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Overcoming Deterrents and Impediments to Electronic Commerce in Light of Globalization: The Case of Egypt

Mohamed A. El-NAWAWY <nawawy@intouch.com>
InTouch Communication Services SAE

Magda M. ISMAIL <magda.ismail@ise.org.eg>
Cabinet Information and Decision Support Center / Internet Society of Egypt


Egypt has led the region (Africa and the Middle East, excluding Israel) in making Internet services available on a wide scale. Nevertheless, with respect to electronic commerce (e-commerce), Egypt is encountering the particular issues and problems common to developing countries.

Within developing countries, many deterrents to e-commerce are obviously the same deterrents to the use of information and communication technologies in general. In this paper, we identify deterrents to e-commerce in Egypt and offer a to-do list to anyone in favor of overcoming this predicament. As far as we can see, efforts to surmount these obstacles, namely (1) lack of awareness and education, (2) market size, (3) e-commerce infrastructure, (4) telecommunications infrastructure, (5) financial infrastructure, (6) legal system, (7) government issues, (8) pricing structure, and (9) social and psychological factors, will be driven from the bottom up (as was the Internet in general). Unlike the growth of the Internet, however, progress will be slow. Many of the subjects mentioned here might be familiar to some readers. However, the core of the paper is presented and substantiated as a case study to provide a real-life perspective on the issues presented. These issues are not, by any means, comprehensive; nor are the solutions. Opposing views to the issues presented will arise; however, the goal of helping developing countries to overcome deterrents to e-commerce is beyond reproach.

This paper serves as a serious "wake-up call" to anyone looking for a way to narrow the gap (or at least to decrease its rate of increase) between the free world and the less educated one.


I. Introduction

The Internet is one of the factors in the approach of globalization. Globalization has changed the nature of national governments, imposing national culture on local culture and promising to homogenize economies. However, it has widened the gap between these nations and those that do not abide by this new world order. Furthermore, electronic commerce (e-commerce) has arrived, compelling economists, politicians, lawyers, and bankers to rethink and reengineer work methods, policies, laws, and standards.

In this paper, the main deterrents to the implementation of e-commerce in Egypt are outlined, and case studies are used as "real-life" examples to support the ideas presented. Although in its broadest definition, e-commerce has preceded the Internet, it has become a mainstream issue, thriving on Internet transport and its general ease of use. For this reason, the term e-commerce is defined from here onward as "commerce on the Internet."

After presenting important background information on current telecommunications systems, the Internet, and the status of e-commerce in Egypt, we discuss a set of deterrents to Egypt's implementation of e-commerce, and their accompanying problems, ranked in order of priority. Finally, we offer a to-do list is offered for the benefit of anyone wishing to take on the arduous task of "Getting Egypt E-commerce-Ready" (motto of the E-commerce Committee of the Internet Society of Egypt). This paper not only presents an overview of the situation in Egypt, but provides analogies to many other developing countries undergoing the same process.

II. Background information

Egypt is located in a strategic geographical location -- bordering Asia at the northeastern corner of Africa. Egypt maintains peaceful diplomatic relations with its neighboring countries and is regarded as the leader of political mediation and negotiations in the Arab region.

In the past 10 years, Egypt has been moving toward a more decentralized, deregulated, liberalized, and market-oriented economy. A strong privatization policy has swept the country. Economic reforms and growing investment opportunities have prompted increasing foreign investment. However, incoming capital has largely been concentrated in stock market portfolio flows.

In this section, a profile of Egypt's telecommunications infrastructure, Internet services, and e-commerce environment will be provided as a background for the core discussion of this paper.

1. Telecommunications environment

By 1997, the number of telephone lines had increased nearly tenfold from the 1980s, when there was very poor service, to reach 4.9 million lines and a teledensity rate of 7.42. Communities with phone access are concentrated in the city of Alexandria and the capital, Cairo. The quality of services has greatly improved with fiber optic technology and with automatic and digital exchanges.

