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ICT Maghreb. Finpro project final report

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Maghreb countries (Morocco, Algeria, Tunisia) ICT markets are growing rapidly. Finpro's ICT Maghreb project seeks to find business opportunities for Finnish companies in this market. This is a final ...

Maghreb countries (Morocco, Algeria, Tunisia) ICT markets are growing rapidly. Finpro's ICT Maghreb project seeks to find business opportunities for Finnish companies in this market. This is a final report of the project.

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ICT Maghreb. Finpro project final report ICT Maghreb. Finpro project final report Presentation Transcript

  • ICT Maghreb12/10/2011
  • Table of Contents Introduction to the Project Pag. 3 Executive Summary Pag. 4 Maghreb as a Region Pag. 5 Tunisia Pag. 6 Morocco Pag. 31 Algeria Pag. 77 Project financing Pag 106 Conclusions and Reccomendations Pag. 108 Primary sources Pag. 112 .12.10.2011 © Finpro 2
  • Introduction for the project Background Information Methodology • ICT-markets in Maghreb are in an interesting • The study used both desk and field studies development phase • In the desk study phase material on the ecosystem • Maghreb and its opportunities are not known to the was collected Finnish companies • Interviews of the main players like mobile operators, • The aim of this project was to investigate the software companies and industry experts were used opportunities in Tunisia, Morocco and Algeria to get a view on the concrete business opportunities • The project was financed by TEM Assignment Objectives Project team • Understand the ICT-ecosystem Finpro team members • Identify concrete business opportunities for Finnish • Marjaana Karjalainen, Head of Trade Center, Finpro ICT companies Italy (Project Manager), • Formulate market entry recommendations marjaana.karjalainen@finpro.fi • Initiate networking with local key players • Anneli Virtanen, Head of Trade Center, Finpro Tunisia (Tunisia), anneli.virtanen@finpro.fi • Steve Colling, Senior Consultant, Finpro France (Morocco and Algeria), steve.colling@finpro.fi12.10.2011 © Finpro 3
  • Executive summary  ICT-markets in Tunisia, Morocco and Algeria are in an interesting development phase, but Finnish companies do not yet know about the concrete opportunities the area is offering.  The “Arab Spring” is paving way for democratic reforms in the area. For example the first democratic elections are at hand in Tunisia.  In all the three countries the ICT-sector is dominated by the public sector.  Concrete business opportunities in these countries can be found especially in the following sectors:  Mobile operators’ value chain as 3G networks are being launched and new services developed  In vertical enterprise software markets like logistics, banking, e-tourism, e-learning and e-government  Outsourcing and offshore activities.  Tunisia and Morocco have a good infrastructure, educated work force and a good business climate for foreign companies to develop their business.  Algeria is still almost an untapped market with little competition.  They can also be seen as gateways to the French-speaking Africa.  In order to take advantage of advantage of the opportunities Finpro recommends a fact-finding trip to Tunisia and Morocco in March 2012.  For those who want to proceed at a quicker pace we suggest Test Drives to test the commercial feasibility of their offering and to receive concrete client feedback as well as Partner Searches to evaluate potential partner candidates12/10/2011 © Finpro 4
  • Maghreb as a region (Algeria, Libya, Mauritania, Morocco, Tunisia) • All states are members of the Arab Maghreb Union (l’Union de Maghreb Arabe, UMA). UMA promotes regional integration with emphasis on economic and political co-operation. • IMF (International Monetary Fund) divides the region into three groups: - Major oil producers - Algeria and Libya - Emerging markets - Morocco and Tunisia - Poorest country - Mauritania (oil production started in 2006) • The population of Algeria, Tunisia and Morocco is around 77 million and the proportion of Muslims is almost 100 %.12.10.2011 © Finpro 5
  • Tunisia Tunisia in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • Tunisia Population 10.5 million Area 163 610 km2 Capital Tunis Languages Arabic, French Currency Tunisian dinar (TND) (1€ = 1.94 approx.) GDP 2010 33.4 billion € (per capita € 3180) Minim. wage 121 € / month (40 h work week) Government Presidential Republic12.10.2011 © Finpro 7
  • Economic indicators 2010 2009 • Stable economic, political and social situation enhances foreign Unemployment 13.0 % 13.3% trade GDP growth 3.7 % 3.1% Inflation 4.4 % 3.5 % • Competitiveness: 32nd among FDI (M€) 1140.9 1212.1 139 countries, 1st in Africa (WEF 2010-2011) Gross investment as a % of GDP 24.3 % 24.2 % 800 GDP by sector 2010 600 Services 400 200 Manufacturing 0 industries Agriculture and fisheries Non manufacturing industries Others12.10.2011 © Finpro 8
  • Trade • Tunisian economy is diversified and competitive • Tourism is still most important sector in Tunisia followed by manufacturing industry and agriculture, but the focus is on technology and innovation based economy. • In 2010 the country’s exports amounted to EUR 16 billion, whereas imports were EUR 15 billion, leading to a trade surplus. Tunisias main exports are manufactured products (clothing, machinery and transport equipment) energy and agricultural products. Trade of Tunisia (M€) Imports of Tunisia 2010 20000 Consumption products (exc. food) 15000 Raw and semi- finished materials 2009 Equipment products 10000 2010 Oil products 5000 Food products 0 Exports Imports Balance Others -500012.10.2011 9 © Finpro
  • Trading partners • European Union is Tunisia’s biggest trading partner. EU exports to Tunisia amounted to EUR 8.9 billion and EU imports from Tunisia EUR 7.9 billion (2009) • Tunisia has signed an Association Agreement with the EU. The trade of goods is already liberated from customs, but negotiations of services trade and agricultural products are ongoing. • Major imports from the EU include machinery and transport equipment (38%), textiles (13%), chemicals (9,9%) and energy (8,5%) • Finnish exports to Tunisia reached EUR 53.6 million in 2010, whereas imports amounted to EUR 8.6 million • Finnish exports include industrial machinery, communications equipment, wood and crude materials Major export partners Major import partners EU27 EU27 Libya Libya India Turkey United States China Algeria Algeria12.10.2011 © Finpro 10
  • Key Tunisian companies 1 2 3 Tunisie Télécom STEG – Tunisian STIR – Tunisian Leading telecom operator, Company for Electricity Refining Industries partly state-owned and Gas Turnover: 827 M€ company State-owned Turnover: 1155 M € State-owned company that operates under the Ministry of Industry and Technology. Turnover: 1225 M€ 4 5 GCT – Group National Company of Chimique Tunisien Oil Distribution AGIL Phosphoric acid and fertilizer Commercializing of oil products production, state-owned and their derivatives, State- Turnover: 521 M€ owned Turnover: 675 M€12.10.2011 © Finpro 11
  • Development policy • Old government’s 12th Development Plan for 2010-2014 aims at improving the standard of living for all Tunisians • Goal: GDP up till 5.4 %, cutting unemployment to 11.4 % by creating 425 000 jobs • Expanding health & social coverage  improving human development index to the level of developed countries • Creating knowledge based, innovation and technology driven society  increasing the number of high-qualified engineers, creating employment for the young graduates • Developing infrastructure: € 12.250 billion to energy sector (e.g. solar & wind power), € 4.512 billion to ICT sector (digital television, modernizing telecommunication infrastructure), € 2.850 billion to scientific research and technological development etc. • Future development of the country depends on the outcome of the elections in October 23,201112.10.2011 © Finpro 12
