We thank all readers who have provided

valuable guidance and suggestions for

improving the quality of thi! newsletter.

Thi! modest effort to reach out to our

stakeholders will only succeed through

continued feedback for further

improvement. We therefore look forward

to your continued advice.

Mahmood Ayub Sami HaddadWorld Bank. IFC, DirectorCountry Directot; Middle EI1Jt &Egypt, Yemen & Djibofti North Africa

of the World Bank for Middle East am

Also present at the ceremony was

H.E. Ali AI-Saiedi, Minister of

Industrial and Technological

Development. The loan, which was

approved by the Bank's Board of

Directors on July 31, 2003, will help

support the Government of Egypt

in stimulating private sector demand

for skilled training. In turn this will

help achieve greater economic

growth, increased competitivenessand labor productivity. Lack of skilled

labor remains an important

constraint to economic development

in Egypt.

Overall, the country assistance

strategy for Egypt specifically

identifies the need for skilled

development, thus promoting broad

based private sector led growth.

In 2000, with assistance from th~

World Bank and the European

Commission, the Government ofoperation with

:f

North Africa during the signing cere'

vocational training system. The Skills

Development Project supports one

part of the strategy -financial reform

-and is designed to establish a

training system responsive to labor

market needs of the private sector.

The project also aims to improve

the internal efficiency of training,

including the more effective use of

public training funds, by establishingincentives, and feedback systems

for employers and providers.

Companion projects, funded by the

Government as well as by the

European Commission, Germanyand France, support the other

elements of the strategy.

The project has three main

components:-technical advisory services for

awareness, promotion and

outreach programs as well as

monitoring and evaluation surveys.nony.

driven training program on a

shared cost basis with beneficiary

firms, and strengthening of the

institutional capacity of eligible

project intermediaries.

-a project management unit under

which goods and technical advisory

services will be financed.

"The project wiH help improve the

employability and labor productivity

of individuals by bridging the gap

between their skills and those

required by businesses," explainsMahmood Ayub, World Bank

Country Director for Egypt. The

project will be carried out over four

years from December 2003 to

December 2007 by the Ministry of

Industry and Technological

Development. The loan for this

project has a 17 year maturity with

a 5-year grace period. .

With thir edition, we celebrate the

completion of the first year of publication

of Outreach, the quarterly edition in

your handr. We sincerely hope you have

found thir publication informative and

useful. The newsletter reflects our desire

to reach out to a wide ranging audience,

which explains why we are publirhing

it in both Englirh and Arabic.

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The lack of an agreement in Cancun is a disappointing setback but the process of negotiating improved trade rules that

benefit all countries-and especially poor people in developing countries-must go forward. Important progress was made

in the months preceding the Imeeting on the key issue of agriculture. Parties to the talk!; can and should recapture this

momentum. We continue to believe that rich countries, which have benefited most from the expansion in world trade,

should take the lead. At the same time, overcoming special interests that benefit from the status quo will require

significant political will on all sides.

President Wolfenson

We hope that the WTO members

will soon find a way to compromise

on the key stumbling blocks. The

stakes are huge. A good, pro-poor

agreement that lowers tariff peaks

and averages in bo~h rich and

developing countriJs could produce

up to $520 billion in income gains,

with both rich and poor countries

gaining substantially. Such an

agreement would increase growth in

developing countries, and would lift

an additional 140 million people out

of poverty by 2015.

opportunities offered by global trade.

This includes providing financial

support for improvements in ports,

customs, and other trade-related

infrastructure as well as financing for

transition costs, such as compliance

with WTO rules, the fiscal effects of

tariff reductions, and the economic

impacts of the erosion of trade

preferences. The Bank will also step

up trade-related research and analysis,

both to support developing countries

in formulating their own trade policies

and to better identify options that

would benefit all parties

to the talks. .The World Bank will continue to

support developing countries in their

efforts to make the most of the

Mr. Christiaan Poortman, the World Bank's new Vice President for the Middle East and North Africa Region, visited Egypt for the first time during

September 15-1 G, 2003. n~r. Jean-Louis Sarbib, the previous Vice President for the Region, joined Mr. Poortman on a departing mission prior to his

assuming his new responsibilities as the Senior Vice President for Human Development at the World Bank. The main objective of this visit is to ensure

the continuity of the strong relationship that exists between Egypt and the World Bank.

as selected members of civil society. corporate governance.

