A report published by the global research and advisory firm Oxford Business Group (OBG) exploring Egypt’s economic sectors, said that the development of Egypt’s ICT sector is supported by concerted efforts to diversify the economy and develop knowledge-based industries.
“The Report: Egypt 2022” shed a spotlight on Egypt’s ICT Sector and start-up ecosystem in 2022, as the Egyptian government is working to boost internet access in rural areas, improve service delivery, and develop infrastructure that will support data centers and technologies such as artificial intelligence (AI).
The report noted that Egypt is looking to build on its strong fundamentals and ambitious reform program in the global recovery phase to drive long-term growth.
According to Egypt’s Ministry of CIT, the ICT sector hit new heights, recording a growth rate of about 16.3%, outpacing all the state’s economic sectors during the fiscal year 2021/2022. The sector has retained its lead position as the fastest-growing sector among its peers for the fourth consecutive fiscal year.
OBG highlighted the endeavors exerted by the Information Technology Industry Development Agency (ITIDA) to support the local industry and boost its competitiveness. The agency allocates export subsidies, through its Export-IT initiative to help local companies secure resources and gain access to markets while reducing export overheads.
Depending on company size, companies receive direct cash incentives of up to LE2.5m ($159,000), or up to LE3m ($191,000) for those operating in one of Egypt’s technology parks. The report noted that between its creation and January 2021, the program disbursed around LE400m ($25.4m) in export subsidies to over 200 local ICT firms, contributing to IT export revenue of more than LE7.8bn ($495.6m).
The report pinpointed areas of the most popular exports by giving an example of the program’s ninth edition launched in 2019, being software, mobile app development, and technical support services, accounting for 40% of total Egyptian exports, followed by outsourcing and call center services (31%), and digital marketing (7%).
The MCIT and ITIDA are keen to boost the growth of the IT market in Egypt and help local SMEs operating in this field to develop their resources, enhance their competitiveness, and help them reduce their export-related costs.
Moving to Egypt’s start-up ecosystem, OBG 2022 highlighted that Egypt has an established and dynamic start-up ecosystem, with company founders working across verticals to create innovative digital solutions. It noted that Egypt is home to the fourth-largest ecosystem of start-ups in Africa, with 562 active tech start-ups, according to the 2021 Disrupt Africa report. According to the report, “Nearly 94% of startups are based in Cairo, with Alexandria accounting for 3.6% and the remainder in cities such as Assuit, Qena, and Mansoura”.
The Ministry of CIT indicated that the volume of foreign investments in startup companies in Egypt reached $190m in 2020, and $490m in 2021, noting that Egypt targets to increase investments to $850 million by the end of the current year.
OBG 2022 reported that even as the global pandemic slowed the launch of new ventures in Egypt, the segment continued to grow, with investment rising by 30% in 2020. This trend continued into 2021, supported by the launch of several new venture capital (VC) funds.
Egypt is witnessing unprecedented growth amid the widespread entrepreneurial culture. The country recorded 77% of foreign investments in startups as the highest across MENA countries, reflecting the confidence of foreign investors and global venture capital funds in the local entrepreneurship environment and the technology startups in Egypt.
Egypt is currently leveraging international events taking place, such as the COP27 UN Conference on Climate Change, which Egypt will host in November 2022, as an opportunity to further develop ICT infrastructure; the ministry released plans to install smart systems for visitors and participants at the event, as well as leverage AI and other tech tools.
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