Selling software stateside

Minister of Technology and Communications Ahmed Nazif tells Nevine Khalil about the ideas he is promoting in the US
Boosting the Information Technology (IT) sector was high on President Hosni Mubarak's agenda during his last visit to the United States, in March 2000. A year on, Egypt's IT sector is still enjoying strong growth and useful cooperation with US partners. Experts have also thought of new ways of cooperating across the Atlantic. These include creating a fund to encourage US-Egyptian partnerships, publicise investment opportunities in Egypt, and promote the offshore development of Egyptian IT products which may sell to America.
Minister of Technology and Communications Ahmed Nazif put together these ideas ahead of Mubarak's latest trip to Washington. He hopes they will replace the now-defunct Mubarak-Gore initiative. The initiative was the mechanism used to promote cooperation between Egyptian and US private firms. The new US administration has now dissolved it. Nazif believes that although the Mubarak-Gore mechanism was instrumental in promoting IT cooperation, it had already "served its purpose" and relations were ready to shift. "I think the initiative had outlived its purpose in the IT sector," noted Nazif. "We need a mechanism for cooperation, but it doesn't really matter which. Let's just do the work."
Nazif also feels that a new mechanism will make cooperation more lively. While the IT sub-committee of the Mubarak-Gore initiative helped business leaders from both sides meet and discuss ideas, Nazif believes what is needed today are "more pragmatic and real projects." The ideas which Egypt put on the table during Mubarak's latest visit suggest ways of allowing business as well as government to talk to each other directly, though they still need further fine-tuning, according to Nazif.
One proposal is the creation of a joint fund to encourage partnerships between American and Egyptian technology companies. The fund requires managers and a secretariat comprised of business people and civil servants from both sides, thereby creating a "more pragmatic mechanism for cooperation."
Nazif believes $50 million is needed to launch the fund, and that within weeks ideas will crystallise further. "If we achieve this within the next six months, it would be great," he said.
Other ideas focus on business-to-business cooperation. Current proposals include installing up to 5 million telephone lines in Egypt, using wireless technology, within the next five years. The required technology was primarily developed in the US, so Egypt expects heavy US involvement. Another concrete investment opportunity is Egypt's plan to introduce a third mobile telephone operator by December 2002.
Nazif's third task last week was to sell Egypt as a software exporter. "There is always a shortage of talent in the US for programming, database administration and information services," noted Nazif. "Egyptian professionals can provide this at a quarter of the cost (of US competitors)." While Egyptian companies already export software worth $40 million to the US each year, the minister believes that this figure can multiply ten-fold within the next five years if ideas are marketed well. "It's a win-win situation for both sides," Nazif said.
Before Mubarak's arrival, Nazif held meetings at the World Bank, the Federal Communication Commission (FCC), and met the under-secretary of state for economic affairs, as well as prominent IT business representatives in Maryland and Virginia. These entrepreneurs are planning visits to Egypt next autumn to seek investment opportunities and to cooperate with Egyptian counterparts.
The minister's meetings also aimed to finalise a number of agreements as well as review progress made since the presidential visit last year. "We got a lot of momentum out of last year's visit when many agreements were signed," noted Nazif. "All of which were successfully implemented."
Nazif said that a year after Egypt took steps to market its IT sector aggressively in the US, many American business leaders in the IT sector were "following closely" Egypt's progress, and seeking opportunities in Egypt. "Now we are witnessing the translation of our work last year into more concrete partnerships," he said. Over the past 12 months, the Egyptians and Americans finalised a number of agreements including one to invest $10 million in an e-commerce company for pharmaceuticals, another to create a data bank in Egypt at a cost of $25 million. "The more we show these success stories and duplicate them, the closer we will be to our goal of really enlarging our local industry and becoming more export oriented. That's our main goal," said Nazif.
Over the past 12 months, Egypt's IT sector experienced "very healthy growth," according to Nazif. Growth figures for the IT sector in the year 2000 stood at 35 per cent "which exceeded all expectations. It certainly exceeded any other sector in the Egyptian economy which has not grown much over the past year," said Nazif.
These figures were mainly a result of agreements with American firms. In the professional training sector, Egypt worked with companies like IBM and Microsoft which helped train over 5,000 Egyptian professionals. New investments in the IT sector more than doubled last year, from LE290 million in 1999, to LE620 million in 2000. "We've also seen a lot of growth in our infrastructure and our network," said Nazif. Telecom Egypt, for example, added some 850,000 lines in one year, bringing the number of subscribers to six million. The number of mobile subscribers grew from one million in January 2000 to 2.5 million this year. "This is enormous growth," said Nazif.
The Egyptian government has encouraged the private sector to do business in telecommunications and IT. But still more is needed, particularly new laws to promote and facilitate investment and partnerships in the IT sector. These wishes should be partly met by a series of draft laws due to be presented to parliament soon. These include a new telecommunications law, an e-signature law which facilitates e-commerce, and a law restructuring Egypt's National Postal Authority along commercial lines. It is also hoped that the proposed Software Industry Development Association will expedite a boom in Egypt's IT sector.
Nazif notes, however, that passing legislation is a protracted affair, and more time is needed before Egypt's IT house is in order. "I thought it would be easier," he remarked, "but found out the hard way that it would take a long time."
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