Bridging the Digital Divide in Egypt: Lessons from India

Introduction
In the modern digital era, access to the internet is no longer a luxury but a funda- mental necessity for economic growth, education, and governance. The Interna- tional Task Force on Global Public Goods identified knowledge generation as one of six essential global public goods in 2006, emphasizing the role of the internet as the primary medium for knowledge dissemination. However, despite its critical importance, the digital divide remains a major challenge, particularly in develop- ing economies. Addressing this divide is crucial for ensuring equitable access to opportunities, fostering innovation, and promoting inclusive economic develop- ment.
This paper employs the Most Similar Systems Design (MSSD) methodology, comparing Egypt and India, two nations that share common demographic and economic challenges, including high population growth, widespread poverty, and efforts to enhance e-governance. Both countries recognize the transformative power of digital technology in governance and economic progress. However, while Egypt has focused on localizing smartphone manufacturing to reduce costs and

drive economic development, India has prioritized making internet access more affordable through regulatory reforms and net neutrality enforcement.
India’s approach has resulted in some of the world’s lowest internet costs, significantly increasing data consumption and digital participation. In contrast, Egypt faces rising internet costs and regulatory gaps, which hinder accessibility and widen socioeconomic disparities. By examining these contrasting strategies, this study explores how different policy approaches can either widen or narrow the digital divide, ultimately shaping economic and technological progress.
As a member of BRICS, Egypt stands to benefit fr om learning fr om India’s policies, particularly regarding internet affordability and digital accessibility. The experiences of both countries provide valuable insights into how governments can effectively balance industry localization with digital inclusion, ensuring that all cit- izens can benefit from the opportunities offered by the digital age.

Egypt’s Efforts in Localizing the Smartphone and Mobile Phone Industry

Egypt is actively working to localize smartphone and mobile phone manufac- turing to reduce reliance on imports and establish itself as a regional technology hub. These efforts align with Egypt’s Vision 2030, which emphasizes digital trans- formation, industrial growth, and job creation. By attracting international and local investments, Egypt aims to build a sustainable mobile phone manufacturing sector that supports economic development and technological innovation.

Government Policies and Incentives

The Egyptian government has introduced policies to attract investment in the local smartphone industry. The Ministry of Communications and Informa- tion Technology (MCIT) has partnered with global and domestic firms to estab- lish production facilities. In 2022, the government implemented tax incentives and reduced customs duties on key components to enhance competitiveness. The “Egypt Makes Electronics” (EME) program further supports the sector by promot- ing assembly and production in industrial zones such as the Suez Canal Economic Zone (SCZone) and the New Administrative Capital.

International Investments and Local Manufacturing Efforts

Leading smartphone manufacturers such as Oppo, Samsung, Vivo, Xiaomi, and Infinix have established production facilities in Egypt, benefiting from its strategic location, skilled labor force, and government incentives. Egyptian com- panies, particularly Silicon Industries Corporation (SICO), have also contributed to domestic smartphone production. By mid-2024, mobile manufacturing com- panies in Egypt had reached a total production capacity of 11.5 million units, with

cumulative investments of $87.5 million. However, challenges remain, including reliance on imported components and competition from international brands.

The Impact of Rising Internet Costs and the Need for Net Neutrality in Egypt

Egypt’s increasing reliance on digital services has been undermined by rising internet costs and limited accessibility. Internet service providers (ISPs) engage in practices such as paid prioritization, zero-rating favored platforms, and imposing additional charges on high-bandwidth applications. This undermines competition and raises costs for users reliant on other services. Countries that recognize the internet as a public good enforce net neutrality regulations to prevent such distor- tions.

Disproportionate Price Hikes and Accessibility Barriers

Recent internet price hikes have disproportionately affected lower-income households. The most affordable broadband package—140 GB per month—saw a 108% price increase between December 2023 and December 2024. While high- er-tier plans experienced smaller price increases, the rising costs have deepened socioeconomic inequalities. Internet accessibility remains highly uneven, with urban areas having significantly more fixed-line subscribers than rural regions.
Despite higher costs, mobile broadband subscriptions grew at an annual rate of 6.53%, reflecting its increasing adoption. However, fixed-line internet remains crucial due to its affordability and superior capacity for downloading and stream- ing, making it indispensable for students, healthcare, and government services.

The Need for Regulatory Reforms

Egypt’s internet services are regulated under the Telecommunication Reg- ulation Law No. 10 of 2003, which lacks specific provisions on internet pricing. While it emphasizes free competition and fair pricing, it does not mandate ISPs to disclose detailed pricing structures, allowing companies to increase prices without regulatory scrutiny. Improvements in infrastructure have not kept pace with price hikes, leading to frequent outages and reduced speeds.

India’s Approach and Its Lessons for Egypt

India’s telecom sector has prioritized affordable internet access. The Telecom Regulatory Authority of India (TRAI) introduced regulations in 2016 prohibiting discriminatory data tariffs and ensuring a free and open internet. In 2019, India’s Supreme Court recognized internet access as a constitutional right. These mea-

sures have contributed to India’s exceptional internet affordability, driving sig- nificant data consumption. By 2028, India’s per capita data usage is expected to surpass that of Western Europe and the United States.



Egypt, as an aspiring regional digital hub and a BRICS member, can learn from India’s approach to internet accessibility. India has demonstrated that regulatory measures ensuring fair competition and price control can significantly enhance digital inclusivity. While Egypt focuses on localizing industry, ensuring affordable internet access is equally vital for fostering digital transformation.

