Introduction

Cloud computing is currently one of the most prominent manifestations of the global development and growth of digital technologies. It represents a fundamental infrastructure for several rapidly growing industries, including artificial intelligence (AI), big data, and the Internet of Things. Hence, cloud computing is a key element of the infrastructure that underpins the digital world today. This role is expected to continue in the future.

Although the term “cloud computing” may suggest an intangible entity, it actually relies on a dense physical infrastructure, represented by the massive data centers now widespread worldwide. Investments in establishing data centers are currently estimated at hundreds of billions of dollars annually, with expectations that this volume will increase in the coming years.

While the majority of these investments are concentrated in advanced industrial countries, particularly the United States, trends indicate a potential expansion into developing countries. This expansion is driven by lower resource costs, tax breaks, and low public participation in decision-making.

In this context, Egypt enjoys a unique geographical location on global data transmission routes, offering potential opportunities to attract a share of these investments. The Egyptian government’s drive towards digital transformation is linked to broader ambitions to strengthen its position as a regional technology hub within its Arab and African spheres. This has been reflected in the growing interest in cloud computing by state institutions, which is one of the factors attracting investments in this field.

The sector has already witnessed some development in recent years, but this does not negate the questions about the risks and challenges associated with its growth in the Egyptian context.

This paper aims to provide a comprehensive and balanced overview of the current state of the cloud computing sector in Egypt, exploring its future development potential while considering the associated risks and challenges.

The paper examines the cloud computing market in Egypt, highlighting its key players at both the local and international levels. It also reviews the policies and roles of relevant government institutions and institutions in this field.

Furthermore, the paper discusses the challenges associated with this sector’s growth, including its impact on essential resources and the environment, as well as its implications for development and social justice. Finally, the paper explores possible trajectories to guide the growth of the cloud computing market in Egypt in ways that support more equitable economic and social development.

What is cloud computing, and why is it important?

Computing refers to a set of processes that use available technology to process data, solve problems, or perform tasks with specific objectives. In the current technological development context, all computing processes can be considered forms of data processing.

The data these processes handle is digital, which means that computing, in this regard, is essentially about processing digital data. The concept of computing includes both the hardware necessary to perform these processes and the software, including the programs and instructions used.

Cloud computing is a type of computing that relies on the cloud. This cloud consists of a large number of computing devices and equipment, distributed in different locations around the world, and connected to each other and to users through wired and wireless communication networks, primarily the internet.

As a service domain, cloud computing refers to the provision of computing resources on demand. Computing resources here refer to the resources required for processing, such as storage capacity. For example, a personal computer provides physical resources, such as storage, memory, and data processing power, as well as software resources, based on the programs the user chooses to install, such as the operating system and various applications.

Cloud computing services provide access to resources that may be larger, more complex, or more costly to manage and operate than what is available through traditional computers or the capabilities of individuals and organizations. These services also enable more flexible, efficient use by making resources available online as needed.

Cloud computing provides a wide range of services that benefit users from individuals to private organizations of all sizes to government entities. These services can be categorized into four main models:

• Infrastructure as a Service (IaaS): Provides access to computing infrastructure resources, such as storage and processing capabilities, without controlling how they are used.
• Platform as a Service (PaaS): Provides a software environment, enabling the development, operation, and execution of software, without the need to manage the underlying infrastructure.
• Software as a Service (SaaS): Enables the use of software applications over the internet, such as word processing, spreadsheet, or image editing applications.
• Function as a Service (FaaS): Enables the execution of specific tasks or code, in response to specific conditions, without the need to manage servers or the operational environment.

The Cloud Computing Market in Egypt: Size, Growth Factors, and Indicators

The size of the cloud computing services market in Egypt reached approximately US$2.82 billion in 2024. It is expected to grow at an annual rate of 12.65% from 2025 to 2031, reaching approximately US$6.45 billion in 2031.

Globally, the cloud computing market was estimated at approximately US$781.27 billion in 2025, with projections reaching approximately US$2.9 trillion by 2034 at an annual growth rate of 15.7%.

This projection indicates that, despite the availability of growth factors for the Egyptian market, its expected growth rates remain lower than the global average.

The cloud computing market in Egypt offers a diverse range of services, including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), Disaster Recovery as a Service (DRaaS), and Backup as a Service (BaaS).

Software services hold the largest market share, driven by increased demand for subscription-based solutions and the trend among Egyptian companies to utilize them for their core operations, improve efficiency, and reduce the costs of establishing and managing IT infrastructure.

