28 Oct. - 3 Nov. 1999
Issue No. 453
|Published in Cairo by AL-AHRAM established in 1875|
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Emancipating EgyptAir?By Aziza Sami
The International Finance Corporation (IFC) is interested in funding privatisation in Egypt's aviation and electricity sectors, said Managing Director of the World Bank and IFC Executive Vice President Peter Woicke in an interview with Al-Ahram Weekly.
Woicke recently held a meeting with Prime Minister Atef Ebeid in Cairo during which he raised the question of the privatisation of the national airline, EgyptAir. Woicke said that this "is an important issue in terms of tourism development. This country has a tremendous potential, but it needs, I think, this inherited airline's emancipation." Describing Ebeid's response to his question about the possibility of privatising the long-standing state monopoly, Woicke said "[Ebeid] did not answer, but he smiled. I did not know if his answer was yes or no, but he is committed to privatisation."
Woicke said given "that Ebeid's previous role was privatisation," he felt sure that the prime minister was "fully committed to total privatisation in Egypt."
The "eventual privatisation" of electricity distribution was also raised by Woicke during the meeting. "[Ebeid said] that it was one of his original ideas anyway," Woicke added.
The IFC, which currently holds a portfolio in Egypt worth over $500 million in the financial, industrial, oil and tourism sectors, is now looking at funding privatisation in infrastructure, power generation and the distribution of utilities, including electricity and water.
Asked whether the IFC recommends a certain pace for the privatisation of these sectors, Woicke said, "It is important to recognise that we are not pushing for privatisation for privatisation's sake. The worst thing you can do is to replace a public monopoly with a private one. So we will always recommend a competitive environment. For instance, once you privatise electricity distribution companies, it is most important that this should be made available to everybody so that there is competition in the electricity sector."
In a previous interview with Al-Ahram Weekly, the IFC's former representative in Egypt criticised the "non-competitive policies" which regulated Egypt's first privatisation in the services sector -- that of the mobile communications operation which was part of the Egyptian Telecommunications Company-- for having given one private sector investor sole monopoly of the mobile phone market and, subsequently, an unfair advantage over other potential competitors. The current view of IFC officials is that the competition generated by the entry of a second mobile phone operator in the market is a positive step paving the way for further privatisation of the telecommunications sector.
Small and medium enterprises are also among the IFC's priorities, in line with the Egyptian government's current emphasis on reinforcing this sector as a prerequisite for building an entrepreneurial base for industrial development and exports.
Funding for hi-tech investments was also discussed. "Ebeid is interested in looking at developing the hi-tech industry," said Woicke. "We discussed how the IFC can help in this respect. We have, in the past, been asked [to help in this sector] in some other countries," he added.
The IFC is currently contributing to the funding of a hi-tech project known as the "peace technology fund", the brainchild of former Israeli prime minister Shimon Peres. Woicke, who was going on to the Palestinian territories and Israel as part of his tour, said that the idea of the fund is "to invest from both Israeli and Palestinian sides into hi-tech projects in Palestine." The fund makes direct equity investments in joint-venture companies in the West Bank and Gaza whose operations "encourage" technology transfer.
The IFC has no investments in Israel, Woicke pointed out, "because it does not qualify as a developing country"-- a prerequisite for receiving IFC funding.
Woicke said that the IFC, in its capacity as the World Bank's private sector funding arm, has played "a key role" in helping the Palestinians build an environment conducive to private investment.
"We have done quite a lot for the Palestinians in micro-financing and in helping build their financial institutions as well as small and medium enterprises," Woicke said.
Woicke's tour in the region is his first since he was appointed as World Bank director and executive vice president of the IFC. The tour, which ended last week, included Lebanon, the West Bank, Gaza, Israel and Jordan . An IFC statement said that Woicke's meetings with business leaders in all of these countries was "intended to support an investment programme designed to cement peace in the region, with economic prosperity generated by the private sector."
Asked whether the aim of his tour had been to promote a Middle East North Africa (MENA) conference on regional cooperation, which the United States is currently promoting through contacts with the Arab and Israeli private sectors, Woicke said, "There is no connection whatsoever." He later added, "To be honest, I believe good business basically promotes peace. If people invest in each others' countries [on a private sector-] basis, then prosperity is generated."