  • Doing business in Tunisia • Exporting to Tunisia • On the basis of the Association Agreement Tunisia is looking for preferential status within the EU, i.e. “partenariat privilégié”. • The most used method of payment in Tunisia is letter of credit - international transfer and documentary remittance are also possible. • Investing in Tunisia • Good investment and business environment (69 th out of 183 countries in WB’s Doing Business 2010) and fairly good banking system. • Offshore advantages in taxation e.g. full tax exemption on exports-derived profits for the first 10 years and taxation at a low rate of 10% after this period of ten years for the life of the company. • Tunisia continues to attract Foreign Direct Investment (FDI). Partnership plays a major role as nearly half of foreign companies have mixed capital; they are associated with Tunisians in joint venture. • Corruption • In 2010 Tunisia was ranked 59th out of 178 countries in the Corruption Perception Index, ahead Greece, Italy and Romania, as well as most Arab and African countries. • Travel & safety issues • No visa needed for Finns staying less than 3 months • Safe country for foreign people, yet cultural issues must be considered12.10.2011 © Finpro 13
  • Tunisia Tunisia in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • Tunisian ICT market • Ministry of Communication and Technologies (Ministry of Industry and Technology at present) is responsible for ICT sector development in Tunisia • 1st country in Africa having an ICT based national strategy • Government is promoting the use of technology in administration and education: e- government, e-learning • Tunisia will be a member of Board of Directors of the International Telecommunications Union (ITU) 2011-2014 • Tunisia has positioned itself as a regional high-tech centre of the Maghreb countries  emphasis on software technologies and services • Global Information Technology report 2010-2011: Tunisia is the 35th out of 138 countries, 1st in Africa and in Maghreb (and gained 4 places from the previous year) • During recent years ICT sector has experienced strong growth. Sector accounted for 11.4 % of GDP in 2009 and attracted EUR 2.1 billion for 2007-2011. Sources: Tunisiaonlinenews.com 13.10.2010 , OBG: the report - Tunisia12.10.2011 © Finpro 15
  • Tunisian ICT market • Technoparks • Three technoparks focused on telecommunications and IT, Elgazala Technopark in Tunis is the biggest one Wide range of big international companies, as well as local and foreign SMEs (e.g. Stonesoft) operating in Elgazala Elgazala forms a synergy between research, training, industry and private sector with research units, training establishments and an incubator for start-ups • Over 1 800 private ICT firms are operating in the field of software design and management, systems integration, distribution and retail, and internet service provision12.10.2011 © Finpro 16
  • ICT in general population Tunisia Finland Mobile phone penetration 106 % (2010) 156 % (2010) rate Fixed telephone lines as a 12 % (2010) 23 % (2010) % of population Internet users as a % of 38 %* (May 2011) 87 % (2010) population Households owning a 15.7 % (2009) 85.4 % (2010) computer * About 75 % ADSL subscriptions12.10.2011 © Finpro 17
  • ICT usage evolutions 90 80 70 60 50 Finland 40 30 Tunisia 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Internet users as a % of population 160 60 140 50 120 40 100 80 30 Finland Finland 60 20 Tunisia Tunisia 40 10 20 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mobile phone penetration rates in % Fixed telephone lines as a % of population12.10.2011 © Finpro 18
  • ICT in organizations • 90% of Tunisian companies connected to the Internet (2009) • 47% of companies have their own website • Rankings in the WEF Global Information Technology Report • Firm-level technology absorption, 33 out of 139 countries • Extent of business internet use, 64 / 139 • Government ICT use, 16 / 139 • Improved competitiveness through ICT at the heart of Tunisia’s national Enterprise Upgrading Program (2009-2010) • The program covers a good share of corporate ICT adoption costs by paying for up to 50 percent of computer hardware costs, 70 percent of software costs, and 70 percent of some technical assistance costs • Software acquisitions supported include: management, technical, collaborative and document management as well as networking softwareSource: WEF GITR 12.10.2011 © Finpro 19
  • Tunisia Tunisia in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • Telecom market • Fierce competition • Three operators, Tunisiana, Tunisie Télécom (TT) and Orange, competing in a market with the mobile subscription penetration rate at 106 % (2010) • TT losing customers to Orange the current trend, Tunisiana holding its position • Market dominated by pre-paid subscriptions • Big changes and demand for applications ahead with the extension of the 3G offering in 2011. Orange is already holder of 3G licence. TT has also got a 3G licence and started to offer 3G services in July 2011. Tunisiana expects to have its 3G licence in November 2011. • Orange to challenge TT in the fixed-line and broadband market • TT’s fixed-line monopoly over since the entry of Orange • TT has however control of substantial tranches of Tunisia’s telecoms infrastructure • TT around 470.000 ADSL subscriptions against Orange’s around 36.000 3G subscriptions (9/2010) • Both TT and Orange offer WiMAX and VSAT services • Tunisia has participated in pan-African RASCOM initiative intergovernmental commercial satellite enterprise12.10.2011 © Finpro 21
  • Telecom operators Tunisie Télécom Tunisiana Orange Launched 4/2010 Activities Fixed, Mobile (2G, 3G), Mobile (2G) Fixed, Mobile (2G, 3G), Broadband, Satellite Broadband, Satellite Market share 41.4% (mobile) 53.3% (mobile) 5.3% (mobile) Number of mobile 4.5 million 5.8 million 600.000 clients Turnover (2009) N/A € 512 million N/A Revenue per N/A € 7.96 N/A mobile user (monthly, Q409) Ownership Tunisian state (65%) and Wataniya Telecom (50%) Divona Telecom (51%) and Dubai Investment Group, and a consortium of France Telecom (49%) TECOM-DIG / Emirates Wataniya and Princesse International Holding (50%) Telecommunications EIT (IPO planned for 2010) (35%)12.10.2011 © Finpro 22
  • B2B solutions and services • Characteristics of the demand • IT landscape highly dominated by software • Key activities are software development (financial, management and industry purposes), tailored information systems (private and public sector), integrated systems (ERP), and business process outsourcing • Big demand in mobile applications, device to device applications and M2M solutions with the extension of the 3G offering in 2011 • Sectors with demand for applications - telecom operators - government, institutions and agencies - health - tourism - transport (road security) - payment - agriculture - education - mobile banking and finance - post services • WAP services, LBS, business solutions and integration12.10.2011 © Finpro 23
  • B2B solutions and services • Challenges for local players • Services and applications still marginal markets in Tunisia, lack of local expertise and thus foreign technical assistance needed • Tunisian consumers are used to have access to free content • Lack of project management skills and quality of services • Market opportunities • All the mobile operators and the Ministry of TLC are together planning a multi-OS platform for piloting 3G and LTE • Deployment of 3G network and LTE presents a huge need for middleware solutions and mobile consumer/enterprise applications • Applications like Vodafone’s M-Pesa and Orange Money in Kenya (mobile money transfer services) might become a killer application, as a half of the population does not have a bank account • At the moment mobile payments for third party services or mobile money transfers (mobile wallets) are not allowed by the regulator. Currently only banks are allowed to transfer money • TunisieTélécom already has a mobile payment platform to be used after the de- regulation will happen • Orange has announced that it will launch MobileMoney by the end of 201112.10.2011 © Finpro 24
  • B2B solutions and services • The Tunisian dinar is expected to become freely convertible in 2014. This means a big change for the banking sector and puts pressure to find adequate solutions for e-banking. It also presents a step towards further internationalisation of the country • Most interesting projects are in the public sector, such as e-government, e-health and e-learning12.10.2011 © Finpro 25
  • Media • Foreign investment in the Media was allowed in 2008, although media legislation is governing both content and financing • TV & radio • TV penetration rate 88.1 % (2009) • 77 % of Tunisians have access to satellite dish (regional & international channels). Private sector is gaining ground in terms of audience share (e.g. Nessma TV, Hannibal TV) • Tunisian Radio & Television establishment broadcasts Tunisia’s public channels • Tunisian TV network is expected to be fully digitalized in the end of 2010, goal: 100 % Digital Terrestrial Television coverage by the end of 2015 (Office National de Télédiffusion, ONT is in charge)  Opportunities for private companies • Online Media • Online media is growing rapidly, and the adoption of mobile internet will drive the growth of online content12.10.2011 © Finpro 26
