The opportunities being created in Egypt are huge, but unlocking them will not be easy
Last week’s Egypt: The Future economic development conference in Sharm el Sheikh had heavy involvement from Gulf nations and companies.
Alongside the $12.5bn pledged to support Egypt’s economy by Kuwait, Oman, Saudi Arabia and the UAE, there were scores of announcements involving GCC companies and leaders revealing huge investments in the country.
The most notable of these was the $45bn Capital Cairo project led by Emaar’s chairman Mohamed Alabbar on the eastern side of Cairo, and a $20bn joint venture between Abu Dhabi’s Aabar Investments and Egypt’s Palm Hills known as October Oasis in Sixth of October City on the west.
On top of this, the contract for the massive $40bn affordable housing project agreed between Egypt’s government and the UAE’s Arabtec last year is due to be signed in the very near future.
With such huge sums announced, and with so much local involvement from UAE and Saudi developers, it is hardly surprising that so many in the GCC’s contracting market are excited about the prospects of working in the country.
Those that have been there before the outbreak of violence and the removal of former president Hosni Mubarak in 2011 will know it is not easy. Although President Abdel Fattah el-Sisi has started on a programme of economic reforms which has included cuts to expensive fuel subsidies and a simplification of the tax system, it is still a very difficult place to do business.
Investment minister Ashraf Salman recently said that any foreign investor looking to set up in the country has to deal with up to 78 different government agencies. Egypt also has issues with corruption, ranking 94th of 175 nations listed in Transparency International’s Corruption Perception Index – considerably higher than the UAE (25th) and well above Saudi Arabia (55th).
If el-Sisi can continue to make life easier for those looking to do business in the country, the rewards are potentially huge. There will be a mass of infrastructure and construction work all around Cairo, in housing programmes and right along the banks of the revamped Suez Canal.
Not only this, but Egypt’s current lack of natural resources (and cash) has meant that it has been much more amenable to the type of privately-financed infrastructure investments favoured by many international contractors who know they can either guarantee long term revenues from a major scheme or bring in finance from their own governments or funding partners to help land contracts.
For its part, Egypt will gain expertise to help with infrastructure investment and deals with multinationals who agree to set up local manufacturing and training bases to add something back into the economy.
The ultimate hope is that this greater investment will bring wider prosperity and much more stability, which, in a country that has endured plenty of troubles in recent years and is still dealing with pockets of internal strife, is perhaps the most welcome of all outcomes.