Evaluation of private sector feasibility studies program : USAID project no. 263-0112

private investment in Egypt. Special evaluation covers the period 9/79-11/84 and is based on document review and interviews with project staff and Egyptian and U.S. businesspersons. Although targets have not been reached, the project approach has been generally successful. The majority of potential U.S. investors interviewed indicated that the incentives offered by the project were an important factor in their decision to explore investment opportunities in Egypt. Of 84 applications received, 44 have been disapproved and 4 are under consideration. Ten reconnaissance visits and seven feasibility studies have been completed; seven staff members have been trained; and ten sectoral studies have been prepared. Three of the firms that have used the project are currently processing Law 43 applications. It remains unclear how many actual investments will be made. Achievement of targets was hindered by several factors. The initial promotion effort was a "shotgun" approach. The project was highly publicized before application procedures were finalized, and the original procedures were cumbersome. A one-year contractual delay impeded timely completion of half of the sectoral studies. Later delays resulted from bureaucratic problems in both Cairo and in the commercial section of the Egyptian Embassy in Washington. However, the introduction of modified procedures in 6/84 and the increased experience of General Authority for Investment and Free Zones (GAFI) personnel have partially offset the negative impact of these problems. It is recommended that the project be extended with the following changes: (1) initial screening, routing of applications, and communication with applicants be streamlined and (2) greater emphasis be given to promotion of the project as a package of services provided by USAID/E. Lessons learned: (1) the timing of project inputs is critical. In this case, application procedures should have been finalized and sector studies completed before the project was promoted; (2) targeted investment promotion efforts are most cost-effective; and (3) the time frame for securing investments was unrealistic in the project design. (Near East Abstract, modified)