Egypt Information Technology Report Q3 20007

Market Overview

With Egypt's IT market size expected by BMI to be on course to increase a value of around US$1.3bn in 2011, from US$889mn in 2006, the market is one of the most promising in the MEA region over the forecast period. With strong real GDP growth likely over the next five years, led in part by two sectors with huge potential for IT vendors (real estate and telecommunications), as well as growing foreign investment, strong growth in IT revenues is likely. Egypt's rise up the regional IT rankings as revealed in BMI's regional overview is being fuelled by regional trade liberalisation with around 40% of the direct investments fuelling spending in key verticals such as telecom and finance coming from GCC countries. The same trend is also stimulating new spending by smaller and medium companies on applications, hardware and services with predictions from regional distributors that Egypt could soon surpass regional giants the UAE and Saudi Arabia for computer sales.

BMI therefore expects the Egyptian IT market to exhibit relatively strong all-round growth over the forecast period, with considerable opportunities in both the public and private sectors and the rate of computer penetration rising for both households and enterprises. While computers remain a luxury item for many, a series of factors should drive household sector penetration. Private consumption is expected to grow at around 5% annually over the forecast period, boosted by an expansionary monetary and fiscal policy. Moreover, the increasing popularity and affordability of notebooks is also emerging as a major driver of PC sales in the country, providing an opportunity for foreign vendors to strengthen their market position. Despite all this however, limited disposable income and wide economic disparities will remain constraints on the market for the foreseeable future.

The administration of Prime Minister Ahmed Nazif seems likely to remain committed to promoting IT as part of its overall development strategy and vendors of hardware systems, packaged software, peripherals and IT services should all benefit. In addition, a number of vertical sectors are providing particularly strong demand. The telecoms sector is growing at an unprecedented rate, with the award of 3G licences to three service providers certain to generate new spending on IT products and services from this sector. The banking vertical, led by the Central Bank of Egypt and other financial institutions, is also building on earlier IT installations.