ICT measurement: Egypt’s Experience

1. Ministry of Communications and Information Technology Information Center ICT measurement: Egypt’s Experience Dr. Nagwa El-Shenawy Information Center Director Ministry of communications and Information Technology First Workshop of the Regional Project "ICT Indicators and Capacity Building for ICT Measurement in Arab Region", Amman, 25-27 Sept. 2010

2. Content • ICT Indicators and Capacity Building for ICT Measurement in Arab Region project .. Importance and expected outcomes. • ICT measurement in Egypt: • Vision. • Goals. • Life cycle. • Scope of work: • ICT readiness. • ICT affordability. • ICT usage. • ICT impact. • Road Map. • Work Plan. • Main Deliverables.

3. ICT Indicators and Capacity Building for ICT Measurement in Arab Region project .. Importance and expected outcomes • Since the World Summit on the Information society (WSIS) (Geneva 2003 – Tunis 2005) “Measuring the Information Society” many international organizations have worked on developing ICT indicators and setting statistical standards to measure ICT infrastructure, usage and impact in countries. • It is important here to refer to the notable efforts of ITU, UNCTAD, WB, ESCWA, OECD, Eurostat to set international standards and methodologies to measure ICT indicators.

4. ICT Indicators and Capacity Building for ICT Measurement in Arab Region project .. Importance and expected outcomes • In spite of that, Arab ICT indicators still not sufficient not available and not publicized. • Hence, the ITU Arab regional office project for ICT Indicators and Capacity Building for ICT Measurement in Arab Region considers one of the main efforts needed in this area. • It is expected that this project will enhance ICT measurement in the Arab states and facilitate building a unified and comprehensive data base for Arab ICT indicators which will act as the most important reference point as well as policy makers for international organizations and all over the world. Cont.

5. Vision. • Goals. • Life cycle. • Scope of work. • Selected samples. ICT Measurement in Egypt

6. ICT Measurement in Egypt .. Vision Developing and improving the measurement of ICT use and impact in Egypt, following international standards; so as to show the progress witnessed in ICT sector.

7. Building a database for ICT indicators within MCIT to measure, analyze and monitor ICT sector in Egypt according to international standards; taking into consideration lagging regions behind in order to bridge the digital divide. Providing decision makers with up-to-date and accurate ICT indicators to help them setting and following up policies and strategies pertaining to ICT sector. Providing international organizations with required data and indicators which reflect the positioning and the performance of ICT sector in Egypt. Disseminating the ICT indicators to the public and policy makers. ICT Measurement in Egypt .. Goals

8. ICT Measurement in Egypt .. Life cycle ICT Diffusion ICT Diffusion and statistical demand Measuring ICT Impact Measuring ICT Intensity Measuring ICT Readiness Time Source: Vincenzo Spiezia (2009), “Implementing the Seoul Agenda. Discussion points for the round table on “ICT measurement: Assessment and Proposals by Member Countries”, OECD

9. ICT Measurement in Egypt .. Scope of work ICT Readiness ICT Affordability ICT Usage ICT Impact • Usage Indicators: • Households and individuals. • Private enterprises. • Government. • Education. • Public Access points. • Health (Forthcoming). • ISPs. • Economic Indicators: • -ICT value added. • ICT contribution to GDP. • ICT contribution to GDP growth rate. • -ICT Contribution to the treasury. • -ICT exports. • -ICT demand and supply multipliers. • others. • Development: • PIACs. • others. • Infrastructure Indicators: • Fixed lines. • Mobile: • Subscription. • Data services • Internet: • Narrowband. • Broadband: • Fixed. • Mobile. • Other indicators. • Tariff Indicators: • Fixed lines. • Mobile. • Internet.

10. ICT readiness: • Internet Users Calculation Method. ICT Measurement in Egypt

11. ICT Readiness .. Internet Users calculation method Internet users by access mode (Q2 2010) Internet users (Million) 19.84

12. ICT Readiness .. Internet Users calculation method Cont. Dial Up (Unique Numbers) … Source: TE X (Average no. of persons using internet in each household) … Source: HH survey + ISDN (ISDN Subscribers) … Source: TE (Average no. of persons using ISDN) … Source: Recommended by ITU X + Estimated number of internet users ADSL Commercial Subscribers .. Source: calculated from ISPs survey Using ADSL subscribers figure (Average no. of employees using Each ADSL line) … Source: Private sector survey X ADSL + ADSL HH Subscribers .. Source: calculated from ISPs survey using ADSL subscribers figure (Average no. of HH using each ADSL line) … Source: HH survey X + Mobile & USB Modem (Mobile Internet users) .. Source: NTRA (USB Internet users) .. Source: NTRA +

