Overcoming Challenges in Building a Green Economy in Egypt

Egypt is a transcontinental country spanning the northeast corner of Africa and southwest of Asia. Within the two continents is a land bridge called the Sinai Peninsula.

Egypt’s heritage dates back to the 6th–4th millennia BCE, entailing some of the earliest developments of urbanization, writing, agriculture, governance, and organized religion, which made it the “cradle of Civilization’ once. But, how did Egypt descend into a quagmire of retarding economy, high unemployment rates, high poverty rates, low job opportunities today?

Since the Arab Spring revolution of 2011, political turmoil, violence, and terror attacks put Egypt on the back burner and spread misfortune in not only in Egypt but also the entire Middle East/North Africa regions.

In this article, I would be exploring the roles of green interventions and how entrepreneurial opportunities and technology can cut across in fixing the Egyptian economy.

Green Economy and Strategic Approaches by Egypt

A green economy is a conducive handle to sustainable and inclusive economic growth. The green economy focuses on achieving growth by efficient use of natural resources while reducing pollution and emissions of greenhouse gases. In its simple terms, a green economy is low-carbon, resource-efficient, and socially inclusive.

Green economy is gaining a lot of prominence in many countries in the world, including Africa. Unlike other African sub-regions of Africa, North Africa has limited natural resources and is also most vulnerable to climate change. Just a few years ago Egypt took an important step and actively launched a national strategy on the Green Economy. African Ministers Conference on Environment (AMCEN) (2) was held in Cairo from 16 to 19 April 2016. It called for the promotion of a clear development vision in the context of the international sustainability agenda.

Under Agenda 2030 and Paris Agreement: ‘From policy to implementation in Africa’, around 50 African leaders (1) came together to tackle sustainable development, desertification, and climate change. And most importantly they are focused on how to move forward for overall sustainable development.

Economic growth and social development policies have not brought the anticipated benefits. For this reason, North Africa particularly Egypt is employing consultation and inclusiveness and adapting to limits of its natural resources.

Industrial Policy

Egypt has a population of over 100 million. In 2020, its Free Economy Index score is 54.0 and is ranks as 142nd freest economy(3).

The Egyptian economy has declined for more than two decades. As per the survey conducted by the Economic Commission for Africa (ECA) in four countries of North Africa (Algeria, Egypt, Morocco, and Tunisia) in 2015, there is a general willingness among enterprises to implement green socially responsible activities. However, only a few adopt charters for sustainable development; mainly due to the lack of government incentives to cover the additional costs.

In order to expand economic freedom, the government should bring fiscal reforms and pursue pro-business policies to improve the investment climate. The countries’ economic performance largely depends on the exploitation of natural capital resources. The limited diversification of the national economies coupled with high dependence on international food and energy markets has rendered the country vulnerable to external shocks.

In Egypt, small and medium-sized enterprises constitute as much as 40 per cent of GDP(4). The industrial sector is, however, plagued by a lack of innovation, diversification and competitiveness.

Key strategic sectors of the green economy

The following key strategic sectors have potential for job creation and value addition.

1. Energy Efficiency

Since 2007, there has been a huge gap between energy supply and demand which continues to increase. Moreover, public expenditure on energy subsidies is unprecedented at 73 percent representing 21 percent of the country’s budget (5), according to the African Development Bank.

Egypt is lagging behind in placing a regulatory framework and financial mechanisms for the promotion of energy efficiency. She is, however, making an effort to reduce energy consumption in 2020 by 20 percent, focusing on reducing the energy consumption of public buildings and public lighting. Solar water heaters are also being manufactured for use in public offices, schools, hotels and health centers.

Special measures should be developed to support small and medium-sized enterprises. Controlling energy consumption and improving energy efficiency in industry is required not only for the protection of the environment but also to boost the competitiveness of the sector.

2. Solid Waste

Since 2000, Annual solid waste generation has increased by more than 36 per cent, according to SWEET Net. While in the urban areas, average solid waste collection rates range between 40 – 75 per cent, it lower in rural areas.

Formal sector recycling is only 2.5 % of the total collected waste and 8 % of composting (7). All of this has resulted in increased environmental damage and negative impacts on health.

There have been significant shortfalls in disposing of other types of waste like industrial waste, selective waste sorting, recycling and waste recovery. In fact, there is a lack of vision and clear policy in waste management coupled with a lack of expertise and the absence of effective mechanisms to strengthen private sector participation.

Though, the Government has renewed its interest in this sector with new guidelines that aim to increase waste recovery, share management costs and integrate the informal sector into a more efficient system; a lot more needs to be done.

Heavy investment is required in the sector for proper waste management. For example:

  • to turn waste to organic fertilizers and bio fuel facilities;
  • produce refuse-derived fuel for use as an energy source for cement factories and other industrial uses; and
  • procure innovative recycling technologies and equipment.

