|
|
|
|
|
|
|
|
|
|
  |
 |
  |
Egypt
>> Regional Overview >> Egypt Overview ACTIVITY DATA SHEET
PROGRAM: Egypt
TITLE AND NUMBER: Environment for Trade and Investment Strengthened, 263-016
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $494,928,000 ESF ($94,928,000 Program Activity; $200,000,000 Cash Transfer; $200,000,000 Commodity Import Program)
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $515,830,000 ESF
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2009Summary: Egypt has made tremendous progress over the past ten years. Nonetheless, challenges remain to Egypt's full participation in the global economy. This objective will focus on improving the environment for trade and investment, which is key to creating private sector jobs and accelerating economic growth while spreading the benefits of growth equitably. Direct beneficiaries will consist of private sector firms (including micro-enterprises), private sector workers, and the families of the workers. Special efforts will be made to provide employment and income opportunities to the country's poorest-the four million small farmers, landless laborers and women-who produce and process horticultural and agricultural commodities, and the three million non-agricultural micro-entrepreneurs.
This objective includes funds previously obligated under "Accelerated Private Sector-Led, Export-Oriented Economic Growth" (263-001), which have been merged into this activity, and is implemented using three mechanisms: basic project assistance, cash transfer (CT), and non-project assistance in the form of the Commodity Import Program (CIP).
Key Results: During FY 2000, the first year of the new strategy, real gross domestic product, the broadest measure of Egypt's progress, increased by 6.5%, according to official Government of Egypt (GOE) figures. The private sector contribution to GDP is now at 73% for the 1999-2000 period, up from 63.3% in 1995-1996. Achievements in these areas contributed to the recorded increase in private sector activity. USAID supported reforms that strengthened the private sector and facilitated privatization. In addition, technical support to the private sector is helping increase exports and promote economic growth. The challenge for the future is to maintain and build upon these results.
In order to achieve expected results under this objective, USAID will focus on improving the policy framework for trade and investment, increasing the competitiveness of the Egyptian private sector, and enhancing opportunities for business growth. USAID will continue to support the development of a strong capital market and measures to significantly reduce the number of state-owned enterprises. Accelerated privatization, together with policy reforms supported by USAID, are expected to contribute to an increase in real output per worker.
Performance and Prospects: Illustrative program activities (non-CIP and non-CT) for FY 2001 and FY 2002 are as follows.
The prospects for continued progress under this objective are good, with the GOE increasing its commitment to liberalizing the economy. The current GOE economic team seems even more committed to economic reform than its predecessors, which may result in dramatic improvements in Egypt's policy regime. However, a slowdown in the economy and Egypt's liquidity and foreign exchange problems may have a negative impact on overall program performance.
Major reforms achieved in FY 2000 include the following: a) the transfer of water management to user groups; b) increased private sector involvement in research, horticultural extension services, transport of horticultural exports, and the provision of pest management services; and c) the collection and publication of farm-level agricultural data disaggregated by gender. In FY 2001 and FY 2002, policy reforms will be directed at the following: a) promoting competitiveness and generating employment opportunities within the agricultural sector; b) transferring water management functions to the district level; c) promoting the growth of fish exports; d) promoting the use of the internet for the marketing of Egyptian cotton lint and yarn; and e) improving the labeling of food products. USAID will continue to support policy reform to increase agricultural productivity and income through FY 2002.
In FY 2001 and FY 2002 ($19.5 million and $15.521 million, respectively), technical assistance will be provided to increase exports in targeted high-potential sectors such as fresh produce, processed foods, livestock, furniture, textiles, leather, and software. USAID activities will support the adoption of better technology for production, the development of better market information, and the strengthening of Egyptian firms' capacity to export goods, particularly high-value horticultural commodities. High-potential export sectors have grown rapidly and have provided a significant share of total growth in national exports this past year. For example, in FY 2000, exports of grapes, strawberries, and green beans increased by 54%, 40%, and 70%, respectively. Egyptian agriculture associations have established new export facilities and facilitated the adoption of improved seeds, information technology (IT), and quality assurance techniques. Export growth is benefiting an increasingly diverse range of geographic areas within Egypt as a result of USAID's policy reform efforts.
