Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameMSME Support Programme in Egypt and the Social Fund for Development

2. Requestor Information

Name: Eng. Mohamed HammamTitle: Assistant to the Minister in charge of international, Regional and Arab Financing institutions and Organizations

Organization and Address: Ministry of Planning and International Cooperation (MoPIC)

Address: 8 Adly Street, Cairo, Egypt

Telephone: +(202) 2391 2815 - 2391 6214 Email: mehammam@gmail.com

3. Recipient Entity Name: Ms. Ghada Waly Title: Managing Director

Organization and Address: Social Fund for Development (SFD)

Address: 120 Mohie El Din Abou ElEzz St., Dokki, Giza, Egypt

Telephone: +(202) 3332 2303 Email: ghada.waly@sfdegypt.org

4. ISA SC RepresentativeName: Richard Jones Title: Director, Donor Co-financing

Organization and Address: European Bank for Reconstruction and Development, One Exchange Square, London EC2A 2JN, United Kingdom

Telephone: +44 20 7338 7948 Email: jonesr@ebrd.com

5. Type of Execution (check the applicable box)Type Endorsements Justification

Country-Execution Attach written endorsement from designated ISA

√ Joint Country/ISA-Execution Attach written endorsement from designated ISA

The project will be jointly executed by Egypt and EBRD. Component 1 (Legal and regulatory reform) and Component 3 (Strengthening data analysis) will be executed by the country. Component 2 (Promotion of women entrepreneurship) will be executed by EBRD

January 25, 2013

acting as ISA. The Bank has a dedicated team in Egypt providing advisory services to MSMEs and will make available additional financial resources (see budget) to implement the Women Entrepreneurship programme in Egypt. In order for the country to benefit from EBRD’s expertise and co-financing, Component 2 has to be executed by the ISA.

ISA-Execution for Country Attach written endorsement from designated ISA

(Provide justification for ISA-Execution)

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

6. Geographic Focus√ Individual country (name of country): Egypt

Regional or multiple countries (list countries):

7. Amount Requested (USD) Amount Requested for direct Project Activities:(of which Amount Requested for direct ISA-Executed Project Activities):

US$ 2,744,000(US$ 1,625,000)1

Amount Requested for ISA Indirect Costs:2 US$ 192,080Total Amount Requested: US$ 2,936,080

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: March 11, 2013 Closing

Date:April 1, 2017 End Disbursement

Date:April 1, 20183

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√

Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

√Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

1 For more details please refer to the budget breakdown in section 20.2 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.3 This extended period is required to ensure full disbursement of all committed activities in line with EBRD standard procedures.

B. STRATEGIC CONTEXT

10. Country and Sector Issues

In the wake of the January 25, 2011 “revolution”, expectations for change in Egypt have reached unprecedented heights. The Egyptian economy still faces key economic and social challenges. The slowdown in economic activities throughout 2011 and into 2012 relative to Egypt’s potential levels pushed up the official unemployment rates to reach 12.6%4 by end of June 2012, compared to an unemployment rate of 11.8% in June 2011. Though, GDP growth in 2011/12 reached 2.2%5, some 0.4 PPT higher than the rate achieved in 2010/11, real economic activity remains below its potential levels. In addition, the budget deficit widened notably during July-October 2012/13 to record some EGP 70 billion (3.9% of GDP)6, up from EGP 47.2 billion a year earlier (3.1% of GDP). This had its toll on the private sector, as bank lending activities to the private sector has weakened, with almost 53% 7 of total deposits directed to finance government borrowing needs. Such macro-economic trends make it increasingly difficult for the private sector in Egypt, which MSMEs constitute the bulk of it.MSMEs make up over 99.7% of all private non-agricultural enterprises in Egypt and account for 85% of non-agricultural private sector employment and almost 40% of total employment8. MSMEs have been the primary absorber of labour force entrants over the past years and contribute significantly to employment generation, albeit much of it is of an informal nature. MSMEs are also the major provider of products and services for local markets, particularly lower-income segments with limited purchasing power. Despite the potential it holds, MSME sector in Egypt faces a multiplicity of constraints that hinder its performance and affects the outcome of its developmental role. In addition to the well-known financial constraints, MSMEs face a myriad of non-financial obstacles such as obtaining the required inputs, producing and marketing a competitive product, obtaining knowledge on the latest know-how and on market requirements, in addition to an inadequate institutional, legal and regulatory environment.Legal and regulatory context:Diligent efforts by the government, the Social Fund for Development (SFD) and concerned NGOs have helped in improving the institutional set-up that affects the operations of MSMEs (e.g. the setting up of One-Stop Shops). However, little progress has been made in reducing informality levels over the past years. This suggests that current policies and programmes are not sufficient to solve this problem, and ongoing regulations continue to hamper the potential of the MSME sector.Women entrepreneurs and Business Development Services (BDS) context:According to current literature, women-owned micro and small enterprises make up 18% of the total number of micro and small enterprises. As size grows, levels of female ownership decrease. Women-owned enterprises have lower levels of capitalisation, are less likely to employ other workers, more likely to be in retail trade, less likely to export and less likely to be registered. There is significant untapped potential to encourage more women to enter the labour market and to consider entrepreneurship as an option. Barriers to their entry include social and cultural resistance in the home and outside; low education and literacy levels; the lack of essential business training; the absent of business development services and markets; low property ownership rights; and difficulties dealing with regulatory authorities. These trends are borne out by Egypt’s performance in the Third Billion Index. The country’s overall index score is 38.6 (108th country out of 128)9.In sum, with respect to women’s entrepreneurship in Egypt, there appear to be two major challenges. The first is to create a cultural, social, and economic environment that is more favourable to the emergence of women as entrepreneurs, and the second is to ensure that women who already have their own enterprises have adequate access to the resources and support needed for sustainability and growth, that is, financing, technical and business management training, information, BDS, business networks, and technology.On the supply side, business advisory services targeting MSME and women entrepreneurs remain limited. While there are a number of existing programmes that seek to address these constraints, the lack of coordination among these programmes, together with a lack of clear and effective leadership to represent the needs of the sector and facilitate the introduction of necessary changes, have resulted in limited positive impact.