13. ICT Readiness .. Internet Users calculation method Cont. Estimated Internet users = (Unique numbers * 2.5) + (Commercial ADSL Subscription * 16) + (Household ADSL subscription * 4 )+ (Leased line * 40) + (ISDN * 4 ) + (Mobile internet users) + (USB internet users). Note: Values of the abovementioned multipliers differ from country to another and it should reflect the results of the relevant ICT usage surveys and international norms.

14. ICT Affordability: • ICT Price Basket. ICT Measurement in Egypt

15. Price baskets are a set of affordability indicators developed by the World Bank to compare affordability of communication services between countries world wide on an annual basis. These indicators are: price baskets for fixed lines, for mobiles and for internet services, and are all measured in USD. MCIT has started calculating the same indicators for Egypt using local data on a quarterly basis since (Jan – March 2006) till the present. Calculations are done in EGP and then transferred into USD using the quarterly average of the monthly exchange rate of the EGP versus the USD release by the Central Bank of Egypt. ICT Affordability .. Price Basket

16. Price basket for fixed line Calculated as one-fifth of the installation charge, the monthly subscription charge, and the cost of local calls (15 peak and 15 off-peak calls -which are the same cost in Egypt -of three minutes each). The main changes occurring in this indicator usually result from offers and promotions in installation charges, aiming at increasing the number of subscribers in fixed telephones, in addition to the changes in the exchange rate or the minute rate. ICT Affordability .. Price Basket Cont.

17. Price basket for mobile Calculated as the pre-paid price for 25 calls per month spread over the same mobile network, other mobile networks, and mobile to fixed calls and during peak, off-peak, and weekend times. It also includes 30 text messages per month. The prepaid tariffs of the operators resulting in the cheapest basket are used. Each of the services included in the mobile price basket is given weights based on the OECD Telecoms Price Benchmarking Baskets 2006. http://www.teligen.com/publications/oecd.pdf. The latest decrease in the cost of mobile is due to the decrease of mobile to fixed minute rate and the on–net rate decrease applied by one of the mobile operators (Etisalat). ICT Affordability .. Price Basket Cont.

18. Price basket for Internet  Calculated based on the cheapest available tariff for accessing the Internet 20 hours a month (10 hours peak and 10 hours off-peak). The basket does not include the telephone line rental but does include telephone usage charges if applicable. This indicator includes dial up services and not ADSL, since it aims to measure “the cheapest available tariff”, hence changes in the prices of dial- up internet and not in any other type of services It has remained relatively constant since (Jan – March 2006). ICT Affordability .. Price Basket Cont.

19. ICT Affordability .. Price Basket Cont. Price basket for Internet (Q2 2009-Q2 2010) 

20. ICT Usage: • ICT Usage by Private Businesses. ICT Measurement in Egypt

21. Cont. ICT Usage .. ICT Usage by Private Businesses Questionnaire • This questionnaire has been formulated in light of international ICT core indicators recommended by partnership on measuring ICT for development project adopted by many international organizations. • The questionnaire mainly includes 7 sections: • Private businesses basic indicators. • ICT usage by businesses (Fixed lines, Mobile, Internet, Computer). • Human resources (employees and training). • E-commerce. • Security and Privacy. • ICT expenditure. • Mobile data services. • R & D activities.

22. Frame: has been acquired from the census of enterprises for the year 2006. Sample Design: Multi-stage stratified sample (3 stages: economic activities, number of employees, geographic regions). Sample size: 5,000 enterprise covering all regions of Egypt, in addition to 3,000 enterprise as an alternative frame using for replacing non-respondent enterprises with respondent ones, and to solve the problem of differentiation in enterprises size between the frame and the sample. Cont. ICT Usage .. ICT Usage by Private Businesses Methodology

23. 3 Stages for Drawing the Sample: Geographic regions Urban governorates. Lower Egypt governorates. Upper Egypt governorates. Border governorates. Economic Activity Economic activities inside each stratum are distributed according to their normal distribution inside of each stratum in the frame. Those weights differ from a stratum to another according to the relative importance of activities inside each stratum, as explained in the frame. Cont. ICT Usage .. ICT Usage by Private Businesses Methodology

