Nestled at the crossroads of Africa and Europe, Egypt's strategic location has long been a hub of trade and cultural exchange. This has paved the way for the country to emerge as a burgeoning center for information and communication technology (ICT) in recent years.
Fueled by a young, tech-savvy population and government initiatives aimed at fostering digital transformation, Egypt's ICT sector is experiencing rapid growth.
Egypt's ICT Sector: A Growing Hub
Egypt has been working on becoming a regional ICT hub. The country boasts a powerfully built digital infrastructure, including an extensive network of 16 landing stations and 20 submarine cables. Having Africa's fastest fixed internet speeds and a 100% mobile penetration rate make Egypt an ideal environment for technological innovation and growth, as outlined by the Ministry of Communications and Information Technology.
Meanwhile, Egypt’s geographical location plays a role in turning it into an ICT hub. Dina Samir ElWakkad, an economics instructor and economist, tells Arab Finance: “Egypt’s control of the Suez Canal positions it as a crossroad between continents.”
“This enables the country to serve as an ICT hub with extensive connectivity to Europe, Africa, and Asia, backed by the passage of critical undersea cables that handle global data traffic,” ElWakkad says.
Attracting Global Investors
The ICT sector in Egypt has been attracting international investors, and the government is working on drawing in further investments.
During the second quarter (Q2) of fiscal year (FY) 2022/2023, the ICT sector’s contributions to total public investments reached 2.53%, up from 2.32% in FY 2021/2022, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
Moreover, Egypt’s large population with many tech-savvy minds plays a role in attracting such investments. Economist Ibrahim Yousif highlights that factors, such as a large, young population, a relatively stable economy, and government support, make Egypt an attractive destination for ICT investments.
“The combination of a low-cost business environment, high-quality infrastructure at reasonable prices, and affordable living standards makes Egypt an appealing destination for multinational companies looking to expand or start worldwide operations,” Youssif states.
“These cost savings not only boost profitability but also allow businesses to direct resources into expansion projects. It also helps establish a distinct competitive advantage in the global market,” Youssif adds.
ElWakkad agrees, stating that Egypt's large and youthful population, along with rising digital engagement, makes it a lucrative market for ICT companies. “The growing demand for mobile and internet services offers vast opportunities for expansion, positioning Egypt as a key market for ICT-driven innovations.”
ICT Sector Empowering Economic Growth
Egypt's strategic focus on the ICT sector has significantly boosted its economy, attracting investments and driving development.
In FY 2023/2024, the sector contributed 5.8% to the country’s gross domestic product (GDP), 16% up from 5% in FY 2022/2023. The government aims to boost ICT contribution to 8% of the GDP by 2030, Minister of Communications and Information Technology Amr Talaat stated in July 2024.
This comes as the ICT sector supports the success of several fields in the country. “ICTs promote development across many dimensions. At their most fundamental level, they enhance organizational productivity, spurring economic growth and helping firms be more competitive,” Nirmeen El Sayyad, UN Women Project Manager at the American University in Cairo (AUC) and an economic expert, explains.
The ICT sector has expanded impressively by approximately 16.3% in FY 2022/2023, making it the fastest-growing sector in Egypt for the fifth consecutive year. "ICT sector revenues amounted to EGP 315 billion in the current fiscal year, representing a growth rate of about 75%," as posted on the communications ministry's website last January.
The sector has also been steadily expanding its global reach, exporting a diverse range of products and services. El Sayyad points out that the increased number of companies operating in the ICT sector, along with government efforts to boost exports, contributed to the growth of digital exports.
In 2023, Egypt's digital exports increased by around 26% to $6.2 billion, compared to $4.9 billion in 2022, according to the ministry.
Overcoming Challenges
Despite the sector’s growth, the ICT business in Egypt is facing a number of challenges. ElWakkad notes, “Egypt’s ICT sector faces challenges related to regulations, cybersecurity, unequal digital access, and a shortage of advanced technical skills.”
However, the sector promises ripe fruits for the Egyptian economy to reap if these challenges are strategically addressed. “Addressing the challenges requires regulatory reforms, investment in cybersecurity, expanding rural ICT infrastructure, and improving skill development through education and training initiatives,” ElWakkad points out.
Streamlining regulations and creating clearer guidelines for ICT operations will ease market entry and foster investment. "Implementing stricter cybersecurity protocols and encouraging public-private partnerships for cyber defense will mitigate risks,” ElWakkad explains, adding, “Developing specialized training programs in partnership with universities and the private sector will help close the talent gap.”
While challenges remain, Egypt's potential for continued ICT growth is evident. By strategically addressing these challenges and leveraging its unique advantages, Egypt can solidify its position as a leading player in the global ICT landscape.
By Sarah Samir