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Will Egypt’s Military Companies Float?

Author: Yezid Sayigh

Affiliation: CARNEGIE Middle East Centre

Organization/Publisher: CARNEGIE Middle East Centre

Date/Place: April 7, 2020/ Beirut, Lebanon

Type of Literature: Article

Number of Pages: 6


Keywords: Egypt, Military, Economy, Military Companies, Floatation. 


Yezid Sayigh proposes in his article a controversial question about the possibility and the predictable scenarios of floating some Egyptian military companies on the Egyptian Stock Exchange (EGX). Sayigh proclaims that floating military companies theoretically could represent a favorable sign of deviation from the “opacity and dubious feasibility” that mark Egyptian military economy, since floatation will reveal the finances of such companies and pave the way for capitalizing them. However, in practical words, built-in problems of the military economy and policy challenges of “lack of transparency, profitability, unfair competition and legal ambiguity” indicate significant uncertainties whether military companies’ floatation is eligible or feasible. In other words, if the floatation process is not properly achieved, it will not be more than an instrument for private funds’ injection in the military economy and companies, which is completely free of any civilian law or control. To demonstrate this, Sayigh refers to the need of the military companies for full disclosure of their finances which is extremely unlikely to happen. Otherwise, the Sisi administration could pursue a twist in the EGX rules to facilitate a listing of military companies with less disclosure. This full disclosure would unveil the military’s economic advantages including “subsidies, exemption from tolls, and easy access [to] foreign currency at favorable exchange rates along with the use of virtually free conscript labor.” Moreover, the lack of a joint legal framework that combines military and private companies would create “a legal gray zone” as a challenge for Egyptian or foreign investors. All such considerations illustrate the hesitation of the government to take an action in the floatation process. He concludes that the government’s decision to float companies on the market was taken before any examination of feasibility or compliance, and that it should use the pause of the coronavirus crisis as an opportunity to reconsider or “to get it right.”  The proposed floatation paradigm follows a “public-private” partnership model under which the first controls and the other accepts the risk.

By: Yomna Süleyman, CIGA Research Assistant



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