CAIRO: Ahead of the Euromoney Conference that kicks off Tuesday, its director Richard Banks sat down with Minister of Communications and Information Technology Tarek Kamel to discuss the booming Egyptian sector.
Banks, the director of the Euromoney Conferences for the MENA region, quizzed the minister on the dynamics of the ICT sector, its positioning within the global landscape and its development.
Richard Banks: In the last decade, globally the ICT (Information and Communication Technologies) sector has ridden two cycles of boom and bust — first the dot-com era and then the credit super-bubble. Is boom and bust built-in to ICT more than other industries?
Minister Tarek Kamel: I don’t think so. I believe that the global ICT sector was quite resilient during the financial crisis and was able to overcome it. The global ICT vendors have to now have a futuristic look: working on challenges that are customer-centered, introducing new services and products that have an economic return and similarly achieving return from rising data traffic, and making sure that value is created through off-shoring and out-sourcing for the benefit of the ICT global market.
Thankfully, Egypt was not affected much by either of the dot-com or credit super-bubbles. The ICT sector has proven its strength through its support to the general economy over the last period by maintaining a growth rate of 13-14 percent throughout the last few years.
How has the global ICT investment landscape in the sector changed in the last year?
It is not really change, but rather a natural development and more of catering to long-term objectives and challenges. I believe major global investments have been geared towards R&D and innovation in specific fields such as cyber security, cloud computing, green ICT, Nano technology, and 4G technologies and applications. Other types of growing investments are targeted to support the demand and need for applications of social media, content, and mobility. Similarly, a number of mergers and acquisitions took place which should have a positive impact on the global market.
What does this change mean for Egypt?
Opportunity. Our 2011-2014 Strategy has a clear objective of developing a niche in innovation and entrepreneurship. Indeed we are pleased that our strategy fits well within current global trends.
We see unique opportunities for our sector to export to the region, cater to 300 million Arabic speakers, provide more job opportunities for the new generation, and much more. Egypt’s ICT sector has proven throughout the last decade its capacity to lead the region into the digital future.
Here I would like to note our successful experience: Global ICT players partnering with the Egyptian government were able to fulfill their plans for Egypt despite the global financial crisis. The commitments ranged from investing in establishing delivery centers to innovation and R&D centers, to setting up new operations and offices in Egypt. The result was always positive. Further business has been generated. Renewed commitments from existing investors have attracted new ones, who enjoy the enabling environment of doing ICT business in Egypt.
On another note, Egypt has set a target for 2010 to reach $1.1 billion in exports of IT and IT-enabled services. After achieving this target, the goal is to reach $2 billion by 2013. And, as previously mentioned, we maintained the annual growth rate despite turbulences in the global economy.
ICT is often a force for “streamlining” and “efficiency gains” — which means making people unemployed. How do you balance that force against the need for the government to provide jobs?
The ICT sector was able to inject into the business community a great number of working opportunities for ICT-related jobs. Fortunately, the out-sourcing and off-shoring industry is human intensive. The type of jobs has developed, and a new base of qualified youth and business opportunities was created. We are able to commit to a continuous supply of competent human capacity through our various qualifying and development programs. We run 25 human capacity development programs in ICTs and related fields. This objective is very clear within our strategy: to contribute to the fulfillment of the employment component of [President Mubarak’s] presidential program.
If we take the newly inaugurated technology zone, the Cairo Call Center Park in Maadi, it is expected that by its completion in 2014-2015 it will offer 40,000 direct ICT work opportunities and 100,000 indirect work opportunities such as support services and so forth. The zone was inaugurated by President Mubarak last June.
Is Egypt really just leveraging a low-cost workforce in its out-sourcing business or is it creating sustainable, high value employment?
In our out-sourcing strategy we built our competitive advantage on several fronts, the key component being the skilled workforce. To sustain the supply of skilled individuals needed for a growing ICT Industry, we made sure such a workforce offers the world strong language capabilities, a mastering of soft skills, accent-free communication services, and expertise in technical capacities. As mentioned above, Egypt implements more than 25 capacity-building programs and even supports neighboring countries and efforts in Africa.
The actual expertise and business range far beyond call center and basic BPO/KPO activity. An example of our proven track record is in areas such as remote infrastructure management, package implementation, technical support, engineering and R&D, testing, and application development.
