In-depth: Poverty Reduction with a focus on Inclusive Growth

A teenager selling vegetables

Employment Creation: Under the umbrella of employment creation, UNDP is supporting the institutional capacity of the Social Fund for Development, and is helping it provide a technical and administrative framework, enabling it to create temporary, short term and long term jobs. Moreover, in response to the economic crisis and in support of job creation, UNDP mobilized US$ 5.5 million in Japanese funding in support of job creation through Public Works Programs. The program aims to respond to the urgent need to create short and medium term employment and to build capacities and skills of Egyptian unemployed youth in response to the current economic crisis.

Additionally, UNDP is extending its collaboration with Ministry of Communications and Information Technology (MCIT) to respond to the urgent need to address prevailing unemployment figures of youth (less than 30 years of age) in Egypt, who account for approximately 90% of the Egyptian unemployed according to the Egyptian Human Development Report 20120 (EHDR). UNDP is addressing the mismatch between private sector skills demands and women and men youth skills sets by providing youth with the necessary vocational training in IT and soft skills to increase their employment prospects. The intervention is geared towards short-term and quick impact objectives of creating increased self-employment and employability for young women and men through access to and use of technical, vocational and entrepreneurial skills training with special emphasis on Information and Communication Technology (ICT) on the one hand, and increased internship opportunities in private companies and/or other institutions for youth (both men and women) on the other.  UNDP mobilized USD 500,000.00 from the Government of Japan to implement these activities.

Furthermore, UNDP is supporting the establishment of inclusive markets that serve to strengthen macro-economic reforms and enhance national systems in the creation and sustainability of Micro, Small and Medium Enterprises (MSME). With respect to building capacity in the private sector to better respond to market changes and to serve the broader Egyptian population, UNDP has provided technical expertise in the development of a pro-poor responsible private sector. This effort is complemented by the Egypt ICT trust Fund (EICT-TF) activities in the area of ‘ICT for M/SME’, which aim to create job markets, unlock social capital, promote equity and foster innovation. It is to be noted that currently, social enterprises in Egypt are mostly pioneers; and the EICT-TF providing M/SMEs with the skills and information necessary to integrate ICT into their business models and realize the accompanying benefits.

Improving the Efficiency of Social Protection Programmes: In terms of improving the efficiency of social protection programmes delivered by the Ministry of Social Solidarity, UNDP is providing policy advice on alternative subsidy policies and programmes, and is supporting pilot models of conditional cash transfers and introducing evidence-based policy reforms that address poverty and vulnerability. Furthermore, UNDP is partnering with the Ministry of Communication and Information Technology to increase the use of ICT for pro-poor socio-economic development and to make Egypt far more competitive in this sector across the region.

Monitoring and Reporting on Poverty: UNDP has also assisted the Government in monitoring and reporting on poverty on a quarterly basis. Monitoring and Evaluation practices have been adapted to help the government assess progress on the Millennium Development Goals. Moreover, UNDP coordinates the publication of the Egypt Human Development Report, which brings a comprehensive analysis and strong recommendations on critical development issues to the policy table.

Poverty: Challenges

Picture of poor children smiling

Challenges in the area of poverty reduction include persistence in poverty (reaching 25.5% in 2012) despite relatively consistent economic growth, reflecting large disparities and inequitable growth; jobless growth with unemployment standing at around 12.4%, 90% of which are youth; unemployment was recorded was four times higher among women; shrinking public sector; inefficient safety net programmes unable to target the poor; and the Digital Divide: a globally competitive ICT sector needed to generate long-term employment aiming at equitably benefiting underprivileged Egyptians.

Egypt had a GDP growth averaging 7% between 2006 and 2008, which declined to 5.1% with the onset of the global crisis in 2009. By 2011 the GDP growth had slowed down to 0.4% due to the combination of the global crisis and the local situation. This will exacerbate poverty and hit those who are living below – or close to – the poverty line hardest. While rural poverty is higher than urban poverty, citizens living in both areas are bracing for tough economic times due to a sharp rise in unemployment, flagging tourism, declines in foreign and domestic investment, and a reduction in worker’s remittances.

Close to 32 million of Egypt’s 85 million citizens are under the age of 18.  More than 24% of young men of working age are unemployed (this figure jumps to 60% for young women), and identifying jobs for the 600,000 annual entrants to the job market has been a challenge and has negatively impacted levels of productivity and investments.  Government public works programmes are a critical, albeit temporary, stopgap measure that should be supported, though longer-term solutions need to be identified that target productivity, foster inclusive growth and labour-intensive investments, and generate decent jobs.