Egypt's Internet Economy at a Crossroads | Entrepreneur Resources ...

Although Egypt may be a country presently beset with economic and political difficulties, it?s future as a location in which to invest long-term is not in doubt. Even as the full impact of the January 2011 revolution has yet to be fully realised, there has been no mass exodus of foreign companies as was once feared although investment plans by some have been temporarily put on hold until the financial implications become a little clearer.

Egypt?s banking sector, which has been thoroughly modernised in recent years, continues to be well placed to meet the needs and aspirations of the business community. Despite the turmoil, business banking from HSBC and the other major banks in the country now offer the potential entrepreneur and investor some of the most intuitive financial services to be found anywhere in the Middle East and North Africa (MENA) region.

If the business banking services offered by Egypt bank CIB, for example, or by multinationals such as HSBC, Barclays, Citibank and others, finds easy resonance within the business community, the same can?t be said of the country?s retail banking services. Take-up remains stubbornly poor with only around 10% of Egypt?s population having a bank account at present. But the country?s financial institutions are striving hard to change all of that and to realise the huge investment opportunity which retail banking represents.

Another growth area yet to be fully realised is the Internet, according to a recent report produced at the end of 2012 by the Boston Consulting Group (BCG), a global management consulting firm and the world?s leading advisor on business strategy. The report, Egypt at a Crossroads: How the Internet Is Transforming Egypt?s Economy, was commissioned by Google Egypt.

With the largest population of users ? 31 million in July 2012 ? in the MENA region, Egypt was beginning to embrace the Internet prior to the overthrow of the Mubarak regime. Indeed, the Internet ? especially social media ? is viewed by some as having a role in the events of the revolution, says the report.

In 2011, the Internet contributed an estimated $2.4 billion, or 1.1 percent of GDP, to the Egyptian economy. The Internet?s share of Egypt?s GDP (?e-GDP?) was comparable to several other sectors, including health services (1.3 percent), education (1.1 percent), and oil refining (1.1 percent). However, it was smaller than such sectors as restaurants and hotels (3.2 percent), wholesale and retail trade (11.5 percent), and commodities (14.9 percent).

The report continues, ?Today, in Egypt, consumers? combined purchases on the Internet and spending to access the Internet make up just 50 percent of e-GDP, compared with 59 percent in Saudi Arabia, 71 percent in Turkey, and 72 percent across the EU-27. As this spending increases, we expect the Internet?s contribution to GDP to grow significantly (estimated to reach $8 billion by 2017, or 1.6 percent of GDP).?

However, Egypt?s industries have not yet seized the significant commercial potential of the Internet, says the report. In the travel and tourism sector, Egyptian companies were just beginning to get in on the act. The migration of travel and tourism planning to the Internet has created a potential online marketplace for Egyptian travel and tourism services of $2 billion ? of which Egyptian tourism companies currently exploited less than 5 percent.

In the manufacturing and industrial sector, the report estimated a potential online marketplace for exports to developed countries of $0.9 billion. Leveraging the Internet would also enable the capture of significant efficiency gains.

Similarly, Egyptian small and medium enterprises (SMEs) do not take full advantage of the Internet, despite the significant economic benefits won by early adopters.

The report says, ?Egyptian SMEs that use the Internet as a customer-acquisition channel sell more internationally and experience higher growth. Between 2007 and 2010, 55 percent of SMEs that were active online saw more than 20 percent annual growth. Only 25 percent of businesses that were not active online grew at such a rate.

?However, as of 2011, only 13 percent of small enterprises and just over 40 percent of medium enterprises in Egypt had an online presence.?

Egypt?s Internet economy, says the report, is now at a crossroads.

?Still, while Egypt stands poised to capture the benefits of fully integrating the Internet into its economy and society, it has not yet embraced the commercial opportunities of the Internet as have other countries in the Middle East and North Africa region.

?The choice is whether to continue with business as usual or to take bold steps now to unlock the potential of e-commerce and energize online business-to-business transactions, thereby driving substantial growth in the Internet economy?s contribution to Egypt?s GDP.?

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Click here to read the full report.

Source: http://www.entrepreneur-resources.net/egypts-internet-economy-at-a-crossroads

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