With a population of 355 million and the vast majority of people living in middle-income countries, the MENA region came into the Arab Spring with multiple strengths, including a young and educated population, strong resource base, and economic resilience that helped it weather the 2008/9 global financial crisis.
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Bank Group ContributionOver the past decade, the Bank (IBRD/IDA) committed funding for US$33 billion, from which IDA’s contribution was US$7.7 billion (23 percent) to support investment in environment... Show More + and natural resource management (ENRM). By far, climate change has been the fastest growing ENRM area where the Bank is supporting client countries. Other areas that have significantly expanded in the last five years are environmental policy and institutions, and water resource management. As for the types of funding provided over the decade, development policy lending accounted for 30 percent and investment lending 70 percent of the Bank’s ENRM portfolio. The trend is in favor of development policy lending that increased to 33% of the ENRM portfolio in the last five years (FY09-13).In addition to funding ENRM projects directly, IDA has leveraged additional funds through the Global Environment Facility (GEF) and other agencies and organizations. Specifically, the GEF provides grants to IDA countries to address global environmental issues while supporting national sustainable development initiatives.PartnersAn important lesson learned is that partners are essential to face the environmental challenge because the agenda is huge and beyond the means of any single institution. Partnerships with multilateral funds such as the GEF and the Climate Investment Funds have focused on global and trans-boundary environmental issues. Close partnerships with civil society organizations have allowed a greater focus on biodiversity and social accountability in particular. Other trust funds have focused on key subsectors, such as the Program on Forests (PROFOR) or the Global Program on Sustainable Fisheries (ProFISH). Partnerships with the United Nations Environment Programme and the Food and Agriculture Organization of the United Nations (FAO) have allowed the Bank to broaden its analytical base. Perhaps most important, through the Climate Investment Funds the multilateral development banks are working in collaboration and demonstrating scaled-up climate action. Because the private sector plays a key role in creating jobs and technological development, it can contribute to sustainable development in ways that complement the public sector. Public-private partnerships are likely to continue growing in the near future because they are essential for achieving sustainable development in a fiscally constrained world. Moving Forward As the world becomes increasingly urbanized and the global population expands ever closer to 9 billion, the World Bank’s focus on improving environmental sustainability and building resilience to climate change will remain as strong as ever. Building on progress since the 2012 Environment Strategy, the Bank’s work will continue to focus on: • Climate change by increasing support to countries for low-carbon development efforts, and climate-smart agriculture, improving access of client countries to renewable energy, and incorporating climate-related disaster risk into development planning.• Biodiversity by strengthening client countries’ systems to protect biodiversity and combat illegal wildlife trade and wildlife crime.• Improving environmental decision-making by supporting countries to build institutions and enhance their capacity for environmental management, including efforts to improve generation of environmental and natural resources information so that countries are better equipped to make informed decisions. Through the WAVES partnership, the Bank will continue to support countries to incorporate environmental considerations into their national accounts. • Fighting pollution and improving environmental health by strengthening environmental health valuation analysis, enhancing environmental governance frameworks and policy tools, addressing environmental legacies, and improving nutrient management and control of agricultural run-off.• Oceans by supporting countries to improve management of fisheries, protect critical ocean and coastal habitat and reduce sources of pollution entering waterways and oceans. BeneficiariesIn 2009, the fishery in Ngaparou in Senegal was on the brink of collapse due largely to a combination of over-fishing from artisanal fishing and added pressure of semi-industrial fishing vessels further offshore. Every year, fewer and fewer fishermen were able to support themselves and feed their families.The World Bank has been supporting West African governments since 2009 in their efforts to better manage the region’s rich natural resources through its West Africa Regional Fisheries Program (WARFP). The WARFP has supported Ghana, Cape Verde, Guinea-Bissau, Liberia, Sierra Leone and Senegal. The program supports a combination of regional cooperation, national reforms and local education and empowerment to help West African countries work together to manage their shared resources.“In the beginning, the main objective was restoration of our fish,” says Issa Sagne, President of the Local Committee of Fishers of Ngaparou (CLP). “Now, the fish are really abundant. We know when people from other villages are fishing illegally in our area when they try to sell very large fish that can only be found here now.” Show Less -