The World Bank officials also used

the opportunity of their visit to

sign the Skills Development Project.

which was recently approved by

the World Bank Board of Directors.

They also signed a grant agreement

for strengthening the institutional

capacity of the National Council

for Women, and another grant to

the Ministry of Foreign Trade for

the establishment of the Institute

of Directors, aimed at improving

Mr. Poortman and Mr. Sarbibtravelled toOubai (September 17,2003) to attend the WorldBankjlMF Annual Meetings.

During this two-day visit, Mr.

Poortman and Mr. Sarbib met with

H.E. Dr. Atef Ebeid, the Prime

Minister, and the Economic Cabinet

on the major macroeconomic and

structural reform issues. They also

met with several sectoral ministers

on the key areas of cooperation

in project financing as well as

advisory and technical assistance

services. The senior officials also

took the opportunity to meet with

key representatives of donor

agencies and private sector, as wellMr. Christiaan Po~man

North Africa Enterprise Development (NAED) signsits first Small and Medium Enterprise (SME) access tofinance mandate with United Bank of Egypt (UBE)

NAED signed on June 2nd, 2003 with UBE, an It will also evaluate the current operational

advisory service mandate which focuses on the environment and internal capabilities to introduce

development of UBE's retail and SME finance credit scoring, which in turn, will allow UBE to

operations. capture data and process applications electronically.

This will lead to a substantial reduction in the timeNAED advisory mandate will focus on assisting consuming application process, making it less costly

UBE in analyzing its strategic options for three and more profitable for bank lending to retail and

business areas: credit cards, merchant and Islamic small business customers.

financing and assessing their potential for growth

in the small enterprise financial services market. NAED mandate is expected to start in June 2003

and be implemented over a period of four months.

Mr. Antonie Courcelle-Lobourse, NAfD's ProgramManager and the Chairman of UHf.

The project is expected to have threemain components: (i) improvingaccess and equity to P!eschoo.ls..

, . t' d t d d .," .. ... Inpu s.,. an san 'ar'c,/cens/ng

procedu res; and ( ill) Jmprov ing

cap~cio/ .in the Mi..nistry of Education

benefi.tsofpreschool educat!on,

..rh

eWorldBank' s strategy in Egypt

ptaces emphasts on areas wher~

gov~rnmentco mm itment.l sstrong,where the Bank has along and

successfutexperience, and whereiheBankcan serve as a catalyst tomobilize significant donor financing.

The proposed project ~atlsfiesallthese criteria.. The design of the

proposed ECEproject <;omp!imentsand bui)ds on prior operations thatthe Bank has supported in Egypt;helping to build coherence andcontinuity of the overall. Egyptianeducation program. It is hoped thatthis future project will contribute to

the generaJ well.bemg and schoolreadiness of disadvantagedchUdrenthrough access to quality ECEprograms, therebycontributmg tothe attainment of. Education for Alland Millenmum Development Goals

wofldwide..

Egypt has made substantial progress

in educational development over

the last decade. However, it still

fates several important challenges

to achieve its future educational

goals. One such challenge is making

sure that young children are ready

for school by the time they enter

the first grade. The country has made

a serious commitment to preschool

education and has started to strive

for increasing access and improving

KG teacher qualifications, class size,

and curriculum development.

