Strategic Management mid-term report

The impact of technology

as an external force on business in Egypt

Prepared by:

Remon Mounir
MBA-4S

Under the supervision of:

Prof. Dr. Adel Zayed

The Impact of Information communication technology on business in Egypt

At a time of slowed growth and continued volatility, many countries are looking for policies
that will stimulate growth and create new jobs. Information communications
technology (ICT) is not only one of the fastest growing industries – directly creating millions
of jobs – but it is also an important enabler of innovation and development.

The number of mobile subscriptions (6.8 billion) is approaching global population figures,
with 40% of people in the world already online. In this new environment, the competitiveness
of economies depends on their ability to leverage new technologies. The common economic
effects of ICT will be discussed as follows.

1. Direct/indirect job creation

The ICT sector is, and is expected to remain, one of the largest employers. In the US alone,
computer and information technology jobs are expected to grow by 22% up to 2020, creating
758,800 new jobs. In Egypt, increasing investments in the sector created over 35,000 jobs
opportunities in addition to over 150,000 related, through indirect, jobs created in the ICT
sector. Naturally, the growth in different segments is uneven. In the US, for each job in the
high-tech industry, five additional jobs, on average, are created in other sectors. In 2013, the
global tech market will grow by 8%, creating jobs, salaries and a widening range of services
and products.

2. Contribution to GDP growth

Findings from various countries confirm the positive effect of ICT on growth. For example, a
10% increase in broadband penetration is associated with a 1.4% increase in GDP growth in
emerging markets. In China, this number can reach 2.5%. The doubling of mobile data use
caused by the increase in 3G connections boosts GDP per capita growth rate by
0.5% globally. The Internet accounts for 3.4% of overall GDP in some economies. Most of
this effect is driven by e-commerce – people advertising and selling goods online.

the ICT sector in Egypt had an invaluable contribution over the last two decades to GDP
growth with around 3.13 billion US dollars of foreign direct investment during the period
1998-2004; 3.97 billion US dollars for the period 2006-2007 and until August 2007 over 522
million US dollars
3. Emergence of new services and industries

Numerous public services have become available online and through mobile phones. The
transition to cloud computing is one of the key trends for modernization. The Egyptian
National Communications and Information Technology Plan has paved the road for
launching the Egyptian Information Society Initiative (EISI), which has been structured
around seven major related mechanisms, each developed, when fully executed, to facilitate
Egypt’s evolution into an Information Society.

a) E-Readiness: Equal Access for All citizens must have easy and affordable access to the
opportunities and benefits offered by ICTs. Developing appropriate communication
infrastructure is a prerequisite for achieving this public access.

b) E-Learning: Nurturing Human Capital ICT is a complementary mechanism for high

education standards at all levels and for improving citizens' skills and productivity. This
initiative aims to promote and encourage the use of ICT in education and to develop a new
generation of people who are motivated to understand and use ICT in their daily lives.

launched the tablet system in the 2018/2019 school year with the aim of modernizing
Egypt’s creates a new business & job opportunity as there is an agreement has been reached
with an international company to manufacture these educational tablets in its Egyptian
factory with investments worth US$70 million, this comes under the company’s plan to
localize Egypt’s electronics industry.

According to the minister of education, 40 percent of the components of the devices

produced in this factory will be locally made, with production dependent on Egyptian labor.

Ministry of education had been investing in an e-learning and distance learning capacities
before the global health crisis, but the Covid -19 pandemic had significantly increased citizen
acceptance for them.
c) E-Government: Government now Delivers The Information Society should be able to
provide publics with high quality government services, where they are, and in the shape
that satisfies their needs and expectations. This initiative is targeted to deliver a
convenient collection of information and e-services, provide citizens with the opportunity
to participate in the decision-making process, and improve efficiency and quality.

The government of Egypt inaugurated E government portal (www.egypt.gov.eg) in

January 2004. Some services were placed in the portal to pilot test the project such as
telephone e-billing, birth certificate, issuing, etc.

d) E-Business: A New Way of Doing Business ICT is an enabler to economic growth. It

can contribute in creating new technology-based enterprises, evolving e-commerce and
ebusiness, improving labor skills, using electronic documents, and developing online
payment infrastructure. As well as, ICT can be a significant means to increase
employment, create new jobs and improve competitiveness of Egyptian industries.

Take otlob.com, for example, an e-commerce pioneer in Egypt and the preferred online
destination for ordering food. Already in 1999, at a time when it was a challenge to
convince restaurants to go online, otlob.com started its online ordering service with just
two employees and 10 listed restaurants. The company did well, and three years later it
was acquired by Egyptian Internet service provider Link dot net. In 2010, with its
continued success, the company began to offer free web listings, deriving its revenues
from commissions on sales. Today, Otlob's website includes 200 restaurants representing
about 5 to 7 percent of the food delivery market in Egypt. When a new restaurant opens,
it is the restaurant owner who contacts otlob.com to ask to be listed. And roughly 50,000
to 60,000 unique customers place five orders on otlob.com each month.

