16 JUNE 2015

USAID's Latest and Future Initiatives in Egypt

Mission Director, USAID / Sherry F. Carlin

Remarks at AmCham Egypt Breakfast
June 16, 2015

Good morning.  Please let me begin by thanking Anis Aclimandos and Hisham Fahmy for inviting me to speak with you today.  USAID has a long friendship with AmCham Egypt, and we welcome opportunities to share information about our programs and hear from you about how we can support private sector-led growth in Egypt.

I’d like to introduce my technical team who is here with me today.  1) Dr. Bill Patterson, who many of you may already know, is the Director of our Economic Growth Office; 2) Dr. Arturo Acosta, Deputy Director of our Education Office; 3) Dr. Nabil Al-Soufi, is the Director of our Health Office; and 4) Taly Lind, is Acting Director of our Democracy and Governance Office.  I hope before leaving today, you’ll have an opportunity to exchange cards with each of them. 

Egypt is facing a period of great challenge and great opportunity.  There is a tangible demand for shared prosperity, to which the Egyptian government has pledged its commitment. As Egypt emerges from a period of transition and uncertainty, now is the time to refocus “our” energy toward achieving this goal.  I say “our” energy, because “shared prosperity” demands the sustained efforts not only of the Government of Egypt, but also of the private sector, civil society, and the donor community.  I’d like to talk to you today about how “we” can—and must—work together to achieve rapid, inclusive, and sustainable economic growth.

When Secretary Kerry addressed AmCham Egypt at the Economic Development Conference in Sharm this past March, he praised President El Sisi for his bold economic reform agenda to improve the climate for doing business in Egypt and enhance macro-economic stability.  USAID stands ready to assist the Egyptian government and private sector in this challenging but critical endeavor.

As leaders of the business community, you play a leading role in advancing a structured, results-oriented reform effort, in partnership with the Egyptian government.  You can speak to the needs of Egypt’s private sector with the deep knowledge and credibility born of direct experience and personal investment.  It is private sector advocacy and active engagement with the government that must be the driving force behind these policy changes.  The business community in Egypt must play a central role, along with other civil society groups, in advancing Egypt’s economic development and its transition to a stable, democratic society.

We must also ensure that economic growth is broad-based and inclusive. The low participation of women and youth in the workforce is a source of untapped potential.  As the young people of Egypt’s youth-bulge begin to enter higher education and the workforce, Egypt faces a crossroad of risk and opportunity. If these young people find productive employment, Egypt will realize vast economic benefit.  If they are unable to find jobs, it could strain the country’s resources and create additional pressures.

Youth unemployment is a challenge in Egypt, particularly among educated youth, who struggle—sometimes for years—to find their first job.  This struggle has affected women disproportionately.  Women’s overall participation in the labor force is very low in Egypt compared to the rest of the world, and even within the Middle East.  It’s particularly low in the private sector. 

Research has shown numerous economic benefits to increasing women’s economic participation.  It increases household incomes and results in higher consumption spending, and it expands the talent pool available to employers. We also know that economies that take full advantage of a country’s potential human capital are more competitive globally.  Therefore, as we work to remove economic constraints in order to create more jobs, we must simultaneously address barriers that prevent women and youth from accessing these employment opportunities.

USAID remains committed to working with the government and the private sector to address challenges to Egypt’s economic growth.  Consistent with the economic development strategy articulated by President El Sisi at the conference in Sharm, our programs focus on improving the business enabling environment; increasing private sector competitiveness, particularly for SMEs; improving workforce skills; and promoting growth that is broadly shared by all Egyptians.  

We work to enhance the enabling environment for trade and investment.  For example, as a result of past support to the Egyptian Customs Authority to streamline procedures and reduce tariffs, we contributed to reducing the time to import from 29 days in 2006 to 12 days in 2012.  Through another project, USAID worked with the local Chambers of Commerce in four Egyptian cities to establish “one stop shops” for business services.  As a result, the time to formalize a small business was reduced by 50%– allowing business owners to quickly start their business, generate profit, create jobs, and contribute to the economy.  We plan to expand this program going forward, as well as provide assistance to improve trade facilitation policies. 

