Information Technology Transfer to Egypt

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Information Technology Transfer to Egypt Sherif Kamel American University in Cairo, 1101 Corniche El Nil Street, Apt #28, Cairo-Egypt Abstract - The introduction of computing into Egypt started in the 1960s. However, the use and applications was limited to a few sectors and industries. During the early 1980s and with the introduction of personal computers worldwide, a major evolution involving information, computing and communication technologies penetrated the society in Egypt affecting major public and private sector organizations in Egypt. Such transformation has had socioeconomic implications on the nations’ development and growth. This paper demonstrates the information technology diffusion across different sectors and its vital role in building an information-based society in Egypt.

I. INTRODUCTION Before we can appreciate the use of information systems in Egypt, we must understand its introduction and diffusion since the 1960s. This paper demonstrates the history and the present of information technology in Egypt. It also analyses the active role played by the government since 1985 causing a change in the role of information technology in the society as an important tool in targeting socioeconomic development and improving the decision making process. The change brought about by information technology in developing countries has been accelerated by the continuous development of new tools and techniques that had direct and concrete effects on socioeconomic development. Consequently, the way developing countries will manage the computer driven process of change will influence whether their development goals will be promptly achieved (Munasinghe 1987). This will be coupled with the ability to invest continuously in new technologies and to provide the trained human resources and up-to-date technological infrastructure required. Many researchers have identified information technology as the combination of information, computing and communication technologies (Benjamin and Scott Morton 1988, Schware and Choudhury 1988, Munasinghe 1987, Lind 1986). Most of the applications of information technology introduced into developing countries were implemented to deal with major sectors in the economy such as education, health, energy and agriculture. There are a few cases that recognized information technology, as an emerging sector by itself due to the large financial resources needed, and the lack of a fully equipped technological infrastructure and that of human resource capacities. In the past few years, the importance of information technology has been greatly emphasized in most developing countries in a deliberate effort to ensure that they do not lag behind (Goodman 1991, Lind 1991). In most of these countries, the government has played the most important role in the diffusion of information technology. The government

has always been the largest, if not the single user of computers (Moussa and Schware 1992) and through their policies, laws and regulations they still exert the largest influence on the diffusion of information technology throughout the various organizations and entities in these countries (Nidumolu and Goodman 1993). Egypt is not an exception. However, one could say that the governmentprivate sector partnership has been a deciding factor in diffusing information technology in Egypt. The extensive benefits of information collection, analysis and dissemination together with the support of computerbased technologies have been sought to enable decisionmakers and development planners in various developing countries to accelerate their socioeconomic development programs. During the last decade, a large number of these countries have been embarking on medium and large-scale information technology and computerization projects. These projects were mostly funded by the government and/or by various international agencies (Daly 1992). In the case of Egypt, as part of the comprehensive country’s structural adjustment program, a large number of informatics projects were formulated targeting the use of information technology to leverage managerial and administrative performance in the government. This has been targeting a number of key sectors such as education, health, employment, trade and local administration. In practice, most of the projects have sought to introduce computer-based technologies to developing countries to release socioeconomic change and development. Frequently, this has been inappropriate to the needs of the local context (Berman, 1992), the focus was more on large-scale capital expenditures rather than on human capital investment such as training and human resource development (UNESCO 1989). It focused more on large urban areas and cities rather than on more rural settings and therefore, failed to achieve their goals. Such a large number of failed projects resulted in a generally negative conventional wisdom that defined information technology as inappropriate to developing countries, especially outside the big cities and national capitals. However, research studies show that the implementation of informatics projects is an area of growing interest in developing countries and where effective and growing use is taking place (El Sherif 1990, El Sherif and El Sawy 1988, Schware and Trembour 1987, Moussa and Schware 1992). Respectively, developing countries, gaining from the experiences of the past, have been extensively investing in training, consultation and the establishment of an efficient technological infrastructure that could move them into a state

