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Egypt Reforms: An update from the ICT Sector
Tarek Kamel
Minister of Communications & Information Technology
June, 2006
Content
• Egypt’s Political and Economic Reform
• The ICT Sector as a leading Model– Deregulation in ICT– Public-Private Partnership– Business Environment & Investment
Opportunities
Egypt
• A regional hub linking the Mediterranean, Europe, Africa, Asia and the Arab World
• 72 Million inhabitants with 58% under the age of 25 years
• Egypt maintains strong and balanced diplomatic relations with all neighboring countries
Political Reform
• Since mid 70s, Egypt has succeeded in putting together the building blocks of a democratic system
• Egypt is further empowering the democratic process
– Egypt's first multi-candidate presidential election took place in September 2005
– Most competitive elections in parliamentary history in November-December 2005
• New Cabinet in January 2006
Further Reforms
• Future Reforms are currently under discussion among stakeholders:-
– Enhancing Judiciary independence– More oversight authority for Parliament over
Government– Decentralization & Empowerment of Local
Administrations– Increasing representation of women in
Parliament– New law for Terrorism instead of State of
Emergency– New Electoral Law to improve electoral system
Economic Reform Agenda
• Competition is the organizing principle of economic reform
• Building the institutional and regulatory framework for a successful market economy
– Competition Commission– Consumer Protection Agency
• Customs reform in September 2004– Simplification of customs procedure
• Tax reform in June 2005– Reduction of tax rate up to 50%
Economic Reform Pays-Off
• GDP growth of 6.1%
• Reduction of inflation rate to 3.1%
• Real Income increased by 15-20%
• EGP 20 billion in proceeds of privatization since July 2004
• Investments and FDI boom since 2005
• Exports surged 23% creating 175000 job opportunities
Agenda for Further Reforms
• Further Empowerment of Sectoral Regulators:-– A new framework for Audio-visual regulations that enable
converged services – A new Education Quality Assurance & Accreditation
Agency to foster Education reform– A new mechanism for inviting private sector participation
in reforming the transport sector– Reform of water and sanitation sector through the
establishment of appropriate regulatory bodies
ICT Sector as a Leading Model
• Deregulation in ICT
• Public-Private Partnership
• Business Environment & Investment Opportunities
Reform of the Telecom Sector
• Strategic direction to reform the sector and engage Egypt in the global information society
• Restructuring subsidies in telecom sector– Aligning tariffs with costs of fixed service (April 2006)– Activation of Universal Service Fund
• Privatization of Telecom Egypt– Lead by CSFB, EFG-Hermes & CIB in Dec. 2005– Biggest IPO in the Cairo and Alexandria Stock
Exchange (CASE) with a value of around USD 1 billion
Egypt becoming a Regional Leader in Mobile Technology
• Development of Egyptian know-how in the area of design, establishment and maintenance of 2/2.5G networks
• Development of OrascomTelecom as a regional operator through acquisition of licenses in MENA, Asia and most recently in Europe
Introduction of 3G Services through 3rd
Mobile Entrant• Deployment of technology neutral 3G networks
– 11 Consortia of Egyptian, regional and international operators submitting technical proposals
– 9 Bidders technically qualified
• Public auctioning of license on 4th of July, 2006– Min. of EGP 2.5 billion as upfront fees– Min. of 3% of annual revenues
• Operations to commence in Q1 2007
• Penetration rate expected to grow from 20% in 2006 to about 45% in 2010
Postal Reform
• Restructuring & Governance of Egypt Post
• Liberalization & Establishment of Regulatory function
• Development & Modernization of infrastructure
• Post as a delivery arm for financial and e-government services
• Building on the trust with the citizens in maximizing the utilization of their postal savings
Further Deregulation of the ICT Sector
• International Submarine Cabling Systems with landing points in Suez and Alexandria in 2006/2007
