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What is the goal of Privatization in Egypt?


"The Egyptian government started to launch the privatization in Egypt with the general public enterprise of regulation 203 in 1991". "The framework work was 314 companies and now it is 319 enterprises". (Peter: 2009) The term is most commonly applied in reference to the deal or transfer of public belongings to the private sector. "Privatization may also be used to make reference to any coverage or action which increases the role of the private sector throughout the market. " Privatization means taking the public issue under consideration to use it, in the private firms or organizations. raise the efficiency in some of the assistance that are open public. (American background: 2003). The privatization thought as liberalization and marketization because they are able to set up a new market that'll be helpful alternatives for the federal government products and services. (Levin, 2001).

Purpose of Privatization:

The main reason for the privatization in Egypt to assist the traders and the owners to use, develop, and evaluate the general public sector within the privatization. (El Tabbak, Abdel Wahab, P. 5: 2002 )

Objectives of privatization:

. The aims of the privatization in Egypt is to keep up and develop a positive effect globally, also building a good competitive economical and to get more involvement of the populace inside the financial process. The main and quite objective that privatization in Egypt focus on it is to raise the productivity and for better allocating of resources. "Replacing some of the employees in the local and central administration". The Fiscal objectives are reducing a few of the budget deficit that comes through the income, through the privatization process. The general public companies use to get more income now from the fees that paid by the private companies and by this way they are receiving more profit (Kenawy, 2009)

Methods of Privatization:

. The techniques divided into two main methods, the material and management privatization. The materials privatization is the change of the propriety, meaning the public firm becomes private propriety. The next method, is the managerial its vey known type in the developed and deal countries.

The privatizing through show selling to private traders:

. The method here methods to transfer the shares to one main investor that is choosing through immediate negation. Some individuals said if the company owners sell the entire company one time it will be easier for them and prevent a great deal of problems. (Kenawy, 2009)

Management and employee buy-out privatization (MBO or EBO):

. This technique contain two types the MBO or the EBO one of the types will choose the enterprise, this technique is for the public enterprises which have received a problems in financial or economical situations. These companies are organizing themselves for privatization. These are good in managing and put themselves on the right track, also it offers a strong determination. (Kenawy, 2009)

Characteristics of the Egyptian program of privatization:

. The privatization program in Egypt is followed by process. The ministries of the public companies are the person who choose which companies will be privatized and, then start making the decisions; they are the one who responsible for the privatization program. The privatization preserved on the market who is implemented through stock of the market, they opting for the companies which may have an extremely small gains and let them move toward privatization, however the big companies is not yet privatized because they are profitable and can entice more private assets. The government begin to build community for aiding the graduating students and then for the unemployed people in assisting there small assignments. (Kenawy, 2009)

. Predicated on my readings, privatization can take a major part from our society and nowadays everything in the world is private. FOR INSTANCE: the education in Egypt, the universities and the universities are actually private, also the firms half of these now are multinational.

The three kinds of the privatization in education:

. The Private provision:

. Now the education can be had by private owners, not only by the federal government. It's now provided by private people who supervised this private school. Within the private provision they discussed that the private academic institutions can be built through many ways, like for -earnings business people, charities, or may be for other interested gatherings. . (Levin, 2001).

The private financing:

. The main one who starts to implement the idea of building private schools, he is normally the one who is accountable for funding this college, as opposed to the authorities role in paying money they aren't responsible for that, therefore the privatization in education means that the parents pay for their Childs money for schooling them. (Tsang, 2002)

Private legislation, decision-making and accountability:

. The monitoring system for the training service will be focused on the people who obtains the service, they will be the students and the family because the family the main one who pays the amount of money. If they find that the institution is not well in education or poor education quality they leave, but if indeed they find that its good they will start demanding more good service and they will have a tone of voice. Also the federal government has the specialist to put legislation and to keep an eye on the performance of the universities through audits. For instance: the American system, when the federal government reduced the passing class on the SAT exam from 1300 to 1200, and these changes are resolved by the federal government, This rule launched in 2007 and be used only until 2012 then it'll expire. (Belfield, 2001)

Over view about the privatization in education:

