egypt and British Embassy, Egypt sector on the UKTI website. New export Tel: (+202) 27916061 events are added daily to the site and you can Fax: (+202) 27916130 register to be alerted to them on a daily, Email: gary.hunt@fco.gov.uk weekly or monthly basis Web site: www.ukti.gov.uk UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: ICT opportunities in Egypt Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Egyptian market are advised to you to meet contacts and promote your undertake as much market research and company in the Chinese market planning as possible in the UK. UKTI?s team in Egypt, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Egyptian market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: ICT opportunities in Egypt
Posted: 01 October 2010