Economic system in Egypt :: essays research papers

THE ECONOMIC SYSTEM IN EGYPTPRIVATE SECTOR Ready for actionAs Egypt is known for its mixed economic system ,Comp ard with other emerging markets, Egypts private sphere is tiny. The public sector still accounts for almost 70 per cent of gross domestic product despite the fact that hundreds of public enterprises have been wholly or part privatised during the past four years.Judging, however, by the rapid growth of some of the countrys largest family-owned melodyes, this is unlikely to hold true five years from now. Raouf Ghabbour, chairman of Ghabbour Group, a family business and the countrys largest assembler and distributor of motor vehicles, says there are hundreds of medium-sized companies which are ontogeny fast enough to qualify for joint-stock status within three or four years.Ghabbour Group is one of only a dozen or so unlisted private sector companies with a turnover of much than E1bn. This is considered a minimum threshold for a company to launching a successful public listing. "Our turnover has been growing at approximately 25 per cent a year this decade," says Mr Ghabbour. "There are myriad small and medium-sized companies with this kind of growth rate."Much like Orascom, Egypts largest family-owned group, which has interests ranging from tourism to telecoms confused into several publicly listed companies, Ghabbour has been converted to the benefits of going public.The car assembler, which also has a growing consumer loan subsidiary, hopes to offer 10 to 15 per cent of its equity in an initial public offering later this year. Others, including IGI, a modify family-owned group with interests in manufacturing, dairy farming and petroleum, are thinking along similar lines."There are probably about 10 or 12 family companies with similar plans," says Khaled Sheta, chief executive of International Group for Investment. " completely of them will be quoted in a year or both from now." Mr Sheta provides justification for such a move. "Opening your books to the public acts as a good business discipline on managers and enables you to value your assets more accurately," he says.It is also, of course, a handy way of raising capital without having to cede bulk control of the company. Indeed, for the few that have achieved genuine nation-wide market share in their industries, there is little choice but to go public or offer stakes to strategic investors if they want to continue expanding.Being so small in number, companies such as Ghabbour and Mansour, which has the Coca-Cola and McDonalds franchise in Egypt, are inevitably bumping up against credit limits to their banks.