Lets first discuss the training in Egypt and especially the schools and after all the private classes. Now every family is better steering clear of the public classes and the general public education (Thanwaya Amaa) why these individuals are doing that? To begin with when you look to the two options you will see no common things between the two. First look to the public education in Egypt, first go and visit the schools see how the school appears. Then observe how the instructors are dealing with the students, they can be treating the students in an undesirable way and that is reflect a negative physiological effects on the scholar that's, the student don't want to go to the institution and in once he don't want to study. Second let's discuss the exams of the (Thnawya ama). The scholar make all of his efforts all the year, studying well to get the higher average, to attain his hopes, when the student go directly to the exam, he faces that's he can't answer some of the questions inside the exam, because a few of these questions come in an exceedingly difficult way, or a few of them result from out of the syllabus. Then the college student will face the most detrimental surprise in his life that he'll not get a good level or maybe he'll fail. So in the long run the student will get stressed out because he do a whole lot of efforts to attain his goal, as well as others get rid of themselves. Then let's discus the idea, of heading to an exclusive schools, The young families now are likely moving to the private universities because this academic institutions, the sole ones that have the best education nowadays. For example: The American diploma and the United kingdom diploma. Not all of the people can pay because of their child this heavy fees beginning with 20, 000 L. E, nevertheless they making all what they can do for paying all of this money, for better knowledge well, they'll learn a fresh things in their life that is vital to know. Some young families look from another part and it's really the safety for their Childs. To sum up with the privatization of education, what all I want to say that's privatization of the classes one of the better services the areas serve for citizens and it's convenient also once and for all treating in the universities, high quality of education. Students are learning more than one language. Next to the core vocabulary the English vocabulary, in addition they learn another words like (French, German).

Then moving to the second thing that's privatization is just how of coming back every singles private sector quality that was taken by the federal government. It's more advantageous to take the public issues from the federal government because it isn't expensive and it'll be more efficiently doing by the private sector. The reason why behind the efficiently of the private sector is because of the abilities, experience, and the main thing that money is obtainable. Also privatization will certainly reduce the expenditure and will develop the effective of the government because the good privatization are certain to get more benefits for the government authorities and that will help them in reducing the unemployment rate and also bringing up the economy. You will find two important kinds of privatization. "The first one is the private certification of the assistance with someone general population characters". For example the minister one of the general public character, he acts as an important person within our society so they need to take a whole lot of private benefits for the coffee lover. For example a private police man to safeguard him, and if he went to a open public place just like a membership or hotel he gets an exclusive parking and a private places to take a seat in it. The minister is general population, because he is one of the government's team. But the government can pay for this to get some good especial private benefits for him. (shafitz, Russell, Borick :2009 )

Selling the governmental assets:

. You can find other steps for the privatization, that the governments are adding their possessions for advertising. From my very own analysis I can describe what the governmental possessions are. They may be the main property of the country. FOR INSTANCE: the Roads, Plants, and the gear and they are intangible assets. When a large business man like (Hisham Taalt Mostafa) commence to want to make a private business like (El- Rehab). In This situation He Visited the federal government to keep these things buy a component of the governmental possessions (Lands), then the government provides him the agreement to buy this land for his own by paying money of the land and then it will be private because of this person. After that the land will be privatized for the (El-Rehab City Job). That What I mean by retailing the governmental belongings, Also the federal government takes a Ratio of the Task, but it's an extremely small Percentage Like 7% and the rest for the Business man and his group. In the end we can call it Privatization of the Governmental assets. (shafitz, Russell, Borick :2009 )

The role of the donor community in developing privatization:

From Month or two some countries meet together under the chairmanship of the World Standard bank. They said that they will share with Egypt "10. 3 billion" on the next three years and they'll give area of the money for the products and services purchasing. They also said to them to bring back or to renew the privatization programs that have a bad lead to the last years.

. In the conference they said that they will develop the united states from the donor community. The donor Community is the part who makes donations for the country to boost it and they're some of people such as a business man's (Private Sector). They will begin to Maintain a fresh job opportunities for folks who don't have a job. Provide the new people who completed their colleges to provide them money to start out a little business in the begging of these work life. (El Tabbakh, Abdel Wahab, p. 11: 2002)

. The lending company privatization in Egypt is the part of the privatization inside the ministry of international trade that was in charge for each purchase of the insurance sector. "In nov 2001, they began to be focusing on the privatization joint ventures plus they get 34 private jv join them, they choose those companies to join, because they know that they are profitable and that's the aim of the private jv.

Study of privatization in Egyptian bankers:

. Then Let speak about another and various thing about the privatization in Egypt. First let me announce that's this part is the main part of the privatization in Egypt.

. Let speaks some about the privatization of the banking institutions in Egypt it's really a fascinating part to discuss it. let us see what's happened in privatizing the public banks. First of all they began to private the lenders in Egypt in 1996. In Another situation the government got some phone calls from many people to privatize the public sector of banks in Egypt (Bank Misr, Alex Standard bank).

Then the government starts to think about it plus they discovered that will be profitable to get many people from private sector to join them. So they start to work out with some private visitors to give them a share of the shares in the lender. They Offers to them from 5 to 10 % talk about for just about any private sector want to join this open public sector bankers. (El Tabbakh, Abdel Wahab, P. 13: 2002)

They think in more complex and profitable ways to utilize the thought of changing the banking institutions from the public sector to the private sector since when they come striving analyzing how the bank is is going in Egypt they received an awful results. They discovered that the bankers face a great deal of problems and losing big money. All this because the bad and the indegent banking system.