  • Software & SI companies 1 2 3 OXIA Telnet Consulting, software Product engineering and SunGard engineering and services for consulting company in innovation Multinational provider of banking, finance and telecoms and advanced technologies software and IT services sectors 4 5 HR Access Vermeg Development and integration of Private limited liability corporate products for Tunisian market. entity specialized in financial Software maintenance and software update. HQ in France12.10.2011 © Finpro 27
  • Tunisia Tunisia in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • Business models • ISV (Independent Software Vendor) is the dominating business model • Most locals not ready for SaaS (Software as a Service) • Offshore advantages • Tunisia offers a number of advantages to foreign companies: - fiscal benefits for export-oriented firms - produced goods can be exported to third countries - research and development capacity • Outsourcing • Good location for business process outsourcing because of the highly educated, underemployed human resources and lower cost structures • Regulations for the ownership of foreign companies • If you sell products manufactured abroad, a joint venture with minimum 51% of Tunisian ownership is needed • Rep office can be totally owned by a foreign company (e.g. Stonesoft) • Support units, R&D units and Service units can be totally owned by a foreign company12.10.2011 © Finpro 29
  • Tunisia SWOT Strengths Weaknesses • Good business environment • High education level and good ICT • ICT sector dominated by public skills tendering processes which are difficult • Developed and functioning for foreign companies infrastructure • Political dimension of the business is • Well developed outsourcing and still high offshore activities • Limited market in size • Gateway to other African countries Opportunities Threats • Operators looking for concrete solutions to leverage their 3G investments • Developing a sustainable business (platforms, services) takes time • First democratic elections at hand • Competition is getting fiercer12.10.2011 © Finpro 30
  • Morocco Morocco in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • Kingdom of Morocco Population 31,5 million (50% less than 25) Area 446 550 km2 (excl. W. Sahara) Capital Rabat (largest city Casablanca) Languages Arabic (French, Berber) Currency Moroccan Dirham (1€ ≈ 11MAD) GDP €65 446 million (per capita €2 076) Minimum salary 0,90 € per hour Government Constitutional monarchy Sources: Haut-Commissariat au Plan, Chiffres Clés 2009; HCP Recensement 2004.12.10.2011 © Finpro 32
  • Economic indicators 2009 2008 Evolution of GDP/Capita in € 2500 Unemployme 9,1% 9,6% 2000 nt 1500 GDP growth 4,9% 5,6% 1000 Growth of 500 primary 29% 16,6% 0 sector Growth of secondary - 4,7% 3,6% sector Moroccan GDP per sector Growth of Primary 3,9% 4,1% 16 % tertiary sector Tertiary FDI & private 55 % 2 367 M€ 3 137 M€ Secondary loans 29 % Transfers 4 465 M€ 4 717 M€ from migrants Income from 4 696 M€ 4 938 M€ Sources: HCP, Direction de la statistique 2009; tourism Office des Changes.12.10.2011 © Finpro 33
  • Trade • Growing trade deficit • Imports 2,5 times larger than exports • 60% of Moroccan exports from • Raw and processed phosphates (acids & fertilizers) • Cloth and footwear • Food products (mostly fresh and processed fish, fruits and vegetables) • 46% of Moroccan imports are capital goods and energy • Rising share of capital goods (from 22 to 25%) and consumer goods (from 16 to 20%) Sources: Office des Changes12.10.2011 © Finpro 34
  • Trade Evolution of Moroccan trade Main exports (in MMAD) 350 000,00 180 000 300 000,00 160 000 140 000 250 000,00 51 394 Phosphate Value in MMAD 120 000 products 200 000,00 Cloth & Footwear 100 000 18 810 Exports 27 877 150 000,00 Food Imports 80 000 26 536 26 164 Electrical 100 000,00 60 000 machinery 23 961 14 328 Others 40 000 12 316 50 000,00 20 000 35 976 30 343 0,00 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2008 2009 Sources: Office des Changes12.10.2011 © Finpro 35
  • Trading partners • In 2009 EU countries received 65,6% of Moroccan exports and supplied 56,4% of its imports • France and Spain are the main trading partners • 24,5% of Moroccan exports and 15,7% of imports for France; 21,2% of exports and 12,1% of imports for Spain • China is now its 3rd largest supplier, ahead of USA, with respectively 7,8% and 7,1% of Moroccan imports • Finland represented 0,65% of Moroccan exports and 0,53% of its imports • Finnish exports to Morocco were 78 M€ and imports 19 M€ • Wood & paper (50%) and electric devices (21%) were the main exports • Clothes (37%) and phosphates (33%) were the main imported products Sources: oc.gov.ma; Tulli.12.10.2011 © Finpro 36
  • Trading partners Morocco Main Clients Morocco Main Suppliers Europe Asia America Africa Others Europe Asia America Africa Others 7% 5% 7% 13 % 14 % 60 % 70 % 22 % Sources: oc.gov.ma; Tulli12.10.2011 © Finpro 37
  • Key Moroccan companies 1 2 3 Groupe ONA Samir Maroc Telecom turnover 2009: 3 393 M€ turnover 2009: 2 637M€ turnover 2009: 2 055 M€ Oil refining and distribution Former state-owned Holding company with a company owned by the Saudi monopoly, now a subsidiary of portfolio of 20 firms in Corral Group the French group Vivendi distribution (Optorg), food industry (Lesieur Cristal), mining (Managem), telecom (Wana) and finance (Attijariwafa Bank) 4 5 Listed in Casablanca and Paris stock exchange, with Akwa Group Groupe OCP international subsidiaries turnover 2009: 1 800 M€ turnover 2009: 1 787 M€ mainly in Africa State-owned company with the Holding company which main monopoly of phosphate mining and activity is gasoline retail (gas processing stations Afriquia) Largest Moroccan exporter (17% of Its portfolio includes media, real Morocco exports in 2009 and more estate, car parts companies than 30% in 2008) Sources: Corporate websites; les500.com. c12.10.2011 © Finpro 38
  • Development policy • The King has set 2 main objectives: • developing the economy around the sectors where Morocco has some competitive advantages • reducing Morocco’s energy dependence • 2 programs define the strategies: • National Pact for Industrial Emergence 2009 – 2015 • Combines tax incentives for investors, training, modernization measures for the institutions and regulation, financial assistance to SME and creation of industrial integrated platforms • 6 sectors, defined as the 6 World Crafts of Morocco are targeted by the program: • Off shoring (see also Maroc Numeric 2013) • Automotive • Aeronautic & Space industry • Electronics • Textile & leather • Agribusiness • Investment plan of 10 billion € over 10 years in renewable energies • Morocco currently imports 95% of its energy. The objective is that wind and solar energy would generate 42% of its energy by 2020 ´Sources: emergence.gov.ma; Ministère de l’Energie, des Mines, de l’Eau, et de l’Environnment, mem.gov.ma12.10.2011 © Finpro 39
  • Doing business in Morocco • Exporting to Morocco • Tariffs are applied on many imported products • Investing in Morocco • Morocco is highly accommodative to foreign investors • Creation in 2009 of the Moroccan Investment Development Agency (AMDI), under the Ministry of Industry, Trade and New Technologies • Designed to inform and assist foreign investors throughout the different phases of their project • Corruption • In 2009 Morocco ranked 89th out of 180 in the Corruption Perception Index scoring 3,3*, below the world’s average (4) and median (3,35) • Morocco has set up a commission and voted several laws to fight corruption • Travel & safety issues • No visa required to enter the country • No particular risk Sources: AMDI; Transparency International; business-anti-corruption.com *The country ranking 1st is the least corrupt., New Zealand in 2009, scoring 9,4.12.10.2011 © Finpro 40
  • Morocco Morocco in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • ICT sector in the economy • Current general situation • The ICT sector currently employs 32 000 people in Morocco • 5 to 7 000 of these jobs are pure IT (such as software developers, programmers) • 20 000 jobs work in client relation in call centers • 5 000 jobs in IT business development, marketing… • ICT generates 3 700 M€ • Excluding telecom, the sector generates 628 M€ • IT offshore activities has grown 270% faster than anticipated • Altogether offshore activities generate a turnover close to 75 M€ • To develop the ICT sector, in 2009 the government has launched the Maroc Numeric Plan • Combines state-sponsored projects, investments in education, tax incentives for R&D and FDI, and the creation of clusters Sources: Maroc Numeric 2013; Apebi12.10.2011 © Finpro 42