4 Central Agency for Public Mobilization and Statistics (CAPMAS)5 Central Bank of Egypt (CBE)6 Ministry of Finance (MoF)7 CBE8 CAPMAS Establishments Census, 20069 Aguirre, d., et al, 2012. “Empowering the Third Billion: Women and the World of Work in 2012”. Booz and Co.

11. Alignment with Transition Fund Objective

The objective of the Transition Fund (TF) is “to improve the lives of citizens in transition countries, and to support the transformation currently underway in several countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms”. In that context, the alignment of this Project with the TF objective is in on the following fronts:

1. Strengthening public institutions: the Project will entail enhancing the capacity of the SFD to support the MSME sector, including in delivering non-financial services for women entrepreneurs.

2. Sustainable and inclusive economic growth: the provision of non-financial services that are tailored to women owned businesses, will have direct impact on the performance of assisted MSMEs, on GDP value added, and thus will contribute to inclusive economic growth.

3. Advancing country-led policies and institutional reforms: the Project’s first component is dedicated to strengthening SFD’s advocacy and policy formulation capacity, making it aligned with both the institutional capacity reforms and advancing country-led policies with regard to MSME development.

With regards to the TF pillars, Egypt, being a transition country participant in the Deauville Partnership, and based on the call for proposals for the TF, is presenting this Project Proposal which corresponds primarily to the thematic area/pillar entitled: “Investing in sustainable growth”. The main goal of the Project is to support the growth and development of MSMEs by improving the enabling environment in which they operate, as well as through the capacity building of the SFD in order to enable it to effectively and efficiently deliver/facilitate services to MSMEs. In addition, given that the Project will have a direct effect on enhancing female labor force participation, the Project is also aligned with the thematic area: “Inclusive development and job creation”.

12. Alignment with Country’s National Strategy

The areas of intervention identified in the document lies within the GOE’s vision of private sector development in general, and MSMEs in particular, as stipulated in Egypt’s Near Term Plan document. Particularly under the sections on “reducing the administrative burden and simplifying the regulatory environment for SMEs”, and “Improving entrepreneurship policies, including women's entrepreneurship”. The measures in the document are considered as the near term strategy for the governmental organizations who drafted it (Ministry of Foreign Trade, Ministry of Finance, Ministry of Foreign Trade and Industry, Ministry of Investment, and the Social Fund for Development),. The document was also presented to the Deauville Partnership as such at the EBRD on 1 November 2012.10

C. PROJECT DESCRIPTION

13. Project Objective

The Project’s objective is to strengthen the capacity of the SFD to support the MSME sector in Egypt with a particular focus on promoting women entrepreneurship.

10 It is to be noted that the Near Term Plan was developed by the SFD, after a consultation process with key government Ministries; Ministry of Foreign Affairs, Ministry of Foreign Trade and Industry, Ministry of Investment, and Ministry of Finance.

The Project lies within a larger policy and implementation framework/strategy that the SFD is adopting on a national level for the MSME sector.

