Egypt's free-share plan remains a mystery

Cairo: To laymen and econ-omists alike, a plan unveiled by President Hosni Mubarak's ruling party to offer free shares of public sector companies to citizens, is vague.

A few weeks ago, senior officials in the ruling National Democratic Party started touting the plan, officially known as the State-owned Asset Management Programme. The plan promises to give Egyptians above 21 who are resident in the country or abroad stakes in nearly 150 companies. The plan aims to ensure that benefits of privatisation trickle down to the majority of citizens and enhancing the efficiency of these enterprises.

"Anything coming for free from the government is welcome," said Fatallah Abbas, a 46-year-old taxi driver in Cairo. "But I don't know how we, the people who have no idea about business, will benefit from these shares. We'll sell them on the bourse to the first buyer because we badly need the money."

In a series of press conferences and media interviews, Minister of Investment Mahmoud Mohieddin said the scheme was the result of a three-year study and that it would take around one year to be implemented after getting the parliament's approval.

"This programme is purely Egyptian, but it benefits from similar international experiences," the official told reporters in Cairo last week. He estimated the would-be beneficiaries among Egypt's 80 million population at 41 million with a portfolio worth several hundred Egyptian pounds for each. According to him, the state would keep majority stakes in the companies ranging from 30 to 67 per cent. "Egyptians failing to receive their shares in one year's time would lose them and they [the shares] would be channelled into a fund for Egyptians under 21."

Egypt has sold off several public sector companies, including banks and industrial enterprises, since it initiated a privatisation programme in 1991. The opposition has, however, said that the privatisation programme has deprived Egypt of such companies without the majority of people reaping the fruit.

"The latest scheme is an attempt to beautify the privatisation process that has been scathingly criticised for the sale of complete firms to foreigners," said Hamdi Abdul Azzim, an economic expert. In remarks to Gulf News, he expressed concern about the "ambiguity" of the scheme. "For example, it is not clear how the shares will be distributed, given that the companies to be covered by the plan include loss-making as well as profitable companies."

"With the majority of Egyptians being unable to make ends meet, they would rush to sell these stakes on the stock exchange. This would prove a windfall for capitalists and monopolists," Wahid Al Oqsori, chairman of the opposition Arab Socialist Egypt Party, told Gulf News.