Improving Egypt’s business climate to revive private sector growth

Ania Thiemann

No 1808, OECD Economics Department Working Papers from OECD Publishing

Abstract: Weak productivity in Egypt is rooted in deep-seated structural causes that impede market competition and prevent a more efficient resource allocation. This implies a number of challenges for economic policy to meet the objectives for long-term sustainable growth as set out in the National Structural Reform Programme, but the government is determined to tackle the issues, and is committed to increase the role of the private sector. Market mechanisms such as business entry and exit, and growth of the most efficient firms, appear to be weaker than in many similar emerging markets. Recent reforms have started to tackle heavy regulatory burdens and barriers that hinder market entry and encourage informality and should be pursued, while the judiciary system still requires improvement. Competition from abroad, and the attraction of foreign direct investment are hampered by trade barriers, implying that Egypt does not fully benefit from global value-chains and spillovers of technology and knowledge that would help lift productivity. The way state-owned companies are operating across a several sectors prevents private businesses from competing on a level playing field, although the government has recently started to take steps to level the playing field for all firms. Moreover, many businesses still face difficulties in accessing finance, as banks overwhelmingly prefer to lend to the government. Enhancing access to finance and improving digitalisation would contribute to a more competitive environment, lifting business sector growth.

Keywords: access to finance; anti-corruption measures; Business climate; competition; corporate governance; digital diffusion; Egypt; foreign investment; informal economy; investment; judiciary efficiency; level playing field; network sectors; private sector development; privatisation; productivity; regulatory reform; resource allocation; SMEs; state-owned enterprises; tax incentives; trade barriers (search for similar items in EconPapers)
JEL-codes: D24 E26 F13 F21 G21 G34 G38 H11 H25 K21 K23 K35 K42 L11 L14 L25 L26 L33 L40 L50 O19 O33 O53 (search for similar items in EconPapers)
Date: 2024-07-16
New Economics Papers: this item is included in nep-ara, nep-ent and nep-sbm
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