December 16, 2018
The activities of the first edition of the Arab Digital Economy Conference began today, under the patronage of Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces.
The conference was attended by a number of leaders from the Emirate of Abu Dhabi, in addition to Tarek Amer, Governor of the Central Bank; Ahmed Aboul Gheit, Secretary-General of the League of Arab States; Mohamed Osman Elkhosht, President of Cairo University; and Ali Al-Rabi’, Secretary-General of the Council of Arab Economic Unity.
During the first day’s activities, Tarek Amer, Governor of the Central Bank of Egypt, announced the Central Bank’s goal of launching an Innovation Support Fund with a capital of one billion Egyptian pounds to contribute to the capital of innovative projects during the coming year 2019. He noted that the Central Bank has allocated 20 billion Egyptian pounds to micro-enterprises for financing through banks and civil society organizations. He noted that the volume of financing through the initiative has increased to 16 billion Egyptian pounds, contributing to the creation of approximately 3 million job opportunities.
The Governor of the Central Bank of Egypt reviewed the state’s strategy for transitioning to a digital economy, which relies on the Central Bank acting as a coordinator through technical and professional intervention, utilizing its mechanisms to promote financial inclusion that supports the digital economy.
He explained that the political leadership supports the digital transformation by overcoming all legislative and procedural obstacles to establish an information system that supports future generations.
He added that the Central Bank is working to support and innovate, while establishing a strong financial system in Egypt. The Central Bank is also working to expand financial and digital technologies, a direction the state is pursuing through the establishment of the National Payments Council.
He emphasized that Egypt has succeeded in overcoming obstacles to exchanging information with global markets, as the Central Bank has shifted to risk assessment processes and established methodologies for dealing with foreign markets.
He explained that the most important components supporting the transition to the digital economy include increased citizen awareness, attracting investments in technological infrastructure, and ensuring competition that serves the customer’s interests and transparency. He noted that the Central Bank is working on a new banking law to strengthen transparency and governance, establish the concept of appointing young cadres to leadership positions in the banking sector, and implement continuous leadership changes to support the banking industry and its development.
He pointed out that Egypt’s population has risen to 100 million, and that they must be given the opportunity to engage with the digital economy. He noted that the number of e-wallet customers has increased to more than 10 million.
Amer emphasized that the banking sector began implementing the digital economy early on. In 2008, while serving as Chairman of the National Bank of Egypt, Amer worked to establish bank branches and link branch information to a single information system. This represented a major challenge, but now Egyptian banks are electronically connected.
For his part, Ahmed Aboul Gheit, Secretary-General of the League of Arab States, said during his participation in the conference that the rapid and successive developments in information technology that our world is witnessing today are giving rise to a new type of economy: the digital economy. This economy has begun to play a tremendous role in achieving economic development by creating real investment opportunities across all fields and sectors, as well as in achieving financial inclusion, thus supporting economies in keeping pace with global economic modernity.
He explained that the ongoing war between major global powers reflects, in an important aspect, a race to control the digital technology market and its future, especially fifth generation (5G) technology, in light of the enormous gains. There is no aspect of contemporary societies that digital technology does not control and guide, especially since the returns on innovation in this technology incomparably exceed profit rates in other sectors. Indeed, mastering it propels other economic sectors forward.
Aboul Gheit continued: “We are witnessing a comprehensive revolution driven by digital technology and led by artificial intelligence and big data applications. Some have called it the Fourth Industrial Revolution, suggesting its profound impact on various aspects of life, similar to the First Industrial Revolution. We must never allow our nations to emerge from this battle empty-handed, or to be content with a backward position in this fierce competition.”
The Secretary-General of the League of Arab States added that since creativity and innovation are the primary drivers of this new revolution, our Arab world finds itself faced with only two options: innovation or extinction. Either we hasten to prepare our educational infrastructure and employment markets to keep pace with these profound changes in the structure of the modern economy, or we face the risk of marginalization and dwarfing.