14. Project Components

Component 1: Legal and regulatory reform to strengthen SFD advocacy and policy formulation capacity to support the MSME sectorThe SFD was established in 1991 with the mandate to support MSMEs in Egypt through the provision of financial and non-financial services. However the SFD suffers from a confused image following the adoption in 2004 of the Law 141. The Law, which is entitled the Law on the Development of Small Enterprises, but is often referred to as the SFD Law, contains a mixture of provisions that define SFD’s role and powers as well as the small business sector as a whole (for instance, by defining small businesses). This confusion has resulted in the perception of the SFD as a regulator or oversight authority, rather than as a facilitator and advocate of the sector, serving its stakeholders’ needs. In practice, many of the powers granted to the SFD (via their regional offices and One-Stop Shops) were not implemented by the relevant administrative bodies. Moreover, this has hampered the ability of the SFD to act as a strategic entity. It was therefore discussed and agreed between the EBRD and the SFD that it is a priority for the Law 141 to be reviewed and revised in order that the SFD can achieve its objectives. This component consists of providing the SFD with technical assistance in revising the Law 141 and its Executive Regulations, leveraging on the EBRD’s Legal Transition Team experience in supporting MSME development.Sub-components and activities in this component will include: Sub-component 1.1: Developing a strategy for the SFD and an appropriate governance structure. This will be done through the hiring of a Senior Strategic Adviser whose role will be to develop, in close coordination with the SFD management, a revised strategy where all functions of the SFD would be defined, and a governance structure put in place.Sub-component 1.2: Drafting a Law on the SFD to clarify SFD’s mandate. This will be done by decoupling the SFD mandate from the actual regulation of the small business sector (in Law 141). The new Social Fund for Development Law/regulations will define the SFD objectives, governance and powers. The drafting of the new SFD law will be undertaken by two newly hired Junior Policy Advisers, managed and coached by the Senior Strategic Adviser, with the view of this new draft being presented and eventually adopted by the Egyptian Parliament, accompanied by all necessary regulations (still to be defined).Sub-component 1.3: Developing recommendations in order to create a better operational environment for MSME. This will entail reviewing one of the features contained in the Law 141 which has proven not to be satisfactorily implemented, namely the operational environment for MSME creation and the responsiveness of public administration in the One-Stop Shops run by the SFD. Recommendations will be provided by external consultants as to how the One-stop Shops operated by the SFD (and possibly those operated by the General Authority for Investment GAFI) could be made more efficient and integrated into the working of public administrative bodies which play a role in the start-up of MSMEs. Building from the EU Small Business Act (2008) and the experience in EU member states and other EBRD countries and under the EBRD guidance, the consultants will be expected to make specific and practical proposals which would be presented in a White Paper to all stakeholders with the view of the White Paper being endorsed and eventually acted upon. This work will build upon past and on-going assistance provided to the SFD, in particular the Review of the Operations Manual of the One Stop Shops, funded by CIDA, and also a Study of the Business Development Services of the SFD prepared with USAID assistance.

Sub-component 1.4: Developing an advocacy and policy function of the SFD. This will entail building the capacity of the SFD to advocate for MSMEs, build consensus among various stakeholders on key policy issues, and formulate policy guidance on pertinent issues, such as but not limited to, the micro-finance regulation and the transformation of existing NGOs (in particular the ones with which the SFD works in order to provide funding to micro-enterprises) in profit-making entities better equipped to meet the needs of their clients as per the soon-to -be-adopted Micro-Finance Law. This will also build upon the hands-on knowledge gathered through the implementation of Components 2 and 3 below. In practice, the Policy Unit of the SFD will start operating, staffed by the two Junior Policy Advisers hired for the entire duration of the project, under the supervision of the Senior Strategic Adviser. The Unit would work closely with the external consultants in the development of the White Paper, in order to be able to follow up on it once this has

received endorsement.Component 2: Promotion of women entrepreneurshipWith respect to women’s entrepreneurship in Egypt, there appear to be two major challenges. The first is to create a cultural, social, and economic environment that is more favourable to the emergence of women as entrepreneurs, and the second is to ensure that women who already have their own enterprises have adequate access to the resources and supports needed for sustainability and growth, that is, financing, technical and business management training, information, business development services (BDS), business networks, and technology. That is why activities suggested under this component focus on creating successful stories of women entrepreneurs to be disseminated and showcased in order to enhance awareness of the role of women in entrepreneurial activity and the contribution they make to the economy and to society in general, and to promote entrepreneurship as a viable and feasible employment opportunity for women.This component (including its sub-components) will be implemented by the EBRD (the ISA for this proposal) in partnership with SFD and in cooperation with other relevant institutions including the Egyptian Banking Institute, the National Bank of Egypt and women associations in the country (e.g. Egyptian Business Women Association (EBWA), Assiut Businesswomen’s Association, The Women Business Development Centre (WBDC), Businesswomen of Egypt 21 (BWE21), Businesswomen for Development (BWD)).The EBRD will implement this component leveraging on its experience in supporting small businesses and ‘Women in Business’, particularly through its Business Advisory Services (BAS) and its existing activities (and team) in Egypt. Through the implementation of this component, the SFD, who will allocate dedicated staff, will therefore also gain experience, knowledge and best practices in the promotion and support of small businesses and women entrepreneurs in particular.This component will include the following sub-components:Sub-component 2.1: Implement two year pilot project to promote women entrepreneurship in 3 key regions of Egypt (Greater Cairo, Delta and upper Egypt).This sub-component will involve the implementation of a pilot project to support women entrepreneurs to access non-financial business development services in order to increase their performance following the EBRD Business Advisory Services (BAS) model. Through the implementation of this component, the SFD, who will allocate dedicated staff, will therefore also gain experience, knowledge and best practices in the promotion and support of small businesses and women entrepreneurs in particular.Activities will be targeted to enterprises with majority women ownership and women managed enterprises active in 3 key regions of Egypt: Greater Cairo, Delta and Upper Egypt. These focus areas were identified on the basis of the high number of women clients of the SFD, following an EBRD mission to the SFD in January 2013Activities in this sub-component will include:

