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A sustainable tourism model transforms economic development: the Egypt case study

Yomna Mohamed, Head of Experimentation

September 12, 2022

Egypt is a world-renowned touristic destination. Tell someone you are visiting Egypt, and the pictures immediately come into focus: the iconic pyramids of Giza, with the mysterious Sphinx standing guard; the beautiful beaches along the coast, warm and inviting; the vibrant and bustling bazaars, infused with the legacy of the pharaohs, teeming with the rich cultures of its people.

As the top destination for tourists visiting North Africa, how might Egypt evolve its tourism industry into a sustainable engine for economic development – particularly as the world emerges from the pandemic?  More fundamentally, might tourism sector provide an opportunity to rethink the development model capable of withstanding & thriving in the context of interlinked, largely unpredictable and fast-moving crises – from food security and changing climate, to rapid inflation, polarization, economic downturn & inequality?

This is the critical question facing UNDP Egypt, one of nine country offices selected by UNDP’s Strategic Innovation Unit to join the second cohort of Deep Demonstrations, an initiative financed by the Government of Denmark.

In this post, we detail the context for tourism in Egypt, consider emerging trends in the economic model, and share progress to date in shaping broader system transformation.

The Egyptian Context

Egypt is best characterized as a Low-Cost Mass Tourism Magnet. According to the IMF , the tourism industry employed 10 percent of the population and contributed to about 12 percent of GDP pre-pandemic. Egypt ranks first in Africa, fifth in MENA, and 51 st globally in the travel and tourism development index (TTDI). It is a top performer in the MENA region with regards to environmental sustainability (31), natural and cultural resources (33), and business and cultural travel (22). With over 100 million in population, Egypt is both a prime destination for nature-based activities and a home to rich cultural diversity.

While the pandemic has definitely been an accelerant, the combination of economic factors and new norms that underpin global tourism raise fundamental questions about long-term viability (see fig 1). Even as the global airline industry recovers from the pandemic, the costs of long-haul travel have become increasingly unaffordable – not only in the rising price of fuel but also in its contributions to climate change. The unexpected benefits of lockdown, improved environments and ecosystems, have countries questioning whether they want to return to the risky, crowded, over-reaching pre-pandemic world. And COVID-19 has magnified the vulnerability of local communities who already do not benefit from unsustainable tourism.

fig 1. Macro Trends, or the Opportunity Space for Change

This requires rethinking the model entirely. The circumstances call for collective effort that transforms the system to one based on sustainability, resilience, and putting local communities first.

Looking at the adjacent possible and entry points for unlocking systems transformation

In response, UNDP Egypt has embarked on a journey to rethink the tourism model and develop a portfolio of policy options on sustainable tourism that align with national priorities.

This approach relies not on a singular discrete intervention but a full system-wide transformation. The adaptive framework is designed to continuously learn from experience and detect new opportunities or needs in the system. A portfolio-based approach serves as a dynamic repository of strategic ideas that frame policy, an investment pipeline for funders, and a coordinating mechanism for relevant stakeholders.

In order to design this portfolio, it is necessary to start with strategic intent. This involves three specific actions –

1. Create a shared vision at the national level: 

This frames the possibilities for a transformative agenda and mobilizes stakeholders to build sustainable, innovative tourism in Egypt. A critical mindset shift is seeing investment in the population and nature as an investment in tourism, where tourism becomes an entry point for rethinking the country’s existing development paradigms.

2. Reimagine a tourism industry that benefits all: 

These include activities that strengthen climate resilience and deliver sustainable benefits to local communities at the forefront.

3. Expand the diversity of business models: 

By focusing on innovative and integrated experiences for tourists, Egypt can accelerate and drive sustainable growth in the industry.

Informed by this strategic intent, existing models, and portfolio ambitions, we have identified three main shifts to create in conjunction with our partners and stakeholders, showcased in fig 2.

fig 2. Three Shifts in the Model

As innovation advisors, we have learned to trust the process. Through this system transformation framework, two parallel but complementary pathways have emerged –

1. Continuously exploring and deeply learning the needs and opportunities in the system; and

2. Identifying key policy options that accelerate the investment pipeline

We are taking these shifts and translating them into specific and coherent offers to be pursued with partners. A sample of these is shown in fig 3.

fig 3. Three Shifts, in Practice

A system transformation is premised on collective action and stakeholder engagement around a coherent approach. In this deep demonstration on sustainable tourism, we embarked on a journey to learn about the problem space, design a portfolio of policy options, and activate a set of evidence-based interventions.

We have yet to determine where best to introduce this portfolio of interventions, but we invite all potential partners to learn alongside and act with us as we work together to make tourism a sustainable economic engine in Egypt.