  • ICT sector in the economy • Main objectives of the Maroc Numeric Plan by 2013 • Develop the domestic demand by boosting the use of IT in households, companies and schools • 20% of schools now have an internet access. The objective for 2013 is 100% • Create 26 000 additional jobs • Gain productivity in all sectors, adding 1 800 M€ to the GDP • Multiply by 7 the revenues generated by the IT offshore activities Sources: Maroc Numeric 2013; Apebi12.10.2011 © Finpro 43
  • ICT sector in the economy • Morocco to focus on the following sectors and around which specific techno centers are being built: • Multimedia • Software development • BPO • Mobile application • On-board electronic equipment • Moroccan ICT sector is expected to grow 10% annually for the coming years • In addition to the rise of a few local champions, this potential has already attracted most of the French leading ICT firms (telecom operators, software and consulting firms) Sources: Apebi12.10.2011 © Finpro 44
  • ICT in general population Morocco Finland Mobile phone 96,79% 144,59% penetration rate Fixed telephone lines 10,99% 26,85% as a % of population Internet users 32,19% 84,14% as a % of population PC 2,50% 50% penetration rate Sources: For the table, International Telecommunication Unions ICT Eye –database ; ANRT Sept. 2010 for Mobile Penetration rate; Union Internationale des Telecoms.2009 figures. Other data, Apebi survey, conducted in 2007.12.10.2011 © Finpro 45
  • ICT in general population • 30% of households have a fixed telephone line • Internet penetration rate is around 5% • 70% of connections are 3G and 30% ADSL • 17% of households have a PC (16% of which have a laptop)’ • The barriers for Internet and PC penetration rate in households are: the price, the absence of need and analphabetism issues Sources: For the table, International Telecommunication Unions ICT Eye –database ; ANRT Sept. 2010 for Mobile Penetration rate; Union Internationale des Telecoms.2009 figures. Other data, Apebi survey, conducted in 2007.12.10.2011 © Finpro 46
  • ICT usage evolutions Internet users as a % of the population 90 80 70 60 50 Morocco 40 Finland 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: International Telecommunication Unions ICT Eye –database, 2009 figures.12.10.2011 © Finpro 47
  • ICT usage evolutions Mobile phone prenetration in Fixed telephone lines as % of % population 160 60 140 50 120 40 100 80 30 60 20 40 10 20 0 0 2009 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2003 1999 2000 2001 2002 2004 2005 2006 2007 2008 2009 Source: International Telecommunication Unions ICT Eye –database, 2009 figures.12.10.2011 © Finpro 48
  • Basic corporate hardware Entreprises du Kompass Companies with an Internet connection (in %) Entreprises du Kompass Computers / employee ratio 100 90 91 88 88 90 0,60 0,48 0,50 80 0,50 70 0,40 0,37 0,40 60 % 50 0,30 40 0,20 30 20 0,10 10 0,00 0 2004 2005 2006 2007 2004 2005 2006 2007 Répartition par secteurs Connected companies per sector (in %) Computers /Répartition par secteurs per sector employee ratio 100 96 88 90 1,00 0,90 90 80 0,90 80 0,80 70 0,70 0,56 60 0,60 0,50 % 50 0,37 40 0,40 0,30 30 0,16 0,20 20 0,10 10 0,00 0 Sect.Techno. ICT Sect. Primaire Primary Sect. Indus/Constr. Ind/Const Sect. Serv./Transp. Service Sect.Techno. Sect. Primaire Sect. Indus/Constr. Sect. Serv./Transp. ICT Primary Ind/Const Service Source: Apebi Survey, 2008.12.10.2011 © Finpro 49
  • Basic corporate solutions Companies with an intranet Companies with a website (in (in %) %) per sector per sector 39 % 49 % 35 % 21 % 28 % 14 % 15 % 19 % ICT Primary Ind/Const Service ICT Primary Ind/Const Service Source: Apebi Survey, 2008.12.10.2011 © Finpro 50
  • e-Commerce Companies buying online (in Companies selling online (in %) %) per sector per sector 12 % 5% 4% 8% 7% 3% 5% 0% ICT Primary Ind/Const Service ICT Primary Ind/Const Service Source: Apebi Survey, 2008.12.10.2011 © Finpro 51
  • Morocco Morocco in brief Market characteristics Ecosystem & main players Business modelsTunisia
  • ICT professional associations • APEBI • Federation set up in 1989 • 340 members representing more than 90% of Moroccan ICT sector • Oldest and most powerful ICT federation in Maghreb • Works with the government which contributes to its budget • Since 2009 has organized every year a professional fair called Mitex (Maghreb IT Expo) • Designed as a deal-making event with workshop and meetings for decision makers • Next edition in February 2011 focused on the following themes: e-cities, infrastructure, software development, cloud computing, e-health and energy • Can organize meetings for Finnish IT companies if there is a local interest12.10.2011 © Finpro 53
  • ICT professional associations • AMECSEL • Association set up in September 2009 to promote the development of e-commerce in Morocco • 40 members • Organizes promotional events in the country to inform local companies about the interest of e-commerce • Received subsidies from the Canadian state organization CIDE provide e-business specific trainings in Morocco • Can also arrange meetings for Finnish companies12.10.2011 © Finpro 54
  • Telecom market • 2nd largest market in Africa for telecoms • 5% average annual growth over the past 10 years • 9,6% growth expected for 2010 • French companies in 2 of the 3 local telecom operators • Former state-owned monopoly and market leader Maroc Telecom (MT) is controlled by Vivendi • France Telecom acquired in September 2010 40% of the 2 nd largest operator, Meditel • Mobile penetration rate expected to reach 100% by 2011 • Current market penetration around 97 • Fierce competition for mobile clients • Inwi (Wana) gained1,5 million clients between June and September 2010 • Aggressive pricing strategies have led to a drop in the average revenue per user, but gross margins remain comfortable (57% for MT and 43% for Meditel) • MT international mobile subsidiaries are now growing faster • The Internet market is still up for grabs • MT is the leading broadband provider, with Wana far behind • But 3G-based offers appear better suited for a large scale development Telecom marketTelecom marketTelecom market.12.10.2011 © Finpro 55
  • Telecom operators Maroc Télécom Meditel Inwi (Wana) Activities Mobile, fixed line, Mobile, fixed line Mobile, fixed line, broadband internet broadband internet Market share 55% (mobile) 35%(mobile) 10% (mobile) 43,42% (fixed) 0,24% (fixed) 56,35% (fixed) 80% (ADSL) 21% (3G) 20% (ADSL) 36,3% (3G) 42,7% (3G) Number of mobile 24 million 10,7 million 1 million clients Net revenue 1 400 M€ 465 M€ 143 M€ (in 2009) Revenue per 9€ 5,2 € 9,8 € mobile user (monthly) Ownership Vivendi (53%), State (30%), France Télécom (40%), ONA Groupe (69%), Zain Free float(17%) Financecom, RMA Watanya and Aijal Holding from and Fipar Holding from Kuwait (31%) Morocco (32,18%), Caisse des Dépôts et de Gestion (27,82%) Source: Les Echos, 11.2010 (Sept. figures); Corporate websites.12.10.2011 © Finpro 56
  • IT solutions market • Today’s leading IT solution providers in Morocco have emerged from the needs of the local subsidiaries of French IT companies • Nearshore outsourcing started 15 years ago with call centers, then continued with ITO and now moves towards BPO • Local IT skills have progressed along the way • Leading local players have built strong competences in secured data transfer • All are SME with less than 250 employees set up more than 10 years ago • Software editors are also consultants and integrators • Outsourcing and e-government projects represent the majority of the demand • Development of new techno-centers further boosts demand • Government keeps on investing in e-administration projects • Local SME have a priority access to these projects • Tax and social security declarations can already be made online • Projects from telecom operators, banks and tourism sector make the rest of the demand • Local SME lack the resources and the skills to equip themselves • Maroc Numeric Plan has a 10 M€ budget to subsidize IT equipments for SME (for both hardware and software, mainly ERP) Source: Apebi, Amecsel and Casanearshore interviews12.10.2011 © Finpro 57
