Approach Paper The Arab Republic of Egypt Country Program Evaluation, Fiscal Years 2015–25 June 9, 2025 1. Evaluation Purpose and Audience 1.1 The Country Program Evaluation (CPE) will assess the performance of the World Bank Group’s support to the Arab Republic of Egypt from FY 2015 to FY25. The evaluation will focus on the relevance, coherence, and impact of the Bank Group’s contribution to Egypt’s key long-term development challenges over the period of the Country Partnership Framework (CPF) from FY15 to FY22 and part of the ongoing FY23–27 CPF. The evaluation seeks to identify lessons to inform future Bank Group engagement in support of Egypt’s development priorities, including the next CPF, which is due to commence in FY28. The primary audience for the evaluation includes the Bank Group’s Boards of Executive Directors, Bank Group management and staff working on Egypt, the government of Egypt, and a broad set of in-country stakeholders. Its findings and lessons may be relevant to other middle-income countries in the Middle East and North Africa and other Regions. 1.2 The CPE will evaluate three main areas of the Bank Group engagement, selected based on country diagnostics and analytics; a preliminary review of the portfolios of the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA); and early discussions with the Bank Group country team in Egypt. The evaluation areas are private sector–led job growth, household resilience, and energy transition. These areas are critical to achieving the government of Egypt’s objectives of sustainable, equitable, and socially inclusive growth as outlined in Egypt Vision 2030. 2. Country Context, Development Challenges, and Government Vision Country Context 2.1 Egypt’s strategic location and ownership of the Suez Canal gives it an advantage in terms of logistics, market access, and revenues, but it also exposes it to 1 regional conflicts.1 Two critical sources of revenues—tourism (8 percent of GDP in 2024) and the Suez Canal (2 percent of GDP in 2024)—have seen large volatility because of tensions in Libya and Sudan and the conflict in West Bank and Gaza and have not yet recovered to the prepandemic levels. The country has significant endowments of oil, natural gas, gold, and iron ore and exports both oil and gas. It became a net energy importer for the first time in 2009 as domestic consumption growth outpaced production. 2.2 Egypt’s GDP growth and per capita GDP growth have been volatile throughout the past decade and lagged middle-income country averages. During 2014–23, real GDP growth averaged 4.3 percent and real per capita GDP growth 2.3 percent, compared with 4.4 percent and 3.4 percent, respectively, in middle-income countries. Growth has been driven by large-scale infrastructure projects (for example, the new administrative capital) and energy sector investment (in gas and renewables). The share of tradable sectors in GDP has declined from about 60 percent of GDP in 2010 to 50 percent of GDP in 2023 (World Bank, forthcoming), reflecting the dominance of agriculture, gas and oil extraction, and construction in Egypt’s economy.2 At the same time, the private sector has failed to emerge as a competitive force (IFC 2020; World Bank, forthcoming). 2.3 To achieve sustained and inclusive growth, Egypt will have to address constraints on private investment, particularly the dominant role of the state and the resulting lack of market contestability (IFC 2020; IMF 2021; World Bank, forthcoming). Received analytics and diagnostics point to the presence of state-owned enterprises (SOEs) in almost every sector of the economy as being an important constraint on private sector development. In 2021, there were more than 300 publicly owned companies, including public business sector companies, public sector companies, and military-owned companies, and approximately 645 joint ventures and partnerships involving the state. Many of these SOEs register weak financial performance relative to SOEs in peer countries, while benefiting from an uneven playing field in relation to their private sector counterparts (IFC 2020; IMF 2021). 2.4 Egypt has experienced two macroeconomic crises in the past decade reflecting structural weaknesses in the country’s policy framework (figure 2.1). Both crises (in 2014 and 2021) were triggered by shocks, against the backdrop of persistent macroeconomic 1In 2015, Egypt completed a significant expansion of the Suez Canal at a cost of US$8 billion, funded mainly through domestic debt issuance, with the aim of converting the area into a global logistics hub. 2 Tradable sectors are agriculture, manufacturing, mining, petroleum, electricity, transportation, information and communication technology, the Suez Canal, and tourism, whereas nontradable sectors are construction, wholesale and retail trade, finance, insurance and social security, housing, utilities, and other services. 2 vulnerabilities. In 2014, political and social instability in the aftermath of the Arab Spring and a weak business environment undermined investor confidence, triggered credit rating downgrades, and lowered growth and employment. Over 2021–22, the combined impact of COVID-19 and Russia’s invasion of Ukraine exacerbated the same preexisting vulnerabilities, leading to another crisis. During both crises, Egypt experienced growing imbalances as a result of weak domestic revenue mobilization, high public spending, and sharp increases in public debt (figure 2.2). The balance of payments deteriorated because of attempts to stabilize the exchange rate at the cost of an overvalued exchange rate and rapidly depleting reserves. 3 Figure 2.1. Timeline of Events, FY11–25 F 12 14 ISN F 1 1 CPF e tended to F 22 F 23 2 CPF 2 11 2 12 2 13 2 14 2 1 2 1 2 1 2 1 2 1 2 2 2 21 2 22 2 23 2 24 2 2 IMF program o ra Spring dly Mansour Start o the IMF program o C I 1 Start o the S illion sworn in as e onomi S 12 illion pandemi e onomi approved a ting risis approved risis president Egyptian pound Mohamed del Fattah Egyptian pound devalued Morsi El Sisi ele ted devalued y 4 per ent ele ted president y 4 per ent president Source: Independent Evaluation Group. Note: CPF = Country Partnership Framework; IMF = International Monetary Fund; ISN = Interim Strategy Note. 4 Development Challenges 2.5 Egypt’s development challenges, the government’s priorities, and the Bank Group’s strategy and programs point to three areas of interest for this evaluation: (i) private sector–led job growth, (ii) household resilience, and (iii) energy transition. 2.6 The government of Egypt has recognized these areas of interest in its long-term development strategy—Egypt Vision 2030 (updated in 2021). The government’s strategy recognizes the leading role the private sector is expected to play in economic development and job growth, and the need for greater transparency and accountability in the public sector. The emphasis on inclusion incorporates improved social safety net targeting and better funding for education, particularly skills for jobs, and addressing gender inequities under the National Structural Reform Program. The ongoing National Structural Reform Program was originally approved for FY22–24. Egypt Vision 2030 also incorporates energy security and transition anchored in financial sustainability of the sector and private investment in renewables. Overcoming Private Sector Growth Constraints 2.7 A weak business environment, marked by constrained competition and market integration, was impeding private sector investment and growth and was not conducive to Egypt realizing its potential to become a trading and logistics hub for the region. Egypt’s share of private investment in GDP was only 8 percent in 2023, compared with 31 percent in middle-income countries on average. Perceptions of a growing and privileged role of the state in economic activities and concerns about competing on an uneven playing field have deterred private investment and compounded the challenges of diversifying growth from traditional sectors and reducing informality and unemployment (IFC 2020). The large state footprint, including the dated and untransparent SOE governance and operational frameworks, prevents the opening of the economy to private investment, particularly in commercial sectors. Enhancing the independence of regulatory authorities, reducing the scope for conflict of interest within the regulatory functions, and ensuring a level playing field for all economic actors could foster a more competitive business environment. Trade barriers due to policy and facilitation, especially a wide range of nontariff barriers, contribute to Egypt’s weak performance in exports and low foreign direct investments in nonextractive sectors (IFC 2020; World Bank, forthcoming). 2.8 Private sector growth was also constrained by a combination of persistent macroeconomic vulnerabilities and structural weaknesses in the policy framework. Reforms, which followed the macroeconomic crises, were supported by the Bank Group and the International Monetary Fund (IMF) and targeted critical challenges, including risks to fiscal sustainability and a weak business environment. In 2016, for example, Egypt introduced spending cuts, particularly to food and fuel subsidies.3 Egypt’s fiscal consolidation relied almost exclusively on expenditure cuts through austerity measures and reduced imports, rather than achieving sustainable improvement in the fiscal framework anchored in stronger domestic revenue mobilization.4 Protests against the austerity measures erupted, and spending gradually increased. Exchange rate stabilization led to growing pressure on the reserves once again. During the next five years, this created conditions for the second crisis in 2021, followed by another wave of reforms. These reforms targeted the business environment, particularly state ownership of commercial assets, government spending (especially fuel subsidies), and liberalization of exchange rate policy. However, improvements in the business environment have been slow, as have the reforms to state ownership of commercial assets. By 2023, exchange rate management had resumed in the face of still high inflation. Although government debt (excluding SOE debt) declined after peaking at 103 percent of GDP in 2016, it rose again because of the COVID-19 pandemic, reaching an estimated 100 percent of GDP in 2023 (IMF 2024). 3During the period from FY14–15 to FY23–24, the government expenditure declined from 30 percent of GDP to 21.7 percent. 