The Research and Innovation System in Egypt

THE RESEARCH AND INNOVATION SYSTEM IN EGYPT

Scientific and technological cooperation opportunities with the Apulian innovation system

October 2008

QUA

DERN

IINTE

RNAZ

IONA

LIAR

TI

Regione Puglia

Agenzia regionaleper la tecnologiae linnovazione

UNIONE EUROPEA

Osservatoriopermanente

dellinnovazione

Attivit cofinanziata dallUnione Europea attraverso il POR Puglia 2000-2006, Misura 3.13 Ricerca e sviluppo tecnologico, Azione E Costituzione dellOsservatorio Permanente dellInnovazione.

Progetto graficoNino Perrone

ImpaginazioneGrafiSystem snc - Modugno (Ba)

2007 ARTIAgenzia Regionale per la Tecnologia e lInnovazione

S.P. per Casamassima km 370010 Valenzano (BA)tel. 080/4670.576fax 080/[email protected]

LARTI, lAgenzia Regionale per la Tecnologia e lInnovazione della Regione Puglia, stata creata con legge regionale nel 2004, con il compito di costruire il Sistema Regionale Pugliese dellInnovazione (SIR). Questo significa: a) migliorare le condizioni di contesto; b) rafforzare i singoli attori (imprese e strutture di ricerca, in termini di crescita dimensionale, innovazione, internazionalizzazione); c) promuovere la collaborazione tra gli attori (pubblico-privato, privato-privato, pubblico-pubblico).

In particolare nellambito dellOsservatorio permanente dellinnovazione, lagenzia produce rapporti e analisi da diffondere in Puglia e fuori per disseminare la conoscenza e favorire la discussione. Questo documento rappresenta il primo dei Quaderni Bianchi ARTI, relativi alle analisi derivanti dalla attivit di indagine dellOsservatorio ed dedicato alla prima significativa iniziativa di rafforzamento dellofferta tecnologica in Puglia (Accordo di Programma Quadro tra Stato e Regione Puglia per la Ricerca: Progetti Strategici).

This report is based on a survey realized for ARTI by the Center for Advancement of Post-Graduate Studies and Research in Engineering Sciences (CAPSCU), Faculty of Engineering, Cairo University, Egypt, in the person of Prof. Adel M. El-Nadi.

Il presente Quaderno si basa su un ampio lavoro realizzato, su incarico dellARTI, dal Center for Advancement of Post-Graduate Studies and Research in Engineering Sciences (CAPSCU), Facolt di Ingegneria, Cairo University, Egitto, nella persona del Prof. Adel M. El-Nadi.

Regione Puglia

Agenzia regionaleper la tecnologiae linnovazione

UNIONE EUROPEA

Osservatoriopermanente

dellinnovazione

ARTI International Booklets

ARTI, Regional Agency for Technology and Innovation, in agreement with the Mediterranean and Economic Development Assessorships of the Apulia Region, has started an activity aimed at the promotion of the scientific and technological cooperation among the regional actors, both research and university centers and innovative enterprises, with their counterparts in foreign countries, with a special focus on the Mediterranean and Balkan areas.

The ARTI International Booklets series reports the studies carried out on the research and innovation systems in the target countries. The Booklets are quick consultation tools that, besides presenting a general information picture about the innovation systems structure and governance, highlight a limited number of excellent organizations that represent the best candidates in terms of scientific competences, available research results and attitude to international cooperation for setting up bilateral partnerships with the Apulian scientific and technological actors, in those technological areas that are of major relevance for the Apulia region.

In the first phase of this project, the considered countries have been: Morocco, Tunisia, Algeria, Egypt, Jordan, Lebanon and Palestinian Territories, Israel, Turkey, Greece, Western Balkans (Serbia, Montenegro, Croatia, Bosnia-Erzegovina, FYROM-Macedonia, Albania, Bulgaria), Romania, Slovenia, Argentina and Chile.

Quaderni Internazionali ARTI

LARTI, Agenzia Regionale per la Tecnologia e lInnovazione, in accordo con gli Assessorati al Mediterraneo e allo Sviluppo Economico della Regione Puglia, ha avviato una attivit rivolta principalmente ai Paesi dellarea balcanica e mediterranea, finalizzata alla promozione della cooperazione scientifica e tecnologica tra gli attori regionali, siano essi imprese innovative o istituti universitari e di ricerca, e i loro omologhi nei Paesi stranieri.

La collana Quaderni Internazionali dellARTI nasce per raccogliere i rapporti sui sistemi dellinnovazione e della ricerca dei Paesi considerati. I Quaderni sono strumenti di rapida consultazione che, oltre a presentare un quadro informativo generale sulla struttura e i sistemi di governance dellinnovazione, individuano un numero limitato di enti e organizzazioni eccellenti in termini di competenze scientifiche, risultati prodotti e propensione alla collaborazione transnazionale negli ambiti tecnologici di maggiore interesse per la Regione Puglia, in modo da facilitare lattivazione di contatti bilaterali e la creazione di partnership.

Nella prima fase del progetto, i Paesi presi in esame sono: Marocco, Tunisia, Algeria, Egitto, Giordania, Libano e Territori Palestinesi, Israele, Turchia, Grecia, Balcani Occidentali (Serbia, Montenegro, Croazia, Bosnia-Erzegovina, FYROM-Macedonia, Albania, Bulgaria), Romania, Slovenia, Argentina e Cile.

Fonte: CIA - The World Fatbook


Scientific and technological cooperation opportunities with the Apulian innovation system

Index

PART ONE: GENERAL FRAMEWORK

1. Egyptian economy, 11 1.1 Introduction, 11 1.2 Reform Era, 12 1.3 Land, Agriculture and Crops, 14 1.4 Water Resources, 15 1.5 Main Industries, 15 1.6 Mineral and Energy Sources, 16 1.7 External Trade, 17 1.8 Public Finances, 17 1.9 Exchange Rate policy, 18 1.10 Investment, 18 1.11 Challenges, 20 1.12 Summary, 20

2. Industry in Egypt, 22 2.1 Introduction, 22 2.2 Industrial investment, 23 2.3 Industrial Sectors Structure, 24 2.4 Recent Industrial Programs, 25 2.5 Protecting the Environment, 25 2.6 The industrial Production Development, 25 2.7 Improving the quality of Egyptian industrial products, 25 2.8 Industrial exports, 26 2.9 Summary, 27

3. Education in Egypt, 28 3.1 Introduction, 28 3.2 Basic Education, 29 3.3 High School Education, 30 3.4 Modern instructural methods for basic education, 31 3.5 International cooperation projects for basic education,32 3.6 Higher education, 32 3.7 Modernization of higher education, 33

4. Science in Egypt, 37 4.1 Introduction, 37 4.2 Science centers, 37

5. Research, development and Innovation in Egypt, 44 5.1 Introduction, 44 5.2 The structure, 44 5.3 Egypts main innovation actors, 45 5.4 The governance system of R&D and Innovation in Egypt, 49 5.5 The performance indicators, 50 5.6 National policy of science and innovation, 50 5.7 Regional policy of science and innovation, 51 5.8 Governing norms & laws and funding of R&D and innovation, 52 5.9 International cooperation Projects, 53

PART TWO: RESEARCH CENTERS INVENTORY

6. Introduction, 59

7. Research centers forms, 60 7.1 Aerospace, 60 7.2 Agrofood, 66 7.3 Mechatronics, 71 7.4 Health, 80 7.5 Information and Communication Technologies, 82 7.6 Renewable Energy, 104 7.7 Other, 112

PART ONE: general framework

1. EGYPTIAN ECONOMY11

1. Egyptian Economy

1.1 Introduction

Economic growth in Egypt has been held back by a severely limited amount of arable land (less than 5% of the total area) as well as a large and rapidly growing population. After 1945, a large proportion of funds and energy were devoted to preparing the country for regional warfare and later rebuilding. The countrys industrial base increased considerably in the 20th century, especially after 1952. The state owned much of the economy and played a decisive role in its planning. However, in recent years Egypt has moved toward a more decentralized, market-oriented economy, and there has been an increase in foreign investments.

Table 1 Government Ministries of Egypt

Administrative Development Information

Agriculture Interior affairs

Civil Aviation International Cooperation

Communication and Information Technology

Investment

Culture Irrigation and Water Resources

Defense and Military Production Justice

Economic Development Legal Affairs and Parliamentary Councils

Education Local Development

Electricity and Energy Manpower and Immigration

Environmental Affairs Military Production

Finance Petroleum

Foreign Affairs Social Solidarity

Foreign Trade and Industry Tourism

Health and Population Transport

Higher Education and Scientific Research Waqfs (Endowments)

Housing, Utilities, and Urban Communities

A series of International Monetary Fund arrangements, coupled with massive external debt relief resulting from Egypts participation in the Gulf War coalition, helped Egypt improve its macroeconomic performance during the 1990s. Egypt joined the World Trade Organization (WTO) in mid-1995 and has since become one of the most open and free markets in Africa and the Middle East. Through sound fiscal and monetary policies, the Government of Egypt tamed inflation, slashed budget deficits, and built up foreign reserves. Structural reforms, such as privatization and new business legislation Egypts steps toward a more market-oriented economy have prompted increased foreign investment. Hard currency inflows resulted mainly from tourism, worker remittances, oil revenues, and Suez Canal tolls and by the late 1990s external payments were not in crisis.

