Egypt Announces Plan to Transfer State-Owned Companies to the Sovereign Wealth Fund: A Strategic Move or Just Administrative Reorganization?
The Egyptian government has announced a comprehensive plan to transfer the management of all state-owned companies to the Egyptian Sovereign Wealth Fund, with the aim of maximizing the return on state assets and achieving more efficient investment. This move comes at a time when questions are increasing about the effectiveness of this approach, given the bureaucratic and administrative challenges that may hinder the achievement of the desired goals.
Will It Be a Strategic Move or Just Administrative Reorganization?
The transfer of all state-owned companies to the sovereign wealth fund has raised many questions: Will this lead to improved asset management and maximized revenues, or is it simply an administrative reorganization that will not bring about any real change, given the obstacles faced in integration and management?
Details of the Egyptian Government’s Plan
During the “Investopia 2025” conference in Abu Dhabi, Egypt’s Minister of Investment, Hassan Al-Khatib, confirmed that the transfer of companies to the Egyptian Sovereign Wealth Fund would occur gradually according to a carefully prepared plan. The plan consists of three main steps:
- Restructuring state-owned companies.
- Attracting private sector companies for investment and participation.
- Listing some companies on the stock market.
Through these steps, the government aims to enhance the value of state-owned companies and increase the returns generated from them, moving away from focusing on selling companies at prices that may not reflect their true value.
The Future of the Egyptian Sovereign Wealth Fund and Its Objectives
As part of its commitment to the State Ownership Policy Document issued in 2022 and the economic reform program supported by the International Monetary Fund, the government has announced plans to offer stakes in 32 state-owned companies across 18 different economic sectors.
The Egyptian Sovereign Wealth Fund is valued at approximately $12.7 billion, while the assets it manages total around $637 million. The fund aims to professionally manage the state’s funds and assets, ensuring their value is maximized for future generations.
Controversial Amendments to the Egyptian Sovereign Wealth Fund Law
In a controversial step, the Egyptian parliament approved legal amendments to the Egyptian Sovereign Wealth Fund Law. These amendments included exempting all internal transactions between the fund and its affiliated entities from taxes and government fees, as well as granting the fund legal protection to prevent any external parties (other than contracting parties) from challenging the validity of its contracts or procedures.
While these amendments enhance the fund’s authority in managing assets, they raise questions about the transparency of its operations and the oversight mechanisms in place.
Challenges and Expert Recommendations
According to Mohamed Foad, a member of the Advisory Committee for Macroeconomics at the Cabinet, the fund has not yet achieved its intended goals. It has mainly focused on transferring ownership of assets between government entities rather than developing these assets or generating tangible returns.
Foad noted that the ambiguity surrounding the fund’s identity and role, coupled with its institutional instability due to frequent administrative changes, presents a barrier to achieving its objectives.
Regarding the fund’s future, Foad recommended a clear restructuring of the fund, including the development of a balanced strategy that combines operations and partnerships, improves administrative stability, and establishes a mechanism for asset transfer based on thorough studies.
Experts Comment: Radical Solutions for Economic Reform
Mustafa Youssef, a political economy researcher and Director of the International Center for Development Studies, described the government’s plan to transfer all companies to the sovereign wealth fund as “bold.” He argued that the government’s repeated statements about solving the dollar liquidity crisis through the sale or pledge of assets do not accurately reflect the economic reality.
Youssef stated that the core of the crisis lies in military dominance over large sectors of the economy, leading to structural imbalances and a lack of comprehensive development plans. He proposed several radical solutions to ensure comprehensive and sustainable economic reform, including:
- Rule of law.
- Removing the military from the economy.
- Reducing government spending.
- Selling non-viable projects.
- Redirecting resources to vital sectors such as education, health, and tourism.
Conclusion
While the Egyptian Sovereign Wealth Fund aims to improve the management of state assets and maximize returns, the road to success is fraught with challenges that require strong strategic and administrative solutions. Will the government be able to achieve its goals amid these challenges? The answer remains dependent on how the plan is executed and how the fund is managed in the long term.
Sources:
- Statements by Egypt’s Minister of Investment, Hassan Al-Khatib, during the “Investopia 2025” conference in Abu Dhabi.
- Government data on the Egyptian Sovereign Wealth Fund.
- Articles and reports from Al Jazeera and news agencies.