AmCham Egypt hosted a special business luncheon with keynote speaker Tarek Kamel, minister of communications and information technology, at the Four Seasons Hotel in Washington, DC on June 14. The event attracted some of the biggest names in the ICT industry and ended with the signing of several memoranda of understanding between prominent ICT firms.

David Welch, assistant secretary of state for Near Eastern affairs and a former US ambassador to Egypt, took the podium first to share his perspective on Egypt’s economic reforms. “The strength of the economy is impressive. I visit Cairo quite regularly and I can see the changes,” he said, citing the rate of economic reforms, specifically tariff cuts, exchange rate changes, simplified customs, reduced taxes and improvements to the financial sector.

He also commented on the impressive pace of Egypt’s ICT development, noting the huge gains in computer and Internet usage that he saw first-hand during his stay in Cairo as the American ambassador. “When I got to Egypt in the year 2002, everyone was reading the Arab Development Report about how Arabs societies are not wired,” he said. “It’s hard to say that Egyptian society is not wired [now]. Internet and computer usage are way up. When I left Cairo, I had broadband access I didn’t have to pay a heck of a lot for.”

Following Welch’s opening remarks, Kamel took the podium to deliver his keynote speech on how ICT serves as a catalyst for development in Egypt. He began by giving an overview of Egypt’s political and economic reform process, the ICT strategy through 2010, and existing partnership agreement opportunities between the US and Egypt.

Kamel commented on the tremendous growth in mobile penetration. “In July 2004, there were 6 million mobile subscribers; today we’re talking about 22-23 million subscribers,” he said. “We’re adding 1 million users a month and after the third mobile [operator] entered the market the numbers for May exceeded [this].”

He said the mobile growth reflects greater purchasing power, economic progress and the partnerships between Egyptian and multinational companies, such as Vodafone, Orange and France Telecom. “We’re talking about growth of more than 50 percent annually. This is one of the highest growth rates in the world.”

Similar growth is being witnessed in Internet penetration, which has reached 10 percent, or 8 million subscribers. “We started with our Free Internet initiative a couple of years ago and today we’re talking about immense growth in broadband... connectivity in the country,” Kamel said.

This growth would not have been possible without successful liberalization of the telecom sector. Once the sole monopoly of state-run Telecom Egypt, the sector has been opened to private sector participation. Kamel reckons that private investment amounts to over $1 billion per year in infrastructure deployment for mobile and broadband services. He says these firms are finding it advantageous to expand their investments due to solid returns within a framework of deregulation and reform. Average revenue for fixed and mobile services is increasing by 30 percent per annum, he estimated.

He added, however, that the deregulation and privatization process has also brought significant gains to the government’s coffers. For instance, the treasury received LE 25 billion over the last 18 months as a result of the initial public offering of 20 percent of Telecom Egypt, the sale of a third mobile operator license and the upgrading of Vodafone’s license to cover a 3G network.

“Definitely this [revenue] is the result of the work within the last five or six years. I’m not saying that we will continue with this input and contribution to the public proceeds, but the message is that when reform is [undertaken] and managed in a transparent and balanced way, FDI is attracted, synergies and partnerships are built, and everybody [can benefit], even the public treasury.”

Kamel said the ministry’s ICT strategy through 2010 offers many investment opportunities for outside parties. The opportunities are varied, such as laying submarine cables, licenses for new international voice gateways, triple play service and WiMax technology. He noted that several agreements would be signed that day between Egyptian and American companies for piloting WiMax technology in Egypt.

The second part of the ministry’s strategy is using ICT for development, Kamel said. “It has been clearly recognized that ICT is a catalyst for health services, for government services, for education services and, not to forget, content services. All of these are happening in public-private partnerships.”

One massive undertaking that requires partnering with the private sector is digitizing Egypt’s cultural and historical heritage. “I urge those companies that really have experience in online content in the US to come and invest in Egypt and partner with Egyptian companies to serve the 300 million Arabic-speaking population worldwide – in our neighboring countries and also North America and elsewhere. We will be really supportive.”

Kamel also discussed the Egyptian Education Initiative, begun in May 2006, using a public-private partnership model to improve education through the use of ICT. The initiative has received the support of Cisco, Hewlett-Packard, IBM, Intel, Microsoft, Lucent, Oracle and Siemens. As a result, 2,000 preparatory schools have received broadband connectivity. The initiative aims to equip another 6,000 schools. In addition, 80,000 teachers have been trained on the use of ICT applications such as operating systems, software applications and database administration, as well as hardware and network maintenance.

The minister said the ICT sector is working to improve healthcare by modernizing 400 primary healthcare unions. Still, he admitted, more progress is necessary to modernize the nation’s emergency care, which he said was a government priority. He called on the private sector for greater investment.

Finally, he said the ministry’s strategy focuses on developing export-oriented, IT-enabled services. He believes international companies can profit from Egypt’s know-how and location. “We’ve realized that the world is changing, specifically in delivering services worldwide. There are big numbers, billions of dollars of growth each year in the services industry in the US every year, and we think that Egypt really ought to get its share.”

Specifically, Kamel said that Egypt should be a key offshore destination in the Middle East. Already, he noted several huge companies have significant operations in Egypt, including IBM, Intel, Microsoft, Cisco, Oracle, France Telecom and Alcatel-Lucent. These companies have trained engineers, invested in support centers and set up operations that help solidify Egypt as an up-and-coming IT destination.

He concluded his speech by remarking: “There are many friends in this room helping us and again I’m hoping that our American partners and friends continue to help us in our endeavors in a win-win relationship.”

During the next session, Paul Laudicina, managing officer and chairman of the board of A.T. Kearney, discussed how Egypt can capitalize on its potential to capture a growing segment of global services. He noted that while the US and Europe have shrinking populations, Egypt stands to gain through a combination of its size and skills. “The opportunity that population-rich, technically-able societies like Egypt have to meet the needs of the industrialized world is really quite extraordinary.”

To do so, Laudicina explained that Egypt needs to overcome gaps in performance and perception. He pointed out that the performance gap is closing thanks to government efforts, and that Egypt is now considered among the top 15 countries in terms of offshore destinations due to its technical and language skills, low labor and infrastructure costs, and a reliable telecom infrastructure. As for the perception gap, he outlined areas in which Egypt needs to make strides. In particular, the country needs to broaden the talent pool, develop broad-based marketing and management skills, minimize bureaucracy and red tape, and reshape its image in order to help attract more investment, he said.

In closing, Daniel Carroll, Jr., a member of the National Security Telecommunications Advisory Committee and board member at Telcordia Technologies, announced that a new partnership between Telecordia and Egypt would provide technical training and a gateway solution to number portability. “These are tremendously exciting times for those of us who are involved in partnering with local partners in Egypt,” he said. “We thank you for your vision, we thank you for your steps that have been taken to get this entire process under way, and we look forward to continuing to grow with you in Egypt.”

Following the luncheon, several memoranda of understanding were signed. These included:

• Two MoUs between Nile University and Ohio State University: one for educational and scientific cooperation in communication, networking and signal processing; the other for cooperation in wireless networks and intelligent transportation
• An MoU between Nile University and Bell Labs Alcatel Lucent for cooperation in research on wireless communication technologies, network performance analysis and optimization
• Two MoUs between Telecom Egypt and Teletech: one to upgrade CDMA networks to EVDO for broadband; and the other for the replacement of transmission networks
• An MoU between Next Wave and MCIT for cooperation in wireless broadband technology and the development of human capital
• An MoU between Telecordia Technologies and Mashreq Telecom to establish a regional telecom academy in Egypt