12 THE RESEARCH AND INNOVATION SYSTEM IN EGYPT

At the turn of the millennium, monetary pressures have eased more with the continued oil price rise since 2002, increased natural gas exploration and production and a moderate rebound in the sensitive sector of tourism. Egypts reform record has substantially improved since Nazif government came to power in 1994. Egypt has made substantial progress in developing its legal, tax and investment infrastructure. The reform programme is still a work in Progress.

Four years into a robust economic expansion, this country has shaken off its history of Arab state socialism and embraced the free market. A rush of construction is throwing up office buildings. Sluggish state-owned companies from banks to department stores are being sold to private investors, and foreign capital is flooding in, lured by the scent of certain profit. Egypt today has all the earmarks of a gathering boom. Ambitious economic reforms launched in 2004 have won plaudits from the business community. Economy grows at an annual rate of about 7%. Egypts reformist prime minister, Ahmed Nazif, remains committed to the transition from a bloated state-centric economy to a more market-oriented one.

1.2 Reform Era

Under comprehensive economic reforms initiated in 1991, Egypt has relaxed many price controls, reduced subsidies, reduced inflation, cut taxes, and partially liberalized trade and investment. Manufacturing become less dominated by the public sector, especially in heavy industries. A process of public sector reform and privatization has begun to enhance opportunities for the private sector. Agriculture, mainly in private hands, has been largely deregulated, with the exception of cotton and sugar production. Construction, non-financial services, and domestic wholesale and retail trades are largely private. This has promoted a steady increase of GDP and the annual growth rate. The Government of Egypt tamed inflation bringing it down from double-digit to a single digit. Currently, GDP is rising smartly by 7% per annum due to successful diversification.

Gross domestic product (GDP) per capita based on purchasing-power-parity (PPP) increased fourfold between 1981 and 2006, from US$ 1.355 in 1981, to US$ 2.525 in 1991, to US$ 3.686 in 2001 and to an estimated US$ 4.535 in 2006. Based on national currency, GDP per capita at constant 1999 prices increased from EGP (Egyptian Pounds) 411 in 1981, to EGP 2.098 in 1991, to EGP 5.493 in 2001 and to EGP 8.708 in 2006. Based on the current US$ prices, GDP per capita increased from US$ 587 in 1981, to US$ 869 in 1991, to US$ 1.461 in 2001 and to an estimated US$ 1.518 (which translates to about US$ 130 per month) in 2006. According to the World Bank Country Classification, Egypt has been promoted from the low income category to lower middle income category. Average wages in 2007 hover around $8-10 per day.

The reform programme is a work in progress. Noteworthy that the reform record has substantially improved since Nazif government came to power. Egypt has made substantial progress in developing its legal, tax and investment infrastructure. Indeed, over the past 5 years, Egypt has passed, amended and admitted over 15 legislative pieces. The economy is expected to grow by about 7%-8% in 2007/2008.

13 1. EGYPTIAN ECONOMY

Table 2 Egypts Summary of Budget Financing (Billions of Euros and Fiscal years)

2002 2003 2004 2005 2006 2007 2008 2009

Revenues 18,01 14,17 12,94 15,3 20,87 22,21 22,9 34,19

Taxes 11,68 8,86 8,53 10,45 13,49 14,01 14,89 20,65

Grants 0,98 0,52 0,64 0,3 0,33 0,47 0,39 0,57

Expenditures 26,58 20,24 18,54 22,3 28,68 27,36 29,95 42,2

Wages and Compensations 7,02 5,38 4,73 5,73 6,45 6,61 7,39 10,17

Interest 5 4,11 3,9 4,52 5,08 6,51 6,45 6,56

Subsidies and Social Benefits 4,15 3,28 3,14 4,1 9,51 6,69 7,99 16,57

Cash Deficit -8,56 -6,07 -5,6 -7 -7,8 -4,79 -7,05 8,02

Net Acquisition of Financial Assets -0,29 -0,89 -0,25 -0,12 0,85 -1,19 -0,24

Overall Deficit -8,85 -6,96 -5,85 -7,13 -6,95 -6,34 -7,29

Net Borrowing 8,76 6,95 5,85 7 6,94 6,28 7,17

Proceeds from Privatization 0,96 0,006 0,002 0,14 0,02 0,06 0,12 1,24

Deficit as % of GDP -10,20% -10,50% -9,50% -9,60% -8,20% -6,70% -6,90% -6,40%

Source: Ministry of Finance (Figures for 2008 and 2009 are budget estimates)

Table 3 GDP per capita (EGP = Egyptian Pounds)

Indicator 1981 1991 2001 2005 2006

GDP (PPP) per capita (US$)

1.354,81 2.524,99 3.685,98 4.316,59 4.534,82

GDP per capita at constant prices (EGP)

3.121,85 4.075,47 5.138,36 5.519,09 5.692,24

GDP per capita at constant prices (US$)

545,8 758,85 956,8 961,5 999,00

GDP per capita at current prices (EGP)

411,20 2.098,71 5.493,28 7.890,65 8.707,88

GDP per capita at current prices (US$)

587,42 869,30 1.460,98 1.315,75 1.517,85

Source: IMF WEO Online database

Surging domestic inflationary pressures from both economic growth and elevated international food prices led the Central Bank of Egypt to increase the overnight lending and deposit rates and the rates which currently stand at 10% and 12% respectively. Reform of energy and food subsidies and inflation targeting are perhaps the most controversial economic issues in 2007/2008 and 2008/2009.


Fig. 1 Distribution of GDP in Egypt in 2001

Source: UNIDO

1.3. Land, Agriculture and Crops

Warm weather and plentiful water permit several crops a year. Land is worked intensively and yields are high. Cotton, rice, wheat, corn, sugarcane, sugar beets, onions, and beans are the principal crops. Increasingly, a few modern techniques are applied to producing fruits, vegetables and flowers, in addition to cotton, for export. Further improvement is possible. The most common traditional farms occupy one acre (4.000 m) each, typically in a canal-irrigated area along the banks of the Nile.

Several researchers questioned the domestic (and import) policies for dealing with the so-called the wheat game since the former Minister of Agriculture Youssef Wali was in office.In 2006, areas planted with wheat in Egypt exceeded 400 thousand acres (1.600 km) producing approximately 8 million metric tons. The domestic supply price farmers receive in Egypt is 1.200 (US$ 211) per ton compared to approximately EGP 1940 (US$ 340) per ton for import from the USA, Egypts main supplier of wheat and corn. Egypt is, in fact, the U.S.s largest market for wheat and corn sales, accounting for US$1 billion annually and about 46% of Egypts needs from imported wheat. Other sources of imported wheat, include Kazakhstan, Canada, France, Syria, Argentina and Australia. There are plans to increase the areas planted with wheat up to nearly 3 million acres (12.000 km) by 2017 to narrow the gap between domestic food supply and demand.

The Western Desert accounts for about two-thirds of the countrys land area. For the most part, it is a massive sandy plateau marked by seven major depressions. One of these, Fayoum, was connected about 3.600 years ago to the Nile by canals. Today, it is an important irrigated agricultural area.

Housing and Real

Estate2%

Government Services7%

Social and Personal Services

7%

Hotels and Restaurants

2%

Trade, Finance & Insurance

21%

Transportation9%

Construction6%

Electricity2%

Petroleum & Products

8%Industry &

Mining20%

Agricolture16%


Practically all Egyptian agriculture takes place in some 25.000 km (6 million acres) of fertile soil in the Nile Valley and Delta.Some desert lands are being developed for agriculture, including the controversial but ambitious Toshka project in Upper Egypt, but some other fertile lands in the Nile Valley and Delta are being lost to urbanization and erosion. Larger modern farms are becoming more important in the desert.

The agriculture objectives on the desert lands are often questioned; the desert farm lands which were offered regularly at different levels and prices were restricted to a limited group of elites selected very carefully, who later profiteered retailing the granted large desert farm land by pieces. This allegedly transforms the desert farms to tourist resorts, hits all government plans to develop and improve the conditions of the poor, and causes serious negative impact on agriculture and the overall national economy over time. One company, for example, bought over 70 hectare of large desert farm for a price as low as EGP 0,05 (US$ 0,01) per square meter and now sells for EGP 300 (US$ 66)per square meter. In numbers, 70 hectares bought for about US$ 6.000 in 2.000 sells for over US$ 3,7 million in 2007. Currently, no clear solution exists to deal with these activities.

