Overview

The World Bank Group’s current engagement with Egypt is guided by its Country Partnership Framework (CPF) 2015–19 and Performance and Learning Review (PLR), which have resulted in the extension of the CPF to 2021 and which focus on fighting poverty and inequality. These are informed by rigorous analysis of the key constraints to both poverty reduction and creating shared prosperity, and by extensive consultations with the government, the private sector, academia, civil society organizations, and youth groups. The CPF comprises three, interconnected, strategic focus areas consistent with the Government of Egypt’s longer-term development strategy: i) improving governance, ii) improving opportunities for private sector job creation, and iii) social inclusion. The CPF was designed to remain flexible so that it could respond to the country’s evolving needs while offering world class expertise on integrated development solutions customized to Egypt’s specific context. 

The two-year extension granted as part of the PLR (endorsed by the Board of Directors in May 2019), positions the World Bank Group to build on its existing strategy by focusing on mobilizing finance for development and human capital development, and on enabling the transition to a digital economy. The extension supported a key goal of the Bank’s Regional Strategy—the renewal of the social contract—by addressing regional disparities through interventions in Egypt’s lagging regions, and by strengthening the social safety net system, improving accessibility to low-income housing, expanding access to water and sanitation services (especially in rural areas) and household natural gas, and moving ahead with education and health reform programs. The World Bank’s current portfolio in Egypt comprises 13 projects (10 IPFs and 3 PforRs), with commitments totaling US$5.84 billion. 

The World Bank Group is preparing a new Systematic Country Diagnosis (SCD) to inform the new CPF 2021–2025, with job creation and socio-economic inclusion the core theme. The new CPF will address priorities identified by the SCD and the Country Private Sector Diagnosis (CPSD), in addition to providing relevant analytical tools and utilizing global knowledge, financial resources, strong partnerships, and the Bank’s convening power to help the people of Egypt reap the fruits of their patience.

Last Updated: Oct 01, 2020

The Government of Egypt, supported by the World Bank Group, has achieved significant results across all three focus areas under this CPF. Policy reforms—backed by the US$3.15 billion Development Policy Finance (DPF) program and consisting of 3 operations over the 3 years of 2015 to 2017—have supported Egypt’s homegrown reforms’ program, which is aimed at enhancing the economy, creating jobs, and achieving sustainable growth, especially in the energy sector. 

Government revenues have been bolstered through the Income Tax Law while expenditures have been brought under control, especially on wages and salaries (through annual budget instructions and the automation of salary payments) and on energy subsidies (through annual tariff adjustments for gas and electricity). The environment for investors has been strengthened by amending the Investment Law, implementing the Competition law, and reforming the industrial licensing regime, which helped reduce the time taken in providing licenses to low risk industries by 80%. 

The World Bank Group has been supporting the Government of Egypt to mitigate any adverse effects the first wave of reforms may potentially have on the poor and the middle class. The Bank has helped design and finance key flagship projects and programs to do this, using financial instruments to: (i) enhance social protection programs; (ii) support sustainable job creation activities; and (iii) improve quality service provision in the country. Its active interventions include:

• The Bank has supported the government in designing and scaling up social safety net programs, including the Takaful and Karama cash transfers’ program. Due to the success of this program, US$500 million in Additional Financing for Egypt’s social safety net program was signed for on September 11, 2019. The program has reached about 3.1 million households (around 11 million citizens); its total financing is US$900 million. The program has expanded its coverage during the pandemic, adding 160,000 households. The project will boost the reach and efficiency of Takaful and Karama by piloting models aimed at economic inclusion for poorer households that provide job training and links to economic opportunities. Pilot programs will have a special focus on women and youth. 

• The Upper Egypt Local Development Program for Results (US$500 million) is working to improve the business environment for private sector development and the local government’s capacity for quality infrastructure and service delivery to citizens and local firms in two of Egypt’s poorest governorates, Qena and Sohag, which have a combined population of 8 million. The program has supported about 4,000 firms through interventions, including the digitalization of administrative services for construction permits and business licenses, resulting in a 25% decrease in the time required to obtain them, as well as an increase in occupancy rates in industrial zones (of 23% in Qena and 5 % in Sohag). So far, infrastructure and service investments are estimated to have benefited about 5 million citizens, of whom about half are women. Citizens, including women and youth, are involved in identifying sources of capital investment through consultations held with almost 5,000 local citizens to date. 