Major international companies continue to dominate the Egyptian cloud computing market, most notably Amazon, Microsoft, Google, Oracle, and IBM. There are also active local companies, including Telecom Egypt and Raya Holding, as well as telecom operators such as Orange, Vodafone, and Etisalat.

Among the key factors contributing to market growth in recent periods is government support, particularly within the framework of the state’s drive towards digital transformation. This has led to the government sector representing a significant portion of demand for cloud computing services. The government is also striving to attract investments in establishing data centers and providing services from within Egypt.

Egypt’s geographical location is one of the most prominent factors attracting investment, given the large number of submarine communication cables that pass through the Suez Canal, especially those connecting Asia and Europe.

This location allows direct connection of data centers to main communication cables, providing high connectivity capacity. It also enables the provision of cloud computing services to markets in the Middle East, North Africa, and Southern Europe.

Domestically, Egypt has a skilled workforce with the appropriate skills to work in this sector. In addition to the essential resources needed to operate data centers, electricity and water are relatively inexpensive compared to other markets. However, the sustainability of providing these resources, especially amid the expected expansion in data center establishment, remains questionable.

Key International and Local Players in Egypt’s Cloud Computing Market

Currently, Egypt has 13 data centers, 7 of which are under construction, with ownership split between the Egyptian government and several local and international companies.

The total capacity of these centers is estimated at 20-25 megawatts, with total investments of approximately US$278 million. It is estimated that by 2030, the total capacity of data centers in Egypt could reach 42 megawatts, with investments estimated at approximately US$694 million.

State Institutions and the Government Sector

The Egyptian government relies on two main approaches to using cloud computing services: either providing them internally or acquiring them from service providers, particularly major international companies.

The choice between these two approaches depends on the sensitivity of the data and its connection to sovereign entities involved in national security.

As part of the first track, the Egyptian government established the Government Data and Cloud Computing Center in the New Administrative Capital, which was launched on April 28, 2024. This center is one of three government data centers planned for the capital, and it provides services in the fields of big data processing and AI.

Press reports indicate that the center covers an area of ​​23,500 square meters, of which 10,000 square meters are dedicated to facilities, with the remainder allocated for future expansions. The center’s operational capacity has not been officially announced, but specialized estimates suggest it may be a Tier 3 or 4 facility, with a capacity exceeding 5 megawatts.

Huawei

On May 21, 2024, Huawei announced the launch of a regional cloud computing center in Cairo, with a capacity expected to range between 10 and 15 megawatts. This center is the first of its kind in North Africa and aims to provide cloud computing services within Egypt and across North Africa.

The center specializes primarily in AI services, as evidenced by its statement, coinciding with the launch of an Arabic language model that includes speech recognition technology, targeting approximately 20 Arabic-speaking countries.

Telecom Egypt

The state-owned Telecom Egypt relies on its monopoly position to establish and operate the telecommunications infrastructure in Egypt, as well as its exclusive right to route international telecommunications lines through Egyptian land and territorial waters. The company owns several data centers with a total capacity of 5 to 10 megawatts.

The company is among the first entities to establish data centers in Egypt. It announced in October 2020 the establishment of a large Tier 3 international data center, connected to its ten submarine landing stations. Such stations are linked to international submarine telecommunications cables. The company also plans to establish a large data center in Alexandria to capitalize on the location as a landing station for submarine cables.

Local Cloud Computing Service Providers

Raya Data Centers, established in 2012, is one of the leading local companies in cloud computing services. According to a company statement, its projects have a total capacity of approximately 15 megawatts, and all its centers are Tier 3.

Telecommunications companies operating in Egypt, such as Orange, Vodafone, and Etisalat, also offer cloud computing services.

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An Analysis of the Cloud Computing Strategies and Policies of the State Institutions

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Key Institutions and Their Roles

The strategic approach of state institutions in Egypt to cloud computing focuses on two main tracks: the first supports digital transformation across various governmental and private sectors, and the second leverages the Egyptian market’s comparative advantages to attract investments in cloud computing.

The tasks associated with these two tracks are distributed among several government institutions, each playing a different role in supporting these trends. Next, the paper reviews the most prominent of these institutions, clarifying the role of each in managing, organizing, and directing cloud computing policies in Egypt:

The Supreme Council for the Digital Society:

Established by Presidential Decree No. 511 of 2022, it is the body responsible for developing digital transformation strategies and policies in Egypt, aligned with its competencies. Regarding cloud computing, the Council is responsible for developing the governance structure, public policies, and implementation plans, and for monitoring their implementation and amending them as needed. It also defines the roles of other relevant entities and distributes their responsibilities.