Agriculture biomass, including agricultural wastes and animal manure, produce approximately 30 million metric tons of dry material per year that could be massively and decisively used, inter alia, for generating bioenergy and improve the quality of life in rural Egypt. Unfortunately, this resource remain terribly underutilized.

1.4. Water Resources

Egypt, wrote the Greek historian Herodotus 25 centuries ago, is the gift of the Nile. The lands seemingly inexhaustible resources of water and soil carried by this mighty river created in the Nile Valley and Delta. Without the Nile, Egypt would be little more than a desert wasteland.

The river carves a narrow, cultivated floodplain, never more than 20 kilometers wide, as it travels northward toward Cairo from Lake Nasser on the Sudanese border in front of the Aswan High Dam. Just north of Cairo, the Nile spreads out to form a fertile delta about 250 kilometers (150 miles) wide at the seaward base and about 160 kilometers from south to north.

Before the construction of dams on the Nile, particularly the Aswan High Dam (started in 1960, completed in 1970), the fertility of the Nile Valley was sustained by the water flow and the silt deposited by the annual flood. Sediment is now obstructed by the Aswan High Dam and retained in Lake Nasser. The interruption of yearly, natural fertilization and the increasing salinity of the soil has been a manageable problem resulting from the dam. The benefits remain impressive: more intensive farming on thousands of square kilometres of land made possible by improved irrigation, prevention of flood damage, and the generation of millions of gigajoules of electricity at low cost.


1.5. Main Industries

The main industries in Egypt are tourism, Iron and steel, cement, engineering industries, petrochemicals, chemical industries (especially fertilizers and pharmaceuticals), plastic products, military production, textiles, ICT and food industries. The ICT, Information and Communication Technology, represents one of the newly emerging sectors in the Egyptian industry. Egyptian Industry will be studied in a separate section.

1.6. Mineral and Energy Sources

Fig. 2 Oil Production and Consumption

Egypts mineral and energy resources include petroleum, natural gas, phosphates, gold and iron ore. Crude oil is found primarily in the Gulf of Suez and in the Western Desert. Natural gas is found mainly in the Nile Delta, off the Mediterranean Sea shore, and in the Western Desert. Oil and gas accounted for approximately 14,8 % of GDP in the year 2006. Crude oil production has been in decline for several years since its peak level in 1993, from 941.000 bbl/d1 (149.600 m/d) in 1993 to 873.000 bbl/d (138.800 m/d) in 1997 and to 696.000 bbl/d (110.700 m/d) in 2005. (See Figure). At the same time, the domestic consumption of oil increased steadily (531.000 bbl/d and 616.000 bbl/d (97.900 m/d) in 1997 and 2005 respectively. The Government of Egypt has been encouraging the exploration, production and domestic consumption of natural gas. Natural gas output continues to increase and reached 65,7 billion cubic meters in 2008. The main natural gas producer in Egypt is the International Egyptian Oilfield Company (IEOC), a branch of Italian ENI-AGIP. Egypts excess of natural gas will more than meet its domestic demand for many years to come. The Ministry of Petroleum and Mineral Resources has established expanding the Egyptian petrochemical industry and increasing exports of natural gas as its most significant strategic objectives. Egypt and Jordan agreed to construct the Arab

1. billions of barrels per day


Gas Pipeline from Al Arish to Aqaba to export natural gas to Jordan; with its completion in July 2003, Egypt began to export 1,1 billion cubic feet (31.000.000 m) of gas per year. Total investment in this project is about $220 million. In 2003, Egypt, Jordan and Syria reached an agreement to extend this pipeline to Syria, which possibly could mean a future connection with Turkey, Lebanon and Cyprus.

Gold mining is more recently a fast growing industry with vast untapped gold reserves in the Eastern Desert. There is already a gold rush and gold production facilities are now reality from the Sukari Hills, located close to Marsa Alam in the Eastern Desert

With respect to nuclear energy, Egypts President Mubarak on October 29, 2007, gave the go ahead for building several nuclear power plants. Egypts nuclear route is purely peaceful and fully transparent and hopefully should not face technical and financing obstacles in the future. Egypt is a member of the IAEA and has both signed and ratified the Nuclear Nonproliferation Treaty (NPT). Currently, a draft Law on Nuclear Energy is being reviewed by the IAEA and expected to be passed by the Egyptian Parliament in 2008. Many other countries in the region, including Libya, Jordan, Morroco, and Yemen aspire to build nuclear power plants.

1.7. External Trade

Egypts main exports consist of natural gas, and non-petroleum products such as ready-made clothes, cotton textiles, medical and petrochemical products, citrus fruits, rice and dried onion, and more recently cement, steel, and ceramics. Exports value rose to $24,22 billion f.o.b in 2006. Egypts main imports consist of pharmaceuticals and non-petroleum products such as wheat, maize, cars and carsspare parts. Export partners were Italy 12,2%, US 11,4%, Spain 8,6%, UK 5,6%, France 5,4%, Syria 5,2%, Saudi Arabia 4,4%, Germany 4,2%. Egypts Balance of Payments made a surplus of US$ 4478 million in FY22005 compared to a deficit of US$ 158 million in FY2004. Egypts trade balance in goods and services was US$ (-3,87) billion in FY2006 (UN Data). In the Arab world, Egypt has the largest non-oil GDP as of 2005. The gross external debt of Egypt, including the total public and private debt owed to non-residents repayable in foreign currency, goods, or services is estimated at US$ 29.898 million at the end of FY 2007.

One major Egyptian success grew out of a provision in U.S. trade law designed to promote Arab-Israeli reconciliation. In 2004, the U.S. approved plans for Egypt to export to the USA products made in special export zones. So long as the goods derived at least 11,7% of their value from Israeli inputs, they could enter the USA duty-free. Annual sales and workforce of related companies nearly doubled.

1.8. Public Finances

On the revenues side, total revenues of the government were EGP 78,32 billion ( 14,17 billion) in FY2002 and are projected to reach EGP 184,7 billion ( 22,9 billion) in FY2008. Much of the increase came from a rise in tax revenues, particularly personal income and corporate taxes

2 Fiscal year


which constituted the bulk of total domestic taxes, due to recent tax reforms. This trend is likely to gradually widen the tax base in the forthcoming years. Revenues, however, have remained more or less constant (about 21%) as a percentage of the GDP over the past few years.On the expenditures side, strong expenditure growth has remained a main feature of the budget. This is mainly a result of continued strong expansion of (1) the public-sector wages driven by government pledges. Wages and Compensations increased from EGP 30,5 billion ( 7,02 billion) in FY2002 to EGP 59,6 billion ( 7,39 billion) in FY2008; (2) high interest payments on the public debt stock. Interest payments rose from EGP 21,8 billion ( 5 billion) in FY2002 to EGP52,0 billion ( 6,45 billion) in FY2008. Importantly, dramatic increase in domestic debt which is projected to be roughly 62% of GDP in FY2008 up from 58,4% in FY2002; and (3) the costs of food and energy subsidies, which rose from EGP 18,0 billion ( 4,15 billion) in FY2002 to EGP 64,5 billion ( 8 billion) in FY2008.

The overall deficit, after adjusting for net acquisition of financial assets, remains almost unchanged from the cash deficit. The budgets overall deficit of EGP 43,8 billion ( 10,07 billion) or -10,2% of GDP for FY2002 has become 49,2 billion ( 6,35 billion) in FY2007, so that is narrowed to -6,7% of GDP. Deficit is financed largely by domestic borrowing and revenue from privatization sales, which became a standard accounting practice in budget Egypt. The government aims at more sales of assets in FY2008.

1.9. Exchange Rate policy

The exchange rate policy is linked to US Dollar. With the turn of the new millennium, Egypt introduced a managed float regime and successfully unified the Pound exchange rate vis--vis foreign currencies. Currency black markets do not exist anymore. The transition to the unified exchange rate regime was completed in December 2004. Shortly later, Egypt has notified the International Monetary Fund (IMF) that it has accepted the obligations of Article VIII, Section 2, 3, and 4 of the IMF Articles of Agreement, with effect from January 2, 2005. IMF members accepting the obligations of Article VIII undertake to refrain from imposing restrictions on the making of payments and transfers for current international transactions, or from engaging in discriminatory currency arrangements or multiple currency practices, except with IMF approval. Egypt thus assured the international community that it will pursue economic policies that will not impose restrictions on the making of payments and transfers for current international transactions unnecessary, and will contribute to a multilateral payments system free of restrictions.

In the fiscal year 2004 and over most of the fiscal year 2005, the pound depreciated against the US Dollar. Since the second half of the fiscal year 2006 until the present time, the pound gradually appreciated to EGP 5,35 per USD.

1.10. Investment

Egypts location astride trade routes linking Asia, the Middle East and Europe is a key selling point when officials meet with potential investors. So far, the government has done well competing against nations such as Turkey for the right to host companies looking for an export platform to serve consumers in Africa and the Middle East.


