State-Owned Enterprises in Middle East, North Africa, and Central Asia: Size, Costs, and Challenges

Abstract

In the former Soviet Union, SOEs in the industrial sector were vertically integrated with only a few enterprises supplying goods (including for the military sector) for the whole country (Im, Jalali, and Saghir 1993). Since the collapse of the Soviet Union, privatization of SOEs in former Soviet countries was part of a broader effort to transform these economies to become more market based. The large and diverse footprint of SOEs in the region raises questions about their role and contribution to the economy. 3 However, there is limited available information on SOEs in the ME&CA region as the majority of SOEs are not publicly listed companies and in general public disclosures are weak. Some information, often at an aggregated level, may be available on costs and revenues to the budget, but little is systematically known about the size of SOEs, operating performance, and the state of SOE gover-nance in the region. This diverse SOE landscape also raises questions about the rationales for SOEs' role in the economy and whether their objectives are being achieved. Broadly, the possible rationales for state 4 ownership can be generally grouped into six categories (Figure 2): (1) support national economic and 3 See, for example, Richmond and others (2019), IMF (2020a), and EBRD (2020). 4 The terms "state" and "government" are used interchangeably throughout the paper.