On 29 December, Prime Minister Mustafa Madbouli announced that President Abdel-Fattah Al-Sisi had approved the final draft of the long-awaited State Ownership Policy Document.

The move aims to double the private sector contribution to the national economy, generate job opportunities and boost investment and exports, said Madbouli.

“The document targets an increase in the volume of investments by 25-30 per cent and to boost economic growth to between seven and nine per cent a year,” said Madbouli.

The 30-page document outlines how the government will fully exit 62 sectors of the economy within five years. They include the cultivation of field crops, fish farming, aquaculture, wood production, desalination stations, information technology, food and beverage services, retail trade, construction, river transport, commercial insurance, the engineering and chemical industries, leather and furniture production, textiles, printing and the production of cosmetics and perfumes.

Government involvement in transport activities, including the maintenance of train rolling stock and metro lines, the building of container terminals, livestock and dairy production, mining, the wholesale trade, sporting businesses, power generation and electrical transmission will either be maintained or reduced gradually, while its role in building railway tracks, the operation of electric trains, establishing dry ports, land reclamation, air travel, potable water stations, pre-university education, university hospitals, postal services and oil exploration is targeted to grow.

Madbouli explained that privatisation will come “either through selling public shares on the stock market, selling assets to strategic investors or concluding public-private partnerships [PPP] in the form of build, own, transfer; build, own, operate, transfer; build, operate, own; design, build, operate, and build, finance, operate, transfer contracts.”

“Performance and management contracts with the private sector will be also adopted, allowing private sector companies to manage selected activities in return for fixed returns,” said Madbouli.

The document also recommends the restructuring of public projects to make them more attractive to the private sector and promises that privatisation processes will be transparent and impartial, noting that “the competition law passed last month gives the Egyptian Competition Authority (ECA) greater powers to block practices that harm free market competition.”

Madbouli revealed that a higher committee will be formed to implement the document’s recommendations and determine exit mechanisms and a timeframe. The committee will be headed by the prime minister and include ministers with relevant portfolios, the heads of the ECA, the General Authority for Investment and Free Zones, the Sovereign Fund of Egypt (SFE) and the cabinet’s Information and Decision Support Centre.

“The committee will oversee the implementation of the document’s strategy, determine best practice, guarantee the fair evaluation of public assets, revise the legal and regulatory environment in ways that boost private sector involvement, and conduct periodical evaluations of the state’s strategic assets,” said the document.

A secretariat-general for the higher committee will be set up to prepare detailed information on public assets and state-owned companies, publish periodic reports about the progress of privatisation and hold a dialogue with citizens on the document’s objectives.

The SFE will play a central role in promoting the new ownership strategy. Since it was formed in 2018, the SFE has been instrumental in securing LE37 billion of foreign direct investments (FDIs), much of it from the Gulf.

Following a meeting with President Al-Sisi on 1 January, Madbouli said the Fund had been directed to ensure the optimal use of public assets within the framework of the new ownership strategy. He also revealed that the government is planning an investment conference to drum up international interest in the privatisation strategy and attract as many local and foreign investors as possible.

Fakhri Al-Fiqi, head of parliament’s Budget Committee, told reporters on 29 December that the State Ownership Policy Document is part of the four-year deal between Egypt and the International Monetary Fund (IMF) which was announced in October.

“The document reflects the recommendations of the IMF and its conditions for approving a $3 billion loan to support economic and structural reforms,” said Al-Fiqi.

The document opens the door for Arab Gulf sovereign wealth funds to engage in Egypt’s privatisation initiative.

Saudi Arabia’s Public Investment Fund is expected to acquire the United Bank for $600 million while Abu Dhabi is reported to be eyeing Banque du Caire.

“We hope the state will be able to generate $10 billion from privatisation annually over the next four years,” said Al-Fiqi.

*A version of this article appears in print in the 5 January, 2023 edition of Al-Ahram Weekly