New law to stimulate e-commerce
Egypt, Economics, 4/24/2002

In a bid to stimulate and secure electronic commerce activity in Egypt, the government is considering an electronic signature law that experts expect to help usher in an IT breakthrough in the country.

The law, which will be later submitted to the People's Assembly for final discussion and ratification, will recognise e-signatures and help to protect e-commerce transactions in banks from hackers. The law will also set new legal penalties against forgers of e-signatures.

Informed banking sources, quoted by the Egyptian Middle East News Agency (MENA), said the new law would help national banks introduce new electronic technology and services for their clients.

"Egyptian banks are facing huge challenges at the present time. The only way to overcome these challenges is to modernise performance and introduce new services. The new law will provide security and regulations for banks to carry out this mission," said the sources.

They noted that a recent study by the Centre of Monetary and Banking Studies showed an unprecedented growth in the so-called "web economy", which started in 1994.

"By the end of the year 2001, the volume of international electronic commerce reached $1.3 trillion. The annual growth rate of e-commerce transactions will range between 10-25 per cent by the year 2003," the sources said.

They added that international e-commerce involves some 200 million companies and individuals. "The annual growth rate of participants in e-commerce activities is 40 per cent," MENA quoted the banking sources as saying.

The sources, referring to the above-mentioned study, said that Egyptian banks have yet to introduce new services for their clients in order to be able to compete with foreign banks at home and in the regional market. Among the recommended services are basic facilities for e-commerce and e-business activities, which mainly depend on e-signatures, the study said.

Another study, prepared by the National Bank of Egypt, said that new e-commerce activities in Egypt would change the entire banking system. "However, the direction and magnitude of the change are still unpredictable.

Banks involved in e-commerce and e-business activities and facilities will have a greater ability to respond to the demands of their clients," said the study. It added that introducing modern technology to banks will also be cost-effective.

"E-commerce eliminates geographic borders.

The faster Egyptian banks adopt this new technology, the more flexible they will be in meeting the demands of their clients and will be more able to compete with international banking and monetary service institutions," it said.

The study also expected that the growth of e-commerce activity in Egypt, following the ratification of the e-signature law, will also increase the use of credit cards in Egypt. "E-commerce will also reduce the cost of banking operations by least 90 per cent," said the study.

It added that while some Egyptian banks have started to respond positively to worldwide technological developments the pace of introducing new services in Egypt is still very slow.

"The banks have responded the technological developments in various ways, but they have done little more than establish webpages or offering minor services through the internet," it said.

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