Egypt's House of Representatives has given initial approval to a landmark draft law on state ownership, setting the stage for a centralized overhaul of the nation's vast public assets. The proposed legislation, still awaiting a final parliamentary vote, will establish a new “State-Owned Enterprises Unit” directly under the Cabinet, aiming to streamline management and boost the economic returns of state-held companies.
The envisioned unit will be led by a full-time executive boasting extensive experience in investment, corporate management, and economic projects, supported by a team of experts in these fields. Its mandate will include organizing and overseeing all companies wholly or partially owned by the state, with a focus on implementing time-bound action plans aligned with Egypt's overarching state ownership policy and unified guidelines. The unit will be required to coordinate closely with relevant state agencies.
According to a report from the Economic Affairs Committee, the law's objectives are ambitious: maximizing economic and social returns on public investment, enhancing asset management efficiency, and forging a transparent governance framework. It also seeks to clearly define the roles of the state and state-owned companies to foster a more attractive investment climate and contribute to sustainable development goals.
However, the legislative push is not without its critics. MP Abdel Moneim Imam, secretary of the Budget and Planning Committee, welcomed the bill but sharply rebuked the government for its protracted delay. “The government reminds me of the fable of the hare and the tortoise,” Imam stated, expressing frustration that “after two years of waiting, we suddenly woke up to the urgent need for this law.”
Imam underscored the formidable challenge of public skepticism surrounding “privatization,” a term that often evokes deep-seated mistrust among Egyptians. “Egyptians see public sector assets as part of their national ownership, funded by their sweat and toil and their taxes,” he explained. “Any move toward privatization or divestment, regardless of the terminology, is met with suspicion and fear.”
He cited historical instances where state-owned factories were sold off only to be redeveloped as real estate projects, a practice that has eroded public confidence. Imam stressed that the government now faces a “historic opportunity to reassure citizens” and rebuild that trust as it embarks on this significant restructuring of its economic holdings.
Imam urged the government to catalog all vacant lands owned by public sector companies and transfer them to state entities like government-owned companies, the Sovereign Fund of Egypt, or other public investment bodies to prevent undervalued sales.
Founded in 2018, the Sovereign Fund of Egypt aims to boost private partnerships and attract foreign investment in state-owned firms.
Imam concluded by calling for guarantees that asset divestment won’t lead to land speculation or overpriced real estate development. “The goal,” he said, “is to channel assets into real investment and development, not real estate flipping.”
Last month, Public Business Sector Minister Mohamed Shimy said the ministry’s portfolio of companies showed improved performance, with preliminary results for the first half of the current fiscal year showing revenues nearing 60 billion Egyptian pounds and net profits of 17 billion pounds (approx $340 million).
The IMF loan program, agreed in 2022, aims to generate $3.6 billion in privatization revenues during the current fiscal year.
