The European Union’s project for ENP South Countries EUROPEAID/133918/C/SER/MULTI
Enhancement of the Business Environment in the Southern Mediterranean
Institutionalising a Public-Private Dialogue for Green Cities in Egypt
Draft Report
Prepared by Hussein Abaza and Mike Mann
January, 2016
This project is financed A project implemented by by the European Union GIZ and Eurecna Institutionalizing Public-Private Dialogue for the Greening of Cities in Egypt 0/37
TABLE OF CONTENT
ACRONYMS AND ABBREVIATIONS ...... 3
1. INTRODUCTION ...... 4
2. ASSIGNMENT BACKGROUND ...... 6
3. ASSIGNMENT OBJECTIVES ...... 7
4. INSTITUTIONALISING A PPD MECHANISM IN EGYPT (OBJECTIVE #1) ...... 8
4.1 What is Public-Private Dialogue? ...... 8 4.2 Advantages of Public-Private Dialogue ...... 8 4.3 Summary of best practices ...... 9 4.4 How to institutionalise a PPD? ...... 11
5. THE “IDEA CORRIDOR” (OBJECTIVE #2) ...... 12
5.1. What is the Idea Corridor? ...... 12 5.2 The Idea Corridor General Objectives and Expected Results ...... 13 5.3 The Idea Corridor Structure and Process ...... 13 5.4 Proposed agenda and road map for the Idea Corridor ...... 14 5.5 Methods and instruments to monitor and evaluate results ...... 14 5.6 Concluding remarks ...... 15
6. APPLICATION OF THE IDEA CORRIDOR ON GREEN AND SUSTAINABLE CITIES (OBJECTIVE #3) ...... 15
6.1 Methodology Used ...... 16 6.2 Main Findings and Recommendations ...... 16 6.3 General Recommendations ...... 17 6.4 Proposal for a Public Private Dialogue Mechanism for Green and Sustainable Cities .....18
PRIVATE SECTOR: ...... 20
PUBLIC SECTOR: ...... 20
PROPOSED IDEAS FOR THE STRUCTURE ...... 20
6.5 Action plan...... 22 6.6 Challenges that the action plan might face ...... 29 6.7 Monitoring and Evaluation ...... 29
7. CONCLUSIONS AND POLICY RECOMMENDATIONS ...... 30
ANNEX 1 – CASE STUDIES OF GOOD PRACTICE IN PPD ...... 32
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ACRONYMS AND ABBREVIATIONS
BOT Buy; Operate; Transfer - A financing mechanism for infrastructure projects in Public Private Partnership Projects whereby a successful bidder earns the right to build, operate a project for a pre-determined period before transferring the project back to the Government. IMC Industrial Modernisation Centre MTI Ministry of Industry and Trade NGO Non-governmental organisation
PPD Public Private Dialogue – The dialogue between institutions of the public sector and institutions of the private sector in order to seek a common objective PPP Public-Private-Partnership – A financing mechanism whereby the Government enter into partnership with a private sector investor to create the project using private sector funds. Such mechanisms might included BOT. Examples include toll roads, and the UK/France Channel Tunnel SBA Small Business Act for Europe SMEs Small and Medium Size Enterprises
The terms BOT and PPP do not appear in the document, but it was noticed during the workshop that there was some confusion between the terms PPP and PPD. It was felt useful to clarify this within this section
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1. INTRODUCTION
Within the framework of the Euro-Mediterranean Industrial cooperation process, an assessment of policies related to small and medium size enterprises (SME) in nine Mediterranean (MED) countries, including Egypt, was carried out in 2014 by the European Commission (EC), the Organisation for Economic Cooperation and Development (OECD), the European Training Foundation (ETF) and the European Investment Bank (EIB)1. This assessment was based on the Small Business Act for Europe (SBA) and was coordinated by National Charter/SBA coordinators at country level. A previous assessment (2008) was based on the Euro-MED Charter for Enterprise, used as policy framework before the 2011 decision by MED ministers of industry to align gradually the Charter with the SBA.
The results of the assessment emerging from consultations with governments, public institutions, private sector organisations and civil society have led the Egyptian Government to implement reforms in priority areas identified in the assessment report, in particular to enhance Egypt SMEs policy-making process and the engagement of SMEs in this process, their role in economic activities, their competitiveness, and their role in implementing green projects, which represents SBA principles 3 and 9 respectively. Indeed, the findings of the assessment indicate that the institutional SME policy framework in Egypt remains highly fragmented. The SME policy mandate is distributed over several institutional agencies such as the Social Fund for Development (SFD), GAFI and the Ministry of Trade and Industry, through the Industrial Modernisation Centre (IMC) and other affiliated agencies, and without clear delineation of responsibilities and separation between policy elaboration and policy implementation functions. In addition, policy elaboration responsibilities are split between different ministries: Trade and Industry, Investment and Finance, and Planning. Some form of co-ordination is maintained through cross-sectoral representation in the implementation agencies (SFD, GAFI, IMC), but co-ordination remains difficult in the absence of a comprehensive SME development strategy.
With respect to public-private consultations, the assessment shows that there are several channels of formal and informal public-private consultations. It also showed that there are several private sector associations that are active in policy dialogue at sector, central or regional levels (for instance the Egyptian Business Association, the Egyptian Junior Business Association, the Manufacturers Associations, the Alexandria Business Association, the Egyptian Chamber of Commerce Federation, etc.). Since the 2011 events, there has been an increase in the number of civil society associations and non-governmental organisations (NGOs) representing young entrepreneurs, new market entrants and previously underrepresented categories of enterprises. However, at the same time policy dialogue has been highly disrupted by the political transition. SME representation continues to be highly fragmented, as there is no national association specifically representing them. SMEs are members of the leading national business associations, a number of which have established SME committee(s), but their voice is largely diluted, while microenterprises, many of them operating informally and therefore excluded from the public policy process, are largely absent from public-private consultation.
1 For more information see the report “SME Policy Index: The Mediterranean Middle East and North Africa 2014, Implementation of the Small Business Act for Europe” available through the following link: http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/sme-policy-index-the- mediterranean-middle-east-and-north-africa-2014_9789264218413-en#page1
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With respect to SMEs competitiveness in the green economy, there are clear efforts by various entities to integrate green growth in the national policy framework. Egypt introduced the National Strategy for Cleaner Production, which mainly aims at encouraging the adoption and implementation of cleaner production technologies and practices in Egyptian industry. Egypt also adopted a National Environment Action Plan 2002-2017, which identified specific measures aimed at greening the industrial sector in Egypt. However, and as mentioned in the assessment report, existing national strategies are lacking concrete action plans with particular focus on the role of SME in promoting eco-efficiency and eco-innovation and the greening of the Egyptian economy.
To support Egypt in implementing reforms in the selected priority areas, two missions were conducted in 2014 and 2015, in collaboration with the IMC and the “Enhancement of the Business Environment in the Southern Mediterranean” Project (EBESM).
A seminar entitled “Turning Environmental Challenges into Commercial Opportunities for Egyptian SMEs” was organised on 17-18 December 2014 in Cairo, to discuss with and inform participants of the great potential in greening the economy. Indeed, with access to a large labour force, and an extensive network of national and international network of experts, sizable domestic market, its central geographical location and the strategically important Suez Canal, Egypt has the capacity to develop a strong and sustainable industrial base. With SMEs representing more than 90% of the Egyptian industry, it is crucial to increase the capabilities of the Egyptian SMEs to transform environmental challenges into commercial opportunities2.
A second consultancy mission was carried out in October-December 2015 to assist the MTI in setting up an appropriate institutional architecture to conduct a structured dialogue with the private sector. The overall objectives of this consultancy mission is to institutionalise a PPD mechanism in Egypt (Objective no. 1); develop a mechanism for PPD; This initiative is called the “Idea Corridor” as it will be further developed below (Objective no. 2); and to test this mechanism in the area of green economy (Objective no. 3).
Integrated policy making and involvement of key stakeholders including the private sector is essential for sound and sustainable planning. This is particularly important due to the current transition period Egypt is going through and the number of challenges that needs to be addressed. The business as usual approach to development is no longer an option. Adopting a transparent and an all-inclusive participatory approach is essential in order to ensure that the needs and priorities of the different segments of the population are addressed.
