Towards New Arrangements for State Ownership in the Middle East and North Africa Contents Towards New Chapter 1. Priorities for improving governance and performance of state-owned New Arrangements for State Ownership in the Middle East and North Africa Towards enterprises in the Middle East and North Africa Arrangements for State by Alissa Amico, Manager, Middle East and North Africa, Corporate Affairs Division, Directorate of Financial and Enterprise Affairs, OECD Ownership in the Middle Chapter 2. The Arab Spring emphasises better corporate governance of state-owned enterprises East and North Africa by Nasser Saidi, Executive Director, Hawkamah Institute for Corporate Governance with the assistance of Jahanara Ahmad, Manager, Hawkamah Institute for Corporate Governance Chapter 3. How the GCC did it: Formal and informal governance of successful public enterprise in the Gulf Co-operation Council countries by Steffen Hertog, Lecturer, London School of Economics and Political Science Chapter 4. State-owned enterprises in Kuwait: History and recent developments by Mithqal Sartawi, Managing Director and President, Privatisation Holding Company of Kuwait Chapter 5. Transparency of Egypt’s public-private joint ventures by Jennifer Bremer, Associate Professor of Public Policy and Chair, Public Policy and Administration Department, School of Global Affairs and Public Policy, American University in Cairo Chapter 6. Corporate governance of state-owned enterprises in Morocco: Evolution and perspectives by Abderrahmane Semmar, Head of the Division of Programming and Restructuring, Department of Public Enterprises and Privatisation, Ministry of Economy and Finance of Morocco Please cite this publication as: OECD (2012), Towards New Arrangements for State Ownership in the Middle East and North Africa, OECD Publishing. http://dx.doi.org/10.1787/9789264169111-en This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information. ISBN 978-92-64-11090-8 26 2012 02 1 P -:HSTCQE=VVU^U]: Towards New Arrangements for State Ownership in the Middle East and North Africa This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2012), Towards New Arrangements for State Ownership in the Middle East and North Africa, OECD Publishing. http://dx.doi.org/10.1787/9789264169111-en ISBN 978-92-64-11090-8 (print) ISBN 978-92-64-16911-1 (PDF) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. 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FOREWORD Foreword The role of state-owned enterprises (SOEs) in the Middle East and North Africa (MENA) has historically been and remains significant in terms of their contribution to the economic value added, employment and provision of vital services. State-owned enterprises operate across a wide range of sectors in the region - in hydrocarbons, banking, and construction, as well as network industries. Despite the privatisations carried out during the past 20 years, the role of the state in Arab economies has not declined and indeed in many ways has increased, reflecting the growth of oil and gas SOEs, sovereign wealth funds and infrastructure development projects, often carried out with the involvement of the state. Recognising the central role of state-owned enterprises in economies of the Middle East and North Africa region, a regional MENA Taskforce on Corporate Governance of State-Owned Enterprises was launched in 2008. Since its establishment, the Taskforce has acted as a unique regional body to consider issues relating to governance of state-owned companies, to facilitate the sharing of experience in the region and with OECD countries, and to advise MENA governments on national priorities. The Taskforce, to which the OECD serves as a Secretariat, serves as a forum for discussion among varied constituencies, including state audit institutions, ministries, boards and management of SOEs from across the region. This publication is a key product of work of the regional Taskforce and has been developed at the latter’s request by the OECD. It leverages the discussions and debates among Taskforce members, who gathered in Paris and in Cairo in 2010 and again in Rabat in 2011 to discuss regional priorities such as the organisation of the ownership function and the nomination and functioning of SOE boards. The book also builds on country-specific projects where the OECD's input was welcomed, such as the support to establishing SOE corporate governance codes in Egypt and Morocco, both inspired by the OECD Guidelines on Corporate Governance of State-Owned Enterprises. TOWARDS NEW ARRANGEMENTS FOR STATE OWNERSHIP IN THE MIDDLE EAST AND NORTH AFRICA © OECD 2012 3 TABLE OF CONTENTS Table of Contents Executive Summary ............................................................................................ 9 Chapter 1. Priorities for improving governance and performance of state- owned enterprises in the Middle East and North Africa by Alissa Amico, Manager, Middle East And North Africa, Corporate Affairs Division, Directorate of Financial and Enterprise Affairs, OECD ......... 13 Introduction ..................................................................................................... 14 Role of the state in MENA economies ............................................................ 14 Current reform priorities ................................................................................. 27 Conclusions ..................................................................................................... 43 Notes ............................................................................................................... 47 Bibliography .................................................................................................... 50 Chapter 2. The Arab Spring emphasises better corporate governance of state-owned enterprises by Nasser Saidi, Executive Director, Hawkamah Institute for Corporate Governance with the assistance of Jahanara Ahmad, Manager, Hawkamah Institute for Corporate Governance ................................................. 53 The Arab Spring and corporate governance .................................................... 54 State capture: relevance to MENA countries .................................................. 56 SOE sector reform ........................................................................................... 57 Sovereign wealth funds ................................................................................... 63 Recommendations ........................................................................................... 67 Notes ............................................................................................................... 68 Bibliography .................................................................................................... 68 Chapter 3. How the GCC did it: formal and informal governance of successful public enterprise in the Gulf Co-operation Council countries by Steffen Hertog, Lecturer, the London School of Economics and Political Science ........................................................................................... 71 Introduction ..................................................................................................... 72 Absence of conventional governance mechanisms ......................................... 73 A level playing field – but who wants to play? ............................................... 75 TOWARDS NEW ARRANGEMENTS FOR STATE OWNERSHIP IN THE MIDDLE EAST AND NORTH AFRICA © OECD 2012 5 TABLE OF CONTENTS The institutional context of GCC SOEs: governed well without good governance? .............................................................................. 77 Legal status and regulation: measured privilege ............................................. 79 Do GCC boards matter? .................................................................................