Egypt's IT market is forecast to grow to EGP10.878 billion ($1.55 billion) in 2013, says Business Monitor International (BMI).

Computer hardware sales in the country are forecast to grow 8.2% in local currency terms from EGP6.175 billion in 2012 to EGP6.484 billion in 2013, says the BMI.

Meanwhile, software sales in Egypt are forecast to increase 14.3% from EGP1.408 billion in 2012 to EGP1.6 billion, says the BMI. The research firm explains that sales of Microsoft’s Windows 8 operating system and “the medium-term potential of small and medium-sized enterprise investments” are pushing up the growth rate in this segment.

Also, IT services sales in Egypt are predicted to be EGP2.785 billion in 2013 compared to EGP2.474 billion in 2012, representing a 12.6% growth rate in local currency terms. Strong demand from government, finance and telecoms sectors, and the growth of Egypt’s outsourcing industry are reasons for BMI’s strong growth predictions for IT services sales in the country.

Despite strong growth figures in these three segments of Egypt’s IT market, the BMI says overall growth of the country’s IT market could be slower in 2013 as compared to 2012.

Reasons for potentially weaker growth could be owing to “a curtailment of government spending and a slowdown in real terms growth of private consumption,” says the BMI.

But researchers do say that although Egypt’s IT market is constrained by political and economic uncertainty, over a five-year forecast period, Egypt may benefit from youthful demographics and improving information and communication technology (ICT) infrastructure.

BMI adds that the Egyptian government's policy framework for developing the ICT sector through to 2012 is also a positive for medium-term performance.

“Egypt's IT market made a strong recovery from the economic and political upheaval of 2011; however, ongoing uncertainty around economic policy and political stability have been a drag on investment in the IT sector,” says the BMI in a research report summary.

“That said, a favourable cost base and proactive government initiatives to attract investment and boost adoption of ICT by the populace has ensured continued growth of sales,” says the BMI.

In terms of BMI’s ‘Risk/Reward Ratings’, Egypt's score is 38.8 out of 100.0.

“The country is at the bottom in our latest Middle East and Africa risk/reward ratings table, behind Saudi Arabia, Kuwait and South Africa,” says the BMI in research report summary.

“Despite the high growth potential of the market, which was reflected in an industry rewards score of 40.0, Egypt's overall ranking was constrained by a lowest-in-region country rewards score of just 25.0,” adds the BMI.