In 1991, Egypt embarked on a massive privatization program to transfer the ownership of many public enterprises and assets to the private sector. Underlying this strategy were two major factors: (i) the state of many public enterprises which proved to be unproductive and inefficient, and (ii) resulting financial liability that further constrained government’s resources, contributing to a larger budget deficit that necessitated an increase in domestic borrowing and crowded out necessary resources for private activity. Indeed, private credit growth remains low and the share of private investment in total investment falls below that for many of Egypt’s comparators.
Against this background, the government has stepped up the plan to address shortcomings against the performance of ailing public enterprises and transform the economy into private-led growth. Since the launching of the privatization program, it has gone through several stages, ranging from high speed to a virtual halt in response to issues related to the political economy. The purpose of this workshop is to present the main results of a large-scale study conducted by ECES staff regarding the role of the private sector in Egypt’s economic development, the overarching philosophy of privatization, and the results of the privatization program thus far.
Having taken stock of the sales and mobilization of privatization proceeds, the study evaluates the effects on macroeconomic performance and firms’ performance. Finally, the study recognizes shortcomings in implementation that have slowed down progress and fueled public anger, in a few cases, diverting attention away from the overarching objectives of privatization. The study concludes that shortcomings in implementation should be properly addressed without compromising the privatization philosophy as a cornerstone towards maximizing the benefits of economic reforms and energizing the role of the private sector in economic activity.