United Nations Public Service Awards Case Studies

Investment is considered by Egyptian Government as the main pivot of development in various economic sectors: agriculture, manufacturing, tourism and trade. It is seen as the optimum means for resources and capacities utilization in order to achieve the country’s main development goals.

In July 2004, the Egyptian Ministry of Investment came into office to oversee investment policy, coordinate among various ministries with investment-related areas of responsibility. The General Authority for Investment (GAFI), one of the ministry affiliates, is the principal governmental authority concerned with regulating and facilitating investment, in addition to its role as a proactive investment promotion agency.

One of the main services provided by GAFI is establishing the companies working under the umbrella of investment laws. This process involves dealing with 6-8 entities (governmental and non-governmental).
These entities vary according to the type of company to be established (whether limited partnership, joint-stock-company, individual, etc) and which Investment law it will follow.
Prior to initiating the project in 2005, the process of establishing an investment company in Egypt used to take about 2 months and several visits to different entities. The investor had to go from one body to another to obtain relevant permits and approvals, and then paying service fees separately. This entailed several overlapping and complex procedures. The end result was an unattractive and unfavorable investment environment with a negative impact on the country economy.

What is the initiative about? (the solution)
Reengineering, streamlining and simplifying the procedures needed for establishing a company was the key achievement that led to a considerable time reduction in service delivery. A unified work cycle was redesigned and created. The total number of procedures involved has been reduced to 6 (against 13 in 2005). The number of days to establish a company became on the average 2 days instead of 55 days. In 2005, a one-stop shop was introduced where the investor has to directly deal with only one service provider, reducing the number of visits he used to do to just one. The project was further developed and since March 2010, the service is provided electronically. Now the investor can access the service and establish a company through the website of GAFI (www.gafinet.org) or through the Egyptian government portal (www.egypt.gov.eg). The online service covers submitting and following-up the application request, uploading transcripts of documents needed. An integrated E-payment model has been totally defined, designed and agreed upon with the National Bank of Egypt (NBE), GAFI and all other stakeholders. It is under development and planned to be availed early in 2011. At present, the investor needs to pay only one visit to GAFI for signing the submitted documents, paying the total required fees and receiving the company’s establishment approval. This initiative was part of an integrated investment reform plan (including incorporating more agencies in the one-stop-shop, introducing a flat fee structure, etc). The time and cost of incorporation were reduced in both 2005 and 2006, and by 2007 the number of registered companies had increased by more than 60%. This development was regarded by economists and financial institutions as a key legislative and institutional reform to pave the way for a favorable investment environment in Egypt. Foreign Direct Investment (FDI) grew 50-fold between 2003 and 2007 to reach U.S$ 13.2 billion in fiscal year 2007-2008, representing 8.1% of the country’s GDP. Achievements attained were as well translated to a drastic improvement of the country’s international assessment and economic indicators. As per the Doing Business Reports, issued by the World Bank Group, Egypt was selected for 5 consecutive years (2006-2010), among the 10 top reformers. ‘Starting a Business’ is one of the indices measured in this report. Egypt’s rank (out of 183) is continuously improving: Egypt stood at 18th best country compared with 24th in 2010, 43rd in 2008.

Who proposed the solution, who implemented it and who were the stakeholders?
This project was initiated by the Ministry of State for Administrative Development (MSAD), in cooperation with all involved stakeholders: • General Authority for Investment (GAFI) as the main service provider • Commercial Registration Office • Publicity & Notarization Authority • Egyptian Tax Authority • Egyptian Financial Supervisory Authority (EFSA) • Different Syndicates (lawyers, trading, etc) • Different Chambers of Commerce • National Bank of Egypt (NBE) All entities approved to delegate GAFI in collecting the necessary establishment fees. Total fees are paid in one transaction and the NBE automatically divides and distributes the fees to stakeholders’ accounts.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The most important strategy followed was to align all relevant stakeholders to achieve the unified vision, and relevant objectives. The Initiative’s main vision is to pave the way for a better investment climate through facilitating a fast start-up of an investor operation in Egypt. Among the most important strategies was the adoption of business process reengineering as a tool for simplifying the procedures involved in establishing a company by an investor. The project was implemented by reviewing all work cycles related to establishing different types of companies taking into considerations all governmental entities involved in addition to all encompassed overlapping procedures. The work cycles were analyzed and then reengineered to come up with a final design of one unified, simple and integrated work-cycle. Additionally, a mechanism between GAFI and the involved stakeholders was put into operation to process inter-requests electronically. Several other strategies were followed in the implementation of the project. Among them was securing top management’s support at all relevant bodies, ensuring smooth and timely implementation of the project. Another main strategy followed was capacity building of civil servants, as being the users for the new IT applications. Most of them were computer-illiterates at the beginning of the project. Continuous training turned them to positive elements and promoted their sense of ownership. These strategies have been established through: compilation and documentation of all procedures; co-ordination between all participating entities; implementation of state-of-the art automated procedures through the adoption of information and communication technologies. A detailed implementation plan was prepared to provide the integrated service either through 'one- stop- shop' or electronically through GAFI and the Egyptian government portals.

