MCIT plans to raise IT sector contribution to GDP to 3.8% in 2018

Mohamed Alaa El-Din
10 Min Read

The Ministry of Communications and Information Technology (MCIT) aims to increase the contribution of the IT sector to the GDP to 3.8% in 2018. According to MCIT Minister Yasser El Kady, the ministry is negotiating a number of international companies in the field of electronics design, such as Mentor Graphics and Synapses, to establish centres of electronics design in Egypt.

In an interview with Daily News Egypt, El Kady said that the four mobile operators can apply to obtain new frequency bands and pay for them in US dollars.

The minister also confirmed that the ministry is continuing its plans to reorganise the market, where three IT experts were selected to represent Telecom Egypt (TE) on Vodafone Egypt’s board of directors, as part of the corporate governance plan.

The IT sector has a big role to play in achieving sustainable development. It seemed that the sector was unable to attract foreign funding except with the recent launch of 4G services. What are your plans to draw in further foreign investments?

The telecommunications sector is one of the most important sectors in Egypt. It is the main tool for the services provided by the state. If we talk about 4G networks, for instance, it is more than just a license – it is a technology that enables providing services to customers. Based on the availability of 4G services, companies invest in infrastructure to be more capable of offering new and better products.

As for attracting investments, the communications sector is the only sector in Egypt with the ability to attract foreign direct funding. This proves how important the sector is and the confidence that foreign companies in Egypt have in it.

Our other focus is the different services that can be provided to citizens, evident in the developments made to the offices of Egypt Post. These developments are not only related to office facades, but extend to the quality of services Egypt Post can offer. There are more services under study now, such as anchoring electronic economy and financial inclusion, both of which Egypt Post can play a role in.

A number of technology parks have been established across different geographical areas spanning the entire republic. These hubs offer jobs and innovation centres that represent a huge leap in fair development across the country.

Major steps have also been taken to prepare the investment climate to attract foreign funding, in addition to the electronic manufacturing strategy aimed at positioning Egypt to become a producer instead of consumer.

An existing electronics plant in Assiut will be inaugurated soon. It will be followed by several more in the coming few months, and these factories will work to provide a number of electronics, including mobile phones, tablets, notebooks, servers, and appliances.

In the coming two years, we will also inaugurate new plants within the electronic manufacturing strategy. In this context, two fibre optics factories will be opened within the coming days.

These are the fruits we reaped as a result of working toward our main target: attracting foreign investments. They also contributed to creating jobs, improving the investment climate, and supporting innovation and entrepreneurship, all of which achieve sustainable development.

What are the opportunities available for investors in the coming period?

We had a big role in formulating the investment law. We believe the law provides more flexibility for investors. In addition, specific articles were devoted to technology parks under this law. It is one of the steps that will attract investments.

As for the opportunities available for investments, they include infrastructure, community development, smart cities, and services offered to citizens.

What are the targeted growth rates in 2018 and what are the current rates for 2017?

We achieved growth rates for the ICT sector in 2017 that amount to 12.5%. If we include electronics, the rates jump to 16.5%. We aim to maintain these rates and grow further, despite the floating of the pound that makes this harder.

Yet, the ICT sector’s contribution to GDP has increased in the current quarter to 3.5% up from 3.2% in the first quarter. We aim to increase this ratio even more in the coming period to reach 3.8% in the coming year.

What are the coming steps in implementing the electronics manufacturing strategy?

The ministry will open a number of electronics plants in the coming period. We are also working on establishing electronics complexes in a number of new technology parks and smart villages to be able to assess the quality of production and grant quality certificates, in cooperation with international institutions.

The telecommunication sector has suffered a lack of organisation. Is the market, in its current condition, organised?

We have four mobile operators now. They all are offering the same services, and all are working hard. The main competition element between all four has become the quality of services provided to clients. The market is seeing fair competition. This, eventually, falls in favour of the country as a whole, investments, and the end-consumer.

After launching 4G technology, is there a plan to keep pace with global technologies?

Yes, we will work on that. We shall not fall behind the latest technology advancements. In the Cairo ICT exhibitions, we will run 5G tests.

Growth in this sector is very fast. Egypt must regain its rank in the sector. We used to lead the technologies, but we have now stepped behind. However, we do have the will to return to our leading position.

You embarked on new steps to implement governance over TE’s share in Vodafone Egypt. What are the coming steps?

We are implementing governance protocols, by assigning Iskandar Teama as one of four TE representatives on Vodafone Egypt’s board of directors. We are now working to select three more experts to take over the seats of the remaining three.

We are working to choose experts that can serve the interests of the company they work in not the company they represent.

Does this solve the problem of TE dividends held by Vodafone?

No, there are no withheld dividends. All profit was distributed.

Last year you announced establishing technological service centres starting with Al-Asmarat district. Where does this plan stand?

There is now a centre in Al-Asmarat district and another in Borg El Arab at the technology park there, next to another in Assiut. There will be more in Beni Suef and Sadat City, as well as another in Smart Village Maadi.

Mobile operators were promised more frequency broadband. Are you ready to provide the frequencies?

We are ready to offer more frequency bands once companies submit their bids, as long as they are ready to pay in US dollars.

There are estimates that the mobile market is valued at EGP 30bn. What is your estimate, following the introduction of a fourth operator?

The market has been growing quickly. TE managed to attract 1.7 million clients in 90 days.

I believe that the new services offered in the coming period will push the sector forward, driven by state plans for financial inclusion and transformation into a digital economy, which will rely on the ICT sector as a tool.

What are the ministry’s priorities in the coming period?

We are focused on the Knowledge City in the New Administrative Capital, as well as supporting innovation and entrepreneurship. We are also working on laying the bases for electronic manufacturing and expanding in electronics design. In addition, we are negotiating with a number of companies in this sector, such as Mentor Graphics and Synapses for the establishment of electronics design centres in Egypt.

Furthermore, we are working on qualifying Egyptian youth through the presidential initiative to train 11,000 young men and women over three years.

What is the status of Knowledge City?

We are currently waiting for the land procedures to be finalised. Once we receive the land, we will immediately begin implementation.

The New Capital will be a smart city. Are there negotiations with IT companies in this regard?

There is a committee formed by several agencies and ministries to handle this matter. The committee has been formed and is working to gather information about the latest technologies from a number of international companies with the aim of employing these technologies in the coming period.

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