Internet and e-commerce industry in Egypt

Egypt…A Muslim country of sand dunes and deserts that is famous for its ancient civilization and some of the world's most famous monuments, such as Giza pyramid complex that claims to be one of the seven wonders of the world, and its Great Sphinx. Egypt is one of the most populous countries in Africa and Middle East. This Arabic country is also one of the most visited ones in the world. Egyptians are rich enough mainly because of crude oil and petroleum export and have means to develop their e-commerce and Internet infrastructure.

Commercially broadband Internet access was introduced in 2000 as ADSL. Firstly the service was offered in some of central offices in big cities Cairo and Alexandria, and then it gradually spread to other parts of the country. There are numerous (220 according to regulatory authority numbers) ISPs in Egypt offering ADSL service although only four companies own the infrastructure and they are called class A ISPs (Egynet, Link.net, TE Data, and NOL) which sell to class B ISPs, 8 major companies, who in turn furthermore sell to the rest of the 208 ISPs. It is worth mentioning that broadband Internet in Egypt for the home user is still at a very poor level of service mainly due to the communication infrastructure and poorly connected phone lines.

In July 2007 it was announced about the intention to turn from Unlimited to Limited with Quota at a starting price of 45 LE Pounds for the 256k/64k and a 2GB limit for the download and so on. The plan was to start the Limited ADSL Packages on the 1st of September 2007. But the majority of ADSL users, students in general, and users of unlimited ADSL refused to accept this innovative service as they decided if this plan would be imposed they would cancel their subscription as they wanted the Internet to be Unlimited. The minister of the Egyptian Telecommunications Tarek Kamel had an intention to provide a specific offering at different price range as number of individuals were unable to subscribe for the Unlimited package. Thus the Limited ADSL price range has been offered at a discounted price, the Unlimited packages remained as is and are available through all major ISPs without any changes in price. The registration in the zone of Egypt’s top-level domain, or ccTLD, .eg or .com.eg costs $183 for two years (as http://www.rwgusa.com shows).

According to some open sources in April 2008 ADSL2+ was presented at speed up to 24mbit. Today the majority of ISPs provide the unlimited ADSL services offering a quota between 100GB and 150GB per month calling it a Fair Usage Policy. Internet speeds vary from 256k/64k up to 24mbit and the traffic is capped to up to 150 GB per month. ISPs stated that the 150GB quota was huge and users can download up to 60 large movies, 10,000 large songs, browse endlessly and send up to 2 million emails a month, most users are divided upon this capping especially those who are heavy P2P users, going above the monthly quota would result in throttling speed of 64kbit/s for the rest of the month. There's an alternative offer from 256k to 2mbit ranging from 2GB a month to 15GB a month. Though most ISPs capping to 100-150GB a month still claim the offers as Unlimited, also nobody had any idea about the Fair Usage Policy, the ISP's websites got the FUP in English and placed in hard-to-navigate places plus most of the technical support and representatives are denying that any FUP is in place when it's in fact otherwise possibly in fear of customers canceling their subscription at the thought of being capped.

At the beginning of 2008 the Internet service in Egypt and Middle East has been affected by a breakage of two marine cables FLAG FEA and SMW4, connecting Egypt to the world. At the end of 2008 three of existing four cables were damaged. So users suffered from reduced bandwidth. In both cases specialists were trying to fix the problem as soon as it was possible but unstable weather conditions made it rather difficult.

As for Internet access, internetworldstat.com reveals an enormous growth of 2,240.5 % for the period of 2000-2008. Thus in 2000 only 450,000 of citizens got an Internet access (or 0.7 %), in 2006 the volume jumped to the figure of 5,100,000 (7.0 %). And in 2008 the number of users exceeded 10 million and reached 10,532,400 people that is 12.9 % of the whole population. The Internet access percentage in Egypt takes the first position in Africa with 19.4%, leaving behind Nigeria with 18.5% and Morocco with 12.2%. 

Now let’s turn to e-commerce sphere. Following the rapid Internet development, e-commerce In Egypt also appeared to be on an advanced stage. Egyptian e-commerce is represented both by business-to-business (B2B) and business-to-consumer (B2C) e-commerce. PC and Internet penetration is much higher within the business community compared to the general population that supplies a greater potential for B2B than B2C sites. So e-commerce is limited to a small segment of the population that has regular and constant Internet access and credit cards. Though, large companies in Egypt have already started using in-house websites to manage inventory. 

