City and Governorate endowments:

Alexandria is widely acknowledged as one of the most ancient and glorious cities of the world, with a central position in commercial maritime activities in the and numerous outstanding landmarks such as the ancient lighthouse of Pharos—one of the Seven Wonders of the World—and the ancient Alexandria library contributing to its prominence. Even though such treasures have not survived, the Government of is nonetheless committed to supporting Alexandria’s rediscovery of its rich cultural heritage and economic prominence. The government has worked with many countries to revive the city’s archeological and cultural heritage, including most notably the reconstruction of the new Bibliotheca Alexandrina with the support of UNESCO and many donor countries at the same location of the ancient library. The new library houses some 4 million books, 3 museums, 5 research institutes, several exhibition halls, an advanced conference center with 3,000 seats, and a planetarium.

Today, Alexandria is one of the major cities on the Mediterranean Sea, stretching linearly along a coastline of about 70 kilometers to the north and bound by Lake Marioutt to the South. The city of Alexandria, considered as Egypt’s second capital by virtue of its location and population size, houses the large majority of ’s estimated 3.7 million inhabitants in 2001 (18.7% live in rural areas). Alexandria Governorate covers an area of 2,819 km2, of which 1,100 km2 are inhabited (these include 775km2 of agricultural lands and the rest—12% of the total area of the Governorate—in urbanized lands).

The city of Alexandria has a diversified economic base and a competitive advantage in several economic sectors. With respect to tourism, Alexandria offers a variety of attractions, including important historic and religious landmarks from the Roman, Islamic, Coptic, and Jewish periods. The city and its region, which enjoy a temperate climate year round, feature long sandy beaches, in addition to numerous parks and recreational areas, fairs, cultural events, etc. During summer months, the city receives some 3 million visitors, making it the most popular summer resort for Egyptians. Yet, the number of foreign tourists visiting Alexandria was a mere 309,000 in 2002, which constitutes a critical focus for city planners seeking to expand the city’s tourism potential and thus improve economic prospects for the city’s population. It is recognized that Alexandria needs a strategic plan to promote the city as a tourist destination for foreign visitors, building on its numerous assets and its important tourism infrastructure (hotels, an international airport, a mega seaport, etc) to create an accessible, attractive and inexpensive venue for tourists. Overall, Alexandria plays a key role in the national economy. The port of Alexandria is Egypt’s largest, with 57% of total port capacity in the country, and one of the Mediterranean basin’s major ports. The Government has plans to develop the port to strengthen its ability to compete globally. Alexandria Governorate is also one of the most important industrial bases in Egypt, with several large, well- equipped industrial estates (e.g. Borg El Arab, Merghem, Om Zegheow and El Gharbaneyyat) that give it a dominant position in the manufacturing sector. It is home to 4,417 industrial establishments responsible for 40% of Egypt’s total industrial production and employing 35.8% of the Governorate’s labor force.

Alexandria’s main industries are in the chemical and petrochemical sector (272 enterprises); steel, iron and engineering industries (886); construction materials (107); wood products (327); spinning and weaving (1,160); food industries (486); and over 1,100 other manufacturing enterprises. Finally, the availability of different transportation means linking Alexandria to all Egyptian regions (by land, a railway together with an international, regional and ring road network; by sea, Egypt’s largest port; and by air, two international airports) represents one of the city’s key strengths in attracting investment.

Challenges and opportunities:

Despite its many significant endowments and competitive advantages, and the noteworthy efforts to develop and beautify the city (Alex was awarded the best Arab city prize from the Arab Cities Organization in 2002), Alexandria still faces difficulties in achieving a sustainable development process built around a vision and action plan to improve the standard of living for its citizens, and a local economic development strategy that defines development priorities in the city. Overall, the Governorate leadership defined three challenges as top priorities to be addressed in the city’s future development:

I) Squatter Settlements. The city currently has about 48 squatter settlements, with an estimated 1,059,974 inhabitants, representing 30.5% of the total population. Squatter settlements suffer from several problems including high population density,[1] lack of infrastructure and basic services,[2] poor healthcare services,[3] lack of educational facilities, which results in high pupil density in classrooms,[4] and most importantly a high unemployment rate.[5]