b. What were the key development and implementation steps and the chronology? No more than 500 words
As mentioned earlier, the establishment of a company under the umbrella of investment laws required the investor to call on 6-8 different entities (governmental and non-governmental) to get approvals. Accordingly, the first stage was to coordinate between different entities to align them on a unified vision as follows: • Define and design a unified integrated work cycle covering all entities’ needs • Agree to proceed in their course of action and postpone the inspection of the original documents when the investor receives the establishment consent • Delegate GAFI to collect service fees, through the bank, on their behalf. The bank is responsible to redistribute the fees to concerned entities’ accounts. • Create subsidiary outlets in GAFI premises and allow direct access to their corresponding database for inter-requests processing The second stage was concerned mainly with the implementation of the newly designed work-cycles as follows: • Real Implementation at different entities involved to secure the validity • Automation of the work-cycle • Linking between different applications and different platforms in various entities • Provide the service through one-stop-shop at GAFI premises The third stage was to provide the service (2010) online through GAFI and Egyptian government portals. Online service covers: • Submission of the application request • Uploading copies of documents transcripts • Follow-up the application request • Define, negotiate with all entities for approval, and design an integrated e-payment process: The National Bank of Egypt (NBE) acts as the gateway providing the electronic payment service. NBE collects the total establishment fees once and automatically reimburses the fees to stakeholders’ accounts based on a detailed statement received electronically with each payment transaction The next planned stage, currently under process, aims to eliminate the need for the one-time visit that the investor has to pay. When this stage will be terminated, company’s establishment approvals could then be sent to the investor’s address directly. This stage will cover the following: • Activation of e-payment • Activation of digital signature to enable investor to electronically sign required documents.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
The project faced several obstacles that challenged its success. The diversity of existing work cycles adopted by different stakeholders involved, providing the same service, was the most prominent. Aligning and unifying vision was a must. Strengthening co-ordination, improving collaboration, and providing leadership were essential. As the ultimate objective was to facilitate a fast start-up of an investor operation in Egypt, one unified work cycle had to be agreed upon by all entities. Another issue was to switch to a new automated and integrated payment process that allows the investor to pay total fees once. The National Bank of Egypt (NBE) was involved to act as the gateway providing the electronic payment service. The responsibility of automatically reimbursing the fees to stakeholders’ accounts was assigned to NBE based on a detailed statement received electronically with each payment transaction. This was an unprecedented technique unlike the electronic payment cards system. It necessitated a lot of negotiation and cooperation with all stakeholders related to the reallocation of establishment fees. The process involved alteration of conventional (traditional) systems and linking it to the electronic establishment system set at GAFI. From a technical perspective, it was required to accomplish interoperability, integration and linkage between different information systems and databases with different platforms. This was overcome by making use of technical consultants, to set interoperability and multi-model standards to follow, in order to ensure smooth future operation. Finally were the cultural obstacles. This was manifested in digital divide, computer illiteracy and resistance of civil servants to change, feeling threatened by such development. Some even thought they might be replaced by younger, computer-literate employees. This was overcome by providing extensive IT courses to everyone to get them on board.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
From the financial perspective, the whole project is sponsored and fully funded by the Ministry of State for Administrative Development (MSAD) with a budget about EGP 1,000,000, the equivalent of USD 175,000. The IT part of the project was carried out through a strategic rebate agreement between the government and multinational partners to finance the development and consulting services activities as a percentage of the cost of software licenses purchased. From the technological and human resources perspective: • MSAD plays a crucial role as the solution architect, and the main coordinator between the different stakeholders involved; In addition, MSAD acts as the Technical Project Manager through its multinational partners and their local private-sector partners, as being the expertise responsible for the development and implementation of the automated systems. • Initially, the project team included a group of business analysts for procedures reengineering and streamlining. During the following phases, the team included IT specialists and systems designers who developed the new systems and workflow. Besides, they established the integration mechanism with the legacy systems at different government entities. In addition, MSAD supplied the required infrastructure (hardware and software) to accommodate the 'one- stop- shop' approach and the electronic payments. • On top of that, the team of GAFI’s information center offered, through the project different stages, significant consultations and assistance either technically or regarding business analysis and reengineering process.

