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Despite efforts, investors have not flocked to national mega projects - Daily News Egypt

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Despite efforts, investors have not flocked to national mega projects

The government headed by Sherif Ismail has repeatedly said that it wants to attract investment to all national projects which were announced by President Abdel Fattah Al-Sisi. However, experts believe that the government is wasting precious time by not establishing the infrastructure of these mega projects. These projects are the Suez Canal Economic Zone, the …


The government headed by Sherif Ismail has repeatedly said that it wants to attract investment to all national projects which were announced by President Abdel Fattah Al-Sisi.

However, experts believe that the government is wasting precious time by not establishing the infrastructure of these mega projects. These projects are the Suez Canal Economic Zone, the Golden Triangle, and the 1.5m feddans reclamation project.

Daily News Egypt asked various experts about their opinions on these projects and why they think the projects have been delayed.

No investor has signed a contract for any project to invest in the zone
No investor has signed a contract for any project to invest in the zone

The Suez Canal Economic Zone

Ahmed Darwish, chairperson of the Suez Canal Economic Zone Authority, has been visiting Singapore, Japan, Germany, and other countries. He is holding talks and arranging meetings with officials and businesspeople to talk to them about investing in Egypt.

However, up until now, no investor has signed a contract for any project to invest in the zone. The infrastructure is currently being implemented in the zone in order to make it ready for investments.

In spite of establishing the infrastructure in the Suez Canal Economic Zone, experts believe that the government could have made more efforts to accelerate the process of developing the canal.

The national project, which was announced two years ago, has not managed to attract any investments.

Hany Tawfik, executive chairperson of Union Capital, said that if the government really wants to develop the Suez Canal area, it has to accelerate the rate of establishing infrastructure.

He believes that the government has to fix the laws to reduce bureaucracy, because Egypt’s investment climate is hardly attractive now.

Tawfik believes it is necessary for the government to provide concessions to investors in order to attract their investments to the Suez Canal area.

“The government is late in developing the area”, he stated. The expert emphasised that the Suez Canal and Sinai are very sensitive areas, adding that the current counter-terrorism campaign has stalled development.

He added that there is no transparency in what is actually going on with the project.

“With every passing day, Egypt loses another important benefit and the economy suffers,” Tawfik said.

He believes that the project has the potential to attract a lot of investments, which could create jobs, increase Egypt’s exports, and ultimately increase Egypt’s GDP.

Tawfik believes that the Suez Canal’s best projects are ship services, such as welding and supplying, industrial projects, and agricultural projects.

Such projects could develop Sinai as well, he claimed.

Medhat Nafea, a board member at Misr International University, believes that the Suez Canal Economic Zone has the potential to improve the country.

He said that the parliament should inquire as to why the government is late in delivering the project.

The government mainly focuses on creating jobs out of such projects, and developing the Suez Canal area would lead to one million job opportunities according to government statements, he said.

Nafea also noted that the government must find other ways to finance its national projects instead of borrowing.

He believes that Egypt’s external debt is not high, but he emphasised that the rate of borrowing is very scary, which he says shows that the government has not thought of another way to obtain financing.

On the other hand, Nafea said that national projects alone do not develop a country.

He explained that fixing and developing the investment climate and creating new laws is what development is actually about, which the government must understand.

President Abdel Fattah Al-Sisi  while announcing The first phase of 1.5m feddans reclamation project
President Abdel Fattah Al-Sisi while announcing The first phase of 1.5m feddans reclamation project

The Golden Triangle

The Golden Triangle was one of the projects announced by the government.

The triangle is located between Qena, Safaga, and Al-Qusayr, which is an area rich in mining resources that make up 75% of Egypt’s mining minerals.

When Al-Sisi came to office, he ordered the government to consider the Golden Triangle development project a priority in order to attract investments to the area.

The project will be implemented over an area of 2.7m acres and aims to establish a new industrial capital by building industrial, commercial, and mineral sites.

According to studies, the area is rich in metallic and non-metallic minerals, including iron, copper, gold, silver, granite, and phosphate, which are involved in the manufacture of many high-tech industries.

Mining for these minerals could be used as part of the establishment of new industries.

Tawfik said that there is currently a media blackout on the project, adding that no one knows anything about it.

He believes that Egypt is one of the top five countries in mineral reserves and by taking the right steps in the Golden Triangle project, the country would greatly benefit both economically and industrially.

“The government must understand that creating a clear economic environment is the most important pillar for developing the country”, he noted.

He stated said that investors know nothing about the project, which has resulted in the project being stalled at a time when it could help Egypt attract investments and create more jobs.

It is worth noting that Ismail Gaber, the former head of the Industrial Development Authority, had previously told Daily News Egypt that the Golden Triangle development project is considered the second largest project that will aid in developing Egypt’s economy due to the high income expected from the area, once it is developed.

Gaber added that the implementation of the project began following the announcement of the proposal details, which took place in June 2016.

He stated that the project aims at attracting new Arab and foreign investments, in addition to local investments, to enhance the value of the region.

According to Nafea, the project also has a social dimension.

He believes that the Golden Triangle will also help the government develop Upper Egypt, which has suffered from a lack of development for decades, and it would lead to a reduction in the unemployment rate and poverty.

The Sukari mine, located in the Golden Triangle
The Sukari mine, located in the Golden Triangle

The 1.5m feddans reclamation project

The third national project was the reclamation of 1.5m feddans, which was announced by the president on 30 October 2015. The project aims to increase agricultural land by 20% outside of the Delta region.

The president said the feddans will be provided to the public for sale, a provision that is an investment in national food security as much as an investment in their individual futures.

Al-Sisi said that the government will provide the feddans to investors at subsidised prices in order to help entrepreneurs owning small- and medium-sized enterprises to start their own businesses.

He promised that the agricultural lands will not only provide economic stability to farmers, but will provide places of residence and services to them and their families.

It is worth noting that on 21 October 2016, Atter Hannoura, head of New Egyptian Countryside Development (NECD), announced the reclamation of 500,000 feddans as the first phase of the project, at a price of EGP 5,000 per feddan.

However, experts have doubts about the project.

Tawfik believes that the government has not enlisted enough studies on the project.

He explained that no one from the cabinet has created or released pre-feasibility or feasibility studies for the project, which does not reflect transparency.

Tawfik stated that it would not be the best idea if the government were to plant wheat in the project. He explained that it is much cheaper for Egypt to import wheat because there are bigger countries operating in this field and Egypt cannot compete with their prices.

He added that planting wheat will cost Egypt more than global prices.

Tawfik added that the countries that export wheat at low prices depend on rain to grow it, unlike Egypt, which needs water well drilling projects to plant the crop in the desert.

There is no transparency about the project, according to Gamal Seyam, a professor of agricultural economics at Cairo University, who explained that most of the information publicly available is derived from the media.

He added that the modern Egyptian state has witnessed the failure of a lot of different agricultural projects, such as Toshka.

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  • Mohamed

    It makes me sad to learn that so much time has passed with so little achieved. Unfortunately, the failure does not come as a surprise. Who did expect a general to successfully run an economy that is so much more complex than an army? The past three years could have seen a major advance of small businesses had Sisi focused on fighting corruption instead of fighting and arresting the youth. Success on the small scale would have convinced large scale investors and maybe even turned these silly mega projects in partial successes. Instead, the state is way poorer than before and so are we all.

https://dailynewsegypt.com/2017/01/26/612538/
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