4For example, the government spending on education declined from 3.9 percent of GDP in FY14 to 2.1 percent in FY23. Egypt’s average education spending over the past five years (2.3 percent of GDP) is low compared with middle-income country and lower-middle-income country averages for the same period, 3.4 percent and 3.8 percent, respectively. Figure 2.2. Egypt’s Main Macroeconomic Indicators, FY13–24 95 40 Share of GDP (%) 90 30 85 Share of GDP (%) 20 80 10 75 0 70 -10 65 -20 60 2014 2016 2018 2020 2022 Year Year General government net debt Primary balance Fiscal balance Revenue Expenditure 50 50 7 45 45 6 40 40 Exchange rate (LE/US$) 35 35 Annual growth (%) Inflation rate (%) 5 30 30 4 25 25 3 20 20 15 15 2 10 10 1 5 5 0 0 0 Year Year Inflation rate (period average) GDP growth (annual %) Exchange rate (period average) GDP per capita growth (annual %) Sources: World Development Indicators; World Economic Outlook. Note: LE = Egyptian pound. Reducing Household Vulnerabilities Through Job Growth 2.9 Progress on poverty reduction has stalled, inequality has grown, and significant regional disparities point to persistent household vulnerabilities. In the aftermath of the 2016 crisis, Egypt’s extreme poverty rate (population living below US$2.15 a day) soared from 0.9 percent in 2015 to 2.5 percent in 2017, before retreating to 1.5 percent in 2019.5 Similarly, the moderate poverty rate (population living below US$3.65 a day) increased from 13.2 percent in 2015 to 17.6 percent in 2019. Economic growth has not been inclusive—growth in per capita income for the bottom 40 percent was negative throughout most of the evaluation period (figure 2.3), and there are significant disparities in poverty rates across Egypt’s provinces. Figure 2.3. Shared Prosperity and Shared Prosperity Premium for Egypt 4 Annualized growth (%) 2 0 -2 -4 2010–12 2012–15 2012–17 2015–19 Growth of the bottom 40% Shared premium Median income growth Source: Indepdendent Evaluation Group al ulations ased on the World Bank’s Poverty and Inequality Plat orm data. Note: The indi ators are e pe ted to e updated till 2 22 y May 2 2 . The shared prosperity premium is the di eren e etween in ome growth o the ottom 4 per ent and the entire population and is strongly orrelated with inequality. 2.10 Slow job growth in the private sector limited income growth and left households vulnerable to shocks. Country analytics—2021 Systematic Country Diagnostic (SCD) and the forthcoming Country Economic Memorandum—identified both demand and supply side constraints to job growth. On the demand side, macroeconomic challenges, a weak business environment, noncontestable markets, and slow progress in the implementation of the government’s State Ownership Policy have impeded productivity growth, market access, and diversification. On the supply side, the SCD suggests that skill shortages hindered the modernization of the economy and led to growing informality, whereas sluggish job growth and high inflation constrained real income growth and consumption of households. This made households more susceptible to shocks and created dependence on social protection schemes. 5 This is the latest year that poverty data are available. 2.11 Only 40 percent of the working age population was employed, and approximately 70 percent of employment was in the informal sector (World Bank 2021; forthcoming). Female labor force participation rates remained low, estimated by the World Bank at 15 percent (as of 2023), which is a decrease by 7 percent since the Arab Spring. Youth unemployment continued to be high at 17 percent as of 2023 (figure 2.4). Egypt’s labor market over the past decade has also seen a growing share of low- productivity and low-paid, informal services sector jobs and a stagnation in organized sector jobs (World Bank, forthcoming). Figure 2.4. Egypt’s Labor Market Trends 40 35 Labor force participation (%) 30 25 Female labor force 20 participation Unemployment youth 15 Unemployment female 10 Unemployment 5 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Year Sources: Independent Evaluation Group al ulations; World evelopment Indi ators. 2.12 The World Bank’s 2021 SCD identified three main constraints to strengthening household resilience: (i) a segmented labor market and low demand for skills and low informal sector productivity; (ii) care responsibilities and gender norms, which limit women’s employment; and (iii) fragmented social protection, which leaves many impoverished households vulnerable to shocks. The centerpiece of addressing these constraints was the introduction of the Takaful and Karama cash transfer programs in 2015, aimed at protecting poor children, older adults, and individuals with disabilities, and its subsequent expansion. Supporting Energy Transition and Security 2.13 Egypt is highly vulnerable to climate change and faces a growing energy deficit, with continued reliance on traditional energy sources. Approximately 95 percent of Egypt’s population lives on 5 percent of the land in the Nile River valley. The variability of the river’s water levels and rainfall events can incur damage costs of 1 percent of GDP (World Bank Group 2022), further increasing vulnerability to poverty. One of the government priorities for supporting growth while mitigating climate impacts is through higher private investment in Egypt’s energy transition (World Bank Group 2022). This will decouple growth from reliance on traditional energy sources, which are the largest emitter of greenhouse gases (64.5 percent). 2.14 Diversifying the energy generation mix is crucial to Egypt’s energy security, and there is progress in the energy transition to renewables. Egypt has increased its installed renewables generation capacity in the past two decades but has fallen short of targets. In 2016, Egypt adopted the Integrated Sustainable Energy Strategy 2035, with an ambitious target of reaching 42 percent of renewable energy in the electricity generation mix by 2035. At the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change in 2022, the government pledged that the target would be achieved by 2030. However, the current share of renewable energy (wind, solar, and hydropower) stands at only approximately 12 percent. Nonetheless, the government announced in June 2024 that the share of renewable energy would increase to 58 percent by 2040, which was revised down to 40 percent in October 2024 (Reuters 2024). 3. The World Bank Group’s Engagement in Egypt 3.1 The three proposed evaluation areas of the CPE—(i) private sector–led job growth, (ii) household resilience, and (iii) energy transition—featured prominently in the Bank Group country strategies. The FY12–14 Interim Strategy Note (ISN) guided the Bank Group program immediately after the Arab Spring. SCDs were published in 2015 and 2021. The CPFs over the evaluation period are anchored in Egypt Vision 2030, the National Structural Reform Program, and the National Climate Change Strategy (figure 3.1). The Bank Group country engagement demonstrated broad continuity in objectives across the CPF periods, aligning with the government on priorities. For example, the FY12–14 ISN aimed at creating an enabling environment for the private sector, as did the FY15–22 CPF, which also prioritized the macroeconomic framework in line with postcrisis needs (figure 3.1). The FY23–27 CPF emphasizes support for export competitiveness and strengthening of the business environment for the private sector. Similarly, support for social safety nets (focus area 2) and the energy sector (focus area 3) has been consistent throughout the past two decades. 3.2 Support under each area reflected evolving priorities. For example, the FY12–14 ISN focused on expanding power supply and improving reliability (as part of overall improvements to infrastructure), whereas the FY15–22 CPF prioritized the governance of the energy sector, in particular subsidy reform and competition. The newest FY23–27 CPF aims at supporting the energy transition and improving the energy sector as climate 1 adaptation and mitigation become priorities. In the case of the energy sector, upstream reforms through development policy lending, especially in the previous CPF cycle, have led to increased engagement, especially by IFC and MIGA in recent years. Figure 3.1. Evolution of World Bank Group Objectives in Its Engagement in Egypt FY06–11 CAS FY12–14 ISN FY15–22 CPF FY23–27 CPF More competitive and Contain the fiscal Improved fiscal efficient financial sector deficit Strengthened private management sector environment Increased trade with Improve transparency of Improved fiscal transparency that encourages export regional and global public sector competitiveness partners management Establish evidence base for per orman e ased pu li Strengthened Increased private Create an enabling administration competition on a level business activity environment for playing field with state- private investment Strengthened citizen Macroeconomic engagement in service owned enterprises stability and businesses delivery Expanded infrastructure Expansion and Improve financial through greater private rationalization of sector competitiveness Strengthened energy sector sector participation and efficiency governance infrastructure services Improved health and Expand and improve Improved regulatory Higher quality of environment for private education outcomes education and power and transport infrastructure investment Enhanced inclusion increased through more employability Increase relevance of Increased energy generation capacity and energy equitable delivery of Improved air and water education for labor key services market efficiency quality and reduced Strengthened systems water loss Increase trade with Enhanced capacity and safety of key transport infrastructure to promote inclusive, Improved perceptions of regional and global efficient, and effective partners and services public sector social protection performance Improve management Enhanced access to improved programs Adequate, financially of water, sanitation, and agriculture and irrigation Strengthened irrigation systems services sustainable, equitable, macroeconomic and efficient social Improve air and water Enhanced access to finance management insurance quality for micro, small, and medium enterprises Strengthened Developing targeted Expand access to adaptation to climate safety nets health care Improved access to change sh ‐ m c m Decreasing Develop targeted and opportunities for the poor Strengthened interregional sustainable safety nets population and increased measures to mitigate disparities coverage of the social safety climate change Reduce interregional Improving access to disparities net system health care Increased access to quality Reduce gender Decreasing gender disparities health care services disparities Increased access to housing or low in ome households Enhanced access to sanitation and sewage services in rural areas Increased household access to natural gas Improved education sector governance Source: Independent Evaluation Group. 