Telecom Egypt, recently established from PTT (10 October 1997), is the incumbent provider of basic telecommunications services in Egypt. The company was converted into a joint stock company that would operate local and international telecommunication networks in Egypt. The government owns 80% of the company shares.

In addition, the Ministry of Telecommunications and Transportation determines the rules for market regulation through the Regulatory Board for Telecommunications, whose mission is to regulate pricing, standard of services, and development and implementation of a national telecommunications policy. The board has not yet ruled to enable competition and the rapid expansion of the basic network services. The Minister heads the General Assembly of Telecom Egypt as well as the regulatory board. Therefore, some see Telecom Egypt as acting as regulator and regulatee at the same time.

2. Internet services in Egypt

Internet services in Egypt (which were preceded by several initiatives for partial connectivity by the public and private sectors) were initiated in 1993 through a 9.6 link between the Egyptian Universities Network and France, at which time 2,000 people were using the Internet. The .COM subdomain was managed via a partnership between the Egyptian Cabinet Information and Decision Support Center (IDSC), which is a government institution, and the Regional Information Technology and Software Engineering Center (RITSEC), which at the time was a project of the United Nations Development Program. To catalyze the use of the Internet, IDSC/RITSEC sought to provide free Internet access to Egyptian public and private companies, government agencies, nongovernmental organizations, and professionals; this effort paralleled the already existing service offerings of the private sector, which grew, with difficulty, through customer orientation and support. Before 1996, the concept of value-added services represented a legal "gray" area. By December 1995, the chairman of Telecom Egypt, announced in a meeting at IDSC an open-door policy by Telecom Egypt to establish private and public Internet gateways and Internet service providers (ISPs) in Egypt and to allow 12 ISPs to begin operating. Today, there are more than 50 ISPs in Egypt.

The total number of paying Internet users is currently between 25,000 and 30,000. Although the total number of Internet users is a subject of debate, the number of users on each paying Internet account is estimated to range from 2.5 to 4.5, so that the total number of Internet users is more than 100,000, which is equal to 0.015% of Egypt's population of more than 66 million.

III. Overview profile of e-commerce in Egypt and the Arab region

Although e-commerce was introduced only recently as a business idea to Egypt, there already have been voluntary and professional efforts to raise awareness about e-commerce through organizations, workshops, and commercial attempts to implement e-commerce projects. This section furnishes a profile of e-commerce activity and efforts in Egypt.

1. E-commerce organizations in Egypt

In October 1997, the Internet Society of Egypt: E-commerce Committee (ISE/E2C) was established to catalyze and build awareness of e-commerce in Egypt. The committee co-organized the first national seminar on e-commerce in Egypt (September 1998) to bring together key players in the areas of e-commerce from the government and business and discuss crucial national issues. The ISE/E2C also developed a white paper -- "Towards Electronic Commerce in Egypt: A Certificate Authority for Egypt" -- and several pioneer issue papers, one of which will be used as a basis for the declaration of Egypt's e-commerce initiative, to be declared in the near future by the Ministry of Trade. The committee was also involved in exploring the potential of e-commerce in the country by interviewing and lobbying with various government representatives and banking professionals.

Early in 1999, the national e-commerce committee under the Ministry of Trade was founded and is under formation. A lobbying process of "political massaging" is taking place with the various ministries to sell the idea of e-commerce to the decision makers, secure ownership, and declare and eventually implement Egypt's e-commerce initiative. The "100-day plan," initiated during the above-mentioned seminar in which various stakeholders would come together, is in the process of creating an e-commerce action plan for Egypt.

2. Size of e-commerce activity

Companies working in the e-commerce domain are still laying the foundation for e-commerce and venturing on to their very first projects in the field. In mid-1998, it was reported that only 10 sites offer some level of transactional back office and clearance mechanism to provide some form of Internet-enabled acquisition of goods and services.

