Reviewing State Ownership? An Outsider’s View on Egypt’s New State Ownership Policy

In December 2022, the Arab Republic of Egypt published its State Ownership Policy (SOP) to outline the government’s view on the role of state-owned enterprises (SOEs) in various industries and the regulatory reforms needed to boost the private sector’s involvement in the economy. The policy has since been discussed notably in terms of it underwriting pending national and international reform commitments, its impact on the military’s share of public and private economic activities or its likely effect on Egypt’s current-account position and hence continued need for international funding. Most of these assessments, however, do not evaluate the process and criteria used for selecting the sectors that the government wants to stay in, exit from or enter; nor do they offer a reference to judge which institutional arrangements, governance mechanisms or regulatory processes appear best to support the country’s sectoral development given its present situation. This paper addresses some of these concerns. Section one sketches Egypt’s economic context and current challenges; Section two draws on institutional economics to explore the trade-offs between efficiency and control at various levels of economic coordination and its implication for public or private decision-making and centralized or decentralized governance. Applying the resulting framework, Section three reviews the main elements of Egypt’s State Ownership Policy focusing on the selection of key sectors and the policy’s main concept of “competitive neutrality.” Section four initially juxtaposes the government’s espoused role in four industries with efficient regulatory processes that have been tried in other countries and contexts. Following that, the paper proposes to review the competitive impact of the growing number of trade alliances on domestic industries and their export performance. Section five concludes.