Digital transformation: Egypt’s means to build back better

Newspaper Title: https://english.ahram.org.eg/

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Saturday - 7 August 2021

Covid-19 has imposed a new normal on world countries, leading to major shifts in their strategies in order to be able to face the challenges the pandemic has forced on the social, economic, and other fronts.

Digital transformation has come to the rescue, proving it is one of the critical players in the post-pandemic world. It has become a necessity, not only for a better economic performance and for the prosperity of the people, but also for accelerating the recovery from the severe repercussions of the crisis, which is set to be long-lasting, and for building back the economies.

Egypt on track

Egypt understands digital transformation is imperative. It came to this realisation even before the pandemic. The trend was included in Egypt’s Vision 2030. The vision was an initiative launched by Egypt’s President Abdel-Fattah El-Sisi in February 2016 to align the country with the Sustainable Development Goals (SDGs) set by the United Nations (UN).

The Ministry of Communication and Information Technology launched Digital Egypt project as an all-encompassing vision and plan that lay the foundations for the transformation of Egypt into a digital society through working on three pillars, including digital transformation, digital innovation, as well as digital skills and jobs.

Accelerating efforts

Responding to the pandemic and the associated challenges, Egypt has been accelerating its efforts in this field. It raised public investment allocations for the information and communication technology (ICT) sector by an unprecedented 300 percent in FY 2021/22, according to Egypt’s budget plan data, to push digital transformation forward.

The Federation of Egyptian Chambers of Commerce, in cooperation with the Ministry of Public Business Sector and Microsoft and Fiber Misr Systems, launched the Digital Future initiative, which is meant to enable medium and small-sized enterprises (SMEs) in Egypt to deal with the digital transformation amid the crisis.

Egypt in bold position

In its recent review on Egypt’s ICT sector, Oxford Business Group (OBG) said that the steady advance of ICT over the past decade has put Egypt’s tech industry in a strong position, adding that the country has seen a significant rise in internet penetration in recent years as a result of growing usage among middle-class Egyptians and the business community, rapidly expanding international bandwidth, as well as the accompanying lower tariffs.

OBG said in its report released in July on Egypt’s digital transformation agenda and the role it plays amid the ongoing crisis that Egypt’s economic reforms, adopted since 2016, provided Egypt with a more secure economic base for resilience in the face of the crisis with its digital transformation approach.

“The initial shift to the digital sphere by most businesses caused a surge in demand for ICT services, and highlighted the need to expand infrastructure and capacity further. Trends such as the wider acceptance of remote work, digital payments, and e-commerce platforms are expected to accelerate in the years ahead. This will lead to opportunities not only for investment, but also for public-private collaboration to strengthen digital infrastructure,” OBG noted.

Digital transformation a core policy

Speaking to Ahram Online, CEO of the Information Technology Industry Development Agency (ITIDA) Amr Mahfouz said that digital transformation is a core policy through which Egypt sets to attain a more resilient economy.

Mahfouz noted that Egypt’s government allocated investments worth $1.6 billion between 2018 and 2020 to improve the internet provision, which has contributed to facilitating the changes and the new normal driven by the pandemic.

“When people had to leave their offices, we had the capacity to allow them to work from home, and this helped us in positioning Egypt as an ideal location for IT services delivery and promote this worldwide,” Mahfouz continued.

In light of the challenges brought upon by the global pandemic, ITIDA offered an extra stimulus package for local IT exporters through a new round of “Export IT” programme, which grants IT incentives on proceeds of value-added exports of two consecutive years, 2019 and 2020, in an unprecedented step in response to COVID-19.

Furthermore, ITIDA launched the “Our Opportunity is Digital platform” in 2020, during the first wave of the pandemic, where national digital transformation projects were offered specifically to SMEs either for direct implementation or in partnership with larger companies.

Responding to the pandemic

According to a recent report by Decode – an economic and financial consulting agency – on digitisation in Egypt, COVID-19 has pushed the government to accelerate its digital transformation agenda, mainly in tourism, real-estate, agri-food, retail trade, fintech, banks, education, and online filling of taxes and customs.

Egypt has tapped the growth achieved in the sector, prior to the pandemic, as the number of mobile internet and ADSL subscriptions has grown by 29 percent and 16 percent, respectively, between December 2019 and September 2020, according to the report.

It also added that fixed line subscriptions also grew by four percent, while mobile subscriptions remained almost stable, having been already high.

Promising potential

As per its latest study, issued in August 2020, amid the first wave of the pandemic, Visa revealed that contactless payment users in Egypt witnessed an increase of 78 percent and a rise of 44 percent in QR code users.

It also found that consumers who shop online jumped by 80 percent, while the number of consumers who pay online through cards and e-wallets hedged up by 20 percent amid the lockdown and work from home procedures taken to curb the spread of the pandemic.

Going digital for a better future

The regional director of GoDaddy – an American publicly traded Internet domain registrar, with a special focus on entrepreneurs globally – in the Middle East and African Selina Bieber told Ahram Online that digital transformation is a necessity for a better future and also for navigating the ongoing crisis and its associated implications.

She added that Egypt is a promising stage for digital transformation, stating that internet users in the country have reached 59.1 million with an internet penetration of 57.3 percent, which is quite high. In addition, the average daily time spent online is seven hours and 36 minutes.

Moreover, social media users in Egypt have reached 49 million, while the country has 95.8 million mobile connections (equivalent to 92.7 percent of the country’s population), with 90 percent being smartphone connections.

GoDaddy also conducted a survey in 2020, which showed that 27 percent of the entrepreneurs in Egypt have a company social media presence, 25 percent have a website, and 59 percent intend to build a website believing that it is crucial amid the ongoing challenges.

Thirty percent of them said that the reason they created an online presence is to look professional, according to the survey.

A necessary investment

Mahmoud Mohieldin, executive director of the International Monetary Fund (IMF) representing Egypt and Arab countries, recognised investment in digital transformation – alongside investing in infrastructure and development of rural areas – as key priorities for Egypt to go ahead towards its economic growth.

Challenges ahead

However, digital transformation cannot make an impact on Egypt’s economy without being supported, according to Sherif Kamel, the former president of the American Chamber of Commerce in Cairo (AmCham).

Speaking to Ahram Online during an event organised by AmCham, Kamel noted that digital transformation offers significant opportunities for Egypt and provides the proper atmosphere to make a difference.

“Yet, this requires to be backed by establishing the essential infrastructure, providing skilful human capital, and creating the suitable legal and regulatory frameworks. Also, it needs a proper investment climate to encourage the private sector to play its role,” said Kamel.

The pandemic, despite the economic and social devastation it has caused, provides an opportunity for African countries to go digital, as they will have to rebuild their economies, according to the IMF’s Financial and Development (F&D) Magazine issue released in March.

“They should not merely repair them; they should remake them, with digitalisation leading the way,” the magazine stressed.