You're Just in Time for Egypt's Pro-Business Policies

Like the companies we serve, we at the Information Technology Industry Development Agency (ITIDA) are constantly reinventing ourselves to find innovative and value-driven ways to support and promote the expansion of Egypt's IT sector, along with serving as a one-stop shop for global businesses and IT service providers.

Over the past couple of years, there’s been a dramatic shift in Egypt’s environment, where the global offshoring IT services spending market has expanded from $74 billion to $107 billion in 2022, translating into a CAGR of approximately 7.5%. We believe that ease and attractiveness of doing business is a major factor in the investment climate, and as such, ITIDA’s mission is firmly aligned to the Egyptian government’s commitment to?the 2030 national agenda. And to enable a seamless investment journey, we want to exert all possible efforts to boost investment, promote economic development, expand the workforce, and encourage entrepreneurship.

In collaboration with Ernst & Young a thorough and objective study was done of the Egyptian market and measured and monitored the growing global demand for offshoring services, which is expected to reach $540 billion, at an annual growth rate of 8% to 9%, by 2026.?

Egypt started a comprehensive reform program in 2016 with the goal of attaining fiscal consolidation and sustainable national debt. As a result of these actions, the domestic public debt ratio has decreased from more than 100% of GDP in 2015–2016 to 87% in 2021–2022, falling below comparable developing and frontier nations as well as worldwide levels. It also focused during the past 3 years on stimulating public spending to face the repercussions resulting from the COVID crisis and the Russian-Ukrainian crisis.

When it comes to special economic and legislative reforms (concerning tax rebates, reduced customs tariffs and streamlined customs procedures, bank privatizations, and regulations against money laundering and software piracy), the Egyptian government has been successful in upholding a stable political climate. The cabinet decided to create a subsidiary fund linked to the Egyptian sovereign fund to invest in start-up businesses due to the sector's significance in attaining Egypt's robust economic development.

Another step forward is the new investment law of 2017, which ensures the country’s support to start-ups, entrepreneurs, small and medium enterprises. What’s more is that the new law considerably simplifies taxes, tariffs, and many other financial and tax responsibilities while lowering the administrative costs associated with starting and operating enterprises. Adding to that is the Bankruptcy Law of 2018, a crucial milestone in Egypt's ongoing business-oriented legislative reform. Moreover, Egypt offers international investors a resident permit for the duration of their investment projects in the country, as well as the freedom to repatriate profits without restriction.

Additionally, Egypt recently introduced the law of Data Protection in 2020, a law that forbids the processing of personal data without the express consent of the data subject and grants them a number of rights, including the ability to limit access to their data, revoke earlier authorization and be informed in the event of a data breach. We at ITIDA also established Egypt’s first IPR office to raise awareness of intellectual property rights and ensure that laws and regulations are abided by.

With Egypt being a digital hub, the nation's government concentrates on advancing and developing digital skills and jobs, digital innovation, digital infrastructure, and legislative and regulatory framework.

Each year, the government and foreign capital support thousands of applications for training programs at institutions that concentrate on new ICT technologies, along with the Minister of Education investing $500 million in national university development . Universities and other educational institutions work together with the largest Egyptian technology companies to update curricula, support labs, and research initiatives, and give undergraduate and graduate students internship opportunities.

The pro-business policies are underscored and supported with a huge upgrade and continual investment in Egypt’s infrastructure With an average speed of 46 Mbps, up from 6.5 Mbps in 2019, Egypt topped the list of African nations for fixed broadband internet speed in Ookla's Speedtest Global Index for the first and second quarters of 2022. Additionally, Egypt moves up 42 spots in the 2022 GovTech Index, according to IDSC. Egypt is developing its government technology in a significant way and provides a variety of excellent practice examples and entry points.

One thing we know is that Egypt aims to offer better utilities and telecommunications connectivity to offshoring companies, with continuous investments in developing local physical infrastructure, significant improvement in international bandwidth, and a persistent focus on building technology parks across the entire country.

How are we doing that? With over 8 high-tech and knowledge parks spread out across Egypt and the following programs to encourage and hasten the acceptance of new technologies and the creation of high-value services and goods, innovation is at the core of Egypt's ecosystem:

• CREATIVA Innovation Hubs in collaboration with public universities, where hubs reside inside the universities with external access to support students as well as start-ups to meet up, innovate, access resources, and develop digital transformation solutions.
• The Applied Innovation Center (AIC) promotes the use of emerging technologies in addressing and solving national challenges. The Center aims at? developing human capital, creating an environment for innovative start-ups to grow, and accelerating the creation of domestic high-tech enterprises.
• Knowledge City, a ground-breaking initiative in the New Administrative Capital that contributes more than EGP 15 billion to Egypt’s comprehensive vision and plan to transform Egypt into a digital society, as outlined in the Egypt Vision 2030. Egypt University of Informatics (EUI) will be the first university of its kind in the Middle East and Africa, specializing in Artificial Intelligence (AI), data engineering, data analysis, digital transformation, the fourth industrial revolution, and financial technology, among others.

There has been an interest in providing a bridge between business, community, and government by identifying the needs of the local IT industry. Also, addressing them with well-designed programs, providing policy advice, promoting trade in local and international markets, and serving as a strategic advisor to local and international businesses will play a crucial part in the development of the Egyptian IT sector.

Egypt’s budget for the current year aims to reduce the debt of the general government of the state as a reputation from the gross domestic product to 2.84%. Among the positive points regarding the structure of Egypt's external debt, perhaps the most prominent is the diversity of external debt instruments between loans, deposits, issued bonds, short-term credit facilities, and Egypt's allocations to the foreign exchange fund. There is also a diversification of external debt financing sources on international financing institutions and bilateral financing sources. The weighted average interest rate applied to the external debt portfolio reached 3.58%, which is a new rate.

The Prime Minister explained that the state has made numerous decisions, reforms, and laws this year in an effort to improve the investment climate. This has encouraged - despite the extreme difficulty the global economy has seen recently - about $9 billion in direct investments over the past year. This is the greatest number that has been attained in 15 years, and offshoring has had a major role to play.

Our fundamental philosophy is to lead and mobilize the expansion of Egypt's IT sector in order to boost its worldwide competitiveness and make it a significant driver of the country's economic development.?