- Despite the macroeconomic reforms implemented by Egypt’s government over the past year, its economy continues to underperform. But with a Presidential election just around the corner, the political elite must seek to assert their credentials as serious problem solvers.
- To address this, a swathe of privatisations is planned to take place across the banking, electricity, and energy sectors. First up, at some point in early 2018, the Engineering for Petroleum and Process Industries (Enppi) is suspected to hold an IPO, where political capital – alongside financial rewards – will be the real prize on offer for Cairo’s top brass.
- This strategy, however, is ostensibly irreconcilable with a government in hot pursuit of total control. This leads to questions about who will be ‘allowed’ to buy into Enppi – as well as the host of other state companies set to go public – and what dynamics will emerge between the public and private sectors as a result.
The Road to Public Listings
Throughout President Sisi’s first term in office, the government’s economic strategy has increasingly focused on enticing private investment into Egypt’s economy. As part of its wider drive to secure financial capital, the flotation of several state-owned companies has been touted by officials over the past 12 months, with recent indications that this plan is now gaining considerable traction.
Of course, general sentiments in Egypt towards privatisation are negative. The riches accumulated from state-led IPOs during the 2000s was viewed unfavourably by an impoverished population, which soon began to equate the program with corruption and nepotism at elite level. Hosny Mubarak’s son, Gamal, was seen as the antithesis of integrity and transparency by many, with the liberalisation reforms in Egypt very much his brainchild.
As such, the last time a public IPO took place in Cairo was in 2005, meaning that this is a calculated gamble from Egypt’s current crop of politicians who are no doubt mindful of how this will be received domestically. In any case, state owned entities in the banking, energy, and electricity sectors have all been earmarked for listings.
In fact, the government drew up a privatisation plan in September 2016 aimed at generating U.S. $10 billion in revenue over three to five years via the sale of public assets (Africa Business Communities, 22.09.2016). With many multinational energy firms already present in Egypt, and vast gas reserves discovered in its Mediterranean waters, there is clearly huge incentives from both sides to pursue such a strategy in the energy sector.