Bank ContributionBoth StAR and FMI are advisory units providing strategic counsel to clients. Some lending has, in the past, incorporated AML/CFT-related components – either in the context of Developm... Show More +ent Policy Operations or Investment Operations. There are also some examples of Technical Assistance loans that included AML/CFT components. Such lending operations were then led by the respective Regions, with FMI providing technical support.The advisory services described above include:1) technical assistance – through workshops, mentorships, hands-on trainings and advisory services supporting countries in developing effective laws, regulations and institutional frameworks; assessing the risk of money laundering and the financing of terrorism on their economies and financial systems; training financial-sector supervisors and investigators, prosecutors, or judges; and designing and implementing effective asset-disclosure systems for public officials.2) policy development – through collaboration and research, contributing to international debates with a unique perspective that links anti-money-laundering efforts with governance and anti-corruption, financial inclusion, ease of doing business, taxation, stolen-asset recovery, asset disclosure, environmental crime, and other development issues. 3) diagnostic evaluations – through assessments of countries’ AML-CFT regimes to diagnose effectiveness and areas of potential risk, as stand-alone diagnostics or in the context of the Financial Sector Assessment Program (FSAP).StAR’s interventions have evolved from a strong focus on policy and advocacy work to a rebalancing toward assistance to client countries on asset recovery, putting a premium on hands-on capacity-building for recovering stolen assets that are stashed abroad. Overall, the financial resources allocated to these advisory services range between US$5 million and US$7 million per year and have been financed by a mix of Bank and Trust Funds.PartnersIn order to achieve meaningful results, both StAR and FMI work with partners in recipient and donor countries, as well as with relevant multilateral institutions and civil society organizations. The StAR Initiative is a joint partnership between the World Bank Group and the United Nations Office on Drugs and Crime, ensuring that all activities are conducted under the umbrella of the UN Convention against Corruption (UNCAC) – specifically Chapter V on asset recovery. Beyond this funding partnership, StAR is engaging other partners – international organizations (e.g., United Nations Development Programme (UNDP), OECD, FATF and INTERPOL), financial centers (e.g., G8 and G20 members, the United Kingdom, the United States, Switzerland and others), countries affected by corrupt activities and civil society organizations (e.g. Transparency International and Global Witness). FMI has also worked with a range of partners since the start of the AML/CFT program. Because of the FSAP umbrella, the International Monetary Fund is a critical partner, in terms of both policy and technical assistance. FMI is also deeply engaged with the Financial Action Task Force (FATF) and its regional bodies. Other partners include the United Nations, the Organization for Economic Cooperation and Development, the Organization for Security and Co-operation in Europe, the Egmont Group of Financial Intelligence Units, and the Commonwealth Secretariat. FMI also works with several bilateral partners – either in the context of their support and contribution to the AML/CFT program or through coordinated and jointly delivered trainings. Moving ForwardFMI provides client countries and World Bank staff with tools that increase transparency and go after “dirty money,” with the aim of strengthening the financial soundness, safety and integrity of financial systems. Our AML/CFT and asset-disclosure tools offer innovative ways to fight crime and address development issues involving governance and anti-corruption priorities, financial inclusion, the ease of doing business, stolen asset recovery and illicit financial flows. The training and capacity-building provided by FMI helps sustain national-level efforts to strengthen the governance and anti-corruption agenda.The World Bank is the only multilateral technical assistance provider on illicit financial flows that has a specific focus on developing countries. It is also the lone provider with the expertise and skills to cover the entire range of issues at stake in AML/CFT – including laws and regulations as well as institutional strengthening and capacity-building in the criminal justice sector. There is also a growing understanding by the G8 of the importance of action to recover stolen assets and to combat illicit financial flows. During the upcoming U.S. presidency of the G8, we will continue to provide advice and technical assistance to client countries, as well as the World Bank. Show Less -