He pointed out that the Arab region faces extraordinary challenges that compel its countries to prioritize issues of security and peace more than others. Governments are making remarkable and bold efforts to keep pace with modern economic mechanisms and concepts, efforts that must receive support and backing from all. Furthermore, financial reform policies and improvements to the legislative and procedural climate must continue to unlock the full economic potential of Arab societies and attract more direct investment. He emphasized that the time has come for Arab countries to optimally utilize their abundant human capabilities, important and pivotal geographical locations, and sufficient financial and geological resources to achieve the desired renaissance and position our countries in the position they deserve among the ranks of advanced and developed nations. He pointed out that the size of Arab e-markets does not exceed 1% of the global e-market, which is incongruous with the size of the Arab economy. He noted that it is unreasonable for Arab citizens to be unable to engage effectively with financial technology applications that are sweeping the banking world at an unprecedented rate of acceleration, especially as the impact of synergies between technological applications, particularly in the field of communications, on the one hand, and banking on the other, becomes more apparent. These applications play a role in achieving financial inclusion. He stressed that the League of Arab States always seeks to keep pace with developments taking place around it in all fields and sectors and to adopt best practices to activate and enhance the performance of the joint Arab action system. In this context, it is worth noting the partnership between the League of Arab States and the United Nations Economic and Social Commission for Western Asia within the framework of the Roadmap Initiative for Internet Governance at the regional and international levels, making the Arab Group one of the first regional groups working to formulate a roadmap for Internet governance at the regional level.
He continued, “There is significant progress in some Arab countries that cannot be overlooked. Some Arab countries, including the United Arab Emirates, occupy an advanced position among the world’s countries in terms of internet usage, given the rate of cross-border data flow linking our Arab region to the rest of the world has increased by more than 150 times over the past decade. In this regard, several Arab countries have achieved significant leaps in the digital consumption sector, with increased rates of smartphone adoption and social media use.”
On the other hand, Atef Helmy, former Minister of Communications and Information Technology, stated that the digital economy’s contribution to Egypt’s GDP is estimated at approximately 4%.
He pointed out that this percentage rises to 8% in the United States, while it reaches 6% in the European Union, and 5% in the United Arab Emirates.
He explained that the current phase represents a period of transition to a digital economy that will impact Arab life and develop Arab economies. He pointed out that the economic conditions of Arab countries vary, with some working towards economic sustainability, most notably the UAE, which is targeting strategies that support the digital economy. He noted that the economy contributes to creating job opportunities.
He emphasized the importance of transformation and adaptation to global economic realities, pointing to three factors that will strengthen the digital economy in the Arab world: dividing Arab countries into groups to develop their digital economy strategies based on their internal circumstances. He indicated that countries are divided into three groups: the first includes Gulf countries, which possess strong infrastructure; the second group includes countries with relatively small populations that support the development of the digital economy, such as Jordan, Morocco, and Lebanon; and the third group includes countries experiencing internal unrest, such as Syria, Yemen, and Libya.
Helmy added that the second factor is the need for the necessary infrastructure to drive development in the digital economy, including devices such as mobile phones, computers, point-of-sale terminals, and application software.
He emphasized the importance of government influence in encouraging digital work as a coordinator of coordination between various entities to advance the digital economy system, which he considered the third factor in strengthening the digital economy in the Arab world.
Dr. Mohamed Osman Elkhosht, President of Cairo University, stated that the era we now live in is the era of the Fourth Industrial Revolution, characterized by the penetration of advanced technology into all fields and sectors, including robotics, artificial intelligence, blockchain, nanotechnology, digital technology, the Internet of Things, and 3D printing, and the economic and social impacts of these changes.
He emphasized that advanced digital technology has become the universal language of the age, and those unable to master and engage with this language will lose all means of communication with the outside world.
He pointed out that, based on shared interests, a common desire arose between Cairo University and the Council of Arab Economic Unity to conclude a memorandum of understanding for joint organization on ways and frameworks to support the digital economy in Arab countries.
He explained that this cooperation aims to improve the level of knowledge about the digital economy and its importance in the Arab world, participate in preparing studies and reports related to the digital economy, hold conferences, scientific seminars, and workshops related to the digital economy, and cooperate with Arab governments to develop and harmonize legislation and laws aimed at facilitating the implementation of modern digital economy mechanisms and systems.
He emphasized that the cooperation will contribute to encouraging and promoting awareness and guidance for investors to adopt adequate facilities and infrastructure to ensure the safe and reliable implementation of digital economy mechanisms and applications, and to benefit from best practices, legal and legislative frameworks, and similar international experiences.