Although no funding is planned for FY 2001 and FY 2002 for the Capital Markets Development component, USAID will continue to further strengthen Egypt's capital market. USAID has helped improve capital market efficiency and transparency by providing assistance to implement a series of reform measures, including an executive decree that authorizes bond dealers, and a settlement guarantee fund to protect the financial integrity of the capital market system. The focus now will include meeting the requirement for new financial instruments such as securitized mortgages as well as strengthening partner institutions to issue, trade, and regulate these new instruments. USAID will continue to strengthen the legal and regulatory environment to accommodate new instruments and to ensure efficient, fair, and transparent trading in both debt and equity markets. Other related activities will include the expansion of automated systems, particularly for the regulatory agencies, and a broader public relations campaign to enhance awareness of the equities market.
In FY 2001 and FY 2002 ($10 million and $20 million, respectively), USAID will continue to support small- and micro-enterprise (SME) development in Egypt as an important, reliable source of creating new jobs. During calendar year 2000, USAID-supported SMEs (consisting of non-governmental organizations (NGOs), a private bank, and a credit guarantee company) disbursed 113,000 loans valued at $168 million to more than 40,000 borrowers. This generated an estimated 30,000 new job opportunities. More than 90% of these borrowers had no prior access to credit from formal financial institutions.
In FY 2001 and FY 2002 ($14.828 million and $8 million, respectively), USAID will continue to support the development of IT in Egypt. If the private sector is to compete effectively in both domestic and international markets, Egypt needs to modernize its approach to IT. USAID activities will focus on facilitating the necessary changes in the legal and regulatory frameworks, in human capacity development, and in technology transfer.
In FY 2001 ($7 million), USAID, through technical assistance and training, will assist the GOE to continue to privatize Law 203 state-owned enterprises and joint venture firms through sale to employees, public offerings, and anchor investors. Though the pace of privatization recently has slowed due to economic, political, and social factors, USAID expects that the GOE will privatize 80 more state-owned enterprises over the next three years.
In FY 2001 and FY 2002 ($33.6 million and $15 million, respectively), USAID will provide technical assistance to support USAID's annual $200 million cash transfer program that addresses trade reform, intellectual property rights, tax policy and tax administrative reform, and other macroeconomic policy issues.
In FY 2001 and FY 2002 ($1 million per year), USAID will continue to fund the U.S.-Egypt Science and Technology Agreement, which seeks to promote cooperative scientific research with private sector applications in priority areas of research agreed upon by both countries. The current priority areas are biotechnology, standards and metrology, environmental technologies, manufacturing technologies, and information technology.
In FY 2001 and FY 2002 ($5 million and $2 million, respectively), USAID will consolidate existing monitoring and evaluation contracts that support external evaluations and performance monitoring at the objective and intermediate results levels. This new activity will support the synthesis of monitoring activities, the development of special studies on performance issues, and dialogue among partners on how to improve strategic objective performance.
In FY 2001 and FY 2002 ($4 million and $6.8 million, respectively), USAID will implement training activities that strengthen Egypt's capacity to further develop increased trade, investment, and economic growth.
In FY 2002 ($10 million), USAID will design a new activity to provide technical assistance to support the reform of the Egyptian customs system. USAID will focus on reforming the economic, legal, regulatory, and policy framework to increase the efficiency of the customs system, enhance Egypt's ability and incentives to meet World Trade Organization (WTO) compliance measures, and improve the tariff structure.
In FY 2002 ($15 million), USAID is planning to design a financial sector reform program. The activity will focus on policy and regulatory reform and capacity building in the banking, insurance, and non-banking financial institutions.
In FY 2002 ($12.5 million), USAID is planning to design a competitive environment for trade and investment activity that will focus on competition regulation, rule of law, commercial law development, fiscal policy, and monetary policy regulation.
In FY 2002 ($10 million), USAID will consolidate promotion activities in a new design that aims at accelerating export growth, facilitating U.S. technology imports, and broadening productivity growth to benefit a much larger number of Egyptian agricultural and non-agricultural producers. Key approaches will rely on increased commercial availability of business services, implementation of standards and quality assurance, improved information utilization, and support for legacy institutions, such as associations, that can engage the government to improve the regulatory environment.
Cash Transfer: USAID will continue to support GOE policy reform through the cash transfer at a level of $200 million each year for FY 2001 and FY 2002. The cash transfer program builds upon reforms achieved through the Development Support Program initiated in 1999. The reform measures will address privatization of public enterprises, power and telecommunication facilities, public banks, and insurance companies; passage of a new labor law; trade policy; restructuring of tariff rates and fees on imports; strengthening of patent and trademark regulations; implementation of trade-related regulations and support of Egypt's compliance with WTO obligations; financial-sector stability; fiscal policy; and strengthening of competitiveness.