. Also another causes of this problem that is the bank was giving the client a interest paid and that's was for each consumer comes new for the bank to put his own money. The top problem was that there is a terrible development in the key economic climate, and beside all of this the market was down it was haven't any growth. Then In the end of this took place the government really faced a large problem because everything is down and they're giving the individuals a higher interest rate paid so beside that's these are facing problems in the machine and no growth for the overall economy and they are promising the clients with an increased interest rate paid it's a tragedy. Then the government starts to go and think for a fresh ways to solve this issue. Then in the end after a time of considering they got the perfect solution is which solution is to go all the public sector finance institutions and shift these to the private sector finance institutions. This was the right solution the government had taken to help the country from facing a financial crisis. The opinions of moving the lenders from the general public sector to the private sector that they found a growing in the machine of the banking institutions and also its let us the bank all the long term crises of losing money. Really it was one of the most perfect solutions that they had done for the banking companies and the perfect solution is in the end was the privatization. (Mohieldin and Nasr, P. 19:2003).

. Also They Opt to turn all the public joint projects stocks to be private joint venture shares. These are 23 joint projects open public sector shifted to Privatization jv. They did all of this changes because of earning much more and developed competitiveness. After that's they allow public banks to diminish a few of their stocks to 51 %. After more three years in 1996 they asked again the public banks sector to lessen more shares again then it grows to now 20%. Also the privatizations involve some more benefits, to enhance the system of controlling in the bankers. Also not absolutely all of the public banks reduced their stocks only some of them who have that but some of them did not do that and they're now still owing there general public sector standard bank. (Mohieldin and Nasr p. 19; 2003).

. From My view that's one of the most important thing the federal government did, as a result of country benefits itself and also it's more very important to the development of the overall economy.

The Privatization of insurance companies:

. Egypt started to privatize four of her insurance companies, as start of taking one of the growing steps in financial reform, whose goals to make Egypt one of the financial centers of the center East which is the goal they would like to achieve it. Then they start to request seven investment bankers to go over how they will examine Cairo four authorities insurance companies. These four companies of insurance maintain 90% of the life insurance business, and 70-80% of non life business. Dr. boutrous ghali said that he's looking for a good trader that has energetic insurance companies that would take stakes in those companies and start handling them. (Boutrous-Ghali, vol: 99)

Advantages of privatization:

Then let's discuss the advantages of privatization. The benefits of privatization first starts off with, privatization gives a great deal of chances to begin doing business. For example: (Taalt mostafa group). Second, offering the opportunity also for international companies to come and start starting their business, those international companies are getting with them the best employees and the ones with higher experience and the ones people are well-educated and licensed in their major department. The more private in the market a lot more new companies commence to enter the market and it's an important thing because that are certain to get more rivals to the marketplace. Another reason are certain to get more positive what to the consumer because they'll find a lot of companies doing the same product however in a different brand and with different prices. So the consumer will choose the main one that's locating the benefits in it and cheaper.

It can increase efficiency and advancement, they having the advantage to lessen some of the operating cost through tactics that are versatile like (Job categories). (Eggers: 1993)

Disadvantage of privatization:

Then starts mention the down sides of the privatization. Imagine if one of these big companies fails in doing their own business, exactly what will eventually them? To begin with they invested every one of the capital inside this business so when they fail in doing this business, therefore they'll lose all their money and possessions. Also these big companies are getting all of their qualified personnel while coming opening their business here, therefore the unemployment rate increase, because the business will not have a liquidity to pay pay for the employees, so the employees will leave the company and that will improve the rate of turn-over, or the business will fire every one of the workers immediately. Two of the very most potential issues things in the privatization are the higher of paying the taxes, less duty income, and monopoly. (shafitz, Russell, Borick: 2009 ).

It can be the main cause of exploitation to private sector; this may happen by the abundant people, who is able to improve the prices with their goods and services. In addition they fire a few of the employs to reduce the cost of production.

obstacles of the privatization program in Egypt:

. Privatization found a great deal of road blocks in putting into action there program in Egypt. These road blocks can make a lot of problems in implementing this program. Stop moving this program in the right keep tabs on and it might be fail and never success. Some mention items about the hurdles that they find that a few of the employees fearful of reducing in their wages and could be these employees lose their work, also the uses afraid of shedding their positions electric power inside the organization. The un-equal riches circulation also that's one of the obstructions that can face them while applying this program. . (Kenawy, 2009)


Finally, in this paper I reviewed the theoretical studies on privatization. Privatization is now an important tool in re-structuring general population infrastructure sectors. Privatization will have positive effect on improving the operational and financial country performance. Also I centered on influence the level of economical development on the privatization growth rates in public infrastructure.

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