1 - 7 November 2001
Issue No.558
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Al-Ahram Weekly Online 1 - 7 November 2001 Issue No.558 |
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E-business, in business
The Internet boom in Egypt can help business. Soha Abdelaty surveys e-commerce
Online commerce is certainly not new to world markets. But it is rapidly spreading as an effective and efficient way of conducting business. B2B (business-to-business) transactions, conducted online, are supposed to amount to US$1.4 trillion by the year 2003.
But Egyptian markets still have a long way to go before e-commerce is fully established, in concept and practice. Exact information on the number of companies involved in e- commerce and the volume of business transactions conducted online in Egypt is unavailable, and officials from the Ministry of Telecommunications and Information Technology would not comment, but the indications are that Egypt still has "significant growth potential."
E-commerce involves two aspects, e-business and e-signature, according to Karim El-Helaly, a lawyer at the Zaki Hashem law firm. E-business involves all business transactions electronically, while e-signature involves signing a contract online.
The first company to introduce e- commerce to Egyptian markets was Ciranet, which was launched a year ago as a joint venture between Raya Holding and Citibank. Ciranet is an online market for consumers and suppliers of pharmaceutical products. Egyptian pharmacies can log on, browse the catalogues and order. They can then pay for their selections electronically. Citibank offers a system which gives pharmacies a credit line, paid electronically by instalments. Or users can pay in the traditional ways: by cheque or cash on delivery.
Nilebill is another company offering an e-solution to Egypt's online commercial needs. Nilebill lets you pay invoices -- online. The site, which is expected to launch at the end of this month, will allow users to pay their children's tuition fees, subscriptions to newspapers and magazines, syndicate membership fees and membership fees for social clubs. If all goes well, Nilebill will expand to other services, too. Although Nilebill is not itself a market for online goods and services, the Web site can be considered a first step in the right direction. "E-commerce includes e- billing in it," agrees Akram Allam, deputy board director.
The rise of such new services could signify the maturing of the Egyptian IT market. But Sameh Montasser, managing director of Ciranet, disagrees. He told Al-Ahram Weekly that trends in the world market were simply carrying Egypt along, as the country opens its economy to world markets and develops its IT sector.
"The majority of world trading is going to happen through the Internet," said Montasser. "If we do not prepare for it, we will be left out. Egypt must get there as soon as possible. That is why we launched." he explained. Montasser feels that Ciranet has laid the foundation for future e-commerce companies. "Being the first to introduce B2B to Egypt was tough, because we were the ones who were preaching, who were trying and who were spending a lot of money. Anyone now coming in will have a much easier task than we did a year ago," he said. According to Montasser, e- commerce requires four things. The first is proper physical infrastructure, (in short, lines connecting to the Internet). This, Egypt already has. The second prerequisite is affordability. The government is working on this by making access to the Internet free by the start of next year. But the final two stages, awareness and proper e- commerce legislation, still need a lot of work, Montasser warned.
One of the main problems facing the growth of e-commerce in Egypt is that business people have not yet realised the value e-commerce can add to their businesses. "Government, the public and private sectors, and the IT sector all have a responsibility to raise public awareness. If you are not aware of what electronic commerce can bring to you and can help you do, you will not use it," observes Medhat Khalil, CEO of Raya Holding.
Nilebill's Allam, though, feels awareness will come through availability. He does not expect people to rush to the Web site as soon as it is launched, but believes time will change that. "We believe in the saying, 'availability creates demand.' When it becomes available, there will be a demand, just like mobiles. We did not know we needed them until they were available," he said.
But both Nilebill and Ciranet agree that security of transaction is a problem and both have expended great efforts to try and resolve it. Both companies say they use the latest security measures from the US and Europe. Nilebill is also partners with Verisign, an IT security company, while Ciranet has obtained security certificates from companies in the US and Europe. In fact, Allam is confident because, "It is to our advantage that we are starting behind the US and Europe. This lets us learn from their mistakes. We started from where they finished."
There is one final problem, though, and it is glaring. Surprisingly, all these companies are operating without any proper legislation to protect and guarantee their transactions. "Right now we are working under normal trade laws that are not designed for e-commerce," says Montasser.
E-commerce legislation has been drafted and circulated, but it has not yet been presented to the People's Assembly and Shura Council to be discussed and approved. But when it comes of age, that legislation should protect Internet business people from fraud, whether in local or foreign markets. "With a proper e-commerce law, we would get the privileges and benefits of accessing foreign markets and that would remove trade barriers," explains El-Helaly. The e- commerce legislation also includes e- signature, one of the many integral aspects of e-commerce. Without e- signature, "how do I know that this person is the one who placed the order for me to deliver?" asks Montasser.
Companies have sometimes hesitated to chase markets, because of lack of government initiative and support. "I do not think they [the government] are exerting the right effort. I do not think that e-commerce will come soon because [of that]. Only one ministry understands what it is doing [the Ministry of Telecommunications and Information Technology]. The rest are not even used to computers. They are not convinced that the computer is a useful tool," says Khalil. Others believe that the government is failing to set the right example. "The government is a major procurer. They buy so much, they represent maybe half the market. If they use the old ways of purchasing, [they will not be setting an example]," argues Montasser.
But despite these apparent obstacles, the general mood in the private sector is sanguine. E-commerce is seen as inevitable. "We all know the increase in the number of Internet users is coming, especially with free lines. And we are starting during the renaissance of the Internet. It's on our side," concluded Allam.
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