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Public Sector Enterprises (PSEs) in Egypt: Present and Future

Public Sector Enterprises (PSEs) in Egypt: Present and Future. Dr. Ashraf Hassan Abdelwahab Acting Minister Ministry of State for Administrative Development ( MSAD) Arab Republic of Egypt. Contents. Introduction Historical background

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Public Sector Enterprises (PSEs) in Egypt: Present and Future

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  1. Public Sector Enterprises (PSEs) in Egypt: Present and Future Dr. Ashraf Hassan Abdelwahab Acting Minister Ministry of State for Administrative Development (MSAD) Arab Republic of Egypt

  2. Contents • Introduction • Historical background • Current situation for Public Sector Enterprises in Egypt: • Legislation and structure • Challenges • The new vision for Public Sector Enterprises role

  3. Historical Background - 1 • Starting 1952, Egypt adopted a communist regime and state owned enterprises emerged • Represented the core economic back bone • Governed by Nationalization program and specific legislations • Totally owned by Government • Egypt went through a thorough review of its economical structures in the mid 80s

  4. Historical Background - 2 • In 1991, Public Sector Agencies were reorganized into Holding Companies (ownership) and Public Sector Enterprises. • June 1991, 314 company constituted the Public sector in Egypt • The privatization program started to emerge in 1993 and in parallel to economic reform, it reduced the no. of PSEs from 314 to 147 in 2011.

  5. Historical Background - 3 • Public Sector: • In 1983, Economic Establishments were converted into Public Sector Organizations (Law 97/1983) • State owned and currently, 5 sectors remained public sector: • Media • General Authority for Oil (12 Companies) • Suez Canal Authority (7 Companies) • Banks (5 Banks) • Arab Contractors Company

  6. Historical Background - 4 • Public Sector Enterprises: • 9 Holding Companies: • Cotton, Spinning and Weaving • Metallic Industries • Chemical Industries • Pharmaceutical • Food Industries • Construction and Development • Tourism, Hotels and Cinema • Insurance • Maritime and Land Transportation

  7. Law No. 203/1991 on PSEs - 1 Basic principles of the law: • Establish state-owned holding companies (owning and not managing) • Establish affiliated companies, where holding company owns 51% • Set rules and criteria for the selection of companies management board (holding and affiliated) • Monitoring through periodical reports to the Cabinet of Ministers on the companies’ activities • Give right to the holding and affiliated companies to develop their administrative regulations • Determine audit unit inside the companies (holding and affiliated)

  8. Law No. 203/1991 PSEs - 2 Disadvantages affecting Public Sector Enterprises’ performance: • Vision: • Lack of common vision and coordination of strategic objectives • Transparency and Accountability: • Lack of clear determined criteria for the selection of enterprises’ management board and members • Misuse of liabilities • Restriction of auditing bodies

  9. MainIndicators

  10. Public Sector Enterprises’ Net Profit

  11. Privatization • Privatization program was highly criticized for: • Lack of transparency (companies selection, pricing standards, boards…) • Miscommunication of policies • Lack of experience • Mal distribution of returns and contribution to unemployment • No tangible contribution to national economy in terms of productivity or employment • Was it too fast for the society? • Corruption?

  12. PSEs’ A New Vision • During the 25th Jan. revolution, the society was calling for employment and social justice. • Egypt has adopted a new strategic vision for PSEs: • To become the main pillar for Socio-economic development in Egypt

  13. PSEs’ New Mandate Public Sector Enterprises have to a partner in realizing Socio-economic development in Egypt through the following: • Building and developing the Egyptian community • Realizing social justice

  14. Current Plan of Action • Termination of all privatization processes • Preparation of a complete strategic plan for the public sector companies to be implemented according to a determined schedule • Apply good governance principles • Establishing new criteria for the selection of companies’ management board and members • Tighten control , monitoring and accountability • Re-engineering the companies’ organizational structures

  15. Conclusion • It is always about Why and How? • Why we need to keep these companies and there benefit to us (state) • Supported Political vision • Clear public policy on their role in the society • The balance between commercial and social objectives • How to run these Enterprises ‘Right’ • Good governance (transparency, ownership, accountability,…) • Expertise • Access to finance

  16. Thank you … awahab@ad.gov.eg

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