  • IT solutions market • For foreign IT service and system integrators, 70% of their turnover comes from export and 30% from projects in Morocco • As most of these foreign companies are French, France and French speaking countries are the main clients • Spain is also covered, mainly from Tangier area • French-speaking African countries are becoming important clients as well • Morocco has signed cooperation agreements with many Sub-Saharan countries to create free trade zones and student exchange programs • Morocco thus positions itself as the gateway to Africa for European companies • In general, open-source based solutions are favored in Morocco • Emergence of a demand for smartphone applications • With the arrival of smartphones on the market large companies become more interested in developing their own applications • Banks, airlines and media are the main clients • There are 2 local companies on this embryonic market • Media Mobility, that also provides a solution to easily develop an application • MobiBlanc, that mostly focuses on the offshore markets • In Morocco, the development of an application takes 2 months and costs around 9 000 € Source: Apebi, Amecsel, Media Mobility interviews12.10.2011 © Finpro 58
  • Key IT solution providers Profile Expertise HQ Exports Infrastructure & Networks, Integration, Payment Systems & Finatech Casa Nearshore Yes consulting Security, Services & Offshore activities Software, Electronic payment HPS integration, Casa Nearshore Yes systems consulting ERP for finance, real Software, estate, utility and telecom Involys integration, Casablanca Yes sectors with a focus on consulting portable devices Software, Secure e-transactions M2M integration, Casablanca Yes solutions consulting Integration, Omnidata Generalist Casablanca No consulting Integration, Secure communication Sigmatel Casablanca No consulting infrastructure Source: Corporate websites12.10.2011 © Finpro 59
  • e-Commerce • e-commerce represents nearly 30 M€ in 2010 • In 2008 it barely reached 3 M€ • Most of the transactions are done in 3 sectors • Telecom (Maroc Telecom and Meditel offer the possibility to recharge pre-paid lines and pay bills online) • Online flight bookings (85% paid by credit card) • Utility (water and electricity company Lydec to manage and pay for services online) • There are between 160 and 450 e-commerce sites in Morocco • The 160 are those using the only local online payment platform, Maroc Télécommerce (MTC), and accept credit card payments • The others use other payment solutions such as PayPal, bank transfer or cash payment on delivery • MTC has a de facto monopoly as the only online payment platform for Moroccan website • Set up by the leading private banks in Morocco • According to Amecsel there would be room for another platform • The main difficulties faced by e-commerce come from the local logistics, still dominated by the informal sector Source: Amecsel interview12.10.2011 © Finpro 60
  • Hardware • Morocco is not a cheap mass-manufacturing site of IT hardware • It focuses on high-end, high value added components • The country hosts manufacturing sites of leading aerospace multinationals • EADS, Boeing, Zodiac Aerospace and Safran Engineering • For future development, the country targets few niche markets where it has some experience and qualified personnel • High value added electronic components • Onboard aerospace equipments • Nemotek illustrates Morocco’s plan to develop its own players • Nemotek Technologies was set up in 2008 in Rabat Technopolis Park, with funds from the State’s investment bank Caisse de Dépôt et de Gestion (CDG) • It manufactures customized wafer-level cameras for portable applications • Its facilities include the first certified Class 10 clean room in Africa • Disway is the largest importer of components and software • Turnover of 152 M€ in 2009 • 240 employees • Offices in Casablanca, Rabat, Agadir and Tunis12.10.2011 © Finpro 61
  • International players • Finatech • Offices in Paris, Los Angeles and Dubai • HPS • Office in Dubai • Involys • Office in Tunis, partnership with the Romanian company Siveco in Central Europe • Maroc Telecom • Majority shares in telecom operators in Mauritania, Burkina Faso, Gabon and Mali • M2M Group • Offices in Paris, Cairo, Dubai and partners around the globe12.10.2011 © Finpro 62
  • Media • Television is still monopolized by the state • Société Nationale de Radiodiffusion et de Télévision (SNRT) dominates the two local television networks • The most popular channels are 2M (SNRT channel with a 32,2% audience share), Al Aoula (18,8%) and Al Jazeera (7,8%) • Satellite television is widespread (66,2% penetration) and challenges the state broadcasting monopoly • Competitive international channels offering high-quality television produced with greater budgets • Radio is a more dynamic segment with some thriving private stations • 7 new private licenses in 2007 and 4 more in 2009 • The private stations have quickly become popular as the audiences have begun to have higher standards for radio programs Sources: OBG The Report 200912.10.2011 © Finpro 63
  • Media • The market for written press is growing and becoming more diverse • There are currently 59 publications in (Arabic and French) • However, only 1% of the population reads newspapers (partly due to high illiteracy) • The leading privately owned newspapers are Le Matin, L’Economiste, L’Opinion, Aujourd’hui Le Maroc and Bayane al-Yaoume • Growing audience of local websites still lag behind international domains • Leading websites include local newspapers’ and discussion forums like yabiladi.com and emarrakesh.info • French video sharing site Dailymotion.com launched its .ma domain in October 2010 • The Higher Authority for Audiovisual Communication monitors the media and media freedom is still a challenge Sources: OBG The Report 200912.10.2011 © Finpro 64
  • Advertising • Total advertising spending in Morocco was €378m in 2008 • The country accounts for 62,6% of all the ad spending in Maghreb • But low per capita spending by international standards ($17,70 per capita in 2008) • Maroc Pub Media (MPM) manages all advertising for the state-owned broadcasting company SNRT • Television is the most important advertising medium although its market share is in decline • Accounted for 47% of spending in 2008 against 60,5% in 2006 • Radio advertising has experienced growth since the granting of private radio licenses • An important medium for SME’s and local firms • The biggest ad spenders are the three telecoms companies, followed by international retail and food companies • Maroc Télécom’s ad spending was $55.1m, whereas the largest non- telecoms company was P&G with $15.3m spent (2008) • Advertising companies in the country include local companies and branches of international ad giants such as JWT and Leo Brunett Sources: OBG The Report 200912.10.2011 © Finpro 65
  • Advertising Advertising revenues per medium Radio 11 % Outdoor 20 % TV 47 % Sources: OBG The Report 2009 Press 22 %12.10.2011 © Finpro 66
  • Advertising: Internet • Internet advertising has not yet been able to grow to match the more traditional advertising channels • In 2008 it earned €3.15m in revenues • Its share of ad spending is considerably lower than the global average • Due to relatively low Internet connectivity only the most popular websites are profitable platforms for advertising (Google, Youtube, Yahoo..) • However, the Internet does have growth potential as an advertising media • Revenues more than doubled between 2007 and 2008 • The number of households having a PC and an Internet connection seems to increase during the next 5 years, so as to make Internet a competitive media • Over 50% of the country’s population is less than 25 years old, and thus Internet has potential to reach a considerable youth demographic Sources: OBG The Report 2009, www.developingtelecoms.com12.10.2011 © Finpro 67
  • Advertising: Internet • AdWebMaroc is the first and leading Moroccan Internet advertising agency • Got the exclusivity of ad management for the Moroccan version of the video sharing site Dailymotion.com • Wana, BMCE Bank, Nokia and Méditel are the biggest Internet advertisers • Advertisement targeting Moroccans on global websites such as Facebook • Mobile application use and SMS advertising have experienced growth • Mobile numbers are public which facilitates SMS advertising • 54% of the country’s 1m Internet subscriptions are for mobile Internet • Mobile applications are emerging • E.g. Maroc Telecom launched MobiCash, a mobile banking service in 2010 Sources: OBG The Report 2009, www.developingtelecoms.com12.10.2011 © Finpro 68
