68870 Vol. 1
World Bank
Measuring foreign direct investment in the area of
information and communication technology in Egypt
Executive Summary
Prepared for the Ministry of Communications and Information
Technology, Information Centre (MCIT-IC)
Tim Kelly (Lead ICT Policy Specialist, infoDev/World Bank) and
Geoffrey Robertson (consultant)
15 January 2010
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Executive summary
This study of the measurement of foreign direct investment (FDI) in the information and
communication technology (ICT) sector of Egypt’s economy was undertaken as part of the second
amendment to a reimbursable technical assistance (RTA) programme delivered by the Global
Information and Communication Technology (GICT) department of the World Bank to the
Information Centre of the Ministry of Communication and Information Technology (MCIT-IC) of the
government of Egypt. The initial agreement was signed in June 2006 and the second amendment in
August 2008.
The focus of the Ministry of Communication and Information Technology (MCIT) is to promote the
development of ICT services (and ICT-enabled services) so that Egypt has the best ICT technology
available to it. In addition ICT services provide significant export earnings, and provide employment
opportunities, particularly for the increasingly well-educated Egyptian community. To achieve the
further development of the ICT sector, Egypt aims to attract foreign direct investment (FDI) from
foreign entities that are ICT specialists. Indeed, attracting FDI is a key pillar of Egypt’s ICT Strategy. To
understand and monitor the success of this policy, MCIT therefore needs good statistical data on
FDI.
The World Bank’s GICT department has been invited to assist in MCIT’s measurement of FDI in the
ICT sector by clarifying what are ICT products and services, and what are appropriate measures,
based on international best practice, of FDI, and what strategies should be developed to obtain a
more accurate measure of FDI. The project was carried out in two phases:
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Phase 1: September 2008 – May 2009, resulted in the first two deliverables
Phase 2: June 2009 – January 2010, resulted in the final two deliverable and the final report
The team has carried out a number of missions of which three (in October 2008, July 2009 and
November 2009) were directly related to the completion of this assignment. The Task Team Leader
was Tim Kelly (Lead ICT Policy Specialist, infoDev) and the Consultant for Deliverables 2 and 4 was
Geoffrey Robertson. Carlo Rossotto (MNA Project Coordinator, GICT) provided overall quality control
and provided substantial inputs in Deliverable 3. In addition, Isabelle Huynh and Therese Cruz
provided invaluable support at different stages of the project.
Deliverables
The program has generated four substantive deliverables that were provided to the MCIT team, as
planned, during the course of the project and which have been revised based on comments and
subsequent work.
Deliverable 1, “Definition of the ICT Sector” (38pp), was delivered in January 2009 and revised in
February 2009.
FDI, Deliverable 1,
ICT definitions (Rev 2, Final).doc
Deliverable 1 contains five substantive chapters and two annexes:
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1. Introduction ............................................................................. Error! Bookmark not defined.
2. The role of FDI in the ICT sector ............................................... Error! Bookmark not defined.
3. FDI in Egyptian ICT statistics: What’s the problem? ................ Error! Bookmark not defined.
4. Towards a definition of the ICT Sector ..................................... Error! Bookmark not defined.
5. Conclusions: Key issues for defining the ICT sector in Egypt ... Error! Bookmark not defined.
Annex A: Research meetings and interviews conducted.................. Error! Bookmark not defined.
Annex B: Terms of reference for FDI module ................................... Error! Bookmark not defined.
The main output from this deliverable is recommended definition of the ICT sector (Figure 15), which
was used in the subsequent analysis.
Deliverable 2, “Proposed system for data collection in FDI in ICT” (39pp), was delivered in April 2009
and revised in May 2009.
FDI, Deliverable 2,
Measuring FDI in the ICT Sector in Egypt, v2.doc
Deliverable 2 contains five substantive chapters and five annexes.
Chapter 1. Introduction ........................................................................... Error! Bookmark not defined.
Chapter 2. Concepts and definitions associated with foreign direct investment... Error! Bookmark not
defined.
Chapter 3. International standards on the measurement of FDI in economic statistics ................ Error!
Bookmark not defined.
Chapter 4. Current measurement of FDI in Egypt’s BOP and IIP statistics ............. Error! Bookmark not
defined.
Chapter 5. Proposed improvement to FES and FDI statistics in the ICT Sector ...... Error! Bookmark not
defined.
Appendix A. Concepts and definitions associated with FDI ..................... Error! Bookmark not defined.
