The State Ownership Policy: A New Dawn for the Private Sector and a Strategic Exit Plan for the Government to Address Macro-economic Challenges

May 22, 2023

ADSERO attended a recent roundtable discussion focusing on finance and investment hosted by the American Chamber of Commerce in Egypt on the occasion of the U.S.-Egypt Joint Economic Commission (JEC), a government-to-government dialogue, in partnership with The United States Chamber of Commerce. The State Ownership Policy (the “SOP”) was a topic that was explored by panellists and roundtable participants. The discussion was very dynamic; the panellists (who were carefully chosen to represent the spectrum (TSFE/GAFI/IFC/World Bank/) contributed their views on the topic, which inspired us to write this article.

The Egyptian government has recently announced the SOP, which aims to reduce the state's ownership in the economy and to promote the participation of the private sector. The SOP is a major undertaking that could have a significant impact on the Egyptian economy.

The SOP identifies 12 sectors where the government will reduce its ownership, including agriculture, construction, education, energy, finance, healthcare, housing, industry, information and communications technology, manufacturing, mining, and transport. The SOP also sets out a number of criteria that the government will use to determine whether or not to reduce its ownership in a particular sector. These criteria include the strategic importance of the sector, the level of competition in the sector, the efficiency of the state-owned companies in the sector, and the potential for private sector investment in the sector.

The SOP is a significant step by the Egyptian government to reform the economy and promote private-sector participation. It is still too early to say what the impact of the SOP will be, but it has the potential to make a significant positive contribution to the Egyptian economy.

The SOP could lead to a number of benefits for the Egyptian economy, including:

  • Increased efficiency in the state-owned sector;
  • Reduced financial burden on the state;
  • Increased private sector participation in the economy; and
  • Creation of jobs and boost economic growth.

The SOP is an opportunity for the Egyptian government to reform the investment climate and redefine and expand the role of the private sector in the economy. If the government is successful, the SOP could lead to a more dynamic and competitive economy that will benefit all Egyptians.

The government has invited investors to propose ideas and structures for divestment or partnership with the government in the context of the SOP. We view this as a sign of the government’s commitment to the transition to a free private sector-led economy. We believe that the private sector is the engine of growth and that it is essential to attract foreign direct investment in order to achieve sustainable economic development. The transition from a state economy to a free private sector-led economy is a long-term process that will require sustained effort from the government and the private sector.

The successful implementation of the SOP will require the close cooperation of the different agencies of the government, the private sector, and the investment professional services community (law firms, investment banks, etc..). These stakeholders have a shared interest in ensuring that the SOP is implemented in a way that is efficient, scientific, consistent, transparent, and thereby beneficial to all Egyptians.


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