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National Strategy for Sustainable Tourism 2030

The strategy aims to increase tourism traffic to 30 million tourists by 2028, by working to achieve incoming tourist traffic rates to the Egyptian tourist destination by about 25% and 30% annually, within the framework of Egypt's vision for sustainable development 2030.

The strategy is based on 6 axes:

The first axis: institutional and legislative reform:

In this aspect, a number of laws and legislative procedures related to the tourism and antiquities sector have already been completed and amended, including the amendment of the Antiquities Protection Law to increase the penalty for theft and smuggling of antiquities, and the fight against stowaways, climbing antiquities, and others, in addition to issuing laws establishing two economic bodies, namely the Grand Egyptian Museum Authority in 2020, and the National Museum of Egyptian Civilization Authority in 2021, in addition to the House of Representatives' approval of the Tourism and Antiquities Support Fund Law to maximize the Fund's income, and the Hotel and Tourism Establishments Law to facilitate the Investors to terminate licenses, which have not been amended since the seventies of the last century, and the laws regulating Hajj and Umrah and the establishment of two gates with two laws for Umrah and Hajj .

The second axis: raising the competitiveness of the Egyptian tourist destination:  

In this axis, work is  done to optimize the exploitation of the state's tourism, natural, human and archaeological resources and work to ensure their sustainability, and provide a distinguished and advanced infrastructure and service to increase the competitiveness of Egypt, by encouraging investment opportunities, raising the efficiency of the human element and using modern technology methods, through institutional and legislative frameworks to keep pace with global development, with the application of the best ways to promote and activate tourism locally and internationally to attract the largest number of tourists from various markets and all categories, especially those with high spending,  Encouraging domestic tourism, increasing tourism and archaeological awareness, carrying out archaeological excavations, implementing projects to secure, restore and maintain antiquities, building and developing museums throughout the Republic.

The third axis: economic objectives related to (increasing the number of tourists - increasing the number of tourist nights - tourism spending rates - and targeting segments with higher spending of tourists):

The strategy aims to show the Egyptian tourist destination as a vibrant young destination, in addition to shedding light on the tourist elements of the Egyptian tourist destination and its various patterns and products, in addition to launching a number of electronic promotional campaigns on various social media platforms in a number of major tourist markets exporting tourism to Egypt, and organizing major celebrations of historical events and others such as the procession of royal mummies and Luxor Rams Road and their great impact in promoting Egyptian tourism and creating more The passion of the peoples of the world to visit Egypt and see the ancient Egyptian antiquities, in addition to that it contributed to raising the tourist and archaeological awareness among the masses of the Egyptian people, and many bloggers and influencers on social networking sites from different countries of the world who enjoy a high follow-up rate were hosted to visit and promote the Egyptian tourist destination, in addition to organizing visits to a number of ambassadors of the countries of the world to attend a number of events organized by the ministry, who also contributed to promoting the Egyptian destination, where ambassadors The European Union countries in Cairo published more than 20 short films to promote Egyptian tourist and archaeological sites on their social networking sites and their embassies.

Fourth Theme: Enhancing Social Participation and Raising the Efficiency of Human Resources:

In this aspect, work has been done to provide an accurate database on employment in the tourism sector, in addition to the inventory of official establishments operating in the sector and the data of official workers, improving the process of harmonizing supply and demand for labor, providing the required labor for the owners of tourist establishments, reducing unemployment rates in the tourism sector, and raising the competitiveness of the tourism labor market in Egypt, in order to facilitate work in this sector, attract foreign investments, and provide information to investors.

Fifth Theme: Working to maximize the use of technological means.

Sixth Theme: Maintaining the environmental balance and sustaining tourism and archaeological activity:

It is concerned with maintaining the environmental balance and the sustainability of tourism and archaeological activity, and the state has made efforts in this aspect to transform the Egyptian tourism sector into an environmentally friendly sector, which comes in line with the objectives of the ministry's sustainable development strategy and Egypt's vision 2030 to maintain the environmental balance and the sustainability of tourism and archaeological activity, stressing that these efforts do not coincide only with the special preparations for Egypt's hosting of the 27th Conference of the Parties to the United Nations Convention on Climate Change (COP27).But to transform the tourism sector into a sector that applies all the requirements of environmentally friendly green practices in accordance with the concept of sustainable tourism, pointing to the  ECO Egypt campaign, which was launched in cooperation with the Ministry of Environment to promote ecotourism locally and internationally, pointing to the ministry's keenness to support responsible and sustainable ecotourism, which aims to preserve the environment for green transformation.

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Egypt is often referred to as “Um Al-Dunya,” or “Mother of the World,” as its cultural heritage has an importance on an international scale. Egypt’s ancient sites and Red Sea coast attract visitors from across the globe, with tourism accounting for about 10-15 percent of the Egyptian economy and millions of jobs. 