Otlob.com is no longer alone in the online shopping market, having since been joined by
web-based companies such as nefsak.com and recently launched Jumia-both online
stores.
While otlob.com is a truly home-grown Egyptian enterprise, Jumia illustrates the
potential of e-commerce in Egypt for foreigners. Jumia was founded in July 2012 by the
German online-business incubator Rocket Internet, which perceived a huge opportunity
in Egypt. As the second most populous country in Africa, with a sizable middle class, and
growing Internet use, Egypt seemed ready for an e-commerce site with global offerings.
Rocket Internet's intuition proved to be correct. The Jumia website took off quickly-
offering more than 30,000 products within three months, achieving profitable double-
digit growth each month, and attracting 31,000 highly engaged fans to its Facebook page,
where comments are shared on eagerly awaited new items. Leveraging the novelty of
e-commerce in Egypt, Rocket Internet's know-how in digital marketing, and Egypt's own
talent pool, Jumia has grown quickly from just a handful to more than 60 employees. The
company, which hopes to become the number one e-retailer in Egypt, is off to a
successful start.
Another example Fawry, the first Egyptian e-payments company established in
2008, allows consumers and companies to pay their bills electronically through
multiple channels including online, by ATMs, using mobile wallets, and at retail
points of sale.

It offers more than 560 services in multiple fields, including paying mobile-phone
bills, utilities, government services, renewing licenses, and charitable donations. It
provides financial services to clients through a variety of channels and at more than
166,500 locations.

Fawry’s commercial outlets include small grocery stores, pharmacies, libraries, and
post offices. According to the company’s website, it conducts more than three million
financial transactions a day.

Fawry reported a 135.5 per cent jump in its net profits in the first half of this year,
compared to the same period in 2019, to reach LE85.9 million by the end of June. A
statement by the company said the exceptional performance was due to a jump in
the firm’s sales, which reached LE549.26 million in the first half of 2020, 47 per cent
higher than the LE373.33 million it realised in the first half of 2019.
In the first half of 2020, Fawry had 29 million users making 529.9 million
transactions.
 e) E-Health: Increasing Health Services Availability ICT can be used in the health care
sector to provide citizens with a better quality of life and create a healthier work
environment for service providers. In this context, the application of ICT can contribute
in adding a clear value, such as reaching remote populations, providing continuous
training for medical doctors, and offering the mechanisms for building a national health
network.

f) E-Culture: Promoting Egyptian Culture ICT can be used in the cultural arena for
preserving manuscripts, archives and index materials, offering affordable worldwide
access to Egypt's cultural heritage and historical materials, and generating and promoting
interest in Egypt's cultural life.

g) ICT Export Initiative: Industry Development This initiative is targeted to foster the
creation of an export-oriented ICT industry. Developing this industry can be a powerful
engine for export growth and job creation particularly to Arab countries. ICT has enabled
the emergence of a completely new sector: the app industry. Research shows that
Facebook apps alone created over 182,000 jobs in 2011, and that the aggregate value of
the Facebook app economy exceeds $$12 billion.

4. Workforce transformation

New “microwork” platforms, developed by companies like O Desk, Amazon and Sama
source, help to divide tasks into small components that can then be outsourced to contract
workers. The contractors are often based in emerging economies. Microwork platforms
allow entrepreneurs to significantly cut costs and get access to qualified workers. In
2012, O Desk alone had over 3 million registered contractors who performed 1.5 million
tasks. This trend had spillover effects on other industries, such as online payment
systems. ICT has also contributed to the rise of entrepreneurship, making it much easier
for self-starters to access best practices, legal and regulatory information, marketing and
investment resources.

5. Business innovation

In developed countries, more than 95% of businesses have an online presence. The
Internet provides them with new ways of reaching out to customers and competing for
market share. Over the past few years, social media has established itself as a powerful
marketing tool. ICT tools employed within companies help to streamline business
processes and improve efficiency. The unprecedented explosion of connected devices
throughout the world has created new ways for businesses to serve their customers.
Refrences

- Egypt at a Crossroads: How the Internet is Transforming Egypt’s Economy.

Boston Consulting Group
- THE IMPACT OF ICT INVESTMENTS ON ECONOMIC DEVELOPMENT
IN EGYPT EJISDC (2009) 36, 1, 1-21
- E-Government in Egypt: An Analysis of Practices and Challenges
ISSN 1929-0977 | Vol. 4 No. 2, pp. 11-25 (2015)
- http://www.mcit.gov.eg/
- https://www.weforum.org/agenda/2013/04/five-ways-technology-can-help-the-
economy/
- https://www.statista.com/