Egypt

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Introduction Development Challenge Other Donors FY 2002 Program Activity Data Sheets Summary Tables Program Summary Strategic Objective Summary USAID Search: Egypt Previous Years' Activities 2001, 2000, 1999, 1998, 1997 Last updated: 54     Introduction Egypt is a vital partner in advancing U.S. foreign policy goals in the region. In order to increase the prosperity and quality of life of its people, Egypt must become a fully integrated and competitive participant in the global economy. Only in this way can it generate a sufficient number of new jobs to employ its growing labor force and achieve measurable and sustained development success. The Mission Performance Plan stresses economic growth as essential to strengthen Egypt as a stable and prosperous U.S. ally. The goal of USAID's strategy is a globally competitive economy benefiting Egyptians equitably. One part of the strategy, to create private sector jobs, comprises three objectives: (1) bolster the trade and investment environment; (2) develop competitiveness skills; and (3) increase access to sustainable utility services. The second part of the strategy-to enhance the human and natural resource base-has four objectives: (1) improve basic education to meet market demand; (2) upgrade natural resource management; (3) provide health services; and (4) strengthen governance and participation. During the past year, USAID has succeeded in assisting Egypt to address key challenges and meet important targets in all seven of these areas. Development Challenge Egypt has made significant economic progress since 1991 by implementing a major reform program that strengthened macroeconomic discipline, privatized many state-owned enterprises, and supported a creditable rate of real economic growth. It now ranks among the emerging economies with a per capita gross domestic product of $1,500. Nonetheless, formidable challenges remain. For example, there have been persistent liquidity problems, both international and domestic, in the past 18 months. Intermittent foreign exchange shortages and delays in government payments have squeezed the private sector that increasingly has become the major engine of economic growth. These circumstances add to the uncertainties faced by private business. The public enterprise sector remains sizable as the pace of privatization has slowed, and economic growth is not yet creating enough new jobs each year to employ the rising number of labor force entrants. The Government of Egypt (GOE) is aware that its reform program requires continued attention, and USAID is working with them to address actions needed to advance the reform process. Several major steps need to be taken before the program's goals can be achieved. Investment from both domestic and international sources must be increased if Egypt is to generate higher and sustainable growth rates and more jobs. This will require improving the legal infrastructure, easing the heavy burden of tariffs and other barriers to trade, rationalizing and stabilizing the foreign exchange regime, removing constraints in the labor and capital markets, and restructuring the tax system while increasing its transparency. There are recent signs of increased political will by the GOE to make difficult economic policy decisions. For example, the free trade agreement with the European Union has finally been signed, despite opposition of local interests fearing increased competition; budget reporting has become notably more transparent; and the long-standing fixed pound-dollar exchange rate has been adjusted, effectively devaluing the pound by about 13 percent. Not only are there more young Egyptians entering the labor force than there are newly created jobs, but many of these entrants also are deficient in the skills most needed by an economy aspiring to global competitiveness. Obvious skill deficits exist in such relatively sophisticated areas as management and information technology (IT), but even more fundamental are the shortcomings at the level of basic education. The favorable effects of past family planning efforts are clearly discernible, but balancing the future demand and supply of new labor force entrants requires intensifying these efforts. Further improvements in health for all Egyptians will not only bolster living standards, but will also support advances in labor productivity. As USAID phases out of its activities in infrastructure, millions of Egyptians now enjoy greatly expanded access to utility services, and the vital foundation has been laid for increasing private sector investment. Further gains in both economic growth and quality of life will require meeting the considerable challenges to improving the management of the natural resource base, especially with regard to water, energy, air quality, and the physical and ecological attractions underlying further growth in tourism. Transparent and accountable governance, founded on widespread citizen participation and the ability of institutions to respond, is essential for encouraging private sector job creation and a sustainable resource base. Other Donors Egypt remains a major recipient of bilateral and multilateral aid. At least 38 donors have been active in the country, and the United States is the largest single donor with the widest-ranging program. Other major donors include Canada, Japan, the European Union (along with several of its individual members), the World Bank, the United Nations Development Program, and the Arab and Kuwait Development Funds. FY 2002 Program USAID requests $655 million in Economic Support Funds for the following Agency priorities: $515.8 million for economic growth and agriculture; $34 million for human capacity development ($19 million for competitive skills development and $15 million for basic education); $43.7 million for population and health; $47.8 million for environment; and $13.7 million for democracy. In economic growth and agriculture, the second phase of USAID's cash transfer program will encourage the adoption of further economic reforms. Additionally, specific activities in the sector will assist small and micro-enterprises, support capital markets development and privatization efforts, and provide technical assistance for customs reform. The Commodity Import Program, which benefits private sector investment, will continue. With regard to the environment, USAID will support the mitigation of urban and industrial pollution, advances in energy efficiency, and improvements in resource management for the Red Sea coast and Nile Valley waters, as well as provide the technical assistance needed by the GOE to formulate, implement, and monitor environmental policies and regulatory mechanisms. In human capacity development, USAID will help alleviate skills shortage problems by providing training in management and market-relevant IT skills and by improving links between training providers and employers of the skilled labor force. In the broader field of education, USAID will expand its program to further the access of girls to schools. Renewed signs of broader national reform and innovations in Alexandria, Egypt may allow additional efforts in this sector. In health and population, USAID will continue its programs advancing maternal and child health, family planning, surveillance of infectious diseases, and professional development in the area of workforce health. USAID intends to continue a range of activities designed to encourage further reforms, such as sustainable financing and increased participation by private sector service providers. In the democracy area, programs for improving governance in new communities and the administration of justice will be extended to additional areas. The nongovernmental organization (NGO) service center will continue to help civil society organizations become full partners in the process of national development. In addition to USAID's bilateral programs, the Bureau for Humanitarian Response has an activity through the American University in Cairo to demonstrate U.S. educational and medical technologies and practices. Activity Data Sheets 263-016 Environment for Trade and Investment Strengthened 263-017 Skills for Competitiveness Developed 263-018 Access to Sustainable Utility Service in Selected Areas Increased 263-019 Management of the Env. and Natural Resources in Targeted Sectors Impr. 263-020 Healthier, Planned Families 263-021 Egyptian Initiatives in Governance and Participation Strengthened 263-022 Basic Education Improved to Meet Market Demands Country Background Information Resources     CIA Factbook   Library of Congress National Geographic Country Maps   State Dept. Country Information

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