From just $ 450 million five years ago, foreign direct investment rose to more than $ 10 billion last year. One key: Egypt has been among the principal beneficiaries of a torrent of oil dollars coming from countries such as Saudi Arabia and the United Arab Emirates. The USA was the leading source of capital last year, though it ranks eighth in cumulative investment. Major American corporations such as Citibank, General Motors and Procter & Gamble have sizable stakes here.

A large share of foreign investment has originated with neighbouring Arab states that are putting their petrodollars into speculative real estate projects. The region is flush with money. Traditionally, this used to be destined for investments in North America and Europe. Now, these investors are increasingly looking at opportunities closer to home.

The largest U.S. investor is Apache Corp., a Houston-based energy company that first began exploring for oil and gas deposits in 1994. About one-fifth of the companys $ 3,2 billion in first-quarter production revenue came from beneath the Egyptian desert. A continuing flow of foreign capital is critical for the governments hopes of boosting investment economy wide. Investment now equals about 22% of total output, up from 17% three years ago, but still well below the governments goal of about 27%. Egypts foreign investment once heavily concentrated in oil and gas has grown more diverse as investors have broken ground for factories producing fertilizers, chemicals and consumer products. But last year, more than one-third of foreign investment went into privatizations of large state-owned enterprises, such as the Bank of Alexandria and the Omar Effendi department store. Such deals typically lead to substantial job losses as bloated state payrolls are trimmed.

Turning to domestic investments, the Egyptian equity market is one of the most developed in the region with more than 633 listed companies. Market capitalization on the exchange doubled in 2005 from USD 47,2 billion to USD 93,5 billion, with turnover surging from USD 1,16 billion in January 2005 to USD 6 billion in January 2006.

Private Equity has not been widely used in Egypt in the past as a source of funding for businesses. The government, however, has instituted a number of policy changes and reforms specifically intended to develop internal private equity funds and to attract private equity funding from international sources.

The major industries include textiles, hydrocarbon and chemical production, and generic pharmaceutical production. Unemployment is high at about 10%.

Major fiscal reforms were introduced in 2005 in order to tackle the informal sector which according to estimates represents somewhere between 30% to 60% of GDP. Significant tax cuts for corporations were introduced for the first time in Egyptian history. The new Income tax Law No 91 for 2005 reduced the tax rate from 40% to 20%. According to government figures, tax filing by individuals and corporations increased by 100%.

Many changes were made to cut trade tariffs. Among the legislators goals were tackling the black market, reducing bureaucracy and pushing through trade liberalization


measures. Amendments to Investment and Company law were introduced in order to attract foreign investors. For example, the number of days required for establishing a company was dramatically reduced.

Significant improvement to the domestic economic environment increased investors confidence in Egypt. The Cairo & Alexandria Stock Exchange is considered among the best ten emerging markets in the world. The changes to the policy also attracted increased levels of foreign direct investment in Egypt. According to the UN Conference on Trade and Developments World Investment Report, Egypt was ranked the second largest country in attracting foreign investment in Africa.

Given the large number of amendments to laws and regulations, Egypt has succeeded to a certain extent in conforming to international standards. Very recently the Cairo & Alexandria Stock Exchange (CASE) was welcomed with full membership into the World Federation of Exchanges (WFE) the first Arab country to be invited.In April 2008, The IFC the private sector arm of the World Bank Group signed a memorandum of understanding with Egypts Industrial Development Agency (IDA) that seeks to streamline and decentralize the process of obtaining industrial licenses, reducing cost and time needed to register a company. Over the next two years, the project will help create an integrated platform for business start-up procedures at the national level. Managed by the IFC, the project will involve the government as well as the private sector in identifying issues that hinder processes for obtaining licenses and permits. IFC will introduce international best practices, replicate pilot reforms at the municipal level, and streamline approval procedures required by public entities.

1.11. Challenges

The development of the Egyptian economy is facing some challenges which must be dealt with. Some of these challenges are:

Living conditions of the average Egyptian must be improved as government subsidies are abolished. It is taking time before improvements in the macro economy reaches the population. About 19,6% of the Egyptian population have some degree of poverty. Metropolitan areas are the least poor (5,7%). The government is currently employing recently completed poverty map as tool for geographic targeting of public resources. The past five years, the official unemployment rate has declined from 11% to about 9%. Investments and privatization influence employment. Egypt must produce more than 600.000 new jobs each year just to keep pace with new entrants into the labour force. The global food crisis has a strong impact on the limited income group. Training to produce qualified workers must be strongly encouraged to meet the demands of the growing private sector. The inflation rate must be controlled. Business transparency must be increased and bribery and unfair practices controlled.


1.12. Summary

Year 2006/07 will remain distinct in terms of economic performance and development in Egypt. This is not only because this year has witnessed the highest economic growth rate ever achieved in recent years (7,1%), but also because of the sustainability of this high rate for the second consecutive year, after reaching 6,8% in 2005/06; which implies the possibility of sustaining the momentum of economic growth. Also, the continued escalation of the pace of development is not the only hallmark of the year 2006/07, but its accomplishment is also shaped by the leading role of the basic sectors. For instance, the industrial sector (in abroad definition) grew by 7,3 % and contributed by 30% of GDP increase; the construction and transport sectors contributed together by 16%, and agriculture by 13%. These developments ascertain the diversity and the balanced production structure that feature the Egyptian economy.

The above characteristics reflect the increased effectiveness and efficiency of current economic policy in ameliorating the business climate, and raising confidence in the economic potential and prospects of the country. A sum of LE 155 billion of investments have been pumped into the economy, raising the investment rate from 18,7% to 21,2%. Private sector investments accounted for the largest share; amounting to about LE 96 billion during the year, a figure which is 45% higher than that of last year. The analysis of GDP components reveals a 4% increase in real household consumption in 2006/07. However, the real challenge remains in seeking ways of broadening the base of beneficiaries from economic growth and consumption increase. The dynamic features gained by the Egyptian economy during the last two years and which have grown substantially during the fiscal year 2006/07 have contributed to the enlargement of the absorptive capacity of the labor market. However, despite the large increase in the number of employed persons and the slight reduction in unemployment rate; the most difficult challenge that is still facing policy makers is how to speed up the growth of the economy further to allow for the creation of 750 thousand jobs a year that would ensure full eradication of unemployment.


2. Industry in Egypt

2.1. Introduction

Egypt was known for ages as an agricultural country and the governors never paid attention to industry till the beginning of 19th Century. Egypt witnessed a huge industrial revival when Muhammad Ali created a great industrial base including textile, sugar, cooking oil squeezing, rice mills and the military industries flourished. A shipyard and factories for preparation of chemical materials were established. The industrial revival declined during the following periods till the end of World War I.

Misr Bank was founded in 1920 with Egyptian capital led a campaign to revive the Egyptian industry. The bank succeeded in establishing an industrial base that included a chain of great companies and factories which succeeded in establishing an advanced Egyptian industry. The July 1952 Revolution launched a number of pioneering heavy industry projects such as iron and steel, mining, petroleum, chemical, spinning and weaving and food industries.

The period from 1967 to 1973 negatively affected the performance of the industrial sector due to war and it was revived again after 1973 when the open-door economy policy was actively embraced.

As peace prevailed, Egypt began a new stage of industrial development. By virtue of the economic reform policy that started in 1990s of the past century, the role of the private sector increased in achieving industrial development. The industrial sector enjoyed a wide variety of privileges and incentives to investors.

At the early beginning of 21st century, Egypt has started a stage of reviving the Egyptian industry and both industry and both foreign and internal Trade under one ministry in the government. Modernization of Egyptian industry was essential for quality improvement of products in order to provide a stronger competition within the World economy. Besides, an atmosphere suitable for industrial and commercial activities was necessary to encourage the private sector in assuming the main role in achieving economic development.

2.2. Industrial Investment

Egypt has recently witnessed a marked improvement in the atmosphere of investment due to several elements topped by amending customs tariffs, issuing the new tax law, launching the Great Free Arab Trade Zone beginning January 2005, issuing the law of Investment No. 13 of 2005 that aims to facilitate the procedures of investment through establishing the unified service centers, establishing the public Association of Industrial Development that is in charge of the industrial developing policies and responsible for developing the industrial areas which is qualified to attract industrial investment.

More land was allocated to the Industrial Development Authority which reduced the price of land and facilitated bank lending. Reduction of the price of land and energy combined

23 2. INDUSTRY IN EGYPT

with a low labor cost help to attract foreign industrial investment into Egypt. Egypt has 90 industrial areas which are considered attractive to investors due to the offered privileges and incentives. The areas allocated to these cities reached about 657 km2 in 2005 spread all over the governorates. There are seven public free zones in Egypt equipped with utilities and infrastructure. They enjoy good incentives, investment privileges, guarantees and tax exemption. These zones are located near ports as 50 percent of their production must be exported.

