Constraints to Privatization: The Egyptian Experience

03-05-1999
Author(s): Mokhtar Khattab
Publication Number: ECES-WP38-E

Abstract:

Privatization is perceived as the cornerstone of Egypt’s economic reform program. This paper presents an overview of the challenges that the privatization program has encountered so far and means of tackling them. It discusses the political and legal constraints to privatization, taking into consideration the role of the different actors that are involved in the process, namely the executive authorities, public opinion, press and the People’s Assembly. Implementation constraints are also considered, including social constraints, the valuation process, the absorptive capacity of the stock market, and the selling of loss-making companies to strategic investors. Finally, the paper concludes by offering policy recommendations given that the ultimate objective is to increase the efficiency of public enterprises through divesting state monopoly and encouraging competition within the framework of a market economy.

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