II) Lake Marioutt: Lake Marioutt lies to the south of Alexandria city, extending to the west until Borg El Arab new city. The lake covers an area of about 74 km2 and is divided into four basins: the Main basin (26km2), the Northwest basin (14.7 km2), the Fishing basin (4.2 km2) and the Southwest basin (29.4 km2). Unfortunately, Lake Marioutt has become over time a repository of industrial, agricultural and sanitary water discharge, and is now the cause of many environmental threats in the city and the delta region generally.[6]

The lake nonetheless has a strategic importance at the regional and local level. Indeed, the lake plays an important role in the balance of water in the delta region. Without it and without direct drainage to the sea, the level of water would continue to rise, which would eventually flood wide areas of land. In addition, due to the scarcity of land for new development in Alexandria, and the surrounding area are now viewed as prime land for urban expansion as well as a significant economic resource for the city. As a result of a public-private partnership, a major commercial center with a large retail establishment (Carrefour) was constructed by the lake and it has rapidly become Alexandria’s most attractive shopping and recreational area. Such pressures for development in the areas surrounding the lake instigate the need for short, medium and long-term plans to ensure the area is developed in a sustainable way and to prevent its deterioration through unplanned growth.

III) Lack of a long-term economic development strategy: Several achievements have established Alexandria over the past few years as an Egyptian showcase in regard to public-private partnerships, improved business environment and attracting new investments. Indeed, Alexandria Governorate has recently established a business facilitation center, with funding from the Canadian Agency for International Development to act as a one-stop shop window for investors. The center will be responsible of issuing business licenses in a maximum of 20 days. In addition, a Local Economic Development Department (LEDD) has been established in the Governorate, but it still lacks the technical capacity to develop a medium to long-term economic development strategy as well as exposure to regional and global knowledge in this regard, especially in surrounding industrial/ port cities. Yet, Alexandria faces several challenges to achieve long-term, sustainable economic development, particularly because the city lacks an integrated long term vision based on a sound understanding of its competitiveness (at the national and regional level), potential cluster/business sector growths and investment priorities.

Alexandria CDS:

The challenges represented by the large population living in squatter settlements with limited access to infrastructure services, the environmental degradation of Lake Marioutt and the lack of a long-term economic development strategy prompted Alexandria Governorate’s leadership to launch a participatory process for the formulation of a long-term City Development Strategy (CDS) for sustainable development in Alexandria. The Governor of Alexandria issued decree No.444-2004 on July 17, 2004, forming the Alexandria CDS team and establishing its roles and responsibilities. The CDS committee is chaired by the Secretary General of Alexandria Governorate, and includes three sub-groups in charge of Local Economic Development, Lake Marioutt Development, and Squatter Settlements Upgrading and Development (See Annex 1 for a list of committee members). The objective of the Alexandria CDS strategy is twofold:

 Economic: Developing a medium to long-term Local Economic Development (LED) strategy. The strategy would examine and capitalize upon the city’s competitiveness to diversify and specialize the economic base of the city; support productivity and establish an enabling business environment. Specific policy will be designed to create economic development opportunities in low-income areas, including squatter settlements, and the means to finance them.

 Physical/Environmental: Developing a participatory upgrading strategy for the squatter settlements and Lake Mariout within a sustainable urban development framework. The strategy would include specific measures for improving living conditions of residents, preventing further environmental deterioration in Lake Mariout and improving municipal capacities in delivering secure tenure and services to squatter settlements within the framework of participatory urban upgrading process.