11 Note: The o je tives in old a e are within the s ope o the evaluation questions (although might not e within the evaluation period); the te t in old a e and itali s shows ross utting areas. C S = Country ssistan e Strategy; CPF = Country Partnership Framework; ISN = Interim Strategy Note. 3.3 The FY15–22 CPF significantly increased the overall size of the World Bank’s lending program, compared with the previous engagement period, reflecting greater use of development policy lending (figure 3.2). The World Bank’s portfolio amounted to US$11 billion across 26 lending operations, of which five were development policy financing (DPF; US$4.5 billion) and 16 were investment (US$4.2 billion) projects. Compared with the previous nine years (including the FY06–11 Country Assistance Strategy and FY12–14 ISN), this represented an increase of 59 percent (US$4.1 billion) in total lending commitments, mainly driven by an increase in DPF commitments from US$1.8 billion to US$4.5 billion. Program-for-Results loans emerged during this period with US$2.5 billion of new commitments, while investment project financing commitments fell from US$5.1 billion to US$4.2 billion. At the same time, the number of operations decreased by 35 percent, and the average project size increased from US$174.3 million to US$426.6 million. The World Bank also increased the financing of advisory services and analytics (ASA) activities by 145 percent (US$37.2 million) between the two engagement periods but consolidated the number of ASA by approximately one-quarter. 12 Figure 3.2. World Bank Portfolio Evolution by Instrument, FY11–24 Sources: Independent Evaluation Group calculations; World Bank data. Note: CPF = Country Partnership Framework; PF = development poli y inan ing; IMF = International Monetary Fund; IPF = investment proje t inan ing; ISN = Interim Strategy Note; PforR = Program-for-Results. 3.4 MIGA’s portfolio during FY15–22 CPF also saw a dramatic increase and a shift toward clean energy. The portfolio increased from 2 to 21 guarantees, amounting to US$331 million between this CPF and the previous nine years (covering the FY06–11 Country Assistance Strategy and FY12–14 ISN). In 2015, MIGA had a gross exposure of US$33.6 million in 2 guarantees in the oil and gas and manufacturing sectors. At the end of the CPF period (FY22), MIGA’s total exposure reached US$508 million in 21 projects, mainly in energy. Solar infrastructure represented 64 percent of the total exposure, whereas wind power accounted for 23 percent. 3.5 The program adjusted its focus based on the Performance and Learning Review in FY19. The Performance and Learning Review extended the CPF period until FY22 and cited three emerging issues: management of the social consequences of reducing subsidies and liberalizing the exchange rate, reduction of the role of the state and advancement of private sector–led economic recovery, and the need to address growing regional and spatial inequalities and climate change. Program adjustments responded to these issues with increased emphasis on support for household welfare and social safety nets. 3.6 The FY23–27 CPF aims at supporting Egypt in building pathways out of poverty, enhancing shared prosperity, and creating conditions for green, resilient, and inclusive development. The CPF pursues three high-level outcomes: (i) more and better private sector jobs, (ii) enhanced human capital outcomes, and (iii) improved resilience to shocks. Underpinning these high-level outcomes are two important, interlinked cross- cutting themes: governance and citizen engagement and women’s empowerment. The Bank Group’s engagement in these two areas extends across all three high-level outcomes. 3.7 The FY23–27 CPF was informed by the FY20 Country Private Sector Diagnostic, the FY21 SCD, and the FY22 Egypt Country Climate and Development Report. The Country Private Sector Diagnostic and the SCD emphasized four pathways to a new growth model: (i) increasing the amount and efficiency of public spending on key social and physical infrastructure, while strengthening macroeconomic resilience; (ii) enhancing the effectiveness of the state’s economic role and opening up the economy to boost private sector investment, firm growth, and productivity; (iii) strengthening economic inclusion and household resilience; and (iv) promoting resilient, efficient, and sustainable use of natural resources and preparing for climate impacts. The CPF is fully aligned with the International Bank for Reconstruction and Development strategy for the Middle East and North Africa and IFC Africa regional strategy. World Bank Group Support for Addressing Key Priorities Private Sector–Led Job Growth FY15–22 Country Partnership Framework 3.8 The FY15–22 CPF shifted its focus to enabling policy and institutional reforms targeting the business environment. This shift was in response to the growing share of low-productivity informal employment. The formal private sector’s share in the labor market stagnated between 1998 and 2012, although the public sector employment increased. Gains on reforms targeting the private sector failed to have an impact or were reversed in the face of macroeconomic deterioration and high inflation (World Bank 2015). Therefore, the FY15–22 CPF strengthened support for upstream reforms through DPF, with the objective to improve the ease of doing business and investment promotion, particularly in renewable energy. Out of the World Bank’s investment project financing and Program-for-Results portfolio, approximately US$1.7 billion (or 26 percent of the total) went to investments in private sector–led job creation. This mainly focused on supporting innovation, financial access, trade and transport logistics, and local development for jobs in Upper Egypt (figure 3.3). 3.9 The Bank Group’s DPF during this CPF period also supported reforms targeting macroeconomic vulnerabilities and structural weaknesses that compromised the investment climate for the private sector. Policy lending focused on fiscal sustainability, particularly expenditure management. Some targets were also set to support higher corporate and sales taxes, notably through the introduction of a value-added tax, and to improve the medium-term debt management strategy. The reforms also aimed at improving SOE governance and financial access. 3.10 Both MIGA’s and IFC’s investments supported one of the main priorities under the CPF, which was to bolster private sector–led job growth. Among the sectors that IFC identified for potential job growth were renewable plastics (a technology-driven and capital-intensive industry that generates high-skill employment); manufacturing technical textiles, such as synthetic textiles for sports or medicine based on Egypt’s potential supply of glass fiber; and tourism, which continues to be a significant share of GDP. IFC has followed through on several investments in the chemicals and materials sector (such as resins, synthetic rubber, electrical equipment, and glasses), although only one investment in tourism. Overall, IFC has 45 investments under this CPF for a total of about US$1 billion under focus area 1 and advisory services (including some specific advisory services targeting women’s employment). MIGA has three guarantees in the manufacturing sector that have explicit indicators for private sector jobs generated, though several other MIGA guarantees embed jobs objectives (and energy projects are handled in the section on Energy Transition). Figure 3.3. Private Sector–Led Job Growth, FY15–25 Source: Independent Evaluation Group. Note: IFC investment a tivities were not in luded in the timeline. F = additional inan ing; S = advisory servi es; CPF = Country Partnership Framework; CPS = Country Private Se tor iagnosti ; PF = development poli y inan ing; PL = development poli y loan; EMF = Egyptian Mi ro inan e Federation; ESG = environmental so ial and governan e; IFC = International Finan e Corporation; IMF = International Monetary Fund; IPF = investment proje t inan ing; MEN = Middle East and North ri a; MFI = mi ro inan e institution; MIG = Multilateral Investment Guarantee gen y; MSMEs = mi ro small and medium enterprises; P orR = Program or Results; PPP = pu li private partnership; SC = Systemati Country iagnosti . Te t in green (*): investment proje t inan ing and program or results; Te t in red (+): e ternal events; Te t in purple ( ): national strategies; Te t in lue (#): IFC advisory servi es and MIG guarantees; Te t in gray (**): development poli y inan ing; and Te t in la k (^): ountry strategy do uments. 1 FY23–27 Country Partnership Framework 3.11 The ongoing CPF recognizes that employment growth in the formal sector has not been sufficient to meet the needs of a fast-growing population and must be anchored in robust private sector development. Given Egypt’s demographic trends, reflected in a youth bulge, the need for robust private sector employment opportunities is seen to be particularly crucial. In particular, the CPF has prioritized the need for women’s economic empowerment in the face of declining female labor force participation rates. The focus on the development of micro, small, and medium enterprises, including in lagging regions, is seen in the strategy as fundamental to inclusive development. The CPF has three objectives under this high-level outcome: (i) strengthened private sector environment that encourages export competitiveness, (ii) strengthened competition on a level playing field with SOEs, and (iii) expanded infrastructure through greater private sector participation. 3.12 The World Bank, IFC and MIGA maintain a strong focus on private sector development. The International Bank for Reconstruction and Development continued to focus mainly on upstream reforms through the DPF, targeting competition, investment climate, private capital mobilization, and macrofiscal policy framework. The proposed pipeline strengthens investments in local development for jobs and women’s economic empowerment. IFC has increased the volume of its investments under focus area 1 in the first two years of the CPF. IFC has 13 investments in FY23–24, totaling nearly US$912 million, compared with 45 projects and US$1 billion in the eight years of the previous CPF. However, most of these projects targeting private sector jobs come through intermediaries, mostly through commercial banks financing small and medium enterprises or trade companies, marking a shift from the previous CPF, which had a greater share of direct investment. The effects of job creation through intermediaries are more difficult to observe and evaluate. MIGA guarantees also target private capital mobilization. Household Resilience FY15–22 Country Partnership Framework 3.13 The FY15–22 CPF followed the focus of Egypt Vision 2030 in promoting human development, with social protection as a priority area. Human development is one of the pillars of the vision (MPED 2023). Social protection has been at the core of the Bank Group’s strategy to strengthen household resilience to shocks and has been reflected in the World Bank portfolio with approximately US$2.3 billion in lending operations (US$1.8 billion of which was approved during the FY15–22 CPF and US$500 million under the FY23–27 CPF). Investments have mainly focused on the improved design and 1 access to cash transfers (Takaful and Karama), the country’s energy subsidies, and support of Egypt’s universal health insurance system (figure 3.4). 