Institutionalised by OECD economies, Public-Private-Dialogue (PPD) is a concept that has been developed and applied in a number of developing economies, to promote dialogue, generate ideas from the private sector and channel them through the public sector as a collaborative and participatory approach to implementation. The approach of the beneficiary of this assignment is to introduce PPD in a specific area first, to test and achieve credibility to the mechanism. The specific area chosen has been “Green and Sustainable Cities”, which is logically linked to the outcomes of the above mentioned seminar. To this end, the support of three model Green Cities Authorities have been enlisted to participate in the pilot experiment. The three target cities are El Obour City, El Kaliobeya governorate, El Sadad City, Menofeya governorate, and Bourg El Arab city, Alexandria governorate were field visits were undertaken from 19 to 21 October 2015, and a workshop convened in Cairo on the 22nd of October, with representation from the three cities and government entities. The Cairo
2 For more information on the seminar and its outcomes, see full report and other related material available through the following link: http://www.ebesm.eu/posts/-incountry-seminar-for-egypt
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The PPD activities in Egypt will be driven by the MTI and targeted at the private sector players within the public-private mechanism for service delivery and public-private consultative bodies. This should be supported by the highest level of the ministry through a Ministerial decision.
This report proposes an appropriate institutional architecture to conduct a structured dialogue between the public and private sectors, in particular SMEs, so as to improve Egypt SMEs policy-making process and competitiveness. This PPD will be introduced and tested in the “Green and Sustainable Cities” area first, so as to achieve credibility to this mechanism. The proposed PPD mechanism for Egypt, draws inspiration from PPDs used in developed economies and international good practices in this domain. Its overall objectives are to institutionalise a PPD in Egypt (Objective no. 1), to develop a mechanism for PPD (Objective no.2); and to test it in the area of green economy (Objective no. 3).
This report is structured in six parts: (1) Background of this assignment; (2) Objectives of this assignment; (3) Definition and summary of good practices in PPD in other countries; (4) Description of the PPD called the “Idea Corridor” to be established in IMC; (5) Proposal for a PPD in Green and Sustainable Cities as well as its agenda and roadmap; (6) Conclusions and policy recommendations.
2. ASSIGNMENT BACKGROUND
This assignment builds on a seminar entitled “Turning Environmental Challenges into Commercial Opportunities for Egyptian SMEs” which was organized on 17-18 December 2014 in Cairo, Egypt, within the framework of the EU funded project for “Enhancement of the Business Environment in the Southern Mediterranean”, in collaboration with the Industrial Modernisation Centre (IMC).
The seminar was organized to support the Egyptian Government in implementing reforms in priority areas identified in the report “SME Policy Index: The Mediterranean Middle East and North Africa 2014, Implementation of the Small Business Act for Europe”. With a view to improve the implementation of the Small Business Act (SBA), in particular its principle 9 “Enable SMEs to turn environmental challenges into opportunities”, the seminar focused on three major themes: Greening of current strategies and their implications for small and medium size (SME), industry and innovation; Promotion of environmental Management Systems & Standards for SMEs; Availability of expertise for supporting green and sustainable approaches by SMEs. The main recommendations that came out of the workshop were the following: A long-term vision, strategy and commitment for greening the economy led by the Egyptian Government and implemented by relevant national agencies; An updated mapping of potential business opportunities for SMEs; A regulatory reform and market-based incentives, tax schemes and financial loans to encourage investment in green infrastructure; remove market distortions and environmentally damaging subsidies;
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A communication campaign targeting different stakeholders to raise awareness to the benefits of greening businesses from the private and public perspective. easy access to environmentally sound technologies and increase public/private investment in clean technology and green R&D activities, and to encourage patenting for innovative technologies; A long term capacity building programme to provide the necessary expertise, and enhance the capacities of enterprises to use sustainability and corporate social responsibility (CSR) tools and guidelines; (vii) a renewed collaboration and governance framework between the private sector, public authorities and civil society in policy formulation and implementation, including Public-Private-Partnership (PPP); IMC will establish a working group to follow up on the implementation of the action plans developed during the seminar. The working group will formulate a coordinating mechanism as well as a monitoring and evaluation plan for the initiatives that will come out from the action plans; The working group will arrange for a follow up seminar to assess the implementation of the actions plans; The working group mission will be to: a) Establish a one-stop-shop for eco-efficiency and eco-innovation; and b) Prepare Egypt to be the regional hub for services related to green economy.
3. ASSIGNMENT OBJECTIVES
The overall objectives of this assignment are two-fold: 1) To assist Egypt further enhance its SMEs policy making process by developing inter- governmental coordination and public-private dialogue through a structured, participatory and inclusive approach to bring together public and private institutions as a tool to achieve this end. 2) To enhance the competitiveness, opportunities of Egyptian SMEs by greening their operations and the role of SMEs in greening the Egyptian economy.
The specific objectives of this assignment are to:
1. Institutionalise a PPD mechanism in Egypt; 2. Develop a PPD mechanism mechanism in Egypt. This mechanism is referred to as the “Idea Corridor”. 3. Test and demonstrate this mechanism with the example: to promote the Greening of Cities in Egypt. This implies the definition of a vision and strategy, the identification of priorities and the main constraints and challenges
The long-term objectives of this assignment consist of the following five main elements:
1. Formulate SME industry-specific policies; 2. Promote harmonisation and aligning of SMEs policy development efforts across the Government through inter-governmental co-ordination; 3. Enhance interaction, dialogue and greater inclusion of stakeholders in decision-making;
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4. Build trust and understanding between the Public and Private Sectors 5. Promote evidence-based policy; 6. Enable a predictable business environment for investments in Egypt;
4. INSTITUTIONALISING A PPD MECHANISM IN EGYPT (OBJECTIVE #1)
4.1 WHAT IS PUBLIC-PRIVATE DIALOGUE?
Public-Private Dialogue is defined by the Centre for International Private Enterprise (CIPE)3 as a structured, participatory and inclusive approach to policy-making.
It is directed at reforming governance and the business climate, especially where other policy institutions are underperforming. Dialogue improves the flow of information relating to economic policy and builds legitimacy into the policy process. It also seeks to overcome impediments to transparency and accommodate greater inclusion of stakeholders in decision-making.
Public Private Dialogue brings together a wide variety of actors from the private sector, government, civil society, academia and others who share a common interest in specific policy matters.
PPD creates a forum for sharing ideas and feedback for setting policy priorities, improving legislative proposals, and regulatory implementation. It helps to generate insights, validate policy proposals and it builds momentum for change. The dialogue helps to reveal the likely micro-economic foundations for growth and it creates a sense of ownership of reform programs among the business community which, in turn, makes policies more likely to succeed in practice.
4.2 ADVANTAGES OF PUBLIC-PRIVATE DIALOGUE
PPD has a number of advantages:
It creates a foundation for market-friendly policies that deepen economic reform and enhance national competitiveness; Governments that listen to the private sector are more likely to design credible reforms and win support for their policies; Governments that adopt PPD widen their information sources and promote evidence- based policy; Regular dialogue helps build trust and understanding between the sectors, and helps to develop a low-cost predictable business environment.
In summary, PPD enables democratic and open governance. It builds transparency and accountability into policymaking and implementation and holds both public and private sector stakeholders to account.
The alternative to PPD tends to be policy-making that occurs through back-room deals involving a select few. This counters the natural tendency to adopt policies that win through the power of the promoter. Multi-stakeholder platforms shed light on the workings and
3 Source: K. Bettcher, B. Herzberg, A. Nadgrodkiewicz, Public-Private Dialogue: The Key to Good Governance and Development, CIPE, 2015. http://www.cipe.org/sites/default/files/publication-docs/FS_Jan2015_PPD%20World%20Bank.pdf
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Finally, PPD mechanisms have proven their ability to deliver results. One evaluation conducted in 2009 of 30 PPDs found that more than 400 reforms had taken place in over 50 areas, producing about $400 million in private sector savings4.
Table 1 summarises the rationale of a PPD and its policy impacts5.
