Ministry of Foreign Trade (MOFT)
(formerly Ministry of Economy & Foreign Trade)
and
United Nations Development Programme (UNDP)
Strengthening the capacity of the
Ministry of Foreign Trade
for Economic Management
Project Number EGY/00/015
EVALUATION REPORT
Evaluation report for substantive revision of the project
prepared by Darcy Vaughan-Games, January 2004.
Contents
Acronyms & Abbreviations
page iii
Executive summary
1
1
Introduction
3
2
Findings
4
3
Recommendations
10
4
Conclusion
11
Annexes
14
A
People Interviewed
B
Publications consulted
C
Economic legislation enacted
D
Training schedules
ii
Acronyms and Abbreviations
BoP
CAPMAS
CCF
CIDA
CMA
ERSAP
EU
FTTC
GAFI
GDP
GOE
HE
IDRC
IDSC
IMF
IT
ITP
M/SME
MCIT
MCIT
MOE
MOEFT
MOFA
MOFT
NPC
NPD
OECD
OSS
PD
QED
SCEM
UNDP
USAID
Balance of Payments
Central Agency for Public Mobilization and Statistics
Country Co-operation Framework (UNDP)
Canadian International Development Agency
Capital Market Authority
Economic Reform & Structural Adjustment Program
European Union
Foreign Trade Training Center
General Organization for Foreign Investment & Free Zones
Gross Domestic Product
Government of Egypt
His Excellency
International Development Research Center
Information Decision Support Center
International Monetary Fund
Information Technology
International Trade Point
Medium, Small & Micro Enterprises
Ministry of Communication and Information Technology
Ministry of Communications and Information Technology
Ministry of Economy
Ministry of Economy & Foreign Trade
Ministry of Foreign Affairs
Ministry of Foreign Trade
National Project Coordinator
National Project Director
Organization for Economic Cooperation and Development
One-Stop-Shop
Project Document
Quarterly Economic Digest
Strengthening Capacity for Economic Management
United Nations Development Program
United States Agency for International Development
iii
Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
Executive Summary
The objective of strengthening the capacity of the Ministry of Foreign Trade for economic
management has been successfully carried out by the project, within changed parameters. The
project began with the Ministry of Economy and Foreign Trade. In 2001 the Ministry was split into
two - Ministry of Economy and Ministry of Foreign Trade. The privatization component of the
project was taken over by the Ministry of Public Enterprises whilst all the rest went to the Ministry
of Foreign Trade (MOFT).
The implementation strategy for the project was to hire a small group of highly competent
professionals who provide guidance and direction to the Ministry’s departments, draft legislation,
and initiate and/or participate in design of related projects funded by other organizations. This
project evaluation assesses whether the impetus and supervision by the core team has led to
improvements in the legislative and regulatory environment with respect to economic
management and to the production of outputs that meet the objectives stated in the project
document.
The Project Document lists three immediate objectives and related outputs as shown below.
Immediate
Objective
1:
Professional &
technical capacity
of the MOEFT to
design policies and
prepare legal
frameworks
enhanced*.
2:
Strong links &
communications
with sovereign
rating agencies and
donors established.
OUTPUTS
1.1 Egypt’s Economic Model
1.2. Policy directives and
recommendations for
institutional reform to
encourage exports,
investment and trade
1.3. Policy directives and
institutional measures for the
promotion of SMEs
2.1 Publication of a monthly
bulletin, quarterly digest;
Egypt’s annual economic
report, Investment in Egypt
Report; Ministry’s website.
2.2 Periodic economic reports on
foreign exchange flows; BoP
indicators; inter-bank interest
rates and stock market
updates
Executive Summary
Findings
National Model developed, in cooperation with Oxford Forecasting, to
the level of basic functions such as
predicting the impact of exchange rate
devaluation on inflation and the
current account and, to a lesser
extent, GDP growth rates.
Plan produced in cooperation with
USAID and the EU Industrial
Modernization Project
Plan produced in cooperation with
CIDA and IDRC
Monthly bulletin produced throughout
2000-2003 and continuing, plus
12 Issues of Quarterly Digest
3 Issues of Annual Economic Report
3 Issues of Investment in Egypt
Ministry website established &
maintained
Confidential monthly reports on each
of these issues prepared for the
Minister to submit to the PM and
President
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
3:
Privatization
Programme of Joint
Venture Companies
and banks
implemented
3.1 Comprehensive database on
joint venture companies,
insurance companies and
banks
3.2 Comprehensive & strategic
plan for the privatization of
joint venture companies,
insurance companies and
banks
3.3 Capacity of MOEFT
enhanced in privatization
techniques such as valuation,
marketing, restructuring etc.
