Al-Ahram Weekly On-line 28 Sep. - 4 Oct. 2000 Issue No. 501
Published in Cairo by AL-AHRAM established in 1875

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Looking for innovative ideas

By Niveen Wahish

Need to send someone flowers or a present, but short on time for shopping? These days you can choose from an assortment of gifts available on several Egyptian Web sites. Just one year ago, this option would not have been available. But things are changing and new Egyptian Web sites are established every day. Flipping through the daily papers, one is certain to find a handful of advertisements for Web sites offering everything from real estate services to job opportunities.

According to Mohamed Karam, a software engineer, a few months ago Egypt's presence on the Internet was very limited, but things are beginning to change. Karam believes that growth in this area is "potentially exponential." Last year, the estimated value of e-commerce transactions in Egypt was LE1.5 million. Some observers predict this year transactions will amount to as much as LE9 million. This, however, is a meagre figure when it is viewed in the context of the US$3 billion worth of e-commerce transactions predicted to occur globally in 2002.

Setting up an e-business may be simple, but making it run successfully is hard work. The site for CareerEgypt.com, which helps job-seekers and employers trying to fill positions, was set up during a period of 10 days. In business now for over a year, CareerEgypt.com subsequently commanded much of the time of the partners running it. Tarek Amin, one of the company's three founding partners, said "for a couple of months it was a second job," but as the business grew those involved quit their jobs to devote all their time to it.

But e-commerce is not just about setting up a site; customers need to be attracted, also. Although the numbers for customers of Egyptian sites are up, drawing new ones remains a difficult task, hampered in part by the limited number of Internet users in Egypt. According to Raafat Radwan, head of the Cabinet Information and Decision Support Centre (IDSC), Egypt has 80,000 paying Internet subscribers.

With this figure in mind, the state's primary aim regarding the Internet is to increase the number of users. For the year 2002, Egypt has set a target of two million users. Towards achieving this goal, various initiatives are in the works to facilitate purchasing of computers and to offer Internet subscriptions at lower prices. "Increasing the number of users creates demand which would encourage companies to put their goods on-line."

Many businesses in Egypt are not adequately equipped to conduct e-business. Radwan said that there are less than 1,500 businesses with a leased line Internet connection in Egypt. "This means that the technological infrastructure needed for e-commerce is not in place."

"Companies wanting to conduct business on-line need to put their house in order first," said Radwan. He explained that to participate effectively in e-commerce, it is not enough for a business's telecommunications system to have the capacity for connection with individual consumers. To conduct "business-to-business e-commerce" a business's system must be able to connect with the systems of other companies.

Financial infrastructure capable of dealing with non-cash payment methods is also required for e-commerce. Although banks and credit card companies have increased the number of users of these methods of payment in Egypt, many people are reluctant to pay over the Internet for fear that transactions might not be secure.

However, according to Atef Saber, deputy manager of the credit card department of the National Bank of Egypt, banks are in the process of installing a system to secure electronic transactions. But this system is very costly, and banks hesitate to launch it without assurances that they will have ample subscribers to make it cost-effective. "Business-to-consumer transactions are insufficient to cover the expenses of the system," said Saber. Until such a system is available, Saber said his bank will be issuing Internet Cards to be used to make payments over the Web. The maximum that can be spent using these cards will be US$100.

To assist banks, the IDSC has launched the "cashless society initiative" aimed at encouraging companies to invest in transforming Egyptian society into a cashless society.

For the moment, Egyptian dot-com companies are getting around the credit card dilemma by allowing payment on delivery.

The culture of business is another issue. "The business environment in Egypt has not developed sufficiently for us to say that the relationship between businesses and consumers is secure enough for a transaction to take place without a face-to-face interaction," Radwan said. Typically, shops in Egypt operate according to the principle that "goods sold cannot be exchanged or returned," meaning that a product must be thoroughly inspected before it is purchased, explained Radwan.

Competition among dot-com enterprises is stiff, but according to some in the industry, this may not be entirely healthy as many businesses vie for the same customers. Mohamed Karam explained that many new dot-com businesses are replicating the services offered by established enterprises. He added that the rate at which on-line companies are appearing outstrips the rate at which demand is increasing. According to Karam, what is happening is that once a business succeeds, others follow in its footsteps, offering the same services. Although this creates a "survival of the fittest" environment, explained Karam, considerable investment will be lost. "The market is waiting for good ideas," he said, recommending that e-commerce operators be innovative.

To avoid replication, Amin of CareerEgypt.com suggested that copyright protection regulations should be applied strictly. "Competition is fine, but we are all in the same boat," he said.

Such competition begs the need for regulation of e-commerce in Egypt. Currently, existing regulations are minimal and there is no clear delineation of customers and vendors' rights and obligations.

Radwan of the Cabinet Information and Decision Support Centre said a committee has been established by the Ministry of Justice to prepare a law regulating e-commerce. "This committee has been working for almost a year and will complete its work soon," he said. One of the issues it is exploring is the use of digital signatures and e-mails as documents to be used as evidence in the event of disputes. In addition to establishing regulations for the conduct of parties in transactions, the law also establishes a mechanism for resolving disputes so that minor ones, at the very least, can be settled out of court.

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