• The Household Gas Connections Project will provide 2.3 million of households in rural areas with a reliable, lower cost, grid-connected natural gas supply by 2021. Over 1.5 million households have already been connected, including over 286,000 poor households eligible under the project for subsidized connection costs. The project supports the institutional development of the gas sector by increasing digital development at the Egyptian Natural Gas Holding Company, and by developing a regulated natural gas market. 

• The Sustainable Rural Sanitation Services Program, (US$850 million, including Additional Financing), will bring sanitation to about 1.73 million people in highly polluted villages and satellite areas of Sharkia, Dakhaliya, Beheira, Menoufia, Damietta, and Gharbia governorates in the Nile Delta, through household connections and wastewater treatment facilities. The program empowers and incentivizes local water and sanitation companies to deliver effective, inclusive, and accountable decentralized services, and is laying the groundwork for the sustainable development of the sector by developing its strategy and supporting regulatory and tariff reforms. It has reached 14,000 households to date, with over 150,000 household sanitation connections under construction. 

• The Inclusive Housing Finance Program-for-Results (US$500 million) aims to improve the affordability of formal housing for low-income households in Egypt and strengthen the Social Housing and Mortgage Finance Fund’s capacity to design policies and coordinate programs in the social housing sector. As of June 2020, the program has supported the delivery of demand-side subsidies to 314,000 households across Egypt’s 27 governorates, with a 75% disbursement ratio. The program has contributed to greater social and youth inclusion: over 20% of beneficiaries are women, 70% are below the age of 40, and 18% below the age of 30. It has also prioritized families, with 57% married couples with young children. Analysis of its performance shows that, on average over the past four years, more than 75% of beneficiary households were from the lowest 40% income bracket. Another US$500 million in Additional Financing was signed for by the Government of Egypt on July 5, 2020, with parliamentary approval obtained and presidential ratification pending. 

• The Bank-supported Egypt COVID Response Project (US$50 million) was signed off on, on July 6th, 2020, and will focus on immediate operational challenges and critical areas identified as key gaps in Egypt’s national response. Project funds will complement the activities of Egypt’s COVID-19 response plan by supporting costs associated with: (i) procuring and distributing medical equipment, including ICU and laboratory testing equipment and supplies, infection control products, and PPE; (ii) “Corona incentive pay” for healthcare personnel undertaking COVID-19-related tasks or serving at COVID-19 facilities, or specific costs related to the mobilization of health teams and hazard/indemnity pay (consistent with the government’s policies as per paragraph 36 of the COVID-19 SPRP); (iii) health worker training; (iv) operations of designated quarantine, isolation, and treatment centers; (v) mobilization of rapid response teams in contact tracing; (vi) development of contextualized messaging platforms and tools; (vii) innovative M&E for social distancing strategies, including community mobilization; and (viii) devising and adopting proper policy tools to optimize the country’s response to COVID-19.

• The Supporting Egypt’s Universal Health Insurance System (UHIS) project was approved by the Board on June 16, 2020. The project will support Egypt to implement the new UHIS as envisioned in the newly passed Universal Health Insurance Law. The project will be implemented by the Ministry of Finance through a Project Management Unit and four newly formed UHIS organizations: (i) the Universal Health Insurance Agency, which serves as the ”purchaser”; (ii) the Healthcare Organization, which serves as the “provider”; (iii) the General Authority for Healthcare Accreditation and Regulation, the “accreditor” responsible for quality assurance and accreditation; and (iv) the Egyptian Authority for Standard Procurement and Medical Technology Management, the “public procurer” responsible for buying drugs, medical equipment and other supplies for the public sector. The project will support Phase I of the rollout of the UHIS in 6 governorates: Port Said, Suez, Ismailia, South Sinai, Luxor, and Aswan. The 6 governorates are home to about 6 million people, out of Egypt’s total population of nearly 100 million.