Through decades of partnership, the U.S. Government has invested more than $100 million to protect Egypt’s extraordinary cultural heritage and ensure local communities benefit from the growing tourism industry. USAID has partnered with the Government of Egypt on large-scale engineering projects to protect some of the country’s most iconic archaeological sites from rising groundwater and flooding. These include the Sphinx, Karnak Temple Complex, Luxor Temple, Valley of the Kings, Coptic Cairo, Bab Zuweila Gate of Fatimid Cairo, Edfu Temple, Kom Ombo Temple, and the Catacombs of Kom El Shoqafa in Alexandria. USAID has also supported conservation efforts at dozens of other sites around the country; including the Red Monastery, Medinet Habu, and Theban Tombs of the Nobles. In addition, USAID has invested millions of dollars in environmental conservation efforts to boost sustainable and eco-friendly tourism and protect the coastal ecosystem along the Red Sea.

CURRENT PROGRAMS

RED SEA INITIATIVE: USAID’s decades-long partnership with the Government of Egypt has ensured ongoing protection and long-term strategies to preserve the natural environment and helped local communities build resilience to the shocks of climate change. In 2022, USAID launched the Red Sea Initiative – an ambitious climate action aiming to conserve the Red Sea’s coastal ecosystem, while promoting high-value, low-impact ecotourism. The Red Sea Initiative plans to: protect the Red Sea’s coral reef and surrounding coastal ecosystem against the impacts of climate change and human activity; empower local communities to lead on climate action; establish a blended finance mechanism to support businesses in building resilience against climate change, reducing emissions and creating jobs; and partner with private businesses and other donors to leverage up to $50 million in total funding. To advance the work of the Red Sea Initiative, USAID will collaborate with the United Nations Global Fund for Coral Reefs (GFCR) to enlist additional donors and investors from the public, private, and non-profit sectors to conserve the Red Sea’s coastal ecosystem for future generations.  

INTEGRATED MANAGEMENT OF CULTURAL TOURISM: Current global trends demonstrate a growing preference among visitors for more experiential and authentic travel versus traditional package tourism. Building a platform for unique and sustainable tourism in Egypt is critical to the industry’s long-term success and is in line with USAID’s commitment to sustainable development. Through the Integrated Management of Cultural Tourism project, USAID partners with the Government of Egypt to streamline laws and regulations and develop public private partnership models that incentivize private sector investment in cultural tourism. The approach seeks to not only restore physical structures, but also add economic value by incorporating business opportunities, such as entertainment and event spaces. The program builds the capacity of micro-, small-, and medium-sized enterprises to capitalize on cultural tourism. Focusing on Historic Cairo and Luxor, the program will increase Egypt’s tourism revenues, benefiting the local communities that live in and around historic sites. 

Implementing Partner: FHI 360; Life of Project: November 2020 – October 2024; Total Estimated Cost: $13 million; Governorates: Cairo and Luxor.

VISIT-Esna: Esna, a city rich in cultural heritage, was forgotten by tourists when a new dam built in 1994 allowed for faster passage by cruise ships. In the ensuing years, businesses closed and unemployment skyrocketed, forcing residents to abandon the area in search of new jobs and leaving the city center in a state of disrepair. To put Esna back on the map and create sustainable jobs, USAID and Takween are partnering with the Ministry of Tourism and Antiquities, the Luxor Governorate, the Ministry of International Cooperation, and other public and private stakeholders to restore historic landmarks, revitalize Esna’s tourism infrastructure, and showcase Esna as a prime tourist destination for tour operators, investors, and the public. The program developed a new Esna brand to highlight the city’s diverse heritage assets, ranging from traditional cuisine to historic sites. In Esna, USAID restored an 18th century caravansary (Wakalat El Geddawy), Al Qisariya Market, and several building facades. The program trained and integrated the local community in an array of activities, from guiding tours to reviving local handicraft traditions, with an aim to generating new job opportunities, increasing revenues, and advancing economic benefits for the community.

Implementing Partner: Takween Integrated Community Development; Life of Project: October 2016 – September 2024; Total Estimated Cost: $8.6 million; Governorate: Luxor.

MEDINET HABU AS OPEN-AIR MUSEUM: Located on Luxor’s west bank (ancient Thebes), Medinet Habu is best known for its well-preserved mortuary temple of Ramesses III, who reigned from 1186 to 1156 B.C.E. The site also houses archaeological monuments spanning from 2100 B.C.E. to 900 C.E. Chicago House has been working at Medinet Habu off and on over the last century to document and conserve all of the monuments in the complex. Since 2015, USAID has supported Chicago House’s restoration of the archaeologically-rich Medinet Habu to increase tourist interest in the temple complex. Site improvements include a walking path and an open-air museum.

Implementing Partner: University of Chicago Oriental Institute - Chicago House; Life of Project: October 2015 – September 2023; Total Estimated Cost: $6 million; Governorate: Luxor.