ChallengeEgypt experienced very rapid urbanization until the mid-l980s, fueled by both rural to urban migration and natural population growth. Accommodating the increased urban population growth in su... Show More +ch a short period presented major challenges for the government’s housing and urban policies, infrastructure and institutions. The Government of Egypt constructed about 19 new towns and satellite cities, comprising more than 230,000 housing units, but this imposed a heavy burden on the budget, while many of the new urban communities remained sparsely populated. To help improve access to formal home ownership by low- and middle-income households, the Government of Egypt had provided a selection of subsidies, through a wide range of special programs, many of which involved large government subsidies and imposed a heavy burden on public finances. These efforts were not only unsustainable, but were satisfying only a small part of the demand and not reaching targeted income groups.Meanwhile, access to affordable housing and home ownership for most Egyptian households at project appraisal was greatly constrained by an undeveloped housing finance system. The banking sector offered very little formal housing finance to households although a few commercial banks—both state-owned and private—had made a limited amount of loans to homebuyers, mostly as part of their retail activities or as lending to developers, by using collateral other than mortgage pledges. A few developers had also been providing term financing under a system of deferred installment sale contracts, but these did not offer secure or favorable conditions for borrowers, and housing affordability was not improved because loan maturities were too short. SolutionThe project's development objective was for primary lenders in the financial market (both banks and non-bank lenders) to provide longer-term, market-based mortgage loan financing for residential housing. Such financing was scarce, in part, because primary lenders did not have reliable access to sources of term finance on favorable terms that could help them mitigate the associated business and lending risks. The Egyptian Mortgage Refinance Company (EMRC), the liquidity facility, will provide such a source. Since 2000, the World Bank has provided the government with substantial policy and technical advice on mortgage market development issues in support of their significant efforts to develop the policy, legislative and institutional foundations for a mortgage market. These efforts include providing feedback on the draft Real Estate Finance Law, and its executive regulations, and bringing in the experience of other countries. The Bank also provided advisory services on the main building blocks for a well functioning mortgage market. The Mortgage Finance Project also brought best practice expertise and world-wide experience in alternative mortgage finance systems to the development of the emerging mortgage market. This project was part of an integrated package of World Bank Group support to develop and improve the performance of the financial sector in Egypt. This included a pragmatic series of development policy loans (DPLs), aiming at reforming the financial sector and improving the institutional infrastructure. The Bank also responded to the government’s request to serve in a coordinating role for channeling the support of other donors to the financial sector within a common framework.ResultsThe reforms implemented by the Mortgage Finance Project have yielded some of the most impressive results Egypt has seen in the financial sector. The project allowed banks and mortgage companies to have access to longer term funding through EMRC, which was established and operational. Access to funding contributed to growth in the volume of the mortgage loan portfolio and helped in improving access and costs of housing finance in Egypt, producing a more inclusive system.Achievements have also included:An increase in volume of market-based mortgage loans from LE 300 million in 2006 to LE 4.5 billion in 2011, exceeding the initial target of LE 4 billion.An increase in the length of term to maturity of a mortgage from 7 years in 2006 to 16 years in 2011, exceeding the target of 15 years.An increase in mortgage finance companies from 2 in 2006 to 12 in 2011, much beyond the target of 6 companies.A rise in bank lending for mortgages from LE 12 million in 2006 to LE 2.6 billion in 2011.An increase in the volume of participating mortgage lender borrowings from the liquidity facility, EMRC from nil to LE 450 million in 2011, again exceeding the target of LE 400 million.Bank Group ContributionThe operation was a partnership between the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC). The IBRD provided US$37.1 million for the project. Total cost of the project was US$209.4 million and included US$29.1 million from the client, US$104.7 million from local sources of the borrowing country, and US$38.5 million from sub-borrowers. The IFC worked closely with the World Bank in setting-up the EMRC, through 8 percent investment, in addition to providing advisory work and technical assistance aiming at improving the regulatory and legal framework of the mortgage market and in building the capacity of the liquidity facility. PartnersVarious donors, development partners, and international institutions have been providing support for the implementation of the government’s Financial Sector Reform Program through the provision of technical assistance, and analytical work on reforming and restructuring the financial sector, as well as developing the mortgage market in Egypt. This collaboration required effective coordination, led by the Bank. Together with the IFC, the Bank provided technical support across a range of areas, but in particular in defining the business model, operating procedures and risk management framework of the EMRC. The U.S. Agency for International Development has been actively involved in mortgage market development in Egypt, and has commended the World Bank’s financial sector work, and especially the Mortgage Finance Project.Moving Forward Donors and development partners continue their efforts to support the financial sector in Egypt, especially through supporting inclusive finance, and low-income housing—a priority of the government in the wake of the revolution.Beneficiaries A number of institutions have benefited from the Mortgage Finance Project, including the EMRC, which benefited from substantial input