The Executive Office of the Supreme Council for the Digital Society:

The Minister of Communications and Information Technology heads this office. It undertakes executive tasks, including defining the specifications for cloud computing services according to the needs of various government entities. And monitoring compliance with regulations, especially those related to data security and spending limits, in coordination with financial and administrative oversight bodies.

The Ministry of Communications and Information Technology:

It is responsible for policies in the communications and information technology sector. According to the “Cloud First” document, the Ministry’s role is to regulate the use of cloud computing services, especially by government entities. Its tasks include:

• Implementing unified procurement processes for these services.
• Negotiating with providers on behalf of government entities.
• Organizing training programs to enhance the efficiency of employees in the administrative apparatus in dealing with these services.
• Handling the applications for the registration of cloud computing service providers in accordance with the regulations.
• Coordination role in governing the regulatory environment in cooperation with other government entities.

The Supreme Council for Cybersecurity:

Defines the specifications required for cloud computing services related to cybersecurity safeguards, publishes the controls that must be observed in this regard, and monitors compliance by relevant entities.

The National Telecommunications Regulatory Authority (NTRA):

Prepares and publishes the executive regulatory frameworks for the telecommunications and information technology sector. It has issued the regulatory framework for the establishment and operation of cloud computing services. It is also responsible for issuing the necessary licenses and permits for conducting related activities, in accordance with these frameworks.

Telecom Egypt:

The state-owned company that holds the concessions to establish and operate the telecommunications infrastructure in Egypt and make it available to service providers. It also controls the routing of international communications through Egyptian land and territorial waters, including submarine cables and coastal landing points.

The company provides direct connectivity services to these cables for entities establishing data centers. Furthermore, it is one of the leading local owners of public data centers, distinct from those owned by the Egyptian government, which are dedicated exclusively to serving state institutions.

Cloud Computing First and Regulating Digital Transformation

In 2024, the Supreme Council for the Digital Society issued a policy paper titled “Cloud Computing First“. This policy was the Council’s first adopted on March 13, 2024. Both the paper’s title and timing reflect the importance that state institutions place on cloud computing.

The paper presented cloud computing as a fundamental element in supporting digital transformation in Egypt, which is seen as an entry point to integration into the digital economy. It focuses on the issue of local access to cloud computing services.

While the paper encourages investment in this field, it primarily addresses strategic directions for using this technology, particularly within government institutions and their role in supporting digital transformation.

In this framework, data security emerges as a key aspect of the paper. The paper begins by presenting its policies towards cloud computing through discussing data classification. This classification is an internationally agreed-upon system that divides data into open, restricted, confidential, and top secret categories.

The paper clarifies that only open data may be hosted outside of Egypt, meaning on servers located in other countries. Conversely, the paper stipulates that data classified as restricted, confidential, or top secret must be hosted within Egypt.

This requirement increases the need to establish local data centers, especially since a large percentage of government data, and some private data, falls into these categories.

Furthermore, the government’s direction to mandate or encourage various entities to embrace digital transformation will increase demand for cloud computing services and, consequently, for data centers in Egypt.

Another noteworthy section presents the entities responsible for implementing the cloud computing policy, including the Supreme Council for the Digital Society and its executive office, as well as the Supreme Council for Cybersecurity and the Ministry of Communications and Information Technology.

In this context, it is noteworthy that NTRA is absent from the list of relevant entities, despite the paper’s reference to NTRA’s regulatory framework governing the establishment and operation of cloud computing services and the overlap of its responsibilities with this field. The Central Bank is also absent, despite its regulatory and supervisory role in the financial services sector.

Additionally, the paper addresses considerations for digital transformation in government institutions, specifically cybersecurity, technical aspects, and economic feasibility. It also presents the controls associated with this process.

Although the paper presents itself as a comprehensive framework for cloud computing policies, it does not provide sufficient detail on the policies for establishing the necessary infrastructure to deliver these services within Egypt. This comes despite its emphasis on the necessity of localizing non-open data, which practically requires expanding the establishment of local data centers.

The state also announces its intention to encourage investment in this field and is already participating in establishing government data centers among the largest in Egypt, except for the regional center of the Chinese company Huawei.

The absence of this aspect leads to several unanswered questions, including how to provide the necessary resources to operate data centers, and the obligations of the entities establishing them regarding any impact on the cost of these resources, resulting from their consumption. Moreover, environmental impacts should be considered, especially in light of Egypt’s international commitments to reduce emissions related to climate change, amid the expected expansion in energy production and consumption.

