An integral part of the government’s plan to achieve economic development is digital transformation and financial inclusion, said Mohamed Maait, Egypt’s minister of finance, at the Euromoney Egypt Conference in Cairo on Monday.
The government is currently developing electronic systems and updating its databases to provide better automated services to the public as part of the Egypt 2030 Strategy, Maait added.
“We aim to increase foreign direct investment by simpler and more automated customs and tax processes,” he stated.
He said that the private sector would play an important role as the backbone of Egypt’s economy. “The ministry is working on removing obstacles facing investors and businessmen,” he said.
“The government aims to achieve inclusive and sustainable growth led by the private sector,” Maait said, adding that this would lead to more job opportunities and increased financial allocations for social-protection programmes.
He said the government was working on administrative reforms to improve public services and meet the challenges hindering local and foreign investors.
“Egypt has become one of the best emerging economies in the world, with a growth rate of 5.6 per cent in the 2018/2019 fiscal year,” Maait said, adding that this growth was becoming more balanced and diversified and was based on investments and exports with contributions from sectors like industry, tourism, construction, foreign trade, and oil and gas.
This growth had helped to drive the unemployment rate down to 7.5 per cent, compared to 13 per cent a few years back, he added. “We are committed to continuing to increase the size of the labour market and to implement reforms that generate more productive jobs. We believe that job creation is the key to growth, and it is among our top priorities,” he said.
Egypt had not been affected by global economic worries, especially the trade war between the US and China, he added.
Amr Talaat, minister of communications and information technology, said during the conference that his sector sought to contribute eight per cent to GDP during the current fiscal year instead of the four per cent it had contributed in the last fiscal year.
“We have four main strategies to achieve this,” Talaat said, saying that appropriate investment in infrastructure was the first.
Investment in communications infrastructure has fallen back since the 25 January Revolution, but the ministry has been working to increase this type of investment to increase the use of the high-speed Internet by households.
“The Internet penetration rate in Egypt is currently 45 per cent. We seek to reach 50 per cent by the end of 2019, since this is a main requirement to achieve our strategic goals,” Talaat said.
The second strategy, Talaat said, involved developing manpower. “The Egyptian market has a lot of skilled labour, and we need to increase this through appropriate training institutions,” he said.
The minister said there were plans to establish seven new training institutions outside Cairo, including two in the Nile Delta governorates, two in the Suez Canal area, and three in Upper Egypt.
“This is in addition to a specialised university in information technology and a new research and development centre for applied research to be established in the New Administrative Capital,” he said.
The digital transformation of the government services provided to individuals was the third strategy Talaat highlighted during the conference. “The first government digital services package was launched in Port Said as a pilot project, with more automated services to follow in other governorates,” he said.
Updating the legislative framework was the last strategy being followed by the ministry, Talaat said, since this provided the framework within which policies were implemented and helped to combat cybercrime and facilitate data-pricing.
The minister stressed that the private sector was an integral part of the implementation of these strategies. “The government plans and paves the way for new projects, and the private sector takes on the implementation of them,” he said, adding that Egypt’s digital exports had hit $3.6 million this year.
According to Ibrahim Sarhan, head of E-Finance, a company operating the government’s financial network, the government has been conducting studies to digitise all the services provided to individuals since the launch of its digital systems more than five years ago.
“The Central Bank of Egypt [CBE] is working closely with the government to transform Egypt into a digital society and achieve financial inclusion for all,” he said, adding that the CBE had targeted moves towards electronic payments.
However, Sarhan added that there needed to be further incentives to develop financial technology and benefit from the CBE’s initiatives in this regard.
“Egypt is among the most attractive markets in the region for financial technology investments,” said Mirna Suleiman, founder and CEO of Fintech Galaxy, a digital cloudsourcing platform.
She added that Egypt’s population exceeded 100 million, with 60 million eligible for banking services, but that only 14 million of these had bank accounts. “The potential for growth is enormous,” she said.
Suleiman said that there was a growing need in the Egyptian market for financial services that would force the banks to change their traditional ways.
The digital financial system depended on five main pillars, she said, including demand from institutions, whether banks or companies, the talent of entrepreneurs and start-ups, the regulatory side represented by the government, the central bank and the ministry of finance, infrastructure, mainly through access to mobile devices, and finally investment.
Wassim Bou-Ghanem, a senior advisor at Al-Khair Capital, a financial services company, said that small and medium-sized enterprises (SMEs) in Egypt still sometimes had difficulty accessing financial services from banks and other financial institutions, unlike bigger companies that had access to financial products more easily.
“Moving towards financial inclusion will help SMEs to acquire the needed financial services more easily,” he pointed out.