of self-sufficiency. The government, public and private sector organizations have searched for various channels of technology transfer such as information technology acquisition, education and training, technical assistance, licensing and direct foreign investment to help build an information infrastructure that could help boost the economy and realize development and growth. However, there are a number of important resources that should exist for successful information technology transfer to take place. They include the proper orientation of the uses and advantages of information technology in development and the introduction of the concepts of information sharing, decision making, optimum allocation of resources and socioeconomic development and not just the use of computing at the data processing and operational levels. Moreover, they include the availability of local technological and human resource capacities capable to absorb the technology transferred that could be realized through the establishment of training centers and software development houses that could help develop the culture of information technology and diffuse its use among various organizations. There is no doubt that there are many potentials for developing countries to benefit from information technology in their socioeconomic development. Nevertheless, for developing countries to gain satisfying benefits from the implementation of information technology, they should apply the appropriate technology to the country. Thus, a number of issues should be put into consideration such as the difference in the requirements from one country to the other including the values, the social conditions and the cultural aspects. It is becoming vital to identify what the needs of information technology are and what needs to be done in terms of policies and regulations to provide the proper environment for information technology implementation that could yield the expected benefits and that could contribute to the country's socioeconomic development. Among the issues addressed are balancing investments in information technology with that needed for the development of human capacities, strengthening education and training in information technology, facilitating information sharing and dissemination among various entities and organizations and leveraging local capacities for developing and managing information technologies (Schware and Choudhury 1988). Respectively, it is important to focus on the optimization of the selection and use of the most appropriate technology and its implications on the environment rather than to focus on the technology its self. Therefore, the experiences practiced and the literature in information systems research advocates a clear understanding of the relationship between the process of information technology development and the context of its implementation. It suggests three main issues to focus on for effective management of technological change: adaptation to the cultural context and needs, diffusion into the organization and adoption by the organizational users (El Sherif & El Sawy 1988).

II. EGYPT: “THE COUNTRY” Egypt is the cradle of an ancient civilization dating back to 3000 BC. With a population of about 68 million, out of which 19 million in its work force, Egypt is the most populous country within the region. About 30% of its population are in the education stages. It has the second largest economy in the Middle East. It has successfully implemented the privatization and economic reform program that has enabled its current economic growth rate that stands at 5.7% annually with an inflation of 6%. With an open door policy, the foreign exchange is fully liberalized and stabilized. Egypt has four basic sources of foreign exchange earnings. They are equally divided between tourism, oil, Suez Canal earnings and remittances of Egyptian working abroad, mainly in the Arab Gulf countries. Cairo, the capital of Egypt, is a large metropolis where buildings of French and English architecture stand next to modern skyscrapers. Cairo's 18 million inhabitants constitute nearly 27% of the total population. Egypt, like many other developing countries, is trying to expand its industrial base and modernize itself technologically. Agriculture accounts for 15% of the gross domestic product and industry accounts for 40%. Egypt has a large service sector mainly built around tourism and transportation. Its major exports are human resource capacities, petroleum products, cotton and leather products; its major imports are food, machinery and vehicles.

III. INFORMATION TECHNOLOGY IN EGYPT A. The History Egypt passed through a number of phases throughout its introduction and diffusion of information technology since the early 1960s. It was an evolutionary approach encompassing three phases and representing the country's computing historical background. The first phase took place during the period of the 1960s and early 1970s witnessing a huge industrial boom in various sectors of the economy. It seemed natural that computers were regarded as potential tools targeted by the government to boost its socio-economic plans. The introduction and use of computers was derived from the need to achieve the country's developmental objectives in a more efficient way. However, the cultural and social conditions as well as the resistance to change from senior government officials remained unsolved constituting major barriers before the proper implementation of computer use and diffusion. In the early 1960s, Egypt started to introduce and use information technology, mainly computers, in different sectors of the economy (Lind 1986). Egypt was the first country in the Middle East to acquire a computer, when in 1961 Alexandria University installed an IBM mainframe model 1620. A few months later, the Institute of National Planning acquired the second mainframe computer in Egypt, also an IBM 1620. Next, the Central Agency for Public Mobilization and Statistics (CAPMAS) followed by installing an ICL mainframe

