Jordan: Increasing reach

Significant progress has been made on the goals set out for Jordan’s information and communications technology (ICT) sector to reach by the end of 2011, with internet penetration rates, foreign direct investment (FDI) and revenues all increasing, even as government spending declines. Expanded plans for the sector for the 2010-16 period should be finalised by the end of this year.

The National ICT Strategy (NIS) 2007-11, created by the Information Technology Association – Jordan (Int@j), set three main goals for the end of the year: increase internet penetration from 11% in 2007 to 50%; expand the ICT workforce from 16,000 to 35,000 people; and see revenues reach $3bn.

Jordan is well on its way to reaching the first goal: the internet penetration rate at the end of 2010 was 38%, according to Int@j’s “ICT and ITES Industry Statistics and Yearbook 2010”, released in June. The number of internet users stood at 2.32m people in 2010, up from 1.74m in 2009, the report showed.

Though mobile penetration – which was 108% in 2010 – has seen rapid growth in recent years, internet uptake has been slower to rise. Lowering the price of services is key to getting more people online, as is encouraging private operators to increase their promotional efforts.

“The price of the service is a main factor in attracting more users; however, there is competition nowadays among the service providers. What is more important at this stage is for the private and public sectors to seriously engage in efforts to promote the service,” Abed Shamlawi, the CEO of Int@j, told media in June.

The government’s lowering of the internet services sales tax from 16% to 8% has also encouraged the private sector to expand connections to rural areas. “I think we will achieve the 50% target as we are working hard with non-governmental organisations to penetrate rural areas outside Amman,” Khaled Lahham, the secretary-general of the Ministry of ICT, told OBG.

Also critical to boosting internet use is encouraging more people to purchase the tools that will enable them to do so. “Jordan in Figures”, published by the Department of Statistics in May 2011, reports that the portion of the population using computers for personal use reached 55.7% in 2010, up marginally from 55% in 2009. The same report also showed that the percentage of the population using the internet for personal reasons was 27.2% in 2010, up from 26% a year earlier. The roll-out of mobile broadband services by Orange in 2010 and Zain in 2011, plus the forthcoming launch of 3G services by Umniah later this year, is expected to boost internet penetration rates further.

Total ICT sector revenue has grown from $1.5bn in 2007 to $2.2bn in 2009, short of the $3bn target but significant progress nonetheless. Although overall ICT revenues have increased, IT revenue alone has fallen, from $962m in 2008 to $895m in 2009 and $732m in 2010. This is due to declining government spending in the sector, Shamlawi told Bloomberg in June. Government spending on IT in 2010 was JD25m ($35m), while in the years up to and including 2009 spending averaged JD150m ($211m), Shamlawi said.

This places growth prospects squarely in the hands of the private sector, and indeed, the NIS 2007-11 explicitly states as much. “The private sector itself must be responsible for increasing the size of the industry. The private sector must work on increasing the day-to-day relevance of ICT among Jordanians and among Jordanian businesses.”

Private investors, for their part, are taking note. Cumulative FDI in the IT sector has risen steadily since 2001, reaching $142.5m in 2010. The Jordan Investment Board notes that ICT is the fastest-growing sector of the economy, expanding by 50% per year. The sector was served by a growing IT workforce of some 22,000 people at the end of 2009.

In 2007 the NIS recognised the challenges facing the sector, which include the high cost of personal computers and technology, and government policies that lack either development or coordination. This is where the 2012-16 ICT strategy is expected to continue the work of the NIS 2007-11. Significant progress has been made in the last five years, and continuing on this trajectory should mean internet penetration growth, increasing FDI levels and a growing skilled workforce should all be features of the next several years.