UNIDO Activities in Egypt 2015 – 2016

UNIDO activities in Egypt 2015 – 2016

INCLUSIVE AND SUSTAINABLE INDUSTRIAL DEVELOPMENT

Contents

Abbreviations...... 5

1. Overview: engaging and partnering for private sector development in Egypt...... 6 1.1 Agro-industrial value chain development...... 9 1.2 Micro, small and medium enterprise (MSME) development and competitiveness...... 10 1.3 Entrepreneurship promotion and employability of youths and women...... 12 1.4 Community development...... 15 1.5 Resource-efficient and low-carbon industrial development...... 16

2. Poverty reduction through productive activities and trade capacity-building...... 20 2.1 Egyptian Medicinal and Aromatic Plants Project: upgrading the medicinal and aromatic plants value chain...... 21 2.2 Green Trade Initiative...... 24 2.3 Human security through inclusive socioeconomic development in Upper Egypt (Hayat)...... 26 2.4 Enhancing youth employability and local economic development in Upper Egypt...... 29 2.5 Interregional project to promote SME origin and export consortia...... 33 2.6 Support to the development of cultural and creative industries and clusters in the southern Mediterranean...... 35 2.7 Promoting women’s empowerment for inclusive and sustainable industrial development in the Middle East and North Africa region...... 36 2.8 Enhance regional trade capacities in food through a harmonized regional conformity assessment and food safety systems...... 38

3. Energy and environment...... 40 3.1 Industrial energy efficiency...... 41 3.2 Montreal Protocol projects...... 44 3.3 Utilizing solar energy for industrial process heat in Egyptian industry...... 48 3.4 Low-carbon and climate-resilient industrial development in Egypt, Kenya, Senegal and South Africa.... 49 3.5 SWITCH-Med: demonstration and networking initiative...... 51

4. Future areas of support...... 54 4.1 Industrial policy and strategy...... 55 4.2 Industrial zones and clusters development: enhancing SME performance...... 55 4.3 Upgrading the date palm value chain...... 59 4.4 UNIDO’s contribution to the implementation of Egypt’s 2030 Vision: faster, sustainable and more inclusive growth in Upper Egypt...... 60

References...... 61

UNIDO ACTIVITIES IN EGYPT, 2015 3

Abbreviations

AIDMO Arab Industrial Development and Mining Organization

CBI Centre for the Promotion of Imports from Developing Countries

CFC chlorofluorocarbon

CO2e carbon dioxide equivalent

COMFAR Computer Model for Feasibility Analysis and Reporting

EEAA Egyptian Environmental Affairs Agency

EnMS energy management system

GDP gross domestic product

GEF Global Environment Facility

GHG greenhouse gas

HCFC hydrochlorofluorocarbon

IEE Industrial Energy Efficiency (project)

ISO International Organization for Standardization

MDI metered-dose inhaler

MED TEST Mediterranean – Transfer of Environmentally Sound Technologies

MSE micro and small enterprise

MSME micro, small and medium enterprise

NGO nongovernmental organization

ODP ozone depletion potential

PAFTA Pan-Arab Free Trade Agreement

SDG Sustainable Development Goal

Sida Swedish International Development Cooperation Agency

SME small and medium enterprise

TVET technical and vocational education and training

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNIDO United Nations Industrial Development Organization

USAID United States Agency for International Development 1. Overview: Engaging and partnering with the private sector in Egypt

In recent years, the development community has repeatedly emphasized the crucial role of industry and the private sector for, inter alia, fostering innovation, creating jobs, improving public well-being and protecting the environment, both in developing and in developed countries. ndustry continues to be a proven and cru- In addition, industrialization will play a signifi- cially important source of employment, ac- cant role in achieving goal 8: Promote sustained, counting for almost 500 million jobs world- inclusive and sustainable economic growth, full Iwide, representing almost a fifth of the world’s and productive employment and decent work for workforce. Manufacturing industries and their all (in particular target 8.2: Achieve higher levels 1. related service sectors can absorb large num- of economic productivity through diversification, bers of workers, providing them with stable jobs technological upgrading and innovation, includ- and increasing the prosperity of their families ing through a focus on high-value added and and communities. Broader economic and social labour-intensive sectors), and goal 12: Ensure growth is supported within an environmentally sustainable consumption and production pat- sustainable framework. Environmentally sound terns (in particular target 12.2: By 2030, achieve production methods in industry can significantly the sustainable management and efficient use of reduce environmental degradation, and cleaner natural resources). industry production and green industries can deliver environmental goods and services. Inclusive and sustainable patterns of industrialization are a priority for sustainable development, This year, the Millennium Development Goals – as they contribute to the creation of shared pros- launched in 2000 to make global progress on perity and environmental sustainability. Industri- poverty, education, health, hunger and the en- alization is, in fact, strictly linked to other SDGs. vironment – expired, and were replaced by the On one side, industry requires adequate access to Sustainable Development Goals (SDGs). Acceler- certain input factors (such as educated workforce, ating industrial development is key for achieving water, energy and natural resources), and relies higher levels of prosperity for all and achieving on an enabling business environment (including the SDGs in a comprehensive way. functioning cities and infrastructure, a stable legal framework and non-violent societies). On the At all levels of development, industry can be a other side, industry produces the necessary in- primary driver in fighting poverty, ensuring food puts (such as food and beverages, medical sup- security, safeguarding the environment and pre- plies, infrastructural supplies and machinery, and venting social polarization and fragmentation. chemicals) to achieve long-term efficiency and As the SDGs integrate social, environmental and productivity gains in all its production processes, economic dimensions of development, the issue hence contributing to safeguarding the environ- of industrialization, in recognition of its significant ment, mitigating climate change, and advancing contribution to the sustainability of economic sustainable production and consumption. Indus- activities and advancing social inclusion, is ad- try is also a major driver of the creation of formal dressed at two levels – at the goal and at the tar- employment and women’s empowerment. get level. In particular, industrialization is reflected in goal 9: Build resilient infrastructure, promote This would unleash the potential of the private inclusive and sustainable industrialization and sector as a driver of inclusive and sustainable foster innovation, and more specifically in target industrialization, which in turns is a driver of eco- 9.2: Promote inclusive and sustainable industriali- nomic growth and sustainable development, both zation and, by 2030, significantly raise industry’s in developing and developed countries. Engaging share of employment and gross domestic product, and partnering with the private sector must be at in line with national circumstances, and double its the core of any meaningful development agenda share in least developed countries. and the foundation of any successful large-scale

UNIDO ACTIVITIES IN EGYPT, 2015 7 development strategy to accelerate poverty re- an unprecedented level of partnership between duction and sustainable development, as United industry, governments, civil society, academia Nations Industrial Development Organization and other key stakeholders. These players are (UNIDO) Director-General Li Yong points out (1). At pivotal in bringing to the table innovative meth- the same time, partnering with the private sector ods and strengthened mechanisms for leverag- helps ensure that UNIDO interventions remain rel- ing funding, creating decent employment, and evant to the needs of industry. encouraging technology, innovation and research. Governments, at all levels, should pro- The private sector is not only a source of financ- vide an enabling environment that facilitates ing, but is also an actor in sustainable develop- multistakeholder involvement, including private ment, in its economic, social and environmental industry and business. dimensions. Private industry and business is an important vehicle for technology development In line with UNIDO’s efforts worldwide, its man- and innovation, representing a hub for techni- date in Egypt is to advance inclusive and sustain- cal progress and exchange, as well as being a able industrial development for employment gen- major source for the long-term generation of eration and green industry, thus triggering a range resources for sustained development financing. of environmental, social and economic benefits. However, this cannot mean that the private sec- UNIDO supports Egyptian industry and business tor becomes a substitute for governments in the in promoting industrialization that is inclusive and development context. On the contrary, govern- sustainable. UNIDO’s inclusive and sustainable in- ments must develop policies that drive inclusive dustrial development approach in Egypt is based and sustainable industrial development, espe- on two main pillars: creating shared prosperity for cially for small and medium enterprises (SMEs), all, and safeguarding the environment. which are the backbone of every economy and society; and encourage the centrality of trust, Through its technical cooperation portfolio, accountability and transparency in public-pri- UNIDO responds to development challenges in vate partnerships. The development and imple- Egypt by providing technical expertise and assis- mentation of the post-2015 agenda will require tance, as well as capacity-building measures, in-

8 UNIDO ACTIVITIES IN EGYPT, 2015 tegrated, multi-actor responses and multistake- for rural households, increases food security and holder partnerships, to tackle problems such as helps achieve economic transformation. rising youth unemployment, economic recovery, climate change and the energy crisis. The work on value chains in the Egyptian agro- industrial sector includes a pro-poor dimension, UNIDO is currently engaged with the Government since it looks into the inclusion of small-scale of Egypt and civil society in initiatives that relate farmers and producers into formal and durable to agro-industry development; human security business opportunities, with a special focus on and local economic development in Upper Egypt; Upper Egypt. The agricultural sector remains the micro, small and medium enterprise (MSME) de- backbone of economic activity, employment and velopment and job creation; energy efficiency livelihoods in most of Egypt (particularly in Up- and renewable energies; implementation of per Egypt): it contributes 14.5% of gross domes- Montreal Protocol activities; and promotion of tic product (GDP) and employs 22.6% of the total green industries. labour force, with females accounting for 40.8% of the labour force in agriculture. Strengthening UNIDO situates its ongoing and planned pro- the sector and adding value to agricultural com- jects within government priorities and the out- modities are instrumental to enhancing food se- comes encapsulated in the most recent United curity, stimulating economic growth and reduc- Nations Development Assistance Framework ing poverty in a sustainable manner. (2013–2017). With its proven expertise and experience in designing and implementing programmes for 1.1 Agro-industrial value the development of the agro-industrial sector, chain development UNIDO is ideally placed to lead partnerships at the national level and engage with stakeholders UNIDO recognizes agro-industry as one of the and development partners. One particular area drivers of inclusive development in Egypt. An effi- of focus is the development of value chains and cient agro-industry enhances economic stability investment in agribusiness to enhance produc-

UNIDO ACTIVITIES IN EGYPT, 2015 9 tive capacities and reduce postharvest losses. tems has been provided, resulting in the intro- As opposed to the traditional exclusive focus duction of the cultivation of new products, im- on production, the value chain concept stresses proved production practices and technologies, the importance of value addition at each stage and compliance with quality and food safety re- of the agro-supply chain from production to lo- quirements, thereby ensuring their harmoniza- gistics to market. tion with international quality regulations and facilitating better access to high-end markets. UNIDO designs and validates, in close collaboration with all stakeholders, robust in- To ensure sustainability of its interventions, UNI- terventions that promote valueaddition in DO has established strong and lasting networks agro-processing, postharvest handling, supply and relations with the various institutions affili- chain management,food security and product ated to the Ministry of Trade and Industry, includ- safety,access to technologies, business developing technology centres, export councils, training ment services, financing and trade promotion. councils and credit institutions, as well as with key active civil society organizations. Innovative practices identified and diffused in agro-industrial development to increase productivity, quality, exports, rural income and employ- 1.2 Micro, small and medium ment include: enterprise (MSME) development and competitiveness • Introduction of good agricultural practices in farm production and of new solutions to in- Small entrepreneurs play an important role in the crease productivity (for example greenhous- Egyptian economy. In line with the strategy pur- es, vertical protected cultivation, production sued by the Government of Egypt, which is cur- of specific high-value crops, grafting) coupled rently prioritizing support to SME development, with training of lead farmers and knowledge UNIDO endeavours to improve the performance agents, study tours in country and abroad, and of Egyptian enterprises by targeting opportuni- international expertise sharing. The adoption ties with proven market potential and promoting of these practices has resulted in an increase trade, while ensuring environmental sustainabil- of productivity per unit area on average by ity and social equity. 300% and a decrease of production costs on average by 20% (depending on the crop), a According to the Social Fund for Development, twofold to fourfold increase in revenue per there are around 2.5 million SMEs in Egypt, rep- unit area, and an increase in employment resenting 99% of non-agricultural private sector (protected cultivation approaches are more establishments and 75% of the total employed job intensive than open field approaches). workforce. Of SMEs, 51% are in manufacturing. However, the private sector, which employs about • Good agricultural practices and solutions for 70% of the labour force and whose share of GDP packing, drying and preprocessing of crops deteriorated to around 60% during the past three (fruits, vegetables, medicinal and aromatic years (2, 3), continues to underperform, and it is plants) have been provided to SMEs, including far from being robust and competitive, thus slow- packing houses, drying facilities and preproc- ing down its potential to create jobs and engage essing facilities, resulting in improved quality excluded and vulnerable populations (4). and food safety of final products, and reduced postharvest losses (from 40% to 15%). Partly due to the country’s economic policies, microfirms are faced with a myriad of challenges • In the area of processing, technical assistance that prevent them from fully joining the formal on product development, production practices, sector and competing with old, large, privileged and quality and food safety management sys- firms born as a result of the privatization of State-

10 UNIDO ACTIVITIES IN EGYPT, 2015 owned enterprises. Within the industrial sector, with the increase in the size of enterprises. Op- for example, access to State energy subsidies erating on an informal basis inhibits the growth favours a few old, large firms. The World Bank potential of enterprises, as it deprives them of suggests that if the government stopped giving the possibility of applying for formal loans and well-connected firms preferential treatment and engaging in positive and wider interactions with applied the same regulations uniformly, young- institutions, and ultimately deprives employees er, smaller firms would be able to compete with of the possibility of having a consistent income, more established ones, ultimately resulting in a social security and protection. dynamic private sector. If the government also offered the private sector credible signs of trans- A more competitive MSME sector is particu- parency and accountability, it could restore the larly crucial, given its potential to contribute to sector’s confidence and encourage investment job creation, open up opportunities for youths, and job generation (5). enhance entrepreneurship, generate and raise incomes, stimulate innovation and expand do- MSMEs in Egypt face several obstacles, both in- mestic markets, and finally contribute to the eco- ternal to the firms, such as low productivity, in- nomic prosperity of the country. consistent quality of products and low innovation rates; and external (related to the business envi- UNIDO enhances the productivity and profit- ronment), such as uncompetitive market struc- ability of MSMEs in industrial sectors with com- tures, shortage of skilled workers and missing or petitive advantages and, where opportunities for excessive regulations inhibiting firms from enter- economic empowerment and job creation exist ing and exiting the market, and stringent laws on or can be stimulated further, by paving the way bankruptcy, liquidation and restructuring proce- for private sector growth and increased employ- dures. Institutional obstacles that surround the ment. Special regard is given to MSMEs led by start-up and operation of a business are trans- or employing youths and women. Incentives pro- lated into a relatively low level of productivity vided to MSMEs, mainly in the form of technical and relatively high level of informality within the assistance, are based on the market mechanism MSME sector. Over 85% of Egyptian enterprises and are expected to stimulate local market de- are informal. The degree of informality decreases velopment and local ownership.

