Are smart infrastructure solutions picking up pace in Egypt? The development of smart cities as part of Egypt’s infrastructural development plan, coupled with private sector real estate developers looking to integrate smart infrastructure in their compounds, is beginning to create demand for smart infrastructure solutions. Although the creation of smart cities is beginning to pick up pace, there are hurdles facing the growth of smart infrastructure solutions, according to industry sources we spoke with.

What is a smart city? A smart city takes advantage of ICT to improve its sustainability, efficiency, and services by integrating operations on several fronts. These cities enjoy more advanced infrastructure starting from the way buildings are constructed, the building materials used, the urban planning of the spaces, and the technological infrastructure that will allow for fast internet speeds. Smart cities introduce the use of tech and artificial intelligence in a way that is in line with Egypt’s sustainable development strategy, Egypt Vision 2030, Walid Abbas, assistant housing minister and supervisor of planning and projects at the New Urban Communities Authority (NUCA), previously told Enterprise.

REMEMBER- The Egyptian government plans to introduce 38 new smart cities across the country as part of the Sisi administration’s long-term infrastructure development strategy, with 14 of these already built. These smart cities — also commonly referred to as fourth generation cities — will under the first phase be built on a total of 530k feddans nationwide, offering 4 mn direct and 3 mn indirect jobs, the Housing Ministry has previously said. Upon completion, they are expected to attract 30 mn residents.

It’s still early days for the production of smart infrastructure solutions in Egypt, which means developers typically opt to rely on importing the fully-finished solutions from specialized global companies, industry players tell Enterprise. The other option for developers is to import control systems and complete them with locally-produced technical solutions that are paired with smartphone apps, which is more cost-efficient than fully importing the solutions.

Some players work in the space by providing complementary services: Cisco Systems, for example, does not work in smart home systems, but rather provides the communications infrastructure in facilities by linking all employees’ uses of technology, Managing Director Ayman El Gohary told Enterprise. Cisco has already implemented these systems in the New Administrative Capital and a number of government buildings and facilities within the smart cities system.

The FX situation is a major hurdle for this nascent industry, particularly as a result of rising costs associated with a weaker EGP and increased restrictions on imports, consulting solutions and digital services player Sandex CEO Mohamed El Harty (LinkedIn) tells Enterprise. Demand had been picking up and spurring local and international investments in the industry, El Harty said, adding that they had begun to see specialized companies cropping up to fulfill the demand for smart infrastructure solutions. However, the changing macroeconomic environment has reduced this space significantly, El Harty said.

And import restrictions are also limiting the availability of the solutions: Smart solutions often rely on wireless systems, which require approval and clearance from the National Telecommunications Regulatory Authority (NTRA) for customs clearance, which is time-consuming and can drive up costs, according to ICT consultant Tamer Mohamed. Egypt’s CIT industry is highly regulated, explains KMG Egypt CEO and head of the Federation of Egyptian Chambers of Commerce’s digital economy and tech division Karim Ghoneim.

To drive investment growth, we need more demand — and more flexible regs: Although there are some specialized companies already working on home automation systems and providing digital solutions, as well as others specialized in remote monitoring and control systems for businesses and homes, having robust investment is dependent on robust demand, Ghoneim said. The business environment is also a critical piece of the puzzle, Ghoneim said, pointing to the importance of creating more flexibility in customs procedures to help drive the localization of the industry.

And government incentives would also go a long way: A push to increase local production of the systems, supported by government policies, would help to increase the application of smart systems in real estate developments, El Harthy and Ghoneim agreed. Localizing the industry would make a significant difference in the uptake of these systems, considering the price gap between locally produced systems, which typically go for EGP 40k, compared to imported systems, which can cost as much as EGP 100k.

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