Issue No.588
Economy
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30 May - 5 June 2002 Issue No.588 Economy |
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| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
Eek!-commerce
Around the world, e-commerce is gathering pace. But Egyptian business, and the country's legal system, seem nervous. Sherine Nasr reports
Every day, life is getting harder for private business. In a globalised world of ferocious competition, where customers demand the very highest quality at the very lowest price, private companies in a developing country like Egypt are happy merely to survive, let alone make a profit.
Even the virtual world, once a source of hope to thousands of small companies, has suddenly begun to seem a whole lot more menacing.
"The introduction of automation to business is faster than any of our traditional traders or businessmen can grasp," argues Ashraf El-Attal, chairman of Egyptian Traders, a private company which claims to have been among the first to introduce electronic facilities to its business processes. "Obviously e-commerce will not replace traditional trading methods, but this does not mean that we should completely forget this new area of competition," he explains.
Happily, Egypt doesn't seem about to. According to Ahmed Nazif, minister of telecommunications and information technology, serious plans have been laid to develop institutions related to e-commerce, such as banks and insurance companies. "Moreover, Egypt is working hard on building the infrastructure for e- commerce. We believe it to be the cornerstone for increasing Egyptian exports," said Nazif during the opening session of a conference titled "the Impact of E-Commerce and Transport Services on the Development of Export," which was held in Cairo last week.
Although no accurate statistics yet exist showing the actual volume of e-commerce worldwide, there is no doubt that it is growing fast. According to Adel El-Ali, an e-business manager at Dubai Ports, Customs and Free Zone Corporation, e-commerce accounts for 10 per cent of world trade. El-Ali thinks that come 2005, "E- commerce may represent 15 per cent of the volume of global trade, to the tune of $7.1 trillion."
In the Arab world, the bulk of Internet users, estimated at four million, are concentrated in six countries, with Egypt at the forefront. The number of Internet users in Egypt has risen from 43,000 in 1997 to 850,000 today, while there are 90 Internet Service Providers as opposed to the 20 of a few years ago. The number of Internet users is expected to jump to 25 million in the Arab world by 2005.
Yet to prosper most fully, Egyptian businesses will need to learn to turn these numbers to their advantage.
"In the past, things moved slowly. Traders had to visit clients to build trust and make a deal. With the introduction of the Internet to Egypt, the Website has become a tool for getting customers and marketing services," said El-Attal.
Unfortunately, most Egyptian companies with a Website use it merely to catalogue their products or services. "This is different from e- commerce," he argues.
El-Attal explained that for the Internet to work to a company's benefit, the company must build an e-trading platform which includes not only buyers and sellers but also others involved in the trading process, such as banks, insurance companies and shipping agents.
This, of course, requires diligent work in cyberspace, something most Egyptian traders are either unable or reluctant to do.
But the rewards may be worth it: "It is difficult to ignore the possibilities and advantages for trading on-line. New business opportunities open out, wide and cost-free promotions are possible, and information can flow faster and more reliably," El-Attal said.
But according to Ibrahim Hegazi, associate marketing professor at the American University in Cairo, e-commerce take up is slow not so much because of suspicion of anything e-, but because Egyptian businesses approach their customers in the wrong way generally. Egyptian traders have a big problem confusing the principles of marketing and selling, he argues. "Marketing means making me aware of my customer, selling means letting my customer be aware of me. Unfortunately, most Egyptian traders have not identified who their customers are, so they often try to sell products to people who are uninterested. This is a big problem," he says. Hegazi does believe e-commerce can improve the performance of small and medium- sized enterprises in Egypt but they must first identify who their customers are.
Another obstacle to successful e-commerce in Egypt is social. "We are a cash society. Credit cards are not widely used and computer illiteracy is quite rampant," said Amr Abdel- Motaal, senior manager of a private law firm.
Some, like Dubai ports' El-Ali, advise Egypt to look abroad. He described how Dubai transformed its business processes to bring it up to speed with the new economy.
"We believe that services bring business. Simplifying procedures for our customers was our main target," he said.
"We wanted to save our customers the headache of moving among offices trying to get papers signed, approved or issued," he added.
Now, all that can be done by Internet. The Port, Customs and Free Zones Corporation in Dubai created an application that exporters and importers can sign on-line. Inside the corporation's Website, customers can connect to all the services they may need, including shipping agents, banks, insurance companies as well as different government departments. "The service covers sea, air and land customs clearance. A model application is filled out by the customer, signed and cleared by the customs authorities in no more than three minutes," said El-Ali.
It all sounds brilliant, especially in Egypt where importers complain that customs processing can take weeks. But technology tardiness is not the only problem hobbling the take- off of e-commerce. It has developed so fast that legislation has been unable to keep pace. And that has become a problem worldwide. The only concrete laws combating cyber-fraud are found in the Budapest Convention issued in 2001, which 26 countries signed. But Egypt is still deciding whether or not to join.
Hisham Sadeq, professor of private international law at Alexandria University, points out that as things stand now, on-line trading in Egypt is riddled with legal problems. The two parties who sign the contract are absent, they do not know each other, and there are no signed papers to prove the rights of either in case a legal violation takes place, he explained. He also said, "If the deal is done between two parties in different countries, it is considered an international contract. Then the question is: whose law should be applied?"
In Egyptian civil law, the judge will only consider valid a physical contract with the signature of both the buyer and the seller. "This is a serious vacancy in Egyptian law, because naturally a physical contract does not exist for an on- line deal," explains Sadeq.
Thankfully, a draft law is now being formed to fill in the gaps. "The new law consists of 16 articles that deal with every aspect of e- commerce including e-signatures, e-writing and e-documents," said Omar El-Sherif, counsellor at the legislative department of the Ministry of Justice.
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