Egypt is fast transforming into the silicon valley of the Middle East. Niveen Wahish writes It is unprecedented, and certainly intriguing -- Egypt booms in two main arenas; information technology, and ancient relics. In fact, at a time when most of the world's economies were not growing beyond five per cent, and Egypt's own growth rate hovered between two and three per cent, the nation's Information and Communications Technology (ICT) sector was booming -- growing in recent years at a staggering rate of 34 per cent. The growth has been far reaching: phone lines, Internet penetration, investment -- the whole high- tech development package. In five years, the number of fixed phone lines went from around four million to 11.5 million, a penetration rate of 13 per cent; mobile subscribers surpassed six million, a penetration rate 8.5; and the number of Internet users exceeds three million, compared to 300,000 four years ago. Investment in this sector has also multiplied. The number of companies working in the ICT field reached 1,152, employing 33,413 professionals. This tremendous development has not been coincidental, but is the result of a government target to integrate Egypt into the global information society and make ICT a vehicle to address socio- economic challenges and bridge the digital divide between Egypt and the so-called developed world. As part of its effort to move towards that target, the government -- represented by the Ministry of Communications and Information Technology (MCIT), established in 1999, set forth a strategic plan to encourage private sector investment, expand the market, and spread use and awareness of IT. The deregulation and liberalisation of the sector played a crucial role in that growth, incorporating the private sector as a partner to the government in the rollout of infrastructure and services. Currently in the market there are two mobile operators, seven public date networks, four Internet backbone providers, 165 ISPs, six companies offering value added and voice services and three payphone companies. In fact, the awaited privatisation of Telecom Egypt (TE), the incumbent operator, may be the last remaining task towards fully liberalising the sector. Although international market conditions have kept the company from debuting on the stock exchange back in 2000, company management has not been deterred from revamping the company. The recent acquisition by TE of 25 per cent of Vodafone Egypt has given it a foothold in the mobile phone market -- a move experts believe will boost its value once it is eventually privatised. And that may not be too far off -- market conditions may soon be turning around. The PC for every home, the Information Technology clubs and subscription-free Internet initiatives are three nationwide plans designed to enable the general public to possess a PC at affordable prices, and access the Internet at the cost of a phone call without having to pay any subscription to Internet companies. The PC for every home initiative allows individuals to acquire PCs through monthly instalments, using their phone line as collateral. About 65,000 PCs have so far been dispersed this way. Over the next seven years, MCIT plans to distribute six million computers. The programme is also designed to expand the local computer manufacturing industry. The Free Internet model was a major step in increasing the number of Internet users: from one million in January 2002 to two million a year later. Six hundred-and-forty ICT clubs were set up in dense and remote areas of Egypt to familiarise people with computers and promote IT awareness. To support the growing usage, the government has been prepping up its infrastructure. International capacity and dial-up infrastructure experienced an exponential growth. MCIT also started a number of initiatives to expand broadband capacity and establish a reliable, fast Internet backbone. Introducing competition to the local Internet and data backbone market, was a serious step towards providing end-users with maximum capacities and best service. Several ISPs were licensed by the National Telecommunications Regulatory Authority (NTRA) to build their own data backbones and expand their broadband capacity by obtaining separate international gateways. Whereas Egypt was using a bandwidth of about 20 megabytes to connect to the rest of the world, today it is using a bandwidth of 1,000 megabytes which means 50 times more traffic with the rest of the world on the Internet. Information technology training and connectivity is another essential component of the quest to spread IT. MCIT, together with private sector partnerships has launched several projects bringing Internet connectivity and IT know-how to schools and universities. The training provided ranges from basic computer literacy to preparing the software programmer and IT expert of the future. In fact, software programming and IT services is one of the areas MCIT is attempting to place among Egypt's main hard currency earners. And to an extent it has so far succeeded. Currently Egypt exports about $150 million in software annually, up from $50 million three years ago. Egypt's advantage in the area of software is the cheaper labour cost and their specialising in Arabising English software. MCIT is also banking on greater exports of IT services. This too is already beginning to happen. Several Egyptian companies, such as Orascom Telecom, Raya Holding and ITWorx are exporting their support and services to countries in the region and further abroad. Egyptian engineers are installing mobile networks in Afghanistan, Iraq, and Algeria. "We are exporting the expertise that has been built within the country by multinational companies to the rest of the region, and in some cases to Eastern Europe," MCIT Minister Ahmed Nazif told Al-Ahram Weekly. One example of the high potential service areas is the call- centre business. This area could be worth $200-300 million a year in five years time, estimated Nazif. In fact, Egypt is trying to capitalise on the global trend of offshore Business Process Outsourcing (BPO). BPO includes software development, installation and maintenance, as well as other activities such as call-centres for technical support and telemarketing. BPO relies on moving labour-intensive business processes to low-cost countries. India, the Philippines, China, Dubai, and Russia are some of the countries competing for a niche in this business. Through Egypt's Information Society Initiative (EISI) , the ministry is hoping to integrate IT into every aspect of life and to build a strong export-oriented ICT industry. The initiative has seven fundamental components: e- Readiness, e-Government, e- Learning, e-Business, e-Health, e- Culture and promoting the ICT industry. An essential element to the success of the EISI is a private public partnership in the execution of government objectives. EISI will also lead to technology transfer between local and foreign companies working on the different EISI projects. One of the most recent fruits of such cooperation is Egypt's e- Government portal, a new citizen-oriented gateway that aims at enhancing the level of services offered to citizens and creating a favourable environment for investors and businessmen. Currently, more than 15 complete services are available online, offering options such as checking traffic fines, taxation and customs services and information on more than 700 services provided by the various ministries. The government has also realised the importance of investment for further growth in this sector. With that in mind, it has created the Pyramids Smart Village. A 300-acre state-of-the- art technology park, just outside Cairo. Companies located within the Smart Village receive a 10- year tax exemption. Owned by a private consortium, the Village has already attracted leading international firms such as Alcatel, the Cairo and Alexandria Stock Exchange, Microsoft and Vodafone to set up shop there. It also houses Xceed, Telecom Egypt's contact centre facility, which has a capacity for 2,000 agents. To encourage investments, Egypt's General Authority for Investment and Free Zones is now the one-stop shop, providing investors with all the relevant administrative bodies under one roof. Furthermore, laws and regulations have been upgraded and introduced to suit the requirements of this sector. The intellectual property law, the Telecommunications Act and most recently the e-signature law are three laws instituted to regulate competition and allow for secure expanded use of electronic media. Egypt is also signatory to ICT- related international agreements such as the WTO's Basic Telecommunication Agreement (BTA) and the Information Technology Agreement. Accordingly fixed voice and international services (currently monopoly of Telecom Egypt) will be deregulated by the end of December 2005. But although TE enjoys a monopoly over international connectivity, prices for international leased lines have experienced a number of successive reductions during the last three years, showing a clear sign of the government's commitment to link the country to the global society. Most recently, the strength of the national communications sector has sent ripples through the globe with its strategic step into the rebuilding of Iraq. Egypt's sector strength is perhaps most accurately reflected in its current foothold in the occupied land. The country's place atop the global communications map is indicative of perhaps one main thing: a plan, a drive, and the persistence to realise a goal.