2.1 Business to consumer

From the business-to-consumer (b-to-c) side, most commercial sites in Egypt provide presence/cataloging level e-commerce. In the forefront, on the b-to-c side, was a grocery shopping attempt, which provided an online shopping experience to the Egyptian public, coupled with physical presence of a supermarket. There was a fair return on investment, yet low revenue qualified the attempt as being purely experimental. However, there were a few examples of b-to-c commerce, including the selling of flowers, Egyptian artifacts, Arabic software, and educational courses.

Another project worth noting is "E-stock" (an unprecedented stock-trading system conducted over the Internet), which links all brokers in the trading community with any potential investor worldwide, thereby providing a better mechanism for trade in the Egyptian stock market.

2.2 Business to business/administration

More than 70% of businesses in Egypt remain within operations owned or controlled by the government. Therefore, the government has a strong potential for being a business-to-business/administration (b-to-b/a) prospect. The number of e-commerce attempts from the government compared with local private businesses is negligible.

Nonetheless, there have been several e-commerce projects on the b-to-b level that are still in their preliminary phase of operation; no statistics are available to measure the projects' success.

  1. Egyptian Maritime Organization Electronic Data Interchange: This project demonstrates the use of Electronic Data Interchange over the Internet through Egyptian ports. The Egyptian Maritime Organization hosts the system and has secured business with the largest five shipping lines worldwide.
  2. Egyptian Aluminum Co.: This is one of the largest companies in Egypt's public enterprise sector; it produces 1% of the world's aluminum. The company has been processing its requests for proposals over the Internet.
  3. Capital Exchange: This project is a stock-trading system conducted over the Internet that links the entire trading community of brokers with any potential investor worldwide; it therefore provides a better mechanism for trade in the Egyptian stock market.
  4. Banking: Several banks in Egypt have only recently taken initiatives to incorporate remote banking, intranet banking, and home banking on different levels.

There are also several projects with the customs authority and health care sector that are still in the negotiation phase. The important point to note is that some government authorities and institutions are willing to invest in e-commerce. They considered that practical experiences and exchanges of such experiences among countries were an essential asset in that context and recognized the necessity for private sector and government representatives to engage jointly in discussions and actions in the area of e-commerce.

IV. Barriers to e-commerce in Egypt

In this section, an attempt is made to analyze why the idea of "trade over the Internet" has not been quickly adopted.

1. Awareness and education

A lack of awareness is a crucial barrier to the implementation of e-commerce in developing countries. Other deterrents identified in other sections of the paper can also be traced back to this root factor. The following cases exemplify the lack of awareness in the country by providing examples from the center of the society.

1.1. Consumer awareness

It is worth comparing the consumer market's response to the provision of GSM Service with their response to the provision of Internet service. Let us observe the following facts: (1) GSM and Internet service require similar premiums (mobile phone and PC respectively, between $500 and $1000); (2) Internet access fees are similar to GSM premiums and ongoing fees and may even be less (about $40-60/month); (3) 200,000 people pay for the GSM service; (4) 100,000 to 150,000 people use the Internet, but only 25,000 to 30,000 pay for the service.

Therefore, affordability is not the major problem with Internet usage. The market does not perceive the added value of Internet service at this point. It is worth mentioning the fact that transfer charges of text over the Internet through the use of e-mail (between continents) are approximately two-hundredths of the transfer costs of the same words spoken on the telephone. E-mail is obviously much faster than "snail mail." In many developing countries, including Egypt, it is a much more reliable means of communication.

1.2. Corporate awareness

On the corporate level, unfortunately, the situation is not any different; a case in the financial sector is used to illustrate this point.

A leading private bank made a tender for an Internet leased line; this was seen as a move on the part of the banking industry to become involved in Internet transport. However, only the bank's management information system department used the leased line connection, which enabled the download of software patches and upgrades that were previously sent on disk by post. The connection terminated within the bank's information technology (IT) department at a physically isolated local area network segment. Accordingly, the bank awarded the tender to the lowest bidder and emphasized no quality requirements and/or precedence. Hence, the bank's perception of the value-added service received from the use of the Internet was fixed on low-cost additions. That was the limit to the potential benefit perceived from the leased line connection!