Cultural Heritage and Tourism in Egypt II: Khonsu Temple is situated in the south-west corner of the Karnak temple complex in Luxor. It was built during the reign of Ramses III and dedicated to Khonsu, son of Mut and Amun. In neighboring Sohag, Abydos was the most important burial site of ancient Egypt and has a history extending back some 7,500 years. It served as the cult center of the ancient Egyptian god Osiris, ruler of the land of the dead, and was a place of great religious importance. USAID is partnering with the American Research Center in Egypt (ARCE) on physical improvements to Khonsu Temple in Luxor and the Osireion in Abydos through conservation and restoration efforts, thereby improving the quality of tourists’ experience. ARCE will also build the capacity of the Ministry’s staff to better protect and manage the sites as well as provide employment and training for semi-skilled labor from the local population.

Implementing Partner: American Research Center in Egypt; Life of Project: February 2023 – September 2024; Total Estimated Cost: EGP 32.4 million (equivalent to $1.1 million); Governorate: Luxor and Sohag.

Egypt ranks 1st in Africa on the Travel and Tourism Development Index

Egypt ranked first in Africa, fifth in the Middle East and North Africa, and 51st globally, on the 2021 Travel and Tourism Development Index (TTDI) issued by the World Economic Forum.

Thus, Egypt’s assessment on this indicator has improved by six degrees compared to 2019, making it one of the few countries in the world that has witnessed a significant improvement in assessment compared to 2019, recording 4.2 points out of 7.

The report classifies 117 economies according to a set of factors and policies related to the sustainability, resilience and development of the tourism and travel sector, which in turn contributes to the development of the country in general.

The indicator consists of five subindexes, which are: Enabling Environment, Travel and Tourism Policy and Enabling Conditions, Infrastructure, Travel and Tourism

Demand Drivers, and Travel and Tourism

Sustainability.

The tourism sector in Egypt is making unremitting efforts to restore tourist flows from the most important exporting markets for tourism, led by Russia, whose incoming movement has been affected by the war between Russia and Ukraine since February.

Travel agents of the Russian tourism company Tez Tour in the Red Sea Governorate announced in May that the company will provide travel on charter flights from Russia to the tourist resorts of Sharm el-Sheikh and Hurghada, starting from May 28.

Tez Tour thus became the second tour agency to open sales of tours for charter flights to Egyptian resorts after Fun & Sun Tours.

Russia was a major source of tourism in Egypt, which generated billions of dollars annually for the Egyptian treasury.

Egyptian tourist destinations will likely be negatively impacted by the Russian war in Ukraine, with tourism flow predicted to decline 35 percent according to the Vice Chairman of the Tourism Committee of the American Chamber of Commerce in Egypt Moataz Sedky.

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• Basic Statistic Contribution of travel and tourism to GDP in Egypt 2005-2023
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• Basic Statistic Share of leisure and business tourist spending Egypt 2019-2022, by segment
• Basic Statistic Tourist expenditure in Egypt 2008-2022
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Contribution of travel and tourism to Gross Domestic Product (GDP) in Egypt from 2005 to 2023

Value added of travel and tourism to GDP in Egypt 2019-2023

Contribution value of travel and tourism to Gross Domestic Product (GDP) in Egypt from 2019 to 2023 (in billion U.S. dollars)

Share of domestic and international tourist spending Egypt 2019 and 2022, by origin

Distribution of domestic and international tourist expenditure in Egypt in 2019 and 2022, by visitor origin

Distribution of leisure and business tourist expenditure in Egypt in 2019 and 2022, by segment

Tourist expenditure in Egypt from 2008 to 2022 (in billion U.S. dollars)

Employment impacts of travel and tourism Egypt 2012-2023

Number of jobs in the travel and tourism sector in Egypt from 2012 to 2023 (in millions)

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• Premium Statistic Number of tourist arrivals Egypt 2010-2022
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Number of tourist arrivals in Egypt in 2019 and 2022, by region of origin (in millions)

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• Premium Statistic Inbound tourism expenditure over exports of goods in Egypt 2008-2021
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Inbound tourism expenditure over exports of goods in Egypt 2008-2021

Inbound tourism expenditure as share of exports of goods in Egypt from 2008 to 2021

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Inbound tourism expenditure as share of exports of services in Egypt from 2008 to 2021

Outbound tourism expenditure in Egypt 2008-2021

Outbound tourism expenditure in Egypt from 2008 to 2021 (in billion U.S. dollars)

Outbound tourism expenditure over imports of goods in Egypt 2008-2021

Outbound tourism expenditure as share of imports of goods in Egypt from 2008 to 2021

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Outbound tourism expenditure as share of imports of services in Egypt from 2008 to 2021

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• Premium Statistic Number of hotels and similar establishments tourism industry Egypt 2008-2019
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The Travel & Tourism Development Index (TTDI) 2024 is the second edition of an index that evolved from the Travel & Tourism Competitiveness Index (TTCI) series, a flagship index of the World Economic Forum that has been in production since 2007. The TTDI is part of the Forum’s broader work with industry and government stakeholders to build a more sustainable, inclusive, and resilient future for economies and local communities.

