Egypt’s Digital Economy

For more information on this topic as well as to see the source of some statistics cited in this piece, read Data Reportal's Digital 2024 report on Egypt.

-- James Smith

Editor-in-Chief and Publisher, ExitStrategy.World

April 22, 2024

In today’s world, technology has advanced tremendously, with many aspects of life completely incorporating digital technology into their fields. As Egypt is the most populous Arab country in the world, and the third most populous country in Africa, its sheer size allows for a market that, if entered successfully, can make those who best it very wealthy.

Nile River photo credit: iStock Anton Aleksenko, uploaded November 25, 2021

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But first, before we discuss the Digital Economy in Egypt, we must first have a general idea of what a Digital Economy is in reality.

The foundations of what would later become known as the Global Digital Economy were first laid out in the 1960s, amid the first DARPA experiments in the USA on nuclear war-survivable, geographically distributed and redundant computer networks which would eventually become the Internet. Many academics and US Department of Defense-funded research institutions used Arpanet during the 1980s.

However, the nascent Internet's incorporation into the public sphere would only come around the 1990s and the early 2000s, with the commercialization of the World Wide Web (www) html allowing entities such as EBay and Amazon to flourish in this environment, the advancement of mobile devices into smartphones or tablets, and the increasing commonality of Internet usage compounding the dot com boom wealth effect. Amazon first began selling books in the mid-1990s, and today it is one of the largest logistics and data cloud provider companies in the world, having a presence in everything from simple e-commerce to involving themselves in customer service AI and other state-of-the-art trends.

So, generally speaking, a digital economy refers to an economy where digital technologies, such as Internet connected computers, mobile devices, data analytics, and other digital tools, play a significant role in economic activities. In a digital economy, the production, distribution, and consumption of goods and services are heavily reliant on digital technologies and platforms.

And now to Egypt.

The introduction of the digital economy in Egypt began rather slowly, with the first steps being taken in the early 2000s by the Egyptian government to renovate and integrate their government ministries and other functions, including the Egyptian Stock Exchange, Ministries of Labor, Trade and so on. But keep in mind that a majority of the Egyptian populace did not use the Internet in the 2000s, with that trend only increasing with smartphone introduction from the 2010s onward.

However, in the 2010s, with the Digital Egypt and Egypt 2030 vision plans being drawn up, more and massive investment into this sphere took place, such as the National Broadband Plan, which so far has brought firstfruits and significant changes to the economy, even for the common citizenry.

Companies, both local startups and international firms, capitalized on this prospect, with local firms like Jumia, Souq, and Talabat becoming household names, while the UAE-based 'everything app' Careem and Uber also have local branches and a massive presence in Egypt.

However, e-commerce in Egypt is the most flourishing aspect of all of this.

According to the Central Bank of Egypt, financial inclusion is not only possible, it will be achieved, by including a digital economy in Egypt, as part of its 2030 Vision. In 2022, a report indicated that there was a 64% increase in Egyptians adopting digital payment solutions, and that out of 100,000 people, 46,500 of them maintain a digital phone wallet--a highly respectable ratio for a developing country and a higher digital payments adoption rate than in many OECD economies.

The first few years of the 2020s were important for the digital economy in Egypt, with InstaPay being the first Payment Service Provider licensed by Egypt’s Central Bank, and Fawry now being used to pay government fees and other functions-–which is no small figure, as 35 million people in Egypt use this service to pay their utility bills. This figure is measured out of a population of 113 million (82 million plus Internet users), give or take 9 million foreign residents from Libya, Sudan and other countries living in Egypt.

Many telecommunication service providers, such as Vodafone, Etisalat, and Orange, also maintain phone wallets which enable their users to conduct electronic transactions, many banks in Egypt also have a digital wallet of their own to implement such things. However, make no mistake, cash remains king (or Pharaoh) in Egypt. But the simple fact of the situation is that there is a massive trend for the local populace to be more and more involved in the digital economy, but there will always be a segment of the population that will not use such services.

I personally admit that I have never used Uber in my life, and that I only used a phone wallet twice--due to reasons of a religious or cultural nature, many Egyptians have not done so. But the youth of the Egyptian population have adapted a thing that it is now commonplace to use. Thus, the market potential of introducing e-commerce apps, or payment services, or the likes in the Arab Republic of Egypt, has many benefits and should not be passed over by foreign investors, especially Dubai-based DeFi entrepreneurs.