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Al-Ahram Weekly 30 March - 5 April 2000 Issue No. 475 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 30 March - 5 April 2000 Issue No. 475
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Special Focus Travel Living Sports Profile People Time Out Chronicles Cartoons On the wings of IT
By Amira Howeidy
"Could your future be just as bright without going abroad... to develop Telecom Software?" a leading International Telecommunications Company asked in a newspaper advertisement published recently.
Of course it had the answer. The company was announcing that it was starting a new software facility in Cairo and was thus recruiting Egyptian software developers and wireless engineers.
To many officials and IT people, this ad summed up Egypt's aspiration to become a major software provider in the region.
Armed with rich human resources, geographical proximity and a successful record in developing customised software, both the private sector and government have set themselves a goal -- to establish Egypt as a major provider for the region.
The government was quick to act once the priorities had been set. Given the fact that until President Hosni Mubarak inaugurated the first national IT exhibition last September this sector wasn't viewed seriously, a lot of progress has been made. For one thing, a communications and information ministry was formed last October. Two months later it produced an ambitious "national plan" that seeks to "build an information society". According to the 75-page plan, the government's four goals in this respect are developing the IT industry; building an information society capable of absorbing and making use of the excessive flow of data; developing the communication and information infrastructure and increasing the number of IT graduates.
Both official statements and the government plan seem confident that software export is one of the most potentially lucrative industries of the future. And although the Egyptian industry is small by international standards, it has been growing at 100 per cent a year. The plan drawn by the ministry puts offshore outsourcing revenues in 2000 at $50 million, up $35 million from last year. In nine years time, the government expects this industry to bring in $2,500 million. Moreover, the ministry is working on constructing "hi-tech complexes" across the nation.
The private sector, which for the past three years had been calling for a national plan, is excited at the rapid developments and has geared up for the boost. Recently, seven software companies came together to form the Egyptian Software Consortium (ESC) which seeks to export software services. With the help of the Egyptian Software Association (Expo-Link) and in record time, the ESC has recruited a consultant in the United States to find companies that could be interested in software resources and capabilities in Egypt. According to ESC's chairman, Dr. Abdel-Hamid Abed, the consortium is embarked on finalising "four or five" contracts with US-based American counterparts.
The consensus is that Egypt has a promising future in exporting computer software. So far, the results have been satisfactory, giving IT people reason to believe that Egypt can compete with major low-cost software providers such as India, whose industry brings in revenues of $3.8 billion annually.
Theoretically, the national plan will in effect pave the way for development akin to the Indian model. In the past critics had attacked a government policy based on seeking profit from the IT sector by imposing high communication fees and equally high taxes and customs duties. The new plan, however, exempts computer and software importers and exporters alike from taxes for a period of 10 years.
But Ahmed Nazif, recently appointed minister of information and communication, is overwhelmed with planning which, to the delight of the private sector, gives them an unprecedented role. "With very limited investments we can exploit our best asset, which is our youth, given that more than half of Egypt's population is below the age of 30. We can fill the technological and communications gap faster than we imagine," he said.
The ministry has been busy improving the communications and telephone network, doubling the number of telephone lines and improving overall service. Moreover, Egypt Telecom, the national telephone company, will place 30 per cent of its shares through a public offering.
Egyptian IT industry insiders emphasise the "human resources" advantage.
"Our large population is a very important asset within the hi-tech sector," said Abed. "There is the worldwide shortage of 60,000 IT experts and Egypt should make use of this fact. If I have 20,000 Egyptians each earning $50,000 a year, that makes $1 billion a year. Its a very simply exercise really."
The number of Egyptian programmers, now 10,000, desperately needs to be tripled, he argues. Moreover Egypt should be attractive to international IT firms who wish to invest here because "it can offer 50 per cent lower costs than competitors in Europe," Abed added.
And while he agrees that India is cheaper still, there is only a two to three hour time difference between Egypt and Europe.
"Egypt's proximity to Europe means the time difference ranges from two to three hours only. As for Africa, the time zone is zero. We can serve as a midway point between the European and African continents."
NGOs such as Expo-Link, a non-profit organisation founded by members of the private business community, is already working to promote the export of Egyptian software by providing marketing strategies for both software companies and programmers. So far it has designed and published company profiles, as well as facilitated participation in international IT exhibitions.
A report recently issued by the US-based Harvard Computing Group (HCG) suggested that Egypt could build an export industry worth $600 million annually. In an interview with Al-Ahram Weekly, HCG President and CEO Michael Cunningham said that this would require coordinated planning, involving financial institutions, education, government and industry working together "with a master plan in place. All other countries that have been successful in building an industry this size have taken a similar approach."
Cunningham's list of priorities if Egypt is to see software export successfully take-off includes increasing the number and quality of IT graduates, continuing education for mid- and upper-management in Egyptian software firms, financial support to develop existing firms and create new ones and serious steps to implement intellectual property and contract laws.
According to Nazif, his ministry is relying on HCG's report as a guideline for its own plan. And the government-affiliated Information and Decision Support Centre has already embarked on intensive nine-month training courses to create skilled programmers and increase the number of IT experts.
More software companies are shifting their export expansion activities in the direction of Arab countries, Europe and the US. According to Ayman Samir Abdel-Aal, president of Cairo 2000, which exports software, 50 per cent of the total revenues of the IT industry come from offshore outsourcing. And Egypt is a market leader in the field of Arabisation, he said. But although the new environment is encouraging for investors, Abdel-Aal complains that Egyptian banks are still unwilling to give software companies loans because of a perceived lack of collateral.