UNIDO ACTIVITIES IN EGYPT, 2015 11 UNIDO enables MSMEs to access knowledge and both agricultural and municipal waste that new market opportunities (including in export can be turned into a source of revenue and markets) through the creation of export consor- job creation in the region. tia, quality certification, export logistics, value addition and modern technologies for better Projects targeting MSMEs highlight the impor- generation of sustainable jobs and income op- tance of establishing and fostering linkages with portunities. UNIDO provides multiple training and local supporting institutions (non-profit, private business development services to MSMEs in, in- sector corporate social responsibility, business ter alia, the agro-industrial, waste management, associations) to provide young entrepreneurs textile, hospitality and furniture sectors. It also with advice, guidance, and technical and finan- builds the capacity of local knowledge agents on cial assistance. Building the capacity of the local innovative and best practices and guides them ecosystem allows for sustainability of project in- in on-the-job training, while disseminating the terventions beyond project life. knowledge gained to other community members.

MSMEs, both at the early stages of enterprise 1.3 Entrepreneurship development and in mature stages of growth, re- promotion and employability ceive technical assistance and capacity-building, of youths and women either individually or as members of consortia and clusters: In the first quarter of 2015, total unemployment in Egypt remains as high as 12.8%. Most critical- • Consortia promotion. SMEs in the date palm ly, youths bear a disproportionate share of this sector are provided with technical assistance burden. According to a report issued by the Cen- in the form of preharvest and postharvest tral Agency for Public Mobilization and Statistics, consultations, training, export promotion, and youth unemployment reached 26.3% in 2014 (6). sharing of international expertise and knowl- Females represent 23.9% of the labour force, and edge with other countries, such as Morocco the female unemployment rate reached 24.8% in and the United Arab Emirates. Other support 2014, three times that of men, according to the activities have targeted SMEs in the Egyptian latest figures for 2015 (7). hospitality sector. Youth unemployment is compounded by a mis- • Cluster development. Productive clusters, match between the skills equipped through from the village to the national level, are being secondary and tertiary education and those de- upgraded in various sectors, including food, manded by the local private sector. Almost half aquaculture, poultry, furniture, leather and cre- of unemployed young people have completed ative industries, encouraging collective perfor- university-level education or above (44.5%). The mance and competitiveness and strengthening second-largest group of unemployed are techni- cluster governance mechanisms, thereby im- cal and vocational education and training (TVET) proving the growth of value chains, promoting graduates (38.4%). TVET graduates constitute a business linkages and fostering innovation. large and growing group among new entrants into the labour market (63% of those leaving ba- • Youth-led start-ups. New and existing sic education pursue technical education), yet youth-led start-ups in waste management re- they are not absorbed in the Egyptian economy. ceived technical, managerial, marketing and Youths report being unemployed due to the mis- business development support, from the idea match between their qualification and experi- stage to the investor-ready stage. With its fast- ence and those demanded by the labour market growing population and strained local waste (8). On the other side of the labour market, in- management systems, Egypt, and specifically dustrial enterprises suffer from a chronic supply Upper Egypt, displays a significant surplus of of underqualified personnel.

12 UNIDO ACTIVITIES IN EGYPT, 2015 UNIDO activities in Egypt focus on promoting in- • facilitating a better match between demand clusive and sustainable industrialization, which and offer of jobs, aligning the skills of local results in the creation of quality jobs. Sustainable jobseekers with the demand of the private job creation is not a quick fix.It requires sustained sector; rates of economic growth, structural changes in productive sectors and structural reforms of re- • addressing the structural need to develop en- lated sectors such as education. Engagement trepreneurial attitudes among youths in order with Egyptian local industries has shown UNIDO to increase their employability profile (both as that, despite the deterioration of the country’s self-employed and as employees in existing economic performance in the aftermath of the companies). 2011 “Arab spring” uprisings, demand for qualified labour does exist in several sectors and can The first axis of UNIDO’s action addresses the be stimulated further, together with the promo- competitiveness and growth of the MSME sector, tion of self-employment, entrepreneurship, in- as discussed in the previous section. novation, and better access to financial and educational assistance. Egypt is endowed with a Often enterprises in Egypt, however, do not large youth population, which gives the country find qualified workers, technicians or manag- an entrepreneurial advantage if well supported ers, despite the high numbers of unemployed. and nurtured. There is an evident mismatch of available skills and skills requested by the private sector, and The UNIDO approach within this complex frame- this is the second aspect UNIDO is tackling in work has been based on the following three axes: Egypt. UNIDO has trained hundreds of agronomists in the agro-industrial sector and, based • MSME development to stimulate private sec- on positive experience, plans to collaborate tor growth that can produce new jobs; with the private sector and establish an agro- industrial academy backed up by private enterprises and teaching curricula emanating from the private sector itself. Similar plans are being developed with the engineering and construction sectors, by which UNIDO is seeking partnerships with local and international investors in order to upgrade the skills of the local workers to make them more employable. Technical and know-how aspects are among the biggest weaknesses for youths, both as employees and as self-employed, including in the waste management sector. In this sector UNIDO teamed up with universities, such as South Valley Univer- sity in Qena and Aswan University, to reach out to youths and identify job opportunities in the field of waste management (both agricultural and municipal waste). Discussions are continuing with government counterparts (including the Ministry of Planning, Follow-Up and Admin- istrative Reform, the Ministry of Local Develop- ment, the Ministry of Trade and Industry, and the Ministry of Environment) to reach a much larger number of beneficiaries in sectors of vital importance for Egyptian economic growth.

UNIDO ACTIVITIES IN EGYPT, 2015 13 The third aspect of UNIDO’s work refers to collab- in productive activities and sustainably generate oration with the education sector. Building on its income, thereby improving their socioeconomic global experience, UNIDO introduced an Indus- security, economic empowerment and resilience. trial Entrepreneurship Development Programme This requires also supporting an enabling envi- in technical secondary schools to foster an en- ronment that creates favourable jobs for women, trepreneurship culture among Egyptian youths including those living in rural areas (9). through entrepreneurship education, with the aim of increasing their employability or preparing Women’s participation in the labour market in them for self-employment, ultimately providing Egypt is among the lowest in the world.1 Young a supportive and enabling environment for new women’s labour force participation reached only business establishment and growth. 13.3% in 2014 (8), despite substantial improvements in female literacy and enrolment rates. Consultations are continuing with the Ministry of Trade and Industry, the Ministry of State for Tech- Very few women in Egypt are engaged in early- nical Education and Training, and the Ministry of stage entrepreneurial activities. According to a Education for nationwide roll-out of the UNIDO 2014 report by the Global Entrepreneurship De- Industrial Entrepreneurship Development Pro- velopment Institute, with respect to ease of start- gramme in the education system, specifically in up and growth of own businesses for women, the general secondary schools and technical and Egypt ranks 28th out of 30 countries. Women ac- vocational schools. count for only 11% of entrepreneurs in Egypt (10).

In all projects and programmes developed and UNIDO is currently providing technical assistance under development, UNIDO addresses the lim- for income-generating activities, business coach- ited participation of women in the labour market, ing and access to financial services for women, specifically self-employment and MSME owner- with a special focus on the most vulnerable, and ship, and focuses on the development of entre- increasing their employability through skills en- preneurial and technical skills of women to ena- hancement and matching with private sector ble them to increase their employability, engage needs. In addition, rural women are being em-

1 According to the World Economic Forum’s Gender Gap Report for 2014, Egypt ranks 129th out of 142 countries on the gender gap index, and ranks 130th out of 135 in labour force participation.

14 UNIDO ACTIVITIES IN EGYPT, 2015 ployed in postharvest activities such as grading, as on personal and community security (crime, sorting and packaging of agricultural products, domestic violence and child labour). as well as in the waste management sector. Despite government efforts to relaunch the econ- UNIDO activities aiming at enhancing youth em- omy in 2014, growth rates are still low. Growth ployability are in line with Government of Egypt weakened to about 1.04% in the first quarter of plans and objectives. In order to address these 2013–2014 (4). challenges, in the last year the Egyptian Govern- ment, as part of its Sustainable Development Unless immediate measures are taken to Strategy, has taken a number of important meas- strengthen human security and foster inclusive ures to boost employment, including developing policies, the well-being of many communities in infrastructure, establishing investment projects Egypt, and specifically in Upper Egypt, may be that raise economic growth, and creating thou- severely compromised, especially given the ab- sands of jobs, especially for youths and females, sence of a robust social security network. This with the ultimate objective to reduce the unem- may lead to new social unrest, which may lead to ployment rate to 5% by 2030 (11). further destabilization.

To counterbalance this and promote more com- 1.4 Community development prehensivble local economic development and stability in the poorest of villages, UNIDO aims Prolonged social and political transition coupled at protecting people from critical and pervasive with economic downturn in the aftermath of the threats by implementing an integrated local 2011 Arab spring uprisings has had severe conse- community development approach. quences for the socioeconomic security of communities and individuals in the country, pushing UNIDO works through local government, civil so- the most vulnerable groups (youths, women and ciety partners and community structures to serve children) to slide deeper into poverty and ex- vulnerable and at-risk local communities and indi- clusion. Decreasing incomes at the household viduals, with special emphasis on helping youths level have repercussions on food and health and women to become more economically active security (hunger, unsafe food, malnutrition and and self-sufficient, and to support target commu- decreased access to basic health care) as well nities to become more inclusive and gender re-

UNIDO ACTIVITIES IN EGYPT, 2015 15 sponsive as they play an active role in the creation other resources, which leads to highgreenhouse of sustainable employment opportunities. gas(GHG)emissions. The industry sector represents a major energy consumer in Egypt and is Capitalizing on accumulated experiences from a major emitter of greenhouse gases (GHGs): previous UNIDO efforts to improve human secu- it contributes to about 43% of end-use energy rity for vulnerable groups in Egypt’s poorest gov- consumption and is responsible for 27.7 million

ernorates, UNIDO supports the Government of tonnes of carbon dioxide equivalent (CO2eq). Egypt in the development and promotion of hu- According to the Annual Report on Solid Waste man security by fostering protection and empow- Management issued by the Ministry of Environ- erment measures aimed at mitigating the impact ment in 2013, Egypt, in 2012, generated 6 million of current threats, adequately responding to the tonnes of industrial waste, which accounted for needs of vulnerable communities and individu- 7% of the entire waste generated. als, and empowering local populations to help them overcome their challenges and improve Energy intensity and resource inefficiency in gen- their livelihoods. eral are reflected in high carbon emissions, one of the main causes of climate change. Egypt is one Aiming at improving the economic situation of of the countries at highest risk from the impacts the local population and social cohesion, UNIDO of climate change. It is estimated that climate assists small producers and growers and young change will cause displacement of approximately entrepreneurs to improve their production prac- 50 000 individuals in 50 years due to sea level rise tices and become more economically productive in the Nile Delta region of Egypt, a 30% reduction and sustainable, stimulating their development in food security in the southern zones, and sub- and generating new job and income opportunities stantial health impacts, including malnutrition. for the benefit and empowerment of their families and communities. Local nongovernmental organi- UNIDO has long recognized that environmen- zations (NGOs) have been upgraded to serve their tal issues must be addressed and cleaner, low- communities with infrastructural improvements, carbon, energy-efficient methodologies must be and participatory planning forums have been es- promoted at a systemic level in industrial devel- tablished to allow the local population to interact opment. The promotion of these methodologies with local government and development partners requires a perspective and a decision-making to plan and implement improvement projects. process that simultaneously considers both economic value and environmental sustainability. As a result of its interventions, UNIDO has strongly This entails using less material, water and energy positioned itself in the local community, gaining resources for the same economic output. Moreo- the trust of beneficiaries, community development ver, there is a strong need for capacity-building organizations and local government institutions. in technology development and transfer.

UNIDO’s interventions in Egypt in this regard fo- 1.5 Resource-efficient and cus on the following key areas: low-carbon industrial development • Energy efficiency and renewable energy in industry. Egypt’s installed capacity is no In Egypt, patterns of industry often rely on inef- longer able to meet the increasing demand. ficient and wasteful use of raw materials, fuel According to the African Development Bank, and energy, .Many industries use more materi- Egypt’s total primary energy demand has als and energy than their production processes grown at an average annual rate of 4.6% dur- would require. This is due to the use of old, out- ing the last two decades. Since 2010 Egypt datedand inefficient equipment and technol- has been facing a severe energy crisis – it ogy. and thewastefuluse of energy, water and has become a net energy importer, and is no

16 UNIDO ACTIVITIES IN EGYPT, 2015 longer able to secure its energy needs due to ogy would permit. Energy management stand- economic and infrastructure challenges. As a ards provide a structured and comprehensive consequence the industry has faced damag- framework for industrial facilities to integrate ing interruptions in energy production, which energy efficiency and system optimization into in turn has had a negative impact on the econ- their daily energy management. Such stand- omy as a whole and the livelihoods of workers. ards enable closer linkages between business Residents have also faced frequent domestic practices for the management of energy and blackouts, affecting their day-to-day activities. core industry values, such as cost reduction, increased productivity, environmental compli- In Egypt the industrial sector is expected to ance and global competitiveness. further grow due to high demand and rapid expansion of industrial production. Energy To face those issues, the Egyptian Government productivity in Egyptian industry is well below has set up policies and targets to increase the the international average, with energy con- share of renewables in the energy mix and to sumption per unit of output 10–50% higher promote the involvement of the private sector. than the international average. Growth in other According to the New and Renewable Energy sectors, including the commercial sector (ho- Authority, a strategy was approved in Febru- tels, offices, shopping malls and other energy ary 2008 aiming at raising the share of renew- users) and residential buildings, is resulting in ables to 20% of total electricity generation by increasing consumption of energy, particularly 2020. This represents about 7200 megawatts. for air-conditioning and water heating. Indus- trial processes, large buildings and tourism fa- Egypt is potentially rich in renewable energy cilities are typical major users of electricity for sources, especially solar. The Egyptian solar air-conditioning and heating purposes. atlas, developed in 1991, estimates that two thirds of the country’s area has a solar ener- Many processes have a very low level of en- gy intensity of more than 6.4 kilowatt-hours ergy efficiency and the average energy use is per square metre per day, or between 2000 much higher than the best available technol- kilowatt-hours per square metre per year in

UNIDO ACTIVITIES IN EGYPT, 2015 17 the north of the country and 3200 kilowatt- • Phase-out of ozone-depleting substances. hours per square metre per year in the south, In implementing the Montreal Protocol on Sub- with an economic potential of 73 656 tera- stances that Deplete the Ozone Layer, UNIDO watt-hours per year. Duration of sunshine assists the Government of Egypt in phasing out ranges between 9 and 11 hours per day from commonly used ozone-depleting substances north to south, with very few cloudy days. from industrial processes and products by up- Therefore Egypt has a great potential to use grading industry and introducing alternatives various types of solar technology to support to ozone-depleting substances. These inter- its economic growth and increasing energy ventions add to the sustainability of global in- demand. dustry by preventing the use and emissions of these substances, which not only lead to the • Resource-efficient and cleaner production. destruction of the ozone layer, but also con- UNIDO assists industries to improve their re- tribute substantially to climate change. Phase- source productivity and environmental per- out projects for ozone-depleting substances formance through the adoption of resource- advance industrial development through efficient and cleaner production practices, targeted activities such as technology devel- methods and techniques, as well as through opment, transfer and adoption, provision of enhanced recycling, resource recovery and equipment, market access support, technical treatment of all wastes. In so doing, pressure assistance and training activities. on natural resources – in the form of overcon- sumption or pollution – are alleviated, lead- In partnership with the Global Environment Fa- ing to a more environmentally sustainable cility (GEF) and key stakeholders in industry, the form of industrial production. At the same public sector and academia, UNIDO promotes a time, resource-efficient and cleaner industrial holistic approach, addressing policy, economic, production engenders economic competitive- technical, environmental and social aspects, to ness. This takes the form of realizing produc- disseminate and support the best available prac- tivity gains, implementing better process con- tices and technologies for industrial energy and trols and standards, enhancing environmental environmental management and the adoption of accounting methods and adopting innovative clean, efficient and low-carbon technologies in business models. the industrial sector in Egypt.