In general, there have been few attempts from the business sector to embark on e-commerce ventures, the primary reason for which is simply the lack of corporate awareness of the conceivable business advantage of e-commerce. It may be worth mentioning that this situation is about to change, because some banks are moving toward online banking.

2. Market size: business to consumer

The small market size of 25,000 to 30,000 paying customers is the single largest deterrent for business on the Internet; hence, minimal b-to-c e-commerce is possible. Furthermore, the number of Internet users in Egypt doubles once every 10 to12 months, which is half of the global rate of increase, and this rate is unfortunately decreasing. In general, the number of Internet users (the potential consumer base) discourages commercial efforts to produce venues for the consumer to buy, sell, or engage in any commercial transactions. Another view is that instead of waiting for the demand (the pull), a solution could be to provide the supply (push) of viable e-commerce sites in the local language -- Arabic -- to remove the language barrier and attract potential consumers (as well as corporate customers) to transact over the Internet.

The market is probably at the "early majority" stage of consumer adoption; therefore, the curve is rising slowly. Through catalyzing awareness, the rate of adoption can be increased.

3. E-commerce infrastructure

The nonexistence of an appropriate and secure e-commerce-enabled environment is a disincentive to attempting e-commerce projects but is not a well-grounded justification for avoiding such attempts. Once the demand and potential market arise, these components will automatically be enabled.

3.1 Lack of a certificate authority

The nonexistence of a certificate authority (CA) in Egypt serves as an impediment toward the adoption of e-commerce on a national level, and more importantly, an international level. Moreover, the form of this CA -- whether private or government-owned -- has not yet been determined. The creation of a CA in Egypt is crucial, not only because of the importance of the CA's duties, but also because of the need for a trusted, impartial, transparent, and knowledgeable third party (with the proper expertise) to offer expert advice to the Egyptian legal system in related cases. The CA may attempt to align its certificate issuance with compulsory insurance against the dangers of e-commerce. This authority would also work on raising awareness within the Egyptian community, with the aim of developing both the consumer and the institutional bodies related to e-commerce.

3.2 Lack of secure electronic transaction compliance

Until the time this paper was written, there have been no banks or companies that offer secure electronic transaction (SET) compliance to the public. The banks are waiting for the initial adoption of SET from the Central Bank of Egypt, which is maintaining a reserved position on the entire subject of transaction over the Internet. One of the major barriers to establishing SET and a CA is market dynamics -- the lack of a tempting business case study to demonstrate the aforementioned principles.

4 Telecommunications infrastructure and planning

4.1. Bandwidth cost

Half-circuit charges for international bandwidth were expensive and have been recently revised and reduced by 50% (1 February 1998). Even after this reduction, however, the pricing structure is problematic because it is still very expensive (2.5 times more than the international tariff) and offers no volume discount beyond 2.0 megabits per second (E1). ISPs cannot afford to buy large amounts of bandwidth; the result is a tremendous lag time, which generally affects the usability of the Internet.

An important goal is the development of a managed Internet backbone -- a secure, widely accessible, fully interconnected high-speed network that can guarantee the availability of bandwidth sufficient for the requirements of e-commerce.

4.2. Teledensity infrastructure

There are more than seven telephone lines for every 100 people in Egypt. This telephone line availability (or lack of it) remains a deterrent for Internet use. It is difficult to compete in the information economy with low teledensity. Only in 1998 did it become legal for a person to own a second telephone line. Also, installation of a new line entails a waiting period of almost 6 years, and the up-front cost of obtaining a new line is high ($900). Furthermore, telephone service is available in only 548 of 27,000 cities and villages in Egypt and extends to little more than half of the inhabited land in Egypt. Investment in the telecommunications infrastructure is at a bare minimum in Egypt with a rate of $2.5 per person (vs. $248 per person in Switzerland). However, through its "MEGA" plan, Telecom Egypt is planning to add 1 million telephone lines every year until the year 2002.

