Ministers talk privatizing education, health at Euromoney

Privatizing non-traditional sectors like healthcare and education could help kick Egypt's economy back into gear, the ministers of investment and finance suggested in provocative statements at the Euromoney Egypt Conference on Monday.

The government has already taken concrete steps to open the energy sector to private investment and to court investment in the Suez Canal development zone, areas that were previously restricted to the military and public sector.

But now the government should broaden its scope, Investment Minister Ashraf Salman said.

“After we started to liberate the electricity sector, we should start to liberalize education and health,” Salman said to the surprise of many in the room, including the session moderator. 

Salman explained that this would mean opening up more opportunities for domestic and international investors by liberalizing tuition prices in the education sector. In effect, the government would permit independent schools to charge whatever fees they choose, he said.

“We will start to play the regulator role and not invest in schools,” Salman said of the government’s future role in education. “Start to see your needs, specifically, and then classify your projects, and then you offer your project to the private school and focus on regulation,” he added. 

Richard Banks, the session moderator and the consulting editor of Euromoney Conferences, countered that the most capitalist of countries don't follow this model — even in the US, education is still provided by the state, he noted.

“I don’t see us getting out of the sector as a player,” Salman explained, “but we cannot fulfill all the needs of education, so you have to invite the private sector. In order to invite the private sector, you have to liberalize prices.” 

Seeking out such business opportunities is key if the government is to achieve its goal of 5 percent growth in the current fiscal year, Salman said, and “the education system is at the core of strategic long-term reform.”

Salman did not elaborate on his plans to liberalize the health sector.

“Privatization is not the target itself. Improving the efficiency of the target institutions, making them more market-oriented, this is the target,” said Finance Minister Hany Kadry Dimian in a separate speech.

Some public companies need to reformed and restructured, rather than simply sold off, Dimian continued.

“Privatization doesn’t have to take a format of a buying and selling type of deal, but opening partnerships,” he added.

Moderator Richard Ensor, chairman of Euromoney Institutional Investor, pointed out that many investors believe assets are better managed by the private sector, suggesting that governments stall by claiming they need to restructure assets before selling them off. 

“I totally concur with what you’re saying," Dimian responded. "It’s an issue of we have to manage so many files in parallel in a delicate way."