After merging it and putting it on the stock exchange, does Egypt sell its ports?

Cairo

- Under the pretext of revitalizing the stock market and increasing its competitiveness, the Egyptian Prime Minister, Mostafa Madbouly, announced a package of economic measures, including merging the seven largest seaports under the umbrella of one company, in preparation for its listing on the stock exchange.

The Prime Minister said that the government aims to increase the percentage of the private sector in the implemented investments to 65% within 3 years, compared to 30% at the present time.

This came during a press conference held earlier this week, described by local media as a global conference to present the Egyptian government's mechanisms to deal with the economic crisis the world is witnessing as a result of the repercussions of the Russian-Ukrainian war.

The government official indicated that his country aims to attract about $40 billion in investments from the private sector, whether local or foreign, to participate in state-owned assets, at a rate of $10 billion annually over the next 4 years.

The Minister of Transport, Kamel Al-Wazir, announced the ports eligible for listing on the stock exchange, namely Damietta, Alexandria, East Port Said, West Port Said, Ain Sukhna, Safaga and Al-Adabiya.

He stressed - in televised statements - that the new trend in dealing with government companies does not mean selling them to foreign parties.

Since last March, official officials have been talking about putting forward a strategy for the government's exit from entire economic institutions in favor of the private sector, under the name "state ownership document."

Port development

The tendency to merge national ports and then put them on the stock exchange comes in light of government efforts to develop these ports by entering into partnerships with specialized international entities.

Last week, the Minister of Transport signed an agreement with a global alliance working in the field of international shipping lines to build, manage, operate and exploit the second container terminal in Damietta Port.

The consortium that will develop the Egyptian port includes 3 companies: Eurojet Germany, Conchip Italy and Hapag-Lloyd, in addition to two local companies. According to the statements of the Minister of Transport.

And last April, the Minister of Transport witnessed the signing of the General Authority of Red Sea Ports, a memorandum of terms and conditions to grant the right of commitment to manage, operate and construct the superstructure of the multi-purpose terminal in the Safaga seaport, with the alliance of the Abu Dhabi Ports Group of Abu Dhabi Holding Company and the Egyptian Group for Multipurpose Terminals.

A memorandum of understanding was also signed between the General Authority of Red Sea Ports and Abu Dhabi Ports Company regarding cooperation in the field of developing, managing and operating berths and terminals for cruise ships in the ports of Sharm El Sheikh, Hurghada and Safaga, and providing services related to the work of cruise ships.

And last October, DP World, Development Finance Corporation and influential investors in the United Kingdom (CDC) announced that they had entered into a long-term partnership with the aim of accelerating trade capabilities in the continent of Africa, targeting the ports of Sokhna in Egypt and Dakar in Senegal. Berbera in Somalia.

The CDC Group stated - in a statement - that Sokhna port will support the growth of export industries, and the continuous expansion and development of the port will increase access to basic commodities and foodstuffs for 16 million people inside Egypt.

In Egypt, there are 15 seaports affiliated to 4 port management authorities, namely the Alexandria Port Authority, the Red Sea Ports Authority, the Damietta Port Authority, and the Economic Zone.

There are also 27 specialized ports, distributed among 14 petroleum ports, 6 mining ports, and 7 tourist ports.

force and threat

In general, all mergers achieve many savings and give great strength to the new economic entity, according to what the economic expert, Abdul Nabi Abdul Muttalib confirmed.

He indicated that the mergers of multiple entities lead to an increase in the assets of the new company, in addition to reducing the number of liabilities to total assets.

Abdel Muttalib added - in his speech to Al Jazeera Net - that the merger is not new to the Egyptian business sector, since the issuance of Public Sector Law No. 203 of 1991, a large number of Egyptian public sector companies have been merged and assembled into several holding companies, followed by subsidiary companies, and what will happen with Ports is the same approach, according to him.

On whether putting the ports on the stock exchange might pose a threat to the country’s national security, the economist said that the ports are windows for communication with the outside world, and through them goods and people can exit and enter legally and illegally.

And he added, "Any hostile entity can cause severe damage to the Egyptian economy and national security if it manages to control the country's ports," noting that the damages and benefits of offerings on the stock exchange depend on the percentage of this offering and the entities or persons that own the largest proportion of the shares of these companies.

And he added, "But if the management of these ports remains under the control of the state, and the supervision of the agencies concerned with fighting smuggling and preventing illegal activities in the ports, I do not think that there will be a great danger to the economy or to national security."

As for the link between the integration of ports and the government's efforts to obtain a new loan from the International Monetary Fund, Abdul Muttalib saw that the measures that the government is currently preparing are proactive steps to conclude the next loan agreement with the International Monetary Fund.

That is, merging the ports and preparing to privatize them, or privatize part of them, is an implementation of the IMF's recommendations or directives in the meetings that are currently taking place without announcing what is going on in them, according to the economist.

The Egyptian Prime Minister expected, during the conference held last Sunday, to reach an agreement with the International Monetary Fund on obtaining a new support package within a few months.

In the last quarter of 2016, the International Monetary Fund agreed to grant Cairo a loan of $12 billion, to be obtained in the form of tranches within 3 years.

And in 2020, Egypt obtained another loan from the IMF through the Credit Standby Program, which extended over a year and included 3 tranches with a total value of $5.4 billion, and in the following year it received $2.8 billion through the rapid financing instrument in the wake of the spread of the Corona pandemic.

Social capital

Commenting on the news of putting ports on the stock exchange under the umbrella of one company, the former editor-in-chief of Al-Ahram newspaper, Abdel Azim Hammad, warned against compromising what he called social capital.

He went on to explain the nature of social capital as "the assets owned by the whole society - living, dead and unborn - and it serves every individual, every class and every party in productive relations, the most important of which are all water resources, mineral wealth, ports, airports, roads, railways, and the equivalent facilities and facilities. ".

Hammad added - through a lengthy post on his Facebook page - that there is no objection to managing this type of capital in a corporate style or even by privilege, provided that it is within the limits of price justice and opportunity with administrative and parliamentary oversight.

In addition, the journalist writer considered the inclusion of ports among the assets offered for sale with public companies, whether in the form of shares or for a major investor, as an unscientific confusion between social capital, which has always fixed ownership of the community, and commercial companies with variable ownership by nature, as well as its political risks if owned by foreigners.

He continued, "We are not that strong economy that can digest and absorb foreign influence in its guts, and we do not have the administrations experienced in resisting that influence, and we do not have those parliamentary traditions that return every person or institution to the straight path if a deviation occurs."

He concluded his warning, saying, "Look for funding to face the current crisis, away from Egypt's social capital."

Increase investments

Concerns over Egyptian national security and the absence of oversight and the resulting disadvantages, the economist Ahmed Al-Bakry did not find a place to talk about in light of the port's merger step.

Rather, he considered it a good step that will support the port sector, stressing that the government is fully aware of the importance of the port sector in supporting the country's national economy.

He said - in press statements - that the transport sector is one of the most important economic sectors on which the state depends in the framework of developing the national product in light of the current economic conditions.

He added that the government aims to attract foreign capital and increase local investments within the framework of stimulating the movement of the local market, which contributes to achieving sustainable development.

Selling home or investing?

A wide controversy spread through social media platforms following the announcement of the merger of Egyptian ports. Many expressed their fear of an alliance of hostile parties to the country to buy the ports, which directly threatens national security, and saw what is happening as a "sale of the country."

While others believed that the operations of merging the ports and putting them on the stock exchange was not a precedent for Egypt, as other countries preceded it, in order to encourage the investment climate in light of a global economic crisis.