To further improve Egypt’s business enabling environment, we are designing a new activity to address some of the macro-economic challenges that constrain Egypt’s growth. Where Egyptian reformers emerge, USAID will support efforts to establish a stable macro-economic environment that stimulates growth through improvements in fiscal solvency, public debt management, cash management, public capital expenditure, and regulatory frameworks.  Partnering with the private sector to engage in policy advocacy must be an integral component of this project.

USAID is also focused on increasing the competitiveness of Egypt’s SMEs, which are the drivers of job creation in growing economies.  Recently, our projects have built the capacity of select Egyptian SMEs to expand their access to export markets and helped them increase their energy efficiency, as well as their bottom line.  A new, planned activity to strengthen the SME sector will stimulate entrepreneurship, especially among women and youth; provide business development services; and, increase access to financial services that are not yet fully developed in Egypt, such as leasing, venture capital, and angel investing.

We also support projects that focus specifically on Egypt’s two largest employment sectors, agriculture and tourism.  Our agriculture programs work with small farmers to improve crop yields and expand access to export markets.  In the past two years alone, our agriculture exports program created almost 7,000 full-time jobs and over 8,000 part-time jobs, increasing rural incomes. 

As the tourism sector starts to recover from a downturn, USAID continues to improve conservation and management of cultural resources and increase the skills of tourism-sector workers.  We have supported large-scale projects to save key monuments, such as the Sphinx and tombs in the Valley of the Kings, from the threat of rising groundwater and flash floods.  These efforts are critical not only to Egypt’s cultural heritage but also to its tourism industry, on which so much of the economy depends. 

Without doubt, a growing economy requires a better-educated, skilled workforce, and USAID will expand the quality and scope of educational opportunities to ensure the skills of graduates are matched to the demands of the labor market.  USAID’s flagship Higher Education Initiative, also known as HEI, which I know you are keenly interested in, is a $250 million dollar, multi-year program to provide educational opportunities to high-achieving students and equip Egyptian higher education institutions to better meet the needs of the Egyptian business community and a modern global economy.  Through HEI, we will provide undergraduate and master-level scholarships for study both in the United States and Egypt to approximately 2,000 talented individuals from underserved communities, in targeted fields such as business administration, science and technology, engineering, and economics.  We’ve already awarded one round of scholarships to Egyptian women to obtain MBAs from U.S. universities. These young women—who already have impressive professional and academic credentials—will focus their studies in areas such as international business, IT, real estate, and transportation management.  And they have a vision for how they will apply these new skills to make their respective industries more globally competitive - when they return to Egypt.

HEI will also support partnerships between Egyptian universities and technical colleges, U.S. universities, and the private sector.    Through these linkages, participating institutions will strengthen instruction techniques, modernize and improve curricula and degree programs, and focus educational opportunities in areas where there are significant skills gap in the market. We’ve heard “you” talk about the gaps between what students are learning and what real needs are in the private sector.  In response, we are currently conducting an assessment to identify where these labor market gaps exist. The findings will also allow us to better target university partnerships to focus on fields of study that will contribute most significantly to Egypt’s economic growth including “your” needs for skilled employees within the private sector.  Findings may also include private sector support to university leadership in order to catalyze greater collaboration through professional opportunities in areas such as patents, commercialization of research, or funding joint research. 

Collectively, we need to also think how best the private sector can support universities directly.  For example, I understand that Hisham serves on an advisory board at AUC.  We would encourage more AmCham members to share their expertise in similar ways.  There are also possibilities of endowments, validating needs assessments and research designs that are innovative, relevant and forward leaning. 

What we here time and again, even when skilled applicants exist, many companies report that they’re unable to identify suitable candidates, indicating a need for improved job matching and training in soft skills, such as communications and problem solving.  USAID has partnered with the Ministry of Education and Ministry of Higher Education to establish employment and career development centers in technical high schools and public universities that link students to private employers through activities such as internships and job fairs.  Our initial pilot project helped several thousand Egyptians move into jobs, of which 40 percent were young women.  Going forward, USAID will continue to assist the Ministry of Technical Education and Vocational Training to expand the numbers of schools and institutionalize outreach by technical high schools to the private sector. 

Private sector participation must be central to our higher education and workforce development activities.  Universities, technical colleges, and vocational training institutes must be able to produce graduates with the skills your companies need to be globally competitive. 