He added that many recent studies have demonstrated the positive economic and social impact of the transition to advanced digital technologies. This impact varies depending on the level of progress countries make in the availability and use of digital technologies, with the impact increasing with the level of progress.
He emphasized that Cairo University is a distinguished academic institution in the Arab world and includes many faculties with distinguished specializations, including scientific faculties such as the faculties of engineering, science, medicine, pharmacy, and agriculture, which help find innovative solutions for the transition to the digital economy. In addition, there are theoretical faculties, most notably the Faculty of Economics and Political Science, the Faculty of Arts and Archaeology, and other prestigious faculties that help facilitate “cultural change,” enabling a safe transition process and engagement with modern technologies.
He explained that the Council of Arab Economic Unity (CAEU) of the League of Arab States has adopted an ambitious vision to be a potential partner in building sustainable digital economies in the Arab world by fostering the development, innovation, and creativity of digital economy solutions and applications in Arab countries, in accordance with international rules and standards.
Al-Khasht announced the first steps of this agreement, which will include discussing the Arab strategic vision for the transition to the digital economy. This vision was designed by the oldest research center at the university, the Center for Economic and Financial Research and Studies (CEFRS) at the Faculty of Economics and Political Science, in partnership with Hands-on Management Consulting (EFESO).
He explained that the goal is to launch an international university that will lead citizens to the digital economy. This is in addition to the university’s accreditation two weeks ago of a Bachelor’s degree in Artificial Intelligence, as well as courses in critical thinking and entrepreneurship. He noted that Cairo University aims to become a digital university.
Dr. Ali Al-Khouri, advisor to the CAEU, said that the Arab region has an opportunity for joint cooperation in the digital economy.
Al-Khouri added that there are huge opportunities for inter-Arab investments in digital economy infrastructure, noting that many investments from global investment funds in technology are being channeled into the Arab world.
He emphasized that the conference aims to uncover the economic opportunities available to Arab countries as a result of digital transformation, emphasizing that the digital economy is the largest area capable of competing globally to attract capital to the Arab region.
Al-Khouri said, “This elite group of officials, representatives of Arab countries, ministers of finance and economy, governors of central banks, representatives of chambers of commerce and industry, business leaders, and investors can come up with a joint framework that maximizes Arab cooperation.”
He explained that the conference aims to present the pillars of the joint Arab strategy for the digital economy, which supports sustainable development and investment in technology projects and infrastructure in the Arab world.
The advisor to the Council of Arab Economic Unity also emphasized that the Arab region has a large youth population, with approximately 60% under the age of 30.
Meanwhile, Ayman Hussein, Deputy Governor of the Central Bank of Egypt for Financial Technology and Payment Systems, emphasized the bank’s role in supporting the digital economy. He noted that the Central Bank has received applications from four banks seeking a license to establish a digital bank. He noted that the Central Bank is currently developing the foundations and regulations for launching and operating digital banks, to keep pace with technological developments and reduce operating costs for the bank, benefiting customers.
Hussein pointed to the Meeza card, the first national card with an Egyptian brand, which will be activated and issued to citizens before the end of this month. He noted that banks have completed the banking transactions for ATMs to accept the Meeza card.
The Meeza card is one of the initiatives launched by the National Payments Council with the aim of promoting financial inclusion by establishing a national payment system that enables customers to conduct numerous transactions through an electronic collection tool.
He explained that the Central Bank is currently studying the issuance of a digital currency, noting that the bank is collaborating with international institutions on the study.
He pointed out that digital currency offers several distinct advantages, including reducing the cost of issuing cash, limiting cash flow, and limiting the circulation of funds through banks. Hussein did not disclose whether the virtual currency would be limited to transactions between banks or between customers and banks.
He continued: “The number of electronic wallets issued by banks has increased to approximately 12 million wallets owned by 10.5 million customers, with a transaction volume estimated at approximately EGP 8 billion by the middle of this month.”
He explained that the Central Bank has set several controls and standards for banks to activate electronic wallet services, foremost among which is achieving an annual growth of 30% in the volume of wallets issued by each bank. He noted the need for the percentage of active wallets to reach 10% of the total wallets issued by each bank.
During the first day’s activities, the joint Arab vision for the digital economy was launched. This vision aims to activate and enhance joint Arab cooperation based on digital knowledge, develop technological and legislative infrastructure, and support plans for digital transformation and technological development in Arab countries.