Skilled individuals are fundamental to developing the innovative and competitive capacity of local ICT companies serving the EMEA region. This requires strong, human resources with technical as well as business and commercial skills. Egypt’s talent pool is being qualified and offered on the market professionally by globally known Egyptian institutions such as the National Telecom Institute, the Information Technology Institute, the E-Learning Competence Center, and companies through the Software Engineering Competence Center which provide Capability Maturity Model and Capability Maturity Model Integrated services to local software companies while offering them technical and financial support to help them achieve Level 2 and 3 CMMI accreditation. Moreover, Nile University, a high-tech, not-for-profit research and development institution is offering specializations in engineering and management of technology and business administration, as well as research opportunities in specific fields of current focus such as Nano technologies. All our human capacity initiatives are conducted in partnership with global ICT technology innovators or professional training consultants.
I would like to end my statement by saying that leading consultancy firms and global ICT and business reports have confirmed Egypt’s unique position in the O&O industry and recommend it as the preferred destination for conducting O&O business.
SMEs are all the rage — how should the MCIT be encouraging them?
SMEs constitute the core of the business sector in Egypt. Therefore, special modernization schemes — such as automation — are being implemented, cross-cutting the business community. Building on this potential, SMEs that heavily use ICTs in their daily business and start-ups that are ICT by nature are encouraged and supported by various means, such as the Business Plan Competition, venture capital fund, and incubation packages which cover various areas of support such as international and local marketing, management, skilled manpower, and legal and facility development.
MCIT also encourages building the capacity of local ICT SMEs, providing them with accreditation as well as financial support programs, expanding incubation initiatives, widening the outreach of the Entrepreneurial Business Development Center (EBDC) to help growing IT firms satisfy the requirements of investors and financial institutions, and assisting in promoting the Egyptian IT industry in the global market.
Should the MCIT be a financial investor? How does the MCIT balance investment returns with social and business development?
MCIT is a government body responsible for policy development and strategy implementation. It makes sure that it works on various incentive schemes to attract FDI into the sector. MCIT aims that the ICT sector, through its successful developmental initiatives, leads other sectors of the economy.
The ICT sector in Egypt has been successful in generating income and funds serving other sectors in addition to the public treasury, supporting the fulfillment of the socio-economic development agenda of Egypt. Here I would like to emphasize that during the financial crisis, stimulus packages and specific funds were injected into the local ICT community to support infrastructure projects in IT ad to help increase the local demand on ICT products and services.
On another note, IT Industry Development Agency (ITIDA) supports other industries and academia through a number of programs and initiatives related to innovation, entrepreneurship and O&O with specific incentive packages.
Over the last two years Egypt became attractive to many multinationals as a venue of O&O services. These include BPO and ITO deals with IBM, Vodafone, Sutherland, Sykes, Stream, EMC2, SQS, and Oracle. Those companies enjoyed the benefits of incentive packages formulated by ITIDA. Similarly, investors found Egypt a fertile ground for emerging engineering and R&D services. For example, Mentor Graphics, Valeo, Microsoft, Orange, and IBM all have labs and design centers here.
The attraction of Egypt came by promoting the enabling environment for O&O: our abundant human capital, extensive and modern ICT infrastructure, competitive telecom prices, stable political, social and economic environment, the enforcement of the law, as well as a growing culture for respecting IPRs.
Do we need more Smart Villages? Who will pay for them?
The Smart Village in Sixth of October City is a model; it is Egypt’s first technology park. We have invested in its infrastructure, buildings, services and capacities. Today we offer other technology zones in other parts of Egypt, such as the Cairo Call Center Park in Maadi that started its operations last June. Similar initiatives are starting to sprout in areas such as Assiut, Damietta, and Alexandria.
Public-private partnership has been our strategy since the establishment of the ministry in 2000. The ICT industry — with its multi-stakeholder players — has been taking part and has been engaging in mega-projects like Smart Village (and many others) that develop and empower the industry/sector.
What three things can Egypt do to become more competitive?
Our plan is to invest in human resource capacities, maintain state-of-the-art telecom and IT infrastructure, develop a niche in innovation and entrepreneurship, and to produce IPRs out of Egypt.
Our core competitiveness will lie in our specialization. Egypt has been well known for its achievements in Arab-ization and localization. We are continuing our efforts in this area and proving international success while receiving global recognition.
Will these things be done?
Of course, those goals are core in our national plan/strategy. Our 2011-2014 strategy focuses primarily on embracing innovation. Several initiatives and projects are currently underway, some of which standout — such as the center of excellence in nano technology created in partnership with Nile University, Cairo University, and IBM —which focus on developing research in specific areas like solar energy or water desalination.
Richard Banks is the Middle East director of Euromoney Conferences. This article is published by Daily News Egypt in collaboration with Euromoney Conferences.