Investment activity can be conducted in Egypt inside the private free zones provided that the project has actually started its activity, will have satisfied rules specified by the regulations and has generated exports of more than 50 percent of its production. In 2005/06 the Industrial Development Authority agreed to allocate land for 120 industrial projects with an investment cost of LE 2,7 billion providing about 70 thousand job opportunities. 1,3 square kilometer was allocated to foreign investors who started 22 companies on 21 percent of the allocated area.

It should be noted that Egypt has a wealth of minerals. Copper, titanium, tin and manganese, iron, gold, tungsten, chrome, phosphate, talc, sulphur, gypsum, potassium and sodium salts, quartz, glass sand, precious stones and ornamental stones are present at commercial levels.

2.3. Industrial Sectors Structure

The past five years have witnessed a rise in the total number of industrial facilities. They reached more than 27 thousand facilities in 2005 against 24,5 thousand in 2000 with an increase rate 10 percent. The newly registered facilities in the first half of 2006 reached 2.888 facilities.

The industrial sector structure is characterized by clear concentration on the micro facilities. In 2005 there were 18.868 micro facilities at a rate of 70% of the total facilities and 5.065 small facilities with a rate of 19 percent while the large facilities represented 6 percent of the total facilities.

Most of the working industrial facilities are specialized in weaving and textile, ready made garments and leather with a rate of 22 percent. The tobacco, foods and beverages industries with a rate of 20 percent for each.

The total of the investment costs in the registered industrial facilities reached LE 309 billion in 2005. The large industrial facilities netted 88 percent of the implemented industrial investments, the average facilities 6 percent and small facilities 4 percent.

The industrial production amounted to LE 254,1 billion in 2005. The volume of the large facility production reached LE 203 billion with a rate of 79,8 percent. The average facilities production reached LE 25,4 billion with a rate of 10 percent and the volume of small facilities production reached about LE 20 billion with a rate of 8 percent.


2.4. Recent Industrial Programs

2.4.1. The one thousand factories program

The program which will been carried out during 2006-11 aims at encouraging the partnership between the private sector and the bank sector to build one thousand large factories subject to international standards and expanding the present factories with investments higher than LE 15 million.

The year 2006 has witnessed an involvement with 110 large factories with an implementation rate of 122 percent within the period January September. The number of new factories that began production reached 62 factories while 48 factories have witnessed expansion with a rate of 43%. The investment costs reached LE 5.644 million. The cost of the new factories was LE 3.599 and the expansion cost was about LE 2.045 million. This activity provided 26.128 extra jobs with 17.197 jobs in the new factories.

2.4.2. Business market program

The program aims at financing 2000 small and overage projects in the fields of industry and productive services that have the ability of quick operation. Their investments range from LE 5 million to LE 15 million for the average project and less than LE 5 million for the small one. The number implemented factories during the period January-September/2006 reached 436 projects.

2.4.3. The Egyptian industry modernization Program

In the framework of Egyptian European partnership, Egypt began to implement the modernization program since the fiscal year 2002/03. The program aims at increasing the competitiveness of Egyptian products to allow the country to be integrated within the global economy. This will lead to the increase of the industrial export volume and the creation of more jobs.

The modernization program costs 437 million EURO, the European Union contributed 250 million euros or 59 percent of the total cost. The program has benefited 430 industrial facilities during the first three years. The Industrial Modernization Center (IMC) has assumed the full supervision on implementing the program since 2005/06. The center succeeded in implementing the program in 3.400 facilities within the modernization plan with a financing volume of 146 million EURO during this year 145,6 million EURO were allocated to finance the modernization program during 2006/07 to allow a total of 7.300 facilities to have benefited from the program.

The IMC, in cooperation with the Union of Industries and the banking system, plan to pump LE 70 billion to finance the implementation of the 1000 factories program during 2005/2011. This will participate in raising the industrial growth rate from 5 percent to 9 percent within this period and will increase direct job opportunities by 1,5 million. The


job opportunities will thus increase from 2,4 million to 3,9 million. Industrial exports are expected to increase from LE 18 billion to LE 42 billion within the mentioned period.

2.5. Protecting The Environment

In June 1997, the responsibility of Egypts first full time Minister of State for Environmental Affairs was assigned as stated in the Presidential Decree no.275/1997. From thereon, the new ministry has focused, in close collaboration with the national and international development partners, on defining environmental policies, setting priorities and implementing initiatives within a context of sustainable development.

According to the Law 4/1994 for the Protection of the Environment, the Egyptian Environmental Affairs Agency (EEAA) was restructured with the new mandate to substitute the institution initially established in 1982. At the central level, EEAA represents the executive arm of the Ministry. The Principal Functions of the Agency Include:

Formulating environmental policies. Preparing the necessary plans for Environmental protection and Environmental development projects, following up their implementation, and undertaking Pilot Projects. The Agency is the National Authority in charge of promoting environmental relations between Egypt and other States, as well as Regional and International Organizations.

2.6. The Industrial Production Development

In the framework of the efforts exerted by industrial sector to support the Egyptian industrial products in occupying a suitable position in international markets, the productivity of a number of basic industries was significantly increased during the past twenty five years. In addition, such new hi-tech fields such as micro-electronic industries were introduced.

The industrial structure in Egypt is based on seven industries representing 80 percent of the industrial facilities. The countrys three top industries are textiles, food and beverages. Furniture, minerals, chemicals and metallurgy are also major industries.

In regard to the distribution of industrial production sector in 2005, it was remarkable that the engineering, electronic and electric industries ranked first with 30 present of the industrial production volume. Then tobacco, foods and beverage sector with 23 percent, the chemical industries with 15 percent and the weaving and spinning, clothing and leather products with 10 percent.

These are the most important four sector in the Egyptian economy in terms of the number of industrial facilities, their participation in the total industrial production and their capacity to absorb labor force and offered wages level. In 2005 they obtained 78 percent of industrial investments and 79 percent of labor force.

The volume of production has been regularly growing in many industries. In 2005/06 the


spinning and weaving industry produced 305 thousand tons and 315,1 million pieces of ready-made garments. Construction and building material plants put out 33 million tons of cement and fifty million tons of reinforcement steel. Considering the food industry, 1645 thousand tons of sugar were produced in the same fiscal year. In the poultry area, fodder production was more than10 million tons. In the fertilizer industry, 11 million tons of azotic fertilizers and about 1,4 million tons of phosphate fertilizers were produced.

2.7. Improving The Quality of Egyptian Industrial Products

Ministry of foreign trade and Industry was mandated to emphasize the concept of quality as a national motto to the next stage aiming to raise competitive capacity of the Egyptian product, to standardize specifications of industrial products with the international ones and identify the environmental specifications of such products for international demand and for Europe in particular.

The ministry succeeded in putting and implementing an integrated plan to revive the quality of the Egyptian products. The Egyptian standardized specifications were identified with the international and European ones. Egyptian specifications were issued for food, engineering, chemical spinning and weaving industries and covered 6.000 items.

Setting the first electronic map of quality in Egypt and Launching it on the Internet to introduce all the companies that obtained the quality measures and European safety mark to the world. A national institute for quality was established in cooperation with the Arab Academy for Modern Technology.

2.8. Industrial Exports

The five years (2001/05) have witnessed a remarkable increase in the total Egyptian exports. The total export volume increased from $ 4,2 billion in 2001 to $ 10,7 billion in 2005 at a rate of 156 percent. The petroleum exports contributed the greatest share in the volume of Egyptian exports reaching 49 percent of the total exports in 2005. The volume of non-petroleum export increased from $ 2,3 billion in 2001 to $ 4,2 billion in 2005. Egyptian exports increased to about $ 8,5 billion in May 2006 at a rate of increase 46 percent from the targeted plan for the fiscal year 2005/06. This reflects the successful development of new export methods which were laid by the councils of export and the Council for the Developing of Export.

The foods industrial sector made a dramatic leap in its exports during the first half of the fiscal year 2005/06 with an increase of 49 percent against the same period of the past year. These exports reached LE 2,127 billion. The agricultural exports witnessed a remarkable development reaching a growth rate of 54 percent during the last five years. Rice, potatoes and orange make up 61 percent of Egypts agricultural exports (except of cotton). Non petroleum Communities witnessed a remarkable increase during (2001/05), they increased at a rate of 84 percent to reach $ 3 billion in 2005 against $ 1,6 billion in 2001.


Italy topped the importer list of Egyptian products. USA, Italy and Spain rank the first of trade volume with Egypt. The European Union represents the most important bloc in regard to trade with Egypt with a rate of 25 percent in 2005. The Asian Countries rank second with a rate of 18 percent, the Arab Countries rank third with 17 percent and the North American Countries rank fourth with a rate of 9.5 percent.

2.9. Summary

With the appointment of the current cabinet of ministries in July 2004, the Government of Egypt has revived a stalled economic reform program which was initially introduced in 1991. As a result, the cabinet economic team has simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatizations of public enterprises, and adopted policies to improve competitiveness. Consequently a moderate revival started in 2004 with a 4,1% GDP growth rate, followed by a very dynamic and sustained economic expansion recording a rate of more than 7% for 2007. But inflation and unemployment must be dealt with.

