Amid exceptional global economic turbulence marked by volatility and uncertainty, Egypt stands at a strategic inflection point. The challenge is to recalibrate its growth model by balancing the gains of extensive public sector-led development with the imperative to unlock the full potential of the private sector The Legacy of State-Led Expansion For over a decade, the state's expansive role — manifested through large-scale infrastructure projects, the development of new urban centres, and investments in essential services — has transformed the country's physical and economic landscape. These efforts, while vital for short-term job creation and infrastructure renewal, have come at a cost. Aggressive public spending has driven up both domestic and external debt and crowded out private investment, thereby suppressing private sector competitiveness and discouraging foreign investment. Contextual Justification The aggressive state-led investment approach was not without merit. In the wake of the 2011 political upheaval, a vacuum emerged in which the private sector was reluctant or unable to step in. The government, acting as investor of last resort, assumed the role of stabiliser — fostering economic recovery, creating jobs, and laying the groundwork for future investment. Recognising the Limits By early 2023, however, it became evident that overreliance on public investment was unsustainable. Facing mounting fiscal pressures and guided by IMF recommendations, the government shifted course, cutting capital expenditures by 45.6 per cent and launching a large divestment programme. Early Signs of Private Sector Revival This policy shift produced early results. By Q3 of fiscal year 2024/2025, private sector investments accounted for 62.8 per cent of total capital formation, compared to 37.2 per cent for the public sector. Furthermore, GDP growth reached 4.77 per cent — the highest level in three years — indicating a recovering economic momentum. Sectoral Performance and Investor Confidence Private investment increased across key sectors such as manufacturing, telecommunications, technology, real estate, and logistics. For example, the telecom sector grew by over 18 per cent, non-oil manufacturing by 16 per cent, and tourism by 23 per cent. Additionally, strategic investments in electric vehicles and precision engineering started to grow. The inflow of foreign capital from various countries has boosted global investor confidence in Egypt's market. The Risk of Stalled Public Projects Despite these positive signs, an abrupt halt in many national projects — triggered by reduced public spending — has delayed execution schedules. Incomplete projects that fail to generate returns could transform these assets into financial liabilities, especially given the historically high costs of such investments and the weight of unmet public expectations. Toward a Smarter Growth Formula To address these challenges, Egypt must craft a sophisticated equilibrium that safeguards its hard-earned public assets while catalysing sustainable, private-led growth. This unified vision requires ensuring that public projects are completed and generate substantial returns while simultaneously sparking long-term private-sector-driven, thereby boosting overall GDP and broadening public benefits. Strategic Policy Recommendations To support this vision, a comprehensive set of interventions is proposed: Expand PPP Frameworks: Adopt public-private partnership models with state-managed profit-sharing contracts while retaining public ownership. Establish Sectoral Sovereign Funds: Consolidate state assets into funds for sectors such as transport, energy, and education to attract investment without divestiture. Create National Joint-Stock Companies: Transition some projects into publicly traded companies with phased reduction of state ownership, tied to profitability milestones. Deploy Long-Term Government Procurement Contracts (G2G): Secure predictable revenue streams by committing to long-term purchases of services from these projects. Launch a National Projects Exchange: Develop a digital platform to facilitate transparent public and investor participation in the funding of major projects. Initiate Global Promotional Campaigns: Run international investor roadshows to reposition Egypt's assets and attract sovereign funds and strategic partners. Issue Performance-Linked Bonds: Design structured bonds secured by operational revenues, targeting both diaspora investors and institutional capital. Reimagining Egypt's Economic Future If effectively implemented, these strategies could elevate GDP growth to between 5.2 per cent and 5.5 per cent, improve Egypt's global competitiveness, expand employment across productive sectors, foster innovation and entrepreneurship, and attract increased foreign direct investment. Ultimately, Egypt's future will hinge on a balanced integration of public initiative and private dynamism, forging a model of inclusive, sustainable economic growth. Egypt's resilience in the face of sustained economic turbulence provides valuable lessons. Rather than discarding the model of public investment, the key lies in refining it through smart partnerships, robust governance, and a renewed social contract between the state and the market. The future will be defined by the synergy between public stewardship and private innovation, paving the way for balanced, inclusive, and sustainable growth.