Table 1: PPD rationale
With Dialogue Without Dialogue Buy-in for reform Reform not sustained Evidence-based policy Misaligned policy Inclusive, participatory policymaking Side Deals (elite capture) Feedback Unresponsive regulation Legitimacy Lack of trust
4.3 SUMMARY OF BEST PRACTICES
PPD in Europe is a natural outgrowth of the democratic process and is embedded in EU policy through the “Acquis Communautaire6”, where the practice of consultation with the private sector, policy and regulatory dialogue and impact assessments is enshrined in legislation.
Dialogue platforms implemented in a number of developing economies, have proven their ability to deliver results. Numerous examples of successful experiences and good practices of PPDs are described in a new community of practice online hub7 initiated by the World Bank Group (WBG) and the Centre for International Private Enterprise (CIPE) where practitioners around the world can learn from and apply successful PPD approaches. A few examples of PPDs related to sector-specific dialogue in various countries, including in Egypt, may serve as good practice for Egypt (see Box 1)8.
4 Review of World Bank Group Support to Structured Public- Private Dialogue for Private and Financial Sector Development, commissioned by the International Finance Corporation, April 2009. 5 Source: K. Bettcher, B. Herzberg, A. Nadgrodkiewicz, Public-Private Dialogue: The Key to Good Governance and Development, CIPE, 2015. http://www.cipe.org/sites/default/files/publication-docs/FS_Jan2015_PPD%20World%20Bank.pdf 6 The general body of European Law 7 www.publicprivatedialogue.org 8 Source: K. Bettcher, B. Herzberg, A. Nadgrodkiewicz, Public-Private Dialogue: The Key to Good Governance and Development, CIPE, 2015. http://www.cipe.org/sites/default/files/publication-docs/FS_Jan2015_PPD%20World%20Bank.pdf
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Box 1 Examples of PPDs related to sector-specific dialogue (various countries)
In many instances, it makes sense for a PPD to arise between a particular industry, cluster, or value chain in the private sector and those in government responsible for regulating that area of the economy. These sector-specific (or issue-specific) PPDs provide more focus, greater incentives to collaborate, and more opportunity for action. As such, sector-specific strategies are a form of industrial policy. However, unlike many industrial policy strategies in the past that have performed poorly (e.g., misallocating industries, targeting the “wrong” sector), a PPD framework can overcome many of these shortcomings. In particular, PPDs that emphasize local ownership and leadership, promote participatory workshops open to all interested parties (i.e., outreach), encourage firms to cooperate to resolve common problems, and leverage international benchmarking and technical training (potentially provided or funded by donors) can foster transparency, inclusion, and better means to identify areas for sector development.
For some countries, the introduction of PPDs has transformed industries. For example, until a PPD process was introduced in Egypt in 1998, citrus exports only grew to the extent that more irrigated harvest areas were added to the existing arable land. Once the Horticultural Export Improvement Association (HEIA) was introduced, the joint public private engagement efforts took full advantage of the existing land. As a result, Egyptian citrus sector exports grew five-fold in volume and 14-fold in value between 2000 and 2008. A similar pattern can be observed in other Mediterranean countries. In the cruise tourism sector, a PPD organized by the Izmir Chamber of Commerce in Turkey contributed to a 100-fold increase in cruise passengers visiting Izmir, from roughly 3,500 passengers in 2003 to 350,000 in 2010. At the local level, PPDs in 10 Spanish regions have increased the competitiveness and output of the citrus sector. The public-private partnership, Barcelona22, has helped the city’s cruise tourism sector (and related industries, such as restaurants, hotels, etc.). Barcelona22 has attracted more than 1,500 companies and created close to 45,000 jobs.
The relevance of PPD to resource-scarce sectors can be illustrated, for example through the Jordan Valley Water Forum (JVWF), which was established in 2011 to address crucial water issues and develop an integrated water management system for the Jordan Valley. The forum promotes collective action by farmers to prepare realistic proposals; review by the public sector of the proposals; and transparent, inclusive discussions among public and private sector stakeholders to determine priority solutions to water sector issues. The forum has replaced informal, ad hoc engagement with a coordinated process, which has received the support of the Ministry of Agriculture and the Jordan Valley Authority. The process has resulted in several concrete steps toward rectifying the water crisis, which include: i) breaking the monopoly of the Amman municipal market, ii) providing insurance funds, iii) securing airfreight space in airlines for export of fresh products, and iv) addressing infrastructure maintenance issues along King Abdullah Canal.
Other examples of good practice in the implementation of PPD are available and included as Annex 1 to this report. These include: Example 1 – Malaysia Example 2 – Armenia Example 3 – Vietnam Example 4 - Croatia
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4.4 HOW TO INSTITUTIONALISE A PPD?
According to the World Bank Manual on Public Private Dialogue9 there are four main components of an effective PPD Mechanism. These are (i) the Public Sector; (ii) the Private Sector; (iii) a Champion and (iv) specific PPD Tools.
The Public Sector
In order to have a positive influence on the success of the PPD, the direct participation of relevant ministers and other agencies will facilitate reaching results as the PPD’s primary aim is to improve the capacity for the elaboration and implementation of policies and initiatives by the key institutions and agencies in charge of enterprise policy.
It is imperative to highlight that a PPD is a merely a dialogue that could and should take place between any ministry or ministries and the private sector if the rationality of this dialogue as a far as improving the business climate can be demonstrated. It should be considered as an instrument for improvement and that can be architectured to function in a flexible structure to act in synergy and not in conflict with the official roles and functions of the public sector.
The Private Sector
The private sector is mainly represented by industry, including SMEs and businesses involved in the process. These are represented by SME organisations for the sake of simplicity. Benefits of a PPD to the private sector will be increased through a better structured and more constructive policy dialogue, where they can better voice their concerns and expectations and push for policies that meet their demands.
The Champion
To be effective, any PPD mechanism must have “Champions” from both the public and private sectors. Facilitators that becomes the catalyst to drive forward the dialogue between the parties (public and private sectors). Unless this particular role is accepted by both parties, then experience has shown that the mechanism will not work.
Champions take ownership of the dialogue process and drive it forward. They must be credible and perceived to have the broad interests of the country at heart. Public sector champions must have sufficient authority and be sufficiently engaged in order to demonstrate political will. Business champions must be independent and recognized by the broader business community as qualified to speak on its behalf.
Tools
In general, a PPD framework should be based on a set of tools that help to: identify the collective issues at stake;
9 http://www.publicprivatedialogue.org/tools/PPDhandbook.pdf
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secure political will for reform; set up a multi-stakeholder dialogue process around the issues at stake; and ensure supportive buy-in and monitoring from constituents at large.
These tools help unlock systems where capture and cronyism are prevalent, so as to improve governance, remove barriers to entry, enable open competition, and improve service delivery to the private sector.
Pre-requisites to build and effective PPD
In order to build an effective consultative mechanism there should be certain pre-requisites that favour its success:
The political will to engage in serious consultations; Participants in the process should be able to make credible commitments; Reform objectives should be well defined and specific; Internal processes and procedures should be transparent and participatory; A Secretariat to support the consultative process; The consultative mechanism membership should be authoritative and representative; There should be follow-up procedures for monitoring the implementation of the agreements; The consultative mechanism objectives and activities should be realistic about what is achievable in the country’s economic, political and social context.
5. THE “IDEA CORRIDOR” (OBJECTIVE #2)
IMC have begun the process of developing a mechanism for PPD, referred to as the “Idea Corridor”, to reflect the concept of generating ideas from the public and channelling them through to the public sector as a collaborative approach to implementation.
As mentioned above, the IMC approach is to introduce a PPD in a specific area first, to test and achieve credibility to the mechanism. The specific area chosen in this consultancy mission has been the green economy. To this end, the support of three model Green Cities Authorities have been enlisted to participate in the pilot experiment as it will further developed below (See section 6 below)
5.1. WHAT IS THE IDEA CORRIDOR?
The Idea Corridor is a hub/mechanism that bring together public institutions, SMEs and other representatives from the civil society (e.g. academia, NGOs, media, etc. ) to improve Egypt SMEs policy making process through structured, participatory, and inclusive approach, and, therefore, the inclusion, fairness, transparency and accountability of public policies. The Idea Corridor key actors and their interaction are illustrated in below diagram.