4.3. National strategic telecommunications planning

Until recently, value-added or international services (e.g., long distance, mobile, PDN, international bandwidth, local bandwidth or leased lines, faxes, or pagers) were all declared to be surcharged services, apparently to subsidize the basic local telephone services. The remainder of the subsidy, which is the majority of it, was used to build the Egyptian underground train network. The claim herein was to take from the "haves" to give services to the "have-nots" within the Ministry of Transportation and Communications. Hence, the entire subsidy actually went to the underground train network. Thus, the surcharge that discouraged the Internet service upgrade was seen as a national benefit.

This cross-subsidy existed until 1997, after which Telecom Egypt discontinued it and started paying taxes to the government. However, this practice represents a pervasive school of thought that leads to continuous nonsupport of network-enhanced services, which are seen as "rich-man options."

5. Financial services and infrastructure

A strong financial service infrastructure is regarded as a means of protecting the national economy against an economic crisis (such as the recent Asian crises).

5.1 Credit card usage

In Egypt, there are 102 licensed banks and less than 120,000 credit cards (provided by six banks and a credit card provision entity). This low number of credit cards can be attributed mainly to the lack of existing "culture" and awareness of the use of credit cards; the consumer market is still in the initial phase of providing credit card services for the end-consumer. On the other hand, trust is limited for issuance of credit cards that do not require submission of an earmarked deposit that is twice the credit limit. Thus, as credit cards are the primary method of settling consumer transactions on the Internet, the upper limit potential for consumer e-commerce potential is 120,000 users.

5.2. Concept of individual credit system

Only recently have national citizen numbers been implemented (resembling social security numbers in the U.S.) by which every Egyptian citizen obtains a "national number" or unique identifier. The national number is placed in a computer database, which represents the first use of a nationwide demographic information repository. The project is in an initial stage, and it will take 4 years until all Egyptian citizens over the age of 16 years (eligible age for receiving the card) have a national number.

5.3. Financial transactions on the Internet

The lack of existing SET compliance mechanisms in the country stems from a culture that limits the application of computer online validation services, which are not currently offered as a banking service to reconcile credit cards. Furthermore, the support from the Central Bank of Egypt for Internet-initiated transactions is nonexistent; this bank has refused to be the designated bank for national settlements for credit cards. Egypt might soon be paying the price for not implementing the necessary infrastructure. There are many cases of local Egyptian companies using credit card validation services located abroad to guarantee financial transactions. Some companies pay 10% on every deal they make; if many other companies follow this example, this 10% charge will grow into a handsome sum of money drained from the national economy!

5.4 Online financial information

Until 1998, basic information on money and the capital market was not available on the Internet. One source of this information is currently emerging. A general lack of effective competition in this area decreased the rate of its development. In general, the capital market is adopting a more liberal policy for the exchange of basic financial information.

5.5 Coordination of Egyptian banks

Egypt has 400 automatic teller machines (ATMs), but most banks have their own proprietary cards that function only on their own respective ATMs. Moreover, in an effort to create a support network among Egyptian banks, one bank installed a local area network linking all credit card member banks in Egypt. This system was to be used to report fraudulent credit cards to the donor bank; however, they were not used at all. It is worth mentioning the general policy of Egyptian Banks, which is that the bank's client is the client of the bank's branch and not of the bank as a whole.

One company has begun its mission of operating a switching facility that links all bank ATMs and provides a clearance house infrastructure for all banks. With respect to the ATM facility, it is not yet operational because none of the banks have adjusted or upgraded their hardware facilities to link to the network. As for the clearinghouse, internal competition within the banking sector, along with the sizing handicap (two of the banks are larger than all others put together), results in a negligible number of cleared checks. In addition, only 10 of 23 banks are connected to this network.

6 Legal system

On a global level, many businesses and consumers are still wary of conducting extensive business in cyberspace because of the lack of a predictable legal environment to govern transactions, which results in concerns about contract enforcement, intellectual property protection, liability, jurisdiction, privacy, and security.

