Special Address to the OECD Council by Dr. Ahmed Darwish

Special Address to the OECD Council

by Dr. Ahmed Darwish, Minister of State for Administrative Development, Arab Republic of Egypt

Paris, 13 March 2008

Mr. Secretary General, Deputy Secretary Generals, Ambassadors; It is an honor to address the Council of the Organization for Economic Cooperation and Development. I would like to express my gratitude for this opportunity. The OECD occupies a key place in the global institutional architecture as a major source of inspiration for policy makers around the world. Your particular models of mutual examination, the pertinence and relevance of your standards and recommendations and the quality of your publications and analytical work are recognized and respected worldwide.

I am here to re-emphasize the Egyptian commitment to cooperation with all OECD countries that will benefit both. Egypt has always played a vital role in the Middle East and Africa and will remain the key to several pivotal issues among them: Energy (not only oil and gas but also atomic), Transportation and most important Water Management.

In the next few minutes I will briefly introduce the Egyptian National Agenda, our vision and mission and give a sample of the current initiatives both on the national and regional levels.

It is clear to every one that Egypt is actively and seriously pursuing an economic reform agenda, yet the current government has chosen such path for the benefit of the social agenda specially employment and availing more funds for social safety nets, education and health.

I am representing today a country committed to economic reform and modernization. The Government under Prime Minister Dr. Ahmed Nazif is working with determination since its appointment in 2004 to foster sustainable economic growth in order to raise living standards. Our long term vision of development includes two main goals: achieving high and sustainable growth and alleviating poverty and income disparity. To this end we are implementing a five-year national development plan seeking to achieve growth by maximizing use of the private sector as a catalyst for development, as well as changing the role of the government in managing the economy. In the past four years, economic reform has been at the top of our agenda. We have focused on changing the business environment to facilitate investment by reducing tax burdens, providing clear and stable investment policies and regulations, and improving the interface between business and government.

Within a relatively short period these reforms succeeded in boosting our GDP and FDI to record levels as you can see in the following graphs.

We have delivered one of the best performing emerging stock markets worldwide. With new, more transparent monetary policies and a renewed privatization program whose effects are already visible.

Another healthy sign of the Egyptian economy is its diversity such that it is not linked to a single industry. For example, the service economy is growing. In sum, we have revitalized the business community and fostered a worldwide confidence in Egypt’s economy. The transformation to an open market economy is influencing Egypt in different ways: more business is in the hands of the private sector, markets are liberalized through bilateral trade agreements and attractive investment opportunities have been created in a variety of sectors that reflect the diversity of our economy as you can observe in the graphs.

The recent success of our reforms and the positive tendency I have described do not mean that we have achieved our goals. On the contrary, the path of reform has to be maintained in order to give an effective answer to the needs of our country.

We have a very young population, 53% are younger than the age of 25. The population growth rate, although decreasing, is still significant. Therefore every year 650,000 young Egyptians enter into the job market. According to our estimations, Egypt needs to create 750,000 new jobs a year (to accommodate new entrants and erode some of the accumulated), which is a considerable challenge. Providing the conditions for adequate employment perspectives for the youth segment of the population is a critical target for the government. Although solid economic growth is improving the midterm scenario, unemployment is still at 9%. We need not only to accelerate the economic growth in order to create new opportunities but also to upgrade the workforce with the skills needed for the new jobs. We also have to guarantee that growth has an immediate impact on the life of the people. We are aware that success in the economy cannot happen without a comprehensive and coherent approach to reform, including social and governance aspects.

Governance reforms are an important step to achieve development, with the ability to compete in an open environment with other nations that are also modernizing their structures. I personally use the term modernization rather than reform in such contexts because modernization is a continuous process. We look forward to an agile Public sector; one that responds to the new global and boundary conditions and the new tools that keep emerging. The negative consequences of avoiding governance and public management modernization are higher than the potential cost of introducing them. We have ambitious goals regarding the improvement of the quality of life for Egyptian citizens by raising the standard of living through economic growth and job creation, by improving social services such as health, education, housing, transport and basic infrastructure and by providing the social safety nets. All these charters of our program have deep governance implications on which we are focusing particular attention.

Good governance is made up of an efficient, effective and transparent administrative body plus empowered citizens and an alert active civil society. Alert to use their rights, if we are not transparent, they will exert their right to information. They will hold us accountable and they will monitor how we follow the rule of law. Meanwhile they are active and will participate. Let's remember the basics: it's by the people for the people. This basic principle inspires our approach as we try to assure the efficient management of our public sector, as well as respond to the demands of transparency and participation of our citizens. Let me summarize some of our recent achievements in this domain.

On July 2005, the cabinet approved 26 principles for the restructuring of the government body on 3 levels. On the state level; the most important was the redefinition of the role of government by concentrating on regulatory issues and core business, the adoption of more decentralization by empowering the local government and the engagement of the civil society.

