Shady business with the Dark Room PC

Just when it seemed like the Egyptian scheme to provide low cost PCs to home users had finally come to a fair and amicable way of operating, so another scheme comes along and practically sinks it.

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By  Mark Sutton Published  December 21, 2002

Just when it seemed like the Egyptian scheme to provide low cost PCs to home users had finally come to a fair and amicable way of operating, so another scheme comes along and practically sinks it.

Readers will recall the trouble caused by the proposed Computer For Every Home scheme, sponsored by the Ministry of Communications and Information Technology (MCIT), run by private company Centra, and partly funded and operated using government resources such as Telecom Egypt and Bank Misr.

The scheme allows customers to pay for a low-cost PC in instalments, using the telephone company for payment and collateral.

While the concept was welcomed as a good means to increasing PC penetration in the country, Egyptian assemblers were up in arms because the scheme was closed. Not only was over half of the capital in the project put up by private companies, without any invitation to other investors, but the PCs that would be included by the scheme would be provided by a limited number of companies, again, without any invitation to assemblers outside of the scheme.

Effectively, assemblers that weren't part of the scheme felt that they would see their business disappear as customers chose to buy from the Computer For Every Home project because of the cheap finance.

After much lobbying, led by the IT division of the Federation of Egyptian Chambers of Commerce (ITFECC), and a couple of attempts at finding a fair solution, the Computer For Every Home project was finally officially launched on November 18th.

The MCIT agreed to allow fifteen companies a license to participate in the scheme, and also opened licensing to any company that wanted to participate and could fulfil a straight-forward procedure-the ITFECC was even invited to join the licensing committee for assemblers that wanted to join the scheme, to ensure that the process was transparent.

All should have been well with the scheme, in fact, on the day after the project was officially announced, 4,500 customers flooded the outlets that were participating in PC For Every Home to buy from the scheme. However on November 27th, the Ministry of Education effectively sunk the PC For Every Home scheme, by launching its own project.

The PC For Every Student scheme follows a similar principle of providing cheap PCs on finance, yet undercuts the Centra scheme. The Ministry of Education has awarded the scheme a grant of EGP150 million ($30 million) that will be used to provide interest free finance, compared to 7% through PC For Every Home.

The Ministry of Education scheme also requires no collateral and no down payment, and the only qualification required is a letter from a teacher certifying that the buyer is a student. Unsurprisingly, this scheme has proven even more popular, with a staggering 10,000 PCs ordered in the first forty-eight hours of opening, with 20,000 ordered after one week. Despite the fact that the Student entry level PC is actually EGP500 ($109) more expensive than the Home offering, demand for the MCIT scheme is reported to have fallen off almost completely.

The ITFECC says that once again, there was no invitation to companies to join the scheme, and seven companies have been appointed to provide the PCs apparently in a completely closed and secretive manner.

While it was bad enough that the MCIT scheme pushed out local assemblers due to provision of cheap credit, the Student scheme provides even more attractive credit. Also, because demand is so high, it has forced component prices through the roof, eating up a massive chunk of the Egyptian market-one of the companies involved is reported to have bought 5,000 hard drives in cash-wrecking the market.

The ITFECC is once again preparing its response to a closed, monopolistic, and possibly illegal government scheme, however, most of the participants in the MCIT scheme are delaying production, as it seems that there is little point in continuing with their scheme if they are simply going to be undercut by the Ministry of Education scheme.

Many are so angry that they are referring to the Student scheme as the 'Dark Room PC', because the scheme is so secretive, they suspect that the participants simply met with the Minister of Education in a darkened room.

While it is admirable that the Egyptian government wants to invest to increase PC penetration in the country, the closed-door approach and the suspect practices involved bring nothing but discredit to those responsible.

Hopefully the government will listen to business and make the scheme open to all, as it did with the MCIT scheme, but given the fact that the scheme has already been rushed out, it seems that those that object to the scheme may be trying to close the stable door after the horse has bolted.

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