Egypt offers extra stimulus package for IT exporters

The agency introduced the cash incentive to provide economic relief for small businesses and tech startups

  
Image used for illustrative purpose. Midsection Of Businessman Using Laptop Against World Map

Image used for illustrative purpose. Midsection Of Businessman Using Laptop Against World Map

Getty Images/ Nipitpon Singad / EyeEm

The Information Technology Industry Development Agency (ITIDA) has launched a new round of its annual “Export IT” programme.

The programme was introduced as a coping mechanism for the unprecedented challenges caused by the global coronavirus (COVID-19) pandemic.

The agency introduced the cash incentive to provide economic relief for small businesses and tech startups, and to boost exports amid the pandemic. It will see IT exports given a boost on proceeds of value-added exports for two consecutive years covering 2019 and 2020.

The step is considered the first of its kind since the launch of the Export IT programme in 2010, and looks to support local IT companies in developing their resources, enhance competitiveness, and reduce export overheads.

ITIDA CEO Amr Mahfouz highlighted that the approved stimulus comes as part of the agency’s relief plan to curb the economic impact of COVID-19, and ensures more aid for small businesses and local IT companies.

Mahfouz underlined that the export incentive package is to encourage the local companies to boost exports, secure the position of Egyptian IT products in existing markets, and increase market penetration capabilities.

The programme deals with local ICT companies which are more than 50% owned by Egyptians, headquartered in Egypt, and are exporting ICT services, IT-enabled services such as call centre services, consultation and training services related to the IT industry.

ITIDA has excluded Egyptian IT startups founded in 2016 or later with the “headquarters in Egypt” condition.

According to the programme’s terms and conditions, approved companies receive direct cash incentives of up to 10%, and with a maximum limit of 20% of value-added exports based on the company size.

Entitled companies will receive a maximum of EGP2.5m, or EGP3m for companies operating in, or which have branches in, one of Egypt’s new tech parks.

The programme offers additional incentives to companies exporting e-Commerce, e-Gaming, e-Health, and e-Design services. Further incentives are also granted to companies operating in new tech parks, as well as new entrants to the programme, and those companies operating in governorates other than Cairo, Giza, and Alexandria.

ITIDA announced that it exceptionally accepts medium-sized companies with annual revenues exceeding EGP 50m and which export certain services or have succeeded in penetrating new markets. The move is to further encourage exports of emerging technologies such as artificial intelligence (AI), data science, and Robotic Process Automation (RPA).

As a result, these companies will receive the full export support on the total value added of their exports and not only on the growth of its value-added.

Through the Export IT programme, ITIDA aims to further increase the growing volume of Egyptian IT exports which recorded $4.1bn in 2020, versus $3.6bn in 2019, reflecting a rise of 13%.

In the previous ten rounds of the programme, ITIDA granted more than EGP 400m of export incentives, boosting the growth of more than 200 local IT companies.

Despite the challenges imposed by pandemic in 2020, Egypt’s ICT sector made great strides in achieving growth of 15.2%, the highest growing sector in the country for the second consecutive year.

It gained revenues of EGP 108bn compared to EGP 93.5bn in fiscal year (FY) 2018/19. The sector’s contribution to Egypt’s GDP amounted to 4.4% in FY 2019/20, versus 3.8% in FY 2018/19.

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