- Business Advisory Services (BAS) projects, tailored to women owned/managed enterprises in need of targeted advisory services. BAS projects will cover a wide range of advisory services in the areas of: marketing, strategy, organization, operations, information communication technology, engineering solutions, quality management, resource efficiency, environmental management. Support provided by the local team within BAS projects will include: Project Development including enterprise diagnostics, matching enterprise needs (demand) with consultancy offerings and support in defining consultant assignments; Monitoring during project implementation; Flexible Grant up to 90% and capped at €10,000. Grant levels will be set annually to reflect market conditions with higher grants usually allocated to smaller enterprises, those located outside the capital city and for projects that are more complex and/or not widely available; Evaluation BAS follows up one year after project completion to assess the impact of the project and steps taken by the enterprise to continue their growth, including through access to finance. The impact targets set out in the results framework are verified one year after completion of the project. Therefore indicatively the verification will start at the end of year two and will continue throughout years three and four.

- Ongoing business advisory support (coaching) to women owned/managed enterprises supported through BAS projects. This will be provided through training local business advisers to provide coaching support to the women entrepreneurs on a weekly basis over a year. The assistance will be provided on a cost-sharing basis where the enterprise contribution is not expected to exceed €100 per month.

- Mentoring programme to assist women owned/managed enterprises supported through BAS projects to grow their

businesses over the medium to long term. Matching women entrepreneurs with successful women in business leaders in the region and abroad will enable women to share experiences and develop their management, leadership and personal impact capabilities. The mentoring programme will be run in partnership with existing international and local mentoring initiatives to avoid duplication of efforts.

- Entrepreneurship training courses for established women entrepreneurs in areas such as sales and marketing, financial management, use of information communication technology (ICT) to enhance operational efficiency, HR management. The workshops will also serve to create formal and informal networks of women in business in each country. The specific topics will be agreed with relevant stakeholders.

- Linking with SFD partner financial institutions to improve access to credit for assisted women entrepreneurs, based on business plans developed in BAS projects or in supported training. Activities in this domain will include: introducing women entrepreneurs to available lending facilities and lending terms; entrepreneurship training courses focused on understanding and addressing lenders’ requirements; facilitating links between women entrepreneurs, lender and relevant stakeholders.

- Promoting networking opportunities by establishing partnerships with local stakeholders. Regular events and networking opportunities for women entrepreneurs and women in business will be supported to promote the sustainability of the women in business initiative. Cooperation will be ensured with relevant institutions and stakeholders in Egypt to ensure cooperation and avoid duplication of efforts.

- Visibility and dissemination activities to showcase best practices and successful stories of women entrepreneurs . Activities will be aligned with SFD’s efforts to create a heightened public awareness of the role of women in entrepreneurial activity and the contribution they make to the economy and to society in general, and promotion of entrepreneurship as a viable and feasible employment opportunity for women.

On the job training for SFD staff. Through the implementation of this component, the SFD, who will allocate dedicated staff, will be trained on the job and gain experience, knowledge and best practices in the promotion and support of small businesses and women entrepreneurs in particular. SFD dedicated staff, with assistance from EBRD, will document the pilot and develop an operation manual, based on the experience from the pilot, which will be used for the extension exercise as described in sub-component 2.2 below.

To qualify for assistance, enterprises will need to meet the following criteria: up to 250 employees; operate for a minimum of 2 years; be majority privately owned and majority owned by local nationals and have majority women ownership and/or management; operate in all sectors except banking, financial services and insurance; enterprise and management should be credible and respectable having no previous or ongoing legal proceedings which may affect the implementation of the activities or constitute reputational risk to the EBRD or the donor; should have a discernible competitive advantage, credible track record over recent years, be financially and commercially viable at the time of the application and have the management and financial resources to follow through any business advice and take effective action.; have a genuine need for business advice and a capacity to absorb the assistance given yet have little or no previous experience of using external consultants, and/or do not have resources to finance a complete project; be ready and able to pay at least 10 per cent of the total net project cost; management should have a realistic feel for the problems, opportunities and capabilities of the enterprise, be open to accepting advice, should be committed to developing the enterprise, be open to accepting advice, show real support for the advisory project, be transparent and prepared to share the enterprise financials.