Substantial issues, however, remain

to be addressed at this educational

level and the Government of Egypt

has requested the support of the

World Bank and the Canadian

International Development Agency

(ClDA) to tackle some of these issues

through a proposed Early Childhood

Education Enhancement (ECE)

Project.

particularly for those whoatepoQr;

(ii) improving qualityofpr ,es~hoolsthrough better curricula,trainedteachers, health ahdhutrition~[

and at t~eto(?all~vet5 toad dress.pr~$th()6t.issu~s...rhaddition, the...

project also aim$ to increase 1ocalcommunitykl}o~t.~dge of the

World Bank and CIDA to provide support for an Early Childhoo(]

Education Enhancement Project

The objective of thl! project is to develop and test integrated programs for

children with disabilities and youth at risk, through a range of providers, and

to inform the development of a new strategy for improving services.

The project will create the conditions fundamental to improving the quality

and efficiency of the higher education system in Egypt through legislative

reform, institutional restructuring, and establishment of independent quality

assurance mechanisms and monitoring systems.

The project's objective is to help create jobs and provide community

infrastructure and services through labor-intensive works. The Project will assist the Borrower in carrying out a pilot program to

stimulate the private sector demand for skills training development through

a demand-driven and competitively-based mechanism.

The project will primarily support the sustainable development of Sohag rural

villages through the participatory approach initiated by the National Program

for Integrated Rura! Development.

World Bank Group Director for Small andMedium Enterprise Development visits EgVptThe Director of the World Bank's and IFC's Small and Medium

Enterprise (SME) Department, Mr. Harold Rosen, visited Egypt duringthe month of September as a part of a broader visit to the MiddleEast and North Africa region. The objective of his trip to Egypt was.to assess the state of SME development and intermediary support

institutions in Egypt, and to reinforce IFC's commitment to its newlyestablished North Africa Enterprise Developme~t (NAED) facility inits goal in strengthening such institutions, ~~~~t:e:heW"bpport~l!)ities,

and reduce constraints on SME growth by str~ngthening the bosiness

environment, and financial business services available to SMEs.

Mr. Rosen said, "SMEs are the engines of growth in the private sectorof most economies, and this is especially true for developing countries.

Supporting SME development is thus a core focus for IFC and theWorld Bank Group. IFC's NAED initiative has been working topromote SME development in Egypt and North Africa, and I ampleased with its accomplishments over the last few months."

More information is available at http://www.ifc.org

and http://www.ifc.org/sme.

oflFC.

World Bank AppointsNevv Chief Economist

Fran~ois Bourguignon has been appointed Chief Economist and Senior Vice

President, Development Economics, at the World Bank. He succeeds Nicholas

Stern, who will leave the Bank Group in October to become the Second

Permanent Secretary and Managing Director, of Budget and Public Finances

at the Treasury of the United Kingdom.

Bourguignon, a Frel'lch national, was named Director of the Development

Research Group, a part of the Development Economics Vice Presidency, last

April. He previously served as managing editor of the World Bank Economic

Review. Bourguignon has advised many developing countries, the OECD, the

United Nations, and the European Commission. Since 1985, he has been

Professor of Economics at the Ecole des Hautes Etudes en Sciences Sociales

in Paris, where he founded and directed the DELTA research unit in theoretical

and applied economics. He has also held academic positions with the University

of Chile, Santiago, and the University of Toronto. He is a Fellow of the

Econometric Society and President of the European Society for Population

Economics, among other distinctions.

Sahar Ramy recently joined the World Bank Office in Cairo as a Senior

Human Resources Officer, starting August, 2003. She holds a Masters

Degree in Political Science from the American University in Cairo.

Sahar Ramy brings 18 years of rich experience in the private sector. She

held several positions in different multinational companies in Oil, Banking

and Pharmaceutical sectors. Her last position was Regional Human

Resources Manager for Pfizer Middle East Region. She was also a part-

time lecturer at the American University in Cairo.

She will be responsible for strengthening HR support to country office

staff across the MENA Region.

t~1 develop its Micro and Small Enterprises

[nnSEs] operations~OO3, an adViS?ry

s~rYr~e~~:a:t1datetgi:le¥eIQpJtsMSEs nnancegperatlons. NAED advIsoryc

targeting Micro and Small

Et1terpris~$ pr9Vji:lii1gtnemwithinvestment and working capital financin g., ~

rbankstotbisne:w;tpppoath..Banq\re MISR will exteni:l)oans to

develgp!i~f;tl1elractivity d\\.f.~tq

tost;trt,CC;;" ...of twelve months,

B~hque Misr experts hope

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The Public Information Center maintained at the World Bank Cairo Office, makes Bank

information available to the public and disseminate its work to the widest possible audience.