3.4 Quarterly Report on
Privatization
Developed at MOEFT in cooperation
with USAID; Delivered to Ministry of
Public Enterprises in 2002
Committee formed March 2000.
Handed over to Min. Public
Enterprises when MOEFT split but
MOFT still active on committee
See training schedule for 2000 for
privatization-related training;
key staff subsequently re-trained to
assist minister with investment
problems
MOEFT produced 1st issue;
since discontinued
The overall finding is that the project has made a significant positive impact on Egypt’s capacity
for economic and the continuation of MOFT efforts, as per the proposed revised schedule of
activities, is necessary to sustain the upgrading momentum.
Recommendations
1. The Government should continue supporting MOFT skills upgrading and institutional
development.
2. The extension of project EGY/00/015 and the revised schedule of activities should be
accepted (extend project for 2 yrs with no increase in funding).
3. Project monitoring and reporting should be tightened.
4. UNDP should continue its support to MOFT.
Executive Summary
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
1: Introduction
Egypt’s position in the global trading system is being strengthened by moves to greater
transparency and information sharing as well as by lowering trade barriers and allowing greater
capital mobility. A number of UNDP-supported projects have been implemented to facilitate and
support ministries’ capacity building, including in the area of economic management, by activities
such as the establishment of technical units to assist ministers, staffed by high-level expertise for
policy formulation and institutional development within relevant ministries and agencies.
When HE Dr. Yousef Boutros Ghali was appointed Minister of Economy and Foreign Trade in
1999, he found that there was urgent need to strengthen the capacity of the new ministry with
respect to economic management. The project under review, EGY/00/015 “Strengthening the
Capacity of the Ministry of Economy and Foreign Trade for Economic Management” (SCEM), was
signed in 2000 and had broad-ranging aims to do with privatization, capital market reform and
stimulation of trade. During the project period the MoEFT was split into two (2001) ~ the Ministry
of Economy (MoE) and the Ministry of Foreign Trade (MoFT). The privatization objectives of the
project were taken over by the Ministry of Public Enterprises and associated activities were
transferred over a period of 6 months. However, MoFT retains an active role in privatization
committees. All other activities of the SCEM project are with the Ministry of Foreign Trade.
As a consequence of the split, some spending was delayed, a shift in focus took place, and some
new activities became desirable. A substantive revision will document the re-focussing of activities
and re-allocate the remaining monies to the revised schedule of activities over the next two years.
The present evaluation of achievements of project EGY/00/015 to date is designed to assess
whether the project is worthy of extension for another 2 years and, if so, will provide endorsement
and suggestions regarding the proposed activities.
Approach to evaluation
The evaluation methodology was to (a) compare pre-project outputs of the ministry with those
being produced now, (b) conduct interviews with key personnel, and (c) assess the impact of the
project on the broad developmental goals that were targeted in the project document.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
2: Findings
The Project Document lists three immediate objectives and related outputs as below.
Immediate
Objective1
1:
Professional &
technical capacity
of the MOEFT to
design policies and
prepare legal
frameworks
enhanced*.
2:
Strong links &
communications
with sovereign
rating agencies and
donors established.
3:
Privatization
Programme of Joint
Venture Companies
and banks
implemented
OUTPUTS
1.1 Egypt’s Economic Model
1.2. Policy directives and
recommendations for
institutional reform to
encourage exports,
investment and trade
1.3. Policy directives and
institutional measures for the
promotion of SMEs
2.1 Publication of a monthly
bulletin, quarterly digest;
Egypt’s annual economic
report, Investment in Egypt
Report; Ministry’s website.
2.2 Periodic economic reports on
foreign exchange flows; BoP
indicators; inter-bank interest
rates and stock market
updates
3.1 Comprehensive database on
joint venture companies,
insurance companies and
banks
3.2 Comprehensive & strategic
plan for the privatization of
joint venture companies,
insurance companies and
banks
3.3 Capacity of MOEFT
enhanced in privatization
techniques such as valuation,
marketing, restructuring etc.
3.4 Quarterly Report on
Privatization
Findings
National Model developed, in cooperation with Oxford Forecasting, to
the level of basic functions such as
predicting the impact of exchange rate
devaluation on inflation and the
current account and, to a lesser
extent, GDP growth rates.