Sub-component 2.2: Extension of the pilot and its further implementation over an additional two year period . Subject to the successful implementation of the pilot, the pilot could be replicated and/or extended to: other regions of Egypt; provide support to women start-ups with feasible business ideas; provide support to other MSMEs segments such as youth, particular clusters or focused activity sectors. The scope of activities and expected outputs and outcomes would be defined in partnership with SFD taking into account lessons learned from the implementation of

the pilot project.Component 3: Strengthening SFD’s data analysis to enhance targeting and monitoring mechanismsThe SFD currently has large databases in which it collects data on its clients and recipients of its services. These databases capture the nature of SFD’s outreach along with the scale and accessibility of its services through data collected at the demographic and geographic levels, and broken down by business size and type, along with gender and age. This serves the SFD in helping to map the scope of its activities through its regional offices. However, some gaps in the data exist, restricting analysis on penetration of its services and evaluation of its targeting and monitoring mechanisms.This component aims to leverage the expertise of EBRD’s Office of the Chief Economist to assist the SFD in strengthening data collection and analysis to further enhance its ability to target and monitor its loans, BDS delivery and their impact on the identified vulnerable target groups (in particular: women and youth). This will also guide the recommendations for enhancing SFD’s operating environment in the MSME sector by providing the necessary evidence needed for policy formulation (see Component 1). In addition, the collection and provision of better segmented data will serve to enhance the promotion of women entrepreneurship (see Component 2) by improving monitoring of the pilot and guiding its extension.Sub-components and activities in this component will include:Sub-component 3.1: Enhancing targeting and monitoring mechanisms. This will entail expanding the SFD’s database to include more variables that should improve post-disbursement/post service delivery monitoring and reporting. Activities will include hiring an expert to evaluate the current data-base, review reporting and monitoring mechanisms, and draft an action plan that will include how to integrate and collect new variables for better targeting.Sub-component 3.2: Strengthening SFD’s data analysis. This will include assessment of the research department’s personnel in the SFD, review of the current analysis undertaken, and suggesting actions to strengthen evidence-based analysis techniques. The SFD will allocate at least two dedicated staff, who will be involved in the implementation, gaining experience, knowledge and best practices in enhanced data analysis and monitoring.

15. Key Indicators Linked to Objectives

The key indicators linked to objectives will be as follows:11

11 The breakdown of indicators per component is as follows:Component 1: Legal and regulatory reform to strengthen SFD advocacy and policy formulation capacity to support the MSME sector [Outcome: Strengthened SFD advocacy and policy formulation capacity to support the MSME sector]

- A strategy for the SFD and an appropriate governance structure approved by the SFD Board of Directors

- A new draft Law on the SFD to be proposed for adoption

- A ‘White Paper’ providing recommendations to strengthen the operational environment for SME as defined above

- A Policy Unit established within the SFD comprising at a minimum two full-time staff

Component 2: Promotion of women entrepreneurship [Outcome: Strengthened women entrepreneurial activity and strengthened capacity of the SFD to support and promote women entrepreneurship]

- A functioning and recognised advocacy and policy formulation role of the SFD as seen by

New law on the SFD adopted White Paper on the operational environment for MSME endorsed by all stakeholders (including public

administrations concerned)

Impactful business advisory services for MSMEs delivered by the SFD as seen by:- Strengthened women entrepreneurial activity as seen by:

o Approximately 60 women entrepreneurs assisted with targeted advisory services, ongoing business advisory support and mentoring

o Improved performance of 60 assisted women owned/managed enterprises as seen by:o Approximately 150 women trained in advanced entrepreneurial skillso Approximately 15 local business advisers trained to support women entrepreneurs

Sub-component 2.1: Implement two year pilot project to promote women entrepreneurship in 3 key regions of Egypt (Greater Cairo, Delta and upper Egypt).

- Strengthened women entrepreneurial activity as seen by:

o Approximately 60 women entrepreneurs assisted with targeted advisory services, ongoing business advisory support and mentoring

o Improved performance of 60 assisted women owned/managed enterprises as seen by,:

At least 50% of assisted enterprises to increase turnover/productivity after completion of the project

At least 40% of assisted enterprises to increase employment after completion of the project

At least 10% of assisted enterprises to access finance after completion of the project

A least 25% of assisted enterprises to engage external advisory services independently after completion of the project

o Approximately 150 women trained in advanced entrepreneurial skills

o Approximately 15 local business advisers trained to support women entrepreneurs

- Strengthened capacity of the SFD to support and promote women entrepreneurship as seen by:

o At least 6 SFD personnel trained on the job to facilitate the provision of business advisory services to women entrepreneurs

o Creation of a manual for SFD personnel documenting the pilot projectSub-component 2.2: Extension of the pilot and its further implementation over an additional two year period.The indicators for this sub-component will be determined upon completion of sub-component 2.1

Component 3: Strengthening SFD’s data analysis [Outcome: Enhanced targeting and monitoring mechanisms of the SFD for pilot projects]Sub-component 3.1: Enhancing targeting and monitoring mechanisms

- Linkage and integration of better data analysis and reporting in the overall SFD service delivery strategy established, as seen by:

o Number and quality of reports and data taken into consideration in setting the agenda for the SFD’s BoD meetings

Sub-component 3.2: Strengthening SFD’s data analysis- Data system analysis institutionalized in the SFD, as seen by:

o Number of trained staff inside the IT and Research Departments

o Regularity of analytical reports

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)

Partnerships will be established with all relevant MSME stakeholders.