3.14 This need to prioritize social protection is partially driven by high unemployment (particularly among youth), low-wage informal employment, and high inflation. Using 2018 labor market survey data, Helmy and Roushdy (2019) found that about 25 percent of Egyptian households had experienced food insecurity during the month preceding the survey and 16 percent of households had been exposed to at least one type of shock in the year preceding it. Economic shocks, defined as reduced income or loss of employment, were the most frequently reported type of shock, followed by health shocks. At the time of preparation of the latest SCD (2021), 4 million impoverished households were not covered, a comprehensive adaptive social protection strategy had not been prepared, and a rigorous independent evaluation of existing cash transfer programs (Takaful and Karama) was considered a priority (El Enbaby et al. 2022). The programs were originally unconditional and became conditional, but there has been limited monitoring of conditionalities. FY23–27 Country Partnership Framework 3.15 For the ongoing CPF, social protection remains core to managing vulnerability to shocks. Human capital outcomes and improved resilience to shocks were two of the three high-level outcomes identified. The FY23–27 CPF was prepared in the aftermath of COVID-19 and the most recent macroeconomic crisis and recognizes the importance of strengthening social assistance for the most vulnerable population. At the same time, the CPF acknowledges that the current system is fragmented, improved targeting of food subsidies is necessary, and the system needs to strengthen coverage and incorporate specific conditionalities that would support social inclusion (defined by the government as social justice and equality in its Egypt Vision 2030), particularly investment in women’s empowerment. In line with the new cash transfer law, the CPF also intends to develop an adaptive social protection system that can help mitigate the impact of climate risks on households. Key elements of building an adaptive system have been developing a unified national registry, strengthening program governance, and expanding cash transfer program coverage to buffer shocks. 1 Figure 3.4. Household Resilience Timeline, FY15–25 Source: Independent Evaluation Group. Note: F = additional inan ing; CPF = Country Partnership Framework; IMF = International Monetary Fund; IPF = investment proje t inan ing; SC = Systemati Country iagnosti . Te t in lue (*): investment proje t inan ing; Te t in red (+): e ternal events; Te t in purple ( ): national strategies; and Te t in la k (^): ountry strategy do uments. 1 Energy Transition FY15–22 Country Partnership Framework 3.16 The FY15–22 CPF changed the Bank Group’s focus from supporting the development of conventional generation plants to supporting the development of renewable energy power plants by the private sector and the promotion of energy efficiency. IFC and MIGA have been highly active in the development of renewable energy in part because of the government’s second-round feed-in tariff program to incentivize solar power development. The Benban Solar Park near Aswan had an initial objective to develop 2,000-megawatt solar generation capacity. In 2018, IFC supported various private companies for the development of mostly 50-megawatt solar power plants and two solar power plants with an installed capacity between 20 and 30 megawatts and promoted investments in energy efficiency through advisory services and investments. MIGA has provided guarantees for the development of several solar power plants. 3.17 The FY15–22 CPF also identified sector governance and subsidies as major issues in the energy sector, particularly constraining private capital mobilization. In 2014, energy subsidies reached 6.5 percent of GDP. With the support of the Bank Group’s development policy lending and other engagements, the Egyptian government started taking measures to eliminate the energy subsidies and improve sector governance and investment climate to support private investment in renewables. By the end of the CPF, the issue of energy subsidies appeared to have been addressed, and automatic price indexation for fuel products was in place, except for liquified petroleum gas and fuel for electricity. Subsidies dropped to 0.32 percent of GDP by 2020, but reemerged because tariffs were not adjusted in response to consecutive external shocks (such as COVID-19 and Russia’s invasion of Ukraine) and the depreciation of the Egyptian pound against the US dollar. Furthermore, electricity distribution losses have remained very high in the country, averaging about 20 percent. FY23–27 Country Partnership Framework 3.18 Energy transition is an objective of the FY23–27 CPF, especially as it relates to strengthening measures for mitigation of and adaptation to climate change and meeting Egypt’s growing energy demands (figure 3.5). The Bank Group has continued to coordinate the upstream reforms and investments to support energy transition goals. The new development policy operation series (with the first in the series approved in FY24, with financing of US$700 million) continues to support these goals through upstream reforms focused on improving energy reliability, developing carbon markets, and facilitating monitoring of emissions and implementation of climate mitigation measures. Meanwhile, IFC has facilitated the issuance of green bonds in Egypt and, 2 through the 30 by 30 Zero Egypt Program, targets banks to set up climate risk mitigation strategies and grow low-carbon and climate financing businesses. In FY23, IFC announced a financing package of US$1 billion to deliver more than 1 gigawatt of renewable energy capacity at the lowest price in Africa. MIGA is continuing its work of supporting investments in renewable energy, including less traditional projects, such as guarantees to facilitate the refinancing of six solar power projects through a climate- certified bond issuance. 3.19 Overall, the Bank Group has a sizable and diverse portfolio in the energy sector in Egypt. IFC has a significant portfolio of 20 investment projects for a total of US$483 million and nine advisory services. The majority of these (18 projects and US$315 million) were during the FY15–22 CPF, whereas two investment projects (totaling US$168 million) are under the FY23–27 CPF. MIGA issued 18 guarantees in the energy sector during the evaluation period (totaling US$466 million), all of which were contracted during the FY15–22 CPF period. By contrast, the World Bank has not approved new projects, but it has 22 ASA activities, of which 20 during the FY15–22 CPF and two during the FY23–27 CPF (figure 3.5). 21 Figure 3.5. Energy Transition Timeline, FY15–25 Source: Independent Evaluation Group. Note: CPF = Country Partnership Framework; PF = development poli y inan ing; PL = development poli y loan; IFC = International Finan e Corporation; IMF = International Monetary Fund; IS = investment servi es; MIG = Multilateral Investment Guarantee gen y; SC = Systemati Country iagnosti . Te t in lue (*): IFC investments and MIG guarantees in renewa le energy; Te t in gray (#): IFC investments and MIG guarantees in oil and gas; Te t in red (+): e ternal events; Te t in purple ( ): national strategies; Te t in orange: development poli y inan ing; and Te t in la k (^): ountry strategy do uments. 22 4. Purpose, Objectives, and Audience 4.1 The objective of this CPE is to assess how the Bank Group has supported Egypt in addressing key development challenges. The main purpose of the evaluation is to assess the relevance and effectiveness of the Bank Group’s support in priority areas and to inform the preparation of the next CPF. As discussed in chapter 5, it will also cover two additional criteria—coherence and social inclusion—but in lesser depth. This evaluation will assess the Bank Group’s support for three key development challenges: (i) promoting private sector growth and jobs, (ii) supporting household resilience, and (iii) facilitating energy transition. It will also discuss the overall evolution of the Bank Group’s engagement in the country. The audience for this evaluation is the Bank Group’s Boards of Executive Directors, its Committee on Development Effectiveness, the Country Management Unit and staff working on Egypt, stakeholders in Egypt, and Bank Group teams working in middle-income countries facing similar development challenges. 5. Evaluation Questions and Scope 5.1 The evaluation will undertake deep dives into the three key development challenges (outlined in previous chapters) based on explicit criteria. These deep dive areas (private sector–led job growth, household resilience, and energy transition) were chosen because of their strategic relevance to Bank Group engagement during the evaluation period, including two CPF periods; Egypt’s own development priorities, including Egypt Vision 2030; and the Bank Group portfolio distribution over different sectors. The priorities were also refined based on early discussions with the country team. The evaluation, therefore, does not aim at covering all facets of Bank Group engagement in equal depth. For example, although the sectors such as agriculture, health, and water are also strategically important, these will be assessed only as part of the broad portfolio analysis partially because of the smaller portfolio in these areas. For example, the total combined share of agriculture and health is less than 9 percent of the World Bank portfolio, while there is no current financing for water management. Another reason is the cross-cutting nature of the deep dive areas. The single agriculture project, for example, has a strong focus on social protection and will be covered under focus area 2. Some aspects of the support for universal health coverage as it relates to social protection would also be covered under focus area 2. 5.2 The intent is to be selective on how the evaluation criteria are applied within each focus area, which will also assist in refining the scope of the final report. The rationale for selectivity in how the evaluation criteria are applied to each focus area is further developed under each evaluation question (see appendix A for more information on the evaluation design matrix and preliminary conceptual framework). 23 5.3 This evaluation aims at addressing three overarching questions: • Evaluation question 1: How well has the World Bank Group supported private sector–led job growth? • Evaluation question 2: How well has the World Bank Group supported household resilience? • Evaluation question 3: How well has the World Bank Group supported Egypt’s energy transition? 