24. 3. Number of employees Focus on small, medium and large enterprises that have more than 9 employees when measuring ICT usages (80% of the sample), while micro enterprises constitute only 20% of the sample. However, Micro enterprises were not excluded from the sample because they employ a large portion of the employees included in the frame. Cont. ICT Usage .. ICT Usage by Private Businesses Methodology • To determine the number of enterprises included in each of the above mentioned strata, relative weights are used representing the relative importance of each of those strata in the frame or the population from which the sample is drawn, based on the number of included enterprises. • Note: the sampling error should not exceed +/- 1.5 %.

25. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress • Measuring digital divide by: i. Geographic location • Proportion of enterprises/employees using computers (urban / rural). • Proportion of enterprises/employees using internet (urban / rural). • ii. Gender (Measuring gender gap in entrepreneurship and employees). • Proportion of female employees using computers in the enterprises. • Proportion of enterprises owned by females.

26. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 1. Measuring Digital Divide by geographic location (2010) i. By geographic location

27. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 1. Measuring Digital Divide by gender (2009) ii. By gender The gender gap in private enterprises lies in the level of employment itself not in ICT usage!!

28. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 2. Measuring broadband: • Proportion of enterprises accessing the internet through high speed internet. • Proportion of enterprises accessing the internet through mobiles (by type of activity). 3. Measuring ICT spending: • Spending on ICT as a proportion of total spending in the enterprise. • Value and proportion of spending on ICT disaggregated on different items such as: • Hardware / Software. • Training. • Maintenance. • Networks.

29. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 2. Measuring broadband (2010) High speed internet Multiple answers were allowed

30. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 3. Measuring ICT spending (2010)

31. Cont. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 4. Measuring Security and privacy aspects: - Proportion of enterprises facing security problems (by type). - Proportion of enterprises using security measures (by type). - Proportion of enterprises not using security measures by reason. 5. Measuring E-Commerce indicators: - Proportion of enterprises using Arabic websites on the internet for different activities.

32. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 4. Measuring Security and privacy aspects 2010

33. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 5. Measuring E-Commerce indicators 2010 % of enterprises involved in E-Commerce activities

34. ICT Usage .. ICT Usage by Private Businesses Achieved Progress Cont. 6. Measuring mobile data services activities: • Proportion of enterprises using mobile data services. • Activities undertaken by enterprises using mobile data services. • Degree of satisfaction on mobile data services.

35. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 6. Measuring mobile data services indicators (2010) % of enterprises using mobile data services

36. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 6. Measuring mobile data services indicators (2010) Multiple answers were allowed

37. ICT Usage .. ICT Usage by Private Businesses Achieved Progress Cont. 7. Measuring R&D indicators: • Proportion of enterprises having any innovation or R&D operations (specifying the type of this operation). • Enterprises’ expenditure on innovation and R & D. • Proportion of enterprises receiving government support for their innovation or R & D activities. • The impact of innovation and R & D on the enterprise. • Sources of financing innovation and R & D operations.

38. ICT Usage .. ICT Usage by Private Businesses Achieved Progress 6. Measuring R&D indicators (2010) % of enterprises involved in R&D activities

39. ICT Impact assessment: • ICT Deflator. • ICT macroeconomic impact. ICT Measurement in Egypt

40. It has been suspected that the real ICT component of GDP underestimates the sector performance, because the deflator that it uses (CAPMAS Consumer Price Index (CPI)) overestimates the prices of its services. MCIT has conducted a project to treat this problem and to develop an alternative price index for ICT services in Egypt, that is more representative of the current ICT services in Egypt. The main objective of the project is to review and validate ICT component of real GDP, in addition to the ICT sector growth rates after being deflated by a new index that consists of a representative basket of ICT services. This objective has been achieved through: Developing a new price index, with a conceptual basis that is more consistent with the current ICT services component of the GDP, acting as a new deflator for the ICT component of nominal GDP; and leading to new adjusted figures for the ICT component of real GDP. Contacting telecom operators in Egypt and obtaining the actual quarterly financial data to get accurate estimates for the sector’s output. ICT Impact .. ICT Deflator

41. ICT Impact.. ICT Deflator Methodology Cont. • A quarterly price index for ICT services has been developed, based on a representative basket of the telecommunication services available in Egypt, starting from first quarter of the year 2002 to the present. • The new index has four subcomponents: • Fixed line telecommunication services. • Mobile telecommunication services. • Internet services. • Postal services. • Different types of services for each of those four subcomponents have been included in the index. • The OECD’s “Guide to measuring the information society” and “Methodological guide for developing PPI for services” have been used as references for constructing the index.