  • Movie industry • Ouarzazate is a noted filmmaking site in Morocco • Has been a filmmaking location already for 50 years, most notably for many Hollywood feature films • In 2009, 862 filming licenses were sold to Moroccan filmmakers and 545 to foreigners (out of which 17 were feature films) • A hub of filmmaking-related activities has developed in the area • The film-industry is the town’s main employer • Pre- and postproduction diversified services are offered • A number of film schools are situated in the area • Investments aimed at making Ouarzazate a competitive international filmmaking location • A willingness to offer an experience similar to e.g. Warner Brother Studios in Hollywood • Government will invest 4,3 M€ by 2016 • Plans to expand yearly production of feature films to 38 per year • This would translate into 8 000 more jobs and a yearly revenue of €180 million • The plans include equipping the area with transportation, health care services, conference facilities and lodging for crews Sources: Moroccan Cinema Center, http://www.journeybeyondtravel.com12.10.2011 © Finpro 69
  • Morocco Morocco in brief Market characteristics Ecosystem & main players Business models
  • From Call Centers to BPO • Nearshoring of French companies to Morocco started in 1990s with the set up of call centers • There are now around 185 call centers for French and Spanish markets • Major telemarketing companies have established centers such as: • Sitel • Teleperformance • WebHelp • ITO started 10 years ago • Large IT Consulting companies have outsourced some software development and maintenance activities, like: • Atos Origin • Accenture • CapGemini • GFI • Now development of BPO (human resources in particular) • Early in 2010 the government adopted a new legislation to enable BPO • Essentially about data confidentiality • A regulatory body is being established to enforce the legislation • Plans to develop outsourcing services in Italian, German and English Source: MEDZ interview12.10.2011 © Finpro 71
  • Business parks • 4 business parks host nearshoring activities • Rabat Technopolis is operational but isn’t completed yet • 5th business park is being built in Fez • Another project planned in Marrakech • All business parks are developed and managed by state-controlled organizations • Caisse de Dépôt et de Gestion, through its subsidiary MEDZ is the most important, financing all projects except in Tangier • Tanger Free Zone is managed by TMSA, the state organization in charge of the entire Tangier harbor area project • Casanearshore is the only park focused exclusively on nearshoring activities (ITO and BPO) • Tanger’s focus is nearshoring to Spain • Technopolis’ focus is R&D Source: MEDZ interview12.10.2011 © Finpro 72
  • Business opportunities • As the activities carried out are becoming more advanced, diverse and complex so do the needs • Local demand for Infrastructure & networks management solutions, ERP and CRM is bound to rise along with nearshoring activities • Nearshore business parks have specific needs • Particularly in telecom infrastructure, networks capacity and security • Oteo (a subsidiary of Inwi) is dedicated to offshore activities companies, building and maintaining their telecom infrastructure • Oteo is the telecom operator serving Casaneashore • Interest for companies operating in Southern Europe • Tata Consulting Services established an ITO center in 2007 for its activities in French and Spanish European countries12.10.2011 © Finpro 73
  • Morocco SWOT Strengths Weaknesses • Stable and open country with pro- • Morocco is still a developing country business authorities with a large share of poor, rural and • Skilled, experienced and English- illiterate population speaking personnel • Difficult access to large public projects: • Thriving private sector with a sizable relations and local partners are number of SME and large corporations necessary as potential clients Opportunities Threats • State-sponsored projects and nearshoring activities create new and more complex needs • Increasing competition from local and • All solutions related to data transfers foreign companies will keep on growing • A gateway to French-speaking African countries12.10.2011 © Finpro 74
  • Algeria Algeria in brief Market characteristics Ecosystem & main players Business models
  • Algeria (Peoples Democratic Republic of)Population35,7 million (47% less than 25)Area 2 381 741 km2 (2nd largest in Africa)Capital Algiers (largest city in Maghreb)Languages Arabic• (French, Berber)Currency Algerian dinar (DZD) (1€ ≈ 100 DZD)GDP €80 368 million (per capita €2 b520) Main cities: Algiers (3,5 m inhabitants), Oran (0,77),Min wage 15 000 DZD / month Constantine (0,5), Annaba (0,38), Batna (0,31) Sources: ANDI Investir en Algérie 2010; ONS; UNGovernment Presidential Republic World Population Prospects 2010. Map © CIA World Factbook12.10.2011 © Finpro 76
  • Economic indicators Share of Oil & Gas sector in GDP 50,00 % 45,00 % 40,00 % 35,00 % 30,00 % 25,00 % Sectoral distribution of active 20,00 % population 15,00 % 10,00 % 5,00 % 13 % Agriculture 0,00 % Industry 2001 2002 2003 2004 2005 2006 2007 13 % Construction 56 % Tertiary 18 % Sources: ONS; IMF 2.2010; Ministére de la PME et de l’Artisanat; ANDI12.10.2011 © Finpro 77
  • Economic indicators Investment projects in 2008 (in M€) 16 000,00 14 000,00 12 000,00 10 000,00 8 000,00 6 000,00 4 000,00 2 000,00 0,00 Domestic FDI Foreign and domestic joint-venture Sources: ONS; IMF 2.2010; Ministére de la PME et de l’Artisanat; ANDI12.10.2011 © Finpro 78
  • Trade • 2009 trade balance surplus was 88% lower than in 2008 • Exports represented 112% of imports while they reached 201% in 2008 • Oil & gas represented 97,6% of Algerian exports • Hydrocarbon exports fell by 44% • Other products exports fell by 46% • Mostly half-finished chemical products and raw materials • The 15% increase in capital goods imports offset the drop from other imports • Cereals, metal parts for construction, vehicles and medicines are the most imported product groups, representing almost 30% of imports Sources: CNIS, Statistiques du Commerce Exterieur de l’Algérie, 2009.12.10.2011 © Finpro 79
  • Trade Algerian Trade Algerian Imports (in M€) 70 000 Capital goods Intermediate goods 60 000 Consumer goods 50 000 Food 40 000 30 000 2008 20 000 2009 15 % 10 000 39 % 16 % 0 30 % Sources: CNIS, Statistiques du Commerce Exterieur de l’Algérie, 2009.12.10.2011 © Finpro 80
  • Trading partners • EU countries absorbed 53,4% of Algerian exports, and supplied 52,8% of its imports • Other OECD countries represent 31,5% of Algerian exports and 16,3% if imports • Finnish exports to Algeria reached 108 M€ in 2009 • Represents 0,2% of total Finnish exports and 0,003% of Algerian imports • 60% of Finnish exports were wood, pulp and paper; boilers and generators 23%; Electric machines and devices 14% • Imports were 139 000 € Sources: CNIS, Statistiques du Commerce Exterieur de l’Algérie, 2009. Tulli.12.10.2011 © Finpro 81
  • Trading partners Algeria Main Clients Algeria Main Suppliers USA France China 21 % 16 % 12 % Others 36 % Others 48 % Italy Italy NL 14 % 9% 6% Spain Germa Spain France 8% 12 % ny 11 % 7% Sources: CNIS, Statistiques du Commerce Exterieur de l’Algérie, 2009. Tulli.12.10.2011 © Finpro 82
  • Key Algerian companies 1 2 3 Groupe Sonatrach Djezzy / OTA Cevital Africa1stoil & gas company Leading telecom operator Diversified private company with World 13th largest oil company Subsidiary of Orascom (Egypt) activities including food, (reserve and production) acquired in October 2010 by distribution, construction, media State-owned, monopoly Vimplecom (Russia) and telecom Turnover: 34 547 M€ Turnover: 1 349 M€ Turnover: 1 156 M€ 4 5 Sonelgaz Algérie Telecom Electricity and gas distribution Former monopoly State-owned State-owned Turnover: 1 342 M€ Turnover: 585 M€ (Est.) Sources: Corporate websites; Jeune Afrique.com12.10.2011 © Finpro 83