On the second level, we cater to an integrated organizational development program that tunes structures with management style and complements that with all the necessary tools for enterprise resource planning and service provision for the citizens.

On the base level, I would like to a make a special reference to our civil service system. The Ministry of State for Administrative Development has drafted a new civil service law – which was availed to all stakeholders to study and comment on - to replace the law ratified in 1978 which is still used despite the numerous social and economic changes that took place during the last decades. This law introduces new performance evaluation techniques that are more transparent and effective, strengthens career development and reinforces performance management. A specific aspect to which we pay considerable attention is the selection, appointment and management of senior civil servants. We consider leadership in the public sector to be a critical element for assuring good capacities for reform. Building knowledge and capacities on public management is another priority of our fields of action. For instance, the National Institute of Management (established in 1954) is mandated to perform training courses for top and middle management of the public sector, as well as providing different types of consultancies to public and private entities within Egypt and abroad. All these elements demonstrate our strategic direction and commitment to continuously work on creating a professional, efficient and accountable Public Administration.

Modernizing the administrative structures, functions and procedures is a permanent effort for governments committed to economic efficiency and good public services. In this regard, we have initiated a program to conduct functional reviews of selected government ministries and agencies in order to: 1) assess, develop and redefine the roles, missions and tasks of the different entities at the different levels of administration; 2) establish the appropriate role for the government in each sector by identifying redundant functions, duplication between and within institutions, missing functions and functions that could be rationalized. In general terms, we are moving the Government role from an executor to a policy maker, inspector and regulator, assigning a larger role in execution to the private sector. One of the main roles of the Ministry of State for Administrative Development is to perform process simplification in order to reduce bureaucracy, corruption and improve the quality of governmental services delivery. As an example, our policy of administrative simplification has reduced the period required to establish a company in Egypt from 55 days to an average of 3 days.

Improving the services delivered to citizens is a major ambition for which E-Government plays a key role. Over 70 government services are available at the Government services portal that includes not only information, but also inquiry and full transaction services (this included a revolutionary government policy change by accepting payment upon delivery). For example, filing tax forms or enrolment in Universities can be entirely done electronically (more than 400,000 students used the system last year). In addition to hundreds of other information services, I am particularly pleased to say that municipalities have made good progress in the setting up of one window stops. These examples of reform are an illustration of our approach whereby technical advances are being made increasingly available in a practical form to the general public. We have been working on spreading the culture of Excellence within governmental entities in order to upgrade the quality of governmental services provided to the different segments of the population. For instance, a National Excellence Award, targeting the different governmental outlets, websites and managers has been adopted since 2005.

Egypt is fortunate with its article 27 of its constitution. It states "Those who benefit from public projects/enterprises participate in managing and monitoring them according to the law". In that respect a school is a public project and parents are the beneficiaries, thus they participate in the board that runs the school not just monitor the process.

Quality and excellence cannot be achieved without a public administration fully aware of the high ethical standards it must guarantee. Fighting corruption is considered as one of the highest priorities of the Egyptian Government. Several local, regional and international initiatives have been undertaken in order to fight corruption, especially small irregular payments which creates a financial burden on middle and lower class Egyptian society. The Transparency and Integrity Committee (TIC) has recently been established within the Ministry to set strategies. It is composed of concerned stakeholders representing the government, media, academia, the civil society and the private sector. It is mandated to communicate with relevant agencies, report status, and spread awareness for fighting corruption in the public sector. For instance, we have created a new channel for citizens to communicate their complaints to the Cabinet and to ministries through a Citizen Relationship Management (CRM) system (single phone number all over Egypt – 19GOV). One of the main objectives of our Government is to empower civil society and realize an increased level of transparency concerning the up to date publishing of data, regulations and procedures. The Right to Information act has been drafted and will be presented to the Parliament in the near future.

On November 29th 2007, the Egyptian government was pleased to host the Third Steering Committee of the Good Governance for Development in Arab countries Initiative at ministerial level in Cairo. As the chair of this initiative, I am glad to inform you that participating countries welcomed its continuation, as agreed by the OECD Council on May 10th 2007. The event was a very successful milestone in the implementation of this outstanding experience of cooperation between the OECD and Arab countries. As you are all aware, the objective of this Initiative is to support reform of the public sector and encourage governance concepts in order to improve the environment for social, economic and human development in the Arab region. Participants at the ministerial conference were in full agreement that this objective can be better served by joint action and active co-operation.

Today, I aim to convey a clear message to the OECD Council from the Arab countries participating in the GfD Initiative: we have already built strong partnerships between our countries and we have developed a vibrant dynamic of cooperation in governance related issues. This process had already a valuable and effective role in the reform roadmaps of Arab countries. In the second phase of the Initiative we aim to provide more ambitious and measurable results within the framework set out during the first phase. The current economic and political will in the MENA countries provides a unique opportunity to achieve this goal.

