Efficient and Sustainable Infrastructure in Egypt

1. Reform recommendations

Abstract

This chapter summarises the OECD’s key reform recommendations grouped into five main areas: strategic vision, stakeholder engagement, project selection and prioritization, public procurement and public-private partnerships, and infrastructure operations and maintenance. The recommendations are based on the analysis carried out by the OECD that is presented in the subsequent chapters.

1.1. Strategic vision

• When reviewing Egypt Vision 2030 (EV2030) during future review milestones, consider the benefit of updating KPIs against the value of retaining EV2030’s long-term consistency. For instance, some changes resulting from unexpected and exceptional global events may be justified. Where this is the case, consider providing an explanation in EV2030 as to how circumstances have resulted in changes to EV2030. Ideally, KPIs should only be updated once their final achievement date has passed (i.e. 2030), helping ensure that the private sector can have a sufficient degree of pipeline certainty to invest.

• Ensure that EV2030’s KPIs, which are strategic and high-level, are supported by an adequate range of KPIs in subordinate sector plans. This is to provide officials with a more comprehensive overview of how Egypt is achieving its infrastructure goals. Each goal could have 4 – 6 KPIs that cover all relevant sectors encompassed by the goal, including all transport modes, electricity, water, health, education and telecommunications. The Sustainable Rural Sanitation Services Program with its Program-for-Results Financing model could be a good example for setting KPIs in these sectors.

• Direct MPEDIC to monitor whether KPIs set in EV2030, the National Climate Change Strategy 2050 (NCCS2050), the Nationally Determined Contributions (NDC) report and other strategic direction documents, are reflected in sectoral plans, spatial plans, cost benefit analyses (CBA), programme plans and project plans. While the KPIs should become more specific further down the planning hierarchy, there should be a clear visibility of a KPI set in a national strategy down to the project level, and all stages in between. To encourage this requirement among line ministries, MPEDIC can ensure it utilises all of the available incentives, such as the availability of sovereign funds.

• Ensure the National Climate Change Council (NCCC) and the Ministry of Environment (MoE) report on progress towards achieving the commitments in the Second Nationally Determined Contributions report. Progress can be measured using the KPIs set in the NCCS2050.

• Ensure that sector plans are routinely monitored in a consistent and methodical manner. This ensures agencies can assess whether they are on track to meet their commitments, or whether changes need to be made, and is also an important method of holding public officials accountable for their commitments. Egypt can establish systematic monitoring arrangements that focus on outcomes, as well as inputs and outputs, through the development of the Automated Information Management System (AIMS).

1.2. Stakeholder engagement

• Line ministries, delivery bodies and governorates could emulate stakeholder engagement practices used to inform the 2023 update of EV2030 (see section 3.2) when making significant infrastructure decisions. In particular, line ministries, delivery bodies and governorates should consider engaging stakeholders from the government, the private sector, civil society, academics and affected land owners. Organisers should also strive to include a diverse representation of people participating in the engagement exercise, including by gender, age, cultural background and those with disabilities.

• To identify the relevant stakeholders and define how they should participate in the infrastructure development process, line ministries, delivery bodies and governorates can apply the steps set out in 3.3.4 (Stakeholder Planning).

1.3. Project selection and prioritisation

• To ensure feasibility studies are more consistently developed, require all public and privately-funded investments assessed by MPEDIC’s Infrastructure Projects’ Feasibility and Public-private Partnership (PPP) Unit to be appraised against the steps set out in the Project Selection Checklist (see section 3.2). This assessment should be undertaken when assessing the quality of feasibility analysis, as required by item 9 of the Evaluation Criteria for Investment Projects.

  • While all steps must be met, because project selection can be a resource-intensive exercise, the degree of information-gathering and analysis needs to be proportionate to the scale and risk of the proposed investment. This will require MPEDIC’s Infrastructure Projects’ Feasibility and PPP Unit to apply judgment as to whether entities submitting feasibility studies have completed an adequate amount of information-gathering and analysis. When applying this judgment, officials can pay particular attention to the value of the project and whether it poses significant risks.

