Egyptian minister says Cairo targeting $10 billion in outsourcing exports by 2020

By Tarek El-tablawy, AP
Wednesday, September 29, 2010

Egypt targets $10 billion in outsourcing exports

CAIRO — Egypt hopes to see a tenfold increase in exports from its growing outsourcing industry by 2020 and will boost its focus on information technology entrepreneurship and co-ownership of intellectual property, the country’s information technology minister said Wednesday.

The new emphasis outlined by Tarek Kamel at an investment conference in Cairo offered a window into how the country wants to boost revenues and further diversify its economic base as it moves ahead with its reform program.

Trade Minister Rachid Mohammed Rachid said officials are now more interested in opening new sectors to investments, hoping to eventually attract direct foreign investments of between $12-15 billion per year. Rachid said the priority was on maximizing the returns from state-run enterprises, including through restructuring and better management.

“We need to be able to consolidate. We want to be able to improve management. We want to be able to modernize our base of production,” he said, reinforcing the government’s desire to avoid further privatization of the public sector, at least for the time being.

Prime Minister Ahmed Nazif, echoed those remarks, saying later: “We need growth more than others” — a reference to the government’s challenge in meeting the needs of its 80 million citizens and demands for more jobs.

The information technology sector has emerged over the past few years as a new source of pride for Egypt.

Kamel, the IT and communication minister, said the sector had brought in almost $1.1 billion in exports so far in 2010, and officials were projecting an increase to $10 billion by the end of the decade.

“We’re still completely convinced that this is the way to continue to grow because infrastructure growth (in the sector) will not be enough anymore,” Kamel said. Egypt needs to “take its rightful share out of that service economy.”

Kamel said outsourcing, call centers and other support services were creating about 40,000 jobs per year but that Egypt was no longer content with simply focusing on the call center business. He said the real value lies in creating entrepreneurship in the information technology sector through co-ownership of intellectual property.

“We can also work on the higher end of the value chain,” Kamel said. “It will make Egypt part of the knowledge economy worldwide.”

Kamel said officials were setting up Egypt’s new Center for Innovation and Entrepreneurship, and that there was already a pilot project under way with IBM on nanotechnology. He said Egypt hopes to attract other foreign firms in similar projects.

The strategy for the entrepreneurship plan would be announced later in the year, he said.

The push for new revenue comes as Egyptian officials project economic growth could reach at least 6 percent this year, and inch up slightly higher in the coming year.

Egypt, the Arab world’s most populous country, stumbled slightly during the world financial meltdown. Economic growth dropped from more than 7 percent before the crisis to slightly under 5 percent.

Kamel said the IT sector saw sustained growth even during the crisis. Mobile phone penetration in Egypt now stands at more than 75 percent, with around 60 million subscribers, and broadband subscriptions are growing at about 25 percent annually, including both fixed and mobile services.

He said there were around 1.1 million broadband household subscribers. But he discounted the possibility that a fourth mobile phone license may be offered before 2013, saying officials would rather wait until the fourth generation networks were more established.

Kamel also said the country’s first so-called “triple-play” license would be signed Wednesday. Officials have awarded two licenses for companies to provide a combined package with Internet, cable TV and phone services in gated communities springing up around Cairo.

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