  • Development policy • The president and the government strive to diversify the economy and develop the local industry in order to: • Reduce the dependence of the economy on hydrocarbon exports • Create jobs for the young Algerians • 21,3% of Algerians between 16 and 24 are unemployed, representing 43,6% of the jobless • In 2010 launch of the Five-Year Plan of Public Investments • 206 000 M€ to be invested between 2010 and 2014 • 94 000 M€ to complete projects initiated during the previous five-year plan • 112 000 M€ for new projects • Largest share will go to modernize and develop infrastructures • For transportations (26% of investments), education, healthcare, utilities, housing and sports • 2 800 M€ to favor the employment of young graduates and the creation of micro companies • 2 160 M€ for ICT in education and administration (hardware and software), as well as subsidies to science R&D • Design specific strategies for the development of 4 sectors • ICT (e-Algérie 2013 now renamed e-Algérie), aquaculture, agriculture and tourism Sources: ONS; ANDI12.10.2011 © Finpro 84
  • Doing business in Algeria • Exporting to Algeria • Tariffs and quotas for most of the products • Since 2009 documentary credit is the only method of payment possible • Investing in Algeria • Foreign Direct Investment (FDI) projects must be presented to the Agence National pour le Développement de l’Investissement (ANDI) • In addition to promote investments in Algeria, ANDI has the mission to inform and assist local and foreign investors • In 2009 only 4 FDI projects were presented to ANDI (102 in 2008) • Since 2009, at least 51% of a joint venture’s capital must be owned by Algerian partners. For micro structure the local partner(s) share must be 30%. The repatriation of earnings is also subject Sources: ANDI12.10.2011 © Finpro 85
  • Doing business in Algeria • Corruption • In 2009 Algeria ranked 111th out of 180 in the Corruption Perception Index • Travel & safety issues • A visa is required to enter the country • Recommended to stay in secured hotels in Algiers and to travel only by plane between the main cities Sources: ANDI; Transparency International; www.diplomatie.gouv.fr12.10.2011 © Finpro 86
  • Algeria Algeria in brief Market characteristics Ecosystem & main players Business models
  • ICT in general population Algeria Finland Mobile phone penetration 93,79% 144,59% rate Fixed telephone lines as a 7,38% 26,85% % of population Internet users as a % of 13,47%* 84,14% population PC penetration rate 1,10% 50% *The majority of Algerians access the web in Internet cafés Sources: International Telecommunication Unions ICT Eye database; Union Internationale des Telecoms.2009 figures.12.10.2011 © Finpro 88
  • ICT usage evolutions Internet users as a % of population 100 80 60 Algeria 40 Finland 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mobile phone penetration rates in Fixed telephone lines as a % of % population 200 60 50 150 40 100 30 20 50 10 0 0 Source: International Telecommunication Unions ICT Eye –database, 2009 figures.12.10.2011 © Finpro 89
  • ICT in organizations • 41,4% of companies use the Internet for business • 58,2% of these have an e-mail address • 29,4% have a website • 15,2% have a domain • Rankings in the WEF Global Information Technology Report • Technology absorption within businesses, 130 out of 133 countries • Use of the Internet in business activities (selling, interacting), 133 • Quality of government delivery in Business Services Index, 120 • The use of ICT in government agencies, 116 • Due to many disruptions in the Internet network, many companies are turning towards alternative technologies such as WiMAX • The e-Algeria project supports the integration of ICT in companies and publics administration • According to local IT firms, the project is too vague, lacks leadership and resources to implement concrete actions • This has further underlines the necessity to reinforce the power and the active role of the 3 IT federations Source: The Report 2010, Algeria, by Oxford Business Group; Ministère de la poste et des Technologies de l’Information et de la Communication12.10.2011 © Finpro 90
  • Algeria Algeria in brief Market characteristics Ecosystem & main players Business models
  • ICT professional associations • AITA • The Algerian Information Technology Association (AITA) was set up in 2004 • First and largest ICT association in Algeria with 48 members representing nearly 60% of the Algerian ICT market turnover • Members include leading telecom, software, SI and consulting companies • Algérie telecom is a member of AITA • Despite its recognition in Algeria and abroad, AITA hasn’t yet received the official license from the Interior Ministry, preventing it for instance to open its own bank account • AITA is willing to organize meetings between Finnish companies and potential local partners • There are 2 other ICT associations in Algeria • AASSEL for software and integration companies (created in 2009) • AAFSI for internet providers (created in 2002, dominated by Algérie Telecom)12.10.2011 © Finpro 92
  • Telecom market • Tight control by the state via its regulatory agency ARPT • After initiating the liberalization of the market in 2000, the Algerian state is now turning back • Algérie Télécom (AT) has the monopoly over fixed-line and broadband Internet • Only 600 000 ADSL lines, out of which 99,99% served by AT • There are 40 active ISP’s in the country offering WiMAX and other wireless technologies • A growing demand for mobiles, dominated by pre-paid • Only 4,8% of the market leader Djezzy’s clients use post-paid services • In 2009 the year-on-year growth of the sector was 14,6%, but only 0,5% in Q1 of 2010 mainly due to the regulatory difficulties faced by Djezzy • The current market leader, Djezzy will most likely be purchased by the Algerian state after the sales of the company to Vimplecom • The 2009 rules about foreign subsidiaries entitle the State to do so • Satellite has an important role in the telecom market: the main operators offer also VSAT / GMPCS services Source: ARPT12.10.2011 © Finpro 93
  • Telecom operators Algérie Télécom / Djezzy (Orascom Nedjma Mobilis Telecom Algérie ) Activities Fixed, mobile (2G), Mobile (2G) Mobile (2G) satellite, broadband Market share 100% (fixed) 41,8% (mobile) 23,4% (mobile) 34,8% (mobile) Number of 12,29 million 14,79 million 8,28 million mobile clients Net revenue Doesn’t disclose financial € 353 million € 377 million information Revenue per Doesn’t disclose financial 7€ 3,96 € mobile user information (monthly, Q110) Ownership Algerian State (100%) The Egyptian Orascom The Kuwaiti Wataniya Telecom Holding (97%) and Telecom (71%) and the the Algerian Cevital SPA Kuwaiti Gulf Investment (3%). The Algerian Corporation and United government wants to buy Gulf Bank (29%) 100% of Djezzy by the end of 2010. Source: Les Echos, 09.2010; Corporate websites.12.10.2011 © Finpro 94
  • Case study: Nedjma • Nedjma is the 3rd mobile operator in Algeria, belonging to Wataniya Telecom from Kuwait • As of December 2010, Nedjma is poised to become the last private operator • As the last entrant on the market, Nedjma strategy has been two-pronged: • Aggressive pricing strategy, with the cheapest pre-paid and post-paid • Innovation, being the first to introduce multimedia services and mobile internet solutions on the market • 90% of its clients are private • Nedjma created its corporate clients unit in 2006 • With 28 million Algerians already having a mobile phone, Nedjma considers the market to be saturated • Around 90% of clients have pre-paid packages that include a handset and communications • As a result Nedjma has launched a couple of services to facilitate the purchase of communication credits, mainly to allow a third party to pay for someone else’s calls • But most of the transactions occur in the form of the purchase of pre-paid cards from a store Source: WTA - Nedjma Interview12.10.2011 © Finpro 95
  • Case study: Nedjma • Nedjma has its own platform for multimedia applications, called zHoO • Mostly ringtones and games downloaded via WAP • Mobile apps are popular among teenagers and some young professionals but the demand remains marginal • There is no 3G networks yet in Algeria • Its (not yet scheduled) launch is expected by Nedjma to create a real market for smart phones and mobile apps • Nedjma was the first to launch mobile internet in Algeria • USB Internet key with a GPRS connection (max. speed 200 Kbits/sec) • According to Nedjma, the current regulation gives competitive advantages to Algerie Telecom (AT) • It has ask the regulatory body (ARPT) to stop AT’s monopoly on broadband • Finnish companies that would like to work with Nedjma can deal directly with them, without having to go through Wataniya in Kuwait12.10.2011 © Finpro 96
