Germany launches job creation initiative in Egypt

Ahmed Kotb , Saturday 3 Jun 2023

Germany’s 2023 Investment for Employment initiative kicked off on Thursday, with the goal of boosting private sector job creation in Egypt.



The initiative, created by the German KfW Development Bank on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), aims to help Egypt create integrated markets, increasing competitiveness and innovation, according to German Ambassador to Egypt Frank Hartmann.

"The German government is supporting this initiative because we believe that the growth of private sector is key to creating more job opportunities, especially since Egypt needs to create 800,000 to one million job opportunities annually to meet the needs of youth for jobs with the current rate of population growth," Hartmann stated.

He added that the private sector is home to nine out of 10 jobs created worldwide. It is the role of the state, in his view, to create the conditions that allow the private sector to grow and thrive.

Thus, Hartmann said, the private sector needs to grow to create more job opportunities, especially as the share of the private sector in Egypt's economy was only around 30 percent in 2020.

Bernd Siegfried, director of KfW office in Egypt, said that the main objective of this initiative is to remove investment barriers and to create decent and sustainable jobs in the private sector. The initiative aims to create up to 100,000 new jobs over the course of five years.

He explained that some of the obstacles to investment include the lack of access to needed energy, water and road infrastructure. Moreover, access to finance is not easy as local finance perceive some projects as high risk, request interest rates beyond the project's means or offer only short term loans.

"Potential for investment projects in African countries is huge, including the [Investing for Employment (IFE)] partner countries, and the realization of these investment projects is necessary for the socio-economic development of the countries, including reducing unemployment and alleviating poverty," Siegfried stressed.

IFE is operating in eight partner countries for this initiative including Egypt, Ghana, Morocco, Tunisia, Rwanda, Senegal, Ethiopia and Cote d'Ivoire.

"We aim to select the most promising projects with the highest job creation content. Job creation is the highest priority. We want to give the private sector a push with this initiative," he pointed out.

He explained that the initiative offers co-financing grants ranging from one to 10 million euros for investment projects.

Since job creation is the main focus, IFE uses three key performance indicators, including the creation of new and good jobs, improvement of working conditions and provision of higher education or short-term job related trainings, he added.

According to Siegfried, KFW is working on financing social and economic infrastructure development in emerging markets, including Egypt. KFW's portfolio in Egypt has reached about 1.5 billion euros with projects in different sectors such as food manufacturing, mobility, pharmaceuticals, renewable energy and energy efficiency, he added.

Karim Gad, IFE country focal point for Egypt, explained how IFE grants vary according to the type of project. Those that contribute more to job creation and the public good may be eligible for more co-financing, he said.

Gad explained that projects eligible for up to 90 percent co-financing include not-for-profit projects with job creation impact and no revenues.

Not-for-profit projects that create jobs and generate revenues are eligible for up to 75 percent co-financing.

For-profit projects that create jobs job creation or have a broader job creation impact can receive up to 25 or 35 percent of the total project’s cost, respectively.

Implemented projects that are operationally viable and financially sustainable can qualify from grant support from IFE, according to Gad. Applicants must be legally registered and operating with all required licenses, he added.

The initiative taking proposals for projects through the end of June.

"Germany has invested and will continue to invest in supporting the private sector in Egypt," Hartmann stressed, adding that Germany has been a longstanding partner for Egypt's efforts to strengthen the private sector, contributing about 500 million euros.

"We also work with our Egyptian partners in building a better system for technical and vocational training, to teach young people the skills needed in real life working experiences," he pointed out.

However, Hartmann added, German and international support cannot and should not substitute for what Egypt's government needs to do itself to create framework conditions for business to invest. He stressed the urgend need for structural reforms which includes transparency about governmental economic activities to help private investors take better investment decisions. Competition needs a level-playing field with both state-owned and private sector enterprises working in the same conditions, as well as improving governance and the rule of law, he concluded.


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