Is the initiative sustainable and transferable?
The initiative provides solutions and work cycles that can be generally replicated and reapplied in the process of multi-stakeholders coordination. Moreover, this service is also provided for companies governed by other laws: • Small and Medium enterprises (SMEs): These companies are not established under the umbrella of investment laws • Micro enterprises established under the umbrella The Social Fund for Development (SFD) The SFD has already requested replication of the project, so as to establish SMEs that fall under its umbrella through one service provider outlet, as well as through its website. This will enable the small investors to benefit from all incentive and soft loans offered by the SFD. These investors, in turn, will contribute in stimulating investment climate in the country. To ensure sustainability, the initiative is continuously developing and upgrading the intended systems for more simplifications. As an example, activation of digital signature is currently in process. This will enable investor to electronically sign required documents. Since the signature was the main reason for the one visit the investor has to pay to GAFI, approvals could be in the future sent to the investor’s address, thus eliminating the need for the one-time visit. By the end of the initiative, the project will be shifted to GAFI (as being the owner) with a sustainability plan prepared by MSAD. This plan is a comprehensive guide to ensure both capacity building and continuous cost development. Egypt’s international assessment mentioned in the Doing Business Reports, issued by the World Bank Group, may be used as evidence on the initiative's sustainability. Egypt was selected for 5 consecutive years (2006-2010), among the 10 top reformers. ‘Starting a Business’ is one of the indices measured in this report. Egypt’s rank (out of 183) is continuously improving: Egypt stood at 18th best country compared with 24th in 2010, 43rd in 2008.

What are the impact of your initiative and the lessons learned?
The most prominent impact can be clearly illustrated, as mentioned above, by the international assessment and indicators: • Time needed to start a new business is tremendously reduced from 55 days to 2 days on the average. It could reach at the most 7 days only in case the investor documents are not complete at the time of applying • Total no. of procedures involved to start a new business reduced from 13 in 2005 to 6 procedures Noting that, according to the Doing Business Report 2011, the First globally ranked country for ease of doing business is Singapore. Concerning the Starting Business index, Singapore rank is the 4th, where no. of procedures to establish a new company is 3 and no. of days is 3 • Time and cost of incorporation were reduced in both 2005 and 2006, and by 2007 the number of registered companies had increased by more than 60% • Foreign Direct Investment (FDI) grew 50-fold between 2003 and 2007 to reach U.S$ 13.2 billion in fiscal year 2007-2008 • According to the Doing Business Reports (2006 – 2010), Egypt was selected for 5 consecutive years 2010), among the 10 top reformers • According to the Doing Business Reports (2006 – 2010), Egypt rank for ‘Starting a Business’ index is the 18 Lessons Learnt were: • Strong and efficient management for such kind of project, involving many entities adopting different work cycles, is mandatory. Without it, it may be almost impossible to overcome related difficulties or to achieve prudent coordination that satisfies all needs for all entities, on top of which is the investor who is the primary beneficiary • Human capacity building for the beneficiaries is a crucial issue to guarantee the success and sustainability of the project • Developing the service provision by availing it either through one-stop-shop or electronically through the internet was imperative to facilitate procedures for the investor and consequently participate in creating better investment climate. Besides, it is assisting in promoting transparency and credibility in providing services, as per the policies adopted by the Egyptian government • The ability to integrate and link between different legacy systems, on different platforms and adapt them to fit the project objectives is a complex and tough. However, it proved that there are no impossible goals when the right planning and leadership are in place • Linking governmental entities makes the delivery of services easier and less time consuming


Institution Name:		General Authority for Investment
Institution Type:		Government Agency
Contact Person:		Osama Saleh
Title:		Chairman of General Authority for Investment (GAF
Telephone/ Fax:
Institution's / Project's Website:
E-mail:		dmobadda@ad.gov.eg
Address:
Postal Code:
City:
State/Province:
Country:		Egypt

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information