Partnership with the Private Sector

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Telecommunications

Partnership with the Private Sector

      - Support to Export Services
      - Frame Agreements
      - Regional Expansion of Telecom Companies

Support to Export Services

The Egyptian government has identified several ways to strengthen the local ICT industry and business sector in Egypt. These include attracting foreign direct investment, stimulating growth of the domestic IT industry, and promoting exports of IT products.

Egypt is one of the world’s most promising emerging markets, and the country has long been poised to become the Information Technology hub of the region. The government has made the establishment of a strong national ICT industry one of its top priorities and believes that it will contribute to the acceleration of economic development, promote exports, and increase employment opportunities. With its huge pool of trained ICT personnel and an expanding market, Egypt is increasingly attractive to foreign investment and must take advantage of opportunities to further develop the industry. The ICT Export Initiative aims to achieve the following:
   - Increase local demand in ICT applications and tools.
   - Promote exports and support marketing initiatives.
   - Attract investment in the Egyptian market.
   - Maximize the local value-added component.
   - Embrace new inventions

In order to achieve these objectives, guiding policies and strategies are as follows:    - Promote foreign direct investment to Egypt as the regional hub for the Middle
     East region and the gateway for Africa.
   - Encourage the private sector to drive the development of the ICT industry in
     Egypt.
   - Create an enabling environment for private sector initiatives where the
     government invests in human capital as a critical input for the ICT industry
     development.

Success Stories:
IT Conflict Resolution Committee (CRC)
MCIT has created a quasi-judicial entity, the IT Conflict Resolution Committee (CRC) to resolve conflicts that may arise in the field of communications and information technology between government entities, the public sector, and private corporations. The committee has seven members representing the government, the IT business committees and the information technology chamber and will form subcommittees to provide technical expertise required in conflict resolution.

e-Signature Law
The law established the Information Technology Industry Development Authority (ITIDA) , with the objective of encouraging the IT industry and promoting exports of IT products and services. ITIDA has an independent legal status under MCIT.

Looking to the future, Egypt will also be continuing its investment in its most important asset: the large pool of trained graduates. With its 73 million people, 1.2 million high school and 375,000 university graduates annually, Egypt generates a huge supply of young graduates. With the help of its intensive training programs, Egypt is preparing its labor force for the service industry and will focus on labor intensive industries such as Call Centers. Egypt recognizes that business process outsourcing is becoming one of the most important services worldwide and is getting ready to provide the international market with the human resources capacity necessary for providing services to outside parties.

MCIT is also preparing an aggressive program for the build up of technology incubators for small size companies and new young talents. A private fund has been established for this purpose and the new incubators are being hosted at the Smart Village

Frame Agreements

MCIT aims to increase the local added value of telecommunication projects to serve the local market and create opportunity for exports. The ministry has opted for a win-win strategy in its relations with international companies doing business in Egypt. International companies are granted long term contracts for supply of hardware and services to upgrade the infrastructure and services of Telecom Egypt according to the requirements set in the Telecommunications Master Plan. In return, the companies commit to technology transfer into the Egyptian market through investments in value added projects that result in exportable services and equipment to serve neighboring markets.

Success Stories
A number of agreements have been signed with multinationals since this framework was established in 2002. Ericsson, Alcatel, Siemens, Nortel and Motorola have committed to expand their presence in Egypt through a number of activities that aim towards the transfer of technology and exporting to neighboring countries. Examples of successful frame agreements are as follows:
   - Establishing or expanding training centers to qualify a new generation of
     15,000 engineers and computer scientists. These are trained in the design and
     installation of state-of-the art wireless and IP networks, development of
     value-added services, in addition to maintenance and upgrade of traditional
     technologies of wire line networks.
   - Creating almost 500 new high-quality engineering jobs in the implementation
     of activities related to MCIT and Telecom Egypt agreements, in addition to all
     the necessary support jobs.
   - Investing a total of US$ 450 million in Egypt to implement activities related to
     the expansion of their presence and establishing Egypt as their base in the
     region to serve their customer base in more than twenty countries in the Arab
     African and the Mediterranean region.
   - Achieving exports with a total of US$ 390 million through export of services
     and equipment of Egyptian origin to the region in the period of 2002 to 2007.

Call Centers
Among the new and innovative ways explored in boosting the ICT industry, Business Process Outsourcing (BPO) has proven to be successful for many developing countries. Building on its solid ICT infrastructure, Egypt is equipped today to foster the call center industry. Egypt capitalizes on its macro labor characteristics with an educated and multilingual labor pool of over 300,000 yearly university graduates and wages that are lower wages than in the US or Europe. Moreover, Egypt is centrally located between the US, Europe and Asia with several transatlantic cables passing through Egypt. Call centers are also charged special rates for international telecommunications in order to foster the industry.

Call centers are in fact generating much revenue in hard currency. They provide a solid base for companies in the US and Europe and act as a strong FDI magnet. Call centers are labor intensive and hence complement the training effort exerted by government to generate work opportunities. Indeed, operating a 10,000 seat center carries the potential of putting 30,000 young Egyptians on a steady payroll and would generate approximately US$ 400 million per year.

Regional Expansion of Egyptians Telecom Companies

With their huge pool of trained ICT personnel and increasing experience in the ICT market, Egyptian telecom companies are expanding into the region. In 2005, Telecom Egypt and Orascom Telecom Holdings won the license for building and operating a fixed line telephone network to provide national and international services. This new operation is expected to open new channels of communication and cooperation between Egyptian telecom companies and the rest of the Arab and African countries.

Egyptian Orascom Telecom Holdings is also a leading mobile telecommunications company operating in seven emerging markets in the Middle East, Africa, and South Asia having a population under license of 460, with an average penetration of mobile telephony rate across all markets of 8 percent. Orascom Telecom operates GSM networks in Algeria (Djezzy), Egypt (MobiNil), Pakistan (Mobilink), Iraq (IraQna), Bangladesh (Banglalink), Tunisia (Tunisiana) and Zimbabwe (Telecel Zimbabwe).