right from its creation. The Mortgage Finance Authority (MFA) also benefited from substantial inputs into the regulatory framework for mortgages. The creation of the MFA, with support of the Bank, was a key step in creating a secure and strong regulatory environment to protect the interests of lenders and consumers. Underpinning the non-bank financial sector reforms in Egypt was the strengthening of its regulatory and supervisory framework. The unification of regulatory and supervisory objectives under the Egyptian Financial Supervisory Authority (EFSA), coupled with unifying the Auditors Oversight Board to cover all non-bank institutions, enhances the transparency and reliability of financial reporting in the non-banking sector. For the Mortgage Finance Fund (MFF) as part of the project, considerable effort was put into supporting the government’s mechanisms for creating incentives for lenders to reach lower income borrowers. Show Less -
ChallengePrior to the revolution, Egypt’s economic growth was on a recovery path, growing at 5.1 percent in fiscal year FY10 and 5.6 percent in the first half of FY11, due in part to a successful fina... Show More +ncial sector reform agenda supported by the first and second DPLs. In December 2010, the Egyptian economy was still experiencing the effects of the global financial crisis, but the January 2011 revolution sent the economy into a tailspin from which it has yet to recover fully. Moreover, the revolution led to a complete halt in economic activity and the prolonged political transition, several changes of prime ministers, and Cabinets, as well as the dissolution of the Parliament, contributing to the delay and ambiguity about policies and directions. The Central Bank of Egypt (CBE) had to respond to critical matters, such as capital outflows, depiction of international reserves, pressures on the exchange rate, and rise in the inflation rate, and the overall uncertainty in the macroeconomic policies.Solution The World Bank support for the DPL III addressed two key strategic objectives of most recent country assistance strategy (CAS), namely to enhance the capacity of the financial system and facilitate private sector development. For the past decade, the Bank has worked closely with the government on financial sector development issues, which has been of great benefit to Egypt to develop the policy, legislative and institutional foundations for a sound and stable financial system. The Bank has been supporting the Government of Egypt in the implementation of the financial sector reform program, through an integral package of analytical work, technical assistance, advisory services, and lending.ResultsOne of the key achievements of the reform program was the strengthening of the financial infrastructure, evident in: (i) operational status of real time gross settlements (RTGS) and Automatic Clearing House (ACH) with capacity to encompass low value payments, (ii) the increase of individuals receiving government worker and retiree payments through financial institutions reaching 2.9 million in 2011, compared to 0.6 million in 2008; (iii) the Central Bank of Egypt issued regulations on mobile phone payments and issued licenses to two banks and their mobile phone partners; and (iv) licensed money transfers from customer to customer and from customer to merchant.Key profitability and efficiency indicators of the state-owned commercial banks continued to improve despite the global crisis and the immediate implications of the January revolution. This reflects the strengthening of the banks as a result of the successful financial and operational restructuring of the commercial state-owned banks since the onset of the financial sector reform program that was continued under DPL III. Some key indicators include:decline in non-performing loans (NPLs)-to-total loans, from 14.8 percent in 2008 to 10.9 percent in 2011;increase in provisions-to-NPLs from 92.1 percent in 2008 to 94.6 percent in 2011;decline in the state-owned enterprises (SOEs) NPLs to reach zero in 2011, as opposed to LE 10 billion in 2008.Bank Group ContributionThis loan made by the International Bank for Reconstruction and Development (IBRD) of US$500 million represents the third tranche contributed by the Bank over the past decade to support Egypt’s financial sector reform program. These DPLs have been done in partnership with the International Finance Corporation (IFC), which has contributed to building the capacity of commercial banks, especially in the development of their small- and medium-sized enterprise (SME) and retail operations and in the area of risk management. In addition, the IFC provided advisory services to financial intermediaries—banks, and NGOs-Microfinance Institutions (MFI), as well as micro and small enterprises (MSMEs). The IFC has also supported the drafting of the non-bank financial institutions (NBFI) Law and its Executive Regulations—key triggers in this DPL.PartnersThe African Development Bank (AfDB) provided parallel financing to the Financial Sector Reform Program, of an equivalent amount of US$ 500 million in the first phase of the program.Moving Forward The Bank, along with other donors and development partners that are actively involved in the financial sector work (U.S. Agency for International Development, the International Monetary Fund, the European Union, and AfDB), continue to work closely with the government on financial sector development issues and monitoring the progress of the government’s Financial Sector Reform Program. The Bank continues to serve as chair of the Financial Sector Donors Subgroup, ensuring effective coordination and allowing all donors to leverage resources better for both lending and technical assistance. Beneficiaries Bank lending and analytical support for the government’s Financial Sector Reform Program has enhanced the capacity of the CBE, enabling them to develop the policy, legislative and institutional foundations to support a sound and stable financial system which, in turn helps in facilitating private sector development. Show Less -