• International voice gateways (Q4 2006)
• Cable operators for provision of converged services in Egypt in 2007
• Second fixed operator in 2008/2009
Public Private PartnershipsA Key Strategy for ICT Development
New Initiatives
• Launching the Egyptian Educational Initiative
• Restructuring the Broadband Initiative
• Establishing R&D Centers of Excellence
• Kicking-off Nile University
The Egyptian Education Initiative
• Launched in the meeting of the World Economic Forum in Sharm El Sheikh – May 2006 under the auspices of Egypt’s First Lady
• In partnership with leading ICT companiesCISCO, Computer Associates, HP, IBM, Intel,Lucent, Microsoft, Oracle, Siemens
• Working Areas:– Pre university education – Developing ICT industry– Sustainable Education– University-level Education
• First phase to target 820,000 students in 2,000 schools and over 300 faculties in 15 universities
Restructuring the Broadband Initiative
• Establishing a framework for promoting connectivity
– USD 1/month for local loop unbundling
– Slashes of 40% of prices in June 2006
– Support from USF for rural areas
• Reductions in connectivity tariffs to reach a wider base
– USD 17/month for 256 kbps– USD 26/month for 1Mbps
• Promoting provision of media services
R&D Centers of Excellence as a base for Innovation
Data Mining &Computer Modeling
WirelessTechnologies
Mobile Services& Applications
• Establishment of virtual centers of excellence in association with multinational and local companies working in Egypt and Egyptian ex-pats
• General Support:– Yearly award for best research– Patent filing and IP protection– Marketing of innovative ideas– Incentives for companies involved in R&D– Incentives for researchers
Business Environment & Investment Opportunities
• Fostering ICT Growth
• Partnerships with US Companies in Egypt
• Developing a new lCT Export Strategy
ICT Growth
• Investment of ICT Companies in Egypt exceeded EGP 35 billion over past 8 years
• Increase in number of ICT companies to 1594
• Current Number of Employees of private ICT companies exceeds 40,000
US Companies in Egypt
Company Regional & Global Support Activities
IBM Software Development Center of 400+ skilled IT developers
Mentor Graphics
Design Center of 170+ engineers
Intel Regional Platform Definition Center
Regional Software Enablement Lab
Microsoft Developer Support Center for Regional Developers
Software Innovation Center
CISCO Core competency e-learning institute
Positioning Egypt
• Developing an Export Strategy in ICT services building on Egypt’s competencies
• Egypt ranking 12 on a global index in a study conducted by A.T. Kearney
• Competencies including:– Adequate ICT
Infrastructure– Government-support
training programs– Multilingual
workforce
2 .10 .4
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3 .13 .1
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3 .03 .2
3 .5
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2.11.3
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2.01.0
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2.1
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1.12.1
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1.11.11.00.9
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0.91.0
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1.12.0
1.21.3
TurkeyIreland
SpainPortugalPanama
France (T ierNew Zealand
IsraelSouth Africa
GermanyTunisia
AustraliaUK (TierII)
RussiaVietnamJamaica
RomaniaArgentina
GhanaCosta Rica
UAEHungary
PolandMexico
SlovakiaBulgaria
JordanIndonesia
EgyptUS (Tier II)
BrazilCanada
ChileCzech
ThailandSingapore
PhilippinesMalaysia
ChinaIndia
Egypt’s ICT ExportsIT Services
Technical Support CentersContact Centers
OpenCraft
Arabic Content
EL MUTAHADA
NAHDAT MISR
IT Products R&D/Engineering Design
Export Targets
2005 2010
TargetRevenue
R&D/Engineering
$280 m
Contact Centers
BPO Services
Localization
Arab Content
KPO Services
IT Products*
Technical Support
$100 m$30 m$40 m
$200 m
$75 m
$200 m
$45 m
$115 m
IT Services
CAGR
27%
38%43%22%
46%
72%
27%
25%
50%
USD 1.1 Billion
Thank You
www.mcit.gov.eg
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