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5.2 THE IDEA CORRIDOR GENERAL OBJECTIVES AND EXPECTED RESULTS
A - General Objectives of the Idea Corridor
In line with the overall objectives of Egypt economic plans and policies to promote a strong and vibrant SMEs sector that will provide a strong foundation to increase standards of living and to reduce poverty, the Idea Corridor aims at:
1. Formulating SME industries-specific policies involving the private sector in the process; 2. Easing the harmonisation and aligning of SMEs policy development efforts across the Government through inter-governmental co-ordination; 3. Promoting evidence based policy; 4. Enabling a predictable business environment; 5. Helping to build trust and understanding between the Public and Private Sectors
B- Expected results of the Idea Corridor
1. For the Public Sector:
Harmonization and aligning of SMEs policy development efforts across the Government. (Governments that listen to the private sector are more likely to design credible reforms and win support for their policies).
2. For the Private Sector:
Participation in designing Egypt SMEs policies taking into account the private sector needs which will have a direct effect on their business.
5.3 THE IDEA CORRIDOR STRUCTURE AND PROCESS
The activities related to the work flow in the Idea Corridor will be conducted in several phases as follows:
Phase 1: Identify major problem and Issues for SMEs competitiveness (idea submitted by a concerned Stakeholder); Phase 2: Conduct related research and assessment to overcome challenges and problems identified; Phase 3: Draft policy recommendations;
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Phase 4: Consult with PPD stakeholders; Phase 5: Fine tune/enhance the policy recommendations and submit them to the PPD steering committee for endorsement and formalisation.
The below diagram illustrates the general framework/structure and processes of the Idea Corridor.
5.4 PROPOSED AGENDA AND ROAD MAP FOR THE IDEA CORRIDOR
Step One – Secure agreement to the concept at Government level Step Two – Secure technical assistance for the support to a dedicated PPD Mechanism within IMC Step Three – Deliver support through a PPD Support Programme. Within this programme, carry out the following activities: o Establish and staff the PPD mechanism within IMC o Establish an IT system for tracking and progress reporting on Ideas generated; o Establish and deliver a programme and format for stakeholder dialogue / Awareness meetings; o Establish a phased expansion plan for the geographic and sectoral expansion of the PPD Mechanism o Establish and implement a system for the development of ToRs for Impact Assessments and Feasibility Studies o Establish and implement a mechanism for monitoring the impact of resulting interventions.
5.5 METHODS AND INSTRUMENTS TO MONITOR AND EVALUATE RESULTS
In the first instance, results must be activity based, leading to evaluation of economic and social impact:
Activity Based Results:
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o Number of ideas generated and entered into the pipeline (Database) o Of Ideas generated: o Number accepted – Move to Impact Assessment; o Number Rejected o Number of ToRs prepared for Impact Assessment; o Number of Impact Assessment / Feasibility Studies delivered; o Number of projects judged feasible o Number of projects where financing proposals are presented; o Total Value of Financing Proposals o Number of projects implemented; o Value of projects implemented (by method of financing) o Impact of projects planned / In Progress / Implemented: o Economic Impact o Social Impact o Environmental Impact
5.6 CONCLUDING REMARKS
It is recommended that funding is secured to support the PPD mechanism and that it is introduced in a comprehensive and holistic manner. This elements of this document should form the basis of a concept paper which may be the basis of financing allocation and appropriate programme design for a technical assistance programme with the IMC PPD Unit as the beneficiary
PPD activities should be driven by the Ministry of Industry and Trade and targeted at other line ministries and private sector players within the public-private mechanism for service delivery and public-private consultative bodies such as the Chamber of Commerce. The mechanism is officially endorsed at high level through a Ministerial decision. The adoption of the fundamental elements of good practice are essential for success.
6. APPLICATION OF THE IDEA CORRIDOR ON GREEN AND SUSTAINABLE CITIES (OBJECTIVE #3)
As mentioned above, the approach of the beneficiary of this assignment is to introduce PPD in a specific area first, to test and achieve credibility to the mechanism. The specific area chosen has been “Green and Sustainable Cities”, To this end, the support of three model Green Cities Authorities have been enlisted to participate in the pilot experiment. The three target cities are El Obour City, El Kaliobeya governorate, El Sadad City, Menofeya governorate, and Bourg El Arab city, Alexandria governorate.
Field visits were undertaken to the three cities during the period between 19 to 21 October 2015, with a workshop convened in Cairo on the 22nd of October, with representation from the three cities and government entities. During the field visits meetings were held with staff of the City Councils of the three cities, representatives of the business, local community and private sector. The main objectives of the meetings were to identify the main activities in the cities, with particular focus on green and environmental friendly projects, main constraints facing the greening of activities and the cities in general, and requirements to facilitate the initiation and implementation of green projects and the greening of the cities. The Cairo workshop held on the 22nd of October was used as platform to share the findings of the three field visits and come up with proposed actions to facilitate the greening of cities throughout Egypt.
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6.1 METHODOLOGY USED
The main methodology adopted in completing the assignment included the undertaking of field visits to the three targeted cities in October, 2015: El Obour City (19 October) , El Sadat City (20 October) and Borg El Arab (21 October). The main objectives of the field visits were to meet with the Directors of the City Councils and their staff, business and the private sector, and relevant stakeholders in the three location, and get first hand information on the main achievements in the cities in green investments, challenges as well as opportunities this transformation offers. This was then followed by a workshop convened in Cairo on the 22nd of October with the participation of representatives from the three cities and government representatives from the relevant ministries in Egypt. The Workshop provided a platform for the sharing of experience between the three cities, and findings, and resulted in a set of recommendations for future action for promoting of green cities in Egypt, which have been included in this report.
6.2 MAIN FINDINGS AND RECOMMENDATIONS
In each of the three cities, there appeared to be general support for the concept of “Green City Development”. There were variations however, in the level of adoption of green economy in the three cities, with Borg El Arab and Sadat cities already demonstrating a great deal of understanding of the green economy concept and its applications, while El Obour city is demonstrating interest in investing in green infrastructure. In Borg El Arab and El Sadat Cities could be considered as models not only for Egypt but for other countries. El Obour is also clearly making progress towards this goal as well. Priority green investments in the three cities included solar energy, wastewater treatment, use of treated water for the irrigation of green areas and forests, recycling of solid waste, and the production of compost.
Borg El Arab
Borg El Arab has a visible and highly successful experiment using photo voltaic cells to produce the entire supply of energy to its own administration premises. The city also have a grey water treatment facility. Borg El Arab have many other projects as part of a vision, but they specifically request assistance in carrying out impact assessments and feasibility studies to support investment promotion and prioritisation. In Borg El Arab the owner of a big pharmaceutical factory expressed willingness to use solar energy immediately, if the Government would provide the necessary technical support.
El Sadat City
It was proposed in El Sadat city that a new code or standard should be introduced for the import of engines that are more energy efficient. There is willingness on the part of the private sector to invest in solar energy in the city. El Sadat City is a model City, but acknowledge that there is still much to be done. Progress can be made in the areas of solar energy, waste management and grey water treatment. The local dialogue at el Sadat city has clearly identified the flaws in laws and procedures especially those related to trade and tendering procedures as being long and complicated. Moreover, they do not cover the industrial contracting procedures.
El Obour City
El Obour has smoke filtering in each factory. They have ambitions for grey water treatment
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and solar energy, but have indicated that they need help in prioritising and planning to optimise investment and development. The private sector in El Obour city were willing to invest in a pilot plant for the recycling of wastewater for reuse in irrigating green public space and for flushing. However, support is needed for promoting the introduction of renewable energy and the recycling of solid waste.
6.3 GENERAL RECOMMENDATIONS
1) Green Infrastructure Projects
There is a need to develop and implement demonstration projects for the treatment of the different effluents resulting from the manufacturing process. Technical standards should be introduced for environmentally efficient electric motors and laws should be developed to ban imports of inefficient technologies. There is a need to shift from the import of equipment and machines from abroad to local production to satisfy the local market and for export. Clean public transport systems should be promoted as opposed to private car ownership.