18 UNIDO ACTIVITIES IN EGYPT, 2015 Inclusive and sustainable industrial development current areas of intervention

poverty reduction through productive activities and trade capacity-building

<< Egyptian Medicinal and Aromatic Plants Project: upgrading the medicinal and aromatic plants value chain

<< Green Trade Initiative

<< Human security through inclusive socioeconomic development in Upper Egypt (Hayat)

<< Enhancing youth employability and local economic development in Upper Egypt

<< Interregional project to promote SME origin and export consortia

<< Support to the development of cultural and creative industries and clusters in the southern Mediterranean

<< Promoting women’s empowerment for inclusive and sustainable industrial development in the Middle East and North Africa region

<< Enhance regional trade capacities in food through a harmonized regional conformity assessment and food safety systems

energy and environment

<< Industrial energy efficiency

<< Montreal Protocol projects

<< Utilizing solar energy for industrial process heat in Egyptian industry

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UNIDO ACTIVITIES IN EGYPT, 2015 19 2. Poverty reduction through productive activities and trade capacity-building

Pro-poor growth refers to a model of economic development that can also benefit the poorer segments of the population, including youths, women and micro-entrepreneurs. UNIDO supports technical cooperation projects aimed at enabling Egypt’s private sector to become an effective driver of pro-poor growth through productive activities and trade capacity-building.

20 UNIDO ACTIVITIES IN EGYPT, 2015 2.1 Egyptian Medicinal port clusters and producer groups; and facilitate and Aromatic Plants access to domestic and international markets (12, Project: upgrading the 13). As opposed to the traditional exclusive focus on production, the value chain concept stresses medicinal and aromatic Scan for the the importance of value addition at each stage. plants value chain project’s videos Egypt has been growing medicinal and aromatic Project background and rationale plants since ancient times and its products are considered today as high-value export crops. How- ever, the sector development potential is hindered UN implementing UNIDO by low quality and safety standards, lack of profes- agency: sional advisory services, and a highly fragmented Ministry of Trade and National and underdeveloped supply chain. These factors Industry, Food and Agro implementing negatively affect the position of Egyptian medici- Industries Technology partners: nal and aromatic plant products in the local and Centre export markets, undermining the sector’s ability to Government of Switzerland: enhance the productivity, quality and competitive- Donor: State Secretariat for ness of high-value products and contribute to the Economic Affairs (SECO) generation of employment opportunities. Budget: US$ 2 870 000 Duration: 2011–2015 Project objectives Beni Suef, Minya, Asyut, Governorate: In order to ultimately upgradethe value chain Fayoum of theEgyptian medicinal and aromatic plant- Website: http://www.emap-eg.org/ sectorand consequently facilitateaccess to international markets formedicinal and aromatic plants,technicalTechnical assistance and trade Past projects implemented by UNIDO in the agro- capacity-building activities are being imple- industrial sector provided detailed insights into mented in the framework of the Egyptian Medici- the challenges and bottlenecks hindering its nal and Aromatic Plants Project. These activities development potential, namely the disconnect are intended to raise the efficiency of the value between primary production and further pro- chain, harmonize national standards and ensure cessing, low degree of value addition, high post- their compliance with international quality and harvest losses, and lack of technical knowledge food safety requirements, increase the added and market information. value of final products, and support the access of Egyptian medicinal and aromatic plant prod- UNIDO is addressing these bottlenecks and will ucts to the international market. In particular, the continue to do so, jointly with the Government of programme focuses on two interrelated compo- Egypt, using a number of innovative tools aim- nents: quality enforcement and market access. ing to improve the capacities of producers, especially small-scale producers, to increase pro- In this context, the Egyptian Medicinal and Aro- ductivity, quality, compliance and value addition; matic Plants Project provides an integrated ap- strengthen the linkages of the value chain; sup- proach directly targeting all levels of the supply

UNIDO ACTIVITIES IN EGYPT, 2015 21 chain – growers, preprocessors and local trad- ronment for a ministerial decree setting up an ers, and final processors and exporters – and independent steering committee for establishing indirectly supporting governmental entities, non- and operating the National Quality Scheme (Min- governmental organizations, and research and isterial Decree 205/2014). The Egyptian Medici- scientific institutions. Development and techni- nal and Aromatic Plants Project has also helped cal support programmes are carried out through establish sustainable funding for the activities of a network of specialized technical centres affili- the steering committee, which is now function- ated to the Ministry of Trade and Industry. ing with inputs from the Egyptian export councils. In addition to designing and approving the implementation roadmap of the National Quality Project activities and achievements Scheme with the participation of different stakeholders, the project is providing regular techni- As a core pillar to assure quality and promote cal assistance and continuing support to finally Egyptian medicinal and aromatic plant prod- establish and implement the scheme, which will ucts in export markets, the project succeeded foster the presence of Egyptian exports in inter- in designing principles for and establishing a national markets. National Quality Scheme for Egyptian medicinal and aromatic plants through consultation with Enhancing integration along the supply chain national stakeholders. The project supported will help achieve the project objective to support development of the first standard covering the small producers, improve product quality and entire supply chain for Egyptian medicinal and foster market access. The project has succeeded aromatic plants, and created an enabling envi- in attaining this integration through introducing

22 UNIDO ACTIVITIES IN EGYPT, 2015 and expanding the cultivation of 18 new varie- pert. On-site training and demonstration activities of medicinal and aromatic plants that are in ties will take place for wider application across demand worldwide. For this purpose, 28 exten- the sector. sion fields were established within the four targeted governorates (Fayoum, Beni-Suef, Minya On the market access front, the Egyptian Medici- and Asyut) to technically support and empirically nal and Aromatic Plants Project has created three demonstrate cultivation of the newly introduced export consortia for medicinal and aromatic varieties. Following the technical assistance pro- plants in Upper Egypt, which are now active and vided at the production stage, the Egyptian Me- jointly implementing trade-based activities, such dicinal and Aromatic Plants Project linked small as participating in trade shows and developing producers to exporters through demonstra- business plans. In addition, the project has built tion activities carried out through harvest days, sustainable linkages with international trade pro- whereby exporters were invited to witness the motion bodies, namely the Swiss Import Promo- harvest of the new products and attend expert tion Programme and the Centre for the Promo- workshops on technical specifications and inter- tion of Imports from Developing Countries (CBI). national market trends. Consequently, the pro- Eight Egyptian companies are already supported ject supported farm contracting between small by the Swiss Import Promotion Programme. The farmers and exporters to sustain integration of companies were identified through three sourc- farmers into the supply chain and support their ing missions from the Swiss Import Promotion access to export markets. Programme to Egypt facilitated by the Egyptian Medicinal and Aromatic Plants Project. New Value addition and product development is an- markets penetrated include Germany, India, the other critical developmental pillar that the Egyp- Netherlands, Poland, Saudi Arabia and Sweden. tian Medicinal and Aromatic Plants Project in- The Swiss Import Promotion Programme is now vests in, especially with regard to the essential linked with the Egyptian export councils for sus- oils industry and medicinal and aromatic plant tainable future cooperation beyond the project drying practices. National and international ex- lifetime. Similarly, the Egyptian Medicinal and pertise was integrated to conduct a needs as- Aromatic Plants Project organized and facilitated sessment and diagnostic study on the Egyptian two CBI sourcing missions to Egypt for the essen- essential oils industry. Accordingly, comprehen- tial oils industry, and the programme is now also sive national training was conducted to convey connected to the Egyptian export councils. good practices over the entire supply chain of the essential oils industry, attended by 14 small During 2015, the Egyptian Medicinal and Aro- and medium producers. The sessions included matic Plants Project succeeded in creating an detailed training on “Production, extraction and active business and technical platform – “Herbs distilling techniques for essential oils:the expe- of Egypt” – alongside the Food Africa trade rience of India”. The training programmes were show. Herbs of Egypt is the first specialized conducted in collaboration with national and medicinal and aromatic plants conference in international specialized entities and with the Egypt. Over the four days, Herbs of Egypt pro- Egyptian Food Export Council, which will take the vided inspiring technical sessions delivered by lead in regularly updating the programmes and international industry experts from Germany, In- providing them to different groups of companies dia, Morocco and the United States of America, in the future. In addition, international expertise and was attended by over 60 participants. The has been utilized to design, establish and dem- Herbs of Egypt event created an active business onstrate a new distillation unit with technology platform through 122 business-to-business levels appropriate for small and medium Egyp- matchmaking sessions hosting six major inter- tian producers. The new distiller was conveyed to national buyers and around 29 Egyptian com- two local manufacturers, who are now establish- panies of medium and small scale, many resulting it in direct contact with the international ex- ing in business deals.

UNIDO ACTIVITIES IN EGYPT, 2015 23 2.2 Green Trade The Green Trade Initiative focuses on four main Initiative pillars:

Project background Scan for the and rationale project’s videos

UN implementing UNIDO agency: Ministry of Trade and National Industry, Ministry of implementing Agriculture and Land partners: Reclamation, Ministry of Transport Italian-Egyptian Debt Donor: for Development Swap Programme 54 962 854 Egyptian Budget: pounds Duration: 2013–2016 Governorate: All over Egypt • quality and production improvement to en- UNIDO’s past projects in the agro-industrial sec- hance the quality of horticultural produce and tor provided detailed insights into the challeng- the export controls of the concerned authori- es, bottlenecks and hidden opportunities of the ties to ensure alignment of Egyptian products sector in Egypt. Bottlenecks identified include with European Union requirements; the disconnect between primary production and further processing, low degree of value addition, • integration and strengthening of logistics link- high postharvest losses, and lack of technical ages and practices inside and outside Egypt; knowledge and market information. • increased private sector investment in the ag- UNIDO is addressing these bottlenecks using a ribusiness sector by mobilizing existing finan- number of innovative tools aiming to improve the cial resources, analysing business opportuni- capacities of producers to increase productivity, ties and fostering transfer of technology and quality, compliance and value addition; strength- know-how; ening the linkages of the value chain; supporting clusters and producer groups; and enhancing ac- • better access to national and international cess to international and domestic markets. markets for small producers, cooperatives and farmers’ groups through the dissemina- Project objectives tion of horticulture market information (on prices and products), participation in special- The main objective of the Green Trade Initiative ized fairs, and last but not least fostering the is to enhance the competitiveness and export establishment of joint ventures with Italian value of selected Egyptian horticultural products and other European companies. – green beans, artichokes, strawberries, grapes, lettuce, tomatoes, peppers and pomegranates – Having thoroughly assessed the value chains through the adoption of the value chain approach. of the eight selected products, the Green Trade

24 UNIDO ACTIVITIES IN EGYPT, 2015 Initiative identified the main problems affect- cluding on cultivation practices and food safety ing production and related technical assis- and market standards. The Green Trade Initiative tance, either specific to the crop or cross-cut- has also strengthened partnerships with aca- ting, such as awareness raising and training on demic institutions in Italy (University of Milan) good agricultural practices and integrated pest and in Egypt (Universities of Asyut and Alexan- management. dria) to support a research programme on artichokes and pomegranates to test new varieties In 2015, the Green Trade Initiative started by fo- and enhance cultivation practices derived from cusing on tomatoes as one of the most promi- the Italian model. nent horticultural products in Egypt, which is the fifth-largest producer worldwide. However, to- The Green Trade Initiative is investing significant mato production also presents the biggest prob- efforts in promoting value addition to horticul- lems, from varieties to cultivation methods, with tural products, as an opportunity for small-scale a large potential for improvement. An innovative producers to stabilize sources of income and de- collaboration to test 15 new varieties through crease risks, and for the private sector to develop partnering with a seeds company has been initi- the agro-industrial sector, where Egypt is still lag- ated, together with awareness and implementa- ging behind, as shown by the large quantities of tion of vertical cultivation methods in 1000 fed- processed fruits and vegetables that are import- dans to improve quality and productivity. ed. In this regard, the Green Trade Initiative has promoted, among more than 200 beneficiaries, In collaboration with the Horticultural Research the production of sun-dried tomatoes, which is a Institute, the Green Trade Initiative will also pro- niche segment of the market but one that holds duce eight technical guidelines for producers, in- great interest for the Italian market. Sun-drying is

UNIDO ACTIVITIES IN EGYPT, 2015 25 a simple procedure that takes place in the open which will lead to the issuance of e-phytosanitary air on net tables, requiring only limited invest- certificates and which will also be connected to a ment in infrastructure, while it is doubling job trade information platform gathering information opportunities and can increase profits for small from the field to the shelf. producers by up to 30%.

