Egypt commits to accelerated digitalization

Burdened by an economy that is reliant on vulnerable sectors (Suez Canal, tourism, textiles, hydrocarbons and agriculture), a poorly qualified workforce and an inefficient bureaucracy, Egypt currently has one of the highest inflation rates in the world.

With a mobile phone penetration rate of around 95% (over 100 million subscriptions) and an Internet penetration rate of 49%, Egypt is Africa’s ICT (Information and Communication Technology) giant. As part of its “Vision 2030” strategy, the government has adopted a proactive stance by introducing a new component entitled “Digital Egypt”.

Launched in 2020 under the aegis of ICT Minister Amr Talaat, this new digital doctrine is based on three pillars: improving digital infrastructures, the regulatory environment, and building innovation capabilities. The government and Telecom Egypt (an 80% state-owned company with a virtual monopoly on the distribution of fixed telephony and broadband Internet) have allocated nearly 17 billion Egyptian pounds (around €502 million) to capacity building.

As a result, Internet speeds have quadrupled in less than a year, rising from 6.63 MB/s in February 2019 to 27.09 MB/s in February 2020. At the same time – in August 2020 – the Egyptian government launched an e-services portal offering almost a hundred different services, ranging from making appointments online (at different government offices) and renewing or requesting official documents, to making online payments.

However, a number of challenges are hampering the implementation of “Digital Egypt”. Making a radical digital transition is difficult in a society in which the illiteracy rate stands at over 25%, the informal sector accounts for almost 60% of employment, national infrastructure is inadequate, and the investment climate is unfavorable.

A “fake” digital transition?

In reality, this sudden digitalization of Egypt’s various administrative and ministerial services is more about automating existing services and administrative procedures than embarking on a genuine digital transition. Although efforts have been made to modernize and embrace technological advances, the bureaucratic structure is complicating the effective implementation of digital initiatives.

With 33 ministries (the largest number of ministries in the world) and a colossal public payroll with little or no staff training in the use of these new digital interfaces, the implementation of reforms is a long, incomplete and, in some cases, counterproductive process.

Most pre-existing processes have been digitalized without any adaptation or thought being given to interconnecting them or streamlining them beforehand. The lack of standardization and interoperability between the various systems and platforms prevents seamless data integration and exchanges in general as well as within the different government entities. Although there is only one body responsible for disseminating data – the Central Agency for Public Mobilization and Statistics (CAPMAS) – the data used by the various ministries on a common subject may be variable or even contradictory.

Moreover, most of the data is not made public for national security reasons. Complex administrative procedures, lengthy approval processes, a top-down decision-making system, and the need for coordination between different government departments and agencies are hampering or even paralyzing the effective integration of these new technologies.

Persistent constraints

Despite the progress made in improving digital connectivity, constraints remain in terms of the availability and quality of essential infrastructure. Limited access to broadband Internet nationwide – and especially in rural areas – is hampering the widespread adoption of digital technologies and tools.

Digital infrastructures as a whole, including data collection centers and cybersecurity measures, need to be developed to support the growing volume of digital transactions and the storage of sensitive information. Today, Egyptian employees, civil servants and businesses, whether public or private, often face problems caused by an inadequate and unreliable infrastructure. Poor Internet connectivity and recurrent network overloads in major cities have a significant impact on the quality of services and limit the ability to take proper advantage of them.

One example is the customs authority. Since its complete digitalization, processes often take longer due to recurring disruptions to the IT system. In addition, the successive devaluations in 2022 and the war in Ukraine have fundamentally disrupted the supply chain on which Egypt depends to curb the currency shortage and inflation.