Egypt’s Internet entrepreneurs: Resilient despite difficulties

Beirut–As the best Arab start-ups and ideas were being feted at an honorary banquet at the ArabNet internet business conference in Beirut earlier this week, Egyptian ICT entrepreneurs went entirely unmentioned–and for good reason: of the ten competing fresh ideas by budding entrepreneurs presented in the first day, not a single one was presented by an Egyptian company.

According to Amber Lauretta, responsible for the new business ideas competition, only two submissions out of 39 came from the Arab world’s most populous country. Not a single one of the start-ups featured in the competition, meanwhile, was Egyptian.

The situation begs the question: was Egypt’s low participation reflective of a weakness in the Egyptian ICT sector?

Omar Soudodi, general manager of, was disappointed at the low level of participation by Egyptian entrepreneurs, but strongly believes in the local entrepreneurial spirit. “Right off the top of my head, I can think of two Egyptian companies that could easily be in the best ten start-ups, and maybe even win this competition," he said.

Soudodi believes that advertising for the event in Egypt may have been insufficient. “Perhaps advertisers did not have enough contacts in Egypt, as opposed to the advertising that was done in the Levant," he said. “But I personally meet people in Egypt with great ideas every day."

AbdelKarim Mardini, an Egyptian ICT professional working for Google in Zurich, unequivocally believes in the inherent inventiveness of Egyptian entrepreneurs. “There is no lack of great ideas," he said. "Whenever I visit the graduation project exhibitions at the schools of engineering and computer science in Egypt, I’m always impressed by students’ very creative ideas.”

Despite this positive assessment, however, he is quick to identify a number of problems that weigh on Egyptian entrepreneurs. Lack of access is the first of these.

“Students and entrepreneurs generally lack access to information, to work being done in other universities and to new technologies," Mardini said.

Another weakness they suffer from is a lack of mentorship, said Mardini. To learn how to run a business and how to avoid day-to-day errors, he explained, requires guidance. "The main ingredients for a successful entrepreneurial environment are there, but we’re missing an ecosystem that fosters mentor/mentee relationships," he said. “Sometimes, people just need a little push."

Both men also highlight deficiencies in the institutional support framework. Soudoudi points to the insufficiency of seed funding, which, he acknowledges, is also a problem elsewhere in the Middle East and, perhaps, globally.

Mardini poses the example of Morocco’s “Internet city” in Casablanca. “It isn’t fancy, but it provides very cheap working space for start-ups, which share the facility. They also get to share accountants and secretaries, all of which represents a huge cut in costs.” It’s a model, he said, which Egypt’s Smart Village would be wise to implement.

In the end, said Soudodi, “Many great ideas don’t see the light of day."

Despite a relatively low internet penetration rate of only 17.5 percent–compared to an overall Arab average of 29.5 percent–Egypt has the largest number of individual Internet users in the region, making it the second heaviest Internet user after Saudi Arabia.

Karim Harouny, media sales manager at Sarmady, believes these numbers are not sufficiently well known, which has led to an erroneous perception of Egypt’s online business community.

“People  seem to have the erroneous idea that the market is primitive in Egypt, when in fact there are technologies deployed in Egypt unavailable elsewhere in the region. Egypt is already an outsourcing hub," he said. "And there are many websites generating huge amounts of traffic. It’s a shame none of these were invited to the conference."

“There are so many innovative people in Egypt; people with an established presence on the Internet and the mobile market," he added. "How can anyone say Egypt isn’t on the cutting edge?”

Saudi Arabia-based Hossam Khalaf, chief products officer at Optimal Technology Solutions, believes that for Egypt, the growth of Internet business may be relatively slow compared to the rest of the Middle East.

“Egypt suffers from many obtacles: telephone lines, purchasing power, consciousness. But there’s been some improvement," he said. "We now have 14 million Internet users in Egypt… there is a positive side."

The main weakness for the development of electronic commerce, in Khalaf’s opinion, is two-fold: "People have confidence issues regarding the internet," he said. "That, and the use of credit cards, is underdeveloped."

Nevertheless, the Egyptian ICT sector has been steadily growing, and is estimated to have accounted for roughly 4 percent of the country’s overall GDP growth in 2008. Egypt has also become a major outsourcing destination, ranking in the top ten countries for ICT outsourcing according to a 2009 report by management consulting firm A.T. Kearney.

According to Hossam Megahad, board member of the Information Technology Industry Development Agency, “Egypt’s concept in terms of ICT development is proven by the large presence of multinational and major regional companies," he said. "There are currently 15,000 export-oriented professionals and over 300,000 active bloggers in Egypt. Over 50,000 indirect jobs are supported by the industry.”

Some of this data may be inaccurate, however. According to Gamal Eid, director of the Arab Network for Human Rights Information, "the total number of Egyptian blogs is about 250,000, but active bloggers are only estimated to be between 30,000 and 40,000. Many people simply start a blog and then neglect to update it, or only do so infrequently."

Samer Karam, communications and outreach director at the ArabNet Conference, challenges the notion that Egypt went underrepresented at the event.

“Egypt has always been a closed ecosystem," he says. "We cannot say that Egypt is underrepresented because–let’s face it–Egypt rarely participates in these kind of events that take place outside its borders." Nevertheless, he went on to point out, as preparatory workshops are being held in various countries, Egypt’s workshop was "the largest and most widely attended” of all.

Mardini, for his part, points to different cultural mores and styles. “Levantine countries, and their entrepreneurs, are more successful at branding themselves than we are. We’re somewhat entrenched in our ways," he said. "I suggest we have the conference next year in Cairo–and you’ll see we have more than enough talent and creativity to compete with the best of them."

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