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.

This publication seeks to provide insight into the varied and rich experience of SOE sector reform in the Middle East and North Africa over the past decade, highlighting country specific initiatives and challenges. Promoting good governance of SOEs will remain an imperative for policymakers in the region, considering the calls for greater public sector transparency and accountability sounded during the events of the Arab Spring. It is hoped that this book will be useful for policymakers, academics and civil society groups as they revisit SOE governance frameworks and practices in the region.

The purpose of this introductory chapter is to contextualise recent efforts to reform corporate governance of state-owned companies in the Middle East and North Africa against the backdrop of the development of these economies. This chapter provides a brief overview of the origins of state-owned sectors in the region, outlining key trends that have affected their evolution, including privatisation and the establishment of sovereign wealth funds. The objective is not to cover all challenges that policy makers face in improving the governance frameworks and practices of state-owned enterprises in the region. Rather, the chapter seeks to provide an overview of a few high-priority issues with a view to identify good practices as well as highlight issues that deserve ongoing attention.

This chapter situates advances in and obstacles to better governance of state-owned enterprises in the Middle East and North Africa in the context of the overall public sector governance. The main message is that better corporate governance of SOEs diminishes or eliminates corruption, lowers the risk of state capture, improves SOE efficiency and supports the development of the private sector. There is also a "signalling" effect from improved SOE governance, whereby the state demonstrates to citizens and the private sector that it is committed to the values of corporate governance. The chapter provides recommendations, based on the work of the Hawkamah Institute in the region, on further measures to increase the transparency and accountability of SOEs and governments as their ultimate owners, as well as to ensure that SOE governance arrangements approach those of private sector enterprises, with which they compete in some sectors.

Like state apparatuses in the rest of the Middle East and North Africa, Gulf bureaucracies are not known as paragons of lean administration. This chapter explores the emergence of important “pockets of efficiency” in Gulf Cooperation Council countries' public sectors, namely in state-owned enterprises such as Saudi Aramco, Etisalat and others. In so doing, this analysis seeks to demonstrate that the success of Gulf-based state-owned enterprises can, to an extent, be explained by their adherence to some good corporate governance practices, but also to highlight that the way these principles have been implemented is often quite different than in other jurisdictions. Finally, this chapter seeks to isolate the elements that have contributed to the success of the state-owned enterprises and explore how these lessons can be extrapolated to other MENA jurisdictions.

State-owned enterprises have been an important feature of the Kuwaiti economy since the establishment of the nation state. As highlighted in this chapter, their importance in the Kuwaiti economy has only increased over the years, and today they play an important role in the provision of basic services, employment and fiscal revenue. This analysis outlines the development of the state-owned sector in Kuwait, in order to situate the current structure of the sector and its governance practices in a historical context. Following the introduction of the privatisation legislation in Kuwait in 2010, the privatisation process, which until now has been slow, is expected to accelerate with the initial disposal of a stake in the Kuwaiti Airways Corporation.

This chapter examines a part of the state-owned enterprise sector that has been relatively unexplored to date, whether in Egypt or in the wider Middle East and North Africa region, namely, public-private joint ventures. Such ventures are a major feature of state-owned sectors across the region and are indeed the most common corporate form in Egypt’s oil and gas sector. They deserve greater attention for their importance within the overall role of the state in the economy, but also for the special challenges they pose in terms of corporate governance. The analysis presented here constitutes an initial effort to close the information gap on corporate governance of joint ventures with public participation, specifically focusing on transparency and disclosure practices. To assess performance in this area, this paper first explores the governance environment in which these firms operate, with particular attention to disclosure. It then analyses disclosure of key governance information on corporate websites for a sample of 12 holding companies and 100 publicprivate joint ventures.

Reform of the state-owned enterprise sector in Morocco has undergone three distinct phases: 1) structural reforms in the 1980s, 2) modernisation of their environment in the 1990s, and 3) the liberalisation of numerous industries in the 2000s. These measures have had a positive impact on the performance of SOEs, whose role has grown in the country’s economic and social development over the years. This chapter outlines the experience of reform of the Moroccan SOE sector from the 1980s to today, focusing on the introduction of a corporate governance code specifically aimed at state-owned enterprises in 2011. The code is the second of its kind in the region and constitutes a major step towards enhancing governance practices, especially in commercially-oriented SOEs.