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Al-Ahram Weekly 29 June - 5 July 2000 Issue No. 488 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 29 June - 5 July 2000 Issue No. 488
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Reality bytes
By Aziza Samy
The drive to support Egypt's Information Technology (IT) sector received impetus last October with the formation of the new cabinet. Ahmed Nazif was appointed to lead Egypt's very first Ministry of Telecommunications and Information Technology. Armed with practical experience in the field, Nazif has given a push to the drive to turn Egypt into a regional IT hub. This vision has now been translated into a working plan -- on paper at least -- designed to achieve close cooperation with the private sector.
Vital components of this plan are the solicitation of investments and the forging of partnerships between Egypt's private sector and multinational companies. Nazif has also announced that an e-government is in the making. Although the full details of the three-year plan in which this initiative is to be realised have not yet been disclosed, the ministry's project aims at upgrading the government's performance by mechanising all of its transactions. The government also says it will "invest heavily" in promoting professional training and human resource development needed for software programmers. As such, 5,000 individuals are scheduled to be trained every year in cooperation with multinationals such as IBM, Microsoft and Cisco.
The issue of Egypt's IT becoming able to export software applications, in addition to servicing local demand, gains particular importance, given that if it succeeds in this direction, it will contribute to the aim of attaining 7 per cent growth for the economy. With a global market assessed around 300 billion a year, and 250 million Arabic speakers demanding Arabic software, this would consolidate Egypt's position in the region, especially in view of the potential competition posed by Israel, which is a developer of software, and to a lesser extent the United Arab Emirates, which is working on becoming a trade hub for multinational IT companies.
There is "high human resource potential in Egypt, due to the size of its population and what has proven to be an aptitude for intellectually oriented skills. Therefore, in addition to serving as a trade hub, Egypt is qualified to produce and export software applications, " said George Cassir, regional director of Compaq for the Middle East, Mediterranean and Africa, based in Dubai. "Compared to a country like India, which for years had a closed economy, Egypt can, in a smaller period, launch several initiatives to become a regional IT producer, although because of the complexity of the economic and social environment, the task might not be simple."
While mobilising its manpower, the government is working on laying down the infrastructure necessary to ensure high-speed connectivity to the Internet, such as the extension of a high-speed digital network. It is also bent on planning "smart villages" designed to provide the right environment where the brainware IT industry may develop by providing companies a user-friendly environment to set up their businesses.
The proposed smart village will not include any factories or universities, but will comprise telecommunications, software, Internet, training and services companies complementing one another, providing them with state-of-the-art infrastructure and Internet access, explained Ali El-Hefnawi, senior advisor to the minister of telecommunications and information technology. The village will provide fully-equipped office space with fiber optic cables and satellite connections allowing companies to only plug in and start operating, he added.
The first smart village will be built on 317 feddans in the Pyramids area, said El-Hefnawi. While the Ministry of Telecommunications and Information Technology has contributed the land, the initiative of building villages will be left to the private sector because "the government is not a good salesman," according to the minister.
Consequently, a private sector company is being formed to oversee the first smart village's establishment and management. With a start-up capital of LE120 million and an authorised capital of LE500 million, the private investors will also develop the land, market and maintain it.
But what exactly will be Egypt's role in the software market is an issue raised by people working in the field.
According to Medhat Khalil, chairman of Raya Holding, speaking during a meeting of the Business Software Alliance Club, Egypt's human resources are a relative advantage for an IT industry because it is a "brainware industry." He pointed out that although there are 5,000 Egyptians working in the IT field, it is estimated that there are only 2,000 developers producing around LE50 million worth of software annually.
It is imperative, however, that domestic demand be reinforced so as not to perpetuate a dependence on foreign markets alone, warned Alaa Agamawi, head of the Software Development Society. "The Egyptian market should give a competitive advantage to Egyptian companies, otherwise there is a danger that local developers will become only tools of foreign companies." This would be attained by helping the Egyptian private sector set up small and medium sized IT enterprises, and restructuring investment incentive laws.
A better approach to marketing should also be adopted, said Agamawi, since software companies are "producing haphazardly, not necessarily what the market needs."
Beyond smart villages, infrastructural upgrading is needed in the telecommunications sector in general. Most importantly, according to Cassir of Compaq, "the [very high] costs of telephoning outside Egypt are" a basic factor impeding investments in this domain. Cassir believes that in spite of the structural and legal obstacles, it is important that Egypt take on the IT initiative "because you will have a lot of competition in the region."
"One should not underestimate the strength of Israel's IT sector in particular. Multinational companies are now re-exporting software developed in Israel. And, it is expected that if peace is attained, Israel will be looking to forge [business] alliances with neighbouring countries."
In terms of market competition, Egypt could have a competitive edge in its "cheap white collar workers, meaning the low cost of human resources needed in this domain," said Tareq Heiba, general manager of Compaq in Egypt. "The government has done an excellent job through initiatives with the multinational software companies to generate a calibre of software producers who can compete with a company like Microsoft."
He believes that Egypt's software market would lie in Europe, rather than the Arab countries, since in the former there is a rising demand for software applications in Arabic. "This is a totally different market than that for Israel, for instance, which produces software applications in espionage, Internet security, military and agriculture."
"We have the business, and the competitive edge, which is the market, but we still need to promote the facilities, such as tax exemptions, and good telecommunications: a key element in attracting IT investments," said Heiba.
"Positive intentions are not enough," he continued, adding that there is a need to "upgrade the legal and structural environment."
To date, there is no law regulating e-commerce and e-business. "The law needs to address issues, which will inevitably come up, such as, the use of cheques in transactions conducted via the Internet." said Heiba.
Despite the expanding demand for IT, he believes the government still needs to involve itself more actively in promoting the use of information technology in every day life. "Private initiative alone cannot persuade the public of the importance of IT" he said.
Additional reporting by staff
