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Monday, 23 December 2019

Meet your new cabinet

Meet your new government: Ending weeks of speculation about the scope of a widely expected cabinet shuffle, Prime Minister Moustafa Madbouly formed yesterday a new government after seeking the assent of the House of Representatives. The shakeup sees a handful of new faces in cabinet and a number of portfolios restructured, making it the largest cabinet shuffle since Madbouly formed his first cabinet back in June of 2018. The cabinet was sworn in after receiving approval from the House. President Abdel Fattah El Sisi met with the new ministers and deputy ministers following their swearing-in to stress the importance of building upon their predecessors’ work and maintain open channels of communication between each ministry, according to an Ittihadiya statement.

We have roundups below on:

  • Who’s in and who’s out;
  • What the international and domestic press are saying about the shuffle;
  • Bios on new cabinet ministers;
  • A look at the policy priorities the ministers are inheriting.

WHO’S IN AND WHO’S OUT

What’s not changing: The key ministries of finance, petroleum, defense, foreign affairs and interior. The full list of new ministers and deputy ministers is here (pdf) courtesy of Ittihadiya, while the full list of all cabinet members (new and existing) is available on cabinet’s website (Arabic only as of dispatch time).

So, what are the changes? Six new faces now sit around the cabinet table and four already-serving ministers have new or expanded portfolios.

  • The PM is now in charge of drumming up investment: The most important change (from the perspective of the business community) is that Madbouly will take on the role of investment minister, taking responsibility for GAFI. He will also be responsible for the administrative development portfolio, which has been separated from the Planning Ministry.
  • International cooperation is now its own ministry, having been cleaved off the former ministry of investment and international cooperation.
  • We once again have an Information Ministry, after the portfolio was briefly mothballed back in 2011 and again in 2014. This comes as the war against “fake news” has become a priority for the House.
  • The Tourism Ministry has been lumped in with the Antiquities Ministry in a single portfolio that will be headed by incumbent Antiquities Minister Khaled El Anani.
  • Hala El Said’s Planning Ministry has been rebranded as the Planning and Economic Development Ministry.
  • Omar Marwan has been reassigned from the Parliamentary Affairs Ministry to the Justice Ministry.

Key ministries get new bosses: The shakeup has only impacted three ministries from the cabinet economic group:

  • Sahar Nasr exits as investment minister, with Madbouly taking over the portfolio.
  • Cabinet newcomer Nevine Gamea takes over trade and industry from Amr Nassar;
  • Rania Al Mashat leaves behind tourism to take on Sahar Nasr’s former duties as international cooperation minister.

Still in office: Finance Minister Mohamed Maait will continue to head up the Finance Ministry, while Ali El Moselhy will keep supply. Mohamed Shaker stays on to run the Electricity Ministry, while Tarek El Molla will still head petroleum and natural resources. Hisham Tawfik continues as Minister for Public Enterprises. Housing, ICT and transportation will see no change at the top, while national security portfolios, including the ministries of foreign affairs, interior, and defense, will also remain under their current ministers. The ministries of health, education, higher education, and the environment will also see no changes at the top.

REACTION

International reaction: The resurrection of the Information Ministry was of particular interest to the foreign press, with Reuters pointing out that Egypt had already set up three media regulatory bodies “with the power to fine or suspend publications and broadcasters.” Reuters and the National also note that some of the changes in government were a result of El Sisi wanting to speed up progress on key goals, including development and attracting investment. Xinhua and Al Khaleej Today also covered the shuffle. Bloomberg’s story on its terminal yesterday emphasized that the investment ministry had been scrapped.

What the talking heads are saying: The main talking point on the airwaves last night was what the elimination of the Investment Ministry means for the government. Putting the prime minister in charge of investment highlights the importance the state is placing on attracting fresh capital after a period of low FDI, Al Kahera Alaan’s Lamees El Hadidi says. But it’s an open question, El Hadidi suggested, whether Madbouly has the time in his day that he needs to move the needle in a key portfolio (watch, runtime: 22:32). El Hekaya’s Amr Adib seems to think it’s a great move, and singled out investment as the previous government’s largest shortcoming, saying that the lack of centralization of all things investment created a web of bureaucracy that made life difficult for investment.

Separately, Adib pointed out the challenges ahead of newly formed (or resurrected) positions: For the Information Ministry, the host said the biggest challenge lies in figuring out how to reconfigure the country’s three media regulatory bodies to avoid overlapping jurisdictions with the ministry, while Anani’s new role as both antiquities and tourism minister will prove to be a challenging balancing act (watch, runtime: 17:55).

BIOGRAPHIES

And now, without further ado, we present the new faces of the Madbouly Cabinet:

Nevine Gamea, Trade and Industry Minister: Gamea replaces Amr Nassar at the helm of the Trade and Industry Ministry. The longtime civil servant was most recently the head of the SMEs Development Authority — a post she held since 2017 — where her primary mission was to help make subsidized funding available to small and mid-sized businesses. Prior to heading up the authority, she led the Social Fund for Development. In cabinet, Gamea will face the ongoing challenge of making land available to industry while working on long-term issues including export promotion, export subsidies, and utility costs. Her priorities as minister will be expanding local industry to cut down on imports and help narrow the country’s trade deficit, while encouraging an increase in export volumes, Gamea told the House of Representatives yesterday after being sworn in, according to the local press. Part of her strategy includes bringing distressed factories back online, as well as ramping up the construction of industrial complexes. Maybe, just maybe, her appearance in cabinet will result in our having a strategy for the automotive industry. You can check out her full bio on Al Mal.