2) Public Awareness
The private sector was reasonably aware of the gains resulting from greening their activities. However, there is a need to further raise awareness to the benefits resulting from investing in environmentally friendly projects to the private as well as the public sector. The media including the social media has an important role to play in raising awareness about the benefits of investing in green infrastructure projects. Though the private sector is generally willing to invest in green projects, they need to be incentivised through Government regulations and incentive packages. There is a need to promote dialogue and interaction between the Government and the private sector in order to find solutions to facilitate investments by the private sector.
3) Regulations and Incentives
The “Green Economy” concept should be integrated in national planning, which will eventually trickle down and is translated into practical green projects and activities at the local level. Procedures regulating the industrial sector and its engagement in green investments need to be streamlined and made less cumbersome. Though the “One-Stop-Shop” approach was introduced, decisions are still made by the central government in Cairo. This still involved long delays which discourages private sector investment. Giving more authority and flexibility for governorates to formulate, implement and fund projects and activities in their respective governorates will go a long way in responding to local priorities and needs. Several government policy ideas were put forward, such as waiving customs on green equipment and technologies, tax exemption and rebates and subsidies on environmentally friendly projects. There is a need to adopt a more prudent land use planning system that ensures that industries are properly located and do not result in health and environmental hazards to citizens.
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4) Tools
Feasibility studies should be prepared before investing in new projects. It was acknowledged though that undertaking feasibility studies was an expensive endeavour and required technical expertise. Environmental assessment should be part of these feasibility studies in order to ensure that projects do not result in negative impacts on health and the environment. There should be general guidelines and requirements for all new industrial projects that ensure that projects are environmentally sound and support the greening of cities and the welfare of its inhabitants.
5) Technical Assistance
Technical skills at all levels were generally lacking in the three cities, with a clear need for well trained personnel and skilled labour to support green projects. There is a need to provide technical assistance and support to the private sector, including SMEs on how to start up green investment projects.
6.4 PROPOSAL FOR A PUBLIC PRIVATE DIALOGUE MECHANISM FOR GREEN AND SUSTAINABLE CITIES
The mechanism of PPD has been used up until this point to engage with stakeholders in the area of environmental development in three areas. This serves as a means to demonstrate and introduce the PPD mechanism while, at the same time beginning an extremely useful intervention. It is vitally important that good practices in implementation are used in order that the work done so far is not lost and that the credibility of the PPD mechanism is not undermined. PPD is a powerful tool for policy and regulatory reform. Like any powerful tool, it can be dangerous if not used with care. It may provide more emphasis if we start by describing “Bad Practices” in the area of PPD. Bad practices that will destroy the impact, waste money, and leave the parties with a bad impression of the mechanism and those who implemented it. Bad practices in the area of PPD include failure to appoint a Champion – Dialogue needs facilitation. Unless there is a unit charged with the responsibility of creating the forum for the dialogue, recording the dialogue and progressing the outcomes, with feedback to the participants, then the PPD process will die through apathy. It also include failure to deliver robust analysis – A problem with creating a forum for dialogue is that many contributors put forward ideas that sound good, but have a weak economic basis. A group with many ideas needs to focus and prioritise on the ideas that are viable and practical. Furthermore, such a group has a tendency to work with only basic information, and to see only the primary consequences of their ideas. A good economist focusses on the “Secondary consequences” of reforms, and points out the implications that the group may not be aware of. If PPD is to be used, then there is a duty on the shoulders of the implementers to ensure that the participants are well informed and aware of the possible secondary consequences of their proposals. Without this, there is a danger of those ideas where dialogue is loudest being supported rather than those ideas that will have real positive impact. Impact Assessment should therefore be carried out before ideas are implemented in order to ensure their sustainability (Social, environmental, economic).
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As mentioned above, four main components make up the PPD Mechanism. These are Public Sector; Private Sector; Champions and specific PPD Tools. In this case, the main components can be depicted by the following diagram:
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The Champions
Three private sector institutions, one in each target city will be identified to assume the role of the Champion and support the IMC in its capacity as Secretariat of the PPD mechanism and its extensive network of branch offices to reach out to the private sector associations in the three target Cities of El Obour, El Sadat and Borg El Arab.
The Public Sector
In this pilot phase, the public sector has been represented by the City Authorities in the three target locations, but the mechanism must be extended to other relevant ministries and agencies that should work in close coordination with MTI in order to have a positive influence on the success of the PPD; their direct participation will facilitate reaching results. The Private Sector
The private sector is mainly represented by industry, including SMEs and inhabitants of the target areas. These are represented by SME organisations for the sake of simplicity.
PPD stakeholders
Private sector: SMEs from the 3 target “Green Cities” (El Obour, El Sadat, Borg El Arab) Federation of Egyptian Industries Relevant private sector associations such as sectoral associations, young and women entrepreneurs associations, etc. Public sector: MTI Ministry of Environment (MoE) Ministry of Planning Ministry of Housing Ministry of Local Development
PPD flow chart
Proposed ideas for the structure A forum that includes representatives from the three cities, industry associations and professional bodies. The Government members represent all ministries with a stake in economic and industrial development such as the ministries referred to above. Established according to a ministerial decree (sample will be added as an appendix) Scope/objectives/stakeholders. Location at MTI with assigned secretariat/Hot line (sample of ToR for setting up a secretariat will be added as an appendix) Secretariat reports to Steering Committee Balanced Steering committee, chaired by MTI The forum meets on a regular basis and works in conjunction with sectoral working groups, with secretariat services provided by the PPD Working groups meet every month or ad hoc as the need arises
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PPD Mechanism
The proposed PPD mechanism in the area of green economy is depicted in the following diagram.