3. Agriculture

The famous Nile River flows through Egypt sustaining the Ancient Egyptian Civilization. Without its water and rich soil, the Egyptian civilization would not have emerged. Indeed, most Egyptians, in those days, lived near the Nile as it provided water, food, transportation and excellent soil for food production.


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This flourishing fertile land has, however, deriorated from the effect degrading biodiversity, erosion and desertification. In 2019, agriculture contributed around 11.05 percent to the GDP of Egypt compared to 30 per cent in the 1970s (6).

Though Egypt has the largest aquaculture industry in Africa that provides many jobs, producers face diverse constraints. There is a lack of effective food control systems ranging from difficulties in obtaining licences for establishing aquaculture; access to land, water, quality inputs, markets and export opportunities.

Huge investment is needed in organic farming; and there is a need to shift to modern irrigation systems. Directing investments to rural areas would contribute to enhancing equity, social cohesion. This would also lead to improved distribution of wealth and opportunities among the poor segments of the Egyptian population.

4. Water

Egypt is facing a severe water crisis. Population growth, urbanization, and increased agricultural and industrial activities continue to increase pressure on an already scarce resource.

Severe mismanagement of resources and a lack of investment in water infrastructure have led to Egypt being one of the most ‘water stressed’ countries in the world. At the present rate of consumption, says the UN, the country could run out of water by 2025(8).

Green interventions such as desalination and treated wastewater, upgrading and expansion of national water use-efficiency can help to reverse this trend. Moreover, investing in household water saving devices can accrue about 10 to 20 per cent, or 1.4 billion m3 of water savings annually.

Good governance and regulatory framework is required to bring efficiency in the use and allocation of water.

5. Renewable energy

Due to stagnation of investments and rise in domestic consumption , Egypt has become dependent on oil imports.

Egypt’s hydro power capacity is almost exhausted. Egypt has launched a variety of reforms to encourage domestic and foreign private investment in renewable energy. She has also introduced state-guaranteed feed-in tariffs. There is also an Electricity Act before her law makers.

Where the development of renewable energy is concerned, many policies and programmes have been initiated to increase the use of photovoltaic systems, concentrated solar power and wind. All of this aims to reduce dependence on fossil fuels, cut greenhouse gas emissions and create new jobs.

Conclusion

Egypt’s Strategy for Green Economy is indeed a great step forward in pursuing economic development .Having said that, Egypt needs to overcome the obstacle to reduce greenhouse gas emissions by curtailing the coal expansion and adapting low-carbon fuel sources or it would lead to air pollution.

While the Environment Ministry has rolled out radical changes like decreasing the dependence on fossil fuel energy and moving towards renewable energy resources, general commitment to this effort needs to grow in order to meet the ambitious goals of 2030.

Furthermore, the entire production systems which includes management of land and water resources, waste management and safeguarding biodiversity and ecosystems need to be revamped. Egypt needs an industry revolution in order to allow the Green Economy to thrive.

The approach toward Green Economy can successful if accompanied by a change in governance systems, the transformation of investment models, through fiscal instruments designed to steer existing financial resources towards green investments, better policy integration and, last but not least, the consolidation of efforts at national and local levels.

Citations

1.http://www.dailynewsegypt.com/2016/04/19/egypt-concludes-sixth-amcen-special-session-launches-national-strategy-green-economy/

2.https://www.un-page.org/may-egypt-launches-national-strategy-green-economy-amcen

3.https://www.heritage.org/index/country/egypt

4.https://globaledge.msu.edu/countries/egypt/economy

5.https://europa.eu/capacity4dev/unep/discussions/launch-egypt-green-economy-study

6.https://www.statista.com/statistics/377309/egypt-gdp-distribution-across-economic-sectors/#:~:text=In%202019%2C%20agriculture%20contributed%20around,percent%20from%20the%20service%20sector.

7.https://openknowledge.worldbank.org/bitstream/handle/10986/30317/9781464813290.pdf?sequence=12&isAllowed=y

8. https://ww.egyptindependent.com/egypt-may-face-fresh-water-shortage-2025/

Other References

https://europa.eu/capacity4dev/unep/discussions/launch-egypt-green-economy-study
http://www.eeaa.gov.eg/en-us/topics/management/greeneconomy.aspx
http://wedocs.unep.org/bitstream/handle/20.500.11822/32524/GEESS.pdf?sequence=1&isAllowed=y
https://www.uneca.org/sites/default/files/PublicationFiles/sro-na_green_economy_in_north_africa_print_eng_0.pdf
https://www.businessinsider.com/egypt-tech-scene-faces-two-major-challenges-say-industry-veterans-2019-3

reetikag.mahaja

I am Reetika Gupta from India and now living in the US. I have over 6 years of experience in the field of Marketing & Sales, Project Management and Market Research. I have worked with many NGOs in India and highly endorse Women and Youth Empowerment. I am also actively working with American Red Cross in the Bay Area, US and seek to help Disaster struck Areas. I would like to thank United Nations and Africa Association of Entrepreneurs for giving me the opportunity to work with them and throw some light on the current situation of SMEs and way forward.

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