Plan produced in cooperation with
USAID and the EU Industrial
Modernization Project
Plan produced in cooperation with
CIDA and IDRC
Monthly bulletin produced throughout
2000-2003 and continuing, plus
12 Issues of Quarterly Digest
3 Issues of Annual Economic Report
3 Issues of Investment in Egypt
Ministry website established &
maintained
Confidential monthly reports on each
of these issues prepared for the
Minister to submit to the PM and
President
Developed at MOEFT in cooperation
with USAID; Delivered to Ministry of
Public Enterprises in 2002
Committee formed March 2000.
Handed over to Min. Public
Enterprises when MOEFT split but
MOFT still active on committee
See training schedule for 2000 for
privatization-related training;
key staff subsequently re-trained to
assist minister with investment
problems
MOEFT produced 1st issue;
since discontinued
These ‘objectives’ are worded as outputs.
To change to correct objective-style wording the past tense verb at the end of each sentence should be
removed and used as an infinitive with ‘to’ at the beginning. e.g. Objective 1: To enhance the professional
and tech….etc
1
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
Some of these activities are of an on-going nature i.e. the production of reports, training, and the
drafting of policies, strategies and legislation. Others are no longer within the project because the
mandate of MOFT is different to that of the MOEFT, under which the project began, specifically
privatization activities have been handed over to the Ministry of Public Enterprises. The only item
which was not fully achieved, at least in the terms stated is the Egyptian Economic Model. The
PD envisioned a working model of the Egyptian economy to be used to design economic policies
and scenarios as an outcome of Immediate Objective 1 “Professional & technical capacity of the
MOEFT to design policies and prepare legal frameworks enhanced”.
In light of the limited
resources allocated to this component of the project, this was an over-ambitious goal and
illustrates the need to be circumspect when preparing a project document. However, good work
has been done towards eventual development of the model and the proposed activities in the
substantive revision regarding the Economic Model are for creating partial models (beginning with
the banking sector), still working with the Oxford Forecasting Institute, in a project funded by the
United Kingdom’s DIFD.
Print material
A selection of publications were compared and it is evident that both contents and
presentation style have improved considerably, plus new publications have been added.
Regarding content, the QED is the best example of increased and highly relevant content.
Regarding presentation and style, what were previously irregular loose-bound roneoed
sheets of paper documents are now regular periodical glossy colour booklets. Accuracy
and frequency of attribution has improved greatly (but more attention to detail is still
needed), and the classifications used are moving towards comprehensive international
classifications.
Web sites
Prior to the project the MOEFT had web presence as the former Ministry of Economy. Now
there is a website for MOFT with associated links to the projects that MOFT is involved with
such as the M/SME development strategy and links to Trade Point websites. Trade Points
and the FTTC (Foreign Trade Training Center) have been developed in cooperation with
MCIT’s e-commerce initiative. During the project the MOFT website also expanded to give
access to all published reports and to new decrees on imports, exports, etc and periodicals
from trade points.
IT network and document handling systems
A document handling system to electronically archive and index all work at the ministry has
been developed for the Ministerial office, with plans to extend it to all divisions of the
ministry. The LAN currently has 12- users, including the Cairo Stock Exchange, IDSC and
Reuters.
The main server is hosted at IDSC but managed at MOFT.
A Privatization
database was developed at MOEFT during the first year of the project and was gradually
handed over to the Ministry of Public Enterprises during the first half of 2001.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
Legal initiatives:
Eleven economic laws have been enacted as a result of inputs by the project and executive
regulations issued for three of them.
A further three have been drafted and are in
discussion (see Annex C).
Institutional initiatives:
Full reorganization of the Ministry was undertaken, including establishment of 2 new sectors
– the Trade Agreements Sector with departments for the World Trade Organization and for
other Bilateral and Multilateral Agreements. The other new sector is the Foreign Trade
Policies Sector (formerly the Foreign Trade Sector) which focuses on policy matters
including WTO policy and compliance matters, SMEs, import and export policies and
Foreign Trade Field Offices. Obtaining approval of the Ministry of Administrative reform was
a major achievement and the next phase (i.e. the two year extension of the project) will
establish the operating procedures and undertake the training necessary to ensure optimum
operation of the new trade-related sectors.
Capacity building:
The various training programmes were compatible with the needs of the Ministry during the
period under review (see Annex D).
Development of economic & trade policies:
The major policy initiatives during the period 2000-2003 were in relation to trade
liberalization, the capital market, M/SMEs, monetary and exchange rate policies, Trade
Points, the insurance industry and privatization.
The major Strategic Plans that have been adopted by the government are the M/SME
Development Plan, the Export Promotion Plan and the MOFT Administrative Reform Plan.