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6.5 ACTION PLAN
Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators Objective 1 Steering Committee, PPD To launch a PPD structure at the Ministry of Secretariat, sectoral and Trade and Industry (MTI) crosscutting working groups Commitment of the PPD Secretariat minutes established Steering Committee to meetings and statistics 2 Promote and Develop Green industries in three A range of initiatives for support PPD mechanism cities (Obour, El Sadat and Borg El Arab) development of Green industries Purpose 1 Reduced overall energy consumption Commitment of the 2 Increase in the percentage share of renewable Steering Committee National Statistics energy in the total energy mix in cities support for PPD mechanism Expected Results 1 Steering Committee Established and Operational ToRs approved Minutes of Steering Working Groups established Committee Systems developed 3 Reduced overall energy consumption
Energy Statistics Increased in the percentage share of renewable Includes representatives energy in the total energy mix in cities of MTI, MoE, Private Reports of PPD 4 Reduced overall water consumption, increased Sector, Chambers of Water Statistics Secretariat share of reuse of cycled water Trade and Commerce 5 Reduced volume of waste generated Waste Statistics 6 Improved administrative procedures for the Assessment report screening, approval, and launching of projects 7 Green Technical Support Centre Established Technical Centre Technical Centre Output 8 Legislation gaps identified List of legislative and policy Reports
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators Policy reforms implemented reforms 9 Market incentive measures identified & steps List of market incentive taken towards their introduction measures and impact assessment 10 Capacity built in the three sectors Training delivered 11 Industrial products developed that meet local and Listing of products developed export requirements 12 Public Outreach Materials and Website 13 Increased percentage share of green products & Industrial statistics services by the public sector 14 Enhanced capacity in green technologies Capacity assessment Activities 1 Establishment and Formalisation of the PPD 1 1 A Proposed structure, Secretariat and ToRs for PPD in Egypt to promote dialogue and joint public private partnership and joint project 1 1 1 Champions and stakeholders identified MTI; Public Sector; and consulted Steering Committee Minutes of Steering Private Sector 1 1 2 Secretariat assigned and location established and operational Committee Commitment and identified involvement 1 1 3 Official Launch of the PPD 1 1 4 Secretariat to develop a consultative mechanism for the PPD 1 1 5 Steering committee members identified and consulted 2 Launch consultation process for the first meeting of the PPD Steering committee 2 1 Steering committee operational 2 1 1 Endorse PPD TORs ToRs approved MTI; Public Sector; 2 1 2 Creation of three working groups, one for Minutes of Steering Private Sector each sector, to assist secretariat in Working Groups established Committee Commitment and consultation over export promotion issues involvement
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators as well as the identification of policy reforms 2 1 3 Development of templates for applications Systems developed / requests and progress report. 3 Promote the use of energy efficiency measures and renewable energy in the three cities as demonstration for replication in cities across Egypt Introduce necessary regulatory and incentive measures to encourage households as well as the private sector use solar power as appropriate to run their operations 3 1 Introduce and apply green building codes that Reduced overall energy Energy Statistics Participation of: MTI, promote efficiency in the use of water and consumption MoE, energy and other factor inputs and the use of Ministry of Electricity & renewables and integrated solid waste Increased in the percentage Renewable energy management systems share of renewable energy in Ministry of Housing, 3 2 Introduce clean public transport system in the total energy mix in cities Ministry of Transportation, cities the private sector, & Civil 3 3 Provide shaded green areas or covered society partly by solar panels for pedestrians and cyclers in cities 4 Promote water efficiency and the use of renewable sources of water and the recycling of wastewater Encourage through public awareness the efficient use of water by household and the different economic activities (agriculture, industry, and tourism) 4 1 Increase the percentage of wastewater recycled and used for irrigating green areas and for the cultivation of trees, fodder crops, Participation of: MTI, and agriculture crops if it meets acceptable MoE, Ministry of Water & Reduced overall water health standards Irrigation, Ministry of consumption, increased 4 1 1 Replace flood irrigation by drip and pivotal Water Statistics Agriculture & Land share of reuse of cycled irrigation systems Reclamation, Ministry of water 4 1 2 Improve maintenance and repair of the Housing, the private water network to reduce water leakages sector and civil society 4 1 3 Replace green public areas with water saving plants such as cactus plants
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators 5 Promote solid waste reduction, recycling, reuse and recovery Provide incentives for the private sector and civil society engagement in solid waste management projects to include separation and reuse, recycling, the production of compost from organic waste, and bio fuel 5 1 Encourage households to separate waste at Reduced volume of waste Waste Statistics Participation of: MTI, MoE source and the resale of separated waste to generated Ministry of Housing, be used as an input in industrial processes. Industry, the private 5 2 Cities are encouraged to create a mechanism sector and civil society to facilitate the selling and buying of solid waste and the creation of stock market for the resale of the different components of waste 6 Enhance the efficiency of the “One-Stop-Shop” approach Apply the system in target cities cities to make it easier for investors to complete all the governmental procedures regarding the approval and initiation of new projects in one place 6 1 Approve new activities that supports ongoing projects and projects where major investments have already taken place 6 2 Identify and support solutions that do not Key Performance need major investments while producing Improved administrative Indicators to be immediate and effective results, such Participation of MTI, procedures for the screening, established for replacing incandescent bulbs with LED bulbs, Ministry of Planning and approval, and launching of Administrative and the introduction of green roofs,.. all relevant ministries projects Decision Making 6 3 Seriously consider the decentralization of the Practice decision making process in Egypt, with more authority given to governorates for the screening, approval, and funding of projects at the local level 7 Development of a Green Technical Support Centre for green industrial development and sustainable development projects 7 1 Identify scope, and major objectives of the Participation of MTI Green Technical Support Centre Green Technical Support Centre Technical Output Working groups 7 2 Identify funding requirements needed to Centre Established Reports EBSM report and support the creation of the Centre Private sector 7 3 Identify location for the Centre and
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators assignment of staff 7 4 Prioritize activities and main projects and activities to be covered by the Centre 7 5 Promote the concept of producers’ responsibility & life cycle assessment 8 Gather information on relevant legislation/policies that constrain the greening of the energy, water, & solid waste sectors in the 3 cities Joint private-public efforts to identify and formulate legislations for the greening of the three sectors 8 1 Develop policy reform packages that Legislation gaps identified Output Reports Participation of MTI and encourages private sector investment initially Sector working groups in the three sectors to be extended to other Policy reforms implemented sectors 9 Gather information related to market incentives that constrain the greening of the three sectors
9 1 Identify market incentives that are needed to facilitate and encourage private sector investment in the three sectors (subsidies, Market incentive measures tax exemptions and rebates, concessionary Participation of MTI and identified & steps taken Output Reports loans, eco labelling schemes) Sector working groups towards their introduction 9 2 Identify process for introducing the proposed market incentives package in the three sectors 10 Training of personnel and workers to generate a calibre of skilled technicians and workers in the three sectors 10 1 Secure funding from the public and private sector to initiate and sustain a long-term training programme in green projects Capacity built in the three Training Needs Analysis 10 2 Identify training needs initially in the three sectors Participation of MTI and Training Materials sectors, with the intention of extending Training programme Sector working groups Training Records training programmes to cover other sectors developed & launched 10 3 Develop training packages for the different target groups 11 Promote the local manufacturing of equipment and machinery 11 1 Provide a package of incentives to encourage Industrial products meet local Industrial Statistics Participation of MTI and
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators the private sector invest in the manufacturing and export requirements Sector working groups of green products 11 1 1 Promote R&D and technical support to New Companies registered industry to start up the manufacturing of green products 11 1 2 Provide incentives by the government in the form of tax exemptions, subsidies, concessionary loans to encourage private sector investment in green projects 11 1 3 Waive and/or reduce customs on components needed to support the manufacturing process 12 Raising sector awareness Develop an outreach and public awareness campaigns targeting policy and decision makers, businesses, entrepreneurs, and the general public 12 1 Engaging the media in promoting public awareness to the benefits of green investments and the greening of cities 12 2 Promote the use of social media to disseminate knowledge and information about green economy and the necessity of adopting more sustainable production and Promotional material consumption patterns approved, prepared and Samples and physical Participation of MTI and 12 2 1 Develop a portal through websites or delivered; evidence Sector working groups social media for PPD, this portal should Website on-line and be managed by representatives from both maintained the private and public sector 12 2 2 Website development related to the targeted sectors 12 2 3 Organize periodic promotional events to present success stories and programmes 12 2 4 Create an online group to share
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Intervention Logic Objectively Verifiable Sources of Verification Conditions / Assumptions Indicators knowledge and information related to green cities to be administered jointly by representatives from the public and private sector and civil society 13 Promote green procurement 13 1 Institute in law the requirement for government entities to reduce their environmental footprint by purchasing environmental friendly products and services 13 2 Provide incentives for the private sector to Increased percentage share Public / Private Sector green their operations, purchases and of green products & services Evaluation Reports Dialogue services by the public sector 13 3 Introduce energy and water efficient equipment and renewable sources of energy in public buildings as a main source of energy for lighting and heating 14 Promote research and development in innovative green technologies 14 1 Connect research centres and industry to Enhanced capacity in green KPIs to be developed Public Private Sector enhance the role of scientific research in technologies Dialogue green projects and provide technical support to the private and public sector
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6.6 CHALLENGES THAT THE ACTION PLAN MIGHT FACE
Political commitment and will to make a transition to a green and sustainable economy is key for greening cities. Moreover, adopting an all-inclusive participatory approach through the institutionalization of the PPD process is a necessary requirement for making a shift to a green and sustainable cities and communities in Egypt. Main challenges facing the implementation of the action plan in Egypt, include the following: Opposition to change by decision makers and private sector entities that may believe that change will reduce their influence or negatively affect their businesses. The time and effort involved in convincing policy and decision makers to the benefits from making a transition to a green economy and green cities. The difficulty and complexity of shifting from an ad-hoc fragmented policy making process to a well-coordinated and integrated policy making one. Lack of policy coherence and a supportive regulatory and market incentive package that provides the enabling environment for promoting green investments and the greening of cities in Egypt. Lack of necessary funding to support green investments projects and the initial additional costs involved as compared to conventional projects. Lack of necessary expertise needed at the different levels, starting from the preparation of feasibility studies, to the adoption of a life cycle approach, integrated management, and technical level skills required to support green infrastructure projects.
