On Friday, Egypt made headlines with a groundbreaking $35 billion investment agreement with the United Arab Emirates (UAE) aimed at developing the Ras El Hikma peninsula.
This transformative deal signifies a new chapter of economic resurgence and foreign investment attraction for Egypt, potentially serving as a blueprint for Nigeria in its own forex and investment challenges.
According to Reuters, the deal struck with ADQ, one of Abu Dhabi’s prominent sovereign investment funds, is poised to inject $35 billion into Egypt’s economy over the next two months, with future projections soaring up to $150 billion.
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The initiative intends to metamorphose the Ras El Hikma peninsula into a dynamic nexus of investment zones, residential complexes, commercial precincts, and tourism and leisure facilities, with groundbreaking slated to commence in 2025.
The announcement of this monumental pact has sparked fervent optimism in the markets, as evidenced by the surge in Egypt’s sovereign dollar bonds prior to the official disclosure. Notably, bonds with maturities extending beyond 2047 observed a surge of more than 3 cents in the dollar, marking their highest trading level in about a year, as per Tradeweb data.
The strategic location of Ras al-Hikma, approximately 200 km west of Alexandria, already renowned for its upscale tourist resorts and pristine beaches, positions it as an ideal candidate for this ambitious development endeavor.
However, beyond its immediate economic ramifications, this deal represents a significant stride for Egypt in its protracted battle against a lingering economic crisis characterized by a chronic foreign currency deficit, escalating debt burden, and sustained pressure on the Egyptian pound.
Despite these challenges, Egypt’s commitment to economic stability and growth has been described as steadfast. The country’s engagement with the International Monetary Fund (IMF) for a $3 billion financial support package and its proactive adoption of economic reforms, including transitioning towards a flexible exchange rate regime, attest to its resolute approach to addressing economic hurdles.
This landmark development draws parallels with Nigeria, the largest economy in Africa, and its economic aspirations. Last September, following President Bola Tinubu’s visit to the UAE, the Nigerian government announced the establishment of a comprehensive framework with the UAE, entailing investments worth billions of U.S. dollars across multiple sectors, including defense and agriculture, by the UAE government’s investment arms.
However, five months on, Nigerians await the fruition of these agreements, including the lifting of visa bans on Nigerians. This delay has been attributed to lingering investor skepticism and waning confidence in Nigeria, despite its shared economic realities, such as high inflation and forex shortages, with Egypt.