A Look at Egypt's ICT Sector: Growth, Strategy, and Impact on Startups
Note: this piece has been adapted from the Arabic original.
To help the Egyptian economy recover from the revolution, the Egyptian Ministry of Communications and Information Technology (ICT) has announced a new National ICT Strategy that aims to boost investment in the ICT sector to 55 billion EGP (almost US $8 billion).
To do so, the Ministry of ICT mostly plans to invest in infrastructure, granting 75% of Egyptian households access to internet at a speed of 2Mbps by 2015, and, by 2021, increasing access to 90% of households at 25 Mbps. It also hopes to offer 3G service to 98% of users by 2015, and 4G service for 90% of the population by 2021.
The hope is that better infrastructure will increase the volume of e-commerce by 20% by 2017, boost e-banking by 30%, and, overall, increase the sector’s contribution to 5% of Gross National Income (around $25 billion). (To see more, download the strategy report here).
These goals might be ambitious, but it may come as no surprise,
given the role that social media and technology has played in the
revolution, that Egypt's mobile internet use has increased over the
past year. According to the ICT Ministry's annual report,
mobile penetration reached 115% in 2013, while internet usage has
grown at an annual rate of 10% from 2012 to 2013 to reach a
penetration rate of almost 40%.
To see more, download the annual report here. Here's a closer look at some of its major findings:
- Internet use in Egypt grew at an annual rate of 10% to reach 32 million users in January 2013, for a penetration rate of 39.2%.
- Mobile phone users in Egypt grew at a rate of 5.24% to reach 96 million users in January 2013, for a penetration rate exceeding 115.92%.
- Most internet users in Egypt (44%) access the internet via
mobile internet and USB modem, yet ADSL isn't far behind, at
- Mobile internet use, which reaches over 10 million subscribers, dwarfs that of USB and ADSL, which reach 2 and 3 million respectively.
- The report found that current investments in Egypt's ICT sector reached 46.4 billion Egyptian pounds (US $6.6 billion) in 2013, up from 45.88 in 2012.
Startup Revenue and Advertising
When it comes to how these changes in infrastructure
and internet usage are actually influencing online commerce and
revenue streams, it seems clear that startups are leading the
SMEs, which represent 90% of enterprises in Egypt, are the main driver of the Egyptian economy, according to a report by Boston Consulting Group.
What's more, going online has a huge impact on their ability to scale. 55% of digital companies were able to grow their businesses by 20% or more each year between 2007 and 2010, while this percentage drops to half (25%) of that for companies that do not have an online presence.
Most companies in Egypt are not tapping into this opportunity; only 13% of small enterprises and 41% of medium enterprises are online.
Yet, the report finds, online revenue streams are also
building. While TV commericals still dominate the
market, Egypt’s online advertising market size grew by
134% between 2009 and 2011, to reach EGP 500 million (US$ 72
million) in 2011 (a significant percentage of Egypt's overall EGP
12.5 billion (US $1.8 billion) advertising market).
E-commerce is growing as well. The value of products bought online totaled EGP 24 billion (US $3.4 billion) in 2011, accounting for 3% of total shopping transactions. For more, download the report here.
If the ICT Ministry can enact its strategy and improve infrastructure, chances are these numbers could skyrocket further, given the size of Egypt's 80 million-strong market.