Nivine Kabbag, Social Solidarity Minister: This was an in-house promotion, as Kabbag had served as the long-time deputy to Ghada Wali, who leaves her five-year stint as Social Solidarity Minister to head up the United Nations Office on Drugs and Crime (UNODC). Kabbag had been an advisor to the minister prior to her appointment as deputy social solidarity minister back in 2018, where she helped shape and manage the Takaful and Karama cash subsidies program. Ongoing items on her agenda as minister include pushing through the new Cash Subsidies Act, which would command the government to review subsidy rolls once every three years in an effort to keep track of ineligible beneficiaries. You can check out her full bio on Ahram Gate.

El Sayed El Quseir, Agriculture Minister: El Quseir joins the ministry following a 39-year career in the public-sector banking system, most recently as the head of the Principal Bank for Development and Agricultural Credit — a post he’s held since 2016. He had previously served as head of the Industrial Development and Workers Bank of Egypt following his appointment in 2011. Al Quseir, who replaces Ezzedin Abu Setit, has pledged that under his tenure, the ministry would do more than “just release press statements,” without naming any specific policies, according to Al Mal. You can check out his full bio on Ahram Gate.

Osama Heikal, Information Minister: Heikal comes back to take over the newly reconstituted Information Ministry, a post he held from July to December 2011, after it was briefly dismantled. Prior to his appointment as minister, the long-time editor-in-chief of the Al Wafd daily newspaper chaired the House Culture, Media and Antiquities Committee. Heikal resigned from Parliament yesterday to assume his new cabinet position. You can check out his full bio here.

Mohamed Anba, Civil Aviation Minister: Prior to his appointment as minister, EgyptAir veteran and civil aviation inspector Mohamed Anba headed EgyptAir’s training academy from 2013-2017. Anba, who replaces Younes El Masry, also served as a board member of EgyptAir, following a stint as the company’s director of safety. You can read his full bio here.

Alaa Fouad, Legislative Affairs Minister: Prior to his appointment as minister, Fouad had headed the National Elections Authority since 2017, where he had organized national elections for both the House of Representatives and president of Egypt. He takes over a rebranded ministry at a time when local and district elections are under discussion in the House over the Local Administration Act. His appointment also comes as Egypt looks to hold elections for an upper legislative body, as per the constitutional amendments of 2018. You can catch his full bio here.

Does a new structure to the government signal a policy shift? Other than some rebranding and shuffling of portfolios, the biggest change is President Abdel Fattah El Sisi’s decision to give the prime minister additional responsibility for drumming up FDI, suggesting the issue is taking on new importance at the highest level. Madbouly explained the shift as being necessary to “untangle the interlocking jurisdictions” when it comes to investment policy and administrative reform, in a statement yesterday. He added that the move was done in the hopes to push progress on that front.

Look for: Both statements from individual ministries on their priorities going forward as well as a single statement from cabinet (likely following its next meeting) on key national priorities in areas including economic reform, national security and investment in health and education.

POLICY CONTINUITY?

In the meantime, it seems likely we can expect policy stability. Economic programs and agenda items that have been a priority for the Sisi administration will continue to guide policy for cabinet. These include:

  • Taxation policy stability: Since 2018, the Finance Ministry has emphasized that tax policy in Egypt will remain fundamentally stable even as the ministry looks to cut red tape in a wide-ranging rewrite of the tax code. Changes are expected to everything from the Income Tax Act to the VAT and the capital gains tax — even newly imposed taxes such as “it’s not a tax, it’s a tithe” to support the Universal Healthcare Act might be subject to amendment. Not to mention changes to how social security and the state pension system are funded — we’ve heard rumblings of changes there, too.
  • The state privatization program: The program to sell shares of already-listed state-owned companies and to IPO new ones has been in limbo since Eastern Tobacco sold a 4.5% stake back In March. With the IPO of Aramco now passed, look for the program to kick back to life as early as January 2020 with a roadshow for the IPO of Banque du Caire — global market conditions permitting.
  • Raising foreign direct investment: One of the disappointments of the economic reform program had been the fact that non-oil foreign direct investment (FDI) has never reached the USD 10 bn target that was set back in 2016. While private equity and VC investors have found Egypt appealing and M&A activity was strong in 2019, we’ve yet to see significant investment from global strategic investors.
  • Raising exports: The non-oil trade balance during FY2018-19 wasn’t hot. The deficit widened by 13.4% to USD 38 bn, driven both by a fall in exports and a rise in imports, which the CBE said was partly due to a pickup in economic activity. This runs contrary to the government’s mission to raise exports. The government’s flagship program for this, the Export Subsidy Fund, had largely faltered due to delays in paying out export subsidies. Other issues on this front that will probably need to be tackled, including policies for key industries (such as the automotive sector) and facilitating land and utility prices for industry.
  • Financial inclusion: While the CBE has made significant headway on this with new regulations for the banking sector and the launch of its Meeza card, the flagship government program has been the SMEs Act, which only just received committee-level approval in the House of Representatives last week. The parallel economy is possibly as large as the formal economy. Fixing that needs a push to widen the tax base, not to squeeze more blood out of those already paying.

On the social front, the government had launched its universal healthcare program in the Canal cities, and a new education system that relies less on rote memorization. Both programs look set to continue.

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