Concerning Component 1, partnerships will be sought with governmental organisations who play an important role in this sector, such as the General Authority for Investment (GAFI), the Central Bank, the Egyptian Financial Supervisory Authority (EFSA), the Egyptian Regulatory Reform and Development Activity (if and when such entity becomes again functional). Partnerships will also be sought from international and bilateral organizations which have played a key role in MSME development and regulatory reform, such as the IFC, USAID, CIDA, the EU, etc.

With regard to Component 2, partnerships will be sought with relevant institutions including the Egyptian Banking Institute, the National Bank of Egypt and women associations in the country (e.g. Egyptian Business Women Association (EBWA), Assiut Businesswomen’s Association, The Women Business Development Centre (WBDC), Businesswomen of Egypt 21 (BWE21), Business women for Development (BWD)).

Concerning Component 3, partnerships will sought with a number of existing entities that have collected data concerning the MSME section, in particular the Egyptian Banking Institute, which has conducted a national SME survey and built a database. The EBI, Central Bank, and the Central Agency for Public Mobilization and Statistics (CAPMAS) have conducted in 2010 an SME survey that involved around 40,000 enterprises. Lessons learned from methodology and variables used in this survey will be sought from these organizations.

17. Coordination with Country-led Mechanism/Donor Implemented Activities

SFD, with a Board of Directors (BoD) that is headed by the Prime Minister, and has key ministries, experts, practitioners, and private sector members. This structure of the BoD will facilitate fostering and consolidating a collaborative and consultative approach in implementing the proposed project. In addition, preliminary agreement was established with the Egyptian National Competitiveness Council (ENCC), which is submitting a proposal to the TF with the OECD, to have joint activities under this component with a focus on advocacy.

Similarly, the synergy between this component and the activities proposed under another proposal to the TF submitted by the SFD and African Development Bank on clusters (in particular component 1 on “ Policy recommendations towards an enabling environment for the development of MSMEs in organic clusters”) will be exploited. It is foreseen that the work conducted in both components will be undertaken by the planned Policy Unit in the SFD provided under this proposal. The BAS model developed in this project will be used to reach also women in clusters, as the main focus of the proposal with the AfDB is to better deliver non-financial services to MSMEs in organic clusters.

The M/SME Donor Sub-Group will be another important vehicle utilized by the Project to coordinate with other donor initiatives. The M/SME Donor Sub-Group was formed in June 2002, as one of the Sub-Groups of the Donor Assistance Group (DAG). It consists of all donors who have initiatives and an interest in small and medium enterprise development in Egypt. The Sub-Group is currently chaired by GIZ. Since its inception, the Sub-Group has been gradually evolving towards further crystallization of its mandate, objectives and activities. The current focus of the Sub-Group’s work is to establish clarity of roles and responsibilities among the various donors and Egyptian ministries and agencies that have an interest in M/SME development. The group's objectives are to: Mobilize synergy between donors to streamline objectives, avoid duplication of efforts and optimize benefits for M/SMEs, Create a forum for information sharing and intellectual stimulation, Create a venue for M/SME policy dialogue, and Ensure information on M/SME initiatives is shared among donors to establish the optimum opportunity for bi-lateral collaboration. Within this context continuous flow of information will be passed through this forum (by having EBRD

as a member) and donor experiences will be solicited so as to identify linkages and complementarities.

In addition to the abovementioned Group, there are a number of projects under the SFD with other donor agencies/organizations that are complementary to the work under this project where linkages are going to be made, namely; the cooperation between the SFD and UNWomen in issuing women IDs, and the cooperation between SFD and the Women Entrepreneurship and Leadership Program (WEL), with the American University in Cairo (AUC).

18. Institutional and Implementation Arrangements

Overall direction for the Project will be provided by the Project Steering Committee (PSC). Important responsibilities will also be delegated to the Project Management Committee (PMC). Day-to-day management of the programme will be shared by the SFD and EBRD, the latter acting according to the role identified in the Transition Fund Operation Manual.

i) The Project Steering CommitteeThe Project Steering Committee (PSC) will be responsible for:

providing the Project with overall strategic and policy direction; facilitating implementation of agreements; interpreting and recommending modifications to Project plans if deemed necessary; reviewing and approving work plans; reviewing and approving semi-annual Project progress reports; carrying out (as required) dispute resolution.

The PSC will meet semi-annually within the first year of the Project, and annually thereafter, or more frequently (on an extraordinary basis) as required. Decision-making by the PSC will also occur, as determined appropriate by the Chair, through exchange of letters or emails. The PSC will be comprised of the following members:Government of EgyptSFD representative - Managing Director of The Social Fund for DevelopmentMOPIC representative

EBRDEBRD representative

SecretariatSFD

ii) The Project Management CommitteeThe Project Management Committee (PMC) will be responsible for:

advising the PSC on strategic and operational aspects of the Project; preparing the Project annual work plans and semi-annual progress reports prior to their

submission to the PSC; reviewing Project progress and adjust for the upcoming period; proposing the timing and scope of monitoring and evaluation activities; providing ongoing advice and direction on the overall management of the Project (all three

components); carrying out (as required) dispute resolution; bringing issues to the attention of the PSC (as considered appropriate).