  • Hardware • Characteristics of the demand • Basic infrastructure installation (cables, LAN, WAN…) still represent the bulk of the activity • The demand for the infrastructure is mostly shared between the 4 main customer groups for ICT: • The .gov sector, i.e. the government, public institutions and agencies • The telecom sector • The banking sector, i.e. the private and mostly foreign banks • The oil & gas sector, i.e. Sonatrach and its subsidiaries • Besides the large organizations from these sectors, there is virtually no demand for ICT from local SMEs • It is estimated that there are about 500 000 SMEs, but no precise data exists and their situation isn’t really monitored • They are mostly family companies with rudimentary managerial structures • Challenges for local players • Companies have difficulties in finding qualified sales engineers, project managers and finance specialists • Keeping the employees they have trained is a challenge for local ICT firm Source: AITA interview12.10.2011 © Finpro 97
  • Hardware • The restrictions on imports create important delays in deliveries and lead to higher prices • With letter of credits being the only possible mean of payment, importers face cash flow difficulties • The internationalization of Algerian ICT companies seems unlikely given the restrictions and the absence of a local champion • Market opportunities • Steady growth in the demand from private consumers to whom internet connections and IT equipments start to become affordable • It is the only engine for growth in the Algerian ICT sector • Stagnant demand from the 4 dominant corporate sectors Source: AITA interview12.10.2011 © Finpro 98
  • Software & SI • Characteristics of the demand • Clients are mostly .gov, large public companies and banks • A few Subsidiaries of foreign companies (mostly French) • But a sizeable number of SME in urban areas are getting ERP or some ERP components (payroll and accounting solutions mostly) • SI companies • Several French (CFAO Technologies), Tunisian and Moroccan companies • A few local players • Groupe IT Solutions (a recent merger of SMEs) • Halkorb (specialized in offshore, with an office in France) • UNIDEES (specialized in offshore, with an office in France) • Software companies are SME with less than 50 employees • BIG Informatique (ERP integrator & editor) • Technosoft (ERP editor) • IntelliX (ERP integrator & editor, hardware reseller and web design) • Red FabriQ (software engineering, working almost exclusively with French IT firms as a nearshore provider) • Ineodev (open source software) Source: AASSEL interview12.10.2011 © Finpro 99
  • Software & SI • Challenges for local players • Offshore activities never really developed in Algeria, so the sector couldn’t capitalize on technology and skill transfers • Most of the French IT companies prefer to operate from Morocco or Tunisia • Market opportunity • Cloud computing doesn’t yet exist in Algeria • No local company has yet had the resources to develop the infrastructure and the solutions • Software and SI firms are less affected by import and FDI restrictions than hardware firms • No price inflation affects the demand of SME clients Source: AASSEL interview12.10.2011 © Finpro 100
  • Media • TV & radio • Monopoly of ENTV in TV broadcasting in Algeria • State-owned TV company with 4 channels broadcasting programs in Arabic, Berber and French • Part of TDA, the national agency of radio and TV broadcasting, put under the supervision of the Ministry of Communication • All local radio stations belong to TDA • 60% of Algerian have access to satellite TV, following programs from Arabic countries and France • News agencies • Algérie Presse Service • A news agency operating under the supervision of the Ministry of Communications • Agence Algérienne d’Information • An independent news agency • The most important independent media are in the written press • There are 76 daily newspapers and 200 weekly magazines Sources: TDA; Menassat.com.12.10.2011 © Finpro 101
  • Advertising • In 2009 ad expenses reached 121 M€ (6% lower than in 2008) • Ad expenses per inhabitant is the lowest in Maghreb • Only 3,4 € in Algeria against 7,15 € in Tunisia and 12,8 € in Morocco • The state-owned company ANEP is the advertising networks for all state organizations (49% of advertising clients) • ANEP operates also as the ad networks for 170 newspapers; has several subsidiaries including the only outdoor display / billboard company (ACS), and IPSOFIM, a market research company • It is estimated that ANEP controls 65% of all the ad sector revenues • There are about 2 250 private ad & com agencies in Algeria • They work for both public and private companies, focusing in producing contents and media planning Advertising revenues per • Online ad still marginal but growing medium Radio • 1,5 M€ in 2009, +100% from 2008 7% • 167 campaigns for 129 clients were made Billboar ds TV • Telecom operators and Cevital as main clients 17 % 42 % Sources: CNRD; ANEP; algerie360.com; El Watan. Press 34 %12.10.2011 © Finpro 102
  • Algeria Algeria in brief Market characteristics Ecosystem & main players Business models
  • Algeria SWOT Strengths Weaknesses • Red tape and heavy restrictions on • Large untapped market with little imports & FDI competition • Telecom and media sectors dominated • Local private ICT companies are by state-owned companies mainly SME accessible and responsive • Underdeveloped infrastructure (networks) Opportunities Threats • Arrival of 3G should create new demands that local resources cannot • Increasing state control over telecom meet sector may affect competition and delay investments • Expertise and investments needed to initiate cloud computing12.10.2011 © Finpro 104
  • Project Finance in ICT-Sector 105
  • Project finance in ICT sector• Development Financiers • European Union / European Investment Bank • African Development Bank • World Bank• ICT sector funding is focused on institutional support, capacity building and development of telecommunication networks and systems• Funding focused on regional projects, principally in Sub-Saharan Africa• Other Financiers • Finnfund / Finnpartnership • Finnvera • Finnish Concessional Credits (Tunisia and Morocco eligible) • Nordic Investment Bank • Commercial Banks
  • Conclusions andRecommendations 107
  • Conclusions / Market area Small markets, high growth Dominating public sector • Telecom and media sectors dominated• Arrival of 3G should create new by state-owned companies demands that local resources cannot • Difficult access to large public meet projects: relations and local partners• Interesting growth opportunities are necessary almost in all sectors Out of “quarter economy” Towards democracy• Patience to wait for results is needed, • The “Arab Spring” is paving way for as developing sustainable business democratic reforms can take more time than expected • First democratic elections at hand in Tunisia © Finpro 108
  • Conclusions / Opportunities Operators Enterprise software• Recent and planned roll-outs of 3G networks open up opportunities • Vertical enterprise software markets• Content and applications should have in a huge growth: a local flavour (sports, social media, • Health chat, music) • Education• Applications for logistics, tourism, • E-government agriculture and education and health • Logistics• Content management systems, middleware Financial sector Outsourcing / offshore activities• Lot of opportunities as banks are • Technical know-how at a good level renewing their systems often done in- in Tunisia and in Morocco house • Still lacking high level project• Risk management software management skills• Card management systems• A high number of people without a bank account => how to serve them © Finpro 109
  • Recommendations for following steps Fact finding trip Test Drive • Fact-finding trip to Tunisia and Morocco in March 2012 • Get direct feedback for your offering • Seminar, B2B-meetings, networking • Understand the concrete market • You can either participate in one or potential two countries • Start discussing with potential clients Partner search Finpro at your service • Local partner is a “must” for a • Office in Tunis covering Maghreb successful business • Finpro Tunisia supported by Finpro • Find right partners Trade Centres in Southern Europe • Have smooth start for your business12.10.2011 © Finpro 110
  • Primary sources (Interviews)
  • Interviews Tunisia • Media Mobility • Tunisiana • Tunisie Télécom Algeria • HR Access • AASSEL (Algerian software & SI • OXIA federation) • Telnet • Technosoft • Stonesoft • AITA (Algerian ICT federation) • Elgazala Technopark • Oasys • Ex-Nokia director • PC Combo • Wataniya Telecom Algérie Morocco • Algeria Vision, • AMDI • Vivacom • Apebi • Amecsel • Venteonline.com • Medz / CDG Development • Casanearshore12.10.2011 © Finpro 112