Commodity Import Program: During FY 2000, USAID's private sector CIP financed 661 commercial transactions totaling $221 million. In FY 2001 and FY 2002, USAID plans to continue the CIP at $200 million per year, with no substantive program changes. The CIP is designed to encourage private sector investment in Egypt by providing U.S. dollars to Egyptian private sector firms to finance the importation of U.S. manufactured commodities. Through CIP purchases of U.S. equipment, the program contributes to increased trade and investment, more jobs, and greater productivity for Egyptian private sector firms.
Possible Adjustments to Plans: None.
Other Donor Programs: Other major donors involved in economic growth in Egypt include the European Union (EU), the World Bank, and the United Nations. USAID coordinates its policy reform efforts with the International Monetary Fund (present in Egypt in an advisory capacity) and other donors. With the GOE, the EU has set up the Public Enterprise Reform and Privatization Program, a five-year program budgeted at $38.2 million, which complements USAID privatization activities. The World Bank's current portfolio consists of 19 projects with loans of over $1.2 billion. Of these, eight are in agriculture ($534 million, much of which is irrigation); seven are in the social sectors ($415 million); and four are in infrastructure and the environment ($251 million). Other donors-including Japan, Canada, and Germany-are working in agriculture, textiles, exports and trade, small and micro-enterprise lending, education, and health. In total, Egypt receives between $2 and $3 billion in foreign grants and loans each year.
Principal Contractors, Grantees, or Agencies: Nathan Associates; Chemonics International; Barents; the International Executive Service Corps; Carana; PricewaterhouseCoopers; the National Cooperative Business Association; Agricultural Cooperative Development International; Environmental Quality International; RONCO; and the Universities of Florida and California at Davis.
FY 2002 Performance Table
Egypt: 263-016
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: NA NA NA NA NA NA NA Indicator 2: Elements of Economic Freedom Index - (a) NA NA 3.7 NA 3.66 3.63 3.57 Indicator 3: Percentage of Private Sector share in GDP NA NA 72 73 74 76 77 Indicator 4: Increased exports in selected sectors (Textile & Ready Made Garments, Fresh Horticultural products and Processed foods) Value in million US$ NA NA 79 101 80 90 100 Indicator 5: Index of Economic Freedom 6.5 NA NA NA 6.6 6.7 6.8 Indicator 6: Non-petroleum exports and imports of goods as a percent of GDP NA NA 22.1 20.8 21 21.3 22 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR NA NA NA Indicator 2: IR Index for trade and investment. Ranking is one to five where one is the best. Heritage Foundation NA Indicator 3: IR Percentage Ministry of Economy and Foreign Trade Bulletin GDP contributed by the private sector as a percentage of total GDP by Egyptian fiscal year starting July 1 and ending June 30 Indicator 4: IR Value in million US$ Annual Reports from the Egyptian Exporters Association (EEA) Cumulative value of increases in private sector exports in the largest sectors where USAID/Cairo is playing a major role in assisting producers/growers and exporters to better compete in the global markets Indicator 5: IR Index of Economic Freedom. Index Score on a basis of zero to ten; higher scores indicative of greater economic freedom Fraser Institute The Fraser Institute's version of the Index of Economic Freedom is postulated to be a function of 23 economic inputs. These are grouped into seven topic areas: Government Size, Structure of Economy, MonetaryPolicy, Accesss to Alternative Currencies, Legal Structure, Freedom of International Trade, and Capital and Financial Markets. Of the inputs, 17 are quantitative inputs derived from international sources, while the remaining six inputs are non-quatitative in nature and based on clearly explained criteria used by the Fraser Institute to compute their values. Indicator 6: IR Percentage calculated as exports and imports of non-petroleum products divided by GDP Ministry of Economy and Central Bank monthly and quarterly reports for trade data and GDP This indicator is defined as exports and imports of goods minus crude petroleum and petroleum products. The baseline for 98/99 is an average for the period 96/97 - 98/99 U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999* 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 957,464 ESF 0 ESF 957,464 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 0 DA 0 DA 0 CSD 0 CSD 501,034 ESF 458,082 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 1,458,498 ESF 458,082 ESF 1,000,416 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 494,928 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 0 DA 0 CSD 494,928 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD ESF ESF 5,549,572 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA * These funds were previously obligated under former objective 263-001, whose activities have been merged into this SO.
 |
|||
Last Updated on: May 29, 2002 |