5.4 To answer these questions, the evaluation will be anchored in the assessment of four evaluation criteria: relevance, adaptability, effectiveness, and coherence. It will also focus on four cross-sectional issues: (i) the extent to which the Bank Group was able to pursue ambitious goals and set out to inform challenging reforms while respecting the engagement context and adapting to it; (ii) the extent to which the Bank Group was able to engage on the unevenness of the playing field for the private sector, particularly in the context of supporting private sector development in the presence of a large and dominant SOE sector; (iii) the extent to which the Bank Group’s support balanced opportunities for short-term engagements and fixes versus longer-term priorities; and (iv) the extent to which the Bank Group complemented and leveraged partners and other stakeholders to support country engagement. Scope Under Evaluation Question 1 5.5 Evaluation question 1 (explored in two subquestions) examines the Bank Group’s support for private sector–led job growth. First, it assesses how well the Bank Group supported the macroeconomic policy framework (through DPF). Second, it examines how well the Bank Group supported the investment climate (through DPF, World Bank lending and ASA, IFC real sector investment and advisory services, and MIGA guarantees). The four evaluation criteria of relevance, adaptability, effectiveness, and coherence (internal within the Bank Group and external with partners, such as IMF) are selectively applied based on preliminary portfolio and document review and early discussions with country teams. Under evaluation question 1, the evaluation will also assess support for women’s economic participation. 5.6 The first part of evaluation question 1 will assess how well the World Bank’s DPF has supported the macroeconomic conditions necessary for robust private investment and growth. The evaluation will assess the relevance and coherence of the policy reforms intended to address structural weaknesses in the macroeconomic policy framework, including reforms to support domestic revenue mobilization, expenditure management, and fiscal and debt sustainability. Relevance and coherence would be 24 examined through several lenses, including Bank Group adaptability to evolving context, whether the reforms prioritized addressing the right constraints and were sufficiently ambitious in the given country context and whether they adequately balanced near-term needs against the medium-term priorities, and the extent to which the reforms were well coordinated with IMF. 5.7 Under evaluation question 1, the evaluation will also examine the adequacy of the World Bank’s, IFC’s, and MIGA’s support for improving other critical elements of the investment climate in Egypt. The investment climate refers to relevant drivers affecting private investment, including the regulatory environment, competition, trade policy and logistics, access to finance, and capital market development. Under this subquestion, the evaluation will assess the relevance and coherence of the Bank Group’s support to the investment climate and the extent to which gender considerations were adequately embedded in it. In terms of relevance, the evaluation will review, in addition to policy reforms, support through IFC advisory services and Bank Group real sector investments and guarantees. Under coherence, both internal and external complementarities will be assessed, particularly with IMF and other key development partners (such as the Gulf Cooperation Council, the European Union, and key bilateral partners) and across the three Bank Group institutions. Moreover, an important aspect of external coherence would be how the Bank Group, particularly IFC and MIGA, leveraged partnerships with the private sector. 5.8 The evaluation will selectively assess the effectiveness of the Bank Group’s support for private sector–led job growth. Regarding the effectiveness of the support for the macroeconomic environment, the evaluation will use process tracing (see appendix A) to examine the impact of the support to expenditure management. There are two main reasons for this zoom-in on expenditure management. First, it has been a feature of the response to economic crises in Egypt, and the evaluation will assess these reforms to understand the extent to which they helped restore the macroeconomic stability necessary for an improved investment climate. Second, expenditure management cuts across all three focus areas because it entails improved targeting of entitlements and reduction of energy subsidies, calling for an integrated approach from teams across macroeconomics, social protection, and energy. The evaluation will also analyze how IFC’s and MIGA’s real sector portfolios captured jobs’ impacts. The effectiveness of the Bank Group in pulling private investment into the energy sector will be evaluated under evaluation question 3. Scope Under Evaluation Question 2 5.9 Evaluation question 2 covers only the World Bank and focuses mainly on social protection. The selection of social protection as the main instrument for supporting 2 household resilience was based on three prioritization criteria. First, as noted in chapter 3, it represents the largest share of the human development portfolio. Second, Egypt’s vulnerability to shocks, detailed in chapter 2, calls for a strong, adaptive, and well-targeted social protection system. Third, spending on social safety nets has cross- cutting ramifications across all three areas of focus. Subsidy management was a critical aspect of fiscal stabilization, improved targeting was essential for fiscally sustainable increase of social protection and reducing energy subsidies through tariff reform was critical to pulling private investment into renewables and supporting the energy transition. The evaluation will also consider aspects of social inclusion, particularly related to gender equity, as women are target beneficiaries of key social protection programs, and spatial equity given that geographic challenges in program scale up. 5.10 Within social protection, the evaluation proposes to drill down on two subareas that are especially important to household resilience in the face of shocks. First, the evaluation will examine the extent to which the World Bank’s support for social safety nets was relevant. Relevance refers to the extent to which the World Bank’s support contributed to building a well-targeted, financially adequate, foundational social protection system;6 the degree to which the system was also adaptive (in line with the dimensions of the World Bank’s adaptive social protection framework); and interoperability with related interventions on education and health (in line with the growing focus on conditionality in transfers in Egypt). Second, the evaluation will assess the effectiveness of the World Bank’s support for social safety nets (see appendix A), particularly in terms of targeting lagging regions and marginalized groups and addressing gender equity considerations. As in the World Bank’s forthcoming adaptive social protection evaluation, the CPE will focus on several key shocks—Egyptian pound devaluations, COVID-19, and the effects of Russia’s invasion of Ukraine—and will assess the adequacy of the World Bank program’s responses to these shocks. Scope Under Evaluation Question 3 5.11 Evaluation question 3 looks at how well the Bank Group has supported Egypt’s energy transition to power generation from more sustainable sources. There are three dimensions to assessing how well the World Bank, IFC, and MIGA have engaged on the energy transition. On relevance, the evaluation will focus on key aspects of the energy transition, such as policy reforms supporting energy sector governance and subsidies containment, promotion of energy efficiency practices, competition in the sector, and private capital mobilization for investments in renewable and other cleaner forms of energy. On adaptability, the evaluation will consider how the Bank Group’s support adjusted over time to country needs and sector capacity, aligned with the Bank Group’s 6 As per the aims expressed in Egypt Vision 2030. 2 comparative advantage, and how it has used this advantage to work with the government. The evaluation will also look at coherence—externally, at how and whether the Bank Group’s support complemented or informed that of other development partners (such as the European Investment Bank, the European Bank for Reconstruction and Development, European bilateral agencies, and United Nations agencies) and internally, at how upstream reforms supported by the Bank Group were relevant to IFC and MIGA interventions. 5.12 On effectiveness, subject to data availability, the team will assess IFC’s and MIGA’s support for private capital mobilization in the sector. The reason for this examination of private capital mobilization is twofold. First, private capital mobilization was the stated objective behind a significant step-up in the Bank Group’s support for sector policy and institutional reforms. Second, it is closely related to focus areas 1 and 2, given the energy sector’s role as a broad private investment enabler and the impact of the energy sector’s subsidy reforms on the private sector and households. The report will build on previous evaluations of Egypt’s energy sector, including, but not limited to, Creating an Enabling Environment for Private Sector Climate Action: An Evaluation of World Bank Group Support, Fiscal Years 2013–22 (World Bank 2023b) and Renewable Energy: Evaluation of the World Bank Group’s Support for Electricity Supply from Renewable Energy Resources, 2000–2017 (World Bank 2020). 6. Evaluation Design 6.1 The evaluation will assess the Bank Group’s engagement through three main and one additional evaluation criteria: • Relevance. Within each focus area, the evaluation will determine the relevance of the Bank Group’s support along three dimensions: (i) whether it addressed important constraints to Egypt’s development in the three focus areas, was sufficiently ambitious given the country context, and was able to support medium-term priorities and nearer-term needs; (ii) whether it took into account the government’s development priorities and the Bank Group’s perceived comparative advantage; and (iii) whether it adapted its engagement because of changing conditions. • Coherence. Under each focus area, the evaluation will assess complementarities and synergies internally (among the three Bank Group institutions) and externally (with partners, such as IMF, pertinent bilateral agencies, the European Union, and so on). • Effectiveness. The evaluation will capture the Bank Group’s contribution to country outcomes during the evaluation period on specific topics, as described in 2 chapter 5. It will also test the Bank Group’s support on a macro (focus area) level to determine whether the sequencing and complementarity of instruments were appropriate and amounted to more than the sum of its parts. • Social inclusion. The evaluation will consider the relevance of the World Bank’s support to two cross-cutting issues: (i) gender (under evaluation question 1 as relevance of support to women’s economic participation and under evaluation question 2 as effectiveness of targeting) and (ii) spatial equity (under evaluation question 2 as effectiveness of targeting). Methodology 6.2 The CPE will adopt a mixed methods approach to answer the evaluation questions. The analysis of the development context in Egypt will provide a background in which the Bank Group program took place. An extensive portfolio review and analysis will inform the major developments (within each development theme) and the areas the Bank Group sought to influence. A theory-based approach will be used to trace the role of analytics and strategy on identifying areas of work and projects to ensure relevance and coherence. Specifically, process tracing will be used to assess the effectiveness of expenditure management reforms, and contribution analysis will be used to explore the degree to which the Bank Group’s work contributed to improved outcomes relating to adaptive, well-targeted social protection and improved private investment in renewables. The evaluation design matrix in appendix A provides further information. 