Moreover, in order to better integrate small and 2.3 Human security medium producers into the export value chain, through inclusive appropriate logistics services should be provid- socioeconomic ed to reduce losses and optimize delivery times. development in Upper To raise awareness on logistics and logistics op- Scan for the erations, the Green Trade Initiative has designed Egypt (Hayat) project’s videos and implemented a first round of combined awareness and training on logistics, involving Project background and rationale 500 stakeholders along the supply chain from farmers to intermediaries and finally to exporters. UNIDO (lead agency), UN Women, UN-Habitat, UN implementing To ensure improved access to markets and fair International Labour partners: conditions, the Green Trade Initiative is promoting Organization, International contract farming practices among small and medi- Organization for Migration um producers to enable them to stabilize and plan National Ministry of Local their production and safeguard their income. The implementing Development project is also supporting access to high-end mar- partner: kets by promoting participation of small exporters, associations and cooperatives in international United Nations Trust Fund for Human Security, Swiss specialized fairs, for example Fruit Logistica 2016, Donors: and by selecting international buyers for sample Agency for Development trials and for trade missions to Egypt. and Cooperation Budget: US$ 5 372 791 At the institutional level, in order to have an enabling environment for small and medium export- Duration: 2013–2016 ers and align Egypt with European Union require- Governorate: Minya ments, the Green Trade Initiative has mapped the national quality infrastructure, including both relevant institutions involved in and legislation The Hayat project is working to strengthen the related to the export of horticultural products economic security of vulnerable communities and its control. The results of the assessment in- in the districts of El-Edwa and Maghagha, both dicate that Egypt has fully fledged legislation re- in the Minya governorate. Project interventions garding quality control, standards, accreditation have been extended to south of Minya, with sup- and controlling bodies, yet it is lacking effective port from the Government of Japan. enforcement, due to inefficient and insufficient operational capacities (human and financial resources). In this respect, the Green Trade Initia- Project objectives tive will raise awareness on quality infrastructure for fresh produce from the top management level The project has adopted a concept of human to the officers and inspectors of different institu- security that focuses both on the protection of tions to enhance the control of exported prod- well-being from threats (such as chronic pov- ucts. The Green Trade Initiative is also contrib- erty, precarious livelihoods, unemployment, uting to the network of plant quarantine offices, disease, financial and economic downturns and

26 UNIDO ACTIVITIES IN EGYPT, 2015 environmental degradation) and on community on productive cluster projects, specifically aqua- empowerment measures, which allow commu- culture, poultry, furniture and dairy, in response nities to acquire the means to become self-re- to the unemployment issue. Other prioritized liant in addressing vulnerabilities and building interventions are related to health (hepatitis C), their own future. solid and agricultural waste management, and simple infrastructural projects such as building The plan is to promote the sustainable employ- bridges and upgrading market places. ability of the local labour force, while contributing to mitigation of threats to environmental, Based on the labour market assessment, an in- personal, community and food security. The pro- formation counselling and referral system has ject capitalizes on the combined resources of been established, supported by an online, freely UNIDO, the International Labour Organization, accessible database, and has been institutional- the International Organization for Migration, ized at the Ministry of Manpower and Migration UN-Habitat and UN Women, working through employment offices at the Minya governorate. local government, civil society partners and The capacity of staff at the offices has been built community structures to serve at least 18 000 to provide job-matching services in line with the beneficiaries. The joint project supports target needs of the local private sector, through several communities throughto become more resilient, information sessions and employment fairs, at- self-reliant andinclusive. In this respect, the ac- tended by 580 participants and reaching 320 oth- tivities envisaged by this joint programmeaim at ers during counselling sessions and employing (a) strengthening human security through crea- 170 people. Linkages to other employment pro- tion of more and better employment opportu- jects, such as the International Labour Organiza- nities and increased employability of the local tion’s Career Guidance Project and the German labour force; and (b) enhancing community and Development Cooperation (GIZ) Employment personal security through activities to develop Promotion Programme are being established. communities’ social capital and enhance cohesion and inclusiveness. The project has assisted over 1800 local farmers in their production practices and built the capacity of local youths as knowledge agents Project activities and achievements to extend its outreach. With the technical assis-

In a participatory manner, all stakeholders have been involved in assessment and implementation at different levels. Human security forums have been established in a participatory manner in each of the five mother villages. The forums constitute 25 members each, reflecting different socioeconomic aspects of community development: inclusiveness (including women, youths and other vulnerable groups), economic key actors (such as farmers and producers) and environmental themes. The forums also include strong representation of local government and community leaders. In the project’s extension in Maghagha, two further forums were formed rely- ing on already existing electoral processes of the community, appointing forum members based on their posts in different occupations and building their capacities. The forums agreed to work

UNIDO ACTIVITIES IN EGYPT, 2015 27 tance of the project building on the success of charges 10–15 Egyptian pounds per palm tree past interventions for the setting up and opera- for combating the lethal pest. tion of pilot community-level greenhouses for the vertical expansion of production in farmers’ Interventions in animal production tackle the value associations in Upper Egypt, 20 entrepreneur chain as a whole, improving inputs by promoting groups have constructed their own greenhous- production of silage and field beet for feed, and es, based on four demonstration models pi- developing capacities of farmers and veterinarians. loted in collaboration with a local NGO and the Six local veterinarians trained on artificial insemina- agricultural extension unit. These greenhouses tion have widened their business by improving local increase productivity by up to 300% and offer cattle breeds. The project also supports improved permanent employment for two workers per value addition practices and dairy production as feddan, in addition to seasonal employment op- well as productive use of agricultural residues, portunities during harvest seasons. The green- which are turned into compost. Over 80 farmers are houses extend the production window, captur- able to reduce their feeding costs by 60% applying higher market prices for the produce, and ing these methods. The project also foresees a 30% increase income per unit area by up to 200%. increase in milk productivity in the coming season.

Through Hayat’s assistance, date producers The project has also cooperated with the furni- have grouped to form a cluster, aiming to im- ture technology centre in Damietta for a one- prove their production practices and access week hands-on training of lead carpenters, economies of scale. They have implemented complemented by a visit to Furnex in order to drying practices and sorted and packed their demonstrate the potential of the craft, building products for sale in their first marketing inter- the capacity of the carpentry cluster. vention, increasing their product value up to 200%. The group has been linked to national With the aim to improve the socioeconomic liveli- and international markets through trade fairs in hoods of underprivileged rural women in the gov- Cairo, Alexandria and Abu Dhabi. This interven- ernorate of Minya, over 4500 women have joined tion is complemented by technical assistance over 300 village savings and loan associations, in integrated pest management of the red palm and over 1300 women have received training on weevil, whereby a new job profile has been de- hygiene and nutrition through the associations. veloped, namely the pesticide applicator, who In the villages of Eshinin and Dahrout, 50 women

28 UNIDO ACTIVITIES IN EGYPT, 2015 are now integrated in the palm crates production The creation of jobs in a given territory or in a giv- business. Several community events, mobilizing en industrial sector depends on many elements, over 150 youth volunteers, have been held, such such as. It depends on sustained economic as a blood donation campaign, an orphans’ day growth,as well as on inclusiveness in the pattern and sports tournaments for the month of Rama- of growth, competitiveness of the local private dan, aiding community cohesion and integration. sector, the set of skills available, the match be- In cooperation with Kidzania, the youth groups tween skills and job market demand. organized a visit to the facility for 60 marginalized children promoting the merits of working Despite high youth unemployment, demand for and spreading awareness on different jobs. qualified workers does exist countrywide and can be stimulated further, but the capabilities of the Hayat pipeline interventions include entrepre- jobseekers need to match the characteristics of neurship promotion through technical assistance this demand. Analysis of the local economic tex- to entrepreneurs in agribusiness and collabora- ture highlighted that opportunities for job creation with the Ministry of Local Development ini- tion are available in the agro-industrial sector as tiative to finance start-ups. well as in the waste value chains. However, a mismatch is evident between the outputs of the edu- Best practices in human security, updated and cation system and the needs of the private sector: upgraded based on lessons learned from Hayat the former does not fully equip youths with the as well as from other UNIDO projects supporting skills and attributes required by the industry, while MSMEs and entrepreneurship (see next section), the latter has to make up for this at its own cost. will be scaled up in other Upper Egypt governo- Moreover, technical and know-how, managerial rates. Consultations with interested donors are and business, and marketing aspects represent continuing. young entrepreneurs’ biggest weakness when it comes to business start-up and operation. Finally, for entrepreneurial activities to flourish a condu- 2.4 Enhancing youth cive environment needs to be fostered. employability and local economic development i Project objectives n Upper Egypt Scan for the project’s videos UNIDO aims at fostering simultaneously the Project background and rationale productivity and profitability of micro and small enterprises (MSEs); technical skills of local job- UN implementing UNIDO seekers as demanded by the local private sector; agency: and entrepreneurial attitudes (willingness and National ability to take initiatives, innovation and creativ- Ministry of Trade and implementing ity, readiness to take calculated risks, self-confi- Industry partner: dence and ability to collaborate).

Donor: Government of Japan The project promotes sustainable and inclusive Budget: US$ 750 000 business opportunities for the rural poor through agribusiness, waste management and entrepre- Duration: 2014–2015 neurship development, ultimately aiming at increased employability of the local population, Aswan, Luxor, Qena, Sohag Governorates: with special regard to youths.

UNIDO ACTIVITIES IN EGYPT, 2015 29 Active engagement of local supporting institu- that are both innovative and labour intensive; tions, the private sector and potential employ- (b) technical and entrepreneurial training for ers has been constantly promoted during project jobseekers; and (c) advisory services and busi- implementation so as to facilitate linkages and ness counselling. networking within the entrepreneurship system. After intensive consultation with local stakehold- The main target group is constituted by unem- ers, and based on the results of previous projects ployed and underemployed youths aged 18–30 implemented by UNIDO in Upper Egypt, the pro- in the Upper Egypt governorates of Aswan, Luxor, ject focused its efforts related to the agro-based Qena and Sohag, as well as local MSEs (both for- sector in two main directions: mal and informal). • improving horticulture productivity by introducing protected vertical cultivation tech- Project activities and achievements niques under greenhouses;

Agriculture and food processing are a source • improving quality and marketability of palm of employment for approximately 60% of the date products by enhancing preharvest, post- workforce in the target governorates, yet pro- harvest and processing techniques. cessing of locally available horticultural crops does not fully unleash its striking potential for Training of trainers on protected vertical cultiva- growth and job creation. In order to upgrade tion under greenhouses has been conducted to both the productivity and profitability of MSEs upgrade the capacities of agronomists and ex- in the agro-food sector, hence enhancing their tension officers, lead farmers, technicians and potential to provide new employment opportu- demonstrators from universities (259 in total) to nities for youths and women, the project envis- serve as local knowledge agents. The local agents aged the provision of (a) integrated programmes are then requested to disseminate the knowl- helping entrepreneurs to adopt technologies edge acquired on the best farming practices for

30 UNIDO ACTIVITIES IN EGYPT, 2015 horticultural crop production under greenhouses As a part of the pilot demonstration, the project and postharvest techniques to other community also provided marketing assistance to the four members based on their existing networks. farmer traders to tap higher-value markets, by identifying local and export markets for the dates To showcase the positive contribution of green- (dried and semi-dried) and possibilities for value houses to employment generation and increased addition. agricultural productivity, the project launched an initiative to establish four greenhouses in part- In response to the request of the Luxor governo- nership with interested trainees from the training rate, the project supported youths to establish of trainers programme. The criteria for selection their own business ventures in agribusiness (ani- were based on their preparedness to manage a mal production and fisheries production). From vertical cultivation project as demonstrated dur- the proposals received, the project provided tech- ing the training and coaching sessions, as well nical assistance (upgrading of technical and en- as their readiness to invest in such a business trepreneurial skills) to 23 young entrepreneurs to venture. Each unit of 1 feddan generates three establish their own ventures in animal production. permanent employment opportunities and 379 Simultaneously, awareness-raising sessions on temporary worker-days. Based on the support the economic benefits of converting sugar cane to greenhouse establishment and on the above- residues to animal feeds were conducted in the mentioned training of trainers programme, 10 four governorates among the sugar cane farmers knowledge agents established on their own initi- (reaching 1046 farmers). Local sugar cane produc- ative 22 units of greenhouses over 1 feddan each. ers used to burn their production residues in the field, with negative impacts on the environment The intervention in the date palm sector intro- and health. The residues, however, if converted duced simple and affordable preharvest, har- into animal feed, would have a market value of vest and postharvest techniques to increase 1000 Egyptian pounds per tonne, providing a sig- productivity and profitability while creating nificant economic uplift to both small sugar cane more job opportunities for the local community farmers and local animal growers. and enhancing their position in both domestic and export markets. The technical assistance Youth-led business ventures have also been pro- approach uses on-the-job training, demonstra- moted in waste management: technical, mana- tion and extension, which are more effective in gerial, marketing and business development introducing new techniques and methodologies support has been provided to support youth- to farmers. Four Luxor-based farmer traders led start-ups for productive uses of waste and from the Upper Egypt Palm Dates Association enable them to reach the investor-ready stage. have agreed to work with the project. According to the Annual Report on Solid Waste Management issued by the Ministry of State The positive results of the demonstration car- for Environmental Affairs in 2013 (14), Egypt, in ried out with the four farmer traders on new 2012, generated 21 million tonnes of municipal techniques in fertilizer application, bagging, solid waste (accounting for 24% of the entire drying, storage and packing have been dis- waste generated), 30 million tonnes of agricul- seminated among the association members, tural waste (34%), 4 million tonnes of construc- agronomists, farmers and traders. Fourteen tion and demolition waste (4%), 6 million tonnes farmers with an aggregate of 172 palm trees are of industrial waste (7%), 0.28 million tonnes of now using the new techniques. In addition, 24 hazardous and medical waste (0.3%) and 3 mil- agronomists and farmers have been involved lion tonnes of sludge (3.4%). Agricultural waste in capacity-building activities to help curtail the constitutes the largest source of waste generat- negative effects of the red palm weevil, while ed in Egypt. Agricultural waste management has two of them have also received integrated pest untapped potential to create jobs in rural and management training sessions. marginalized communities.

UNIDO ACTIVITIES IN EGYPT, 2015 31 Following the dissemination of the results of Building on this experience, an implementa- the mapping of business opportunities in waste tion guide for support programmes to youths management in the target governorates, the pro- in waste management and policy recommen- ject received 60 proposals for youth-led waste dations to promote youth entrepreneurship in management start-ups. Based on socioeconom- waste management (with regard to market de- ic parameters, including social and economic velopment, finance, human capability develop- impact, community involvement, potential for ment, consultancy, outreach and awareness, job creation, innovation, business feasibility and legal and regulatory aspects, networking and skills required, 15 proposals were selected to re- exposure) are being developed and will be dis- ceive technical training (covering supply chain, seminated to relevant stakeholders in the entre- marketing, business plan and modelling, feasi- preneurship ecosystem. bility and technology) to address young entrepreneurs’ biggest weaknesses, namely technical As part of UNIDO’s efforts worldwide to foster and know-how, managerial and business, and an entrepreneurship culture among youths to marketing aspects. After the training, the new increase their employability or prepare them for and existing start-ups (conversion of agricultural self-employment, the project, in partnership and waste into animal feed and compost; recycling coordination with the Qena Governor’s Office, of crushed glass; biogas; and wood panels from the Directorate of Education and the then Min- date palm midribs) received further technical istry of Education – TVET (Technical and Voca- assistance focusing on validating information, tional Education and Training) Department, intro- finalizing technology issues, in-depth financial duced industrial entrepreneurship development analysis and planning, consolidating the busi- training in 11 TVET secondary schools (industrial, ness plans and mobilizing investors, through agricultural and commercial) in the governorate both streamed generic support and one-on-one of Qena. More than 100 teachers from the tech- assistance tuned to the needs of each start-up. nical schools in Qena now have the capacity to Moreover, since the project’s early stages, the teach entrepreneurship skills, and more than project has facilitated active engagement with 2000 senior students have been trained on the local supporting institutions (non-profit, private concept of entrepreneurship, work and life skills, sector corporate social responsibility, business environmental scanning and business opportu- associations) to provide young entrepreneurs nity identification. with advice, guidance, and technical and financial assistance, and strengthen the entrepre- Both teachers and students reported to be sat- neurship ecosystem. Leveraging and building isfied with the introduction of the new train- the capacity of local supporting institutions, ing. Teachers reported that the training even whether public or private, profit or non-profit, brought back to school a number of students allows for sustainability of project interventions interested in the innovative, participatory and beyond the project life. concrete approach proposed in the new curriculum: they learned about concrete options Linkages with financing opportunities have and ideas for future employment and self-em- been established and partnerships with the ployment, and how to enhance their self-confi- private sector initiated to provide start-up fund- dence, manage their time, solve conflicts in the ing to youth-led businesses. Private investment workplace, develop a positive attitude towards companies have positively reacted and invested business and work, and transform their thinking together with youths in ventures such as con- from jobseekers to job creators. version of agricultural waste into compost (organic fertilizer) and animal feed, animal waste Building on the positive experience of the into biogas for fertilizers and heat energy, and above-mentioned pilot, UNIDO is engaged in waste glass into powder for glass and ceramic consultation with the newly appointed Minister industries. of State for Technical Education and Training to