Despite the ongoing reforms, the economy is still hampered by government intervention, substantial subsidies for food, housing & energy, and bloated public sector payrolls. Moreover, the public sector still controls most of the heavy industry. Agriculture contributes nearly 14% to the GDP and employs nearly one-third of the active population. Warm weather and plentiful water (thanks to Nile river) permit several crops a year. The main crops are cereals, cotton and sugarcane. In the manufacturing sector, food processing industry has developed considerably and now contributes 17% to the GDP. However, the Egyptian economy relies heavily on tourism, oil and gas exports and Suez Canal revenues. Oil and gas sector accounts for approximately 12% of the GDP.

The Egyptian market has been opening up gradually, especially since the EU-Egypt Association Agreement which came into force in June 2004. The top three export partners are: Italy, the USA and Spain. Its top three import partners are: the USA, Germany and China. Egypt mainly exports mineral fuels & oils, cotton, and iron & steel; while as it mainly imports consumer electronic and capital goods, nuclear reactors and boilers, cereals, food products, and Chemicals.


3. Education in Egypt

3.1. Introduction

Current educational philosophy in Egypt is the product of three cultural heritages: British, secular (westernized) Egyptian, and Islamic (traditional) Egyptian. The British protectorate in Egypt left an exclusionary, state-controlled education system structured to serve elite (British) interests with little concern for the masses. The heritage was one of restricted opportunity, unenforced limited education (generally of poor quality), and higher education reserved mostly for the elite. Egyptians and non-English foreigners were left few options but to expand private and religious education.

Muhammad Ali, regarded as the father of modern Egypt and its education system, introduced a secular, modern, western educational philosophy complete with sciences. Egyptian leaders since the bloodless revolution that ended the monarchy in 1952 have espoused this approach, viewing it as essential to Egyptian development. Islamic education remained in place and, eventually, the traditional Islamic and the western educational tracks, with their differing orientations, created a dichotomized educational culture that persists to the present.

The Islamic heritage provides an educational system, parallel to public education, that is basically a system of transmitting culture. The Arab/Muslim heritage carries an orientation that transcends national boundaries to include all Arabs and Muslims. From 1952 on, Nasser offered free education, not only for Egyptians, but also for students from other Muslim countries. At the same time, Egypt sent teachers and administrators out to the rest of the Arab world where they set up and staffed schools and universities on a large scale.Egypts educational system both reflects and augments the socio-economic status of its own people. Historic conflicts between tradition and innovation, and between foreign and national interests all influence contemporary Egyptian education. Education in Egypt has political, social, and economic objectives, namely: education for strengthening democracy and comprehensive development as a continuous process, within the framework of Arab culture.

Throughout the past 40 years, the strong autocratic government sometimes conflicted with the democratization efforts in schools; nevertheless, the number of schools and technical schools increased even in times of economic downturns.

There is an abiding belief in Egyptian education. It is viewed as vital to the transmission of cultural values and as a critical force in individual development and in national Egyptian development. Pre-university education reflects the dual secular and religious philosophies as it aims to develop the learner culturally, scientifically, and nationally at successive levels with the aim of developing the Egyptian individual who is faithful to his God, his homeland, and to the values of good, truth, and humanity. Pre-university education is supervised by the Ministry of Education while the Ministry of Higher Education and Scientific Research is responsible for university and higher Institute level education.

The public education system consists of three stages: the basic education stage for 4-15 year-olds (kindergarten for two years followed by primary school for six years and

29 3. EDUCATION IN EGYPT

preparatory school for three years); the secondary school stage for three years, generally for ages 15 to 18; and the university stage. Education is compulsory for 8 years between the ages of 6 and 15. All levels of education are tuition-free at all government schools and institutions. In 1993, more than 13,8 million people were enrolled in state education at all levels. In five years, that figure grew by 5 million. Ninety-one percent of all school-age children were enrolled in school in 1991. When this figure is adjusted for school dropouts and students repeating grades, the enrollment figures drop to 70-84 percent. In 1996, the total official enrollment in primary, preparatory, and secondary schools topped 14 million, the equivalent of 88 percent of the school-age population (boys, 94 percent; girls, 82 percent). In 1998-1999, some 17 million students were enrolled.

Rural-urban inequities continue to persist; in 1991-1992, rural enrollments often did not exceed 50 percent of the appropriate age group. Gender inequities also persist; fewer female than male students are enrolled. Many girls drop out of school at the end of their basic compulsory program either to work or to marry. A law prohibiting girls from marrying prior to age 16 has slowly begun to affect the female dropout rates.

The planning process, especially at the basic education level, begins at the bottom as governate officials submit new project proposals (schools, classrooms, equipment, and teachers) and budget requests every year to the Ministry of Education.

3.2. Basic Education

Preschool education: Within the Ministry of Education, a Higher Council for Childhood supervises and coordinates preschool education with other concerned authorities. By ministerial decree, preschool education is intended to aid mental, physical, social, moral, and emotional development; develop language skills and numerical and technical abilities, especially creativity and imagination; raise children in a better environment; help children develop good personalities; and help children gradually accept formal school life and discipline.

In 1995-1996 there were 2.060 preschools staffed by 10.913 teachers, enrolling 266.502 students. Preschool enrollment included 80 percent of the children in the relevant age group (boys, 86 percent, and girls, 74 percent). There are no periods in the preschool day; days are filled with activities and experiences to help children develop their spiritual, moral, physical, social, and emotional domains. Homework or outside duties are strongly discouraged.

All preschool institutions, whether state run or privately operated, are under the Ministry of Education, educationally, technically, and administratively. The Ministry selects and distributes textbooks; the use of any additional textbooks is forbidden. Guidelines state that each class is to have two teachers and a helper in addition to a music teacher. The maximum class size is 45 students. No child less than 4-years-old is allowed in state preschool classes or schools.

Primary Education: Primary school is also concerned with physical, social, moral, and emotional development, as well as with giving children the knowledge and technical


skills needed for a successful practical life. Students may attend non-government private schools, religious schools, or government schools. Primary schools enroll 60 percent of the total school population for all levels of schooling in Egypt. Approximately 45 percent of the primary students are girls, and the majority of primary teachers are women. English and French private schools are growing in popularity as bilingualism gives children social and academic privileges and later lucrative employment. Primary schools served 7,5 million students in 1995-1996. In the same year, the Al-Azhar Moslem system served 704.446 students in 1.912 primary schools with another 147.762 students enrolled in 1.030 preparatory schools.

Preparatory Education: An important function of preparatory education is to provide a safeguard against illiteracy as early school dropouts tend to lapse back into illiteracy. The enrollments in preparatory schools in the 1990s totaled 3.679.325, less than half that of the primary schools. Preparatory schools reflect the attrition occurring in the final primary year.

3.3. High School Education

The second tier of compulsory education (grades 7 through 9) lasts for three years. Students completing the primary part of basic education can complete the second part in general preparatory schools, in vocational training centers or schools, or in vocational preparatory classes. Completion of this stage earns the Basic Education Completion Certificate or the Certificate in Vocational Basic Education. There are two types of public secondary education: general secondary education and technical secondary education. To enter general secondary education, students must pass a national exam given at the end of their preparatory stage. Secondary schools conduct examinations every month for the first two years, and students take a national exam in the final year. Those who pass receive the Certificate of General Secondary Education, a requirement for admission to the universities (accompanied by a strong academic record). A wide range of social, cultural, athletic, scientific, and artistic extra-curricular activities are available in secondary schools, usually sponsored by the teachers. Enrollment expanded significantly between 1990-1991 and 1994-1995 in secondary school (47 percent in general secondary and 85 percent in technical-vocational secondary). In 1994-1995, general secondary enrollment reached 894.400 students, while technical-vocational enrollment was more than twice as high at 1.893.800 students. In 1996 secondary school enrollment included 68 percent of the appropriate age group (boys, 71 percent; girls, 64 percent). In 1995-1996 there were 2.753 secondary schools with 6.142.651 students and 369.107 teachers.

In the parallel Islamic educational system, known as the Al-Azhar system, girls and boys attend separate schools. In 1995-1996, the Al-Azhar Moslem system operated 57 secondary schools with 165.829 students. The curriculum is identical to the normal public curriculum with additional study of the Quran and Islamic sciences. Graduates are automatically accepted into Al-Azhar University.

Special Education: In the year 2000 approximately 10 to 12 percent of pre-university students were special education students. Responsibility for the physically challenged is shared by the Ministry of Education (concerned with the education of the blind and

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partially sighted, deaf and partially deaf, and mentally retarded), the Ministry of Social Affairs (provides rehabilitation services to all disabled persons), the Ministry of Health, and the Ministry of Manpower. By 1994-1995, a total of 25 schools for the blind, 95 schools for the hearing-impaired, and 107 schools for the mentally impaired students were operating. Special schools and classes are provided at all levels, serving a total of 22.043 students in 1996-1997. English language study is part of the curricula in the preparatory stage of basic special education.

