GOOD INTENTIONS FAIL TO MASK DOUBTS ABOUT GOE'S

C O N F I D E N T I A L CAIRO 001531

SIPDIS

E.O. 12958: DECL: 08/09/2039
TAGS: ECON PGOV EAID EG
SUBJECT: GOOD INTENTIONS FAIL TO MASK DOUBTS ABOUT GOE'S
POVERTY PLAN

Classified By: ECONOMIC-POLITICAL MINISTER COUNSELOR DONALD A. BLOME FO R REASONS 1.4 (B) AND (D) 1.(C) Key Points --The GOE's Village Development Initiative (VDI) - a poverty alleviation program - aspires to target more than 1,000 of the country's poorest villages to improve basic living conditions. --Following a pilot phase, the GOE this year decided to expand the program from 14 villages to 151 over the next three years. --The initiative enjoys the strong and visible support of the ruling NDP, especially the party's assistant secretary-general Gamal Mubarak, who visited a pilot village earlier this year. --Despite its laudable goals, there is no existing mechanism to evaluate VDI's progress. Critics charge the initiative is politically motivated and exists to boost Gamal Mubarak's future election prospects. -------------- TARGETING 1000 POINTS OF POVERTY --------------
2.(SBU) Begun in 2007, VDI is part of a national strategy to reduce poverty levels by 15% by the end of the GOE's 2012 five-year economic plan. Working in conjunction with the World Bank, the Ministry of Economic Development created a map to identify the country's poorest villages. The methodology used to define what constitutes a village included approximately 30 indicators, chief among them a family's size, income, and education level. The 1,141 villages' population includes more than 5 million poor people, which is 42% of the country,s total poor population. Overall, more than 10.7 million people live in the areas encompassing where the program plans to target - more than 13% of the country's total population.

3.(SBU) Since the initiative's inception, infrastructure programs have targeted several key development areas, such as building new housing units; establishing sanitation, electricity, and water networks; and upgrading health clinics and schools. In a few villages, literacy classes and pre-school programs are offered. VDI is administered at the Cabinet level, with the Ministry of Housing (MOH) serving as the lead agency coordinator for the 10 participating ministries.

4.(SBU)The GOE started the initial phase of the program in 2007, when it invested approximately LE 270 million in 14 villages in Beni Suef and Sharkeyya governorates. Since then, the initiative has expanded to 151 designated villages in six governorates. This second phase began in 2009 and will take approximately three years. According to Dr. Sahar Tohamy, an economic advisor to Housing Minister Ahmed El Maghrabi, this new phase will incorporate lessons learned from the pilot villages ("we cannot talk about better health if we do not effectively deal with the garbage problem") and will address local residents' concerns - such as community centers and small athletic complexes that can serve as social gathering points for their villages. -------------- CRITICISM TARGETS GAMAL MUBARAK'S PET PROJECT --------------

5.(C) Critics charge that the program lacks a coherent focus and is politically motivated. Dr. Samir Radwan, an economist and advisor to the Ministry of Trade,s General Authority for Investment and Free Zones, told us that he believes the initiative will fail since it relies upon "corrupt local councils" to implement new programs. He further explained the Ministry of Finance has struggled to fund the initiative and that the only reason the GOE supported programming for the 151 villages is because of Gamal Mubarak's strong interest in VDI. Radwan also noted that the program has suffered from bureaucratic mismanagement: the Ministry of Social Solidarity was originally assigned to direct overall operations but was replaced in this position because they were seen as "doing nothing." -------------- PILOT PROJECT VISIT REVEALS POTEMKIN CLINICS --------------

6.(C) We visited the Al Asayed pilot program, located in the central delta governorate of Sharkeyya - approximately 2 hours north of Cairo. Local officials proudly noted Gamal Mubarak visited the village earlier this year and were keen to show us what he viewed. We were taken to see a still-under-construction sewage system, health clinics, housing units, and a renovated co-ed school and water treatment plant. They attributed the new infrastructure to VDI. While the new facilities in the pilot village appear impressive, no data is available about their use and access (we failed, for example, to receive an answer to how many patients were seen on a daily basis in either health clinic we visited). Roads between the new development areas were rudimentary, and one facility - a job skills center - was empty. XXXXXXXXXXXX -------------- COMMENT --------------

7.(C) Comment: It is very difficult to assess VDI's impact and effectiveness. No benchmark study has been conducted and we received conflicting information on whether or not there will be an interim progress report available in September. There is no coherent program plan for the 900 villages not involved in the initiative's second phase, despite vague MOH promises that they will be included and will receive services. However, the NDP and the media have lavished attention on Gamal Mubarak's visit to the pilot village, his statements about the VDI, and his overall anti-poverty credentials. This appears to be a concerted effort to bolster his political image in the run-up to elections in 2010 and 2011, portraying him as someone sympathetic to the needs of poor Egyptian constituents. Despite Mubarak's strong interest, an unwieldy management process, unfocused mandate, and program financing struggles raise doubts about GOE plans to alleviate rural poverty through the initiative. SCOBEY