Appendix B. Proposed FDI Survey Form .................................................. Error! Bookmark not defined.
Appendix C. Analysis of proposed data items, their purpose, priority and easy of collection ....... Error!
Bookmark not defined.
Appendix D. Outputs from the FDI survey ............................................... Error! Bookmark not defined.
Appendix E. Data Entry and Tabulation System for the Proposed FDI Survey ....... Error! Bookmark not
defined.
The main outputs from this deliverable are the definition and concepts associated with FDI (annex 1)
and the proposed FDI Survey Form (annex 2) that was used in the data gathering.
Deliverable 3, “Matrix of sample companies”, was developed by MCIT-IC staff under the supervision
of the project team. Work was carried out in June and July 2009 and the final sample was agreed on
14 July 2009. It covers 50 companies to be included in the survey as well as 6 other companies on
the margins of the ICT sector but that do not fall within the definition adopted in Deliverable 1.
FDI, Deliverable 3,
Companies matrix v7.xlsx
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The main output from this deliverable was the sample of companies that was used in the
subsequent data gathering stage, conducted between August – October 2009.
Deliverable 4, “Results and analysis of data collection of FDI in ICT” (19pp), was delivered in
November 2009 and revised in January 2010.
FDI, Deliverable 4,
(final), Results and analysis.doc
Deliverable 4 contains four substantive chapters and an annex. In addition, a series of confidential
annexes, in the form of a spreadsheets with estimates and data on individual companies, was made
available separately to the client.
Executive summary ................................................................................................................................. 2
Chapter 1. Introduction ........................................................................... Error! Bookmark not defined.
Chapter 2. An analysis of the interim results on FDI ............................... Error! Bookmark not defined.
Chapter 3. Analysis of the results for FDI in the ICT Sector ..................... Error! Bookmark not defined.
Chapter 4: Recommendations and next steps ........................................ Error! Bookmark not defined.
Annex A: Streamlined survey questionnaire............................................ Error! Bookmark not defined.
In addition, a presentation of the outcomes of the project was made to the MCIT-IC project team
and to the Central Bank of Egypt (enclosed below).
12 Nov, FDI
presentation, v3.ppt
The main output from the final deliverable is the final estimates for the flow of FDI in the ICT sector.
between 2006 and 2008, and the cumulative level of FDI, which exceeds US$3 billion as of June
2008. The estimates are shown below.
FY 2006-07
FY 2007-08
FDI inflows (LE million)
LE 12’339
LE 1’431
US$m
US$2’260
US$ 262
30 June 2006
30 June 2007
30 June 2008
Cumulative level of FDI
(LE million)
LE 3’235
LE 15’616
LE 16’847
US$m
US$ 594
US$2’870
US$3’097
The final deliverable also resulted in five recommendations for the continuation of the analysis,
which are reproduced below. As a result of this project, Egypt now has a much clearer idea of the
actual level of foreign direct investment in the ICT sector as well as a clear methodology for moving
forward with data collection in future years.
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Recommendation 1: The momentum gained during the study should be continued as a full data
collection is commenced on a regular reporting cycle. A timeline for the next phase of this work was
established in the revised Deliverable 2. Although the schedule has been slightly delayed because of
data collection problems, the next phase of regular data collection and report should be launched
upon the completion of this project.
Recommendation 2: The study results should be published with confidential information
removed. This should encourage companies both to appreciate the study and to cooperate more
fully in future data collection. Furthermore publication will assist in encouraging companies to
revised and improve their own internal data collection and reporting. Reporting the results will also
act as a showcase for Egypt’s achievements in the field of ICT and in attracting further investment.
The headline figure of US$3billion in cumulative FDI can be a powerful sales tool for promoting the
benefits of ICTs in economic growth in discussion with other agencies.
Recommendation 3: Data collection would be more effective if the requirement to report were
made a legal obligation. Already companies have some obligations in reporting to GAFI and ITIDA.
These requirements should be codified and, as appropriate, extended to the necessary FDI data.
Recommendation 4: The survey questionnaire should be further improved and streamlined. The
original questionnaire proposed in Deliverable 2 was simplified because companies were resistant to
answering too many complex questions. Based on the experience of this project, it should be
possible to further improve and streamline the questionnaire for the phase of full data collection.
Recommendation 5: FDI estimates should be presented as an annualised figure. The calculation
is complicated by the fact that different companies have differing year-ends (e.g., in December, in
March or in June. It will be necessary to present a consolidated figure so that changes over time can
be compared on a like-with-like basis.
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