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Will Economic Summit attract foreign investment in communication and IT sector? - Daily News Egypt

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Will Economic Summit attract foreign investment in communication and IT sector?

Egypt is the most stable within the promising markets in Middle East, says businessman

(AFP Photo)
(AFP Photo)

By Mohamed Alaa El-Din

The Egyptian economy is counting on the Economic Summit to encourage foreign investment by offering various mega projects in all sectors for regional and international investors.

The summit is being held in difficult security and economic circumstances. The police and the army are facing tough challenges in confronting militancy in North Sinai, bombing strongholds of “Islamic State” in Libya and the successive explosions in the capital and different governorates.

The information and communications technology (ICT) sector has a big role in attracting more foreign investments, especially after the pumping of new investments stalled after the 25 January Revolution. Moreover, it has a role in pushing the economy forward and raising growth rates of the national economy through mechanisation of governmental bodies and ministries.

The Ministry of Communications and Information Technology prepared 10 projects with investments of roughly EGP 23bn. These include technological zone projects in different Egyptian governorates, at a cost of approximately EGP 15bn. A further EGP 5bn-EGP 7bn will be spent on the smart metre project that will be implemented in cooperation with Ministry of Electricity. This is in addition to EGP 650m for the distribution of services project fpor registration offices throughout the country. However, the question is, will the ICT sector succeed in attracting foreign investments in the next period?

Opinions vary among local senior officials in the ICT sector regarding the feasibility of marketing the sector’s projects in attracting foreign investments.

Hesham Abdel Ghafar, Commercial Consultant at Advanced Computer Technology (ACT), believes that the Economic Summit will not be effective in attracting foreign investments to the IT sector. According to him, Egypt does not need a summit to attract foreign investments from friendly countries, because they are already investors in Egypt, and are increasing their investments.

While there are many European countries, as well as the US, taking a clear stance against supporting Egypt, inviting them to invest in Egypt will not be effective under the current circumstances, he said.

Abdel Ghafar expressed his concern regarding some projects that the ministry is offering during the summit, as most of them are focusing on developing the ICT infrastructure. None of them requires new technology, which they can benefit from in developing human resources. The other point is that the cost of the projects is not huge in a way that Egyptian banks cannot fund.

He believes that the offered projects should have focused on the electronics industries, as well as data centres, in order to make use of passing of marine cables through Egypt in a better way.

Khalil Hasan, Chairman of the General Division of Computers in the Chamber of Commerce, expects the Economic Summit to help in attracting more foreign investments in the ICT sector. Meanwhile, he insists on the necessity of security and tourism stability in order to attract foreign investments to the sector.

Khalil sees that Egypt has many good investment opportunities, which the Economic Summit can be used to promote. He added that outsourcing industries and electronics assembling will be on the top of the investors’ interests for high growth opportunities. Khalil further stressed that the government should make more effort to prepare the investment atmosphere through granting more legal facilities.

Khaled Ibrahim, Chairman of the Chamber of Information and Communication Technology, also believes the Economic Summit will not have a major role in attracting foreign investments to the ICT sector. Attracting foreign investment mainly depends on stability, while Egypt currently suffers from security unrest.

Nevertheless, Ibrahim believes the Egyptian market is full of investment opportunities in electronics industries. During previous years, Egypt was able to attract new investments through the Samsung factory in Upper Egypt. Moreover, exports of engineering industries increased last year from $1.2bn to $2bn. This is thanks to Egypt’s geographical location and the trade treaties with other countries, which can deliver products to more than 2billion people worldwide with no additional costs.

According to the President of the Chamber of Technology, outsourcing industries, call centres and Arabic digital content industries attracts more foreign investments, but when it comes to the software industry, the Arabic market is still relatively weak. For this reason, these industries are not strong enough to attract new foreign investments.

Microsoft director in Egypt, Khaled Abdel Kader, believes that the ICT sector will succeed in attracting more foreign investments during the Economic Summit. This is due to the effective strategy, planned by the Ministry of Communications, which includes a roadmap for the sector`s development. This will occur through various and giant projects in various fields, whether in the hardware or software industries, which will allow the positive marketing of these opportunities in the summit.

Abdel Kader believes the infrastructure, informatics, software and outsourcing sectors will attract most investors, bearing in mind that the above-mentioned industries provide promising opportunities for development.

Mokbel Fayad, Director of Prosylab Holding Company, shared the same opinion. Fayad believes the Economic Summit will be a serious opportunity to promote the Ministry of Communications and Information Technology’s plans and projects. This is considered the first time for the ministry to launch this package of projects with such a large cost. Fayad also believes that the Smart Village projects and informatics infrastructure are promising opportunities that will attract investors.

Further, Adel Danesh, Executive Director of the Smart Village, shared the same opinion. According to him, the ICT sectors are full of opportunities for investments, especially in the construction of technological zones and the smart villages’ sector.

Danesh believes the strategy prepared by the Ministry of Communications last year accurately highlights the investment opportunities in the sector.

Hesham Safwat, Head of the Jumia Egypt office, believes that many investors will pay attention to internet services in the next period. This keeps in mind that the majority of Egypt’s population is young, who during the past three years have shown keenness on social networking sites, a step that was followed by the development of e-commerce.

Ashraf Sabry, Executive Director for Fawry Company, similarly stated that the Egyptian market is safer than other Middle East markets offering opportunities for investments, such as Iraq, Syria, Libya and Yemen.

Sabry believes electronic finance services will be a priority for investors, especially as the Egyptian government plans to mechanise all services provided, which will create investment opportunities for the private sector.

Further, according to Reem Asaad, Executive Director of Raya Data Center, the informatics infrastructure and projects that serve the internet, such as data centres, are considered sectors that will attract foreign investments. She said that the Economic Summit is capable of attracting foreign investments to the Egyptian market, especially as the Egyptian market is stable compared to other markets in the region.

Asaad called for the preparation of the investment climate in Egypt, rather than depending on promotion through only launching mega-projects. Assad believes that the government should be keen on issuing the unified investment law to encourage investors to pump new investments in Egypt.

Meanwhile, External Affairs and Legal Director for Vodafone Egypt Khaled Hegazy called the Egyptian government to complete the issuance of legislations and legal frameworks, to provide stability for investors, for example through the value-added tax law.

From Hegazy’s point of view, the communications market in Egypt is promising and provides many investment opportunities.

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