Scope of Work

This assignment is intended to prepare the ground for the formulation of the Alexandria LED strategy (one of the two key CDS components), by providing in-depth an analytical study assessing Alexandria’s local economy and competitiveness. Specifically, the Consultant is expected to conduct a SWOT analysis for Alexandria City and Governorate, undertake an analysis of the city and governorate’s existing assets and economic base, identify the factors that contribute to their competitiveness and the characteristics of existing investments and profiles of investors, the opportunities/potential for investment and the sectors and business clusters that have growth potential and the impediments facing such sectors/clusters, and develop guidelines on types of economic activities and sectors that could support the city and governorate economy and the required actions to address the bottlenecks facing these. Special attention should be paid to the Alexandria port and port-related activities and business clusters, the manufacturing sector, Small and Medium Enterprises (SMEs), and the capitalization on the city’s cultural and archeological heritage and tourism potentials, as well as the environmental and economic development potentials of the Lake Marioutt area.

Specific Objectives

The specific objectives of this assignment are to conduct the following:

I. Local Economy Assessment and SWOT Analysis:

 Review the city and governorate’s economic base, including the inventory of existing investments in the different sectors (industrial, services, etc), employment structure, and the value-added of the formal and informal sectors. This includes: o Number of local firms, their investment size and employee numbers, broken down by economic sector (if available); o Number and type of new local business startups (e.g., last 10 years) by size, sector and longevity; o Number and type of recent (e.g. last 10 years) local business closures, by size, sector and date; o Number of inward investments (in new and existing enterprises) by source, sector, value and date; o Largest (e.g. 10) companies by size, employment and/or turnover, by sector; o Estimates of employment in and value-added of the informal sector by type.

 Assess the city and governorate’s current economic performance based on various indicators of economic vitality and standard of living, such as employment growth, unemployment, wage levels, wage growth, exports, cost of living and other quality of life indicators;

 Assess the appropriateness of the existing business clusters and mix including type, form, quantity and location;

 Assess the business environment including: o Basic and specialized factor inputs (e.g. workforce skill and educational level, access to capital and venture capital, information and communication infrastructure, land/sea/air transportation infrastructure including in-depth analysis of the seaport’s performance, water and electric power supply, etc) o Related and supporting industries/businesses and the “deepness” of such clusters (e.g. business services, other supporting/industrial functions, etc, by type of linkages); o The context in which firms operate (e.g. tax and customs regimes, investment incentives and other factors influencing current firm strategy); and o The context in which the informal sector operates and the obstacles facing the sector (e.g. access to services, access to credit, etc)  Assess current strengths, weaknesses, opportunities and threats in the local economy, with an elaboration of key institutional/infrastructural/socio-economic, etc potentials and constraints: o Strengths: local assets/endogenous factors (e.g. university, competitive wage rates, skilled workforce, SMEs, industrial estate, current or planned, strong transportation network, safe locality, etc); o Weaknesses: endogenous obstacles to growth (worsening poverty, limited workforce skill level, inadequate infrastructure, limited access to credit, etc.); o Opportunities: favorable exogenous factors (technological change opening new avenues for local competitiveness, new international trade arrangements, expanding markets); and o Threats: unfavorable exogenous factors (downsizing of global business resulting in local plant closure, demographic changes).

II. Competitiveness Assessment

The assessment of the city and governorate’s future competitiveness involves examining measures of output growth, innovation and entrepreneurship including establishment formation, investment growth, innovation (formal or informal), etc. When possible, measures will include current levels and growth rate of each indicator.

 Examine existing national or local competitiveness assessment studies and business opinion surveys, if any, analyzing their results and integrating these in the assessment, and conduct interviews and administer small surveys among the business community to develop an in-depth understanding of the contributors to the city’s competitiveness and the challenges/obstacles facing firms and investors;  Assess the city and governorate’s current/future contribution to the national economy and economic growth, including an assessment of formal and informal sectors’ current/future value-added;  Evaluate the capacities of economic sectors/clusters and determine their ability to develop in the future and upgrade the scale, quality and competitiveness of their outputs;  Document and assess the mechanisms and procedures in place to promote and facilitate the development and growth of such businesses/clusters/economic sectors and linkages;  Analyze the impact of the regulatory environment on the growth potential and operations of these clusters in the local economy, with a focus on those related to the port and airport;  Review the factors that are luring industrial development to or away from the proposed industrial estates;

 Assess the city’s current efforts to build regional competitiveness and recommend measures to ensure an effective and ongoing dialogue between the private and public sectors and to enhance competitiveness and institutionalize ongoing processes to build competitiveness.  Performance Measurement and Tracking: Identify data needs and suggestions for tracking the city’s competitiveness.

