A monumental USD 35 billion investment from the UAE to develop Ras Al Hekma is projected to revitalize Egypt’s economy, stabilize food prices, and narrow the exchange rate gap.
Facing a foreign exchange crunch, Egypt is set to receive a significant economic boost with a USD 35 billion investment from the UAE for the development of the coastal city of Ras Al Hekma. The project aims to create a complete urban community, stabilize food prices, and narrow the exchange rate gap. The deal comes as the North African country continues to struggle with a foreign exchange crunch.
A landmark investment
The vast investment in Ras Al Hekma is predicted to significantly bolster the nation’s economy. The agreement, signed between the Egyptian government and the Abu Dhabi Developments Holding Company (ADQ), aims to transform Ras Al Hekma into a “fully functional urban community and not just a beach resort”, Egyptian Prime Minister Mostafa Madbouly said.
An ADQ-led consortium acquired the rights to develop 130 million square meters along Egypt’s north coast from the Egyptian government, in exchange for USD 24 billion, the company said. Additionally, $11 billion of Emirati deposits in Egypt’s central bank would be relinquished to allow “for investment in prime projects across Egypt to support its economic growth and development”, said ADQ. Egypt’s government will keep a 35 per cent stake in the development, work on which will start in early 2025.
The first tranche of the investment, amounting to USD 10 billion, will be deposited into Egypt’s central bank within a week of Friday, Mr. Madbouly said, with a second tranche of USD 14 billion deposited within two months.
His Excellency Mohamed Hassan Alsuwaidi, Managing Director and Chief Executive Officer of ADQ, said: “ADQ is a long-standing investment partner in Egypt, and we have demonstrated our ability to select opportunities that are aligned with our investment framework and benefit the Egyptian economy. This investment underscores our commitment to developing Ras El-Hekma into one of Egypt’s most attractive coastal destinations through the enablement of mega-infrastructure and development projects, working with partners such as Modon Properties and Talaat Moustafa Group, which will deliver value across multiple sectors of Egypt’s vibrant economy.”
Multi-sectoral approach
The multifaceted project encompasses various sectors, including:
- Residential and commercial districts: Catering to diverse needs, the development will offer a range of residential and commercial properties, fostering economic activity and creating new job opportunities.
- Tourism and hospitality: High-end hotels, resorts, and entertainment venues will enhance Ras Al Hekma’s position as a premier tourist destination, attracting visitors and contributing to foreign currency generation.
- Infrastructure development: The project will involve significant infrastructure upgrades, including improved transportation networks, utilities, and healthcare facilities, supporting the overall growth and sustainability of the region.
- Free economic zone: The establishment of a free economic zone will attract foreign investment, fostering the development of export-oriented industries and further diversifying the Egyptian economy.
Long-term benefits
This comprehensive approach is expected to generate numerous long-term benefits for Egypt, including:
- Enhanced Economic Activity and Job Creation: The large-scale development project is anticipated to create substantial employment opportunities across various sectors, contributing to economic growth and improving the livelihood of local communities.
- Improved Foreign Exchange Reserves: The project’s focus on tourism and export-oriented industries is expected to generate foreign currency inflows, stabilizing the Egyptian pound and bolstering the nation’s foreign exchange reserves.
- Infrastructure Development and Modernization: Upgrading infrastructure in Ras Al Hekma will not only benefit the development itself but also contribute to the overall modernization and efficiency of Egypt’s infrastructure network.
- Diversification of the Economy: By fostering tourism, foreign investment, and export-oriented industries, the Ras Al Hekma development project is expected to reduce Egypt’s dependence on specific sectors and contribute to a more diversified and resilient economy.
The sheer size of the investment – the largest in Egypt’s history – is expected to narrow the gap between the Egyptian pound’s official exchange rate, 31 pounds to the dollar, and the rate on the country’s parallel markets, which went up to 72 pounds in late January.
Challenges remain
While challenges, such as managing debt and implementing economic reforms, remain, the UAE’s significant investment in Ras Al Hekma presents a promising opportunity for Egypt to revitalize its economy, create jobs, and improve the overall well-being of its citizens.
In other infrastructural developments, the Egyptian government recently announced that Egyptian firm Elsewedy would operate the country’s planned high-speed rail network.