In common with the rest of the world, everyone in Egypt is currently living through the dramatic changes caused by the COVID-19 pandemic. However, the crisis provides an opportunity to advance the reform agenda in support of reaching the country's fundamental development goals. In 2016, Egypt launched a bold reform program to improve macroeconomic stability, restore confidence in the economy and enhance socio economic conditions. The exchange rate was liberalized,and a sizable fiscal consolidation was undertaken. A series of new laws were adopted to improve the legislative framework and address long-standing challenges in the business environment. Partly as a result of this, Egypt has been one of the few countries that has maintained a positive growth rate despite the COVID-19crisis.Furthermore, the crisis reveals priorities to advance the reform agenda in key sectors of strategic importance and significant opportunities for growth and expansion with an eye towards inclusive and sustainable private sector driven growth, pursuing climate-friendly and gender-focused policies. For instance, the crisis is demonstrating how critical is the availability of information and communication technology (ICT) services to support the work of frontline health and government workers and to mitigate the economic impact of social distancing measures. Other key sectors, including manufacturing and agribusiness, can have a substantial positive impact on employment and exports. According to CAPMAS, the unemployment rate has declined to 8 percent prior to the crisis but has increased to 9.6 percent in the second quarter of 2020.Anestimated 800,000 graduates enter the job market every year, yet the employment rate among working-age people in Egypt fell from 44.2 to 38.9 percent between 2010 and 2019.It has further declined to 35 percent in the second quarter of 2020. Female labor force participation is particularly low in Egypt, and worryingly, has declined further during the crisis reaching only 13.4 percent in September 2020, leaving a huge untapped potential. Successful international experiences of significant reductions in unemployment highlight the key role of a business-friendly environment. A key precondition observed in these countries is rapid growth in private sector investment. In the recent years, the share of private investment in the Egyptian economy has started to grow reaching 9 percent of GDPin FY2019. Yet, it remains below its historical average and considerably lower than in peer countries (15.3 percent in Jordan, 23 percent in the Philippines,and 17 percent in Thailand). Given the large and growing domestic market and its proximity to international markets, Egypt can increase its participation in global trade and attract stronger FDI inflows. Streamlining tariff and nontariff barriers, reengineering the cumbersome customs clearance process, and enhancing connectivity and logistics are important measures to facilitate trade and improve the country's competitiveness. To create a more dynamic private sector and unleash private investments across sectors,important reforms are needed to improve the investment climate, provide oxygen for the private sector, increase the efficiency of the economy, and enhance the competitiveness of Egyptian businesses. Egypt's overarching priorities should focus on establishing a culture of transparency and a participatory approach in policy making and creating a level playing field, as well as providing a functioning regulatory framework and justice system. Taken together, these reforms can restore the private sector's confidence and improve certainty around investment decisions.Additionally, a clear separation between the State's roles as regulator, policy maker and market player in certain markets is needed to avoid conflict of interest and promote fair competition. The shortage of appropriate skills in the labor force, a widely reported constraint facing businesses,should be addressed through education and training reforms, and more generally a greater focus and resources allocated to human capital development. Egypt's fast-growing population provides a basis to realize significant growth, if conditions are right. Generating jobs for incoming employment seekers and the existing stock of unemployed people requires a forceful government support to the private sector and to the business environment in which it operates. Egypt has also taken important steps to put its growth on a more sustainable path, and I'd like to congratulate Egypt on selling $750 million in green bonds in 2020, in the region's first sovereign offering of climate-friendly securities. *The writer is the World Bank's Country Director for Egypt, Yemen and Djibouti
