Issue No. 591
Economy
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20 - 26 June 2002 Issue No. 591 Economy |
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| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
Privatisation blues
SINCE the early 1990s, the government's privatisation programme has been a key component of economic policy. Although devised to invigorate the Egyptian economy, privatisation has proved to be a mixed blessing.
Hisham Hasabou, a professor of accounting and former economic adviser to the prime minister told Al- Ahram Weekly that one of the government's main mistakes when privatising companies was its over- emphasis on selling price rather than other aspects of a sale.
Hasabou added that it would be preferable for the government to focus on providing greater incentives to would-be buyers. This would guarantee project continuity, maintain labour force strength and add value to the Egyptian economy.
Although Egypt's privatisation programme was originally intended to help the economy face the pressures of globalisation, it has faced many regulatory obstacles.
Hasabou explained that the government is to blame for changing regulations after selling public sector companies. He cited Misr Duty Free Shops as an example. After selling the company to private sector investors, the government dramatically reduced the allowance window to purchase from duty free shops from 30 days to 24 hours.
According to Hasabou, this sudden change in the regulations led to losses for the company's shareholders and, more importantly, has discouraged investors from buying other public sector companies.
Moreover, the privatisation programme has led to the dismissal of many public sector workers. To counteract this, Hasabou has recommended that the government provide job opportunities for workers who are negatively affected by privatisation, even if only for a limited time.
According to Hasabou, the privatisation programme's stated goals have not been realised. Improved management should have led to increased profits, greater investment and higher employment. This has not happened. He added that only one privatised company has figures to prove that it is now profitable.
Answering a question on revenues raised by the government's privatisation programme, Hasabou used the example of the project at Toshka. On a recent visit there he found it to be devoid of any signs of economic activity. "If projects like these are financed by privatisation revenues, we are really wasting money," he added.
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