ChallengeEgypt has a rapidly expanding economy that needs a reliable and low-cost source of electric power. The rate of growth of electricity demand in Egypt has exceeded 6.5 percent per year over the... Show More + past 10 years and is expected to remain in the 6-7 percent range over the next 10 years. In 2002, about 95 percent of the population was served by the electricity grid in Egypt, compared to 91 percent in the region. Of a total demand of 83 terawatt hours (TWh) on the interconnected electricity generating system, 78 percent was met by thermal plants, of which 90 percent operate on natural gas and 10 percent on heavy oil, while 19 percent of total demand was met by large hydro (principally the High Dam and Aswan 1&2), and electricity from independent power producers (IPPs), including 3 percent of this amount from wind.SolutionThe objective of the project was to increase the share of solar-based electricity in the Egyptian energy generation mix, thereby contributing to the government’s objective of diversifying electric power production. The global development objective of the project was to reduce greenhouse gas emissions from anthropogenic sources by increasing the market share of low greenhouse-gas emitting technologies. The Bank was also aware that the project would be useful in demonstrating the operational viability of hybrid solar thermal power generation technology in Egypt and elsewhere. In fact, the project was one of several similar ones launched around the world with the support of the GEF, and other financing sources. It was part of a global effort to accelerate cost reduction and commercial adoption of large-scale, low greenhouse-gas emitting generation technologies through demonstration, learning and dissemination. Secondarily, the project aimed to make a modest direct contribution to the reduction of greenhouse gas emissions. ResultsThe construction of the Kureimat Integrated Solar Combined Cycle (ISCC) power plant started in January 2008 and reached commercial operation as a whole at the end of June 2011. The project achieved its development objective of increasing the share of solar-based electricity generation (20 megawatt (MW)) in Egypt and contributed to the government’s objective of diversifying electric power production. Although the contribution of this project to the total solar generation capacity in Egypt is small, it demonstrated a new technology with prospects for scale-up and diversifying the energy mix, which at the moment is very expensive, but has the potential to be competitive once large markets tap into the technology. Egypt has the potential to create an industry cluster of local manufacturing of the technology. Through the dissemination of the lessons learned from this project, it is also expected to meet its global development objective of reducing greenhouse gas emissions from anthropogenic sources by increasing the market share of low greenhouse-gas emitting technologies. The implementation of the Kureimat ISCC project has helped bring greater awareness of this technology in Egypt and the region. Beyond the region, there has also been keen global interest in this plant with Egypt hosting South-South exchanges of knowledge on its construction and operation. The project succeeded in meeting the following key performance indicators:Total electricity generated from solar sources 35.1gigawatt hours (GWh)/year, targeted value was 33.4 GWh (based on limited data)Solar output as a percentage of total energy produced in the hybrid plant was 4.1 percent.Bank Group ContributionThe World Bank provided technical assistance and managed the overall project, with the Global Environment Facility (GEF) providing US$49.8 million in grant financing. PartnersThe original co-financier was the Japan Bank for International Cooperation (JBIC), but as a result of mergers in 2008, the Japan International Cooperation Agency (JICA) took over the role. In addition, the Bank has engaged a broad range of stakeholders, including academia, nongovernmental organizations (NGOs) and the private sector during dissemination events to share experiences from the Kureimat project. There is also continued engagement with stakeholders to receive ongoing feedback on the future development of Concentrated Solar Power (CSP) in Egypt and in the region as part of the Middle East and North Africa (MENA) CSP Scale-up Initiative.Moving Forward In part due to the experience gained in the implementation of this project, the government is preparing its next CSP project at Kom Ombo, Upper Egypt at a scale of 100 MW. This proposed project will also receive support under the MENA CSP Scale-up Initiative. The MENA CSP Scale-up Initiative is a US$5.6 billion program (including US$750 million of concessional funding from the Clean Technology Fund) led by the World Bank Group, working closely with the African Development Bank and other European, Arab, Islamic, and Japanese donors, to implement nine commercial-scale power plants (in Algeria, Egypt, Jordan, Morocco and Tunisia), and two European Union (EU)-MENA interconnection projects. Beneficiaries The main beneficiaries of this project were the Government of Egypt (GoE) and New and Renewable Energy Agency (NREA), as well as the people of Egypt. Show Less -