model 1904. In 1969, Al-Ahram Management and Computer Center (AMAC) was established. While the computer at Alexandria University was used to introduce students and professors to new technology, the computers of the National Planning Institute and CAPMAS were used for tabulation, accounting, stock control and financial systems. That of AMAC was installed to upgrade and computerize Al-Ahram newspaper's internal work structures. The growth rate of computer use was slow, reaching 190 in the early 1970s. Most of them were installed in public sector organizations as well as in the government. There were 185 computers installed in the private sector. The role of computers in education was not yet perceived as a priority. Therefore, the educational curricula and the training programs focusing on computer uses and applications were not available. The diffusion of computers in this phase was monitored and regulated by the government representing a monopoly that was meant to realize organizational performance and to support various sectors in the economy in reaching an optimum level of efficiency. Until the 1970s, there were no local privately owned computer companies in Egypt. This was not only due to the massive nationalization policies but also because computers at that time were too expensive, too large and not yet perceived as necessary. However, there were branches of three computer companies International Business Machines (IBM), International Computer Limited (ICL) and National Cash Registers (NCR). They were mostly selling pre-computer calculating machines that were used by the government bodies. In the mid 1970s when most private enterprises were importexport oriented, they were largely dependent on telexes and telephones for their business operations. However, with the expansion of private business and the economic boom of the market, reliance on computers and information technology in general became inevitable. With the economic open door policy in 1974-75 coupled with the massive drop in the prices of mini-computers world-wide, the second phase of computing started in Egypt characterized by using computers for increased effectiveness after realizing organizational performance and efficiency during the first phase. This phase witnessed the establishment of a large number of representative offices of most international information technology corporations. Consequently, Egypt's image started to be shaped as the information center in the Middle East. Its highly qualified technicians, prospective computer users and the surge in incomes that accompanied the oil boom in the late 1970s fostered this. Consequently, in the second half of the 1970s, the value of the information technology market in Egypt was within the range of US 20 to 30 million dollars. By the early 1980s, personal computers became accessible to more individuals, universities, schools, research centers and private firms. While personal computers became more popular in the 1980s, a dramatic increase in their use seemed highly dependent on the Arabization of software applications since the majority in Egypt prefer to work on Arabic-based applications. Consequently, hundreds of software companies rushed to

provide a variety of software applications in Arabic. For example, IBM established its Arabic Competence Center to provide solutions for the Arabic-speaking world with regard to various software application tools. There were 30 multinationals in the Egyptian market in 1981 (Lind 1986) as opposed to 3 in the previous decades. The period until 1985 represented the second phase of computing, it witnessed the spread of computer companies in Egypt and the orientation and marketing of their information technology services including training and human resources development, systems development and maintenance, as well as information systems evaluation and assessment. The role of information technology during that phase was more intended to provide management support with regard to decision making and improving effectiveness. The third phase in computing started in 1985. It represented a shift in the perception and use of information technology in Egypt. The market was liberalized, leading to a vast increase in the number of multinationals, vendors and local software houses. Information technology has been perceived as a tool to reposition the organization in an ever-growing competitive market where the decisions taken and the resources allocated directly affected its status and position. This phase witnessed the involvement of a new customer in the market with new ideas, strategies and plans, the government. It has redefined the role of information technology within the context of socioeconomic development. Although computing was not new in Egypt, it was not widespread and even the personal computers revolution worldwide did not dramatically affect the information technology market in Egypt. However, because the government stimulated the use of computers, their influence became real and they became widely diffused within the various sectors of the economy. The Role of the Government As of 1985 and through the early 1990s, government policies and systematic procedures guided computing in Egypt. The role of the government has been very positive with respect to a number of aspects of information technology. The microcomputer boom continued and now captures an estimated 70% of the overall computer market. In 1985 there were only 25 dealers and about 70 sub-dealers and retail outlets. Today, there are over 200 international brands, over 500 dealers, about 2,500 sub-dealers and over 1,000 training centers. The government and public sector corporations are by far the largest purchasers and account for an estimated 25% of the total consumption. However, with the spread of computer use and the proper orientation provided for different decision-makers, other important end users in various sectors became primary users of computers in Egypt. For example, the petroleum companies account for 15%, banks 15%, universities 15%, hotels 10%, and hospitals 5% of the total use in the market (CAPMAS 1988). It is estimated that Egypt has achieved only 15% of its computerization potential by installing around 150,000 computers in the public sector, government agencies and offices as well as in the private sector. Thus, demand for

microcomputers is expected to grow at an average of 25% a year. The focus of the software industry is directed towards the production of systems applications serving a number of sectors such as financial services, retailing and wholesaling, and health care and insurance. An estimated 90% of the software available locally is imported while the remaining 10% mainly Arabized software is developed domestically. The training and human resource development faces problems similar to other developing countries. There are few training institutions of high quality. The certified training centers have exceeded 250. The training that is provided by multinationals and private institutions is expensive compared to local standards. Therefore, the government has embarked on a national program implemented by the Cabinet Information and Decision Support Center (IDSC) to train annually 1,000 new graduates for a period of five years. This number should increase to 5,000 per year as of the year 2000. The training includes various methodologies, tools and techniques in software development in a nine-month software skill development program where major information technology vendors world-wide contribute effectively. The program targets training its participants on the latest trends in information and communication technology in terms of software and hardware. The Internet Era In communications and internetworking, since the initial introduction of Internet in Egypt in 1993, it has grown tremendously. The number of users, number of Egyptian web servers, number of Internet service providers as well as the availability of Internet access have all shown significant increases in recent years. The Internet has developed from being used solely by the government and academic institutions to becoming more of a standardized search and communication tool used by everyone from the government to academic institutions to individual users, to companies and other commercial organizations, to hospitals and medical centers. The Internet use is constantly being encouraged by the government and by private investors who establish their own Internet Service Providers (ISP) at a very impressive rate. Finally, the streets of Egypt have recently begun to witness the establishment and spread of Internet cyber-cafes reflecting a sign that there is a strong market demand for the Internet in Egypt. The Internet evolution in Egypt demonstrates once again the active role played by the government. In the very beginning, the government was encouraging Internet use by providing free Internet accounts/access that provided an incentive to try out the new international network. The plan was very successful and there was a very high demand for the limited Internet access that was made available. Since that time, connection speeds have increased and users now have an array of different service providers to choose from. The Internet was gradually introduced and diffused within the market with the subsidy and support provided by the government before privatizing it and transferring it to the private sector.