The above tasks will be conducted recognizing that not all necessary statistics and indicators are/will be readily available. In some cases, estimates or assessments based on qualitative analyses and interviews will have to substitute for quantitative measures. Throughout the process, the consultant shall keep record of future data needs and make suggestions for ongoing tracking of City and Governorate’s competitiveness against relevant indicators.

III. Proposals for viable economic activities

 Explore opportunities that the City and Governorate should be aware of in terms of emerging market trends, especially at the regional level, niches or other potential uses of the city’s land holdings;  Discuss with senior local officials at the governorate level, as well as at the central level (Ministry of Local Administration and the Ministry of Investment, as will be instructed by the Alexandria Governorate leadership and the World Bank team) the direction/target markets that the city has chosen to pursue, and assess/validate such targets and where necessary propose alternative and more viable development strategies;  Identify major opportunities over the coming 5-10 years to enhance the city’s role “as a place to do business”;  Examine obstacles to growth in business and industrial development (through business attitude/opinion survey) and propose mitigation measures;  With respect to potential market niches, the consultant will recommend as to whether the city is in position to effectively attract/service these markets and whether the city’s existing land holdings will serve those needs or whether a new approach is needed;  Based on study findings, the consultant will recommend alternative economic development strategies the city may wish to pursue, such as support for the expansion of the SME sector and/or medium industries or divesting its interests altogether;  Based on market analysis, the consultant will recommend appropriate strategies to deal with the governorate and city’s strategic landholdings, including the area around Lake Marioutt and areas earmarked for industrial development, that may include reconfiguring, expanding, divesting or seeking alternative uses for the city’s landholdings earmarked for these purposes so as to maximize the benefit for the city;  In light of the above, the consultant shall recommend best ways for local government to help this sector (main infrastructure needs, services, tax incentives, land, job training, etc.) and other potentially viable economic sectors (tourism, etc).

The Consultant’s Counterparts

The Consultant shall report to and take directions from the World Bank team and the Alexandria Governorate leadership (Governor and Secretary General). The consultant shall work with members of the CDS/LED teams in the city (who will facilitate his/her job and supply all data available) and where applicable coordinate with other donor activities..

Timing and Work Arrangements

Based on a lump-sum contract, the Consult will start this assignment on November 1, 2004, through January 31, 2005 (a total of 60 days). The Consultant will have to spend at least 45 days working directly in Alexandria Governorate with the CDS/LED teams and local stakeholders in the city and governorate. All cost of print materials, secretarial work, and telecommunications shall be included in the contract’s lump-sum amount.

Reporting and Deliverables

The consultant shall deliver the following three outputs:

1. Local economy assessment and SWOT Analysis

2. Competitiveness Assessment

3. Guidelines on viable economic activities, business clusters and industrial/other investment sectors to support the development and growth of the city economy and proposals to achieve these objectives.

While outputs are to be delivered in English (two hard copies and one electronic copy), it is the Consultant’s responsibility to ensure effective oral and verbal communication with the different stakeholders in the city. Payment Terms

 10 % upon signing the contract;

 30% upon receipt and approval of the 1st deliverable report; Alexandria Local Economy Assessment and SWOT Analysis.  30% upon receipt and approval of the 2nd deliverable report; Alexandria Competitiveness Assessment.

 30% upon receipt and approval of the 3rd and final deliverable report; Guidelines on Viable Economic Activities for Alexandria

Consultant qualifications

The Consultant qualifications for this assignment include an educational background and/or work experience specializing in economics, private sector development, local economic development or other related development field. Extensive knowledge of local economic development, SWOT analysis, competitiveness, port, industrial zone development and management and best practices in LED is essential. The Consultant must demonstrate strong skills in gathering data, doing quantitative and qualitative analysis and preparing reports detailing project and city performance against specified criteria. Excellent communication and organizational skill is a must. It would be preferable if the Consultant has experience in the Middle East region, as well as familiarity with Egypt.