On a national level, a local study confirms that from the written scripts point of view, the existing Egyptian law is ready for e-commerce implementation and for the resolution of disputes that may arise through electronic transactions. However, the legal system is in dire need of reform. Judges and lawyers are overburdened with work and require training and specialization in specific fields of expertise, such as e-commerce and IT. Moreover, specialized circuits are needed to deal with e-commerce cases.

7 Government issues

7.1 Policy

Despite the general categorical support toward IT, Internet, and future e-commerce implementations at the various policy levels, there need to be more harmony and cooperation in the various public and private sectors. All of these obstacles are caused by the lack of an announced national IT policy. Such a policy in France has made possible the privatized PTT-France Telecom's Télécommerce Initiative. This is a service provided by the PTT to facilitate and secure selling of products/services on the Internet as well as assisting in the construction of commercial Web sites. This aforementioned effort by France Telecom contrasts very much with the socialist mentality of the Egyptian PTT, which has not yet moved to a commercial way of thinking.

7.2 Business rules

Complicated and unclear business rules form one of the most critical barriers toward e-commerce, one that exists in many developing countries. Vital components of the e-commerce business cycle (e.g., logistics and customs) are deeply embedded in the government's operations; the information systems for these operations are manual, bureaucratic, and paper-dependent. The government should be encouraged to recognize, accept, and facilitate electronic communications (contracts, notarized documents, etc.). Coherence, transparency, coordination, and avoidance of duplication should be the government's guiding principles in this endeavor.

Egypt's actions occasionally indicate that this thought is pervasive in the minds of its top policymakers, but there is no direct champion of e-commerce to truly liberate this policy and arouse the interest of all sectors of the government and of society. This champion is needed especially because a small move by the government through effective national projects (e.g., government procurement or electronic government services) would lead to tremendous liberation of efforts to develop e-commerce in the country. It is important to point out that the lack of national support (including financial support) for e-commerce will result in damage from international e-commerce to national economies, including Egypt.

8. Affordability/cost structure

This section aims to summarize the cost issues related to the Internet and IT via comparison of costs in Egypt to those of developed countries:



Individual spending on IT

Individual spending on IT in Egypt is $5/year, while it is $995/year in Switzerland. Individual income in Egypt is $1100/year, while it is $20K/year in Switzerland. Hence, Egyptians spend 0.5% of their individual income on technology, whereas the Swiss spend 5% of their individual income on technology (the Swiss income is 20 times that of the Egyptian).

Hosting Cost & Price/Performance

Egypt = $60 U.S. = $25

Taking into consideration the average individual income, this figure is costly for an Egyptian. In addition, the price/performance is very slow. This in itself is an added (time) cost.

Web site Design and Implementation

Cost ranges from $500 to $35,000; the minimum cost is still too expensive.

Internet Access

Egypt is $20/month; U.S. is $10/month.


Adjusting for relative wage rates, a computer is approximately 5-10 times more expensive in developing countries than in the U.S.

9 Social and psychological drawbacks

Commercial relationships are shaped to a considerable extent by social conditions and cultural attitudes. Diffusion of the benefits and opportunities of e-commerce are also limited by the following factors.

9.1 Trust

Although it is subsiding at the moment, the lack of trust in electronic means of payment continues to be a worldwide deterrent to e-commerce. However, Egypt is lagging behind in this issue of trust, which is still a strong deterrent to making payments over the Internet.

9.2 Resistance to change

Resistance to change is one of the most typical drawbacks in any attempts to bring about technological change, and e-commerce is no exception. Decision-makers are used to doing business in a certain way and they do not want to change. "Our system is working, so why change it?" is their attitude, which represents a significant hurdle in itself.

9.3 Territorial behavior

Top-level decision-makers are exerting "territorial behavior," meaning that they want to have control over their business territory. They believe that they would be losing control over the company assets if they were to engage in e-commerce. One manager required all company employees to use one e-mail account to which he held the password, so that he could check all incoming mail. We shall not dwell on the other managerial and organizational issues of many organizations' management systems; but this territorial way of thinking forms a general philosophy to which many executive decision-makers subscribe.