Annex C shows the laws and regulations that have been enacted to support these and
other trade-related initiatives.
Other significant achievements: Participation & transparency
A participatory approach, involving stakeholders in policy development, has been widely
pursued in all activities undertaken by the project.
There is deep understanding that
involvement of stakeholders is both beneficial to the plans and strategies that are
developed and to their enforceability. The approach is evidenced by the structure of the
numerous committees that the project has established and/or is participating in.
Exchange of information and transparency has improved during the project, as
evidenced by the LAN links between MOFT and Cairo Stock Exchange, IDSC and Reuters.
The development of ITPs (International Trade Points) and trade points in 10 Governorates,
with a further 5 in the pipeline, are also evidence of increased information sharing and
transparency in governmental operations.
Article IV Consultations with IMF are a further example of transparency and
information exchange. A significant new item is the Public Information Notice issued by
IMF, which will become a regular publication.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
Corporate Governance: Since 2000, when Egypt asked the World Bank to benchmark Egypt
against OECD Corporate Governance principles, MOFT has taken the leading role in
following through on this initiative.
Shareholder protection has been increased, new
accounting and auditing laws are in process, the unified companies law and the capital
market law have all received substantial input from the project staff. Market operations
include new listing rules for the stock exchange (and have resulted in a reduction of listed
companies from 1,200 in 2002 to 800 in 2003) which provide incentives to conform to
Corporate Governance principles. Management training has been promoted extensively
and cultural development and public awareness of the responsibilities of directors and
boards of listed companies has been, and continues to be, a leading activity.
Assessment of impact by the project on the broad developmental goals that were
targeted in the project document.
The project document stated that the project was expected to enhance the economic
management capacity of the Ministry of Economy and Foreign Trade, targeting the following 5
areas:
1:
Strengthen the capacity of the staff and the organizations in charge of economic reform;
2:
Improve the responsiveness of the Egyptian economy to the various challenges;
3:
Restore the qualities of transparency, accountability & predictability to the economic
environment;
4:
Encourage small and micro enterprises;
5:
Ensure an effective & efficient implementation of the Ministry’s Privatization Programmes.
The evaluation found evidence of significant accomplishments in terms of each of the above
broad objectives.
-
As an example of strengthened capacity of the staff and the organizations in charge of
economic reform a remarkable level of increased confidence & professionalism in matters of
foreign trade was recently reflected in the hosting of the GoE of an Informal Ministerial Meeting at
Sharm El-Sheikh, a step in the ongoing Doha Development Agenda.
- As an example of improved responsiveness of the Egyptian economy to the various challenges,
the floating of the Egyptian pound is the major event during the period under review. Another
example of policy responsiveness is evident in a current account surplus of 0.7 and 2.36 percent
of GDP in 2001/2002 and 2002/2003 respectively, despite the uncertainty in the region due to the
gulf war.
-
Examples of restoring the qualities of transparency, accountability & predictability to the
economic environment are the many new and expanded publication as well as websites and
increased access between related agencies.
- Encouragement of small and micro enterprises is evidenced by the strategic plan for the sector
and the widespread consultative processes that are in place to implement the plan.
The
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
establishment of One-Stop-Shops (OSS) in Mansur, Alexandria, Beni Suef have proven to be a
great success in counteracting the bureaucratic difficulties of dealing with multiple government
agencies and the extension phase of the project is planning for OSSs in 13 more governorates.
- Ensuring an effective & efficient implementation of Privatization Programmes is no longer the
responsibility of MOFT, but the groundwork of establishing a database was performed and
handed over to the agency that currently has responsibility for the privatization programmes, the
Ministry of Public Enterprise.
Weaknesses
1. Over-ambition in the intended activities and outputs. This was clearly the case with regard to
the Economic Model but some increased specificity in other outputs would also be beneficial
for monitoring purposes.
2. Lack of attention to administrative requirements of the project. The project document contains
some inconsistencies and there are no progress reports – a case of too busy doing the work
to do the paperwork, for the project clearly has made very substantial gains in the targeted
areas. According to the Project Document2 the Project Steering Committee should have met
every six months and the National Project Coordinator should have prepared minutes of those
meetings. Also the Project Management Board should have met on a quarterly basis to
review operational issues, resolve implementation problems and assess progress achieved.
No minutes of such meeting were available, nor were any held according to interview
information. Also the requirement for a tripartite review at least once every 12 months was
not met.