32 UNIDO ACTIVITIES IN EGYPT, 2015 gradually introduce the entrepreneurship train- Project objectives ing to a wider number of educational institutions with a view to a potential nationwide roll- UN implementing UNIDO out of the entrepreneurship curriculum in the agency: education system. National Ministry of Trade and implementing Industry partner: 2.5 Interregional project Donor: Government of Italy to promote SME origin and export consortia Budget: 1 000 000 euros Duration: 2012–2015 Project background and rationale Governorate: All over Egypt

For many SMEs exporting is often a complex business involving high risks and costs. One ef- UNIDO has developed an interregional project fective way of entering export markets is through to support the creation of SME consortia in the the development of export consortia or voluntary North African and Latin American regions, choos- alliances of firms with the objective of promoting ing four target countries – Egypt, Morocco, Peru the export of goods and services through joint and Ecuador. The project component implement- actions. Export consortia help individual SMEs to ed in Egypt aims to improve the economic and pool together their financial and human resourc- social performance of origin and export consor- es and other factors of production to achieve tia member companies. To this end, UNIDO in- economies of scale and better reach competitive tends to (a) build the capacity of national public and shifting global markets through clear com- and private support institutions in the country to mon export targets (for example selected market promote, on a regular basis, the creation and de- or distribution channels and trade fairs). velopment of origin and export consortia; and (b)

UNIDO ACTIVITIES IN EGYPT, 2015 33 foster information exchanges and dissemination development with the main target to improve the of best practices on export consortia among lo- exports and quality of Egyptian dates. cal and regional institutions. Currently, UNIDO is working on expanding its in- TIn this context, technical assistance and sup- terventions in the date palm sector in close co- port programmes are carried out in Egypt in ordination with the private sector to help build collaboration with export councils (Food Export a national vision and strategy for developing Council, Engineering Export Council, Furniture and promoting the sector in Egypt and abroad. Export Council, Home Textiles Export Council), This initiative also involves other key stakehold- technology centres and other specialized nation- ers such as NGOs, public institutions, ministerial al institutions, such as the Industrial Moderniza- counterparts and other trade promotion projects. tion Centre and the Egyptian Commercial Service, supporting SMEs and export promotion. As part of its efforts to promote the date palm sector as a vital contributor to Egypt’s economic growth and attract investment – both public and Project activities and achievements in Egypt private, foreign and domestic – UNIDO is cooper- ating with the Ministry of Trade and Industry and SMEs in the following sectors have been assisted the Khalifa International Date Palm Award in the to establish consortia with key activities such as United Arab Emirates to organize a nationwide trade fair participation, technical assistance and event, the First Egyptian Date Palm Festival. The legal consultations: automotive, date palm, me- festival will constitute a unique opportunity for dicinal and aromatic plants, dairy, furniture, hos- Egyptian producers and exporters of palm dates pitality and textiles. and their by-products to showcase their production (including through promotional tools), open SMEs in the date palm sector were provided with up new market opportunities (including through technical assistance in the form of preharvest business-to-business sessions) and engage po- and postharvest consultations, training, and in- tential investors. ternational expertise and knowledge sharing with other countries such as Morocco and the United Activities for the creation of export consortia are Arab Emirates. SMEs in isolated regions such as also targeting SMEs in the hospitality sector. The the Siwa Oasis have been assisted to develop a Hospitality Consortium has finalized its legal for- new and improved brand and legally establish malization. Business-to-business meetings with their first consortium. Today, SMEs in Siwa, which Kurdish companies and major hotel chains led had at first been small unrecognized firms, have to gathering in-depth market information and developed a new uniform brand supported by exploring new business opportunities. The con- promotional material (brochure, website, stickers, sortium is planning other joint activities in the business cards), participated in unison in the In- Middle East area. Hospitality Suppliers Group ternational Emirates Date Palm Festival in Novem- Egypt, a consortium formed in collaboration with ber 2014 and business-to-consumer exhibitions in the United States Agency for International Devel- Egypt, and built new clientele in Indonesia, Malay- opment (USAID) Trade Facilitation Project, par- sia and Oman, and they are now drafting a com- ticipated in the Hotel Dubai show as a first joint mon package design for export business as part activity, with a common booth and a consortium of coordinated efforts involving UNIDO and Indus- catalogue. Hospitality Suppliers Group Egypt is trial Modernization Centre. Coaching activities tar- now expanding and targeting the Saudi market, geting both date palm consortium members and and the members of the consortium have drafted other key date-supporting institutions are contin- a business plan for the establishment of a com- uing. As a result of a study tour to the United Arab mon showroom facility in Saudi Arabia. The con- Emirates, exporters have now commenced estab- sortium has started to include new partners and lishing a national NGO for date palm services and expand its operations.

34 UNIDO ACTIVITIES IN EGYPT, 2015 2.6 Support to the development focus on product diversification, quality and de- of cultural and creative sign (islands of excellence exist but the vast ma- industries and clusters in the jority of products remain of the low-range type); (c) weak entrepreneurial capacities and fragmen- southern Mediterranean tation (many producers of very small size and limited capabilities); and (d) limited access to Project background and rationale finance for innovation.

UN implementing UNIDO agency: Project objectives Ministry of Trade and National Industry, Agriculture and The new regional programme aims to consoli- implementing Agro-Industries Technology date business linkages and improve production partner: Centre techniques, in order to improve the livelihoods of local entrepreneurs and to make them more European Union, Italian Donor: resilient to changes in consumers’ tastes and Development Cooperation to the increasing competition coming from East Budget: 5 600 000 euros Asia. Doing so would create more jobs in the sector, particularly for marginalized groups, while Duration: 2014–2016 also contributing to safeguarding an important Governorate: All over Egypt element of Egypt’s rich cultural heritage.

The cluster development approach will help the Creative industries, as a sector largely dominated assisted enterprises move beyond their individ- by MSMEs, have a strong potential for employ- ual capacities, organize themselves in dynamic ment, notably for youths and women, and as well production networks, and develop strategic re- as for innovation and competitiveness, through lationships with other firms and institutions to creativity and entrepreneurship. improve their competitive advantages based on economies of scale, innovation and learning. Every year, 5 million new jobs are needed in the southern Mediterranean region; these could be Based on an initial cultural and creative industry created by the region’s MSMEs if they become cluster and value chain mapping within a trans- more competitive in terms of business, envi- parent selection process, the project seeks to ronmental and social performance. Cultural and provide technical assistance to at least one clus- creative industries are increasingly contributing ter in each of the target countries.2 The project will to the southern Mediterranean’s socioeconomic also foster information dissemination and knowl- development, and . Cultural and creativeenter- edge sharing through dedicated cultural and prises would strongly benefit from entrepreneur- creative industry centres as well as workshops ial cooperation to help them realize the potential and regional meetings that foster the exchange of their cultural heritage, improve products to of best practices and success stories. Moreover, attract consumers, access local and foreign mar- the project supports the implementation of an kets, and create mutually beneficial international enhanced cultural and creative industry policy partnerships. framework that is conducive to the formation of clusters, thus promoting the scaling up and rep- However, the development of these enterprises lication of its technical cooperation activities for faces several obstacles: (a) inadequate and ob- increasing employment opportunities and inclu- solete market access strategies; (b) insufficient sive growth throughout the region. In addition,

2 Algeria, Egypt, Jordan, Lebanon, Libya, Morocco, Palestine, Syria and Tunisia.

UNIDO ACTIVITIES IN EGYPT, 2015 35 special attention will be given to the establish- enabled the clusters to define a plan of action ment of business linkages between southern and a governance model to move forward in the Mediterranean and European Union cluster sup- implementation of their development strategy. port institutions and between international buy- This includes setting up working groups and will ers (retailers and manufacturers) and local sup- be followed by the creation of partnerships with pliers towards increasing sustainable sourcing. financial and support institutions. Regional activities will also be undertaken under the auspices of the Union for the Mediterranean, In addition, an analysis of the creative strengths which will further partner with the project as a fo- and weaknesses of each cluster and different rum and platform for information exchange and strategies to develop creativity and design ca- knowledge sharing. pacity to produce marketable products was conducted by the project’s designers.

Project activities and achievements in Egypt 2.7 Promoting women’s Mapping of creative and cultural clusters in Egypt empowerment for inclusive has been conducted. Based on the results of the and sustainable industrial mapping, two pilot clusters, of leather and habitat designers, have been selected. development in the Middle East and North Africa region A detailed diagnostic study was conducted in each of the clusters to identify business challeng- Project background and rationale es and opportunities, after an analysis of each of the clusters’ industries at national and global lev- The Middle East and North Africa region registers els, through engagement of key actors and sup- the world’s highest unemployment rates. Moreo- port institutions. A strategic vision specific to the ver, at about 25%, the youth unemployment rate clusters’ challenges and potential for develop- exceeds that of any other region in the world. ment was then defined, based on the analysis of For women, the figures are even more striking: key markets and purchasing criteria as well an in- women register an unemployment rate that is ap- ternational benchmark to enable identification of proximately double that of men, rising to almost key trends and requirements. Finally, the project 40% in the female youth labour force (15).

36 UNIDO ACTIVITIES IN EGYPT, 2015 UN implementing Middle East and North Africa countries, and as- UNIDO agency: sistance it has given in helping countries diversi- Ministries of Industry, and fy their economies and consolidate the develop- National national women’s business ment of their private sectors, UNIDO has a deep implementing associations in the six understanding of the private sector development partner: targeted countries (see next issue in the Middle East and North Africa region. subsection)

Donor: Government of Italy Project objectives Budget: 950 000 euros The project is seeking to enhance women’s eco- Duration: 2015–2016 nomic inclusion and thus to create the conditions Governorate: All over Egypt for sustainable and inclusive growth by harness- ing the great potential of women entrepreneurs in the Middle East and North Africa. To this end, At the same time, women’s labour force participa- UNIDO will offer technical assistance to women tion rates are among the lowest in the world. In entrepreneurs in Egypt, Jordan, Lebanon, Moroc- fact, even though almost all Middle East and North co, Palestine and Tunisia through the following Africa countries have closed 90% or more of the national women’s business associations: gender gap in education over the last decade, and while women in the region are now more likely • Egypt: Association for Women’s Total Ad- than men to attend university (16), only 25.2% of vancement and Development working-age women are part of the labour force, well below the worldwide average rate of 50% • Jordan: Business and Professional Women – (17). Not only do women in the region participate Amman weakly in the labour force on average, but when they do, they are generally active in the public sec- • Lebanon: Lebanese Association for Develop- tor, partly because of the reduced wage gap com- ment, Al Majmoua pared to the private sector, and also because of the higher-level education jobs that it offers. As a • Morocco: Association des Femmes Chefs result, female participation in the private sector la- d’Entreprises du Maroc bour force is relatively weak in a majority of Middle East and North Africa countries. • Palestine: Business Women Forum

According to the World Bank Enterprise Surveys • Tunisia: Femmes et Leadership. (16), 12–15% or formal SMEs in the Middle East and North Africa are women owned, compared to The project approach is holistic, linking policy 31–38% in emerging markets (18). The weak en- dialogue, capacity-building, investment promo- trepreneurial activity among women is worsened tion and networking, and builds on a three-level by the fact that, in absolute terms, the region suf- strategy: (a) it will nurture, facilitate and accom- fers from a low level of enterprise creation. Data pany the policy dialogue between the key stake- show that high-income countries register, on av- holders with the objective to produce a set of rec- erage, four new firms per 1000 working-age peo- ommendations and action points endorsed by all ple (15–65 years), while Middle East and North parties to promote women’s entrepreneurship in Africa countries register only 0.63 new firms the region; (b) it will strengthen the capacities of (ahead only of sub-Saharan Africa) (19). national women’s business associations in providing better-quality and demand-driven servic- As part of its long-term presence in and commit- es to women entrepreneurs to create and grow ment to the industrial development of several their businesses; and (c) it will directly promote

UNIDO ACTIVITIES IN EGYPT, 2015 37 about 200 promising women-led investments in level selected participants from women’s business the target countries through training, coaching, associations in the Middle East and North Africa. identification and facilitation of business partnership opportunities and access to finance. 2.8 Enhance regional trade As a result, it is expected that (a) public key capacities in food through actors will initiate a reform process, based on a harmonized regional an inclusive dialogue with national women’s business associations, to promote a more con- conformity assessment and ducive environment for women’s entrepreneur- food safety systems ship; (b) the national women’s business associations of the Middle East and North Africa will Project background and rationale offer more efficient demand-driven services to UN implementing support women entrepreneurs in the region on UNIDO a sustainable basis; and (c) more sustainable agency: women-led businesses are established or de- National Arab Industrial Development veloped in the region. implementing and Mining Organization partner: (AIDMO) The project will ensure, at every level, favourable Swedish International conditions for networks of businesswomen. Net- Donor: Development Cooperation works in effect can provide leads on contracts, Agency (Sida) market information, logistical support and distribution channels, as well as linkages to suppliers, Budget: US$ 7 910 000 investors, financing and technology. Duration: 2015–2019 The project will then work at identifying synergies Governorate: All over Egypt in activities, fostering the exchange of international good practices and enhancing the dialogue As a follow-up to a first phase successfully im- between European networks and women’s organi- plemented with the Arab Industrial Development zations in the Middle East and North Africa region. and Mining Organization (AIDMO), under which the Arab Accreditation Cooperation was established, UNIDO continues to provide technical Project activities and achievements in Egypt support to accreditation and trade facilitation in the Arab region. In this second phase, the focus The project has been launched in Cairo with is on regional food safety through enhancing re- women’s business associations and representa- gional trade capacities in the food industry and tives of the banking sector and civil society to food safety systems. discuss and exchange experiences on the issue of women’s access to finance in the region. Project objectives Three different training and workshop sessions have been provided so far: COMFAR (Computer The cooperation programme involving UNIDO, Model for Feasibility Analysis and Reporting) train- AIDMO, the Swedish International Development ings benefiting Egyptian women entrepreneurs and Cooperation Agency (Sida) and the Arab League other relevant stakeholders; an investment promo- drew its mandate from a decision of the third tion methodology workshop benefiting 10 partici- Arab Economic and Social Development Sum- pants among the representatives of the women’s mit, Riyadh, January 2013, stressing the need to business associations and task forces; and a stra- finalize the development of standards for Arab tegic planning workshop benefiting seven high- commodities and improve the conformity as-

38 UNIDO ACTIVITIES IN EGYPT, 2015 sessment framework and practices in the region Secretariat, representatives from the 17 PAFTA to enhance and facilitate intraregional trade. countries, the AIDMO technical team, the Arab Organization for Agricultural Development tech- The project aims at contributing to the efforts of nical team and representatives from regional pri- the Arab League, AIDMO and the Arab Organiza- vate sector institutions. tion for Agricultural Development to support the conclusion and implementation of the Pan-Arab The objective of the workshop was to provide Free Trade Agreement (PAFTA). a broad overview of the processes, status and plan of PAFTA, the regional quality infrastructure, and trade facilitation and non-tariff meas- Project activities and achievements in Egypt ures, and to enhance the role and contribution of other organizations, such as AIDMO, the Arab The UNIDO-AIDMO-Sida-Arab League coopera- Organization for Agricultural Development and tion programme was launched in February 2015 the Arab League in the conclusion and imple- in the margins of the ninety-fifth Ministerial Eco- mentation of PAFTA, with a focus on technical nomic and Social Council at the Arab League barriers to trade and sanitary and phytosanitary headquarters in Cairo, in the presence of min- measures. The intended outcomes were the es- isters of economy, trade and industry of Arab tablishment of effective working teams at coun- League member States and representatives of in- try level to act as the PAFTA task force in order ternational organizations and quality infrastruc- to support and coordinate Arab League efforts, ture institutions in Egypt. and the establishment of a networking platform for PAFTA members to exchange and identify is- In June 2015, a PAFTA regional workshop was sues to be addressed and to exchange experi- held in Cairo with participants from the PAFTA ence and good practices.