6.3 To answer the evaluation question, the team will systematically follow a series of analytic steps in each outcome area. The team will review major trends for each high- level outcome and will synthesize relevant information from key diagnostics and analytics produced by the Bank Group, development partners, and the government to identify the main explanatory factors. The team will use the evidence gathered (and will reconstruct a theory of change and action for the focus areas based on the gathered evidence) to assess the relevance and coherence of the Bank Group’s support in the three focus areas and its contribution to selected and specific outcomes. The final step will consist of assessing the Bank Group’s effectiveness in contributing to development outcomes in Egypt. 6.4 The main documentation sources that will be drawn on are as follows: (i) World Bank portfolio documentation during the period, including outputs of ASA, Project Appraisal Documents, Implementation Completion and Results Reports, Implementation Completion and Results Report Reviews, Implementation Status and Results Reports, restructuring documents, Project Completion Reports, aide-mémoire, review of meeting minutes, and project-related communication; (ii) IFC portfolio 2 documentation, including board approval documents, supervision reports, Expanded Project Supervision Report Evaluative Notes, and Evaluative Notes of IFC advisory services (project completion reviews); (iii) MIGA portfolio documentation, including President’s Reports and Project Evaluation Reports; and (iv) formal Bank Group strategies and diagnostics. Independent Evaluation Group (IEG) staff will supplement these sources with information from interviews with Bank Group staff and stakeholders associated with the Egypt country program (including government, development partners, and IFC clients). The geospatial analysis may be used to determine whether the Bank Group and other partners targeted operations in regions or areas of greater need of household resilience (evaluation question 2) depending on data availability. The evaluation design matrix in appendix A provides further information on the main data sources and how they pertain to each evaluation question. 6.5 To achieve its objective and answer the three evaluation questions, the evaluation will use the following methods (see the evaluation design matrix in appendix A, which contains information on how these methods are triangulated under each evaluation question): • Portfolio review analysis. The evaluation team will review and analyze both the lending and nonlending portfolios to map projects and analytic work to the three priority areas. The team will code relevant projects under the three areas from all three institutions (World Bank, IFC, and MIGA). Portfolio review analysis will also inform the adaptation of the Bank Group program over time in response to shocks and other changing conditions. • Content analysis of the Bank Group documents. The evaluation team will review the World Bank’s strategy documents (CPFs) and outputs of analytic activities, especially core ASA. We will also review existing evaluative evidence from IEG. Content analysis will help the team establish the core challenges within each priority area from which to determine the relevance of the Bank Group’s support, while the existing evaluative documentation will serve to establish the effectiveness of the Bank Group’s support. • Analysis of stakeholder interviews. The evaluation team will conduct semistructured interviews with Bank Group staff (current and former Country Management Unit staff, regional management, and task team leaders); development partners, including other multilateral development institutions operating in Egypt; and clients (both private sector clients and government officials). Stakeholder interview data will be used to triangulate findings from the portfolio review and the review of existing evaluations. The interviews will be used to gather additional information, where the empirical record is thinner 2 (for example, on the outcomes of newer projects), and on areas not presented in the documentary evidence (for example, client perception). • Statistical analysis of existing microeconomic and macroeconomic data. The team will use official statistics from the government of Egypt; recognized international data sources, such as IMF, the World Bank, and the Organisation for Economic Co-operation and Development; and other reliable sources of microdata (for example, household and enterprise surveys) to analyze the trends in country and sectoral outcomes that the Bank Group has sought to influence. • Geospatial analysis. The evaluation team may use geospatial analysis to assess the extent to which the design and implementation of World Bank interventions have addressed spatial disparities in household resilience (evaluation question 2) subject to data availability. • Contribution analysis and process tracing in specific cases. Given the analytically intensive nature of these methods, the evaluation team proposes a funneling process to determine which areas most merit additional inquiry to better understand pathways to effectiveness. First, the evaluation team will reconstruct more testable theories of change for each evaluation question using available literature and diagnostics. The focus will be on specified aspects of two priority areas—namely, expenditure management under evaluation question 1 and targeting and focus on women and special equity under evaluation question 2 (see appendix A). These two areas constitute “causal hotspots”—that is, where the Bank Group and the government of Egypt strategy documents consider key focus areas and where evidence may be contested and, therefore, merits additional empirical inquiry (Apgar and Ton 2021). Document reviews and interviews with Bank Group staff will help uncover the sequence of activities and identify how Bank Group contributions addressed key challenges (the timelines in this document serve as a starting point for more detailed timelines on key outcomes of interest). The development of more detailed theories of change will help identify which specific outcomes merit testing. Contribution claims will then be formulated in relation to these outcomes of interest, and these will then be tested through primary data collection with key informants. For the most significant case, process tracing will be used to unpack causal pathways in greater detail. Limitations 6.6 The evaluation faces data and attribution limitations, which may constrain the analysis. Data obtained by the team in the three priority areas (especially in project documents) might be missing or superficial or not sufficiently disaggregated (especially 3 by our cross-cutting areas of gender and spatial equity). For example, performance indicators on private sector job creation might be lacking (evaluation question 1) in many project documents and project evaluations, making it difficult for the evaluation team to attribute them to specific projects or to the Bank Group in general. Furthermore, in many instances, the Bank Group’s influence is likely to be less tangible through instruments such as analytic and advisory activities, capacity strengthening, and support for institutional change. The outcomes of these activities are difficult to observe, measure, and document. The team will mitigate these limitations by using multiple sources of information and data and through stakeholder interviews to triangulate the information. The team will also gather a range of qualitative and quantitative evidence to reconstruct plausible contributions. 6.7 It may be difficult to reach key counterparts and informants, particularly those involved during the early years of the evaluation period. To the extent possible, the evaluation team will draw on the Egypt country office to assist in locating former government officials and others to ensure sufficient stakeholder representation for the early period of engagement. 6.8 It may be difficult to obtain plausible outcome-level results by Bank Group support. Where such outcomes are not available, the team will use other data sources to obtain outcome-level data, such as geospatial analysis and media analysis. The team might also use intermediate outcomes or outputs that approximate the intended final outcomes, if such are more likely to be measurable and achievable throughout the lifetime of the Bank Group support. For example, regarding the aspect of evaluation question 2 that deals with education, this might be a viable approach because educational outcomes are often evident only after a significant lag. 7. Quality Assurance Process 7.1. Quality assurance will take place through peer review arrangements, close collaboration with IEG management, and triangulation of evidence. Peer reviewers for the Egypt CPE include Heba Nassar (professor of economics at the Faculty of Economics and Political Science and former vice president of Cairo University and editor in chief of Review of Economics and Political Science), Subir Lall (IMF deputy director and former mission chief for Egypt), Shahrokh Fardoust (research professor at the Global Research Institute at William & Mary; former senior adviser to the Director General, Evaluation, of IEG; and former director of strategy and operations at the Development Economics Vice Presidency at the World Bank Group), and Dr. Khaled Sakr (nonresident senior fellow at the empowerME Initiative at the Atlantic Council’s Rafik Hariri Center for the Middle East and former IMF assistant director). 31 8. Expected Outputs, Outreach, and Tracking 8.1. The main output of this evaluation will be a report that presents relevant findings and lessons that can inform future country engagement in Egypt. The CPE is planned for e-submission by the fourth quarter of FY26, with an objective to inform the proposed new CPF for Egypt (expected to be prepared during FY27). 9. Resources 9.1. The evaluation team will be led by Rashmi Shankar (lead economist, Country Programs and Economic Management) and Mitko Grigorov (evaluation officer, Financial, Private Sector, Infrastructure, and Sustainable Development). Team members include Thomas Aston (consultant, methods and focus area 2), Gilang Hardadi (analyst, Country Programs and Economic Management), Azada Hussaini (evaluation officer, Gender), Ihsan Kaler (consultant, focus area 3), Naoko Kojo (senior economist, Country Programs and Economic Management; focus area 1), Andrea Rojas-Hosse (consultant and portfolio analyst), and Diana Stanescu (adviser). The estimated budget for delivering this evaluation is US$715,000. 