B2C e-commerce sites in Egypt include stock market trading, real property, food delivery, lifestyle products, Egyptian handicrafts, furniture and human-resources industries. A few news portals attract a steady readership, but efforts to turn these into wide-ranging e-commerce sites have been notably unsuccessful, says Economist Intelligence Unit. 

As globaltechforum.eiu.com states, one of the problem with e-commerce growth in Egypt is trust. In spite of the fact Egyptian credit-card holders are gradually getting used to using their credit cards on international sites like Amazon.com, they are still wary of using their credit cards on domestic sites. One of the examples is Otlob.com, a web portal that acts as an intermediary between customers and restaurants offering food delivery. It adds for its delivery service charge to the bill paid by the customer when food arrives. The customer pays this bill in cash to the restaurant. Thereafter food retailer transfers this charge Otlob. Yallabina.com, an entertainment site, successfully started selling tickets online through credit cards in 2005. In May 2007 several companies, including Otlob.com, Yallabina.com, revealed their intention to integrate ordering service. 

Actually credit cards are not widely used by Egyptians. So, in turn, banks of Egypt introduced credit and debit cards, which were designed specially only for online shopping. And since credit cards mainly can not be obtained by teenagers and young adults, these new cards target particularly this group. Thus the Central Bank of Egypt licensed 11 private sector banks, local and foreign, to conduct e-banking. Citibank Egypt and HSBC Egypt appeared to be among those 11 ones. However the scale of e-transactions is still relatively limited. Citibank lets its customers, who are also Vodafone Egypt’s clients, pay their mobile-phone bills online.

In turn government is willing to communicate with citizens online. Thus it launched a number of sites that allows Egyptians to deal with the government via the Internet. The flagship site for this is Egyptian Government Services Portal, which provides citizens with the materials necessary to begin applications for ID cards, birth and marriage certificates, and driving licenses.

As Economist Intelligence Unite says, in 2004 the electronic-signature law was created to help e-banking service development. The law gives a legal force to electronic signatures and calls for the creation of a new authority, the Information Technology Industry Development Authority, to promote and regulate e-commerce: one of the articles says that small and medium-sized enterprises are encouraged to use e-commerce marketing methods.

The Information Technology Industry Development Agency issued four licenses to Security and Network Services, Egypt Trust, Advanced Computer Technology, and Misr for Central Clearing and Depository and Registry (MCDR) for the launch of electronic-signature solutions on the Egyptian market in 2006. That appeared to be a predecessor of the introduction of wider use of electronic signatures on legal documents.

As for taxation of e-commerce deals in Egypt, the Information Technology Industry Development Authority is to collect a 1% duty on revenues from communications and information-technology businesses to support the development of the industry. 

There is no legislation concerning the residence of e-commerce merchants. However, it’s said that foreign websites may need an Egyptian license to sell to Egyptians. Meanwhile, no license is required as usual in practice. 

Thus e-payment systems development reveals a rapid growth as well as e-commerce. The majority of popular of international electronic payment systems are available in Egypt. Moreover the advancement is not to slow down: the government and national banks support the development as well. The new Electronic Bill Presentment and Payment (EBPP) service provider in Egypt is E-Finance. E-Finance is a joint venture created by National investment Bank, Raya Holding, National Bank of Egypt, Banque Misr, and Egyptian Banks Company (EBC), according to ameinfo.com. The main goal of the company is to provide electronic payment services operation to the Egyptian government and other entities, in order to consolidate the payments and receipts to and from the Egyptian government. The e-Pay system is part of the process of establishing a National Payments Gateway in Egypt to enable the variety of business and government institutions and ministries to advance the existent system of e-services and e-payments; moreover it intends to add new payment channels and methods. The National Electronic Payment center, in addition to B2B and B2C, will provide related B2G, G2G and C2G, C2B solutions. So it supposed to be used by all individuals and businesses that are paying to or receiving funds from the Egyptian government.

Well, Egypt is an African Muslim country with strict laws, specific culture and centuries-old traditions that makes it too much different from the rest of the modern world. But despite all those restrictions Egyptians managed to reach strong economic development where e-commerce plays a significant role. Egypt is in a line with the countries that have the highest level of Internet and e-commerce infrastructure.