UNIDO ACTIVITIES IN EGYPT, 2015 39 3. Energy and environment

Sustainable energy solutions are central to the achievement of broad- based growth in Egypt. For Egypt, the priority today is to respond to the challenges posed to the industrial sector by soaring demand for energy, shortages of fuel and scarcity and unpredictable availability of resources. UNIDO recognizes these challenges and, accordingly, provides assistance to (a) enterprises to improve their energy consumption patterns; (b) the energy production sector to move towards a low-carbon path; and (c) the Government of Egypt to strengthen national energy and environmental standards, in compliance with international standards.

40 UNIDO ACTIVITIES IN EGYPT, 2015 3.1 Industrial energy ergy demand and loosen the link between eco- efficiency nomic growth and environmental degradation.

Project background Industrial energy efficiency represents a signifi- and rationale Scan for the cant opportunity for energy savings as a way to 3. project’s website bridge the gap between expected energy de- UN implementing mand and supply in the country. UNIDO agency: Industry is the most significant energy-consum- National Egyptian Environmental ing sector in Egypt: it contributes to about 43% of implementing Affairs Agency (EEAA) end-use energy consumption. Energy-intensive partner: sectors are responsible for a major part of that Donor: GEF consumption. Budget: US$ 3 950 000 Aware of the importance of developing an energy Duration: 2013–2018 efficiency strategy to face the country’s develop- Governorate: All over Egypt ment challenges, UNIDO is working on the Indus- trial Energy Efficiency (IEE) project together with the Ministry of Environment, represented by the Egyptian Environmental Affairs Agency (EEAA) as the main counterpart and in full partnership with the Industrial Modernization Centre, the Industri- al Development Authority, the Egyptian Organi- zation for Standardization and the Federation of Egyptian Industries.

Project objectives

The project is aiming at annual energy savings of 1277 gigawatt-hours and corresponding GHG emis-

sion reduction of 2.9 million tonnes CO2e annually.

The emissions from Egyptian industries primarily

entail CO2, with the largest contributors being the cement and iron and steel production sectors. The cement industry is responsible for 17 million tonnes

of CO2 emissions per year, amounting to about 62% of the total GHG emissions from the industrial sector. In addition, the fertilizer industry has grown rapidly, with a significant impact on GHG emissions in Improving energy efficiency in industry is one of Egypt. The fertilizer industry is responsible for 5 mil-

the most cost-effective measures to help supply- lion tonnes of CO2 emissions per year, equivalent to constrained countries meet their increasing en- about 20% of the total emissions of the sector.

UNIDO ACTIVITIES IN EGYPT, 2015 41 The project seeks to address some of the key In this respect, training on EnMS is being under- barriers to industrial energy efficiency, to deliver taken, targeting local experts so as to stimulate measurable results and to make an impact on the creation of a market for energy-efficient prod- how Egyptian industries manage energy. Main ucts and services. The training, involving industry identified barriers include (a) lack of energy in- representatives from facilities belonging to the ce- tensity benchmarking for policy formulation; (b) ment, metallurgy, ceramics, paper, chemicals and perception by corporate decision-makers and fertilizer sectors, as well as governmental agency managers of high risks associated with energy personnel, aims to create a cadre of specialized efficiency projects because of their alleged high energy management experts and enable them to capital requirements; (c) lack of awareness of the implement EnMS in their factories. The IEE project potential of energy efficiency in long-term cost re- has exceeded the targeted number of local trained duction; and (d) lack of familiarity with the range personnel, reaching up to 400 beneficiaries. The of energy-efficient technologies and processes project has started the training for industrial repre- to design, evaluate and implement energy effi- sentatives on motor system optimization and will ciency management and optimization. undertake practical training in one of the industrial facilities before the end of 2015. Primary target groups of the project are industrial decision-makers (managers), engineers, vendors In all, 37 companies are currently receiving techni- and other professionals, and IEE policy-making cal support for EnMS implementation compliant or implementing institutions. with ISO 50001 from national experts with the support of international experts, both remotely and on site. The companies are achieving considerable en- Project activities and achievements ergy savings through no-cost or low-cost measures. Two companies, namely SIDPEC and EZDK, have The IEE project works on both the supply (en- received ISO 50001 certificates. SIDPEC has expe- ergy management and energy efficiency ex- rienced multiple benefits beyond pure energy cost perts) and demand (industrial facilities) sides savings, including increased productivity and com- of the market by developing and helping to petitiveness, reduced exposure to volatile energy establish market-oriented policy instruments, prices and greater reliability of operations. SIDPEC and by stimulating the creation of a market for was honoured by UNIDO at the Vienna Energy Fo- industrial energy-efficient products and servic- rum 2015 as one of the best practitioners of EnMS. es, in order to ensure sustainability of energy efficiency improvement efforts after project clo- Building on the experience and knowledge sure. UNIDO’s assistance is directed towards gained by SIDPEC and EZDK in EnMS implemen- the development of a national programme to tation, the IEE project created two peer-to-peer implement the International Organization for networks led by the above-mentioned compa- Standardization (ISO) energy management nies aimed at spreading the knowledge gained to standard (ISO 50001), which supports organiza- local staff members. SIDPEC is currently training tions to use energy more efficiently through the six petrochemical companies and implementing development of an energy management system EnMS in those companies under the guidance of (EnMS), providing companies with a manage- the Egyptian Petrochemicals Holding Company ment structure and process for continuously (ECHEM). EZDK will soon start the creation of the improving operational energy efficiency. This peer network in order to disseminate knowledge management structure is meant to organize on EnMS among iron and steel companies. and efficiently manage the purchase and use of energy, energy-consuming equipment and sys- The project is currently supporting the Government tems in order to reduce operating and energy of Egypt’s efforts to close the gap between expect- costs and energy-related GHG emissions, and ed energy demand and supply in the country by foster environmental performance. adopting sound energy polices. These efforts are

42 UNIDO ACTIVITIES IN EGYPT, 2015 led by the Ministry of Trade and Industry and the policies on industrial energy efficiency, playing a Ministry of Environment. Supportive policy instru- critical role in the development of sectoral road- ments for delivering energy efficiency in industry maps for improved energy efficiency in related and contributing to international competitiveness sectors. The baseline assessment and strategic currently being applied or developed include the framework have been formulated and presented International Performance Measurement and Veri- to the Cabinet of Ministers. UNIDO will provide fur- fication Protocol, an industrial energy database, ther support on the development of a set of policy energy consumption benchmarks, EnMS and an documents to be presented to the Cabinet of Min- industrial energy efficiency policy. Benchmarking isters by the end of 2015. analysis for three sectors – cement, fertilizers and iron and steel – has been put in place so as to The project closely coordinates IEE policy devel- enable decision-makers to develop sector plans. opment with the Energy Efficiency Unit in the In- Benchmarking analysis for a fourth sector – ce- formation and Decision Support Centre and the ramics – is currently being undertaken by national Ministry of Trade and Industry. organizations, namely the Industrial Development Authority and the Egypt National Cleaner Produc- A national campaign to build awareness on tion Centre. The benchmarking studies are expect- the benefits of EnMS and system optimization ed to guide decision-makers when adopting new in industries was launched by the Minister of

UNIDO ACTIVITIES IN EGYPT, 2015 43 Environment and the Industrial Development production and consumption of ozone-depleting Authority in May 2015. A series of awareness substances. During that process, efforts should sessions is being held in close cooperation with be made to facilitate a smooth and sustainable governmental partners, such as the Industrial transition from ozone-depleting to non-ozone- Modernization Centre, reaching out to the maxi- depleting substances and technologies without mum number of industrial companies through creating local market distortions or increasing provision of the sessions in the industrial cities social costs resulting from phase-out costs being (Sadat City, Borg El-Arab and Obour City). An in- passed to the consumer. formation unit was established and is currently answering inquiries about energy efficiency Ozone-depleting substances, gases that damage concepts for the industrial sector. A coaching the ozone layer, have been employed in a wide session for governmental partners was pro- range of industrial and consumer applications, vided in order to improve the communication for example refrigerators, air-conditioners, fire channels between the government, media and extinguishers and crop fumigation, and as aero- public. Promotional material and documenta- sol propellants, solvents and blowing agents for ries are currently being developed and will be insulation foams. disseminated to the industrial sector to raise awareness on energy efficiency concepts and All ozone-depleting substances are halogenated the importance of EnMS application. organic compounds, including chlorofluorocar- bons (CFCs), hydrochlorofluorocarbons (HCFCs) The IEE project has worked on reviewing and and other groups such as bromides. mapping available financing schemes from different financing sources and organizations, UNIDO designs the projects and programmes listing all possible financing sources for IEE closely with the Government of Egypt and the projects, along with the criteria for applications target beneficiaries to find the best alternatives and the fund ceiling. The IEE project is current- to ozone-depleting substances. ly working on linking industrial enterprises to funding agencies, such as the European Bank for Reconstruction and Development, through Project objectives Egypt SEEF (soft loan programme) in order to use the existing fund to finance the companies To achieve the objective of phasing out ozone- that have identified investment opportunities depleting substances by replacing chemical sub- and are willing to receive loans. stances and equipment in uses that contribute to ozone layer depletion, a planned and coordinated approach must be undertaken. UNIDO has 3.2 Montreal Protocol projects been promoting Montreal Protocol projects by providing assistance to build the capacity of the Project background and rationale National Ozone Layer Protection Unit in EEAA to implement and comply with the requirements of Since 1993, UNIDO has been assisting the Gov- the Montreal Protocol. Additionally, UNIDO pro- ernment of Egypt, through EEAA, to comply with vides technical support and technology transfer its commitments as a signatory party to the Mon- to the industries through investment projects treal Protocol, carrying out projects that aim to and national phase-out management plans. phase out ozone-depleting substances in industry, agriculture, the refrigeration sector and the air-conditioning sector. Project activities and achievements

The main objective of the Montreal Protocol is to In recent years, with UNIDO’s assistance, Egypt protect the ozone layer by phasing out the global has managed to phase out halons, carbon tet-

44 UNIDO ACTIVITIES IN EGYPT, 2015 rachloride, methyl chloroform, almost all methyl UNIDO will continue to lead the implementation bromide, and almost all CFCs: of Montreal Protocol programmes and will prepare the second-stage Country Strategy for Egypt • phase-out of remaining CFCs, air-conditioning (2015–2020), in collaboration with the Govern- and refrigeration servicing subsector (834 ment of Egypt. ODP-tonnes),3 and almost all of meter-dosed inhalers (169 ODP-tonnes), and chillers; Next activities include the implementation of the pilot project EGYPRA in cooperation with the • phase-out of most of the 184.2 ODP-tonnes of United Nations Environment Programme (UNEP), methyl bromide in the horticulture and com- and preparation for the second stage of HCFC modities sector in Egypt. phase-out management plans, aiming at promoting low global warming potential refrigerants A strategy for the HCFC phase-out management for the air-conditioning sector in Egypt. plan has been developed by UNIDO in collaboration with the Government of Egypt to achieve Montreal Protocol projects implemented in Egypt the total phase-out of HCFC production and by UNIDO include the following. consumption. The first control measure of the Montreal Protocol, which is to freeze HCFC consumption at baseline level, was met by Egypt in Strategic demonstration project 2013. The next target for HCFC phase-out man- for accelerated conversion of CFC agement plans is a 10% consumption reduction, chillers in six African countries to be met by 2015. (Cameroon, Egypt, Namibia, Nigeria, Senegal and Sudan) A number of investment projects are currently UN implementing being implemented by UNIDO and the United UNIDO Nations Development Programme (UNDP) for agency: National the foam sector and the related phase-out of EEAA, National Ozone Layer implementing HCFC consumption, where UNIDO, as the lead Protection Unit agency, will target the appliance foam applica- partner: tions, while UNDP, as supporting agency, will Multilateral Fund for the implement the HCFC phase-out in the non-ap- Donors: Implementation of the pliance foam applications. In this regard, Egypt Montreal Protocol, GEF has managed to phase out 10 ODP-tonnes of HCFC-141b with UNIDO’s assistance. UNIDO is Budget: US$ 1 000 000 also conducting a number of enabling activities Duration: 2008–2014 in the refrigeration and air-conditioning sector. Governorate: All over Egypt These projects have also resulted in increased competitiveness of Egyptian enterprises in do- The project involves replacement of 20 CFC- mestic and international markets, not only by based chillers with HFC chillers in hospitals and replacing their chemical substances and equip- private buildings. The demonstration project is ment in use but by also adjusting their produc- developing public-private partnerships to (a) co- tion processes to changing market requirements. ordinate inputs from engineering facilities and This has also had a positive effect on safeguard- energy contracting providers, investors, finan- ing existing jobs that would otherwise be endan- cial institutions, government and private sector gered if companies had to stop production lines stakeholders; and (b) enable stakeholders to no longer admitted by international protocols. identify additional financial, technical and regu-

3 ODP = ozone depletion potential.

UNIDO ACTIVITIES IN EGYPT, 2015 45 latory incentives in order to remove local barriers have contributed to safeguarding existing jobs in to investment in chillers. the targeted company.

