São Paulo – The countries of the Middle East and North Africa must change their form of state-owned company management for greater trustworthiness and efficiency. This would be a way of reducing corruption and re-establishing confidence in public institutions after the Arab Spring. That is what is shown in report "Towards New Arrangements for State Ownership in the Middle East and North Africa", disclosed on Tuesday (10) by the Organisation for Economic Co-operation and Development (OECD).
The document shows that state-owned companies answer to around half the economic production in the region and from them come approximately 30% of work posts in the Arab world. One of the points of greatest relevance identified in the report is the need for separation between company property and regulatory functions exercised by the state.
"Full administrative separation of ownership and market regulation responsibilities is necessary to create a level playing field between state-owned enterprises and their private sector competitors, especially when state-owned enterprises are used as an instrument of industrial policy,” explains the report.
According to the report, the state-owned companies of the Middle East and North Africa are concentrated mainly in the sectors of energy, infrastructure and network industries (through which public services are provided), as well as heavy and light manufactured products, the naval and chemical industries. In the Gulf, state-owned companies are predominant in the sectors of real estate and construction, as well as in the banking and hospitality sectors.
The document recommends the establishment of an agency to coordinate state-owned companies aimed at clearly identifying the exercise of power of property within state-owned administration.
"To date, no Middle East and North Africa jurisdiction has defined an ownership policy to clarify and prioritise the objectives of state ownership… This is because state-owned enterprise remains fragmented, thereby requiring a consensus among the various state owners on the content of such a policy," pointed out the report, regarding the part that could be played by coordination agencies.
According to the document, complete centralisation of state-owned property may be unviable in the short run, but coordination agencies would be very useful to harmonise policies adopted by different state-owned decision makers. In the region, only Morocco and Egypt have corporate governance codes for state-owned companies.
"State-owned enterprises in the region could and should take a leadership role in defining the corporate governance agenda, as opposed to merely attempting to keep up with the governance arrangements in the private sector. The Arab Spring has only reinforced this message,” it finishes off.
*Translated by Mark Ament