The PMC will meet on a quarterly basis, or more as required (on an extraordinary basis). The PMC will be comprised of the following members:

SFD Team Leader (to be appointed) EBRD Team Leader (to be appointed)

SecretariatSFD

iii) Project StaffThe Project staff for Component 1 will be established at the premises of the SFD. The component staff will be led by the SFD Team Leader, working closely with EBRD Project Component 1 Leader and will be supplemented with a Senior Strategic Adviser and two Junior Policy Advisers (to be financed from the requested contribution). The SFD Team Leader will, in close cooperation with the EBRD Project Component 1 Leader (from the EBRD Legal Transition Team), manage the External Consultants also hired from the requested contribution.

Component 2 will be executed by EBRD in cooperation with SFD. The existing EBRD Business Advisory Services (BAS) team in Cairo will be supplemented with 2 dedicated Project Specialists (to be financed from the requested contribution). The Component 2 Leader will be the existing EBRD BAS National Programme Manager. The 2 dedicated Project Specialists will have their main offices at the SFD and will spend at least 50% of their time at the premises of the EBRD. In addition, as the key implementing partner, SFD will allocate at least 6 dedicated staff, to be chosen according to the criteria set by EBRD, to support the implementation of the pilot in the 3 regions of Egypt who will report to the SFD and EBRD team leaders and will closely work alongside the EBRD team.

Component 3 will be implemented by the SFD with support from EBRD’s Office of the Chief Economist. In this country executed component, the SFD will allocate two dedicated staff to be responsible for the expansion of the database and enhanced monitoring. An external consultant will be hired to assist the IT and Data Analysis Units of the SFD in the implementation of this component.

19. Monitoring and Evaluation of Results

Project monitoring will be based on regular dialogue and meetings between EBRD and SFD representatives and staff, in addition to meetings of the Project Steering Committee (PSC).Progress Reports will be prepared for the PSC meetings, on a semi-annual basis for the first year of the Project and annual thereafter. A Final Report will be prepared at the end of the Project.In addition, activities under Component 2 will be controlled and monitored through the EBRD Business Advisory Services (BAS) Management Information System (MIS). EBRD policies and procedures covering topics such as selection, contracting and grant management are applied uniformly across all countries of operations through standardised process flows with clear delineation of roles and responsibilities. Advanced reporting features within the MIS enable the enhanced analysis of activities and achievements, and track progress against established objectives. At the project level, each BAS project is routinely monitored at three key stages of implementation – approval, completion and one year after completion. Metrics are captured over time on: percentage local ownership (disaggregated by gender), annual turnover, and number of employees (disaggregated by gender). The need for and ability of MSMEs to attract finance and investment is also monitored at each of these stages. Projects are conducted by local consultants on behalf of client MSMEs, hence the BAS team’s role is primarily one of facilitation rather than direct implementation of projects. To monitor progress and derive ‘lessons learned’ the BAS team evaluates each project using a standardised scoring system. Project implementation is assessed at completion in terms of relevance, effectiveness and efficiency based on the OECD DAC evaluation criteria. One year after completion, impact is assessed in terms of whether the advice was implemented and its overall effect on the business. Depending on the project objective, standard questions range from increased sales or productivity to quality certification or reduced emissions.

The BAS team then calculates an overall score, incorporating implementation and impact considerations, and assigns a project rating of unsatisfactory, satisfactory, successful or highly successful.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs12)

Cost by Component Transition Fund(USD)

Country Co-

Financing (USD)13

Other Co-Financing

(USD)

Total(USD)

Component 1: Legal and regulatory reform to strengthen SFD advocacy and policy formulation capacity to support the MSME sector

(a) Sub-component 1.1: Developing a strategy for the SFD and an appropriate governance structure

(b) Sub-component 1.2: Drafting a Law on the SFD to clarify SFD’s mandate.

(c) Sub-component 1.3: Developing recommendations in order to create a better operational environment for MSME.

(d) Sub-component 1.4: Developing an advocacy and policy function of the SFD.

919,000

183,00014

290,000

446,000

919,000

183,000

290,000

446,000

Component 2: Promotion of women entrepreneurship

(a) Sub-component 2.1: Implement two year pilot project to promote women entrepreneurship in 3 key regions of Egypt (Greater Cairo, Delta and upper Egypt)

(b) Sub-component 2.2: Extension of the pilot and its further implementation over an additional two year period. The scope of activities and expected outputs and outcomes would be defined in partnership with SFD taking into account lessons learned from the implementation of the pilot project.

