Privatization : problems of implementation in Egypt

Abstract

This study aims to investigate to what extent the views of the managers of the enterprises to be privatized are a barrier to smooth implementation of privatization as opposed to other problems. Accordingly, the research tackles two main issues: Identification and analysis of the major problems encountered in the implementation of the Egyptian privatization programme and at which level these problems exist while proposing different approaches to tackle them; and views of public sector top and middle-level managers regarding the main issues of privatization. The study relies upon a literature survey, interviews with stakeholders, a survey of managers' attitudes and several illustrative case studies. A model of "good practice" for the smooth and effective implementation of privatization has been designed. Practice in Egypt has then been studied and compared with the "good practice" model. Lack of strictness and firmness in implementing the announced privatization programme has been found to be a characteristic of Egyptian practice. This is partly attributable to the inadequacy of the programme and partly to the different obstacles to implementation. The main obstacles are doubtful desirability of privatization on the part of the managers at different implementation levels, resistance of stakeholders, in adequately of the legal framework governing privatization, redundant labour, lack of an efficient monitoring system allowing for accountability, inefficient marketing of privatization, ineffective communication, insufficient information at different levels and problems related to valuation and selling procedures. A large part of the thesis is concerned with SOE (State Owned Enterprise) managers' attitudes on and understanding of the privatization (appraised through surveys). Although most managers have stated their acceptance of privatization, many of their responses show that they do not accept selling SOEs. They understand privatization to include enterprise reform and restructuring, changing procedures and giving more authority to company executives, but not necessarily as selling SOEs. The majority of managers still see many issues that have to be addressed for smooth implementation of privatization e.g. insufficiency of information, incompleteness of legal framework, restructuring and labour problems. The main contribution to knowledge of this thesis is the study of problems of implementing privatization in developing countries especially managers' resistance to privatization as a major change, partly because of the threat it poses and partly because of the lack of understanding of privatization and implications of operating private businesses. A programme of persuading managers and offsetting the unfavourable effects is recommended as an outcome of the study. Five different phrases and words for the national Index to theses are: Egypt, privatization, implementation of privatization, problems of implementing privatization and managers' attitudes towards privatization.