Interviews: Ashraf Sabry
What is your assessment of Egypt’s homegrown software development potential?
ASHRAF SABRY: The local software development sector is underutilised due to a lack of critical mass. There are plenty of small and promising initiatives that start off well, but at a certain point these drop out because there is no infrastructure or long-term state vision in place to support and nurture local start-ups.
There is also no appetite from banks to fund startups. Attracting finance for new ideas and concepts is the biggest problem in Egypt, as conventional financial organisations are not investing in new companies. Financiers, and in particular equity investors, want a model that they know and are familiar with.
There are three specialised investment funds in the country; the largest is the government’s technology development fund and the other two are very small privately run funds. If we remove the state fund from the sector we have almost zero financing options for start-ups. As for the state fund, we need to create equal opportunities for all innovators and entrepreneurs, and by this I mean removing business from politics and providing opportunities for those entrepreneurs who are outside of the system to grow.
While we may have qualified and skilled software engineers and bright entrepreneurs, the lack of financing and a comprehensive state development programme restricts the real potential of the industry. Unfortunately so far we have failed the sector. We need to create critical mass, and this has never happened in Egypt. If policymakers do not have the long-term vision, and we are measured only by short-term wins, then one cannot build the right infrastructure around IT or start-ups because noticeable rewards only happen five to 10 years into any new business.
How can innovation best be encouraged?
SABRY: The most important way innovation can be encouraged is by developing local demand and ensurbest international companies and pair them with local start-ups to ensure global technological innovation and advances are being transferred to our market. This way, not only we are creating a local industry but, more importantly, we are giving an opportunity for our successful Egyptian companies to compete globally.
The government is not the missing piece or the driver of innovation in the start-up sector, but the state needs to encourage transparency in the small business environment, provide equal opportunities and bring in additional legal reforms to improve the attractiveness of the sector for financiers. One way it can do this is by putting systems in place for the private sector to help finance start-ups and put their ideas into practice. As for the private sector, there are mostly fragmented efforts, mainly fuelled by personal initiatives and interests. This, however, is not sufficient for a country the size of Egypt.
What sort of evolution do you expect to see in terms of consumption of IT services?
SABRY: I strongly believe that the future consumption of IT services and the growth potential of the sector are excellent. We are witnessing a generational change in society, and once we better understand IT and embrace the use of it socially, as well as professionally, the industry will grow tremendously.
The biggest positive we have in Egypt is our demographics. The young population means acceptance of technology is significantly higher and faster. One may argue that low literacy rates could hamper future growth, but I believe the level of education in terms of consumption does not matter because technology is inclusive, and it captures users’ imaginations and intrigue that will further fuel education. For example, everybody, regardless of education and age, can use a television and a mobile phone. As simple as it may sound, the key is to offer products and services that bring value and become a necessity for consumers, and once that is offered consumers will embrace it.
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