6.7 MONITORING AND EVALUATION
It is important that results are monitored to identify the success of the process and also to ensure that concepts put forward in the dialogue are not blocked. Feedback to the contributors is an essential element of the process. Without a tracking mechanism and an institutionalised feedback process, the concept of an idea pipeline is compromised. There is a danger that this results in a pipeline full of ideas that are not progressed.
The above diagram, highlights the areas where performance may be measured. Ideally, this is through a database, in which the ideas are recorded, and where the data is enhanced at each stage as it progresses through the pipeline.
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Output reports focus on key performance indicators, such as the number of: Forums held Ideas generated Feasibility studies / impact assessments carried out New regulations generated New policies developed Financing initiatives started /in progress / implemented Green investment projects initiated and implemented and level of funding
Further to this, the indicators of the initiatives themselves should be captured such as for example: Energy statistics Water Statistics Recycling statistics Etc.
7. CONCLUSIONS AND POLICY RECOMMENDATIONS
The benefits of the PPD are mainly channelled to the development of the private sector, while the PPD start-up should be a Public sector push. This is highly reflected through the IMC Idea Corridor concept. Nevertheless early results, even if not highly ambitious, PPD will help in bringing the process forward, and establish a PPD unit within IMC. The success of the PPD shall also depend highly on the ability of IMC to inject resources (internal or through donors support), to mobilize the support of other ministries and public institutions towards the goals of the PPD and on the private sector representatives to reconcile common targets among their members.
Recommendations
From the stand point of structure:
Short term It is preferable that the Steering committee not exceeds 10 stakeholder representatives and should be balanced in terms of representation; it shall be chaired by a high level member of the ministry on Industry and Trade. Private sector must work on assuring a robust representation of each sector which will unify their voice in the endorsement of the targets. The selected champions should be well known for their engagement and experience in the field; nevertheless forming or activating associations for each sector will reinforce the role of the champions. The overall agenda should be endorsed by the steering committee but mainly implemented by the working groups from each sector. At least one group per sector. The Monitoring mechanism is essential in keeping the PPD in the compliance path but should not turn into a process to highlight failures only.
Medium term Broaden the base of the private sector and include a larger number of stakeholders such as associations, clusters, chambers, other Ministries. Associate sector working groups with technical groups which can address technological issues.
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At the level of reforms:
Short term Reform Targets should be ambitious but realistic. Thorough consultation between private sector and Public sector (maximize the number of relevant stakeholders involved) to clarify the needs especially when it concerns policy reforms. It is recommended to tackle policy issues that affect the efficiency and cost, especially those related to export services. Build capacity upon Public and private sector to diagnose and design reforms as well as to train Private Sector in the reliance on advocacy as a means to present and apply reforms with the public sector.
Medium term
Consolidate access channels within private sectors as well as between PS and Government to facilitate access to the reform process. Target hard outputs that require broader reforms and robust advocacy skills. Follow up and build on the upcoming PPP law which will promote collaboration between Private sector and the public sector.
From the legal and regulatory stand point
A stated deliverable of the mission is to propose a regulation (law, ministerial decree) to institutionalise the PPD mechanism on Green Economy.
The level at which the legal framework is pitched, depends to a great extent on the support that the concept generates. A number of options are available:
Full Acceptance at national level: New legislation imposing a legal obligation to carry out stakeholder dialogue and impact assessment on all new policies or regulations introduced.
Partial Acceptance (Green Economy / SMEs) As above but restricted in the first instance to environmental policy and legislation
Pilot Acceptance A Memorandum of Understanding between the founder stakeholders of the Pilot PPD Programme: o Ministries of Trade and Industry, Environment, Finance,: o Local Authorities of El Obour; El Nasr; Burg El Arab; o Private Sector Organiations in El Obour, El Nasr; Burg El Arab
It would then be an objective of the PPD Unit to secure further signatories to the Memorandum of Understanding to expand the PPD mechanism to other areas using the IMC Branch network to achieve eventual nationwide adoption.
The recommendations for the legal structure should be discussed with the beneficiary and finalised as a result of discussions.
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ANNEX 1 – CASE STUDIES OF GOOD PRACTICE IN PPD10
Case Study 1 : Malaysia
Malaysia institutionalised PPD in 1993 replacing the previous practice of informal dialogue. The Malaysian government made it a priority then to create – with the strong involvement of the private sector – a business-friendly environment that would lead to more investment, growth and creation of jobs and income. Fundamental to the whole process was the shared belief that the nation is a corporate entity that is jointly owned by the public and the private sector as well and that both are working for a shared goal. The Malaysian government established structural mechanisms and issued several directives to facilitate PPD through: Establishing Consultative Panels in each Ministry/Department/Office at federal, state, and district level; Designating high-ranking officials as chairs of the Consultative Panels, with membership in the panels deriving from public and private sector; Organizing regular meetings and Annual Dialogue Sessions with the private sector; Identifying the Secretariat for the Consultative Panels in each agency and designating an official to liaise with members from the private sector; Taking actions on matters discussed and decided upon in the Consultative Panels.
The ToR of the Consultative Panels includes: Simplifying rules, regulations and procedures related to the activities of the public sector; Preparing guidebooks to facilitate understanding of rules, regulations and procedures; Transparent decision-making process and reducing discretionary powers; Timely delivery of government services to the private sector.
The new approach in Malaysia that the public sector was expected to work closely with the private sector was not in line with the traditional working culture. It took therefore several years until both sides really started to have frank and open discussions in the Consultative Panels. Crucial for the success and the creation of what was later known as Malaysia Incorporated was the strong commitment of high government officials over the years that persistently implemented the new concept in a planned, coordinated and coherent manner. Accompanied was this process by intense training of lower and middle-ranking public servants that aimed at changing their mind sets toward the private sector. A major success factor in Malaysia was the proactive role played by the Federation of Malaysian Manufacturers (FMM) that provided over the whole period critical feed-back and inputs to the government on policy as well as on operative issues. FMM also offered a platform for its members for sectoral consensus building and networking based on consultation among the members. An even more intense PPD mechanism was created in 2007 with the establishment of the Special Taskforce to Facilitate Business (PEMUDAH). While in the previous Consultative Panels the chairmanship lay in the hands of the public sector, PEMUDAH is co-chaired by public and private sector as well. PEMUDAH has taken over the tasks of the Consultative Panels but it has an even broader scope of work. It is also a discussion and advisory forum for the improvement of the business surrounding in general and on the development of
10 The PPD examples included in this report are taken from the EU Report: Establishing a Public Private Dialogue for Industrial Export Promotion, Lebanon, 25 October 2015
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industrial policies. One of the areas where the Consultative Panels and PEMUDAH have achieved the biggest success over the past decades are trade facilitation and trade promotion.
Main lessons learned from the Malaysian example: 1. PPD can only have sustainable results when the public and the private sector are willing to engage themselves over a long period and with considerable joint effort. 2. PPD requires a change of the mind set of many of the involved persons. This change comes not only from the discussions but requires serious training efforts, especially at the middle and lower level of civil servants. The introduction of a PPD mechanism should therefore come with a needs assessment and a training plan for relevant civil servants involved in the process. 3. A strong involvement of Business Associations that ensure that the sector speaks with one voice to the government is crucial for the success of a PPD mechanism. Business Associations need therefore also to increase their own capacities in this respect. 4. PPD mechanisms should focus first on simplification of rules, regulations and procedures and other issues that can be addressed comparatively easily. At a later stage when a culture of working together is established, the PPD mechanism can address also issues related to industrial policy. 5. PPD consultation groups should be chaired by the public sector, at least in the first years.
Case Study 2: Armenia
In 2000 Armenia institutionalised the up to then informal PPD by creating the Business Support Council (BSC) as a governmental structure. Legal basis is a presidential decree and the Prime Minister is in charge of the structure.
The objectives of the BSC are: Promotion of investments and fostering of the business activities; Development of measures aimed at elimination of administrative constraints related to investments and business; Coordination of interrelations between the business community and state bodies, designing an efficient coordination mechanism; Ensuring business community’s participation in the elaboration of the economic policy of Armenia; Fostering the formation of a legal framework favourable for the regulation of investment and business environment.