The Regulatory Framework for Establishing and Operating Cloud Computing Services

NTRA issued the Regulatory Framework for Establishing and Operating Cloud Computing Services in 2021. However, the full text of this framework was not available at the time this paper was prepared because NTRA has not published it on its website, unlike the other regulatory frameworks it issued.

Instead, NTRA only published a summary document titled “Key Features of the Regulatory Framework for Establishing and Operating Data Centers and Providing Hosting and Cloud Computing Services.”

The first section of the document reviews the licensing or registration requirements for establishing and operating data centers, as well as providing hosting services and cloud computing within Egypt. In this context, three types of services are distinguished.

The first is the establishment and operation of private data centers. These are centers established by entities for their internal use to meet their cloud computing needs without offering or selling these services to others. Establishing or operating these centers does not require a license or registration.

The second type includes entities that establish public data centers and offer hosting services. This category requires obtaining a license for establishment and operation. The third type is the provision of cloud computing services, which requires registration as a cloud computing service provider in Egypt.

It is noteworthy that, based on the available details, there is no clear distinction between licensing and registration requirements, despite the legal distinction between the two terms.

The document also refers to the service provider’s commitment to the terms and conditions governing the service. Still, it does not present these terms, even briefly, nor does it provide a classification for them.

On the other hand, the document includes a statement of the service providers’ commitments to all relevant laws and implementing regulations. In this context, certain obligations may be inferred, such as compliance with the Personal Data Protection Law, the Cybercrime Law, and environmental laws applicable to facilities. However, the document does not explicitly specify these laws.

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Challenges and Risks of the Cloud Computing Market in the Egyptian Context

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Impact on Resources and the Environment

The infrastructure required for the growth of the cloud computing services market is among the most resource-intensive sectors, particularly in terms of energy and water. At the global level, data centers consumed approximately 415 terawatt-hours of electricity in 2024, representing about 1.5% of total global electricity consumption.

To illustrate the scale of this consumption, data centers in the United States consumed around 176 terawatt-hours in 2023, equivalent to approximately 4.4% of the country’s total electricity use, an amount roughly equal to the average annual consumption of 10 million households. In comparison, Egypt’s total electricity consumption is about 162 terawatt-hours, while total production reaches approximately 209 terawatt-hours.

Data center energy consumption is expected to increase globally in the coming years, driven by the expansion of cloud computing, particularly as artificial intelligence applications increasingly require significant computing capacity. This trend is accompanied by a shift toward building larger data centers with greater capacity and higher server density.

Estimates suggest that data center electricity consumption in the United States may range between 6.7% and 12% of total consumption, while global consumption is projected to reach approximately 945 terawatt-hours by 2030.

Water consumption is indirectly linked to energy use, as a large share of the energy used to operate equipment is converted into heat, necessitating highly efficient cooling systems. The most efficient cooling systems currently available, in terms of both performance and cost, rely on water.

Large data centers consume approximately 5 million gallons of fresh water per day, equivalent to the consumption of a city with a population of 10,000 to 50,000 people. Water use also varies with climate, with higher consumption in hot, arid regions such as Egypt.

The environmental impact of data centers is also linked to their reliance on energy production—largely based on fossil fuels—making them a major source of greenhouse gas emissions associated with climate change. Data centers currently account for approximately 0.5% of global carbon dioxide emissions.

In this context, Egypt ranked 27th globally in 2021 in terms of emissions, contributing an estimated 0.68% of the global total. The energy production sector is the primary source of these emissions, accounting for about 73.9%.

In light of this, expanding investment in data center development in Egypt may have noticeable effects on energy and water consumption, as well as on levels of environmentally harmful emissions. Egypt is already facing growing challenges in meeting its energy needs, given its reliance on natural gas and the need to import it. It also faces challenges related to water resources, including rising water scarcity, declining per capita water availability, and pressures from upstream dam projects, such as those in Ethiopia.

Accordingly, the management of energy and water resources, as well as emissions, is a matter of direct importance to the daily lives of the population and to the prospects for economic and social development in the country.

Impact on Development and Social Justice

Investment in cloud computing is capital-intensive due to the high costs associated with infrastructure, facilities, equipment, and advanced technological systems. It is also resource-intensive, particularly in terms of energy and water consumption. At the same time, this type of investment has a limited capacity to generate employment.

This means that expanding this sector may affect the growth opportunities of other economic sectors. This effect is not unique to Egypt; it is a global phenomenon, as the cloud computing sector is experiencing rapid growth worldwide, with major companies and governments investing heavily in it.

Large-scale investments in data center construction have mixed impacts. On the one hand, they contribute to economic growth, particularly in more advanced industrial economies. For example, spending related to data center construction accounted for around 80% of the growth in private-sector domestic demand in the United States during the first half of 2025.

