Planning in a Market Economy: What, Why and How

Dr. Ahmed El Dersh, minister of planning and minister of state for international cooperation, spoke at a luncheon on October 16 at the Semiramis Inter-Continental about planning in a market-driven economy, placing particular emphasis on private sector participation. "Participatory planning," the minister explained at the outset, "is a process through which stakeholders influence and share control over development initiatives and the decisions and resources which affect them."

Other approaches in the ministry’s repertoire, according to El Dersh, include interactive, collaborative and communicative planning, as well as "consensus building" planning and "role playing" planning.

The government, he added, regards the business community as well as civil society organizations (whether NGOs, professional syndicates or political parties) as its partners in the development of the country.

All these participants in the development process should be encouraged to collaborate in identifying and analyzing obstacles. "The various stakeholders must work together to identify the strengths and weaknesses of existing policies and service and support systems," the minister said. "The objectives of planning need to be set collaboratively, with each stakeholder deciding and articulating what is needed."

The idea is to develop a strategy together and to "decide in pragmatic terms, directions, priorities and institutional responsibilities." From that point, what is required is to "formulate sectoral programs and identify key projects." After that, the next step is "developing – or overseeing the development of – sector or project objectives, as well as suitable policies, budgets and technologies."

The merits of participatory planning, El Dersh said, include acceleration of growth, increased factor productivity, improved efficiency of allocation. But just as importantly, the participatory approach builds consensus among stakeholders, raises public awareness of development and planning issues, and ensures transparency and sound governance. In addition, new practices and institutional arrangements may emerge, and important social lessons can be learned.

The minister then addressed the question of how participatory planning is relevant for Egypt. "Egypt is making a transformation from a centrally directed economy into a free-market economy," he said. "We are moving towards a private sector-led economy, through deregulation, liberalization and promotion of competition."

Promoting foreign direct investment and privatizing public entities are well-known aspects of Egypt’s economic and social transition. But also important are the decentralization of the decision-making process and, consequently, the growth of the role of civil society organizations.

To clarify the necessity of the business community’s participation, El Dersh outlined the extent of the private sector contribution to GDP (83 percent) and investment (86 percent) in Egypt. In the area of production services, the private sector accounts for 78 percent of GDP and 76 percent of investment, while in social services the figures are 54 and 57 percent respectively.

The minister then outlined the Egyptian government’s privatization achievements: 126 majority-stake sell-offs from 1992 until mid-2001, and 54 partial leases or minority sales implemented in the same period.

Meanwhile, the government is currently involved in 511 joint ventures with capital totaling LE 65.5 billion. These include 152 in the industrial sector (LE 18.1 billion); 42 in banking (LE 18.1 billion); 114 in services (LE 13.9 billion); 60 in tourism (LE 4.2 billion); 61 in construction; (LE 3.3 billion); 44 in agriculture (LE 3.1 billion); seven in the insurance sector (LE 1.7 billion); 12 in transportation (LE 1.4 billion); nine in the power sector (LE 1.3 billion); and 10 in trade (LE 0.4 billion).

The shift in emphasis from central to market-oriented planning entails the shifting of responsibilities from central authorities to local and regional authorities, and a change in strategy from fund allocation to fund mobilization. "The target," El Dersh said "is to ensure that Egypt’s development plans are economically viable and will achieve growth; that they are socially viable and equitable; and that they are environmentally viable and compatible with sustainable development."

The Ministry of Planning (MOP) is therefore charged with the following tasks:

• preparing long-term development strategies

• preparing five-year socioeconomic development plans at national and regional levels

• monitoring the implementation of annual plans

• allocating investment resources among ministries and public institutions

• advocating policies for the effective execution of development plans

• estimating the private sector’s investments and outputs in accordance with the targets of development plans

El Dersh reiterated that business groups and other non-governmental players should assist in developing strategies and policies, determining resource allocation, considering issues of equity and following up on the implementation of development plans. "Stakeholder involvement extends to all stages in the planning process," he said.

In terms of implementing plans developed through the participatory approach, El Dersh cited action-planning workshops and community-based meetings as effective techniques. Planners must take account of social assessments, gender analyses and continued consultations with stakeholders.

The government has taken specific actions in this regard, establishing a joint planning committee, involving universities in different parts of the country, as well as local administrations, in regional plans. A participatory urban management project is being set up to serve as a liaison with civil society organizations, and pilot projects have been initiated in the Cairo districts of Manshiyat Nasr and Boulaq Al Dakrour, as well as in the governorates of Giza, Qalioubiya and Aswan.

To facilitate discussions with the private sector, El Dersh added, the Ministry of Planning would issue a working paper on the general features of the fifth Five-Year Plan.

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