9.4 Generation gap

Many, if not most, CEOs in Egypt do not use e-mail for the simple reason that they were not raised in the information age. IT is not a part of their daily routine. This fact is coupled with their mindset of reluctance to invest in IT and their failure to perceive the added value. However, middle-aged managers who are currently in middle management and will rise to top-level management in the next decade are convinced of the benefits of IT and are technologically adept. Therefore, we can be hopeful that the future decision-makers of the country will engage in IT ventures.

9.5 Language barrier

The language barrier (82% of Web sites are in English) is considered one of the obstacles to large-scale Internet use within the region. The use of Latin characters is common in the Arab region, but the use of Arabic Web sites would help Internet use penetrate more businesses. Language, no doubt, is a barrier to the use of the Internet for most Egyptian and Arab people who read and write only Arabic.

V. Attempt to resolve issues

Is there light at the end of the tunnel? There is, but with a bit of work. There are some governing principles that governments may take initiative in understanding and acceding to, knowing that these principles would lead to further national development:

  1. Transparency: Clear and coherent policy development and implementation by governments is required to create the necessary environment for enabling e-commerce.
  2. Partnership: Partnering between (a) the private and public sectors, (b) national and international organizations, and (c) regions are major challenges in the emerging information gap.
  3. Coordination: Ministries and government entities should collaborate and join forces in a cooperative environment, with involvement by nongovernmental organizations and the private sector.
  4. Government role: E-commerce, should grow under a solid e-commerce infrastructure in a predictable legal and consumer-protected environment that is driven by markets and is not burdened with extensive bureaucracy, regulation, taxation, or censorship.

Ten priority focus areas:

It is crucial for a champion in the government to carry forward the necessary steps to implement e-commerce in the country. The following to-do list is by no means comprehensive; however, it highlights the resolution of issues introduced within the body of this paper.

  1. Promotion and awareness: Encourage and facilitate businessmen associations, key private sector players, chambers of commerce, investors associations, the Federation of Egyptian Industries, and trade points to "educate, lobby, coordinate, and motivate" the society to embark on e-commerce.
  2. Human resource and skills development: It is detrimental to the Egyptian society that professionals are trained and brought to speed regarding e-commerce in their respective fields of practice (lawyers, judges, tax and custom authorities, etc.). The private sector and governments must work together to create new human resources policies that better prepare students and workers to meet the challenges of the emerging digital economy.
  3. Liberalization of telecommunications infrastructure development: Telecommunications is considered a "strategic investment" for maintaining and developing a competitive advantage in both local and international markets; it is a key element in economic development strategy. The private sector should be encouraged to invest in the upgrade of local telecommunications infrastructure and value-added services in urban and rural areas. This would produce a side effect of building expertise and facilitating employment.
  4. National endorsement: More public endorsement of e-commerce is needed on the highest government levels because this would induce the proper "line of control" over all ministries (not just the Ministry of Trade). There is a need for general IT policy reform and, more specifically, automation of workflow systems within the government (e.g., logistics, customs, and taxes). There is also a need for an e-commerce task force consisting of both government and private sector bodies (across the ministries, businessmen associations, etc.).
  5. Regional strategy: Not enough regional planning, initiative, framework, or coordination has taken place in terms of the Internet and e-commerce, whether in the areas of research and development, arabicizing Web sites, or increasing awareness at the organizational or regulatory level. The need for a regional strategy is important because it would encourage countries within the region to abide by specific initiatives, plans, standards, and so forth.
  6. Financial services: A general policy that enables financial services, furthers the credit system, and endorses standards for financial transactions should be adopted to furnish the appropriate environment for e-commerce. The possibility of establishing a CA must be investigated and endorsed.
  7. Content: The use of Arabic content (and perhaps iconographic content) on the Internet must be encouraged to attract local and Arab customers to use the Internet in general and for e-commerce purposes. Crossbreeding and intercultural operations need to be stimulated.
  8. International negotiations and agreements: Aggressive participation in the formulation process of these agreements is needed instead of having to wait for these agreements to crystallize and then being forced to accept them as they are.
  9. Monetary issues: The government needs to investigate means of reducing the general and specific costs related to IT and e-commerce, in addition to investigating sources for funding of projects related to e-commerce.
  10. Pragmatic projects: There is a need to create a sectoral user base to address the needs of the community to attract industries to venture into e-commerce. The need for centers of excellence, aid centers for SMEs, and telecenters (compromise solutions for e-commerce in rural and remote areas) should be addressed.

