For computer technology company Dell, Egypt presents some promising investment opportunities. For one thing, there are more than 35 million young people, many of them keen on computing and digital technology. Moreover, Egypt tops countries in Africa in the use of cloud computing and super-capacity computing.
According to Hashem Mansy, general manager of Dell Egypt, the company has a great future in Egypt, despite various obstacles posed by the current climate, including the lack of dollar availability and changes in exchange rates. Mansy spoke to Daily News Egypt about the future of Dell Egypt, the current investment climate, and the pending purchase of digital storage giant EMC by Dell. With an estimated value of $67bn, the purchase is tipped as the largest deal in computing history.
The telecommunications sector has suffered many crises in the past. Do you think the Egyptian market is still able to attract investment?
The Egyptian market is large and depends on a wide customer base, with 90 million users, equivalent to the population of five other countries. This makes it the largest market in Africa and the Middle East, including Iran and Turkey, and also promising in the IT sector.
Is the weakness of purchasing power in Egypt compared to neighbouring countries considered an obstacle to investment?
The lack of purchasing power is considered a challenge for investment, not an obstacle, because it will improve as the economy improves. Moreover, technology is no longer a luxury but a necessity.
Purchasing power is not the only challenge in the Egyptian market. There is also the lack of availability of the dollar. It is a real challenge, whether for the government or individuals. In general though, the Egyptian market is still able to attract investments and is very promising.
What is the impact of these challenges on investing in the Egyptian market?
Investment challenges hinder the plans and strategies of companies working locally, like the dollar availability crises, which has caused delays in imports, slowing down the pace of business locally.
How have you tackled the lack of dollar availability?
We were negatively impacted by this crisis, because our partners are experiencing delays in the shipment of imports. The dollar crisis is actually composed of two parts. The first is the price of the dollar, in cases that include sealed deals and an increase in the price of dollar afterwards. But the impact of this problem is only partial.
The second and main problem is the availability of dollars. Fixing the price of the dollar and its availability is what really matters to businessmen.
One problem relating to dollars is the use of “Form Four” during the importation process to ensure that the importer has correctly translated the value of the import to a dollar amount in line with the Central Bank of Egypt (CBE). This process must be completed before the shipment can be released. If any other method is used to translate the value, the shipment does not get released.
Bureaucracy is another of the big challenges to investments in the Egyptian market. In the case of dollar availability, this means our partners will not receive imported shipments quicker than eight to ten weeks.
How did this impact on the Egyptian market in the past?
According to indicators from specialised research bodies such as IDC, this caused a reduction in the size of the market. But it also had a positive impact on Dell, because our market share increased.
What response are you hoping for in terms of the dollar crisis?
First, the dollar price must be fixed. Second, it must be available. Third, bureaucracy must be eliminated, because it wastes a lot of time and energy.
Why has your market share been growing, despite the challenges?
It is due to many reasons, most importantly our ongoing cooperation with our partners, whether agents or distributors. The second reason is the changes in the global economy. Many world markets began to shrink due to the growing competition among companies and the disappearance of some companies because of the acquisition processes.
Companies changed their strategies globally through the centralisation of their employees in specific places, something that Dell did not do, and this contributed to the increase in our market share.
What will be the most important investment opportunities in Egyptian market in upcoming period?
The Egyptian market, despite its challenges, is full of investment opportunities, supported by the large population of 90 million people, inducing 35 million youths, who uses IT solutions the most, making the Egyptian market a very large market.
Has Dell taken part in projects presented by Ministry of Communication using the PPP system?
Legally, Dell only works as a representative office of the parent company and so does not deal directly with projects that are presented. We deal with them through our partners and agents. So far, we have participated in two out of three tenders for the mechanisation of commercial register offices and documentation offices.
Why is Dell only present in Egypt through a representative office?
This is related to the company’s strategy on a global level and not specifically to Egypt. It depends on certain factors, including the size of the business conducted by the offices in each country. In all the developing countries in which Dell works, it is present through representative offices. The situation may change in the future, and it may be present through a branch of the company, but only if the size of the business increases to a certain level.
Do you believe that implementing large projects quickly is good for the Egyptian market?
The market currently needs economic mobility, especially since large-scale projects were halted for a period of three years. Presenting the latest mechanisation projects will definitely enhance the economies of a number of companies working in the sector.
Some companies have reported that the government has failed to pay money owed to them, and they have halted further projects. What do you think of this?
The late payment of financial dues does not mean a loss of confidence. Many private companies pay their dues late, and this is normal in any market, especially if it is going through difficult and unstable economic conditions.
What about the growth rates in the market?
According to the indicators we obtained from specialised research companies, the retail market has declined greatly in all countries in the Middle East and Africa. However, there is growth on the level of commercial sectors, especially in cloud-computing solutions and super-capacity computing. According to the indicators, Egypt is the largest country in Africa in terms of using cloud-computing solutions and super-capacity computing in the education sector. Dell also participated in the implementation of super-capacity computing projects in partnership with the Scientific Research Academy.
What about Dell’s agreement to acquire EMC?
Dell made an offer to acquire EMC for $67bn, but the deal is not sealed yet. According to US law, there must be a waiting period of 60 to 90 days – starting from date of the offer – before a decision is made, in case more valuable offers are made. This is to preserve the rights of the contributing minority. If no larger offers are made, the acquisition will continue officially, with legal procedures taking about six months.
If the process for our acquisition is completed, it will be officially announced in June. If this deal is finally done, it will be one of the largest acquisition processes in the history of telecommunications and IT.
Has the current economic situation caused staff to leave Egypt?
Egypt is always suffering from the loss of skilled labour in the sector of telecommunications and IT. This is due to the high wages paid in the Gulf region, as well as Europe, and the availability of a better climate for scientific research in these countries compared to Egypt.
What is the effect of sales of used computer devices in the local market?
The saleability of used devices has a positive impact on the market in terms of increasing the number of users of technology devices, which helps to spread the use of technology. This will necessarily lead to users needing to buy their own devices to fit their needs.
What new products are you planning to launch in the market?
At the Cairo ICT 2015 conference and exhibition, we will launch a tablet that operates on the Windows Phone system. A new version that operates on Android will be launched later.