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Sunday, 3 November 2019

Could military-owned companies be set to list on the EGX?

PRIVATIZATION WATCH- Could military-owned companies be set to list on the EGX or sell stakes to the private sector? President Abdel Fattah El Sisi has raised for the first time the idea of including military companies in his administration’s stake sale program. Egypt’s people should be able to buy shares in military-owned and operated companies, El Sisi said, speaking at the opening of two chemical plants in the Nasr for Intermediate Chemicals complex in Abu Rawash on Thursday. The statement is receiving widespread coverage in both the local and international press.

The army is not competing with the private sector, El Sisi said: The president stressed that the army doesn’t undertake projects at the expense of the private sector and noted that the military and civilian businesses are actively working together on a series of strategic initiatives.

Background: El Sisi’s remarks appeared designed to address claims the military is crowding-out the private sector as its involvement in the economy deepens, a topic he has addressed on several occasions. Last year, for example, El Sisi said the military’s economic activity constitutes only 2-3% of Egypt’s GDP, according to Ahram Online. Growing state involvement in the economy has been of significant interest to the international press. Reuters led a year-long investigation into the issue last year, and the Wall Street Journal later looked into the topic. The IMF has since spoken on the need for the state to reduce its involvement in the economy.

Don’t expect fewer mega-projects: El Sisi said Egypt would continue with projects designed to boost economic growth, saying that critics could “get lost” if they didn’t like it.

El Sisi touts plans for SWF as gov’t promotes fund to private investors: The president also spoke on Thursday about Egypt’s plans for its sovereign wealth fund, which is set to start operating soon. The fund will be an embodiment of the economic power of the state, he added. His statements comes as Orascom Development Egypt and Al Ismaelia For Real Estate Investment appear to have both expressed interest in investing in or alongside the SWF, according to remarks by Planning Minister Hala El Said picked up by Al Mal. She also highlighted proposals from international and Arab investors to partner with the fund, which will get its strategy and full structure within two months. El Said had met last week with UAE businessman Khalaf Al Habtoor of Al Habtoor Group to discuss the fund. The SWF’s newly appointed CEO Ayman Soliman also began drumming up investor interest for the fund during the Egypt Can conference.

Partnership with other SWFs in the offing as well: Prime Minister Mostafa Madbouly also said that the Egyptian government is expanding the participation of the private sector in its development and will also work on partnerships with other global sovereign wealth funds, direct investment funds, and private sector companies.

El Said noted that the government intends to raise the capital of the SWF and contributed new assets at a meeting scheduled for this week, according to Al Mal. El Said noted that assets worth EGP 50 bn will be contributed to the fund, including a number of parcels of land. The current issued capital of the fund is now EGP 5 bn, while its authorized capital is EGP 200 bn.

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