Egypt: Going High Tech

By Brindle, Simon | The Middle East, April 1993 | Go to article overview
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Egypt: Going High Tech

Brindle, Simon, The Middle East

Simon Brindle reports on the state of the computer industry in Egypt, on recent legislative developments and the potential to develop indigenous high tech export oriented industries.

COMPUTERISATION HAS come piecemeal to Egypt as it has to other developing countries. Today, Egypt's computer market is estimated at around $200 million a year with a substantial potential for growth. However, imports still account for well over 90% of sales.

Sales of mainframe computers in 1991 were about US$40 million or 20% of the total. The market is dominated by three leading multinationals - IBM, ICL and NCR - each of which have branches in Egypt. Other installed mainframe systems were purchased directly from suppliers abroad. Most systems in use in Egypt are either all-purpose or high speed systems. These generally cost in excess of $1 million each and are able to support up to 128 users in a commercial environment. While mainframes are expected to play a major role in the medium term, with an estimated average real growth of 20% a year over the next three years, market share in the longer term is expected to decline as users rely more on smaller, less costly machines to handle data processing tasks.

Sales of software in Egypt, which includes office automation software, games, spreadsheets, graphics, cad/cam and networks were about $6 million in 1991 and accounted for about 3% of the total market. However sales have been increasing at about 25% a year and are expected to increase further with the expanding market of first time users. An estimated 90% of software is imported from the United States with the remaining 10% (mainly Arabic language software) developed locally.

US software developers have been victims of widespread computer software piracy in Egypt as they have in other developing countries and the need has been felt to lobby the government for greater protection. Under the so-called "Special 301" provisions of the US Trade Act of 1974, the US Trade Representative (USTR) is required to identify foreign countries that deny "adequate and effective protection of intellectual property rights".

The provisions classify such countries into "priority," and "priority watch list" countries. The former are those countries whose practices are considered to have the greatest adverse impact, actual or potential, on US products and which the USTR considers are not making significant progress in bilateral or multilateral intellectual property negotiations. "Priority watch list," countries are those whose acts, policies and practices meet some but not all the criteria for "priority" identification.

Egypt was placed on the "priority watch list" in 1991 because of what USTR considered to be deficiencies in its patent, copyright and related laws as well as significant enforcement problems. In addition to the fact that Egypt did not specifically protect computer programmes, USTR considered that terms of protection were too short and penalties too weak. USTR pointed out that although the Egyptian government had stated in 1989 that a new patent law was under consideration, at the time of the USTR investigation in 1991 legislation had still not been submitted to parliament.

According to Khaled el Shalakany, an Egyptian lawyer who spent four years at IBM as a computer engineer before taking up law, recent amendments to the original copyright law 354 of 1954 have introduced stiffer penalties for software piracy. Under the amendments contained in Law 38 of 1992, first time offenders now face fines ranging from $1500-$3000 and possible imprisonment while second time offenders face fines of $3000-$15,000 and mandatory prison sentences of up to three years. While the new legislation has been welcomed by USTR and US and other foreign software developers, El Shalakany points out that the original law in so far as it encompassed "any innovative expression of the human mind", was sufficient and there was actually no need for express reference to computer programmes in the amendments.

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