32 Bb g hy Apgar, Marina, and Giel Ton. 2021. “Learning Through and About Contribution Analysis for Impact Evaluation.” Opinion, Institute of Development Studies. https://www.ids.ac.uk/opinions/learning-through-and-about-contribution-analysis-for- impact-evaluation. EIA (US Energy Information Administration). 2024. Country Analysis Brief: Egypt. EIA. ElDidi, Hagar, Hoda El Enbaby, Yumna Kassim, et al. 2018. “Impact Evaluation Study for Egypt’s Takaful and Karama Cash Transfer Program: Part 2—Qualitative Report.” MENA Regional Program Working Paper 15, International Food Policy Research Institute. El Enbaby, Hoda, Dalia Elsabbagh, Dan Gilligan, Naureen Karachiwalla, Bastien Koch, and Sikandra Kurdi. 2022. “Impact Evaluation Report: Egypt’s Takaful Cash Transfer Program—Second Round Report.” MENA Regional Program Working Paper 40, International Food Policy Research Institute. Helmy, Imane, and Rania Roushdy. 2019. “Household Vulnerability and Resilience to Shocks in Egypt.” Working Paper 1362, Economic Research Forum. IFC (International Finance Corporation). 2020. Creating Markets in Egypt: Realizing the Full Potential of a Productive Private Sector. Country Private Sector Diagnostic. IFC. IMF (International Monetary Fund). 2021. “Arab Republic of Egypt: 2021 Article IV Consultation, Second Review Under the Stand-by Arrangement—Press Release; Staff Report; and Statement by the Executive Director for the Arab Republic of Egypt.” Country Report 21/163, IMF. IMF (International Monetary Fund). 2024. “Arab Republic of Egypt: Third Review Under the Extended Arrangement Under the Extended Fund Facility, Monetary Policy Consultation Clause, Requests for Waivers of Nonobservance of a Performance Criterion and Applicability of Performance Criteria, and Request for Modification of Performance Criteria—Press Release; and Staff Report.” Country Report 24/274, IMF. MPED (Ministry of Planning and Economic Development). 2023. Vision of Egypt 2030. MPED, Egyptian Cabinet. https://mped.gov.eg/Files/Egypt_Vision_2030_EnglishDigitalUse.pdf. Reuters. 2024. “Egypt Cuts 2040 Renewable Energy Target to 40%, Keeps Focus on Natural Gas.” Reuters. https://www.reuters.com/sustainability/climate-energy/egypt-cuts-2040- renewable-energy-target-40-keeps-focus-natural-gas-2024-10- 20/#:~:text=Eni%20SpA,billions%20of%20dollars%20in%20arrears. World Bank. 2005. Egypt—Country Assistance Strategy for the Period FY06–FY09. World Bank. World Bank. 2012. Egypt—Interim Strategy Note. World Bank. 33 World Bank. 2015a. Egypt—Completion and Learning Review for the period FY06–FY14: IEG Review. Independent Evaluation Group. World Bank. World Bank. 2015b. Egypt—Country Partnership Framework for the Period FY2015–19. World Bank. World Bank. 2015c. Egypt—Promoting Poverty Reduction and Shared Prosperity. Systematic Country Diagnostic. World Bank. World Bank. 2020. Renewable Energy: Evaluation of the World Bank Group’s Support for Electricity Supply from Renewable Energy Resources, 2000–2017. Independent Evaluation Group. World Bank. World Bank. 2021. Egypt—Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth . Systematic Country Diagnostic Update. World Bank. World Bank. 2022 a. “Egypt—Country Partnership Framework for the Period FY15–FY21.” Completion and Learning Review Review 180826, Independent Evaluation Group, World Bank. World Bank. 2022b. Egypt—Country Climate and Development Report. World Bank. World Bank. 2023 a. Adaptive Social Protection for Effective Crisis Response: Independent Evaluation Group Evaluation of the World Bank’s Contribution. Approach Paper. Independent Evaluation Group. World Bank. World Bank. 2023b. Creating an Enabling Environment for Private Sector Climate Action: An Evaluation of World Bank Group Support, Fiscal Years 2013 –22. Independent Evaluation Group. World Bank. World Bank. 2023c. Egypt—Country Partnership Framework for the Period FY2023–2027. World Bank. World Bank. Forthcoming. How the World Bank Supports Adaptive Social Protection in Crisis Response. Independent Evaluation Group. World Bank. 34 Appendix A. Evaluation Design Matrix and Conceptual Framework The evaluation design matrix (table A.1) indicates the criteria, information, sources, and methods required to answer the evaluation questions and is subject to change. Table A.1. Evaluation Design Matrix Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies EQ1: How well has the World Bank Group supported private sector–led job growth? 1.1.a. To what extent has Evidence of relevant program Documentation: Bank Group ASA; Content analysis: Analysis of relevant Stakeholder access: the World Bank’s support design: Reforms addressed critical design stage program documents; documentation, internal and external. Challenges in for the macroeconomic constraints, as identified by the strategy documents; IMF program Synthesize existing research and evaluations to contacting former policy framework through evidence-based analysis, and, while documents and Article IV reports; contextualize and assess design stage officials (World DPF been relevant, tailored to the country and political internal memos, minutes, and decisions, establish timelines of engagement, Bank and external) coherent, and adaptive? economy context, were sufficiently messaging; and relevant external and validate data and intended theories of and other ambitious. research, analysis, and diagnostics. change. stakeholders. Evidence of adaptation to changing Macroeconomic data: Sources Portfolio review analysis: Bank Group portfolio Partially mitigated circumstances (for example, the include the World Bank database, analyzed to determine relevance, adaptability, by availability of pandemic and economic crises IMF databases, and databases and external coherence of reforms supported. significant creating opportunities to tackle maintained by the Ministry of Trend analysis to track the evolution of the diagnostic and difficult structural reforms), while Finance of Egypt and the Central program as key development and analytic and balancing focus on medium-term Bank of Egypt. macroeconomic indicators shift. evaluative priorities. Semistructured interviews with the Analysis of semistructured interviews to evidence on Egypt. Evidence of external coherence: The country team, civil society, triangulate findings from content analysis and Georeferencing of Bank Group interventions government counterparts, and portfolio review analysis on relevance, Bank Group complement and synergize with relevant stakeholders to gauge adaptability, and external coherence of operations may those of key partners, particularly opinions about relevance and reforms; use of interview data to bridge not be sufficiently IMF. adaptation of design and external information gaps and refine theories of disaggregated. coherence of reforms supported. change. 3 Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies 1.1.b. To what extent has Evidence that results on Documentation: ASA, project self- Process tracing to examine the sequence of Poverty data may support to expenditure expenditure management evaluation and evaluation and events, decisions, and activities that led to that not be sufficiently management been supported by DPF were relevant, validation documents, results outcome, essentially “tracing” the process to updated or effective? were sufficiently ambitious, and indicators, and outcome indicators. identify key factors and how they interacted to disaggregated. balanced short-term considerations Semistructured interviews with the produce the result, focusing mainly on reforms with medium-term priorities. country team, civil society, to expenditure management, which have been Includes data on key performance government counterparts, and fundamental to the Bank Group engagement indicators and contribution relevant stakeholders to gauge on structural reforms during the evaluation narratives, as well as factors for opinions about effectiveness of period. success or failure. expenditure management reforms. 1.2.a. To what extent has Evidence that reforms, technical Documentation: Bank Group ASA; Content analysis: Analysis of relevant support from IFC, the assistance, and investments of the Bank Group project documents at documentation, internal and external, World Bank, and MIGA for World Bank, IFC, and MIGA design; strategy documents; board including advisory documentation from IFC. the investment climate addressed critical constraints as documents; IMF program Synthesize existing research and evaluations to (including access to identified by the evidence-based documents and Article IV reports; contextualize findings, establish timelines, finance and capital market analysis in luding on women’s internal memos, minutes, and validate data and theories of change, identify development) through economic participation, and, while messaging; and relevant external gaps, and assess evidence base for informing DPF, advisory services, tailored to the country and political research, analysis, and diagnostics. strategic insights. and investments been economy context, were sufficiently Economic data: Sources include the Portfolio review analysis: Bank Group portfolio relevant and internally and ambitious. World Bank database; OECD, ILO, analyzed to assess relevance and adaptability externally coherent and Evidence of internal coherence: and IMF databases; and databases of support. embedded gender equity Upstream reforms by the World maintained by the Ministry of Analysis of semistructured interviews to considerations? Bank informed IFC and MIGA Finance of Egypt and the Central triangulate findings from content analysis and engagement, reflecting the One Bank of Egypt. portfolio review analysis on relevance, World Bank Group and cross-sector Bank Group portfolio: Bank Group adaptability, and internal and external approach. project documents (at approval and coherence of support, including on gender Evidence of external coherence: The supervision) and evaluation considerations. World Bank Group interventions are documents. Partnership analysis: Review of development in line with the IMF program in the Semistructured interviews with the partner support, including the IMF programs, country and with other relevant country team, civil society, and support from other relevant partners. external partners. government counterparts, and Review of how the Bank Group leveraged relevant stakeholders, including the private sector partnerships to support Chamber of Commerce, private engagement on investment climate. 3 Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies sector representatives, and representatives o women’s groups to gauge opinions on relevance, adaptability, and coherence of the Bank Group’s support for investment climate and women’s economic participation. 