EGYPT switched on

During FY 2006/07, a total of 5958 new companies were established in Egypt with issued capital of EGP 36.8 billion, compared to 2530 newly established companies with an issued capital of EGP 11.1 billion during FY 2000/01.

With the only direct connection from the Indian Ocean to the Mediterranean Sea, Egypt is the most geo-strategically positioned country in the region to be a manufacturing / logistics and distribution hub.

41% of Egypt’s 74 million inhabitants are between 15 and 39.

For the second time in 3 years, Egypt was named global top reformer 2007 by the World Bank.

French, German, Spanish, Italian, Portuguese, Dutch and Arabic are all languages that are currently serviced out of Egypt.

With the new economic reform program, personal tax rates have been cut from 32% to 20% and corporate tax rates have been cut from 42% to 20%.

Multinational IT services exports from Egypt already exceeded 50% of the $150 million target set for 2010 (AT Kearney’s latest report).

Egypt is one of the world’s promising emerging markets and its merits qualify it to become the regional IT hub for the Middle East and the gateway to Africa.

Over the past few years, Egypt has been striving to enhance its ICT infrastructure through national initiatives and projects implemented jointly by the public and private sectors. So far, Egypt has succeeded in building a considerably strong and reliable infrastructure with a wide base of users, as indicated below:

• A considerable increase in fixed exchange capacity from 6.4million in 1999 to 13.733 million in 2007;
• The number of fixed lines subscribers increased from 4.9 million in 1999 to more than 11.160 million in 2007;
• The number of mobile phone subscribers increased dramatically from 654,000 in 1999 to 29.368 million users by the end of 2007 and it is still increasing steadily;
• The number of PCs rose from 132804 in November 2006 to 152511 in November 2007.;
• The number of internet users rose from 300,000 users in 1999 to 8.29 million users in 2007

In terms of financial attractiveness, Egypt emerges as a strong contender – one of the lowest cost countries. Egypt’s relative infrastructure costs are also among the lowest.

On the key issue of compensation costs, Egypt offers wages for skilled workers equal to, or even lower than, those in India and the Philippines.

During FY 2006/07, a total of 1184 companies already in operation have undergone expansions, with a total issued capital of EGP 42.6 billion, compared to 636 companies with issued capital of EGP 11.1 billion during FY2002/03.

Microsoft, Vodafone, Ericsson and Alcatel all have offices at Smart Village, a 300 acre technology business park on the outskirts of Cairo. The ministry of communication and information technology is attempting to lure foreign companies to Egypt with offers of five-to-ten year tax breaks, and promotes the country as the safest, most stable base in the region.

With Egypt’s IT market size expected by BMI to be on course to increase a value of around US$1.3bn in 2011, from US$889 million in 2006, the market is one of the most promising in the MEA region over the forecast period.

Egypt’s rise up the regional IT rankings as revealed in BMI’s regional overview is being fuelled by regional trade liberalisation with around 40% of the direct investments fuelling spending in key verticals such as telecom and finance coming from GCC countries.

The same trend is also stimulating new spending by smaller and medium companies on applications, hardware and services with predictions from regional distributors that Egypt could soon surpass regional giants in the UAE and Saudi Arabia for computer sales.

Egypt’s cost competitiveness will further improve given relatively lower wage inflation (<5% per annum) and minimal impact of US dollar depreciation on the local currency (3-5% fluctuation).

Egypt has a large annual graduating talent pool of more 300,000 with a large commerce (63,000), engineering (17,000) and science (14,000) base.

The Egyptian BPO/CC industry is expected to have a talent surplus in the next 5 years, even at over 50% annual growth.

Maadi Park is the second contact centre park located in Cairo and can house 45,000 employees in over 40 buildings and 2 million sq feet of business space.

Egypt has extensive availability of high quality and low cost/subsidized support infrastructure and services such as power, telecom and internet.

One-stop-shop set up assistance enabling investors to start operations in 2-3 months.

MNCs are already in Egypt and looking to scale up substantially (Unilever, Orange, Vodafone, IBM, Oracle, Microsoft, Procter & Gamble, Sun Microsystems, HSBC, Google among many).

Egypt has a similar time zone as Europe (1 hour ahead of CET) and better positioned than Asian locations (only 7 hours ahead of EST).

Geographically, Egypt is close to Europe, Asia, Africa – average of 4 hours flight time from major European capitals and 6 hours flight time from India/Africa.