For years, Egypt has been promising to privatize parts of its economy where the presence of the state is hampering private investment. The project, which remained unfulfilled, was relaunched, while the vulnerability of the national economy was exacerbated by the war in Ukraine and Cairo was forced to negotiate a new loan from the International Monetary Fund (IMF). In April, President Abdel Fattah Al-Sisi announced a plan to attract $40 billion (37.9 billion euros) in private investment over four years. The Prime Minister, Moustafa Kemal Madbouli, began to outline the main lines on May 15, and set the objective of doubling the share of the private sector in the economy.
By 2025, the government wants “the contribution of the private sector to investments increases to 65%”, against 30% currently, announced the head of government. Ten companies owned by the state and two companies by the army (the bottled water manufacturer Safi and the service station operator Wataniya) are due to be privatized as of 2022. Two holding companies, comprising “the seven largest ports” of the country and “Best Egyptian Hotels”will also be incorporated, of which shares “will be listed on the stock exchange”, he added. A roadmap detailing the sectors concerned and the timetable must be announced before the end of May.
According to a document circulating in the local media, the state is considering leaving several sectors, such as cereals (except wheat), port construction, fertilizer manufacturing and water desalination plants. It plans to reduce its stake in the production of energy – notably renewable –, pre-school education, the textile industry and the operation of metro lines, as well as in mines and quarries. On the other hand, the State wants to increase its share in the construction of railways and metro lines, in the management of the Suez Canal or even in financial and insurance activities.
“Shocks in the financial markets”
Private investors and international institutions denounce the influence of the State on the economy as a source of unfair competition and market distortions. A World Bank study published at the end of 2020 noted “the unusually high presence” public enterprises in sub-sectors “where the private sector might be better placed to provide goods and services” and lamented the complex and non-transparent framework in which they operate”. The institution lists some 400 companies and public authorities, including 60 owned by the army, operating in 23 of the country’s 24 industrial sectors, and the majority of which are loss-making or highly indebted.
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