42. ICT Impact.. ICT Deflator Methodology Cont. • The detailed structure of the basket depended on the OECD services producer price index (SPPI) for telecommunication services, which is based on the business telecommunications activity defined within the ISIC v3.1. This structure has been slightly adjusted according to the nature of the telecommunications services available in Egypt. • Weights for the detailed items included in the index subcomponents were determined using revenues generated from each of them through sales of services, as it is considered a producer price index (PPI).

43. ICT Impact.. ICT Deflator Methodology Cont. • After the four sub-indices are calculated, one composite index is compiled by giving weights to each of those four sub-indices based on the revenue generated from each of them. • The base period for the index is fiscal year 2006/07, which is the same base period for the quarterly national accounts in Egypt. It is also the base year for the five year plan 2006/07 – 2011/12. Detailed revenue data has been collected for this year, so as to give appropriate weights for all telecom services included in the basket.

44. ICT Impact.. ICT Deflator Results and Achievements Cont. 1. Correcting ICT GDP at current prices: Ministry of Economic Development started this year to release officially the corrected figure • ICT GDP at current prices reached 23 Billion EGP in 2006/2007 based on MCIT calculation, while it reached only 14.5 billion EGP according to MOED calculation in the same year.

45. ICT Impact .. ICT Deflator Results and Achievements Cont. 2. Correcting the trends of ICT services’ prices in Egypt: • ICT services price index (New deflator) shows a downward trend as it decreased by 7% (Q1 2006/2007-Q3 2009/2010), while the old deflator shows an upward trend as it increased by 4% in the same period.

46. ICT Impact .. ICT Deflator Results and Achievements Cont. 3. Correcting the ICT Component of GDP at constant prices in Egypt: • ICT GDP at constant prices increased to EGP 8.5 Billion based on MCIT calculation, while it reached EGP 8 billion based on MOED Calculation in (Q3 2009/2010).

47. The methodology of this project is based on the OECD’s study on 12 OECD countries titled “The contribution of the ICT sectors to economic growth in OECD countries: Backward and Forward Linkages”(OECD,2008). • Stage 1: Developing an updated Input Output table for the Egyptian economy • Problems encountered: • Latest I-O table available is for 2003-2004. • ICT sector is not present independently but as part of “Transportation and Communication” sector. • Education, Health and Other services were also clubbed in one sector which would prevent us later to analyze the link between ICT and education and health. ICT Impact assessment .. Macroeconomic impact of ICT Objective

48. ICT Impact assessment .. Macroeconomic impact of ICT Methodology Cont. • Steps taken: • In collaboration with Ministry of Planning, the ICT sector was disaggregated into a separate sector from the “transportation & communication "according to the distribution of GDP between the transportation sector and the ICT sector. • The Education sector and the health as well were separated in the same manner. • Several assumptions were made related to the nature of sectors in Egypt. • The I-O table was checked for balances like: • Production at market price = Total Uses, in total and for each sector • Intermediate demand + Final Demand = Use , for each sector • Domestic Inputs + Imported Inputs = Total Inputs • Total Inputs + value added = Production • It was then updated according to the performance report of the National Plan for economic development for 2007-2008.

49. Stage 2: Calculating Linkages and multipliers for supply and demand • Demand Concepts: • Demand Multiplier is the change in total output of Egypt if total output of Communications increases by 1 unit. • Backward Linkages are the changes in output of other sectors such as the industry sector if the Communications industry stops using domestic inputs from that sector. Results are reported in percentage changes. • Supply concepts • The Supply Multiplier is the change in total output of Egypt if the communication sector increases its supply to other sectors by 1 unit. Results are reported in units. • Forward Linkages are the changes in output of other sectors if the communication sector stops supplying inputs to those sectors. Results are reported in percentage changes. ICT Impact assessment .. Macroeconomic impact of ICT Methodology Cont.

50. ICT Impact assessment .. Macroeconomic impact of ICT Mechanism of supply and demand Cont. Backward Linkage Forward Linkage