Egypt eyes digitalisation of industry, but faces challenges

Shaimaa Al-Aees
10 Min Read

Two years ago, the ministry of trade and industry said Egypt seeks to apply digital transformation mechanisms on the national industry, in preparation for the fourth industrial revolution. Since then, the ministry has undertaken a series of measures to enhance sustainable development of the industry and address the problems that may emerge due to sector’s digital transformation.

The ministry keeps boasting the beneficial qualifying potentials of the digital transformation technologies. It does not only aspire to fulfil the requirements for the transformation into a digital economy, but also for an effective Egyptian industrial expertise in the fourth industrial revolution both regionally and internationally.

Egypt’s digital transformation strategy focuses on several axes: developing infrastructure,  creating a conducive business environment, investing in human capital, and supporting digital entrepreneurship, especially by women. Most recently, creating smart cities and communities became a top trend in Egypt with the aim of promoting innovative technologies and digital transformation.

Digitalisation will allow increasing breakthroughs in various sectors, especially industry, as it contributes in enhancing local manufacturing, increasing competitiveness, and improving the national industry’s quality and productivity.

Digital Transformation and Technology Support Programme

The ministry has initiated a new programme through the Industrial Modernization Centre (IMC) to develop digital transformation and fintech in companies. It’s called the Digital Transformation and Technology Support Programme Action Plan 2019-2020.

Daily News Egypt obtained a copy of the IMC’s programme which aims to assist comprehensive digital transformation of Egyptian companies’ financial assets in value-added chains. It promotes generation, analysis, and smooth data transfer, which achieves cost reduction, increases revenues, and boosts production efficiency.

The IMC believes that information technology, machinery, and human beings are linked together and interact in real-time, which leads to the creation of a customised and flexible manufacturing method. Thus, integrated data analysis and collaboration are the core values of the fourth industrial revolution.

Through the programme, the ministry aims to provide 75 diverse services by 16 customers across all sectors in the fiscal year (FY) 2019/20.

Digital transformation creates new business models

Digital transformation is expected to achieve additional revenue and create new business models, digital products, services, and solutions. It can also accomplish real-time quality control based on data analysis and preventive maintenance of key assets.

The Executive Director of the Engineering Export Council of Egypt (EEC), Maha Saleh, told Daily News Egypt that digitalisation can have a strong impact on the Egyptian industry by supporting companies’ improvement and even transforming their business processes through the application of suitable digital technologies, thereby enhancing companies’ overall performance and increasing their competitiveness.

She added that the ministry has been taking steps toward conducting the Production Transformation Policy Review (PTPR) in Egypt, in cooperation with the Organization for Economic Cooperation and Development (OECD), which will assess the country’s readiness for digital transformation and the potential sectors that it should focus on.     

“As for fintech, this emerging industry, with its new applications, processes, products, and business models, can help companies better manage and improve their financial operations, and enhance their growth rates,” she elaborated.

Egypt Exports through Product Innovation

The EEC is currently implementing a project titled “Egypt Exports through Product Innovation (EEPI)”, which is funded by the European Union. The project will help companies to improve and adapt their products to better compete in European markets, Saleh noted.

She pointed out that digital technologies are one of the areas where innovative improvements could be made to existing products to help enhance their functionality, and provide them with a competitive edge in global markets.

The EEC also acts as a focal point for engineering companies with local and international service providers to improve their export capacity. In this respect, the EEC can link services that could be offered in fields relating digitalisation or fintech to the engineering companies, so as to explore how these services can help them enhance their performance and foster their growth and competitiveness.

Saleh revealed that the EEC participates in the committee formed by the minister of trade and industry to coordinate Egypt’s activities in the OECD Initiative on Global Value Chains (GVCs), Production Transformation and Development, and conducting the PTPR. It could include the potential role of digitalisation in supporting the development of key industrial sectors in Egypt.

Technology is a means to reach competitiveness

Bahgat El-Dahesh, a member of the Academy of Scientific Research and Technology, said that industry requires competitiveness, as any manufactured product must have advantages in order to be sold and preferred by consumers over other products. Hence, a factory’s  success relies on its ability to sell and market its products, which means that it needs to use appropriate technologies to make its product competitive.

El-Dahesh elaborated that technology is a means to reach competitiveness, therefore, any factory should study the feasibility of adding any technology to its products so as to decide whether to use this technology or not, according to its abilities.

Technology enables companies to know extensive production’s elements

Mostafa Elnaby, CEO of agritech startup Baramoda, said that introducing technology in industry needs considerable data, which several companies lack, as it’s the pillar of digitalisation.

Elnaby elaborated that the existence of data and technological systems enables companies to better know their clients, production distribution, consumption, and solutions. Moreover, companies can use technology and digitalisation to know their target clients and markets.

He further noted that using fintech enables enterprises to pay and collect money from everywhere, saving time and effort in financial transactions, and giving firms the chance to concentrate on production only.

Introducing technology in businesses is expensive

Regarding the challenges that may face startups in introducing technology in their businesses, Elnaby said that technological infrastructure is expensive and outweighs the financial ability of those companies. In addition, some companies do not know how to benefit from new technology in business or production.

He recommended that the government led by the ministry of trade and industry and the IMC communicate more with companies to introduce them to digitisation programmes and capacity building through marketing such programmes in governorates. Both sides should also raise awareness of the importance of technology in stimulating production and exports.

“In our company, we provide innovative solutions to maximise the efficiency of agri-waste management, minimise the cost of production, reduce excessive use of chemical fertilisers, and increase crop production at minimal usage of water resources,” Elnaby explained.

He disclosed that startups were the first in initiating fintech and digitalisation in industry, therefore, the government and other financial institutions should support entrepreneurs and startups in order to achieve increased development and expand in using new technology to serve the state’s plan.

He concluded that the impact of using digital and financial technology, if used on a large scale, may emerge during 3-5 years and hence the state achieves high export and production rates which prevents the state from depleting its resources in imports.

Egypt is doing well in improving technology infrastructure

Ehab Said, chairperson of Khadamaty and head of communications at the Federation of the Egyptian Chambers of Commerce, said digitalisation has become an essential complement to all sectors. “Having an accurate database improves the production process and saves time, therefore manufacturers can provide goods at reasonable prices and increase the competitiveness of their products.”

“However, not many companies use databases in their work because they need to be constantly updated and need special maintenance,” he added.

Said noted that debuting such technologies in companies is expensive, which remains a challenge to many of them. However, on the long term, companies would reap the fruits of initiating this technology in production.

Additionally, he pointed out that Egypt’s transformation toward technology and digitalisation will boost the country’s exports to African markets, whether goods, services, or technology.

“We are experiencing some development in infrastructure technology recently, and I expect the government is doing its best in improving the country’s infrastructure to develop the economy,” he explained.   

Said called on the ministry of communications and information technology to provide an integrated solution for all sectors, in collaboration with other stakeholders, in order to motivate companies and factories to use technology through offering rewards or subsidies. Moreover, the development of financial inclusion will increase the pace of transformation toward digitalisation and fintech.


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