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Identifying the problems and constraints of tourism development and believing in the role of tourism in supporting the national economy , the State enacted Law No. 7 for the year 1991 in 03/12/1991 concerning certain provisions related to the state property . In its second article, the law announced the establishment of the Tourism Development authority TDA to undertake the responsibility of managing, exploiting and using lands allocated for tourism development. IT also declared the establishment of the General Authority For Reconstruction Projects & Agricultural Development to undertake the responsibility of managing , exploiting and using lands allocated for the purposes of Reclamation and cultivation ,in addition to the establishment of the New Urban Communities Authority to undertake the responsibility of managing , exploiting and using lands allocated for the establishment of new urban communities . The articles of law No. 7 for the year 1991 focused mainly on assigning the development of desert areas outside the cities cordons (Tourism - Agriculture - Construction) to the aforementioned entities that own the technical base to take responsibility of planning, supervising , implementing, and monitoring development projects. Presidential resolution of the Arab Republic of Egypt no. 374 for the year 1991 was issued to declare the establishment of the Tourism Development Authority . President of the republic Decided: - Article one : The Tourism Development Authority TDA is a general economic authority, it has a legal personality, its main headquarter is in Cairo ,it is affiliated to the tourism minister , and may establish more branches in other governorates . - Article two : The TDA aims to develop tourist areas within the frame of the general policy of the state and its economic plan and in order to achieve its goals , it can engage in all relevant contracts and activities especially : 1- Formulating plans of developing tourist areas . 2 - Preparing and reviewing the assessment of projects ,studies and programs necessary for developing tourist areas, in addition to defining priority zones. 3- Implementing main projects of TDA in tourist areas . 4- Collecting of the costs of utilities and services from the beneficiaries against projects carried out by the TDA in tourist areas . 5- Agreeing on Local and foreign loans contracts with commitment to repay. 6- Supervising the tourism development implementation plan in tourist areas. 7- Managing, exploiting and using lands allocated for purposes of the establishment of tourist areas in desert lands.

The prime minister issued decision no. 2908 in 1995 to declare the governing rules of managing , exploiting and using TDA allocated lands.

Also released prime minister resolution no.2908 of year 1995 concerning the regulations and conditions that organized to manage ,exploit and use the allocated lands for tourism development authority .

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Promoting Egypt’s Cultural Heritage and National Capacities

In a significant step towards preserving and promoting Egypt's cultural heritage, UNESCO and the National Museum of Egyptian Civilization (NMEC) have joined forces by signing an Implementation Partnership Agreement (IPA). This collaboration aims to enhance the capacities of NMEC in various areas, including fundraising and marketing, conservation practices, scientific labs, library facilities, publication and communication strategies, language skills, and IT capabilities.

With a strong history of collaboration dating back to 1960, when the UNESCO International Campaign to Save the Monuments of Nubia was launched, the partnership between UNESCO and Egypt has yielded remarkable results. The campaign successfully rescued 22 monuments in Nubia from the submersion threat caused by the Aswan High Dam construction. Building upon this success, the Executive Committee for the International Campaign for the Establishment of the Nubia Museum in Aswan and the NMEC in Cairo was created in 1980, following a General Conference resolution.

Since the approval of the NMEC support project in 2008, UNESCO's Regional Office in Cairo has been providing invaluable assistance in establishing the NMEC as a key institution responsible for preserving and showcasing Egypt's cultural heritage. With its formal opening in April 2021, the NMEC became an autonomous authority.

The IPA between UNESCO and NMEC, under the Culture Programme of UNESCO's Regional Office in Cairo, aims further to enhance the capabilities of NMEC through targeted activities. The objectives of the IPA include strengthening fundraising and marketing plans, enhancing conservation practices, assessing scientific labs and library facilities, developing comprehensive publication and communication strategies, improving the language skills of NMEC staff, and providing technical support for IT capabilities.

To achieve these objectives, the IPA outlines a range of activities. These activities include conducting a thorough analysis of fundraising needs and opportunities, developing a tailored fundraising and marketing plan, identifying necessary conservation materials and facilitating their procurement, assessing scientific labs and providing required materials and equipment, evaluating the library facility and improving its functionality through necessary resources, developing a comprehensive publication, communication, and visibility strategy, enhancing language skills of selected staff members through training programs, enrolling eligible staff members in museum studies and diploma programs for professional development, and providing technical support to enhance IT capabilities.

