Cairo- Egypt launched a digital application called “Telefouni”, which aims to organize the registration process for imported mobile devices, amounting to approximately two billion dollars annually, and granted a three-month deadline for registering new phones, which caused confusion in the mobile market.
The Ministries of Finance, Communications, and Information Technology said in a joint statement that the new electronic system, which came into effect at the beginning of this year, is to strengthen governance and encourage and localize the mobile industry in Egypt.
The statement added that a large number of international companies have begun manufacturing mobile phones of various types in the Egyptian market, and that the government is working to ensure fair competition and confront illegal practices in the telecommunications market for the benefit of citizens, investors and the Egyptian economy.
The new system applies to new mobile phones imported from abroad and does not apply to existing phones that were previously purchased from the local market or from abroad and were activated before January 1, 2025, as this system is not applied retroactively, according to the joint statement.
The value of “smuggled” mobile phones reached 60 billion pounds (about 1.2 billion dollars) in one year, at a rate of 5 billion pounds per month, according to what Sherif Al-Kilani, Deputy Minister of Finance for Tax Policies, revealed.
Confusion in the mobile market
The local market witnessed a noticeable increase in prices and a scarcity of supply in some types of smart phones, according to a representative of one of the international phone companies that produces some types in Egypt since the decision took effect.
The representative, whose name is Islam, added to Al Jazeera Net, “More than one company informed them to stop pumping more new phones until further notice, without knowing the reason, despite the fact that many distributors had run out of quantities.”
He attributed the reason to companies’ desire to increase the prices of their new products after the recent government decision to launch the “Telefouni” application to register all types of new phones with the National Telecommunications Regulatory Authority and stop the smuggling of phones from abroad, which are relatively cheaper by about 25%.
Cell phones in numbers
Here we review some numbers regarding the mobile phone market in Egypt:
- $100 million a month in state losses from customs and tax evasion.
- 95% of mobile imports are smuggled, and only 5% of them pay the prescribed customs duties.
- From 18 to 20 million phones, the volume of mobile phone sales in the market annually.
- Imports fell to 338 million dollars in 2023, compared to 1.6 billion in 2021.
According to the Egyptian government, the new decision promotes the localization of the mobile industry, provides more job opportunities, prevents customs and tax evasion, protects the market from illegal practices, preserves state rights, and protects consumers from counterfeit devices.
Widespread controversy
On the Egyptian street level, especially travelers, the matter was different. Since the announcement of the new decision, allowing every citizen coming from abroad to have one personal phone, with any additional phone being subject to customs duties worth 38.5%, it sparked a widespread wave of controversy.
Some believe that the decision increases the burden on citizens and limits their options, especially in light of the difficult economic conditions that the country is going through, while others see it as a means to increase the revenues of the state, which suffers from a large budget deficit.
Beneficiaries of the decision
Prime Minister Mostafa Madbouly revealed during a press conference that the launch of the new mobile phone system also comes in response to complaints from international mobile companies that suffer from the spread of smuggled devices, which negatively affects their business and hinders their efforts to invest in Egypt.
Mobile industry in Egypt
There are a number of international companies producing smartphones in Egypt over the past two years, led by Samsung, Xiaomi, Vivo, Infinix, Nokia, and Micromax, with different production capacities, with the aim of localizing the mobile industry.
Here are some significant numbers:
- Total current investments are $87.5 million.
- These investments provide 2,050 job opportunities.
- 11.5 million units of production capacity.
- Two million units of actual production volume (about 10% of domestic need)
- 85% of Egyptians’ phones are from companies with factories in Egypt.
Head of the Mobile Division at the Federation of Chambers of Commerce, Mohamed Talaat, said that the reason behind launching such an application is “a significant increase in smuggling cases, which has severely harmed mobile phone manufacturing companies in Egypt, which aim to localize such an industry and reduce the import bill from abroad.”
He added to Al Jazeera Net that the new decision would collect the state’s rights to customs duties and taxes amounting to 38% on imported phones, and ensure fair competition in the Egyptian market.
The head of the Mobile Division expected that the decision would contribute to increasing the volume of production at international factories in Egypt and covering part of the needs of the local market, and the remaining part would be through import, especially for types that are not manufactured locally.
“Budget deficit”… the password
For his part, economic expert Mamdouh El-Wali considered that “the main reason behind such a decision is the large deficit in the state’s budget and its desire to collect fees on all phones entering Egypt, including those brought by expatriates abroad, despite their right to own more than one device for themselves and their family members.” .
He explained in his speech to Al Jazeera Net that there is a conflict in officials’ statements regarding the volume of investments and production of locally manufactured phones, most of which are rather assembled in Egypt and the percentage of their coverage of the needs of the local market.
Mamdouh Al-Wali pointed out that the only person harmed by the decision was the citizen who was looking for relatively cheaper devices in light of the high prices.
The economic expert attributed the growing phenomenon of bringing phones in informal ways to the state’s tightening restrictions on imports and providing hard currency to importers, since the beginning of the economic crisis, pointing out that imports fell from $1.6 billion before the crisis to less than $334 million, in addition to exorbitant duties and a decline in imports. Great value of the pound.
According to the governor, despite the revenues from the Ras al-Hikma deal, the total budget deficit in 2023-2024 reached 504.5 billion pounds (about 10 billion dollars), after deducting amounts from new loans to repay debts.
