The state has raised $6 billion from 21 transactions since it launched its public-assets offerings programme, a cabinet statement said on 5 May.
The figures were announced during a meeting held to follow up on the government’s asset-divestment programme, which aims to enhance its capacity to meet its financing needs, expand the ownership base in the Egyptian stock market, attract investments, and boost the role of the private sector in the economy, the statement said.
Going forward, the government intends to move faster with its divestment programme. A government source told news website Enterprise Press that stakes in 11 state-owned companies are slated for sale in the current fiscal year with target revenues of $4 to $5 billion.
The motivation behind the rush to implement the government’s divestment programme stems from pressure to secure the government’s financing needs, explained Cairo University professor of Economics Alia Al-Mahdi.
Moreover, she added, the divestment programme is part of the government’s commitment to the International Monetary Fund (IMF).
In December 2022, as part of its drive to increase private-sector participation in the economy, the government announced its State Ownership Policy Document outlining the sectors it plans to exit.
It also announced a list of 32 companies, later increased to 35, in which it planned to divest stakes. Earlier this year, the prime minister announced that the total number of companies under the programme had been brought up to 40.
Among them are companies affiliated with the Military’s National Service Projects Organisation (NSPO) such as Safi, Wataniya, ChillOut, and Silo Foods. Restructuring and managing the offering of the companies affiliated with the military is being carried out by the Sovereign Fund of Egypt.
During the meeting on 5 May, Prime Minister Mustafa Madbouli reviewed the role of the International Finance Corporation (IFC) in selecting the assets to be prepared for offering, the most suitable offering strategy, and the sectors identified as priorities, the cabinet statement said.
The IFC was appointed in June 2023 as strategic advisor to the government’s Asset Monetisation Programme. The role of the IFC is to provide the government with technical assistance and advisory support to develop a strategy and implementation plan, help structure and prepare assets for sale, including by improving corporate governance, and implement selected approved transactions.
Al-Mahdi said that she is not opposed to the public-offerings programme or to divestment in principle as a financing mechanism, but it must be bound by certain conditions and commitments.
Regardless of whether the prospective buyer is Egyptian or foreign, contracts should include fixed investment requirements within a set timeframe, conditions related to maintaining operations and employment levels, and stipulations that returns be reinvested locally, she said.
The buyer should not have the right to resell the asset to a foreign or domestic entity without state approval. The same should apply to the transfer of usufruct rights.
Al-Mahdi cited the example set by the government’s sale of the Omar Effendi Department Store in 2006. The purchaser was eventually forced to return the assets to the state due in part to the breach of contractual clauses including those on preserving jobs (layoffs were restricted to retirements).
Such contracts, which stipulate that they can be unilaterally annulled in the event of a breach, can help to safeguard rights, Al-Mahdi said.
In its follow-up report on the State Ownership Policy Document on August 2024, the government enumerated several steps for implementing the public-offerings programme. It called for an updated vision informed by recent developments, adding NSPO-affiliated companies to the programme and a clear timeline for the offerings.
Economist Ahmed Abu Ali hailed the $6 billion generated through the sale of state assets as a major step in the government’s drive to improve economic efficiency. The public offerings programme is a pillar of the comprehensive economic reform agenda adopted by the government with the support of major international financial institutions such as the IMF, he said.
The programme is not just about building foreign currency reserves. It also helps attract foreign investment, expand private-sector ownership, and improve the management of public assets, Abu Ali said.
These are all commitments the government is following through on as part of its broader vision to achieve financial sustainability and stimulate economic growth, he added.
“The programme is a reform instrument with economic and structural dimensions. It is not just an asset sale,” he said.
Abu Ali explained that broadening ownership is crucial to enabling the private sector to play a greater role in the economy, which promotes competitiveness and better asset management.
In addition, the entry of strategic investors into major economic entities helps foster the transfer of administrative and technical expertise, boosting company performance, sustainability and growth, export capacity, and job creation.
There are many examples of formerly loss-making public sector assets that were totally turned around after changes in management and ownership to domestic or foreign private sector hands, he said.
Speaking to reporters in mid-April, economist Ali Abdel-Raouf Al-Idrissi did raise one concern, however. He said that the current pace of divestment could come at the expense of realising the maximum possible returns from the sales, especially given market fluctuations and declining asset valuations.
This was not to suggest applying breaks to the programme, he said. However, it must strike a clear balance between maximising returns and ensuring transparency so as to avoid forfeiting strategic assets.
Al-Idrissi also stressed the need to boost domestic private-sector participation and to form a list of sovereign assets that should not be fully divested.
“The public offerings programme is an effective reform tool if utilised with economic rationality and genuine oversight that ensures fairness, efficiency, and transparency,” he concluded.
* A version of this article appears in print in the 15 May, 2025 edition of Al-Ahram Weekly
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