No public participation in sukuk, says report

Tamim Elyan
3 Min Read

CAIRO: Poverty and illiteracy may limit public participation in managing state holdings, according to a new report examining the legality of people’s ownership of public shares. A report, titled Sukuk: A Legal Perspective, was recently published by Maat Center for Judicial and Constitutional Studies. It analyzed the press’s approach towards social peace issues in December 2008.

The report predicted that people will likely sell their shares due to their low revenue.

“When Egypt transitioned from socialism to capitalism, corruption became highly exposed and led to the squandering of a sizable part of the revenues and capabilities of society; the government then decided to shift to a public owned shares system which people received skeptically because of their negative experience with government regulations, the report said.

According to the report, press coverage of the issue varied among different newspapers – governmental, partisan and independent – and this can be traced to the ambiguity around the issue, the novelty of the idea or the rampant illiteracy in Egypt.

People can t manage the state by themselves; even the predicted revenue for each citizen is very low, especially with the economic downturn, author of the report Shaimaa Ahmed, told Daily News Egypt.

There are a lot of loopholes in the project concerning foreign companies’ control over management even if the government holds the majority of the shares because the government has proven its failure in management numerous times, she said.

During the National Democratic Party’s annual conference last November, President Hosni Mubarak proposed the idea publicly owned shares in state holdings (sukuk) that will allow citizens above 21 to own shares in 86 public sector companies.

However, Ahmed warned of this project’s repercussions. “Since some companies are more profitable than others corruption in brokerage operations will occur, she said.

The report called for having a public debate about the proposal before it is discussed by the legislative authorities and launching awareness campaigns among citizens about the importance of sukuk.

“Civil society organizations should engage in the discussions to express people’s opinions, opinion polls should be conducted and public discussion should take place in the media, Ahmed said.

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