Egyptian National Democratic Party

Egypt’s National Democratic Party (NDP) was the ruling party around which President Hosni Mubarak’s government and influential businesspeople built a close political-economic alliance. Founded by Anwar Sadat in 1978, it became a channel for elite influence over government and market rules; the resulting reforms opened parts of the economy without making competition broadly accessible.

Formation and political setting

After the 1954 military coup that removed the monarchy, Egypt was governed as a quasi-socialist society in which the state played a central economic role and state-owned enterprises dominated many sectors. Over time, socialist rhetoric receded, markets opened, and a private sector developed. But market opening did not itself disperse control: the state and a small group of businessmen allied with the NDP continued to shape economic activity.

Founded by President Anwar Sadat in 1978, the NDP became increasingly intertwined with business interests under Mubarak. Mubarak became president in 1981 after Sadat’s assassination and ruled with the party until popular protests and the military forced him from power in February 2011. The party’s significance in this account lies in that alliance: political access and economic influence reinforced one another.

Business influence in government

Major businesspeople received government posts in areas related to their commercial interests. Rasheed Mohamed Rasheed, formerly president of Unilever AMET, became minister of foreign trade and industry. Mohamed Zoheir Wahid Garana, owner and managing director of one of Egypt’s largest travel companies, became minister of tourism. Amin Ahmed Mohamed Osman Abaza, founder of the country’s largest cotton-exporting company, became minister of agriculture. These appointments placed people with substantial commercial stakes inside the government departments connected to their sectors.

Businessmen also persuaded the government to restrict entry in industries including media, iron and steel, automobiles, alcoholic beverages, and cement. High entry barriers protected politically connected firms in concentrated markets. Ahmed Ezz, whose company produced 70 percent of Egypt’s steel, was also a senior NDP figure, chaired the People’s Assembly Budget and Planning Committee, and was a close associate of Gamal Mubarak, the president’s son. The overlap between business leadership and party influence illustrates how formal market reforms could coexist with political protection and concentrated economic power.

Privatization and concentrated gains

The privatization program of the 1990s was promoted by international financial institutions and economists as a way to reduce the state’s economic role and free markets. In Egypt, as in the example of Mexican privatization described alongside it, politically connected businessmen influenced how the program was carried out. The transfer of state assets could therefore replace public monopolies with private monopolies rather than create competition. At the start of privatization, the economy was dominated by thirty-two wealthy businessmen locally known as the whales.

The sale of Al Ahram Beverages shows how political connections shaped the process. In 1996 the government decided to privatize the state monopoly beer maker. A consortium that included former tourism minister Fouad Sultan, businessman Mohamed Nosseir, and other well-connected figures offered 400 million Egyptian pounds, but its bid was rejected as too low. Ahmed Zayat, head of the Luxor Group, lacked the money to buy the company directly. Instead, Luxor acquired 74.9 percent of shares when they were first floated on the London Stock Exchange, at 68.5 Egyptian pounds per share.

Three months later, after the shares were split in two, Luxor sold them at 52.5 pounds each, earning a 36 percent profit. Zayat used the proceeds to fund the purchase of Al Ahram Beverages for 231 million pounds the following month. The company then extended its monopoly from beer into wine by buying the privatized national wine monopoly Gianaclis in 1999. Protected by a 3,000 percent tariff on imported wines, Gianaclis had a 70 percent profit margin. In 2002 Zayat sold Al Ahram Beverages to Heineken for 1.3 billion Egyptian pounds, a 563 percent profit in five years.

Institutional significance

The NDP-era account distinguishes market opening from inclusive economic change. Privatization and private-sector growth occurred, but political connections helped determine who could enter markets, obtain state support, and acquire public assets. The party’s alliance with business elites thus formed part of a system in which formal reforms could preserve or intensify concentration rather than distribute opportunity more broadly.