With the privatization of the Internet in 1996, the role of the government did not come to an end. The government still provides strong support for the ISPs in the form of upgrading the infrastructure to enable them to offer better connection speeds to their users as well as providing them with technical support in the administration of their servers. In addition to the hardware and infrastructure, the Internet market is also witnessing a growth in the software market with more web programmers being trained and more web design companies being established encouraging commercial users to utilize the web as a business development engine. Today, Internet connectivity in Egypt is growing at a faster than ever pace. The number of Internet Service Providers (ISPs) is constantly on the rise as is the number of Internet users. Currently, there are 50 ISPs spread out across 16 governorates, the number of users exceeds 200,000, and the number of registered domains is approximated at 515 domains with the number of web servers around 500. B. Egypt Today Egypt’s information infrastructure is aggressively being built across different sectors. The number of trained professionals in the information sector has exceeded 280,000 in 1998. The number of information technology companies across the nation exceeded 500 in the fields of hardware, software, information technology solutions, and systems integration and information technology consultation. There are 5.1 million telephone lines in Egypt, 360,000 facsimile and telex lines, over 150,000 mobile users and 200,000 Internet users. Multinationals coming to Egypt to develop and partner in its information technology sector include Microsoft, IBM, EDS, Global One, AT&T, Motorola, Oracle, MCI, Siemens, Apple, Sony, Lucent Technologies, US Robotics, and many others. Egypt information technology market represents more than 400 million US dollars in 1997 with the capacity to grow to 1 billion US dollars by the year 2000. Industry experts have cited Egypt’s information technology market as among the fastest growing in the world. In its long-term strategic plan, Egypt has an objective to create a 25 billion US dollars industry creating more than 60,000 technical and managerial job opportunities. Moreover, the government has allocated 72 million square meters to develop a high technology site in the Sinai valley. The project will encourage the development of a high technology industry including co-operation with international firms and multinationals and is expected to add 2.5 billion US dollars to the gross domestic product by the turn of the decade; 1.5 billion US dollars of which will be generated through export markets. Additionally, the government developed a set of policies that differ according to the type of information technology imported. They are designed to encourage imports; for example the customs duty on hardware is just 5% as compared to 6 to 10% imposed on hardware for media purposes or supporting devices. The duties on software are higher, from 20 to 30%, to encourage local development of software applications which is easier and cheaper to achieve as compared to hardware

development. Moreover, the government in its strategic plan to encourage information technology is planning to decrease the taxes and customs on all related elements to software and hardware. The Software Market The software market has witnessed much growth in recent years and is expected to continue this growth in the years to come. Today, software sales contribute 23% of total information technology revenues. With the increase in awareness of the importance of information technology, there is an increasing demand for software packages that facilitate the use of such technology. This calls for the Arabisation of much of the famous software titles to make them more accessible to the mass of the Egyptian people; those with limited linguistic abilities. The division of the software could be seen in terms of its revenue percentage as follows: imported software packages 55%, locally developed software packages 19%, contracts 16% and Arabisation 10%. The growth of the software market is threatened by piracy and smuggling. The weak enforcement of intellectual copyright laws has long been a factor that has encouraged software pirates to step up their activities in Egypt. However, a new set of laws governing the protection of intellectual copyright laws has been passed and is expected to have remarkable impacts. These new laws will impose stringent punishment on those who violate intellectual copyright laws, thus encouraging the growth of the software market in Egypt. The nature of the software market makes its products easily affordable both to the local market as well as foreign markets. The low cost involved in production, largely brought about by the low wage structure, makes locally produced software packages easy to export. Over 20% of Egypt’s total software production are exported to Arab countries. The Hardware Market There is a high and increasing demand for the latest technology hardware models. In addition to business and private individual use, the high demand is constituted by a government plan to modernize the education system by introducing computers to schools, both public and private. The implementation of this plan requires the purchase of a great number of personal computers and the latest technology models are usually a preference, especially with the government. Similar to many cases worldwide, the bulk of the growth of the hardware market in Egypt is due to the growth in the personal computers sector of that market. Today, major hardware producers worldwide have a presence in the Egyptian market. Although they are more expensive, consumers in Egypt rely on brand names. However, in the past couple of years, consumers began to look for more economical solutions such as compatibles that had positive implications on the overall performance of the Egyptian hardware market. Similar to software, hardware is demanded by different sectors mainly the government, the banking sector, the private sector firms and the individual

