Egypt has made salutary progress in its privatization program and in building political support for the process. Once debatable, privatization is now seen by most Egyptians as a necessary and positive step for achieving economic progress. However, the process has recently slowed down. In addition, no ex post assessment has been made to estimate its impact on consumers, workers, the seller and buyers.
In this edition of the DLS, Leroy P. Jones offers insights about the likely winners and losers from privatization and the conditions under which these benefits can be maximized. His views draw on his vast experience and a landmark study on the welfare impact of privatization, covering diverse sectors in five countries. The basic conclusion of this study is that privatization is capable of producing a win-win situation provided certain conditions are fulfilled. These conditions include a transparent sale process, competition, and appropriate regulatory regimes in the case of selling utilities. Jones further argues that the speed of privatization could be hampered by exaggerated reservation pricing and extensive restructuring prior to sale. These insights are particularly relevant as Egypt moves to the privatization of loss-making enterprises and utilities.
Author(s): Leroy P. Jones