I’ve described what USAID can do for you and for Egypt, and I also want to talk to you today about what you can.  As successful representatives of the private sector, you contribute to Egypt’s economic growth by running competitive and profitable businesses, creating the most jobs possible according to your business model, and paying fair wages.  The private sector can also play a key role in advancing Egypt’s development through corporate social responsibility initiatives that leverage your expertise, your capacity for innovation, and—in a constrained budget environment—your resources. 

USAID has partnered with a number of AmCham members on projects, both in Egypt and globally, so I know your members are already aware of the benefits of corporate social responsibility. Providing financial support for Egypt’s development increases your profile, expands your network, and strengthens your brand locally.  Partnership with the private sector helps USAID increase the reach of our projects, improve our effectiveness, and ensures the sustainability of development efforts even after our funding has ended.  USAID can provide opportunities to support activities that align with your business model and amplify development impacts.  These partnerships are win-win, not just for USAID and the private sector, but for the people of Egypt.

USAID’s flagship mechanism for partnering with the private sector is the Global Development Alliance, or GDA, and we’ve had great success with this model in Egypt and the Middle East.  Companies like working with USAID because they know we have rigorous financial monitoring systems that assure money will be used for the intended purpose and that we have a strong focus on documenting results through indicators and regular reporting.  USAID recently completed a GDA with Heinz Corporation in Egypt that provided in-kind grants to 3,000 farmers to cultivate over 10,000 feddans for processing tomatoes in Upper Egypt – creating the largest area for tomato processing under production in Egypt.  Heinz contributed with direct technical assistance and additional investments in its plant to expand its capacity.  This again, created a win-win situation for all.  Through implementing new technologies and practices, farmers’ net income from tomato cultivation more than doubled by the time the project ended in 2013 and Heinz benefited by expanding its supply-base. 

Also in Egypt, Coca Cola and USAID, through the Water and Development Alliance, are designing a new program that will strengthen the capacity of local water utilities, increase their revenues and reduce water losses.  This, will improve service delivery to customers by reducing service cuts and improving water pressure. 

Elsewhere in the region, USAID and Volvo are partnering in Morocco on a training academy that will prepare students to maintain and operate industrial and commercial equipment. The 7.3 million dollar partnership will also train students in technology and general business skills, preparing graduates to enter the modern workforce – either employed by local or multi-national companies like Volvo, or as entrepreneurs running their own businesses.

Not every partnership tool works in every context.  We’ve tried, for example, to encourage lending to SMEs by partnering with financial institutions to provide partial loan guarantees.  Though this model has succeeded elsewhere in the world, many SMEs still could not meet bank requirements for collateral—a reminder of the challenges that SMEs continue to face here in Egypt.

I ask you to consider where your resources might best be leveraged in support of Egypt’s most critical development goals.  You could partner with us to improve training methods for workers in your respective industries, and provide on-the-job vocational training opportunities for technical high school students.  Through our Higher Education Initiative, you could fund scholarships for emerging leaders in your fields; provide internships to promising students both in Egypt and the United States; help universities and technical colleges update their curricula; or support university researchers in commercializing their discoveries. 

Opportunities exist in the health sector as well, where USAID continues to combat infectious diseases and improve maternal and child health.   For example, we’re providing support to the Ministry of Health to design a public health communications campaign to help prevent the spread of Hepatitis C.  Implementing this campaign, for example, through mass communication and public service announcements, requires significant resources, and this is exactly the kind of intervention that has been done successfully by the private sector in other parts of the world. There are also opportunities in human rights which would include countering gender-based violence or supporting inter-faith dialogue, both of which we’re actively engaged.  

Many of the new projects I’ve described today will roll out in the coming months, and we want to engage the private sector, including AmCham members, as early as possible.  In addition to our strong desire to scale up our partnership activities, we’re seeking your input and participation in our new projects to strengthen Egyptian businesses and support the government’s economic reform efforts.  We also want to hear your ideas for how to increase the economic participation of women and youth, especially in the private sector. 

In closing, I’de like to propose that AmCham designate one or more points of contact to follow up with senior members of my team, so that we can start discussing—in concrete terms— how the private sector can actively support key development goals in a way that benefits your businesses and the Egyptian people.

Thank you again for giving me the time to share our programs and ideas for collaboration.  My colleagues and I look forward to partnering with you.