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National Investment Profile. Water for Agriculture and Energy: Egypt

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National Investment Profile. Water for Agriculture and Energy: Egypt National Investment Profile Water for Agriculture and Energy Egypt 1 National Investment Profile. Water for Agriculture and Energy: Egypt. EXECUTIVE SUMMARY This analysis has been conducted within the TCP/INT/3404 "Support to the pre- and post-CAADP compact process for improved agricultural water management" project that covers four countries in Africa: Egypt, Malawi, the Sudan, and Swaziland. The project aims at assisting these countries to foster sustainable agricultural water management (AWM) through the effective implementation of the Comprehensive Africa Agriculture Development Programme (CAADP) compact and post-compact process, the refinement of national agricultural water development strategies and the alignment to national strategies for food security strategies and programmes. The Egyptian economy traditionally relied on agriculture as one of the main sectors. The agricultural sector currently contributes about 13.3 percent of the total Gross Domestic Product (GDP) of Egypt (CAPMAS, 2015). Industries related to agriculture, (e.g. processing, marketing, and supplies) account for a further 20 percent of the total GDP (CAPMAS, 2015). The agricultural sector provides formal and informal employment for about 6.70 million persons (CAPMAS, 2015) and about 8.25 million persons respectively (ILO, 2011). It furthermore accounts for 10 percent of the total national exports (CAPMAS, 2015). The majority of agricultural holdings were of small size. More than 62 percent of the agricultural output comes from agricultural holdings with less than one to three hectares under cropping. Typical farm sizes range from one to two hectares (MALR, 2014 b). Egypt has achieved good progress in agricultural productivity, reflecting the success of horizontal expansion by the expansion of reclaimed areas and vertical expansion by improving productivity. Egypt ranked third in terms of dietary energy supply1 top 20 countries in 2015 reaching about 3550 kcal/cap/day and exceeding the average global calorie availability of 2870 kcal/cap/day as estimated by (FAO, 2015). 1 The dietary energy supply (DES) is the food available for human consumption, expressed in kilocalories per person per day. At the country level, it is calculated as a measure of food available for human use after taking out all non-food utilization, including exports, industrial use, animal feed, seed, wastage and changes in stocks. 2 National Investment Profile. Water for Agriculture and Energy: Egypt. Over the past decade, Egypt has faced a series of shocks that have triggered a decline in food security and nutrition trends. Egypt is self-sufficient in rice, vegetables, fruits, dairy products, poultry, eggs and fresh milk. However, increased food supplies are needed not only to meet nutritional needs of the population, but also to enhance the food self-sufficiency and security position. According to (MOP, 2015 a), the percentage of the population below the poverty line in Egypt declined from about 24.3 percent (12.9 million out of 53.0 million) in 1990/1991 to about 19.6 percent (13.9 million out of 70.7 million) in 2004/2005. However, a recent increase of this percentage was reported to reach about 26.3 percent (22.0 million out of 83.7 million) in 2012/2013 (MOP, 2015 a). Egypt’s irrigation potential is estimated at 4.42 million hectares. The total actual renewable surface water resources are estimated at 56 km3/year (of which 55.5 km3/yr from the River Nile and 0.5 km3/yr from internal renewable surface water resources). Internal renewable groundwater resources are estimated at 1.3 km3/yr. The overlap between surface water and groundwater are considered negligible, the total actual renewable water resources of the country are thus 58.3 km3/yr (FAO-Aquastat, 2015). According to (EEHC, 2014), most of Egypt's economic hydropower potential has been exploited. This can be easily noticed by the declining percentage contribution of generated hydro-electricity into the total electricity generated on the national level, where the 70 percent of the generated electric energy in 1970 decreased to reach 11.3 percent in 2007 then to about 8 percent in 2014 (MOP, 2015 b). The (EEHC, 2014) estimated Egypt’s technically and economically feasible hydropower potential at about 50,000 GWh/year. According to (EEHC, 2014), Egypt has eight hydropower plants in operation. Climate change impact studies predicted a reduction in the productivity of the major crops in Egypt such as wheat, rice, maize, soybeans and barley (MSEA, 2010). The Strategic Framework for Economic and Social Development Plan (SFESDP 2022) aims at poverty reduction (MOP, 2012). Under the framework of overall development policies and the CAADP, Egypt has prepared different policy documents and investment plans regarding agriculture and food security. The National Water Resources Plan (NWRP) (MWRI, 2005) aims at improving overall water use efficiency in agriculture, improving water allocation and distribution of Nile water, preventing or reducing emissions, and treatment of wastewater. 3 National Investment Profile. Water for Agriculture and Energy: Egypt. The SADS 2030 focuses on achieving sustainable use of agricultural natural resources, and improving agricultural productivity (MALR, 2009). Besides, the Sustainable Agricultural Development Strategy (SADS) aims to attain food security by promoting self-sufficiency in strategic food commodities, rationalizing local demand and consumption, improving consumption patterns in order to improve nutritional standards, reducing pre- and post-harvest food losses, improving food quality and safety, and improving social safety nets (MALR, 2009). Egypt has a national energy strategy that covers the diversification of the energy mix, higher energy efficiency, and a reform of the electricity, oil and natural gas markets as well as a reduction of energy subsidies. Based on (NREA, 2014), wind, hydro and solar energies contribute for about 12 percent, 4 percent and 4 percent of the total energy generated by 2020, respectively. To translate these goals into reality, Egypt is currently implementing and planning to implement a number of irrigation and hydropower projects at an average investment costs of US$43 million and US$92 million for the on-going and pipeline projects respectively. The vast majority (91 percent) of these projects is focusing on irrigation categories whereas hydropower categories represent only 1 percent of the envelope; indicating a lack of diversity of investment in this envelope. However, the New and Renewable Energy Authority is pursuing other types of renewable projects, primarily solar and wind power, to diversify the country's energy mix. Investment in the rehabilitation and modernization of irrigation is predominant in the envelope (74 percent). The financial analysis of projects also illustrated that the investment in irrigation within this country is focused on short and medium term projects; investment in the long term is insufficient. Besides, investment is mostly executed by international donors and public funding partners. It is important to mention that Egypt enacted a new Investment Law to attract private sector investors to foster sustainability of funding. It would be important for the country to ensure that the institutional and political environment is adequate for the success of these investments. In addition to this, it is recommended that mechanisms are put in place to encourage the participation of the public and private sectors in developing water resources and to support project formulation in the longer term. 4 National Investment Profile. Water for Agriculture and Energy: Egypt. TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................................... 2 TABLE OF CONTENTS....................................................................................................................... 5 TABLE OF FIGURES .......................................................................................................................... 6 ABBREVIATIONS .............................................................................................................................. 7 1. CONTEXT ................................................................................................................................. 9 1.1 AGRICULTURE AND FOOD SECURITY ................................................................................ 9 Agriculture .............................................................................................................................. 9 Irrigation and Water Control ................................................................................................ 13 Food security ......................................................................................................................... 14 Food self sufficiency .............................................................................................................. 16 1.2 WATER RESOURCES AND HYDROPOWER ...................................................................... 17 1.3 CLIMATE CHANGE .......................................................................................................... 20 2 NATIONAL STRATEGIES FOR WATER, AGRICULTURE AND ENERGY ..................................... 21 3 INVESTMENT ENVELOPE ....................................................................................................... 27 4 CONCLUSIONS ......................................................................................................................
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