1,625,000

812,500

812,500

1,625,000(*)

812,500

812,500

3,250,000

12 ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.13 SFD will provide sizable in-kind contribution in the form of provision of project staff (at least 10) and premises as outlined in chapter 18 of this application form. In addition, SFD will bear the cost of running the Policy Unit upon completion of the project.14 The line budget is for both sub-components 1.1 and 1.2

Component 3: Strengthening SFD’s data analysis to enhance targeting and monitoring mechanisms

(a) Sub-component 3.1: Enhancing targeting and monitoring mechanisms

(b) Sub-component 3.2: Strengthening SFD’s data analysis

-

200,000

100,000

100,000

200,000

Total Project Cost 2,744,000 1,625,000 4,369,000(*) EBRD co-financing: The EBRD intends to make available US$ 1,625,000 to co-finance implementation of Component 2 “Promotion of Women Entrepreneurship” of the proposed programme and has made all inquiries that could be made at this stage to ensure that such funding would be made available. As soon as the Transition Fund grant is approved by the Steering Committee, the Bank will seek to confirm internally co-financing in the amount of US$ 812,500 for sub-component 2.1. A further US$ 812,500 will be made available by the Bank to co-finance sub-component 2.2.

21. Budget Breakdown of Indirect Costs Requested (USD) Description Amount (USD)

For grant preparation, administration and implementation support:

192,080

Cost of administering the contribution (including audit fees, reporting, staff costs of Funds Accounting and Donor Co-financing, etc.)

82,320

Project monitoring and evaluation costs over 4 year period 109,760Total Indirect Costs 192,080

F. Results Framework and Monitoring

Project Development Objective (PDO): Strengthen the capacity of the SFD to support the MSME sector in Egypt with a particular focus on promoting women entrepreneurship

PDO Level Results Indicators*Unit of

MeasureBaseline

Cumulative Target Values**Frequency

Data Source/Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.)YR 1 YR 2 YR3 YR 4 YR5

Indicator One:A functioning and recognised advocacy and policy formulation role of the SFD as seen by: New law on the SFD adopted

White Paper on the operational environment for MSME endorsed by all stakeholders (including public administrations concerned)

Binary

Binary

No law

No

Yes

Yes

Once

Once

Egyptian Parliament

Minutes of the Stakeholders’ meetings

EBRD

SFD

Final reading of the Law passed

Final or informal confirmation by stakeholders that key recommendations of the Paper will be adopted and acted upon

Indicator Two15:Impactful business advisory services for MSMEs delivered by the SFD as seen by:Improved performance of 60 assisted women owned/managed enterprises as seen by: % of assisted enterprises to

increase turnover/productivity after completion of the project

% of assisted enterprises to increase employment after completion of the project

% of assisted enterprises to access finance after

% 0

0

50

40

Ongoing

Ongoing

Ongoing

SFD/EBRD

SFD/EBRD

EBRD

EBRD

15 Please also refer to chapter 14 where further information on impact monitoring of Component 2 is available.

completion of the project % of assisted enterprises to

engage external advisory services independently after completion of the project

0

0

10

25Ongoing

SFD/EBRD

SFD/EBRD

EBRD

EBRD

INTERMEDIATE RESULTS

Intermediate Result (Component One): Strengthened SFD advocacy and policy formulation capacity to support the MSME sector

Intermediate Result indicator One: A strategy for the SFD and an appropriate governance structure approved by the SFD Board of Directors

Binary No Yes Once SFD EBRD

Intermediate Result indicator Two: A draft new Law on the SFD to be proposed for adoption

No Yes Once SFD EBRD

Intermediate Result indicator Three: A ‘White Paper’ on the operational environment of SME

No Yes Once SFD EBRD

Intermediate Result indicator Four: A Policy Unit established within the SFD

No Yes Once SFD EBRD

Intermediate Result (Component Two): Strengthened women entrepreneurial activity and strengthened capacity of the SFD to support and promote women entrepreneurshipIntermediate Result indicator One: Women entrepreneurs assisted with targeted advisory services, ongoing business advisory support and mentoring

Number 0 20 60 Ongoing SFD/EBRD EBRD

Intermediate Result indicator Two: Women trained in advanced entrepreneurial skills

0 50 150 Ongoing SFD/EBRD EBRD

Intermediate Result indicator Three: Local business advisers trained to support women entrepreneurs

0 15 Ongoing SFD/EBRD EBRD

Intermediate Result indicator Four: SFD personnel trained on the job to facilitate the provision of business advisory services to women entrepreneurs

0 6 Ongoing SFD/EBRD EBRD

Intermediate Result indicator Five: Creation of a manual for SFD personnel documenting the pilot project

No Yes

Intermediate Result (Component Three): Enhanced targeting and monitoring mechanisms of the SFD for Service Delivery

Intermediate Result indicator One: Linkage and integration of better data analysis and reporting in the overall SFD service delivery strategy

Qualitative

No Yes Annual Project reports, SFD departments’ reports, and annual plans

EBRD

Intermediate Result indicator Two: Data system analysis institutionalized in the SFD

Number and qualitative research

No, and 0 staff trained

Yes, and 2 staff trained

SFD/EBRD EBRD