Originally the BSC had 15 members, seven of whom are permanent members from the public sector, the other eight rotating members from the business community. Over the years the number of members was increased to 50. This reflects the fact that by time, the BSC gained the trust of the private sector, particularly the SMEs who asked for a possibility to join the BSC. The stronger involvement of the SMEs went in parallel with a reduction of the role of the oligarchs who had dominated Armenian economy in the transition period.
Permanent members of the BSC are by now: Prime Minister of Armenia (Chairman)
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Advisor to the President of Armenia on Economic Affairs (Deputy Chairman) General Manager of Armenian Development Agency (Executive Secretary, since the Agency also acts as BSC Secretariat) Minister of Economy Minister of Finance Mayor of Jerevan Chairman of the Armenian Chamber of Commerce and Industry
All BSC activities and the decision-making process within BSC are regulated in the BSC Charter. The BSC has regular meetings and submits the adopted decisions (recommendations) to the relevant governmental bodies and agencies. Between the sessions of BSC, the work of BSC is carried out by a so-called “Pool of Problems”, a database of complaints raised by the business community. Once a complaint is received, it is addressed to a relevant decision-maker who is in charge for the area. Then responses with comments by the Armenian Development Agency are passed back to the company that raised the complaint. The complaint and the conclusion are discussed at the next BSC meeting. The success quote of these complaints is at about 66%. As a result of the complaints and the BSC recommendations, the Armenian government has changed many laws and regulations, such as the Laws on VAT, on Remuneration, on Income Tax, on Profit Tax, on Legislative Acts, on Arrangement and Conduction of Checks, on Public Tenders, on Licensing, etc. BSC supported and helped to elaborate the Law on Electronic Signatures. BSC was also instrumental in terms of the abolishing of VAT for exporters. Main lessons learned from the Armenian example: 1. Personal commitment of high-level decision makers (Prime Minister, Ministers) can be crucial for the success of a PPD; 2. PPD councils need to be comprised of permanent members from the key institutions of the public sector. The membership of the private sector representatives can rotate (that can help to avoid that the private sector representatives act mainly on their own behalf); a flexibility regarding the number of members is strongly recommended; 3. PPD councils need to have a charter that defines in detail the governance, tasks and working structure of this body; 4. PPD councils need to have a standard mechanism in place regarding how to deal with complaints from the private sector (such as the Pools of Problems mechanism of the Armenian example); 5. While at the beginning small companies may be not strongly involved in the PPD mechanism, a successful PPD mechanism will create over the years trust from the side of SMEs; that can also lead to a stronger engagement of SMEs in the work of PPD consultative bodies.
Case Study 3: Vietnam
In Vietnam it is mandatory to involve the public and the business community in the law making process, but it is usually applied inconsistently and frequently inadequately. Business Associations and Chambers are notoriously weak and have therefore a problem to serve their members as a lobby which is addressing important issues to the government. In a framework of a donor-funded project, the Vietnamese government was supported to revise its Enterprise and Investment Laws and get additional support to develop and increase the capacities of relevant public key institutions, such as the Central Institute of Economic
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Management (CIEM), the Prime Minister’s Research Commission (PMRC), the Vietnam Chamber of Commerce and Industry (VCCI), and the Ministry of Finance.
Interventions to assist the PPD include: Direct support to the organization of policy dialogue meetings between government agencies, the drafting committee of the Enterprise and Investment Laws, and the private sector; Technical assistance on how to implement PPD, including techniques in moderation, group discussion and internet use as an instrument of PPD; Help with the development of a Regulatory Impact Assessment that helps to increase the transparency of the policy making process and the quality of laws and regulations that affect the private sector; Assistance in involving the regions in the PPD by organizing Business Impact Test Panels with the aim to get feedback of the local businessmen regarding the new laws; Assistance in the information of the public about the PPD mechanism (awareness campaigns and information about the outcomes of the decisions).
However, PPD has not yet been institutionalized in Vietnam as in the first two cases. So far it has not yet been possible to create a forum based on a law or decree that uses the PPD mechanism outside the limited form of consultation with the business on a case-to-case basis regarding important new laws.
Main lessons learned from the Vietnamese example: 1. PPD mechanisms should go beyond case-to-case dialogues; without proper institutionalisation PPD mechanisms either fail or cannot unfold their full potential to lead to a better business climate and thus more growth and employment; 2. International donors are frequently willing to support the creation and establishing of PPD mechanisms over a longer period – once there is a visible commitment from the government; in several countries the creation of a PPD mechanism was declared a priority of the respective governments and international development agencies included multi-year activities to support this mechanism in their work plans. 3. PPD mechanisms need to take into account that the involved institutions and business associations need to increase their capacities considerably if the mechanism is expected to be successful.
Case Study 4: Croatia
In Croatia, a tripartite National Economic and Social Council (GSV) with members from the Employers’ Associations, the Trade Unions and relevant Government Ministries had been established, with 18 members. The focus of the GSV is on employment, labor and economic issues. The experience with the GSV was in the first years of its existence rather mixed: although it was considered in principle a useful instrument, it showed also several weaknesses: a sometimes inconsistent and inefficient governance structure; a lack of a regional structure; and also the fact that the GSV has no mandate regarding the development of micro- and macroeconomic policies and issues that affect the competitiveness led to the decision to change the PPD mechanism.
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With the support and technical assistance of a donor, the GSV established a regional structure of the GSV. In each of the counties of Croatia, a local GSV has been established. The local GSVs and ad hoc groups focus on competitiveness – they have clear objectives to identify constraints to regional/local economic development and develop strategies to overcome or eliminate those constraints. The issues and constraints that need to be addressed at a national level are then communicated to the national level councils or directly to the national government. In parallel, a National Competitiveness Council (NCC) has been established that is in charge for macro- and microeconomic issues that affect the competitiveness of Croatian companies. The councils are organised as follows: National Competitiveness Council (NCC) – five Government Ministers; nine business leaders (CEOs of leading companies and presidents of business associations); four leaders of trade union confederations; four professors from the leading universities. National Economic and Social Council (GSV) – the eighteen members include six trade union confederation presidents, six representatives of the Employers Association, and four government ministers and two vice-presidents of government. Local GSVs – an even split of members from government, the local Employers Association office; and trade unions (18 total members). Local ad hoc competitiveness groups – mainly local business leaders with some participation from local government, academia, and trade unions. The main results after the introduction of these new structures are as follows: The local GSVs have had some successes, including input into some national policy reforms and improvement of several counties’ business environment and resulting attraction of foreign investment. Several of the local groups have been very successful in developing and implementing changes in their business environment and in communicating their issues and proposed solutions to the national level. The national councils are now taken seriously, and the Government and Parliament do utilize their recommendations. But, because Croatia’s economic and social policy reform process is slow and uneven, the national GSV and NCC have had mixed results. For example, the GSV quickly developed an effective new labour inspection regime, but after almost a year of dialogue on amendments to the Labour Code, the resulting changes were mainly cosmetic.
Main lessons from the Croatian experience: Donors should provide training on process (e.g. effective communication) and substantive issues. It is most effective when it includes representatives from all social partners and they can discuss issues. Such training leads to improved relationships and communication, and can often lead to resolution of disputes. Donors should help facilitate relationships between councils and local experts as much as possible. This strategy builds sustainability by indigenizing the services and skills we bring to the project. Facilitation is of great importance to developing policy dialogue. In Croatia, as in other transitioning countries, there is limited experience and appreciation of using facilitators to improve stakeholder interactions and increase the productivity of meetings, seminars, etc.
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The public in Croatia and other transition countries still looks to the Government as the primary driver of the economic and social reform process, and the councils should work to change this perception through strategic public relations activities. Exposing GSV members to successful and professional economic and social councils has tangible improvement on GSV members’ professionalism and attitude toward social dialogue and partnership. As demonstrated by the successful work of the social partners in other European countries, research and analysis are among the most important factors in building social partnership. Thus it is necessary to set up an arrangement for unbiased research and analysis to be performed, either through a secretariat, outsourcing to think tanks and experts, or through collaborative work between social partner experts as is done in Austria. Council secretariats are very important and their role should be well-defined and they should answer to the entire council, not one member, e.g. the Government.
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