In the political turmoil that followed the 2011 revolution, Egypt’s economy struggled to regain lost momentum as investors retreated from the market and revenues from tourism and the Suez Canal fell sharply. But the launch in 2015 of the country’s new economic development plan, which included the promise of economic reforms to improve the country’s financial health and a roadmap for megaprojects aimed at stimulating growth and jobs, launched a turnaround that is now in full swing. And, with IMF backing together with widespread regional support, confidence is returning quickly.
President Abdul Fattah al-Sisi’s convincing win in Egypt’s presidential elections in April 2018 provided an affirming rubber stamp for the government’s reform programme. And Cairo now is looking to move forward with much-needed power, infrastructure and industrial projects. The election suggests that Al-Sisi has the backing of Egypt’s business establishment. And, in spite of the pain caused by subsidy cuts, the inflation brought on by the float of the Egyptian pound has largely worked its way through the system and interest rates are falling. Assuming they continue their downward trajectory, Egypt’s banks, which are in good health, will once again be in a position to fulfil their role as facilitators of economic activity.
The power sector is a priority for Cairo, which is moving ahead with an ambitious renewable energy programme, alongside plans for the largest coal power plant in the world and the El-Dabaa nuclear power project, which is being 85 per cent funded by Russia. The electricity ministry is succeeding with its feed-in tariff programme, and is now looking to privately finance the bulk of its future capacity, through a pipeline of independent power projects.
Construction activity is being driven by Cairo’s urban development programme, which could see 23 new cities built, including New El-Alamein on the north coast. Development is also picking up on the $40bn New Capital City, as investors and developers come on board, and the government is hosting regular auctions to parcel off plots of land. Cairo has a $36bn pipeline of rail projects aimed at supporting growth through greater mobility and logistics capacity. While the development of ports along the Suez Canal into an integrated manufacturing corridor aims to capitalise on the waterway’s potential.
Egypt will face many substantial social, economic and political challenges for many years to come. But the turnaround of the giant Egyptian economy over the past three years is one of the region’s emerging success stories. With a huge programme of capital projects, Egypt offers a strong pipeline of potential project opportunities across all sectors. And for companies seeking to offset the recent downturn in the GCC’s projects sector, Egypt offers much to consider, particularly for developers able to bring finance that can enable public sector investment projects.