State Ownership Policy Document: Paving the Way for Private Sector
Updated 3/4/2023 9:00:00 AM
In May 2022, Prime Minister Mustafa Madbouly announced the government’s plan to restructure the economy and move towards more private-sector participation in the Egyptian economy. This plan involved the launch of a State Ownership Policy Document. In September 2022, the Cabinet finalized the policy that has drawn up the roadmap for the state to lower its footprint in the economy. Finally, in late December 2022, only two weeks after Egypt secured the new $3 billion loan, President Abdel-Fattah El-Sisi approved the final version of the policy document.
In this Factsheet, Arab Finance outlines the main pillars of the State Ownership Policy Document.
*The policy targets defining the contours of state presence in the economic activity, creating an attractive investment environment for both local and foreign private sectors to expand to increase their contribution by 25%-30%, and achieve economic growth of 7%-9%, which helps create jobs and lower unemployment rates.
*The issuance of the policy backs government commitments, under the International Monetary Fund’s (IMF) four-year program, to boost the private sector’s role in economic growth while reducing the state’s role. In this respect, the government has to secure financing of $2.5 billion from selling its assets by the end of fiscal year (FY) 2022/2023.
*The state’s withdrawal from particular economic activities will depend on various factors, including the nature of these activities, the strategic value or security implications of the designated activities, and local and global economic developments.
*The policy document identifies three main directions for the government to define its presence and ownership in various economic activities. According to the policy document, the government plans to withdraw from 62 activities; maintain or decrease its presence in 56, and maintain or increase its presence in 76.
*The government plans to withdraw from activities like field crops, desalination plants, river transport services, and commercial insurance. Moreover, the state will fully exit from industries including electric and electronic devices production, leather, furniture, and retail.
*The state will reduce its presence without completely withdrawing in port and railway sectors, water treatment plants, and parts of other industries such as mining, electricity, wholesale, financial brokerage, information, sports, food, metallurgical, chemical, textile, and pharmaceutical industries.
*The government plans to increase its presence in strategic economic activities, including transportation infrastructure, land reclamation and irrigation projects, water production plants, Suez Canal projects, petroleum extraction, fertilizers, oil refining industries, and portions of the education and health systems.
*The implementation of the State Ownership Policy Document will take place gradually within three to five years.
By Amina Hussein
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