15 Sep

Egypt is making renewed efforts to reform its economy

Privatisation has a bad reputation in the country but the government is giving it another go for its economy. THE train north from Cairo winds through the lush fields and meandering canals of the Nile Delta, before chugging into Alexandria. The scenery is pleasant on a 180km journey that can drag on for more than four hours. It is slow enough that EgyptAir offers flights on the same route.

Egypt’s state-owned, 6,700km rail network, the oldest in Africa, has seen better days. Stations are dingy; trains are dangerous and often delayed. In August 41 people were killed in one collision. It was the deadliest crash since 2012, but smaller ones are common, with over 1,200 last year alone. (Britain’s rail network, with three times as many passengers, saw about 750.)

Days after the accident the transport minister said that he would bring in the private sector to improve quality and safety. His ministry is drafting a law to allow private firms to run trains and stations. If it passes, it would be the clearest sign yet that Egypt is serious about reforming its top-heavy economy.

The state has played an outsized role in business since the coup in 1952 that created the modern republic. It ran factories, banks, utilities and even newspaper publishing houses. At one point more than half of Egypt’s industrial production and 90% of its banking revenue came from the public sector. This socialised economy helped create an urban middle class. But by the 1970s it had become bloated and inefficient. Anwar Sadat, then president, had limited success encouraging private investment with his infitah (“openness”) policy.

His successor, Hosni Mubarak, oversaw a real shift. In 1991 his government picked 314 public companies to privatise. They employed 1m people and generated more than 60bn Egyptian pounds (then $21.4bn) in annual revenue, about 15% of GDP.

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