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A guide to Egypt’s tech industry
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Overview:
Egypt’s ICT sector has grown rapidly in recent years. It has become the fastest growing sector of the country’s economy with a growth rate of around 16% in 2020/2021. In the financial year 2020/2021, there were $3 billion worth of investments in the sector.
The Egyptian government, as part of its ICT 2030 strategy, is attempting to build “Digital Egypt” which entails overhauling and improving the country’s ICT infrastructure.
The tech start-up scene is also an essential and potentially more innovative segment of the overall tech modernization drive in the country. Funding for Egyptian start-ups totalled $317 million in the first half of 2022.
The Egyptian government, as part of its ICT 2030 strategy, is attempting to build “Digital Egypt” which entails overhauling and improving the country’s ICT infrastructure.
The tech start-up scene is also an essential and potentially more innovative segment of the overall tech modernization drive in the country. Funding for Egyptian start-ups totalled $317 million in the first half of 2022.
Fintech:
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The Egyptian fintech sector has also grown significantly in recent years, possibly set to become the most profitable area in the start-up ecosystem. Investments in the sector increased by approximately 300% over the period of 12 months to February 2022. According to FinTech Egypt, a platform supported by the country’s Central Bank, as of 2021 there were 112 fintech start-ups, up from only two in 2014. Venture capital investments totalled $159 in 2021, up from only $1 million in 2017. The ICT sector in Egypt is managed by the Ministry of Communications and Internet Technology. The sector has been governed by the Telecommunications Law No.10 of 2003. However, new laws specific to technology have been passed in recent years. They include:
In May 2022, Egypt’s President Abdel-Fattah El-Sisi announced that plans were underway to introduce a digital notifications platform to eliminate excessive obstacles facing start-ups and entrepreneurs. |
Risks and pitfalls
While the technology sector in Egypt will continue to grow, there are a range of factors that make investing in this part of the economy potentially risky.
Many start-ups in Egypt have been overvalued and in some cases expanded rapidly without focusing enough on organizational structure and culture as well as unit economics. Examples of over hiring and later firing staff are rife; as are instances of overspending on customer acquisition rather than customer retention.
Data protection has also been a concern in Egypt. In 2017 the Egyptian government, with assistance from the powerful military intelligence agency, from which the country’s president Abdel-Fattah El-Sisi hails, requested that Uber share real-time location data of its passengers.
The decision-making in the upper echelons of Egypt’s government is notoriously opaque and the media is tightly controlled meaning that accurate reporting of strategic political and financial decisions is often severely limited.
Many start-ups in Egypt have been overvalued and in some cases expanded rapidly without focusing enough on organizational structure and culture as well as unit economics. Examples of over hiring and later firing staff are rife; as are instances of overspending on customer acquisition rather than customer retention.
Data protection has also been a concern in Egypt. In 2017 the Egyptian government, with assistance from the powerful military intelligence agency, from which the country’s president Abdel-Fattah El-Sisi hails, requested that Uber share real-time location data of its passengers.
The decision-making in the upper echelons of Egypt’s government is notoriously opaque and the media is tightly controlled meaning that accurate reporting of strategic political and financial decisions is often severely limited.
Final word
The ICT sector will almost certainly continue to grow in the coming years as will its importance in helping to modernize and standardize Egypt’s economy. Financial technology will be a particular standout.
Although there are various risks in investing in Egyptian tech, the government is continuing to make the ecosystem more conducive to foreign investors given its importance to the country.
Although there are various risks in investing in Egyptian tech, the government is continuing to make the ecosystem more conducive to foreign investors given its importance to the country.