Annex I: Alexandria CDS team composition

The Alexandria Governor’s decree No.244-2004, issued on July 17, 2004, established the CDS Committee as follows:

CDS Team Chairman:

General Mohamed Basiouny, Secretary-General of Alexandria Governorate

Sub-group I: The Governorate Economic Development:

1- Dr. Mansour Bedeiwy, Professor at the Faculty of Commerce, Alexandria University

2- Ms. Nadia Obeid, Head of the Investment Services, General Investment Authority.

3- Mr. Saeed Mahmoud Matar, Director-General, Financial Management Department, Alexandria Governorate

4- Mr. Ali Ahmed Ali. Director-General, Economic Development affairs, Alexandria Governorate

5- Ms. Aida Al Awady , Director-General, Ministry of Tourism, Alexandria

6- A representative from Alexandria Business Association

Sub-group II: Lake Mariout Development:

1- Dr. Hassan Al Beyali , Chairman of Alexandria General Organization for Sanitary Drainage (AGOSD)

2- Dr. Shaker Helmy, Professor at the Institute of Graduate Studies & Research, Advisor to the Alexandria Governor on environmental affairs 3- Eng. Mohsen Al Diwany, Head of the RBO

4- Ms. Soheir Helmy, Head of the Western Region Fisheries Authority

5- Dr. Wafaa Meneisy, Chairman of the Environment Pioneers NGO

Sub-group III: Squatter Settlements Upgrading & Development:

1- Dr. Mohsen Zahran, Head of the Comprehensive Planning Authority

2- Dr. Hisham Seoudy, Professor of urban planning & architecture, Faculty of Fine Arts

3- Dr. Hisham Al Helbawi, Professor at the Faculty of Agriculture, Alexandria University

4- Mr. Ali Abdelsalam, Head of West District

5- Ms. Amal Hamed, Chairperson of Alexandria Regional Planning Authority

6- Ms. Wedad Barsoum, Director-General of the Urban Planning Directorate, Alexandria Governorate

[1] The average density in squatter settlements is 331 persons/ha, three times as the citywide average population density of 118 persons/ha. Such high density poses severe challenges in delivering basic infrastructure services.

[2] Squatter areas lack of basic infrastructure services (e.g. paved roads, water supply, sanitation, etc), which results in environmental pollution and health hazards, including high infant mortality rate (25.1/1000)

[3] In squatter settlements, the average population served by a healthcare facility is 15,620 persons, compared to an average of 12,210 in other areas of the city.

[4] The average number of pupils per classroom is 51 in El Amerya and Montazah areas, compared to 37 in the middle district. Despite government efforts to reduce class densities, overall resources to build new schools remain limited.

[5] In squatter areas, the unemployment rate amounts to 18% of the workforce, compared a citywide average of 7.3%. Unemployment is particularly high among the 15-29 year-old age group.

[6] In terms of environmental pollution, the lake has a high concentration of heavy elements and solvent oxygen, which causes increased rates of fish death. The increase of fertilizer in the water led to rapid spread of reeds and other water plants, namely Nile Flowers, which today cover around 70% of the lake area and thus prevent water movement. The increase in the density of such plants will gradually transform the lake into swamps and destroy the natural ecosystem. The huge increase of the organic load causes a decrease in the lake’s aeration level, which is harmful to fish and causes environmental pollution through the resulting Hydrogen Sulfate gas’ foul smells. Such conditions negatively affect the health of the squatters living around the lake (113, 000 persons). Finally, the decrease in fish production caused by the instability in the water level and decrease in oxygen, is taking place against a rapid increase in the number of fishermen (from 3,000 in 1977 to 7,290 in 1997). The result is a significant decrease in fishing yield (from 4.4 ton/year in 1977 to 0.62 ton/year in 1997), which implies a drop in average family income from LE26,400 in 1977 to L.E 3,702 in 1997.