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Information Technology In Egypt -
April 2002
Revolutionary advances in Information & Communications
Technologies (ICT) are transforming the world economy and presenting new
challenges to all countries. The challenge is to compete effectively in
an emerging information-based economy where computing and communications
play a key role. It is also a challenge to take full advantage of the
enormous potential of ICT in advancing all aspects of economic, social
and cultural life.
Egypt is no exception from
other countries. The Government of Egypt (GOE) has emphasized that
economic reform is inseparable from social reform and that the topmost
priorities for the coming phase of development are reduction in
unemployment, export growth and modernization of education. Realizing
how a strong ICT sector would contribute to high and sustainable economic
growth for the Egyptian economy, the government has pinpointed ICT
development as a national priority.
The formation of the new Ministry of Communications
& Information Technology (MCIT) in October 1999 marked a new era for
Egypt’s telecommunications and information-technology sector,
characterized by a new regulatory framework and a more liberalized
framework. Through this new governmental body, a national ICT plan is
being implemented to create an export-driven, private sector-led ICT
sector. The plan focuses on providing a state-of-the-art national
telecommunications network, information-based development and human-resource development.
Information technology in specific has been
identified as a potential growth sector among non-traditional industries.
The performance of the IT industries has been remarkable in the past few
years. In 2000, the Egyptian IT market accounted for $730 million,
increasing by a rate of 17.1 percent from 1999 and by 33 percent from
1998. It is expected to reach $849 million by the end of 2001. In June
2001, the total number of companies working in the IT field reached 565
companies, indicating a 141-percent growth from 363 in December 2000. In
2001 alone, nearly 202 companies, both large and small, entered the
market, compared to 129 new entrants in 2000. New entrants in 2001
include local companies with very high capital that did not exist before
in the Egyptian IT market. The existence of such huge companies indicates
that the market is heading in the right direction. By 2004, the Egyptian
IT market is expected to reach a value of $1,315 million, increasing
with a compound average growth rate (CAGR) of 16.1 percent from 1998.
The hardware industry has the highest share in the Egyptian
IT market, representing approximately 47 percent of the total
market, followed by IT services with 29 percent. The data
communications equipment sub-sector is the smallest sub-sector, capturing
only 10 percent of the IT market.
As for the Internet
market, the number of Internet Service Providers increased to 65 as of
June 2001, serving 750,000 Internet users. This translates into a rate of
115 subscribers/10,000 person.
Working to develop human
resources in general and IT professionals in specific, there is also a
diversity of training programs conducted by MNCs in cooperation with the
MCIT. In terms of e-readiness, Egypt has recently moved up from the 49th
to the 40th position in a ranking of 60 countries.
This study provides a
comprehensive overview of the information-technology sector in Egypt,
focusing on the developments that took place with the formation of the new
Ministry of Communications & Information Technology. The study
provides statistics and indicators on the software and hardware
industries, the Internet and e-commerce in Egypt, highlighting recent
developments in each sub-sector. The ultimate aim of this study is to
assist local and international investors in understanding the information-technology market in Egypt and to act as a guide in exploring potential
investment opportunities.
Sector
Highlights
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The Ministry of Communications & Information
Technology (MCIT) is the policymaker, Telecom Egypt (TE) is
the service provider and the Telecommunications Regulatory Authority
(TRA) is the regulator in the Egyptian ICT sector
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The information-technology market in Egypt
increased by approximately 16 percent to reach $849 million
in 2001
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The total number of companies working
in the IT field in Egypt reached 565 companies in June 2001,
including nearly 202 new entrants in one year
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Hardware, including data communications
equipment, comprises over 50 percent of the Egyptian IT market
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Software represents a small share of the
Egyptian IT market, comprising 14 percent, but it is one of
the fastest-growing segments
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Internet Service Providers (ISPs) in Egypt
have exceeded 60 as of June 2001, serving 750,000-800,000 Internet
users
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The deployment of the “Free Internet”
service at the cost of the local call was launched in January
2002 and is expected to be completed nationwide by mid-2002
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Imports from the United States cover 64
percent of the local IT market and computer services was ranked
as the fourth opportunity sector for American business in Egypt
in 2001
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