Egypt's ITIDA launches 11th round of Export IT to support companies amid pandemic

Doaa A.Moneim , Monday 18 Jan 2021

The export incentive package aims to boost exports and increase market penetration capabilities

The Information Technology Industry Development Agency (ITIDA) announced on Monday the launch of a new round of its annual “Export IT” programme to support IT companies in the domestic market in response to the COVID-19 challenges.

Throughout the past two years, ITIDA has granted IT export incentives on proceeds of value-added exports.

The action aims at supporting local IT companies to develop their resources, enhance competitiveness, and reduce export overheads, ITIDA said in a statement.

ITIDA’s CEO Amr Mahfouz said the export incentive package aims to encourage local companies to boost exports, secure their position in existing markets, and increase market penetration capabilities.

Mahfouz added that the approved stimulus comes as part of ITIDA’s relief plan to curb the economic impact of COVID-19 and to ensure more aid for small businesses and local IT companies.

“The programme accepts local ICT companies with more than 50 percent of Egyptian ownership, headquartered in Egypt, exporting ICT services, IT-enabled services such as call centre services, consultation, and training services related to the IT industry. ITIDA has excluded the Egyptian IT startup companies that were founded in 2016 or later from “headquartered in Egypt” condition," Mahfouz clarified.

According to the programme’s terms and conditions, approved companies receive direct cash incentives up to 10 percent, and with a maximum limit of 20 percent of value-added exports based on the company size (micro, small, medium, or large), with a maximum amount of EGP 2.5 million for each company or EGP 3 million for companies operating in or have branches in one of the new tech parks.

The programme offers additional incentives to companies exporting e-commerce, e-gaming, e-health, or e-Design services.

Further incentives are granted to companies operating in new tech parks, the new entrants to the programme, and the companies operating in governorates other than Cairo, Giza, and Alexandria.

In another move to encourage exports of emerging technologies such as artificial intillegence (AI), data science, and robotic process automation (RPA), ITIDA announced that it exceptionally accepts medium companies with annual revenues exceeding EGP 50 million that export such services or have succeeded in penetrating new markets.

These companies will get the full export support on the total value-added of their exports and not only on the growth of its value-added, according to Mahfouz.

Through the Export IT programme, ITIDA aims to further increase the growing volume of Egyptian IT exports which recorded $4.1 billion in 2020, up from $3.6 billion in 2019.

In the previous 10 rounds of the programme, ITIDA granted more than EGP 400 million of export incentives, boosting the growth of more than 200 local IT companies, according to ITIDA.

Despite the challenges imposed by pandemic in 2020, Egypt’s ICT sector has managed to make strides where it achieved a growth rate of 15.2 percent; the highest growing sector in the country for the second consecutive year, with revenues of EGP 108 billion, up from EGP 93.5 billion in 2018/2019.

The sector’s contribution to GDP increased to 4.4 percent in FY2019/2020, up from 3.8 percent in FY2018/2019. 

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