• The Promoting Innovation for Inclusive Financial Access Project (US$300 million) expanded access to finance for micro- and small enterprises in underserved regions using innovative financing mechanisms, with a special focus on youth and women. The project closed in December 2019. Over its 5-year lifespan, the project issued loans to 174,808 Egyptians, of which 42% were women, 43% were under the age of 35, and 42% were in underserved regions. The number of businesses launched (from loans) created 303,213 jobs. In April 2019, the World Bank approved a successor project, Catalyzing Entrepreneurship for Job Creation (worth US$200 million) that will continue creating jobs and improving economic opportunities for Egyptians, again with a focus on women and youth. This project provides a comprehensive package of financial and non-financial support to traditional MSMEs, innovative start-ups, and high-growth firms. It went into effect in January 2020.

• The Education Reform Project (US$500 million) supports a major government effort to improve teaching and learning conditions in public schools, with a focus on: (i) improving kindergarten education; (ii) enhancing the capacity of teachers and educational leaders; (iii) the intensive use of digital resources for teaching and learning; and (iv) the introduction of a new, computer-based secondary school exit examination regulating access to universities. To date, the Ministry of Education and Technical Education has achieved the following: (a) the expansion by more than 40% of teachers trained under the teachers’ professional behavior training; (b) developing and administering new computer-based tests for grade 10 and grade 11 students nationwide; and (c) the training of staff to create an item bank, manage the administration and marking of the tests, and make the grade 10 and grade 11 scores available electronically less than a month after students are assessed, to students, directorates, districts, and school principals. Using the UK Trust Fund, the World Bank has provided technical assistance for a kindergarten Diagnostic Study to identify the strengths and opportunities in teaching practices. 

• The Egypt National Railways Restructuring Project (US$600 million, including Additional Financing), supports the government and Egyptian National Railways (ENR) to improve the reliability, efficiency, and safety of railway services by modernizing signals and investing in new tracks. The project has introduced measures to strengthen ENR’s management capacity and restructure operations to address the railway sector’s responsiveness. An estimated 1.4 million passengers will benefit from improved railway services daily on a high-density, passenger traffic corridor. The signaling component includes work on 640 km of track and 120 railway stations along the Cairo–Alexandria and Beni Suef–Asyut–Nag Hammadi lines.

• The Greater Cairo Air Pollution and Climate Change Project (US$200m) will contribute towards resilient and sustainable recovery that includes specific COVID-19 measures in support of government efforts to mitigate health and environmental hazards. Activities are focused on building responsiveness and resilience into institutions and systems, with an emphasis on the health sector (treating and minimizing contaminated waste) and service sector (enhancing worker safety and raising awareness on the link between respiratory infections and air pollution). The project aims to support an integrated climate and air quality management plan for Greater Cairo; the construction of an integrated waste management facility; and the financing of a demonstration low/no emission e-bus transport fleet and activities related to running it. These are expected to reduce the burden of air pollution on health and the economy. 

• Development policy operations have supported reforms to move away the government’s focus away from subsidized goods to market-based solutions. The reforms support changes to the business environment with the goal of promoting private sector-led growth for job creation and improving accountability and transparency. Sound fiscal consolidation, supported by this DPF, has allowed the Government of Egypt to redirect its fiscal savings to the conditional cash transfers program, food subsidies, and social pensions programs. A follow-up DPF supports measures to improve access to finance and strengthen financial inclusion, especially for small firms and entrepreneurs, through the creation of a movable collateral registry (the first in the Middle East).

• A rich program of Advisory Services and Analytics (ASA) helps identify and implement reforms in Egypt. These include:

1. Supporting the government to strengthen human capital development by improving key aspects of social protection, education, and health programs, such as drafting social protection policies aimed at efficiency and effectiveness. A strategy for higher education will be produced to aid the employability of public university graduates and prepare them for opportunities provided in a more dynamic business climate and private sector. This will explore options for the sustainable and equitable financing of the public higher education system as well. Outside of this, dialogue and technical assistance will be given on topics such as food subsidies, pensions, and migration. The work will culminate in a Human Capital Strategy. 
2.  To improve Egypt’s competitiveness and promote private sector-led, inclusive growth, the program includes other advisory services and technical assistance offered to promote knowledge and capacity in private and financial sector development, and to expand the analytical foundation of the World Bank Group’s operations in Egypt. 

Last Updated: Oct 01, 2020