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

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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