3. Inconsistencies in the Project Document: Links between broad goals, activities and outputs
were not as clear as they could be and there were some specific omissions e.g. Organogram
for SCEM, p.13. At no point in the document is SCEM identified. Interviews revealed that it is
the abbreviation used for the project and stands for Strengthening Capacity for Economic
Management. The Management section speaks of a National Project Director and a National
Project Coordinator, whereas the diagram has a National Project Coordinator and a Project
Administrator, but no Director.
4. Accuracy in publications.
The increased level of transparency in published figures is
unreservedly a valuable improvement and the accuracy level of publications is high relative to
government publications in English, but there is room for improvement. The usefulness of
published data will continue to increase as it becomes more detailed, accurate, and frequent.
The data improvements should be matched by further presentation improvements. The fact
that the presentation style and supportive information is much better than before does not
make it international “best practice”. For Egypt to win the full confidence of international
investors and trading partners, inconsistencies, errors and ambiguities need to be reduced
further.
2
At least according to the version of the project document that was given to the author of this report.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
3: Recommendations3
3.1
The Government should continue supporting the strengthening of capacity of
the Ministry of Foreign Trade (MOFA)
The Government of Egypt’s commitment to achieving its economic and social goals
requires continued strengthening of institutional capacity and staff capacity to make optimal
use of the institutional changes. The substantive review to extend the project for two years
does not require additional funding. Rather it re-allocates the remaining funds in a more
appropriate way in light of the ministerial change and evolving circumstances. Continued
support for project EGY/00/015 is highly recommended.
3.2
The revised schedule of activities should be accepted as presented
The re-phasing and re-focussing of activities is in line with the ministerial changes and
represent a good use of the remaining funds in the project budget.
They should be
accepted as the basis for the continuation of project EGY/00/015 for a further two years.
3.3
Project monitoring & reporting should be tightened
Internally consistent documentation of the project and adherence to the mandatory review
mechanisms should be applied during the extension period.
3.4
UNDP support to the project should continue
Project EGY/00/015 is fully in alignment with UNDP’s policy and advocacy focus and the
evident improvement in information quality, transparency, and availability should continue to
be encouraged. Furthermore, UNDP’s new, tighter, documentation and reporting standards
are likely to have a beneficial impact on project implementation.
3
Technical issues concerning the economic analysis, modeling, strategies etc. were not within the scope of
work of the review, consequently no recommendations are made on such aspects.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
4: Conclusion
There is a need for Egypt to modernize processes and systems and institutions to assure success
in the modern global marketplace and consequent domestic growth. As stated in the UNDP
Country Cooperation Framework for Egypt (2002-2006), the key element of this vision is the
development of an empowered private sector that can genuinely push forward improved
productivity and employment growth.
Strengthening the state and empowering society and other development actors is fundamental for
sustainable human development. The role of the state is changing in view of globalization and
adoption of market economy approaches, thus requiring modernization of process and systems,
creating enabling environments through more relevant legal frameworks and institutional
development as well as more participation of people in planning, decision-making and identifying
development needs.
After reviewing the achievements of Project EGY/00/015 for the period 2000-2003 and the
proposed revised activities, it is recommended that the substantive revision and two year
extension be approved in order to maintain the sustainability of the current achievements and the
realization of Egypt’s economic and social vision.
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Project No. EGY/00/015: Strengthening the Capacity of the Ministry of Foreign Trade (MOFT) for Economic Management
Evaluation January 2004
Annex A: People Interviewed at Ministry of Foreign Trade
Ahmed Kouchouck
Economic Researcher
Amina Ghanem
Economist and Senior Assistant to the Minister
Maged Shawky Sourial
Financial Economist & Senior Assistant to the Minister
Mohammed Abu Taleb
Economist and Senior Assistant to the Minister
Nabil Yehia Rashdan
Manager, SME Development Unit
Nermine N. Abulata
Economist & Assistant to the Minister
Sherif Ahmed Sherif
Economist & Senior Assistant to the Minister
Annex B: Documents consulted
Fitch Ratings
Sovereign Report: Egypt: December 2003
Ministry of Economy
Recent Economic Developments and Statistics, July 1998
Ministry of Economy
Egypt 1999
Ministry of Foreign Trade
Egypt 2003
Ministry of Economy and
Foreign Trade
Emerging Investment Opportunities: Privatization Digest:
September 2001
Ministry of Foreign Trade
Monthly Economic Digest: Vol.5 No.10 December 2003
and others
Ministry of Foreign Trade
Quarterly Economic Digest; July-September 2003
and others
Ministry of Foreign Trade
Website
Trade Point
Website
11