In general, efforts must proceed in a spiral, and they should be started without waiting for other efforts to begin. However, when these issues are resolved, new ones that are just as important will appear.

VI. Conclusion

Globalization, which is catalyzed by the medium of the Internet, will be expedited around the world as people increase the use of this medium for trade. Some see that the most enabling mainstream features that facilitate a country's becoming "e-commerce ready" are (1) having its data available electronically and (2) having it available in a standards-based form. Most of Egypt's commercial data have been transported electronically only recently, and even though the standard may exist in bytes, it is not in the regulatory framework set forth. Accordingly, these conditions will deter Egypt's leadership position. It will also delay the rollout speed by which Egypt may catch up.

Nevertheless, Egypt will catch up. The political commitment made toward the new world economy is true. The policy made at the highest levels in Egypt runs against the beliefs of the "old guard," or the executives of the regulations that were inherited from the older regimes. The educational challenge may be overcome at a segmented level. Sadly, this and other factors maintain a widening gap within Egypt (in addition to the pervasively widening gap between the "haves" and "have-nots"). Therefore, there will emerge the "true have-nots," the "true know-nots." The turbulence caused by this gap will be felt and may render the conclusions within this paper too optimistic and generally untrue.

The problem of telecommunications infrastructure is the least pressing, and it is being overcome slowly but surely. Deregulation is occurring and will soon be governed by international treaties (GATS and GATT), which will further liberate this area. Again, its development is not coming from within.

As the number of Internet users increases, more b-to-c forums can come forward. More important, as the government makes a move toward business-to-business e-commerce by enabling its institutions (ministries) to interact commercially, the required time span for changes will be shortened by half. The government must attain transparency and generally increase awareness. Imagine the changes possible if the government determines that 30% of its procurement efforts (hence, suppliers' RFIs, RFPs, prequalifications, tenders, qualification, and closes) will be done via e-commerce by 2001. This objective is singularly important.

The longer-term solution will come about as business deregulation increases, and therefore as foreign investment buys into this business, at which point major moves toward e-commerce will be made. Again, this development will come not from within, but from the outside.

The Authors

Mohamed El-Nawawy graduated from the American University in Cairo in January 1992, where he majored in Computer Science and minored in Electronics. Since his second year in college, El-Nawawy has been a part-time employee participating in various freelance development projects. After co-founding InTouch in January 1992, as Egypt's first value-added communications services company and ISP, he held the position of Director of Business Development, responsible for Sales, Marketing, and Finance. In September 1997, he assumed the position of the Managing Director responsible for the entire welfare of InTouch. El-Nawawy is a member of IEEE, ACM, the Internet Society (ISOC), and a board member of the Internet Society of Egypt, which he co-founded. In January 1998 he also became the Chairman of InTouch Board of Directors.

Magda Ismail is currently the Assistant Manager of the Information Highway Unit at the Cabinet Information and Decision Support Center. She is a founding member and Co-chair of the Electronic Commerce Committee of the Internet Society of Egypt. Ismail serves as a program officer for the Global Information Infrastructure Commission for Africa. Ismail has lectured at the American University in Cairo and the Information Technology Institute. Furthermore, Ismail presented papers on e-commerce at several national and international conferences and has numerous publications on the subject, the most recent being an article included in a book entitled G8 -- Global Market Place for SME's. A graduate of computer science, Ismail received a master's degree with distinction in analysis, design, and management of information systems from the London School of Economics.

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