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Egypt

Situation and cooperation

The Nile river in Egypt

Many Egyptians are living under difficult social conditions. There is a wide gap between rich and poor. About one fourth of all people are living below the national poverty line. On the Human Development Index, Egypt ranks 111th out of 188 countries (HDI 2015). This is due, among other things, to a lack of access to health and education services.

The social situation is further exacerbated by high population growth (2 per cent in 2016). In the past 30 years the population of Egypt has doubled, and has now reached 95.7 million. One third of the population is under the age of 15. In many families, children have to contribute to the household income.

Some 95 per cent of the Egyptian population lives along the Nile Valley and in the Nile Delta on about four per cent of the country's land. These regions are thus among the most densely populated in the world. In urbanised areas, agriculture, industry and local people compete for land and, in particular, for the country's scarce water resources. Living conditions are deteriorating because of the increase in pollution. Moreover, many urbanised areas lack affordable housing for poor people. Illegal settlements are mushrooming without control and with no proper social or technical infrastructure.

On the Corruption Perceptions Index compiled by the non-governmental organisation Transparency International, Egypt ranked 108th out of the 176 countries evaluated in 2016.

Violence against women is widespread in Egypt. According to a United Nations study published in 2013, 99 per cent of all Egyptian women have experienced sexual harassment at some point in their lives. In particular, the practice of genital mutilation, which has been banned since 2008, is still continuing, especially in rural areas.

Economic situation

Repair work at the hydro-electric power plant of the Aswan Dam in Egypt

Egypt's economy has suffered a great deal under the political instability of the past few years. President Mubarak began the process of transitioning Egypt from a state-controlled economy to a market system. Yet reforms were designed in such a way that they benefited mainly the top players in the economy. Only a relatively small proportion of the population benefited from the structural transformation.

The current government has realised that comprehensive reforms are needed. With its Vision 2030, it has launched an ambitious agenda for sustainable development in the country. The government is cautiously dismantling subsidies and embarking on tax reforms. It is also planning to improve the environment for investment.


Poor prospects for young people

Young men in the historic centre of Cairo, Egypt

The biggest challenge for Egypt continues to be the high level of unemployment, which officially stands at roughly 12 per cent. Among 15- to 24-year-olds, the official rate is more than 30 per cent. And more young people will be entering the labour market in the coming years.

Traditionally, the government has been one of Egypt's biggest employers. However, the country has radically reduced the number of government employees in the past few decades in order to reduce pressure on the budget. Private businesses have been unable, however, to create enough new jobs over that period to make up for the loss. Many people therefore try to make a living in the informal sector.

In order to create jobs and prevent social tensions, the Egyptian government is pursuing large-scale infrastructure projects, for instance labour-intensive housing construction programmes and the expansion of the Suez Canal. However, further steps will be needed in order to bring about a long-term improvement in the labour market.


De­vel­op­ment potential

Egypt is the most highly industrialised country in Africa after South Africa. The manufacturing industry and the oil and gas sector generate around one third of gross domestic product. If the necessary enabling environment were put in place, foreign trade could help secure the country's economic development in the long term. Further assets are the country's favourable geographical location and its large population of young people who can contribute actively to the economy. 

The link between the Mediterranean and the Red Sea is very important for international shipping. Developing the Suez Canal so as to create a regional logistics centre could transform Egypt into one of the world's most important trading centres.

Membership of the World Trade Organization (WTO) and the conclusion of numerous economic agreements offer Egypt access to attractive international markets. Since 2004, free trade between Egypt and the European Union has been regulated by an Association Agreement. A separate agreement signed in 2010 greatly liberalised trade in agricultural and fisheries products.

Areas with great economic potential are the environmental protection and climate action sectors. Egypt has good natural conditions for solar and wind power generation. Since September 2014, the government has been fostering the development of renewable energy through feed-in tariffs. Compliance with international environmental standards would also improve export opportunities for Egyptian industrial companies.


Priority areas of German co­op­er­a­tion with Egypt

The most important aim of Egyptian-German development cooperation is to help improve the living conditions of the general population. Development cooperation with Egypt takes place within the framework of a "Bilateral Commission", which meets annually at ministerial level since 2016. In 2016, the BMZ committed 156 million euros for development projects. 100 million euros of this volume was made available in the form of low-interest loans.

The priority areas of cooperation are

  • the use and management of water resources and waste management,
  • renewable energy and energy efficiency, and
  • sustainable economic development.

In addition, Egyptian-German cooperation addresses areas such as women's empowerment, developing informal urban settlements, human rights and administrative reform.