The High Cost of Mobile Phones in Egypt: A Barrier to Digital Inclusion

One of the key challenges to enhancing e-government services in Egypt is the high cost of mobile phones, which, combined with rising internet prices, makes digital access unaffordable for large segments of the population. While Egypt has made significant efforts to localize smartphone manufacturing, this has not yet translated into lower prices for consumers. Instead, mobile phones remain lux- ury items, disproportionately affecting low- and middle-income households who struggle to afford both a device and the increasingly expensive internet services necessary to access government platforms.

Mobile Phone Pricing and Its Impact on Digital Accessibility

Despite Egypt’s push for local smartphone production, prices of mobile devices have continued to rise sharply due to high import duties on essential com-

ponents, currency devaluation, and inflation. Many of the locally assembled smart- phones still rely heavily on imported parts, leading to higher production costs that are passed on to consumers. As a result, an entry-level smartphone in Egypt can cost between EGP 5,000 and EGP 8,000, while mid-range and premium models can exceed EGP 20,000, making them unaffordable for much of the population.
This high pricing structure excludes a significant portion of Egyptians from digital participation. For many families, purchasing a smartphone is a major finan- cial burden, especially when coupled with the excessive costs of internet services. The average household in Egypt, particularly in lower-income brackets, ohen pri- oritizes essential expenses such as food, housing, and education over purchasing costly mobile devices. As a result, large numbers of people lack access to e-govern- ment services, limiting the success of digital transformation initiatives.

The Double Burden: Expensive Internet and Costly Smartphones

In addition to high smartphone prices, rising internet costs further widen the digital divide. Egyptian internet service providers (ISPs) have implemented price hikes that make broadband and mobile data increasingly expensive. For example, the most affordable broadband package (140 GB per month) saw a 108% price increase, jumping from EGP 120 in December 2023 to EGP 249.4 in December 2024. This disproportionately impacts those who are already struggling to afford internet access, particularly in rural areas wh ere connectivity is limited.
With both smartphones and internet access becoming luxury items, the Egyp- tian government’s efforts to digitize services risk being ineffective. If citizens can- not afford the tools necessary to access these services, digital transformation will remain an elitist concept, benefiting only those who can pay the high price of con- nectivity. This is in contrast to countries like India, wh ere affordable smartphones and low-cost, high-speed internet have made digital services accessible to a much broader population.

Policy Recommendations for Affordable Digital Access

For Egypt to fully realize the potential of e-government services, it must address the cost barriers associated with mobile technology. This includes:
• Encouraging price controls on locally produced smartphones to ensure afford- ability.
• Reducing taxes and import duties on key smartphone components to lower production costs.
• Implementing stronger regulations to prevent excessive internet price hikes and ensure fair pricing.
• Exploring subsidies or financing options to make smartphones accessible to lower-income citizens.

Without targeted interventions to reduce both smartphone and internet costs, Egypt’s digital transformation will remain incomplete, leaving millions excluded from essential government services and digital opportunities.

Mobile Phone Pricing and Its Impact on Digital Accessibility

Despite Egypt’s push for local smartphone production, prices of mobile devices have continued to rise sharply due to high import duties on essential components, currency devaluation, and inflation. Many of the locally assembled smartphones still rely heavily on imported parts, leading to higher production costs that are passed on to consumers. As a result, an entry-level smartphone in Egypt can cost between EGP 5,000 and EGP 8,000, while mid-range and pre- mium models can exceed EGP 20,000, making them unaffordable for much of the population.
This high pricing structure excludes a significant portion of Egyptians from digital participation. For many families, purchasing a smartphone is a major financial burden, especially when coupled with the excessive costs of internet services. The average household in Egypt, particularly in lower-income brack- ets, ohen prioritizes essential expenses such as food, housing, and education over purchasing costly mobile devices. As a result, large numbers of people lack access to e-government services, limiting the success of digital transformation initiatives.

Bridging the Digital Divide in Egypt

The digital divide in Egypt is exacerbated by economic inequalities, high inter- net costs, and inadequate infrastructure, particularly in rural areas. While Egypt has made strides in digital transformation, these barriers hinder full digital inclusivity. Lessons from India suggest that addressing affordability and regulatory oversight can significantly enhance internet penetration.
A multi-pronged approach is necessary to bridge the digital divide in Egypt. First, enforcing net neutrality regulations would ensure fair access to online ser- vices. Second, revising telecommunications laws to regulate pricing and enhance transparency would prevent arbitrary price hikes. Third, investing in broadband infrastructure, particularly in underserved regions, would ensure wider coverage. Lastly, adopting policies that promote competition among ISPs would drive down costs and improve service quality.
India’s experience illustrates that affordable internet access directly contrib- utes to economic growth, educational opportunities, and enhanced e-governance. Egypt can replicate this model by prioritizing accessibility alongside its industrial localization strategy.

Conclusion

Egypt’s localization of smartphone and mobile phone manufacturing is a strategic move toward economic self-sufficiency and technological advancement. Through supportive policies, international collaborations, and increased invest- ments, the country is positioning itself as a regional production hub. However, digital accessibility remains a significant challenge, exacerbated by rising internet costs and inadequate regulatory frameworks.
India’s example highlights the importance of enforcing net neutrality, regu- lating internet pricing, and expanding infrastructure to promote digital inclusivity. As a BRICS partner, Egypt can benefit from adopting similar measures to bridge the digital divide, ensuring that all citizens have equal opportunities in education, healthcare, economic participation, and civic engagement. By balancing industry localization with internet affordability, Egypt can accelerate its digital transforma- tion and enhance its global competitiveness.