users. The demand posed by these sectors encourages further growth of the hardware market. In addition to the extensive distribution networks, another factor that has contributed to the growth of the hardware market is the low tariff on computer imports. In a country where import tariffs are usually very high, a tariff of 5% on computers is considered very low. This has encouraged the import of computers, thus contributing to the growth and expansion of the hardware market in Egypt. The Status Information technology in Egypt is a growing sector of the economy and one which will always be developing and changing with broader horizons and high aspirations. However, it has its strengths as well as its weaknesses. Its weaknesses include limited local production, hence a lack of manufacturing exposure, weak linkages and supporting industries, mismatch between manpower training and industry needs, Egypt does not have a reputation as a producer of hightechnology products and the Egyptian market is highly dependent on imported components for local production. Its strengths include the availability of a large educated workforce, low cost labor both technical and managerial, geographical proximity to many markets, growing infrastructure and the availability of low cost land. The Future Major developments are taking place. More services will be introduced and the overall performance should improve. With regard to the network infrastructure a project is underway to upgrade the currently used network to fiber-optic lines and introduce satellite linkages. Also, there is an upgrade of the cellular phone network. A projected fall in charge rates for mobile telephone calls will encourage mobile connectivity through portable computers. Also, the government will continue to support any effort aimed at developing the information technology sector in the Egyptian economy through facilitating connectivity and simplifying legal procedures for establishing information technology related firms. The Knowledge Valley project is an ambitious initiative to build the Egyptian equivalent of Silicon Valley however serving as a center of excellence for the transfer of information technology knowledge. Moreover, the government plans to spread computer and Internet technologies among schools and universities. This project aims at modernizing the Egyptian education system by enabling students to use the latest technological advancements in the learning process, thus gaining a strong familiarity with basic technological skills along with their basic education. C. Lessons Learnt There are a number of lessons to be learnt from the experience of introducing information technology into Egypt in order to realize targeted objectives aiming at supporting socioeconomic development. This includes:

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It is invaluable to complete the information technology infrastructure build-up by establishing information centers in different public and government organizations. This helps create homogeneity across different sectors and diffuses information technology in various domains, which avoids the creation of haves and have-nots. It is important as we approach the 21st century to realizing information inter-connectivity by developing value-added information networks which will help create a competitive information technology infrastructure that is able to compete in a global market place. Investment in human capital through training and education is a milestone in the information and communication era. Where the continuous learning process is essential in realizing the proper adaptation, diffusion and adoption of information technology to serve socioeconomic development. It is essential that Egypt complete its national information infrastructure to keep pace and join the newly growing global information infrastructure as the gateway of business and socioeconomic development in the coming decade.

opportunities for growth. Moreover, societal information needs are growing at unprecedented rates. Thus, it is perceived that integrated information technology solutions will enable organizations to address human resource issues of the 21st century and help people build a smarter community, a smarter society, and a smarter world.

With the growing investment in high-tech, it is important to develop a strong and qualified high-tech industry in Egypt that can compete in global markets.

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IV. CONCLUSION [10]

The information technology sector in Egypt is still under development, though booming with success. The sector has been witnessing changes since 1985 that is reflected in the use and diffusion of information technology in most private and public sector organizations as well as in various services and universities. This was coupled with a comprehensive build-up of an information culture nation-wide that was carried out by the government and disseminated into various organizations both at the central and local levels. This relates to the formulation of government policies guiding the imports of software, hardware and telecommunications components, the promotion of information technology training and professional development, the development of educational curricula for different school and university phases and the establishment of an information infrastructure to support the country's developmental objectives. Throughout the last eight years, the nation-wide programs implemented by the government through its partnership with the private sector, which is another key success factor, led to the development of systematic procedures that had direct and positive implications in widely diffusing information technology within the various sectors of the economy. The innovative information technologies are creating many great

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