This partnership between UNESCO and NMEC holds great promise for preserving and promoting Egypt's cultural heritage. The IPA's activities and deliverables will contribute to the long-term sustainability of NMEC, enable the implementation of best practices in conservation and research, enhance communication and outreach efforts, and empower staff members with advanced skills and knowledge. Ultimately, this collaboration will ensure the continued safeguarding and appreciation of Egypt's invaluable cultural heritage for future generations.

Furthermore, UNESCO Cairo encompasses a series of capacity development workshops. These workshops will focus on the following key areas:

• Intangible Cultural Heritage: Recognizing the immense value of Egypt's intangible cultural heritage, UNESCO Cairo conducts workshops to raise awareness and promote the safeguarding of cultural practices, traditions, and knowledge. These efforts ensure the preservation and transmission of Egypt's invaluable cultural expressions to future generations.
• Green Conservation: With a growing emphasis on sustainable practices, UNESCO Cairo will organize workshops on green conservation. These initiatives will introduce eco-friendly approaches and techniques for preserving and conserving cultural artefacts, ensuring long-term preservation while minimizing environmental impact.
• Soft Skills Development: Recognizing the importance of effective communication and management skills, UNESCO Cairo will facilitate workshops to enhance the soft skills of NMEC staff. These workshops will focus on areas such as leadership, teamwork, intercultural communication, and visitor engagement. Equipped with these skills, NMEC staff will excel in their roles and provide an enhanced experience for museum visitors.
• Advancements in Scientific Laboratories: UNESCO Cairo will provide support to further strengthen NMEC's scientific laboratories. UNESCO Cairo will offer technical guidance and expertise. This support will include training sessions, best practices, and quality assurance measures to ensure accurate and reliable scientific examinations and assessments of cultural artefacts.

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Egypt calls on WTO to adopt development issues in developing countries

• Saturday، 01 June 2024 - 03:07 PM

Egypt’s Commercial Office in Geneva has called on the World Trade Organization (WTO) to adopt industrial development policies and comprehensive development issues in developing countries, particularly in Africa.

Minister Plenipotentiary for Trade and head of the Commercial Office Ahmed Maghawry delivered a speech on Saturday 01/6/2024 during Egypt’s participation at the WTO meetings, underlining the need to focus on food security and limit negative environmental impacts resulting from trade.

He also underscored the need to support economic flexibility in developing countries to face global economic challenges through adopting effective policies to localize technology and fund trade in different countries, particularly in debt-affected ones.

Maghawry also called for pushing agricultural negotiations for strengthening comprehensive growth to realize the sustainable development goals and end poverty and famine, in addition to boosting industrialization, digitization and shifting to green economy policies. 

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​​Promoting Inclusive Human Capital Development and Building Resilience in Egypt through Cash Transfer Programs ​

Eman Abdel Rahman Ramadan, a FORSA wage program beneficiary, standing in the flower field where she works. (World Bank)

Key Achievements

• ​The Takaful and Karama (Solidarity and Dignity) Program (TKP) is the largest cash transfer operation in MENA it reached 4.67 million vulnerable households (roughly 17 million individuals) with cash transfers by December 2023, including beneficiaries who have migrated from the old social pension program, “Daman.” An additional 600,000 households are receiving cash transfers from civil society organizations in coordination with the government in order to ensure coordination and avoid duplication.
• ​75 percent of TKP’s beneficiaries are women , 67 percent of the cash goes to the most lagging regions in Upper Egypt, and 67 percent of Karama beneficiaries are persons with a disability .
• ​A number of complimentary cash-plus interventions are designed leveraging the TKP social registry, with the aim of addressing multi-dimensional poverty and vulnerability. A key cash-plus intervention is the economic inclusion program “FORSA,” (which means ”Opportunity” in Arabic) that was launched in 2020 and which supports the creation of job opportunities and reached around 26,321 beneficiaries by December 2023.
• ​The program is institutionalized through a dedicated budget line, 90 percent of the financing comes from the Egyptian government and there is legislation that guarantees the program’s continuity. ​

​​​TKP was launched in 2015 to mitigate the impact of economic reforms on the poor including energy subsidy removal. It was designed as a well-targeted cash transfer program with a solid delivery system, and a conditionality element that aims to achieve long-term development goals by promoting human capital accumulation through access to health and education services. As of December 2023, the TKP program has achieved the following results: 4.67 million households enrolled (of which, 75 percent are women); around 17 million direct and indirect beneficiaries; 51 percent of Takaful households comply with the health conditionality of three health unit visits per year; 63 percent of Takaful households comply with the education conditionality of 80 percent school attendance; and 100 percent of beneficiaries are paid through electronic means.