  • To promote awareness and compliance with this new requirement:

    • Update the relevant Cabinet circular(s) to create a formal requirement for all infrastructure projects assessed for alignment with the Evaluation Criteria for Investment Projects to apply the steps in 3.2 (Project Selection Checklist).

    • Appoint MPEDIC as the ministry responsible for the Project Selection Checklist and supporting guidance, promoting its use at the national level and with governorates, ensuring it is being applied in a way that fully assesses the value for money of investment proposals. MPEDIC should also develop and deliver training and guidance for line ministries, delivery bodies and municipalities and reporting on agency compliance with the guidance. This would complement MPEDIC's existing responsibilities under Prime Minister Decree No. 193 of 2020 and Law No. 18 of 2022, such as preparing the general manual for the development plan, including the setting of objectives, policies, determinants for selecting development programmes, project priorities, and performance measurement indicators.

    • When receiving feasibility studies as required by the Project Selection and Evaluation Criteria, MPEDIC should require agencies to submit additional information confirming each project’s engineering plans, project management arrangements, contracting and sub-contracting arrangements, risk mitigation strategy and processes for monitoring and reporting breaches of integrity standards. This should be consistent with the information requirements set out in the MPEDIC Feasibility Study Evaluation described in the Manual for the Preparation of the Annual General Economic and Social Development Plan, developed under the MENA-OECD Governance Programme (Ministry of Planning, Economic Development and International Cooperation, 2024[1]).

• MPEDIC should consider removing the weightings applied to several criterion in the Evaluation Criteria for Investment Projects where a yes / no requirement would better reflect the essential nature of the criterion. These include:

  • Determine the project’s precise location

  • A detailed description of the project that clarifies the project’s final outcome

  • Accurately determining the co-ordinates of the project location with a picture

  • The existence of a technically acceptable time frame for the project

  • The accuracy of estimating the required financial investments (and the sources of financing and their uses for the project)

  • The feasibility study or benchmarking has proven the feasibility of the new project, or a contract/assignment order/supply order has been attached to the already existing project

  • The project considers environmental dimensions.

• MPEDIC should also consider removing the criteria that prioritises projects that have either the availability or possibility of providing part or all of the financing for the project from sources other than the public treasury (these sources include grant, self-financing, etc.).

  • Internationally, this criterion is not commonly applied when undertaking value for money or quality assurance assessments because it does not assist with measuring a proposed investment’s economic, social or environmental impacts. As a result, including this criterion can give favour to proposed projects that happen to have a privately-financed component but do not deliver maximum net social, economic and environmental benefits, or may face technical issues.

  • In addition, while privately-funded proposals may appear to be no or low cost for the government, they risk drawing market capacity away from other projects that may generate greater benefits. Secondly, noting that the criterion prioritises proposals only partly funded by private parties, this risks the government having an ongoing financial liability for projects that may have low social returns.

1.4. Public procurement and public-private partnerships

• As a requirement for being granted funding, MPEDIC should ensure line ministries with responsibilities for infrastructure procurement are considering a sufficiently wide range of procurement methodologies for publicly-funded projects, such as negotiated procedures and competitive dialogues, among others. This will also ensure that when public sector comparators (PSC) are used, PPPs can be compared against a sufficiently wide range of public procurement alternatives.

• Ensure comprehensive application of the Public Procurement Law (PPL) across all related procurement processes. To fully leverage the entities’ purchasing power, it is important to promote open and competitive procurement processes wherever possible. Limiting the use of direct contract awards and minimizing reliance on exceptions to the PPL can help drive better value, foster market competition, and enhance transparency. Given the significant influence of public sector entities, particularly in delivering large-scale infrastructure projects, engaging multiple bidders creates opportunities for stronger agreements and improved outcomes. Article 62 of the PPL (2018) clearly outlines the limited and justified cases where direct awards may be applied, reinforcing the principle of competition as the default approach. Within contract and tender requirements, formalise the use of environmental, safety and social considerations.

  • Environmental considerations should include greenhouse gas emissions (GHG), biodiversity impacts, noise, dust, pollution and other construction impacts. Environmental considerations should be used both as contract requirements and evaluation criteria.