Phase-out of CFC consumption in the National CFC phase-out plan for Egypt manufacture of aerosol metered-dose UN implementing UNIDO inhalers (MDIs) agency: UN implementing National UNIDO EEAA, National Ozone Layer agency: implementing Protection Unit National EEAA, National Ozone Layer partner: implementing Protection Unit Multilateral Fund for the partner: Donor: Implementation of the Multilateral Fund for the Montreal Protocol Donor: Implementation of the Montreal Protocol Budget: US$ 900 000 Budget: US$ 5 899 000 Duration: 2010–2014 Duration: 2011–2015 Governorate: All over Egypt Governorate: All over Egypt Investment projects have been developed to retrofit the Egyptian National Railway air-condi- Metered-dose inhalers (MDIs) are one of the main tioning units (125 carriages) with ozone-friendly treatments for asthma and chronic obstructive refrigerants. pulmonary disease. MDIs use a chemical propellant to push medication out of the inhalers. For decades CFCs were the most suitable propellant Phase-out of HCFC-141b from the for use in MDIs. manufacture of polyurethane foam UN implementing By adjusting their production processes to UNIDO agency: changing market requirements, UNIDO has al- National lowed the Arab Drug Company and Egyptian In- EEAA, National Ozone Layer implementing ternational Pharmaceutical Industries Company, Protection Unit partner: the only two manufacturers of aerosol MDIs in Egypt, to phase out 163.1 ODP-tonnes support- Multilateral Fund for the ing the manufacture of MDIs, while being able to Donor: Implementation of the actively compete in the local market. Montreal Protocol Budget: US$ 1 440 498 The project intervention supported the necessary Duration: 2011–2015 technology transfer process to allow the target companies to shift their production lines to CFC- Governorate: All over Egypt free MDIs, and created awareness among physi- cians and pharmacists on the benefits of the new The projects aim to phase out the consumption products, thereby contributing to the transition of HCFC-141b used in the manufacture of polyu- to ozone-safe MDIs. rethane rigid foams in the production of domestic freezers at El Araby Co. for Engineering In- According to the manufacturers, the new prod- dustries, Mondial Freezers Company and Kiriazi uct has been efficiently absorbed by the market. Refrigerators Factory Company, and to manage Moreover, the UNIDO intervention is reported to the transition from HCFC-based foams to HCFC-

46 UNIDO ACTIVITIES IN EGYPT, 2015 and HFC-free products by applying cyclopentane technology.

HCFC phase-out management plan: enabling activities in the refrigeration and air- conditioning sector UN implementing UNIDO agency: National EEAA, National Ozone Layer implementing Protection Unit partner: Multilateral Fund for the Donor: Implementation of the Montreal Protocol Budget: US$ 250 000 Duration: 2013–2018 Governorate: All over Egypt

The project contributes to phase out of HCFC-22 by establishing and upgrading good practices in recovery and recycling, and includes a retrofit demo project for use of R290 in the air-conditioning sector. The project has succeeded in phasing out methyl bromide by replacing it with chemical and National phase-out of methyl bromide in non-chemical alternative technologies (such as horticulture and commodity fumigation grafting, metham-sodium, soil solarization and biofumigation) in the targeted eight large ex- UN implementing UNIDO porting companies and hundreds of small farm- agency: ers, by providing them with capacity-building National EEAA, National Ozone Layer with regard to new technologies as well as fi- implementing Protection Unit nancial assistance. partner: Multilateral Fund for the These measures contribute to better and safer Donor: Implementation of the development of the food processing industry Montreal Protocol through the use of healthier raw materials and give the industry the opportunity to become US$ 1 934 994 Budget: more competitive by employing green sus- Duration: 2011–2015 tainable methods and yielding higher-quality products. Governorate: All over Egypt Grafting of horticultural crops, one of the alterna- In agriculture methyl bromide is primarily used tives promoted, has brought economic benefits for soil fumigation, as well as for commodity and to the companies. The companies with the largest quarantine treatment (postharvest protection consumption of methyl bromide were given the treatment) in the control of pests and diseases. chance to co-finance grafting units, while in addi-

UNIDO ACTIVITIES IN EGYPT, 2015 47 tion receiving extensive training and technology 3.3 Utilizing solar energy transfer to allow them to graft horticultural crops. for industrial process heat The introduction of grafting has also resulted in in Egyptian industry an increased number of women employed by the targeted companies. Project background and rationale UN implementing Technical assistance on commodity fumigation UNIDO agency: has been provided to the Principal Bank for De- velopment and Agricultural Credit, which is re- National Ministry of Trade and sponsible for the Egyptian Holding Company for implementing Industry, New and Silos and Storage. partner: Renewable Energy Authority Donor: GEF

Technical assistance on alternatives to Budget: US$ 6 500 000 methyl bromide in the palm date sector Duration: 60 months UN implementing UNIDO Governorate: All over Egypt agency: National EEAA, National Ozone Layer EIndustry is the most significant energy-consum- implementing Protection Unit ing sector in Egypt: it contributes to about 43% partner: of end-use energy consumption. The sector is ex- Multilateral Fund for the pected to further grow due to high demand and Donor: Implementation of the rapid expansion of industrial production. Other Montreal Protocol users, including the commercial sector (for example hotels, offices and shopping malls) and US$ 302 254 Budget: residential buildings are also growing rapidly Duration: 2015–2016 and consuming more and more energy, particularly for air-conditioning and water heating. In- All over Egypt Governorate: dustrial processes, large buildings and tourism facilities are typical major users of electricity for Egypt was supposed to phase out methyl bro- air-conditioning and heating purposes. mide in fumigation of low- and high-moisture dates by the end of 2014. However, as finding The project is in line with most of the goals of alternatives to methyl bromide in high-moisture the Ministry of Electricity and Energy, specifi- dates fumigation has proved to be a long pro- cally, to optimize the use of available energy cess, Egyptian date processors are using such sources and minimize environmental pollution, alternatives with insufficient knowledge of the expand the utilization of new and renewable en- new technologies and with evident risks of cre- ergy resources (up to 20% of Egyptian electric- ating insect resistance as well as for the safety ity supply in 2020), and restructure the electric- of workers. ity sector to optimize investments and improve electrical services. Moreover, in early July 2014, The objective of this technical assistance project the Government of Egypt announced an in- is to train date fumigators and processors on crease in electricity prices under a plan to elimi- good fumigation practices using phosphine tab- nate power subsidies within five years. Electric-

lets and mixtures of phosphine gas and CO2. The ity prices are set to double over five years. The training process will also put special emphasis plan foresees a larger increase for the industrial on the safety of workers with the installation of sector, which will trigger industries to be more phosphine meters in the fumigation chambers and more interested in energy efficiency and re- and in the surrounding environment. newable energy projects.

48 UNIDO ACTIVITIES IN EGYPT, 2015 After examining the global potential and com- The project document was signed in April 2015 paring it to the potential in the various sectors in and the project management unit is currently be- Egypt, the following sectors were selected to be ing set up. A number of preparatory activities are the focus sectors for the project: textile, food and currently under way, namely the assessment of chemicals. the potential of solar thermal systems in the target industrial sectors and the financial set-up for provision of funding to implement demonstra- Project objectives tion projects using solar thermal systems.

The project focuses on improvement of the energy efficiency of industrial process heat systems 3.4 Low-carbon and climate- and introduction of solar thermal technologies, resilient industrial mainly in industrial companies with a high frac- development in Egypt, Kenya, tion of low- and medium-temperature heat demand in the food, chemicals and textile sectors. Senegal and South Africa Further, the project will support the local manu- Project background and rationale facture of quality components for solar systems, thus facilitating a comprehensive market trans- UN implementing UNIDO formation towards increased diffusion of solar agency: energy technologies manufactured in Egypt. National Ministry of Trade and implementing Industry, Egypt National The project will promote heat system optimiza- partner: Cleaner Production Centre tion measures in selected sectors complemented with the installation of solar thermal technologies Donor: Government of Japan through a combination of technical assistance Budget: 1 500 000 euros and investment activities, including (a) supporting the policy and institutional framework for Duration: 2014–2016 the dissemination of solar thermal technologies Governorate: All over Egypt while promoting the local manufacture of system components; (b) implementing demonstration projects in pilot sites coupled with establishing a There is growing recognition that a new and sus- financial mechanism that supports the financing tainable model of economic growth is urgently of future projects; (c) supporting the local manu- required, responding to increasing scarcity of facture of quality systems and components; and water, fuels and other materials. At the centre of (d) building national capacity for system design, this new growth model is the need to decouple installation, servicing and maintenance. economic growth and revenues from excessive pollution and increasing resource consumption. The interventions will result in considerable global environmental benefits in terms of the UNIDO recognizes these challenges and re- GHG emission reductions that will be achieved sponds with initiatives, such as the Green Indus- through a substantial reduction in fuel and elec- try Initiative, aiming to overcome obstacles that tricity consumption by implementing energy effi- hinder the country path towards climate-resilient ciency measures in 100 enterprises and switching and low-carbon industrial development, hence from fossil fuels to solar thermal energy. Moreo- contributing to the reduction of GHG emissions. ver, the development of a local manufacturing sector for solar thermal technologies will create This can be achieved by implementing cleaner, new employment opportunities and increase the more efficient energy technologies and the sus- competitiveness of solar thermal applications in tainable management of natural resources in the the Egyptian market. manufacturing process.

UNIDO ACTIVITIES IN EGYPT, 2015 49 Green industry is simply defined as industrial close consultation with the Ministry of Trade and production that does not come at the expense Industry, so as to ensure maximum relevance to of the health of natural systems or lead to ad- the country in terms of development contribu- verse human health outcomes. It aims to main- tion, emission reductions, climate resilience and stream environmental, climate and social con- environmental protection. siderations into the operations of enterprises. The Green Industry Initiative aims at scaling up Both the public and private sector are expected to and mainstreaming proven methods and prac- be actively involved to advance implementation tices for reducing pollution and resource con- of green industry interventions, create aware- sumption in all sectors – greening of existing ness and exchange best practices in low-carbon industries – and expanding the supply of in- and climate-resilient development in Egyptian innovative, affordable and reliable environmen- dustry. Moreover, the project intends to advance tal goods and services – creating new green South-South and triangular cooperation as com- industries. plementary solutions to more traditional forms of North-South and multistakeholder industrial Egypt’s vulnerability to the impacts of climate cooperation. change puts its manufacturing and associated sectors at risk. Current and future changes in cli- Activities envisaged by the new programme in- matic conditions may jeopardize Egypt’s devel- clude three main steps: opment gains and efforts for poverty reduction and sustainable and inclusive growth. • government actions, which include national assessment, consultation workshops and Egypt’s industrial sector has a crucial role as driv- green industry action plans, with the aim of er of socioeconomic development, but it is still implementing green industry methods, in- a major energy consumer and a major cause of struments and techniques for realization of pollution. Greening the industrial sector is, there- the government’s mitigation and adaptation fore, key to Egypt’s green transformation and goals; sustainable industrial development. • policy pilots, which include value chain assessment, needs and opportunity assess- Project objectives ment, and pilot projects to assess technology needs and opportunities for reduced The regional project “Low-carbon and climate- carbon intensity and climate vulnerability in resilient industrial development”, funded by the target sectors; the Government of Japan and implemented by the Egypt National Cleaner Production Centre, • new public-private partnership between tar- assures UNIDO’s continued contribution to geted countries and Japan for awareness rais- cleaner and more competitive industrial devel- ing, technology identification and exchange opment in Egypt, as well as in Kenya, Senegal of best practices in low-carbon and climate- and South Africa. resilient development in industry.

The project intends to apply green industry poli- As a basis for the implementation of green cy instruments, practices and techniques by en- industry policy instruments, practices and couraging the more efficient use of energy and techniques, three vulnerability assessments raw materials in manufacturing processes, with mapping the identified target sectors and a focus on the following subsectors: (a) fruit and identifying the obstacles and challenges at vegetable processing; (b) meat and poultry pro- value chain level in adopting low-carbon tech- cessing; and (c) wastewater and sludge treat- nologies, as well as policy gaps, have been de- ment. The target subsectors were identified in veloped.

50 UNIDO ACTIVITIES IN EGYPT, 2015 3.5 SWITCH-Med: and methodologies. Current consumption and demonstration and production patterns are unsustainable, because networking initiative they do no allow today’s resources needs to be met without compromising the ability of future Project background and rationale generations to meet theirs.

UN implementing Governments and the private sector need to con- UNIDO, UNEP sider that environmentally sound industrializa- agency: tion, through transfer of technology and know- National EEAA, Egypt National how, is one of the successful factors for inclusive implementing Cleaner Production Centre and sustainable industrial development. Indus- partner: trial operations often rely on inefficient technologies and wasteful use of energy, water and other Donor: European Union resources, thus increasing production costs and Regional budget: 7 000 000 euros depleting scarce resources. Many industries use more materials and energy than their produc- Duration: 2014–2017 tion processes would require, due to the contin- Governorate: All over Egypt ued use of obsolete and inefficient technologies

UNIDO ACTIVITIES IN EGYPT, 2015 51 Launched in 2009 and supported by GEF and onstrations will be increased and manufactur- the Government of Italy to address priority hot ing sector coverage extended so as to broaden spots of industrial pollution in the Alexandria skills, disseminate best practices on resource region, the MED TEST (Transfer of Environmen- efficiency and mainstream sustainable prod- tally Sound Technologies) project supported ucts and services in the market. the participating companies in applying sustainable consumption and production practic- The actual demand for resource-efficient ser- es and identifying opportunities for water and vices by Egyptian industries is very low, due to energy savings and biological oxygen demand lack of awareness within the industrial sector (BOD) and chemical oxygen demand (COD) re- of the potential economic benefits that can be ductions. achieved by introducing resource-efficient and cleaner production. Nevertheless the industry The project promoted the transfer of environ- demand is expected to grow, driven for exam- mentally sound technologies through an inte- ple by the rise in prices for energy and water. grated approach combining resource efficiency The price for water increased from US$ 0.3 per and cleaner production, environmental manage- cubic metre in 2012 to approximately US$ 0.6 ment systems, and environmental management per cubic metre in 2015, while electricity rose accounting as part of corporate social respon- in price from US$ 0.08 per kilowatt-hour to sibility. By implementing or upgrading environ- US$ 0.09, and gas from US$ 0.007 per therm to mental management systems, companies were US$ 0.07 over the same period. Energy prices supported in fully integrating resource efficiency will continue to rise in the coming years; for in- into company policy, action plans and internal stance, electricity costs will go up to US$ 0.18 procedures, thereby improving their compliance per kilowatt-hour by 2017. with environmental regulations.

Due to the high interest in replicating and scal- Project activities and achievements in ing up this programme at the national and Egypt regional level, the European Union agreed to finance a new initiative in 10 countries in the The second phase of MED TEST commenced in Mediterranean region: Algeria, Egypt, Israel, Cairo in June 2015 with the participation of the Jordan, Lebanon, Libya, Morocco, Palestine, national focal points from the Ministry of Trade Syria and Tunisia. The new project aims at pro- and Industry, the Ministry of Environment, the viding assistance to additional companies and Egypt National Cleaner Production Centre, and training of national institutions, service pro- relevant stakeholders, such as the Federation of viders and local professionals to become TEST Egyptian Industries Environmental Compliance providers, thereby promoting green entrepre- Office, the Industrial Modernization Centre, the neurship and empowering them as key drivers Food Chamber of Industry, the Social Fund for of sustainable consumption and production Development and service providers. practices. In the implementation of demonstration projects priority will be given to private companies that Project objective have not already participated in similar projects and that are not yet committed to improving their The geographical coverage of the project’s ac- sustainability performance. tivities has been extended beyond the Medi- terranean Sea coastal area; this is particularly The selection of new service providers to be relevant for Egypt, since the largest share of its trained on the job in MED TEST II will build on industrial base is not directly affecting the Med- the experience of the ongoing UNIDO IEE project. iterranean Sea. The number of industry dem- In order to ensure the development of the local

52 UNIDO ACTIVITIES IN EGYPT, 2015 market for the transfer of environmentally sound A pool of 11 national experts was trained on each technologies and resource-efficient and cleaner step of TEST methodology, through feedbacks on production services, the selected service provid- the new structure of the TEST guidelines and les- ers will include a mix of both large consulting sons learned from MED TEST I. companies with varied areas of expertise and a good portfolio of industrial clients, and smaller In the development of resource-efficient and consulting companies already providing services cleaner production policy instruments, ownership for which there is a current market demand, such of the Ministry of Trade and Industry will be en- as energy efficiency, productivity, lean manufac- sured from the early stages of project implemen- turing and environmental management systems, tation as well as engagement of key stakeholders and waste management. through one-to-one consultation meetings. 4. Future areas of support

In its effort to promote broader economic and social growth within an environmentally sustainable framework, UNIDO will continue to support Egypt’s development plans and efforts for poverty eradication, inclusive local economic development, decent and durable employment opportunities, encouraging productive activities and sustainable solutions for green industries, and ultimately supporting Egypt in moving forward on the industrial development path.

