Economic restructuring

Gamal Essam El-Din , Wednesday 28 Sep 2022

The government has finalised its State Ownership Policy Document ahead of the economic conference scheduled for next month.

Al-Sisi
Al-Sisi (File photo)

 

In mid-September, President Abdel-Fattah Al-Sisi noted there was a pressing need for an economic conference during which economists, business leaders, and investors could exchange views over the economic challenges Egypt faces. On Tuesday, the president announced that the conference will be held next month.

“We are doing our best to eliminate all obstacles facing investors and businessmen and the economic conference scheduled for next month will be a good opportunity to review problems and solve them within months,” Al-Sisi told officials attending the inauguration of a batch of new investment projects.

He used the occasion to underline that, contrary to many reports, the private sector’s contribution to the national economy is growing. Al-Sisi also revealed that he had directed the government and the governor of the Central Bank of Egypt to further facilitate the activities of the private sector.

On top of the initiatives intended to boost the private sector is the so-called golden licence. “In the past,” said President Al-Sisi, “a new project required 26 different approvals before it could get off the ground. This time-consuming process has been streamlined into a single licence.”

Al-Sisi also said that while the coronavirus pandemic, followed by the Russia-Ukraine crisis, had rocked the global economy, “we are doing our best to absorb the shocks.”

In the wake of the war in Ukraine the government introduced import restrictions in an attempt to reduce demand for foreign currency, a move that led to a slowdown in production.

“The restrictions have adversely affected industrialists and investors who find it difficult to import the raw materials necessary for their projects. The economic conference offers an opportunity to discuss the problems and find solutions,” said Al-Sisi.

He added that the goal of $100 billion a year in private sector exports was within reach.

On 22 September, Prime Minister Mustafa Madbouli said the government had finalised the agenda of the planned conference and that the State Ownership Policy Document, released in June, would top discussions.

Explaining that the document, which sets a roadmap for the large-scale privatisation of Egypt’s economy, emerged from three months of consultations with officials, MPs and private sector businessmen, industrialists and investors, Madbouli told journalists the conference will provide an opportunity to debate the final draft.

The policy document was first mooted by the Madbouli government in June as part of a wider strategy to restructure the economy in favour of the private sector. The strategy targets $40 billion in investment by 2026 and a doubling of the private sector’s role in the economy to 65 per cent over the next three years, by opening state-dominated industries to private investors.

Madbouli revealed the final draft of the document includes a chapter on competitive neutrality “which reflects the government’s interest in supporting policies that promote fair competition and create a more efficient market for consumers.”

Meanwhile, chairman of the Egyptian Competition Authority (ECA) Mahmoud Momtaz said the government has ratified the five-year (2021-2025) strategy developed by ECA.

“The strategy aims to amend legislation, policies and decrees which restrict free competition,” explained Momtaz. “Competitive neutrality means that the state will do its best to fight monopolistic practices and chart new rules to guarantee free competition in the market in a way that serves ordinary citizens, economic institutions and the national economy.”

Momtaz also revealed that a Higher Authority for Competitive Neutrality has been set up and will draft competition rules which will be binding on all state authorities.

The authority, chaired by the prime minister, is currently engaged in a wholesale revision of laws and regulations to ensure they are in line with the principle of competitive neutrality.

“You can’t open the market to the private sector without first laying down clear-cut rules for fair and transparent competition,” said Momtaz.

Other topics on the agenda of the economic conference will include “industrialisation, agriculture, exports, import restrictions, tourism, real estate development, telecommunications and information technology, and business leadership” said Madbouli.

“There will be real debates during the conference on these vital sectors and how to increase their contribution to the national economy.”

The conference will also address the global economic crisis triggered by the Russia-Ukraine war and how both the government and the private sector can work together to contain the high inflation rates the war has brought.

MP Ayman Mehasseb and Senator Mahmoud Sami, the rapporteur and assistant rapporteur of the national dialogue’s public investments and state ownership policy subcommittee, told journalists last week that the State Ownership Policy Document will be thoroughly discussed during the dialogue.

Mehasseb, a Wafdist MP, said the strategy contained in the document is “of major concern to all citizens.” He also warned that “if the document leads to private sector monopolies or undermines social justice opposition parties and MPs will team up and seek to amend it.”

Sami, the spokesman of the Egyptian Socialist Democratic Party in the Senate, said that despite the fanfare around the State Ownership Policy Document MPs and opposition parties still have no idea which sectors the government is planning to exit and whether there will be new rules that guarantee free competition and prevent monopolistic practices.

“We will seek the views of opposition parties on the document during the dialogue’s sessions and assess whether it needs to be changed,” he said.

The State Ownership Policy Document was finalised after government officials held 30 consultative meetings with private and public sector officials over a period of three months. A statement by the Information Decision Support Centre (IDSC) indicated that the consultations covered the agricultural, manufacturing, health, transport, education, electricity, natural gas, construction, insurance, financial brokerage, and tourism sectors, with a particular focus on food, drugs, textiles, electronics, engineering products, chemicals, leather, printing, publishing, packaging, furniture, medical supplies, and wholesale and retail trade.

*A version of this article appears in print in the 29 September, 2022 edition of Al-Ahram Weekly.

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