Beneficiaries Quotes

Eman Ramadan Abdel Rahman , a wage employment beneficiary, who received a job through FORSA: “Now that I have a steady income, I am paying off my debts. In addition to the vocational experience, this job also allows me to interact with a lot of people. I feel happy and healthy. I believe all women should gain [job] experience, see different things, and enjoy life.”

Riham, a Takaful program beneficiary, expressed her satisfaction at being able to have disposable income due to the cash transfers and her increased empowerment at making purchasing decisions: “If I want to buy something for the house, I go buy it. I make the decision because each woman knows what her house needs. I also make decisions when I’m buying something personal for myself. But if it’s something general for the house, then I ask for my husband’s opinion.”

Mervat, another Takaful beneficiary, talks about how she stretches the cash transfers, “Since I received the Takaful transfer, I paid pending tuition fees for my children. I still have EGP 300 ($ 6.15) which I spend on my family as needed.”

Mastoura, a Karama beneficiary, tells us about the positive effects of the health and Karama benefits she has received, “I was examined by the general medical board and was diagnosed with a high stage of fibrosis. I also suffer from hepatomegaly and splenomegaly. So, they decided that I need a “Karama” pension. I got my EGP 350. I paid 250 EGP ($5.12) for my medical examinations and bought a kilo of meat for my children with the rest of the money.’’

​​Egypt’s social protection system faced challenges of fragmentation, with several poorly targeted cash assistance programs that were not automated and lacked mechanisms for citizen feedback. In 2014, Egypt introduced a series of structural and economic reforms to reduce its large fiscal deficit and restore macroeconomic stability by moving away from universal subsidies, including gradually removing energy subsidies, devaluating the Egyptian Pound, and introducing a value added tax. These efforts subsequently led to high inflation. To mitigate the impact of this economic shock, a targeted cash transfer program, Takaful and Karama, was rolled out in 2015. ​

​​The Takaful and Karama program (TKP) incorporates two major components. Takaful (which means “solidarity” in Arabic) is a conditional cash transfer program . It targets poor families with children, requiring them to meet health and education conditionalities (three health visits for mother and child, and 80 percent school attendance for children) in order to prompt behavioral change and promote human capital accumulation to break cycles of intergenerational poverty.

​ Karama (which means “dignity” in Arabic) is an unconditional cash transfer program that covers poor persons living with disability, elderly persons over 65 years of age, orphans, and widows.

​TKP efficiently targets beneficiaries using Proxy Means Testing (PMT) methodologies to estimate household welfare, and it has a solid delivery chain, including a grievance mechanism and a dynamic and adaptive shock-responsive social registry which includes all applicants to the program since its inception (whether enrolled or not) and which has reached around 11.3 million registered households (40.5 million individuals) . In addition to being a targeted program using proxy means testing, the aim was to consolidate all cash benefits under one national umbrella program.

​All TKP beneficiaries receive access to Meeza cards (debit cards), which allow them to make digital payments or cash in their benefits through ATMs and other outlets, rather than having to visit a on post office to receive these benefits as previously the case.

​TKP leverages its data on beneficiaries, housed under the social registry, to design multiple citizen centric cash-plus interventions based on big data analysis. These interventions include 1) interventions that aim to combat illiteracy through literacy classes, 2) raise awareness to help curb fertility rates, 3) facilitate access to reproductive health and subsidized family planning services through health clinics, 4) improve housing conditions (such as roofing, flooring) and 5) improve child nutrition and well-being through additional financial support for mothers with children under two years of age. All TKP beneficiaries are automatically linked with the food subsidy program and universal health insurance.

​Another key cash-plus intervention is the economic inclusion program “FORSA,” (which means “Opportunity” in Arabic), which was launched in 2020 and supports the creation of job opportunities and reached around 26,312 beneficiaries by December 2023. The aim of this program is to move beneficiaries from protection to production by reducing dependency on cash and creating livelihood opportunities, including linking beneficiaries to employment services and providing training and asset transfers.

​The project’s citizen-centric approach, health and education conditionalities, which aim to promote human capital development through access to relevant services, introducing conditionality to combat early marriage to protect and empower girls, and cash-plus interventions (including on illiteracy eradication, reproductive health, awareness raising, and child nutrition), have allowed it to play a transformative role in promoting human capital accumulation with a specific focus on women’s empowerment. This is coupled with a very strong community awareness campaign, entitled Waii (awareness), which is led by community social workers and public campaigns, including the use of art, theater, and music, to raise awareness on social issues such as gender-based violence, female genital mutilation, early marriage, substance abuse, positive parenting, reproductive health, and hygiene and nutrition.​

The Takaful and Karama Program has become a platform that enables human capital development as well as women’s empowerment in Egypt, through health and education conditionalities and a series of cash-plus interventions to tackle reproductive health and family planning, illiteracy, child malnutrition and stunting, and tackling unemployment and dependence on cash transfers through economic inclusion interventions.