In the image, you can observe in simple data the positive trends of the Arab region economy. This process of economic growth is accompanied around the region by an intensive agenda of economic reform. The liberalization of markets and the new role of the state in the economy and the society is a visible regional tendency. Some of us have taken bold steps, some of us are moving at a faster pace, but it is all over the place. The price of oil is certainly a factor making this region a center of investment (both producing and receiving), but this independent fact could not by itself explain the intensive momentum of reform and economic change we are witnessing. Egypt is leading a political commitment to reform to meet social demands for more efficient economies and better public services. Our economies started to be more integrated in the global markets and this is good news as they become more efficient and performing. The active integration of the Arab region in the global economy imposes to policy-makers a duty of analysis and strategic thinking. Time of change and reform is time of decisions, choices between different ways and different methods. We need good tools for this journey and the cooperation between countries is with no doubt a main source of knowledge and inspiration. Egypt is at the center of the MENA region and plays a strategic role in its development. From this position, we can express the extraordinary chances for a reinforced integration of the Arab region in the world economy and the need of adequate policies of cooperation to assure this goal.

We are following the OECD debates and analysis on the Political Economy of Reform with great interest. Reform has costs and benefits; very often the benefits tend to come later. Even when the objectives are clear, the way to translate into action is often difficult. A global approach to reform involves tackling difficult questions regarding the rhythm and the intensity of reforms. It is not an easy task to effectively sequence the multiple needs we face.

When budgetary constraints are significant and the government assists large numbers of citizens in situation of need, finding a correct path to implement the agenda of reforms is essential. Policy makers need specific tools for succeeding in this challenge: leadership, technical and institutional capacities, communication strategies, participation of stakeholders. At the heart of this process emerges the attention of good governance as the most important factor. We cannot succeed in our roadmap for reform without addressing the good governance challenge. The platform for common action that we have built during the last years has immense potential in this regard. It is now time to craft a new and stronger partnership that builds on our fresh ideas and renewed institutions, capitalizes on the lessons and best practices learned and to be learned, and provides a solid framework for long-term, systematic sustainable process and well integrated cooperation.

Arab countries are fully convinced of the value of international cooperation in supporting the policy makers involved in the implementation of reforms. National differences and the diversity of conditions in Arab countries demand solutions adapted to the local context, however, policy makers cannot disregard the importance of country comparisons and the common elements of certain problems which transcend borders. Three instruments are particularly suitable for the purpose of reform:

a) Regional policy dialogue on the management of public sector can result in government’s strengthened capacity to design, implement and evaluate public policies. Policy coherence in particular can considerably benefit from comparative approaches concerning the co-ordination of reforms in the different policy areas and across levels of governments;

b) Peer advice and joint learning activities is becoming a frequent instrument of common action. Arab countries are increasingly asking for peer advice, a tool that has proven very effective for improving public policy in OECD countries. By including the view of policy practitioners from other countries, this method ensures a better understanding of projects currently underway. Our Initiative has a major role to play in enhancing co-operation and integration of views between Arab policy makers.

c) Monitoring and measuring tools for policy-makers are needed for setting objectives. The setting up of reliable systems of indicators requires regional approaches to guarantee adequate comparison. Working in this direction is a long term objective that has to be built on consistent methodologies adapted to the needs and conditions of the Arab region. The OECD is with no doubt the world champion in know how about these methodologies and we pay considerable interest to our cooperation in order to reinforce this instrument of policy action.

As chair of the GfD Initiative, I had the opportunity during the last three years of sharing with peers and experts from OECD and Arab countries several issues of common concern. We have participated in lively discussions, analysis and joint learning experiences at regional level. This experience has created mutual trust and a powerful working dynamic, which is an extremely effective tool for reinforcing and improving our daily action at national level. This initiative is an original and pioneering approach to international cooperation. It is not based only on the transfer of substantive financial funds but on the mobilization of knowledge and expertise. During the last three years Arab countries have devoted the time and experience of their officials at the highest level to the Initiative. OECD countries have contributed to the policy dialogue and capacity building by allowing their government experts to participate in the activities.

The credibility the initiative has gained will definitely encourage increased financial support from international and bilateral donors, both from OECD and Arab countries. For the period to come we intend to ensure strategic approaches in order to guarantee the complementarities between our Initiative and the existing co-operation programs in the Arab region. Egypt is fully supportive of this Initiative, as it is in total coherence with our national priorities and contributes to enhance our ambitious program of reforms.

The process of policy dialogue between Arab and OECD countries based on consultation, good practices and transfer of methodologies can be a very valuable input for our countries. Egypt considers that the partnership with the OECD in particular is a necessary input in order to create good conditions for growth and development I am glad that my Ministry will shortly have the occasion of addressing the Public Governance Committee to discuss with its delegates the current status of the Egyptian reforms in this area. This discussion will be an excellent opportunity for OECD delegates to learn more about us; for us to share our challenges and priorities with OECD officials with large experience on public governance reform; and for all of us to deepen the successful process of dialogue and cooperation between the OECD and the Arab countries towards the strategic aim of good governance.

Thank you for your attention.