Let-s Be Clear in Our Goals for the Textile Sector

Summary

The pitfalls of rapid privatization can be seen throughout Eastern Europe and the former Soviet Union, as well as in many third world countries. A rush to divestiture through a transfer of overvalued government stocks in failing enterprises, often to hapless employees and/or would-be managers, only leads to further industrial decay rather than economic recovery. When it became time for Egypt to face the realities of how to craft and formulate a privatization strategy, the mistakes and disasters of her former mentor, the Soviet Union, were fresh in their minds. Although not all architects of Egypt-s privatization strategy carried out an in-depth analysis of these recent experiences, there were enough who recognized the need for caution and, hence, who suggested that Egypt-s leaders should follow a “go slow” approach. The one most credited with the early privatization successes in Egypt is now the Prime Minister, and he is still guiding the country along a careful path of mixing and matching the most appropriate privatization techniques for each of the different types of Government enterprises. Because our past experiences with privatization do not provide us with a blueprint for guaranteed success, especially under the conditions found in Egypt-s early stages of liberalization, it has become incumbent upon Egypt-s privatization practitioners to pursue an experimental, trial and error approach. They are now in the process of searching for the right combination of privatization methods, which can be tailored to the troubling financial conditions facing many public enterprises. Each recommendation that is developed must consider not only the financial health and survival of the enterprises that are being privatized but care must also be taken to protect the workers and to avoid a wholesale giveaway of “sunk” capital. Initially, Egypt followed the traditional path of selling off “the best, most viable” enterprises whose financial statistics demonstrated relative financia

This paper was first published on the earlier Egytex website. The text above is the summary that was published there.