The PIC serves as the central contact in the country for persons seeking to obtain Bank

documents and information on Bank's operations.

PIC Services:.Access to World Bank publications

.Free training on electonic search on the World Bank homepage

.Free access to electronic through stations dedicated to client's service

.Photocopying service (for World Bank publications)

.Answers to queries through email or telephone

(.)

..c:;,a..

1W 0 ridRecent Ban k Pub I cations

generations. The ability to use land rights as collateral for credit

helps create a stronger investment climate and land rights are

thus, at the level of the economy, a pre-condition for the

emergence and operation of financial markets.

Property rights to land are one of the cornerstones for the

functioning of modern economies. This book looks first at the

historical, conceptual, and legal contexts of property rights to

land. It then considers aspects of land transactions, including

the key factors affecting the functioning of rural land markets.

Finally, it explores the scope and role of governments and land

policy formation and discusses ways in which developing

countries can establish land policy frameworks that maximize

social benefit.

land Policies for Growth and Poverty Reduction

Taxation of Financial Intermediation: Jheory and Practice f~r Emerging E~qnomies

Land is a key component of the wealth of any nation. Throughout

history, virtually all civilizations have spent considerable time

defining land rightsland establishing institutions to administer

them. Well-defined, secure, and transferable rights to land are

crucial to development efforts.

In developing count ies, most land is used for agricultural

production, a main y of economic sustenance. The possession

of land rights also pically ensures a baseline of shelter and

food supply and alI ws people to turn latent assets into live

capital through entepreneurial activity. Once secure in their

land rights, rural h use holds invest to increase productivity.

Moreover, the use f land as a primary investment vehicle

allows households t accumulate and transfer wealth between

This volume examines the possibilities and pitfalls to successful

financial sector tax reform from theoretical, empirical and

practical perspectives. It explores the possibilities and limitations

of "big ideas" such as removal of all capital income taxation,

the application of \fAT to financial services or heavy reliance

on financial transactions taxes. The risks of attempting to use

financial sector taxes as corrective instruments are stressed.

Two defensive criteria are advanced as key: making the financial

tax system as arbitrage- and inflation-proof as is practicable.

Each commissioned essay develops a distinct aspect of the

Investment Climate Around the World:Voices of the Firms from the World Busine~The analysis of firrrtievel data collected through parallel

international enterprise surveys can reveal important linkages

between governance constraints and business growth and

investment. The World Business Environment Survey (WBES),

an initiative led by the World Bank Group in 1999 and 2000,

collected enterpris~ data from more than 10,000 firms in 80

countries and one *rritory. Econometric analysis of responses

to that survey poin~ to a strong association between corruption,

financing, regulatorry and tax constraints, policy uncertainty,

and protection of i~tellectual property rights with firm-level

area. Theoretical chapters model the impact of taxes on

intermediaries, the design of optimal tax schemes, the role of

imperfect information and the relationship with saving. Current

practice in the industrial world and case studies of distorted

national systems provide an empirical underpinning. Finally,

experience with several of the main practical issues is discussed

in chapters ranging from the income tax treatment of

intermediary loan-loss reserves, the VAT, financial transactions

taxes, deposit insurance and inflation. Contributors are

distinguished academics and practitioners.

~S

Environment Survey

performance, as measured by sales and investment growth

and participation in the formal economy.

Investment Climate Around the World presents the core WBES

questionnaire and survey findings, and confirms the significance

of key country conditions on firm performance and behavior.

The findings provide a basis for regional comparison but suggest

the need for caution when averaging across categories, especially

in light of country conditions that can significantly affect firm-

level sales and investment.