54 UNIDO ACTIVITIES IN EGYPT, 2015 4.1 Industrial policy and strategy and increase the diversity of their production far beyond the average for Egypt, though they have Aware of the urgency to have a comprehensive failed to move up the value chain. They produce and integrated framework to support the indus- more similar products but they have been unable trial sector, the Government of Egypt requested to produce knowledge-based, higher-technology 4. UNIDO support in the development of an indus- content products. trial policy and strategy. At the same time, roles and responsibilities re- UNIDO is supporting, and will continue to do so, lated to industrial policy governance need to be the formulation of Egypt’s industrial policies by clarified to reduce existing overlaps and an in- sharing international industry-related knowledge dustrial strategy unit, with secondees from dif- and providing technical expertise. Upon the re- ferent ministries and the private sector and with quest of the Government of Egypt, UNIDO provides a time limit to deliver the strategy, needs to be methodological tools to build data and analyti- developed. Evidence shows that the generation cal capabilities to assess industrial performance, of successful evidence-based strategies can only identify industrial sectors with competitive poten- be achieved if public and private institutions are tial, benchmark industrial competitiveness at the engaged throughout the policy process, from macro and sector levels, and formulate an effec- assessment and design to implementation and tive industrial development strategy and vision. monitoring and evaluation.

UNIDO’s recently developed “Roadmap for the development of an industrial strategy for Egypt: 4.2 Industrial zones and unlocking the industrial potential of Egypt” rec- clusters development: ommends that, in order to unlock the manufac- enhancing SME performance turing capability potential of Egypt and to reduce the gap with competitors, the following strategies UNIDO’s technical assistance for industrial zone should be put in place: (a) a move from trade to development, as a priority initiative for the Gov- manufacturing; (b) unlock the knowledge poten- ernment of Egypt, has been requested by the tial of a number of commodities; (c) focus on hor- Ministry of Trade and Industry. izontal policies, especially industrial standards; and (d) link free and special economic zones For Egypt’s industrial sectors to move up the with global, regional and national value chains. value chain and increase product complexity, adequate support is needed for boosting innova- Egypt needs to move up the value chain and pro- tion and technological capabilities, fostering for- duce more complex products, through targeted ward and backward linkages among producers, industrial policy instruments such as sector com- promoting business partnerships both nationally petitiveness strategies. Egypt falls behind some and internationally, and encouraging synergies of its competitors in terms of the complexity level among businesses, government, universities and of its products, though it displays high potential research centres. to step up the complexity ladder. In accordance with this framework, UNIDO is sup- Cairo, Alexandria, Damietta, Giza, Gharbia, Qa- porting the Government of Egypt in the develop- lyubia and Sharqia are the governorates that ment of the agro-industrial park in Qalyubia and have been able to leverage existing capabilities the furniture cluster in Damietta. Assistance will

UNIDO ACTIVITIES IN EGYPT, 2015 55 be provided with regard to techno-economic vi- Furniture sector ability, master and business plans, governance and management structure, investment promo- As outlined by the Egyptian Furniture Export tion, and development of a roadmap for upgrad- Council and Industrial Modernization Centre in ing SMEs through the implementation of a clus- the Egyptian Furniture Sector Development Strat- ter approach by upgrading technologies, skills, egy (2010), Egypt’s furniture industry enjoys the business linkages and market access. following competitive strengths:

UNIDO intends to further advance the develop- • strong and recognized woodworking know-how; ment of SMEs in Egypt through the adoption and application of a cluster development approach. • geographical and cultural proximity to primary The cluster approach will help the assisted enter- export markets (Middle East and North Africa, prises move beyond their individual capacities, Western Europe); organizing themselves in dynamic production networks and developing strategic relationships • flexibility of producing tailored customer de- with other firms and institutions to improve their signs; competitive advantages based on economies of scale, innovation and learning. • attractive cost structure, based on low labour and shipping costs. While the growth of individual small-scale firms is constrained by limited access to resources and in- Damietta, the furniture industry’s centre of pro- ability to achieve scale and scope economies, firms duction,4 has a long tradition of craftsmanship within clusters benefit from collective efficiency producing mainly handmade classic furniture. gains and are able to achieve higher and sustained Located on the Mediterranean coast, it is home growth rates, as synergies and collaborative link- to an abundance of highly skilled and relatively ages allow them to pool resources and efforts for low-cost labour. Yet, a number of challenges the achievement of shared economic goals (20). hinder sector expansion, competitiveness and enhanced access to markets, including indus- Depending on further assessments and consul- try fragmentation with a very limited number of tations with stakeholders, cluster development large players, prevalence of family ownership projects could be planned in the sectors de- and operation, limited external capital and fi- scribed in the following subsections. nancing options, low labour productivity and

4 Damietta contributes 66% of total Egyptian production, 70% of total Egyptian exports, 36% of Egyptian establishments, and 38% of jobs in the furniture industry (21).

56 UNIDO ACTIVITIES IN EGYPT, 2015 limited quality control, weak enforcement of development. The development path should be copyright protection legislation and heavy bu- shaped towards increasing the technological reaucracy. complexity of the local production system to lead Damietta up the national and international value Several furniture clusters exist around the world. chain. In line with recent government strategies The review of international experiences reveals and international best practices and consist- the factors that affect the success and growth of ent with the industrial policy recommendations these clusters. Most of the reviewed experiences recently formulated by UNIDO, the following ac- point to the crucial role played by supporting in- tions are recommended: stitutions and their services. This is the case in clusters such as the Lucena furniture cluster in • launch a cluster development programme Spain, the São Bento furniture cluster in Brazil, to boost the competitiveness of the Dami- and the Brianza furniture cluster in Italy. Support etta cluster by upgrading technologies, skills, services available to these clusters: business linkages and market access;

• provide training and encourage innovation, • undertake capacity-building of a cluster govern- with particular attention given to quality control ance system and cluster-to-cluster activities; in manufacturing and new design techniques; • evaluate the feasibility of constructing a fully • facilitate access to credit; fledged industrial park.

• set quality standards and audit the implementation; Automotive sector

• establish technology centres to provide de- According to the Federation of Egyptian Indus- signs, foreign markets information and busi- tries, the Egyptian automotive sector is one of ness consultancy services; the largest in the Middle East and North Africa region, and constitutes about 20% of exports of • provide advocacy services; engineering products. However, its potential for growth in the local and regional markets remains • facilitate and organize exhibitions for the cluster, largely untapped. and organize business-to-business sessions. UNIDO can count on a number of tools and suc- Important features of successful clusters are cessful experiences in this sector in India, South partnerships and subcontracting. Partnerships Africa and other countries that can be harnessed usually take place between SMEs in the cluster to offer the following services to the Egyptian au- when they agree to respond to large internation- tomotive industry: (a) supplier development for al orders together to share costs, to participate in production upgrading and application of lean international exhibitions under the name of the manufacturing techniques and total quality man- cluster, and to use common brands. Subcontract- agement; (b) business and investment linkages ing refers to business relations between larger promoting transfer of technology; (c) low-carbon and smaller firms where the larger company automotive supply chains, including energy effi- outsources part of the production to the smaller ciency and awareness building of the public and one. Both partnerships and subcontracting lead private sector on cleaner production, energy ef- to specialization and collective efficiency, essen- ficiency, and occupational health and safety; and tial characteristics of successful clusters. (d) capacity-building of national consultants, service providers and institutions, such as the En- Damietta presents the characteristics of an in- gineering Export Council and the Egyptian Auto teresting regional cluster with high potential for Feeders Association.

UNIDO ACTIVITIES IN EGYPT, 2015 57 In collaboration with the Engineering Export Coun- border transfer of new technologies and best cil, UNIDO is currently conducting an assessment practices in the agro-food industry to upgrade the for automotive companies and small workshops, targeted value chains; (b) foster the competitive- using specific tools to help identify the sector’s ness of rural producers on the basis of the joint bottlenecks and needs, such as gaps in produc- promotion of traditional products, thus delinking tion and technologies, market challenges, and un- producers from the competition on commodity sustainable production practices and energy use. markets and instead supporting them in entering Meetings and factory field visits are being final- niche markets; and (c) favour approximation to ized and a report will be issued by UNIDO in 2014 export market policies and legislation, with spe- that will serve as a key background document cial regard to food safety and traceability, provid- for developing strategic interventions that aim to ing technical assistance to both relevant national provide effective support to the sector, such as authorities and the private sector. increasing its productive capacity and efficiency, facilitating trade and upgrading its technologies. Dairy sector

Olives and olive oil sector The demand for dairy products in Egypt is growing rapidly. The processing industry, however, is Another agro sector that UNIDO is planning to suffering from insufficient supply of fresh milk target if funds are mobilized is the olive oil sec- and is operating at roughly 40% of installed ca- tor. This is an interesting sector with important pacity, even though large imports of powdered implications for rural development, employment milk are used as a substitute for fresh milk. generation and ecosystem preservation. The majority of olive oil production in Egypt is managed The performance of Egypt’s dairy sector should by small- to medium-scale farmers, with limited be improved, increasing quality and output of average farm size. Such producers face signifi- dairy manufactured products, thereby allowing cant challenges with regard to access to technol- the replacement of imported powdered milk with ogy, innovation and extension services, which ul- locally produced quality milk. timately results in higher cost structures, in turn compromising their competitiveness. Although The value of milk and cream imports in 2012 progress has been made, yields still lag behind reached US$ 330 million, for butter the total val- international competitors and lie below their ac- ue of imports reached US$ 200 million and for tual potential. The olive oil international market is whey it reached US$ 77 million. highly competitive; differentiation and sustained costs are essential elements for sustainability. As Egypt’s milk production stems mainly from cow such, Egypt faces hard competition with more es- milk (3 million tonnes in 2011) and buffalo milk tablished producers of the Mediterranean region. (2.6 million tonnes in 2011). According to FA- OSTAT, cow milk production has increased by The proposed initiative aims to enhance the per- 50% in 10 years and buffalo milk production by formance of SME clusters in the olives and olive oil 27%. Goat and sheep milk production is rather industry by improving the efficiency, quality, and low in comparison, and stood at 18 000 tonnes environmental and export performance of SMEs and 113 000 tonnes in 2011 respectively. in targeted clusters, building the capacity of local support institutions and improving cluster govern- Constraints relating to milk production include ance. The project intends to introduce novel or- low-yielding breeds, lack of artificial insemina- ganizational forms such as the cluster and origin tion and lack of proper feed throughout the year. consortia approach in areas with limited experi- Other constraints that negatively affect the sup- ence of inter-firm and inter-institutional collabora- ply of fresh milk include quality and food safety tion and synergies, and aims to (a) facilitate cross- issues relating to milk collection, including unhy-

58 UNIDO ACTIVITIES IN EGYPT, 2015 gienic practices, lack of cold storage and multiple Several soft, semi-dry and dry date varieties are handling (too many intermediaries). Poor quality produced in different regions in Egypt and display of milk leads to short shelf life, even if pasteuriza- particular market opportunities. Egypt actually tion takes place. The involvement of intermediar- enjoys important comparative advantages due to ies may result in price fixing and low prices for the high production capacity at relative low cost farmers, as they are often the only link to the mar- and a latent potential for improvement in quality, ket for many farmers. Very low milk prices paid to product development and value addition. farmers naturally provides a disincentive for the farmers to invest and increase their production. Although Egypt is one of the world’s main date producers, its international presence is relatively UNIDO interventions would thus focus on activi- scarce, especially in terms of value (ninth in the ex- ties aiming to improve milk collection, production port value rank in 2009). Egypt has a negative trade and quality, and improve the profitability of the balance in this sector since best-quality and pro- small daily farmers, specifically through the estab- cessed date products are still imported. Notwith- lishment of “dairy hubs”. A dairy hub is a milk col- standing the comparative advantage of date palms lection centre combining collection of smallholder in many Egyptian governorates, there is still limited milk with services and training for farmers. awareness on how to improve their added value.

The sector faces many difficulties, such as lack Recycled plastic and marble waste of production know-how and postharvest technologies, lack of economies of scale and lack of There is a huge untapped potential for utilizing linkage with research and development. Further- the large volumes of plastic waste generated an- more, local price volatility, weak market informa- nually in the country as well as waste generated tion systems, underdeveloped infrastructure and from marble and granite quarries as a valuable a high percentage of postharvest losses pose source for producing new innovative and high- significant challenges to the sector. On the trade value-added products, establishing or upgrad- side, despite the growth in international demand, ing clusters of SMEs active in the field of waste a modest volume of exports is observed, often recycling, thereby generating employment and caused by difficulties in meeting international income opportunities and opening new markets quality and food safety requirements, leading to while reducing the adverse impact of waste on a lack of premium products and value addition. health and the environment. The proposed intervention intends to help all value chain members – input suppliers, growers and 4.3 Upgrading the date palm producers, collectors and traders, processors, re- value chain tails outlets and exporters – to upgrade their production, increase the level of value addition and Based on lessons learned and innovative and comply with technical regulations, codes of good best practices identified and implemented in practices and conformity standards required by current interventions in the date palm products destination markets, thereby facilitating their ac- sector, UNIDO is planning to extend its interven- cess to those markets. Enterprises in the palm tions to upgrade the date palm value chain via an sector will thus generate higher aggregate value integrated demand-based approach. and offer more equitable and inclusive job opportunities, especially for women. The project strategy is in line with national policies for SME promotion in Egypt, focusing on building The project will also address the different clus- the capacity of SMEs and integrating them in glob- ters of handcrafted non-food products of the al value chains as well as improving entrepreneur- palm tree (woods and leaves), which require a ship policies with the inclusion of women. high degree of innovation and design.

UNIDO ACTIVITIES IN EGYPT, 2015 59 Preparatory activities are being conducted in col- • promote SME development (clusters, special laboration with other UNIDO ongoing projects economic zones and hubs, supply chains, (interregional project to promote SME origin and sustainable suppliers development pro- export consortia, and Montreal Protocol projects). gramme);

• secure the energy supply to farmers and in- 4.4 UNIDO’s contribution to the dustries in selected value chains. implementation of Egypt’s 2030 Vision: faster, sustainable and Target sectors and value chains will include: more inclusive growth in Upper • agribusiness and food; Egypt • creative industries; To further support the country and directly contribute to the implementation of Egypt’s 2030 • leather and furniture; Vision (manufacturing sector grows at an annual rate of 9%, increases its share of GDP to 25%, • renewable energy (cross-cutting and as a val- creates at least 3 million jobs), UNIDO has de- ue chain, including in vocational training); signed an integrated programme aiming at supporting a market-driven and energy-efficient SME • engineering services, especially the automo- environment for Egypt. tive industry;

The programme will: • construction.

• build the capacity for an industrial policy and The proposed programme will be implemented business environment; through the engagement of relevant line ministries: Ministry of Trade and Industry; Ministry of • enhance vocational training centres and youth Local Development; Ministry of Environment; employability; and Ministry of State for Technical Education and Training. The programme is under discussion • enable enterprise creation and development; with relevant government counterparts.

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