Government-sponsored special education schools serve the gifted and talented and the mentally retarded, as well as the physically challenged. Plans to identify gifted students in the kindergarten stage and then to provide special learning experiences for them were developed in 1996. In 1994-1995, some 699 new classrooms were established for 20.790 gifted secondary students. The Ein Shams University School for the gifted was developed with 12 classes serving 261 children. Other special schools include private schools in villages attached to mosques and private foreign schools where the language of instruction is often not Arabic.

3.4. Modern Instructional Methods for Basic Education

In the early 1990s, The Center for Educational Technology was established within the Ministry of Education. Technology equipment is considered as a medium for developing scientific thinking, problem solving, new modes of learning, and training and communication. New technology planned for pre-university schools includes computers, projectors, television and video sets, and CDI sets. A five-year plan to equip 10,000 schools with this new technology was completed, and 2.000 computer instructors were appointed to secondary schools. Advanced science laboratories were developed in secondary schools (1.500 laboratories with 16.500 new computers).

By the mid-1990s, about 200 pre-university schools were linked to the Internet with one pre-university school working on the Globe Project, which gathers environmentally-related global data for sharing with other schools. The Center, in collaboration with the General Department for Educational Aids, is implementing an integrated plan to enhance educational aids such as transparencies, colored slides, still films, models, and microscopic and biological samples; to produce laser CDs for various topics in the curriculum starting with the very early years; and to produce videotapes and audio tapesespecially in the language areas (Arabic, English, and French).

Training on the new equipment has been introduced in Cairo and will eventually take place in educational technology centers closer to schools. In collaboration with Egyptian Radio and Television, distance-training programs are being developed to assist teachers. Six training centers throughout the country are being connected through a fiber optic network to facilitate exchange of information and maximize the use of the technology. Multi-media laboratories, the Internet, and language and computer laboratories are being introduced in the colleges of education. The Egyptian Universitys Network (EUN) links university computer centers and research institutes throughout Egypt and is the Egyptian gateway to the Internet. Internet use is available to all universities, faculty members, and

3. EDUCATION IN EGYPT

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graduate students (with about 1300 users in the mid-1990s). More than 80 organizations throughout Egypt can also access it.

3.5. International Cooperation Projects for Basic Education

Extensive foreign influence is apparent throughout Egyptian education. Examples include UNESCO and Fulbright support of overseas teacher training, World Bank engagement in distance education and educational reform as part of loan programs, and technical and scientific education aid using expertise, facilities, and equipment from Americans, French, Germans, Italians, and Japanese. UNICEF aids in development of educational materials. Teachers are sent overseas to the United States, the United Kingdom, and France for training. The Egyptian-Swiss Fund for Development works to improve primary education. Pan Arabic conferences set the aims and goals of education in Egypt and other nations.

3.6. Higher Education

Higher education is provided by universities and higher institutes of technical and professional training, both public and private. Responsibility for higher education lies mainly with the Ministry of Higher Education. Organization and administration, as well as academic programs, are determined by laws, decrees and government regulations. The State universities are under the authority of the Supreme Council of Universities. Universities have full academic and administrative autonomy. They also carry out scientific research. The higher institutes of professional and technical training award qualifications equivalent to the first qualification conferred by the universities. Open college education was introduced at the universities of Cairo, Alexandria and Assiut in 1991. Private universities are entitled to implement their own criteria of admission and to set fees without intervention from the Ministry. Besides, Some Egyptian universities have begun to establish certain modified curricula which can be joined by students paying their own fees. This can represent and important source of funding as most of the students are constitutionally granted free education.

The higher education system in Egypt is made up of 18 public universities with more than 2,4 million students, 12 public non-university institutions, and 22 private universities providing technical and professional training. Of the 12 non-university institutions, 8 are two year upper secondary-level technical institutes (MTI), and four or five year higher education-level technical institutes. Those are joined by 115 private institutes giving the same type of education. There are more than 63.000 teaching staff in the Egyptian higher education.

The first stage of higher education consists of four to six years of multidisciplinary study in basic subjects. They lead to the award of the Baccalaureate degree. In Medicine, studies last for six years, with one additional year of practical work. The best graduates are usually offered the positions of a teaching assistant.

The second stage is more specialized and comprises two to five years of training in individual


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research work culminating in the submission of a thesis. The degree awarded is the Masters degree. Teaching assistants are required to obtain their Masters degree in Egypt to encourage local research. They will then be promoted to the position of Assistant Lecturers.

The third stage leads to the Doctor of Philosophy (PhD) after at least two years study following the Masters Degree. It is awarded for advanced research work culminating in a thesis. In Medicine, the degree of a Doctor in Medical Sciences may be prepared concurrently with the degree of a professional Doctor of Medicine.

Assistant lecturers are usually able to obtain the necessary fellowships which allow them to study abroad in order to obtain the PhD degree and further to have adequate postdoctoral training. Upon returning home they will be appointed as lecturers. They need to attend some courses in education to learn how to be a good teachers. After five years they will be eligible for the position of an associate professor if they produce enough scientific publications. It will take five years more and more publications to obtain the position of a full professor.

It should be mentioned that many assistant lecturers do not return back home, causing a brain drain problem. To face a difficult financial situation after returning home, many university staff members obtain temporary university positions in neighbouring countries, usually extending for five years. This frequently has a negative effect on their research potential.

Non-university education is offered by industrial, commercial, and technical institutes that provide two-year courses leading to diplomas in accountancy, secretarial work, insurance, computer or health sciences and electronics. Technical education schools provide five-year courses leading to advanced technical education diplomas in commercial, industrial, and agricultural fields.

There are three bodies for the governance and control of higher education in Egypt: the Ministry of Higher Education, the Supreme Council of Universities (SCU), and the Central Administration of Al-Azhar Institutes. The Ministry of Higher Education has jurisdiction over higher education through the supervision and coordination of all post-secondary education, planning, policy formulation, and quality control. It also oversees teacher training for basic education. The Supreme Council of Universities, founded in 1950, formulates the overall policy of university education and scientific research in universities and determines the number of students to be admitted to each faculty in each university.

3.7. Modernization of Higher Education

Various projects were initiated to modernize the higher education system in Egypt. Prominent among these projects are the Tempus and HEEPF projects.

3.7.1. The Tempus Project Fund

Since 2002, the EU Tempus project in Egypt, with most of the Egyptian Universities participating in a total of 64 Tempus projects. The subject areas were: Urban and Regional


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Planning, Microfinance, Health Care, Open and Distance Learning, European Studies, Engineering and Technology, Electrical Engineering, Chemistry, Bio-Chemistry, Cultural Heritage, Pharmacy, Translation and Interpreting, Management and Business, Information Technologies, Interdisciplinary Studies, Mechanical Engineering, Medicine and Surgery, Tourism and Leisure, Physical Education, and Biology. Though this project aims at encouraging cooperation between Egyptian, regional and international higher education systems.

Tempus has had a strong influence on modernizing the Higher Education System in Egypt. The program was very timely to accompany the implementation of the Higher Education Enhancement Strategy that was introduced in 2000 and revised twice, in 2002 and 2004. The main objectives of this strategy were in line with the objectives of Tempus: (modernization of curricula, Introduction of Quality Assurance in Higher Education, etc.). Although the direct impact of Tempus projects on the Egyptian Higher Education system is not directly visible, the programs long term involvement in the country and the introduction of competitiveness in Higher Education have been the main direct outcomes.One of the main elements of impact of Tempus in Egypt is the introduction of quality education through partnerships with EU member states in different disciplines, with more than 170 IMG (individual Mobility Grants) grants being awarded to staff members from Egypt. Such a mechanism was one of the most demanded in the country, and shows the interest of Egyptian staff members in retraining and building bridges for cooperation. Many JEP (joint European projects) projects introduced new concepts and program in the education system and were considered as self sustainable success stories for the modernization of Higher Education in Egypt. Tempus has also been one of the main catalysts for the modernization.

3.7.2. The Higher Education Enhancement Project Fund (HEEPF)

Beside the Tempus project, the Higher Education Enhancement Project Fund (HEEPF) is another mechanism within the national higher education enhancement strategic plan (HEEP). HEEPF is part of the loan agreement dated April 2002, between the Egypt and the International Bank for Reconstruction and Development to support and Finance priority areas of the strategic plan of the higher Education Enhancement Project HEEP. The amount of the loan allocated for HEEPF Grants equal to 12.000.000 USD that was increased to 13.000.000 USD. The project aims at an active participation in the implementation of the strategic plan of continuous higher education enhancement through competitive mechanisms to achieve distinction in Egyptian Education institutions and upgrade them to reach the international standards.

By 2000, the universities generated 150.000 graduates a year. A two-semester system for the school year was instituted in all universities in 1992. The university academic year is 30 working weeks. Arabic is the medium of instruction in humanities, social studies, education, law, commerce, economics and political sciences, information, social service, tourism and hotels. English is widely used in the faculties of medicine, pharmacology, dentistry science, and engineering.