1.2.b. To what extent have Evidence of impact on jobs: IFC and MIGA portfolio: IFC and Triangulation of the portfolio review analysis IFC’s real sector Evidence that IFC and MIGA jobs- MIGA project documents, relevant and interview data to determine whether jobs’ investments and MIG ’s tagged real sector investments have advisory documents, data on impacts are captured, targets are ambitious guarantees been effective credible results chains and targets, results, monitoring, XPSRs, self- and credible, the results chain is adequately in supporting job growth? anchored in evidence-based evaluation documents, validations, motivated, and data are gathered and diagnostics. and other evaluative evidence. monitored at each step of the results chain. Semistructured interviews: Interviews with IFC and MIGA staff, relevant clients and stakeholders, including private sector representatives. EQ2: How well has the Bank Group supported household resilience? 2.1. To what extent has Evidence of relevance and Documentation: Bank Group ASA Content analysis: Analysis of Bank Group ASA, the World Bank’s support adaptability: Projects are anchored and strategy documents, relevant strategies, and project documents. Synthesize for social safety nets been in evidence-based analytic work, external and evaluation literature, existing research (for example, impact relevant and coherent? design is responsive to shocks, and project documents (appraisal, evaluations of the Takaful and Karama social interventions are coherent with the supervision, and evaluation), safety program showed substantial effects on overall Bank Group program and internal memos and minutes, and women’s empowerment) to onte tualize strategies. other documents. findings, validate data, and identify gaps. Evidence of strategic alignment: Semistructured interviews with the Portfolio review analysis: World Bank portfolio, There is a social protection strategy, country team, civil society, approval, supervision, and evaluation which reflects evidence-based government counterparts, and documents to determine relevance and prioritization of areas of relevant stakeholders to gauge internal coherence (for example, across macro, intervention, consistency with the opinions on relevance of the social protection, and energy sector teams on government objectives and the program; field visit, if possible. energy subsidies). overall Bank Group objectives for Databases: Household survey data Analysis of semistructured interviews to 3 Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies the country, and internal coherence as processed by the World Bank. triangulate findings from other sources. and establishes a path toward an Georeferenced data: Bank Group Geospatial analysis of whether and how adaptive, well-funded, targeted, and geospatial mapping of needs, human capital investments targeted lagging modern system. projects, and beneficiaries. regions. 2.2. To what extent has Evidence of adaptation to changing Detailed data on engagement on Contribution analysis: Reconstruct a theory of the World Bank’s support circumstances (for example, the social protection, including from change for the Bank Group and investigate for social safety nets been pandemic and economic crises ASA and project documents and potential pathways where the Bank Group effective, in terms of leading to greater distress among country team interviews to build a might have contributed to observable targeting, addressing vulnerable demographic groups comprehensive picture of the causal out omes in Egypt’s a ess modernization, gender and spatial adequately targeted by the Bank chain involved from dialogue, and adaptability of the social safety system. inequities, and developing Group through adjustment in diagnostic, program design, and The evaluation will assess the system’s a modernized system? intensity of support). financing to impact. response to critical shocks (Egyptian pound Evidence of effectiveness that the devaluation, COVID-19, and Russia’s invasion system has modernized and is of Ukraine). adaptive, based on the criteria of the Independent Evaluation Group’s evaluation of adaptive social protection; targeting has improved; and projects are intensively focused on addressing gender and regional disparities. 3 Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies EQ3: How well has the Bank Group supported Egypt’s energy transition? 3.1. To what extent has Evidence of relevance and Documentation: Bank Group ASA Content analysis: Analysis of Bank Group ASA, Stakeholder access: the Bank Group’s support adaptability: Projects are anchored and energy sector strategy energy sector documents, and project Challenges in for energy transition been in evidence-based analytic work, are documents, project documents documents. Synthesize existing research and contacting former relevant and internally and aligned with the government’s (appraisal, supervision, and evaluations (such as the evaluations on energy officials (World externally coherent? energy sector goals (in particular, evaluation), internal memos and access and renewable energy, for example) to Bank and external) private investment to support minutes, and other documents. assess relevance and coherence of program and other energy transition), and adapt to Semistructured interviews with the design during the evaluation period. stakeholders. changing sector needs and country team, civil society, Partially mitigated Portfolio review analysis: Bank Group portfolio, changing comparative advantages government counterparts, and approval, supervision, and evaluation by availability of of various Bank Group institutions. relevant stakeholders; field visit, if documents to determine relevance and significant Evidence of internal and external possible. coherence of energy transition support. diagnostic and coherence: Evidence of the three Sector data: Sector-level data Analysis of semistructured interviews to analytic and Bank Group institutions sequencing (energy production by type, sector triangulate findings from other sources and evaluative and coordinating their interventions investments, geographical gauge opinions on relevance and coherence of evidence on Egypt. (for example, World Bank DPF distribution, access, and so on). support. Georeferencing of reinforcing IFC and MIGA Evolution of key country and energy Partnership analysis: Review of development Bank Group investment). Evidence that the Bank sector outcomes that the Bank partner support to identify complementarity of operations may Group’s engagement was anchored Group sought to influence; data on Bank Group support with that of other not be sufficiently in its comparative advantage (for the changes in national and sector- development partners (such as the European disaggregated. example, rebalancing among level indicators. Investment Bank, European bilateral agencies, financing, technical assistance, and the United Nations, and the Global advisory services during the Environment Facility). evaluation period). 3.2. To what extent has IFC Evidence of effectiveness of sector Documentation: Project self- Triangulation of portfolio review analysis and supported private capital reforms and subsidy reforms evaluation and evaluation and interview data to determine impact of IFC mobilization in the targeting private capital validation documents, IFC advisory (advisory services and investments) on private renewables sector? mobilization for investment in documentation, XPSRs of IFC capital mobilization—specifically, how impact renewables. projects, results indicators for is captured, whether targets are ambitious and relevant projects, outcome credible, whether the results chain is indicators, and data on expressions adequately motivated, and whether data are of interest from private investors gathered and monitored at each step of the and materialization. results chain. 3 Risks and Judgment Criteria and Evidence Information Sources and Data Mitigation Evaluation Questions Threshold Collection Methods Data Analysis Methods Strategies Detailed data on engagement on private capital mobilization from IFC, the World Bank, and MIGA, including ASA and project documents and country team interviews. Source: Independent Evaluation Group. Note: S = advisory servi es and analyti s; PF = development poli y inan ing; EQ = evaluation question; IFC = International Finan e Corporation; IL = International La our rganization; IMF = International Monetary Fund; MIG = Multilateral Investment Guarantee gen y; EC = rganisation or E onomi Co operation and evelopment; XPSR = E panded Proje t Supervision Report. The preliminary conceptual framework for the evaluation (figure A.1) centers on the three focus areas of the Country Program Evaluation. It shows the key development challenges and how the World Bank Group support can help overcome them and achieve the desired outcomes. Figure A.2 provides the preliminary theory of change for evaluation question 2 for the contribution analysis. 4 Figure A.1. Preliminary Conceptual Framework for the Evaluation Source: Independent Evaluation Group. Note: PF = development poli y inan ing; IFC = International Finan e Corporation; IMF = International Monetary Fund; MIG = Multilateral Investment Guarantee gen y. 41 Figure A.2. Preliminary Theory of Change for Evaluation Question 2 on Household Resilience for the Contribution Analysis Medium term Client engagement Lower level out omes Higher level out omes impa t Strengthened systems In reased Human development e e ts y c s household Households re eive resilien e IT systems are In reased registration in Redu ed de t vaila ility o is al spa e te hni ally un tional uni ied so ial sa ety net ash in a timely Ma roe onomi vulnera ility manner In reased household In reased registry assets Finan ial servi es Households are onsumption in rastru ture in entivized to sign Improved pro y means test Households o serve Redu ed Geophysi al risks up or so ial sa ety and re erti i ation ash onditionalities In reased asset poverty Epidemiologi al risks net registry investment Redu tion o Payments are made Households know Se urity situation negative Citizen engagement e i iently to ene i iaries how to spend ash In rease in oping road map strategy and wisely employment In reased HIS enrolment strategies a tion plan adopted and overage Households see e rease in In reased s m s y Households Payment me hanisms are value in signing up prevalen e o human apital y c s c s understand and more un tional and non ommuni a le a ept transparent Households use g h h diseases onditionalities eed a k c s c E e tive program oversight me hanisms Payment systems are c reporting and eed a k un tional me hanisms Health insuran e B c s agen ies are e e tively esta lished Coordination In entives Funding lows are Resour es timely and equita ly distri uted Low demand C I 1 Corporate priorities Coordination In lation or skills pandemi Source: Independent Evaluation Group. Note: IT = in ormation te hnology; HIS = universal health insuran e system. 42