Summarizes attached study (XD-AAX-892-B) of the potential for recovering the recurrent costs of the Government of Egypt”s (GOE) public services in the education, health, and agriculture sectors. The study was based on review of A.I.D. documentation. The project has shown that cost recovery has great potential. If beneficiaries can influence or control the use of funds to obtain quality services, then even the poor will pay service fees for curative health care, textbooks, school building maintenance, and irrigation system upkeep. Some cost recovery activities which have been initiated or are under consideration in education are (1) community/parent contributions for maintenance of primary schools; (2) sale of advertising space on notebooks and textbooks; (3) sale of textbooks and/or a reuse program; (4) a school tutoring program with a portion of the teacher”s fees retained; (5) performance awards for teachers; and (6) development of private schools without limitations on fees or salaries. Another new approach is the granting of autonomy to district and village level schools, including the authority to set and retain fees and donations. In health, the GOE has made a commitment to upgrade selected facilities and charge fees in a significant departure from the social contract of free health care for all. Initiatives in this area include (1) the Curative Care Organization, which recovers 100% of recurrent costs; (2) the Health Insurance Organization; and (3) group practices developed by the Suez Community Health Personnel Training Project which recover most clinic and medical school recurrent costs. Initiatives in the agriculture sector have been slow to develop because of a restrictive policy environment, the undisputed public benefit of agricultural research and extension, and constitutional and religious opposition to charging water fees (e.g., for irrigation). Potential cost recovery activities in this sector include (1) legalization of water users” associations; (2) fees for irrigation drainage systems; and (3) local contributions of labor for the maintenance of tertiary irrigation canals. Key recommendations are to: support efforts to lift restrictions on private schools and community/parent contributions; build on the success of the Suez Community Health project by identifying Egyptian initiatives that could benefit from continued USAID/E support; and study areas in the agriculture sector where fees could be instituted, particularly rice and land taxes. The Mission comments that the study has proven very useful in focusing attention on cost recovery issues; a similar study of cost recovery in infrastructure and local development projects would be worthwhile.