On the other hand, some economists suggest that this expansion may contribute to rising electricity prices, which could limit growth in other sectors. Roughly speaking, the growth that did not occur in these sectors may amount to a considerable share of the growth achieved in the data center sector.

In a practical example, Meta’s construction of a large data center in the U.S. state of Idaho led to delays or disruptions in other projects due to rising costs, while some smaller projects were not implemented at all.

In the Egyptian context, the economy faces challenges stemming from limited investment, driven by both internal and external factors. At the same time, there is a need to direct investment toward multiple sectors, particularly industrial ones, to reduce reliance on imports, which put pressure on limited foreign currency resources.

The economy also requires more labor-intensive investments to create employment opportunities for the large numbers entering the labor market each year and to support demand amid inflationary pressures and declining purchasing power. In this context, expanding investment in cloud computing may not directly address these challenges and may instead add further pressures.

Compared to labor-intensive investments, capital-intensive investments do not provide sufficient opportunities to support middle- and low-income groups, as their returns tend to be concentrated in the profits of companies operating in construction and infrastructure sectors. As a result, this type of economic growth may not be reflected in tangible improvements in the living standards of most citizens and may have negative effects in some cases.

Large-scale investments in data centers have become a subject of discussion in several countries. For example, in the United States, several artificial intelligence companies signed a pledge under the sponsorship of President Donald Trump, committing to bear the cost of supplying data centers with electricity to limit the impact on consumer electricity prices.

Cities in different countries have also experienced pressure on electricity and water infrastructure due to large data center developments, even in contexts that do not face resource shortages. In contrast, Egypt already faces challenges related to energy supply and water resource management, particularly given its reliance on the Nile River as its primary water source. In recent years, electricity and fuel prices have increased repeatedly, affecting the living standards of a large segment of the population.

In this context, expanding investment in data centers in Egypt may increase pressure on these resources, with potential implications for supply stability and rising costs borne by citizens.

The Potential for Directing Cloud Computing Market Growth in Egypt to Achieve Equitable Development

Profit-oriented economic activities are not, by their nature, concerned with achieving equitable development, regardless of the discourse on corporate social or ethical responsibility. Achieving equitable development remains primarily the responsibility of governments, through the policies and legislation developed by the legislative authority, and the guarantees provided by the judicial authority. Civil society organizations also play an important role in providing information and recommendations to support this objective.

Within this framework, and where these actors fulfill their respective roles, it is possible to guide private investment toward achieving a degree of equitable development, within existing constraints and the broader structure of the prevailing economic system.

This perspective underscores the importance of state institutions in regulating the impact of economic sectors on citizens’ lives, livelihoods, and rights, including the right to sustainable and equitable development. From this standpoint, it is possible to examine how investment in cloud computing services in Egypt can be directed toward more equitable outcomes.

There are already announced initiatives in Egypt aimed at linking digital transformation and the growth of the information and communications technology sector with the expansion of clean energy use and the reduction of reliance on fossil fuels. The government has also announced cooperation protocols with major international technology companies in this context.

Despite their importance, these initiatives are not yet accompanied by binding legislative or regulatory frameworks requiring companies operating in the cloud computing sector to rely on renewable or low-emission energy sources.

In addition, the implementation of some of Egypt’s environmental commitments remains limited. For example, the Financial Regulatory Authority announced in August 2024 the establishment of a voluntary carbon market in line with the Paris Climate Agreement; however, local and international cloud computing projects operating in Egypt have not participated in this market to date.

Moreover, several technical solutions can help reduce energy consumption in data centers and improve efficiency. This highlights the need for legislative and regulatory frameworks to require data center operators in Egypt to adopt such solutions, alongside mechanisms to monitor compliance and the possibility of imposing penalties for non-compliance, including the revocation of operating licenses.

Water resources present a more complex challenge, particularly given existing pressures on water availability in Egypt. There is currently no clear, publicly articulated policy framework for managing these resources in light of growing demand, making it difficult to define specific obligations for companies.

However, technical alternatives exist to reduce reliance on freshwater in cooling systems, including the use of treated wastewater and water-free cooling technologies. Accordingly, regulatory frameworks could require cloud computing service providers to adopt such alternatives to reduce pressure on freshwater resources used for domestic and other economic purposes.

Such requirements are already part of regulatory frameworks in some jurisdictions, including the European Union and the United States. Given the limited availability of energy and water resources in Egypt, adopting similar policies could help reduce the burdens that may otherwise fall on citizens as a result of expanding investment in this sector, particularly when direct benefits to living standards are limited.