The program has been institutionalized within the government of Egypt through a legislative decree and a dedicated budget line in the national budget which has been steadily growing from EGP 3.6 billion ($ 71.7 million) in 2015 to EGP 41 billion ($ 81.4 million) in 2024. The increase in allocation of resources and recent increase in benefit size by 55 percent in 2023/2024 (in light of inflation) is a testimony that the government views the program as well targeted and a channel to cope and mitigate multiple crises (economic shocks; COVID-19 pandemic). The Ministry of Social Solidarity in collaboration with the World Bank has also been producing a number of case studies and videos to document the journey and currently working on a TKP Depository (will include internal platforms for the Ministry staff and external website).

As of December 2023, 4.67 million households (comprising approximately 17 million individuals, 50 percent of whom are women) are enrolled in the Takaful and Karama Program , 75 percent of whom are women. The expansion of the program has been made possible over the years thanks to the program’s strong delivery system and its adaptive and shock responsive social registry. These factors enabled effective project expansion in response to consecutive crises in recent years such as the COVID-19 pandemic, the devaluation of the Egyptian pound, and the repercussions of the war in Ukraine.

The program exhibits strong targeting performance with only 6.4 percent leakage to non-poor households. Independent evaluations of TKP by the International Food Policy Research Institute (IFPRI) in 2018 and 2022, show that it has led to improvements in the quality of diets and child nutrition, increase in consumption by 8.4 percent (2018), reduced the probability of falling below the poverty line by 12 percent (2018), increased the likelihood of enrollment in primary (9 percentage points) and secondary schools (21 percentage points) (2022), and helped households avoid negative coping strategies during the COVID-19 pandemic.

The project has also consolidated Egypt’s cash transfer programs under the umbrella of TKP by transitioning the beneficiaries of the old social pension program “Daman” to TKP using the program’s PMT.

The World Bank’s Advisory Services and Analytics (ASA), which are non-lending activities that help clients to advance a development objective, for Egypt’s 2022 Public Expenditure Review for Human Development demonstrated that TKP is well-targeted and that the government should increase coverage and benefit size. In 2023, coverage went up to almost 5 million households and the benefit level was increased by 40 percent . An additional increase of 15 percent was announced in February 2024.

World Bank Group Contribution

​​The project is supported by two International Bank for Reconstruction and Development (IBRD) loans totaling $900 million. The project has also ​received parallel financing in the amount of approximately $3 million through the United Kingdom Trust Fund over the course of its implementation. The project also received a small contribution from the Nordic Trust Fund (to support disability assessments) and from the Partnership for Economic Inclusion (to support FORSA).

Partnerships

​​The Takaful and Karama Project is implemented by the Ministry of Social Solidarity (MOSS), which liaises with the Ministries of Education and Health for the conditionality component of Takaful. The program has very strong partnerships, between government including Ministries of Health, education and Supply and Internal Trade, as well as with NGOs and the private sector, especially in the context of the FORSA economic inclusion program, and with UN Agencies for the cash-plus interventions. The TK national program has been gaining regional and global recognition with numerous study tours organized by the World Bank for knowledge exchange, including with Sudan, Yemen, Iraq, Jordan, and Gabon.

​TKP collaborates with United Nations agencies on complementary cash-plus interventions, which build on the TKP registry and target TKP beneficiaries. One such initiative, entitled “Two is enough,” provides subsidized family planning services in collaboration with the United Nations Population Fund (UNFPA). Another such program is “Waii,” an awareness program with the UN Development Programme (UNDP), which promotes equal access to education, family planning, positive parenting. The “1,000 days program,” with the World Food Programme (WFP) gives additional cash to Takaful mothers for improved nutrition. TKP also collaborates with the International Labour Organization and Food and Agriculture Organization under the FORSA program for wage and self-employment tracks. The project has also been supported by the UK Trust Fund throughout the implementation period and the Nordic Trust Fund. The wide range of partners has contributed to enhanced coordination and integration among the different government entities as well as ensured complementarity with donor activities.

Looking Ahead

​​​The World Bank continues to support Egypt’s efforts to increase TKP’s efficiency and effectiveness by strengthening the delivery system, building the management information system, and bolstering the capacities of social and community workers that engage with beneficiaries. The Takaful and Karama Program needs to continue to analyze the big data collected under the social registry to better respond to climate change issues and to scale up cash-plus interventions, particularly for the FORSA program. Additional complementary efforts are taking place regarding social protection reforms, including further developing the Unified National Registry (UNR) by the Administrative Control Authority (ACA), which plays a key role in improving the targeting and reform of social protection programs, including food subsidies. Reforms are also underway in Egypt’s pension system, focused on implementation of a 2019 reform law and led by the National Organization for Social Insurance (NOSI). ​The World Bank is supporting NOSI with technical assistance to strengthen systems and carry out digitalization.

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