Many programmes in the current cooperation portfolio address – as cross-cutting issues – the development of civil society, gender equality, (sector) governance, and conflict prevention.


The use and management of water resources and waste management

Pump at an irrigation canal near the city of Qena, Egypt

Egypt is one of the most water-poor countries in the world. Less than four per cent of the land can be used for agriculture. Agriculture, industry and the population are heavily dependent on the Nile.

The country is also facing major challenges when it comes to the collection and disposal of waste. Current waste management practices are causing major problems for human health, the environment, and the global climate.

Germany is supporting Egypt in its efforts to reform the water sector with the following goals in mind:

  • fostering efficient use of water
  • providing poor people with access to drinking water
  • improving health through proper sanitation
  • improving efficiency levels in the agricultural use of water
  • modernising the infrastructure for water supply and sanitation
  • promoting the financial viability of the sector and strengthening public and private institutions
  • decentralising the sector and building up local water user communities
  • training experts and educating the population with regard to water issues

As it pursues these goals through development cooperation, Germany applies the principles of integrated water resources management (IWRM). Among other things, funding is being provided to help modernise Egypt's agricultural irrigation infrastructure. Germany is supporting the owners of small family farms in developing strategies for using water more sparingly and forming water user groups. The BMZ is also providing advice to Egypt's ministries of water and agriculture on how to better involve water user organisations and agricultural cooperatives in their planning and consultation activities.

In the waste sector, the reform process is only just beginning. Through a national domestic waste management programme, Germany is supporting its Egyptian partners in creating the urgently needed infrastructure for waste disposal and developing the requisite administrative bodies. Working with the European Union, Germany is supporting Egypt in setting up a waste management system that meets needs and ensures cost recovery. And "green" jobs are to be created through new, decentralised forms of waste collection and recycling.


Energy

Wind farm near Zafarana, Egypt

Egypt's Red Sea coast offers ideal conditions for wind power. In view of that, the government has adopted an ambitious plan and by 2020 intends to increase the share of renewable energy in power generation to 20 per cent. As a first step, it has reduced the subsidies for fuel and oil products by 30 per cent.

So far, the BMZ has been the number one financier of wind and hydro power projects in Egypt. In some cases, funding is being provided through co-financing arrangements with other donors under the Neighbourhood Investment Facility (NIF) of the European Union.

Following its support for the Zafarana wind farm, which went into operation in 2008, the BMZ has financed a further wind power plant in the Gulf of al-Zayt. Its capacity is 200 megawatts, making it one of the biggest wind farms in the whole of Africa.

Under the BMZ's programme of Technical Cooperation, the Egyptian-German Joint Committee on Renewable Energy, Energy Efficiency and Environmental Protection (JCEE) has been set up. It serves as a platform for dialogue and provides advice on reforms in the energy sector, for example regarding feed-in tariff systems for wind and solar power, a trading system for green power certificates, and the development of public tender procedures.

Support is also being provided for the Cairo-based Regional Center for Renewable Energy and Energy Efficiency (RCREEE), in which 17 Arab countries are involved.


Sustainable economic development

Construction of towers for wind power plants, SIAG El-Sewedy Towers company, Ain Sukhna, Egypt

One important area of Egyptian-German cooperation is vocational training and youth employment. This aspect is addressed by the National Employment Pact formed by Egyptian and German enterprises in cooperation with GIZ and with the German-Arab Chamber of Industry and Commerce (GACIC). In recent years, job placement agencies have been set up. They register vacancies, identify suitable job seekers and help match them up. They only register job offers that have been checked for certain criteria: minimum wage, employment contract, social benefits, compliance with safety standards.

Germany is also supporting the establishment of a training centre for occupations in the field of renewable energy and promoting business start-ups in promising industries.

All activities in this field include measures to empower women, be it women entrepreneurs or women employees. There is also one project that specifically addresses the social, cultural and business environment with a view to fostering the economic empowerment of women.


Participation in urban development

Beggars in the old town of Cairo

In addition to the priority areas for bilateral cooperation that have been agreed with Egypt, Germany is supporting good governance and participation by civil society, for example through neighbourhood development projects. The main focus here is on urban slums in Cairo: by fostering self-help initiatives, Germany is helping local people to come up with proposals of their own for improving their lives. Working with local authorities and local people, efforts have already been made to improve the drinking water, sanitation and transport infrastructure. In addition, activities concerned with adaptation to climate change are being carried out with financial support from the Bill and Melinda Gates Foundation and the EU.


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