World Bank managing director, Sri Mulyani (Photo: Al-Ahram)
Excellencies. Ladies and Gentlemen. It is a great pleasure to be here today on behalf of the World Bank Group.
This event marks an important step for Egypt. It shows that Egypt is open for business. It gives the world the opportunity to learn more about the country’s vision. For us at the World Bank Group it is part of our ongoing dialogue. It is a chance to identify better ways in which we can support Egypt in building a sound and equitable economic foundation that benefits all of its people.
But as we all know well, the country is facing challenges. This conference comes after four years of tumultuous political transition. Transitions are difficult. But they can pave the way for socially inclusive and equitable economic reforms.
Despite the challenges, there are signs that Egypt could be on the right track.
We see promising attempts to address the macro economic imbalances, for example by reducing the fiscal deficit. They could bear fruit when spending is adjusted in favor of areas that improve productivity and address inequality.
One such area is infrastructure: Investing in infrastructure projects could provide jobs for low-skilled workers. Improving public transport will increase mobility while giving more people better access to the formal private sector. Safe and reliable public transport also encourages women to join the workforce.
While fiscal adjustment is critical, the Egyptian government is also aware of the need to protect the poor. It is good that Egypt wants to improve its social safety net by expanding its cash transfer system to the poorest members of society. The system Egypt is designing aims to reach an extra half a million households this year and could expand to another one million households over the next two years. The World Bank will provide initial support of US$400 million to this program.
Finally, the private sector can only be successful if it operates in a business climate that encourages competition and levels the playing field. Reforms in this area will be critical to making Egypt’s economy grow. A successful private sector can create the jobs and livelihoods that millions of people are waiting for.
Moreover, the government knows that in order to unleash the private sector it needs to address governance.
Good governance means rule of law as well as transparent and accountable public institutions and as such it is critical for achieving widely shared prosperity and reducing poverty. The Egyptian government has passed important legislation in this area. But the temptation to stay away from tough issues, like addressing corruption or lowering barriers for competitors, will be high. So for reforms to yield results they need to be bold, and it will take persistence and strategic focus to stay on course.
Egypt has some way to go.
If reforms are done well, the benefits for the Egyptian people could be countless. We know from experience that a positive business environment creates a large and diverse set of jobs. Vibrant private sector will contribute to Egypt’s growth by helping develop capital, technological know-how, and management skills.
We remain a committed partner to the Egyptian people and often serve as a convening agent for the donor community. Our current portfolio of US$5.5 billion will be scaled up by US$1billion. We are preparing projects that strengthen social protection, increase affordable housing and better access to sanitation.
Other key sectors we already support range from transport, energy, to agriculture and irrigation. Together with our hosts we focus on reforms that bring better health services and better education to the poor and vulnerable.
It is the young who are currently shouldering the burden of the jobs shortage. More than three-quarters of the unemployed are between 15 and 29 years old. At the same time poverty rates have increased to almost 25 percent. High poverty and high unemployment require serious attention and our joint efforts to improve education and vocational training, especially for the youth.
Our private sector arm, the International Finance Corporation, is playing a strong role as well. Over the last four years IFC committed almost US$1.1 billion to 20 projects that are supporting companies with the ability to create jobs, boosting access to finance for small and medium enterprises, and demonstrating Egypt's long-term potential to investors. Looking ahead, it will pursue and strengthen its effort.
I am very pleased that the government of Egypt and the World Bank Group have agreed to work together on two issues for the next five years:
Creating jobs, particularly for young people through a large and diverse private sector.
And improving governance, a key ingredient to achieving social and economic progress.
Let me close by reminding all of us that development is not a sprint. It is a marathon. We are all aware of this. Egypt needs an environment in which the private sector can thrive to create the jobs Egyptians need to build better lives for themselves. The country cannot afford to slow the reform progress. So patience and perseverance are important.
It is good to see that Egypt is open for business. We should now work hard to push the door as wide open as possible. The people of Egypt expect us to go beyond talking and put words into action.