Egypt looks to Suez for ICT expansion
Some LE12bn-15bn ($1.5bn-1.9bn) will be channelled into mega-projects in the area surrounding the Suez Canal, according to the Ministry of Communications and IT, LE9bn-12bn ($1.1bn-1.5bn) of which will be invested in fibre-optic infrastructure, application development and cloud computing, with another LE3bn ($383.1m) earmarked for the construction of technology parks in nearby Ismailia.
Speaking in late 2014, Atef Helmy, the former minister of communications and IT, likened the plan to transforming Egypt into a cyber Suez Canal. “We have a very aggressive plan to upgrade our infrastructure and at the same time enhance and upgrade the quality of services through different technologies,” he told regional press.
Lifting the sector
Funding for the projects is to be provided by public (12%) and private (88%) actors, according to the General Authority for the Suez Canal Economic Zone (SCZone), with a wide variety of public-private partnership structures being considered, including build-operate-transfer concessions, privatisation and joint ownership.
The government’s broader plans for sector development, which include LE120bn ($15.3bn) worth of investments through to 2020, aim to boost ICT’s contribution to GDP to 8% or higher, up from the current 4.1%.
According to official estimates, the improvements are expected to more than triple ICT revenues from LE58.3bn ($7.4bn) in FY 2013/14 to LE195bn ($24.9bn) by FY 2020/21.
Income alternatives
Once operational, the new ICT zone is forecast to generate some 1m jobs – 250,000 direct and 750,000 indirect – and provide a welcome supplementary income stream at a time when Suez Canal revenues are falling.
Although initial forecasts suggested that the expansion project would double canal revenues once completed in August, the canal has posted year-on-year (y-o-y) declines over the past nine months, with little prospect for recovery in the medium term.
The Baltic Dry Index, which tracks shipping prices for industrial commodities, reached a 30-year low in late November. Revenues from the canal appear to be tracking the global drop in trade, falling from $4.58bn in October 2014 to $4.34bn in October 2015.