Higher education includes non-university training in Egypt in engineering and technological education institutes, education institutes, private institutes, technical


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industrial institutes, and commercial and hotel institutes. Since the late 1970s, the government initiated policies to reorient postsecondary education toward technical training programs in agriculture, commerce, and a variety of other fields. Student subsidies were partially responsible for a 15 percent annual increase in enrollments in the countrys five-year technical institutes. In 1993-1994, 49,703 students were enrolled in commerce institutes (24.906 women) and 31.259 in technical institutes (9.401 women). Female literacy in 1927 was only 5 percent; fifty years later it was 38 percent (male literacy was 62 percent). The combined adult literacy rate is estimated presently at 57 percent.

Both men and women have equal opportunity in pursuing higher education. Given that education is state-sponsored and that progression through school is dependent on test scores, the number of women in science and engineering colleges has increased remarkably. The female students in year 2002 reached 55,4% in pharmacology, 45,5% in medical schools, 58,1% in dentistry, 45,4% in veterinary, 45,8% in science colleges (physics, chemistry, mathematics, biology, and geology), 37,4% in computer science, and 24,5% in engineering as shown in Fig.2. Women getting accepted into science and engineering schools are not likely to drop out because they have reached this position after a tough competition that screened all students and proved that they are capable of pursuing these studies. Moreover, higher education in Egypt is free.


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Table 4 Performance Indicators of the HEEPF University Education Project

HEEPF Objectives

Output/Outcome Performance Indicators

Create a competitive environment to improve and enhance Higher Education Institutes

563 proposals have been submitted over 4 Cycles where 158 projects were selected for fund in Egyptian universities are funded. (41 in the 1st, 36 in the 2nd, 36 in the 3rd and 45 in the 4th cycle).Contractual budget for the funded projects =13.884.096 US$83 projects have been successfully submitted.

HE Institutions participated in the HEEPF projects

17 universities, 5 T/C & MOHE.

Faculties participated in the HEEPF projects

90

Direct beneficiaries121.722 undergraduate students and 100.915 other categories

Indirect beneficiaries89.899 undergraduate students and 209.747 other categories

Faculty members participated in the HEEPF Projects.

3.540

New under-graduate programs 5

New postgraduate programs 35

Upgraded under-graduate curricula

10

Upgraded post-graduate curricula

44

Upgraded and developed courses

509

Laboratories upgrading 122

Simulation/Virtual labs 71 Experiments

E-learning and on-line courses 519 electronic courses

Knowledge resources 7

IT projects 16

MIS, HMS & Database 9

Quality assurance systems 15

Management and reform of higher education institutes.

9

Increase collaboration with the community

Establishment of relations with the community

Specialized/interdisciplinary centers have been incorporated with HEEPF projects.

57

Cooperation protocols with community organizations have been signed and activated.

39

Specialized units for sustainability purposes

64

Source: Ministry of Higher Education, Egypt


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4. Science in Egypt

4.1. Introduction

Egypt is aiming to achieve a high standard of academic achievement while maintaining its cultural heritage. This ambitious aim is built on a well-founded research structure and a vast manpower resource of critical mass. Historically, prior to the nineteenth century, the ulama and Coptic clergy controlled Egypts traditional education. The countrys most important institutes were theological seminaries, but most mosques and churches even in villages operated basic schools where boys could learn to read and write Arabic, to do simple arithmetic, and to memorize passages from the Quran or Bible. Muhammad Ali established the system of modern secular education in the early nineteenth century to provide technically trained cadres for his civil administration and military. His grandson, Ismail, greatly expanded the system by creating a network of public schools at the primary, secondary, and higher levels. Ismails wife set up the first school for girls in 1873. Between 1882 and 1922, when the country was under British administration, state education did not expand. However, numerous private schools, including Egypts first secular university, were established.

4.2. Science Centers

In the following lines a brief description of some of Egypt science facilities will be presented.

4.2.1. Cairo University

As detailed elsewhere in this report, Egypt at present has 18 state universities and twenty two private universities. While offering students the opportunity of higher studies, they play an important role as research centers. The presence of graduate studies in each department allows faculty members to carry out research work while supervising Masters and PhD degree student. Publishing in international journals is strongly encouraged. We will offer more details regarding Cairo University, the oldest Egyptian University.

At the beginning of twentieth century, some Egyptian social thinkers called for the establishment of an Egyptian University to act as a lighthouse of liberal thought and to be the basis of a comprehensive academic revival in all the fields of knowledge in order to be able to cope with the international scientific and academic advancement.

The university finally came into being and it was officially inaugurated on December 21, 1908. Study began at the university in the evening of the inauguration day in the form of general lectures to be given in diverse places until an official location was found. The first concern of the University was to send some of their distinguished students to Europe to obtain their Ph.D. and then come back to teach at the university.

The University also established a library that contained invaluable books and treatises that were authored by Egyptians and non-Egyptians alike. As a result of the Universitys accomplishments, the government decided to establish a State University in 1917 and set

4. SCIENCE IN EGYPT

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up committee to study the project. The committee suggested that the Higher Schools be upgraded to the university level and annexed to the existing colleges. School of Law and School of Medicine were thus annexed to the State University in February 12, 1923. It was agreed that the old University would merge into new one, with the Faculty of Arts as the core.

Fig.3 Percentage of female university students in science colleges (2000/2001)

0

10

20

30

40

50

60

70

Medicine

Engineering

ScienceDendistry

Pharmacology

VeterinaryComputerScience

AgricultureMed

icin

e

Engi

nee

ring

Ph

arm

acol

ogy

Vete

rina

ry

Com

pu

ter

Agr

icul

ture

Sci

ence

Den

dis

try

Source: Global Alliance for Diversifying the Science and Engineering Workforce3

Cairo University now has 20 faculties. These are: The Faculty of Agriculture, Archaeology, Arts, Commerce, Computer and Information Sciences, Dar El-Ulum (Islamic Studies), Oral Dental Medicine, Economics and Political Sciences, Engineering, Law, Mass Communications, Medicine, Pharmacology, Physiotherapy, Regional and Urban Planning, Science, Veterinary Medicine, Nursing, Kindergarten Education and Specific Education.

Besides, Cairo University has an open learning center and four institutes: The Institute of African Studies and Research, The Institute of Educational Studies and Research, The National Cancer Institute and The National Institute of Laser Enhanced Sciences. The suggestions and advice of Dr. Ahmed Zewail, the Egyptian Nobel Prize Winner, played an important role in establishing the Laser Institute. The Open Learning Center allows grown ups who wish to obtain a university degree such an opportunity.

Each faculty allows student to choose from various specializations (departments). For

3 http://www.globalalliancesmet.org/egypt_education.htm


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example, the Faculty of Engineering of Cairo University has the following Engineering departments: Aeronautical and Aerospace, Architectural, Biomedical, Chemical, Civil, Computer, Electric Power and Machines, Electronics and Electrical Communication, Mathematics and Physics, Irrigation and Hydraulics, Mechanical Design and Production, Mechanical Power Mining Petroleum and Metallurgical, Public Works and Structural Engineering.

The Faculty of Engineering of Cairo University, again as an example, has the following research Centers and Laboratories: Architectural and Engineering Design Center, Center for Advancement of Post-Graduate Studies and research in Engineering Sciences (CAPSCU), Center for Advanced Software and Biomedical Engineering Consultations, Center of Studies and Design for Water Projects, Center of Studies and training, Civil Engineering Center, Concrete Research Laboratory, Engineering Center for Archeology and Environment, Energy research Center, High Tech Design and Consultation Center (ICT), Material Testing Lab, Soil Mechanics and Foundation Research Lab, Technical Center for Job Promotion, Center of Manufacturing Studies, Highway and Airport Engineering Research, Tribology and Spare Parts Center and The Unit for Production and Management.

University staff members are usually experienced researchers, having obtained their PhD degrees from prominent international centers and having gone through the usual postdoctoral research experience.

This was just one example of education and research scientific activities at on Egyptian university. Other comparable activities can be also found at other universities such as Ain Shams, Alexandria, Mansoura, Assiut, the American University in Cairo, The German University in Cairo, etc.

4.2.2. National Research Center (NRC)

The National Research Centre is the largest multidisciplinary R&D Center devoted to basic applied research within the major fields of interest. It is the largest of all institutions affiliated with the Ministry of Higher Education and Scientific research and employs about 70% of all scientists working in research institutions. It was established as an independent public organization at 1956, with the aim to foster basic and applied scientific research particularly in industry, agriculture, public health and other sectors of national economy. Between the sixties and eighties 6 divisions of NRC developed into independent research institutes:

The National Institute of Standards Petroleum Research Institute Central Metallurgical Research and Development Institute Theodore Bilharz Research Institute Ophthalmology Research Institute Electronics Rese

The Research and Innovation System in Egypt

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