  • Safety considerations should include workplace safety measures, such as formal compliance with recognised workplace safety regulations, access to personal protective equipment (PPE) and procedures for managing emergency events. Compliance with these requirements should be binding contract requirements and not be part of the evaluation criteria.

  • Social considerations should include equal payment and non-discrimination in the workplace. Compliance with these requirements should also be binding contract requirements and not be part of the evaluation criteria.

• Provide a transparent online tender system that ensures tenders reach a wider range of potential bidders, either domestic and foreign, to participate in upcoming tenders. The examples from Korea and the EU referred to in Box 2.7 and Box 2.10 could serve as a source of inspiration.

• Use the MAPS Initiative (Methodology for Assessing Procurement Systems) to measure the need for improvement of Egypt’s procurement systems and skills. Applying MAPS would be a starting point to understanding improvements that need to be made in Egypt’s procurement system, assessing current infrastructure procurement systems and the skills and competencies of infrastructure procurement professionals.

1.5. Infrastructure operations and maintenance

• To improve asset management practices and maintenance forecasting, all public and privately-funded investments assessed by MPEDIC’s Infrastructure Projects’ Feasibility and PPP Unit should be appraised against the steps set out in 4.2 (Asset Management Plan Checklist). This assessment should be undertaken when assessing the quality of feasibility analysis, as required by item 9 of the Evaluation Criteria for Investment Projects.

  • This analysis should be undertaken in a manner that is consistent with the requirement to complete a maintenance and operations plan, which is set out in the MPEDIC Feasibility Study Evaluation described in the Manual for the Preparation of the Annual General Economic and Social Development Plan, developed under the MENA-OECD Governance Programme (Ministry of Planning, Economic Development and International Cooperation, 2024[1]).

  • While all steps must be met, the degree of asset management planning needs to be proportionate to the scale and risks present during the operations phase. This will require MPEDIC’s Infrastructure Projects’ Feasibility and PPP Unit to apply judgment as to whether entities submitting feasibility studies have completed an adequate amount of information related to their asset management plans. 

• To promote awareness and compliance with this new requirement:

  • Update the relevant Cabinet circular(s) to create a formal requirement for all infrastructure projects assessed for alignment with the Evaluation Criteria for Investment Projects to apply the steps in 4.2 (Asset Management Plan Checklist).

  • Appoint MPEDIC as the ministry responsible for the Asset Management Plan Checklist and supporting guidance, promoting its use and compliance at the national level and with governorates. MPEDIC should also develop and deliver training and guidance for line ministries, delivery bodies and municipalities and reporting on agency compliance with the guidance.

• Ensure that the Integrated System for Investment Plan Preparation and Monitoring (ISIPPM) has the capability to identify trends at the ministry and portfolio levels, alongside the current practices of analysing information at the project level. This requires ISIPPM to have the information gathering and analytical capabilities needed to standardize and compare information related to costs, time commitments and the achievement of intended benefits and outcomes across projects.

• MPEDIC to establish a central asset register that standardises the collection of key information inputs about all government assets. The asset register should be supported with guidance and regular training for users on the key information inputs, how often the register should be updated and how it can be used to inform maintenance and operations decisions.

  • Explore the potential for the asset register functionality to be added on to existing asset management tools, such as the Ministry of Information and Communication’s proposed digital state property management system and ISIPPM.

• To incentivise the uptake of a more standardised approach to recording asset information, MoF should make the allocation of operational expenditure conditional on whether line ministries are keeping the asset register up to date.

  • While this should be applied in the first instance to line ministries, explore the potential of these requirements being extended to regional governorates.

• Direct MPEDIC to review and report back on new reforms needed at the national level and within governorates that would enable and encourage line ministries and local bodies to enter new arrangements to share services, either vertically or horizontally. The review should include any incentives the national government can create that would encourage more sharing of services, such as making co-funding available for infrastructure delivery, operations and maintenance that have cross-institutional or cross-boundary governance arrangements. The review should draw from lessons learned from previous efforts to create inter-municipal co-operation in waste and water management. 

References

[1] Ministry of Planning, Economic Development and International Cooperation (2024), Manual for the Preparation of The Annual General Economic and Social Development Plan.