Saudi Minister of Investment Khaled Al-Faleh announced during a meeting with Egypt’s Prime Minister Mustafa Madbouli in Alamein on 1 August that Saudi Arabia intends to convert its deposits at the Central Bank of Egypt (CBE) into direct investments.

The latest CBE figures reveal that Saudi deposits at the CBE have reached $10.3 billion, made up of $5 billion in short-term deposits renewed annually and $5.3 billion in medium-term deposits maturing in October 2026.

Six months earlier, the UAE shifted a portion of its $11 billion deposit at the CBE into direct investments as part of the Ras Al-Hekma financing deal.

“We see Egypt complementing the kingdom as a promising market and a crucial export platform to the region,” Al-Faleh said.

Saudi Arabia has shown interest in boosting trade with Egypt, with a Saudi delegation meeting with the minister of agriculture in December to explore agricultural investment opportunities, the ministry stated.

In January, the Saudi SFIG Group formally requested the Ministry of Housing to acquire a tower in the Central Business District (CBD) of the New Administrative Capital for hotel investments. In July, the Adeer Real Estate Company affiliated with the Saudi Sumou Holding Group expressed plans to invest in developing 11 million square metres of eastern Cairo.

Egypt aims to finalise an agreement to foster mutual investments with Saudi Arabia this month, also reducing bureaucracy and offering investment guarantees for both parties. The General Authority for Investment and Free Zones has established a dedicated office to address the needs of Saudi investors in Egypt.

Ahmed Attia Al-Fayoumi, chair of the Federation of Chambers of Commerce, said the kingdom’s decision to transform its deposits into direct investments is a significant strategic move fostering economic ties between the two countries and bolstering the Egyptian economy.

He said that Egypt has promising prospects in sectors favoured by Saudi Arabia, such as clean energy production, electricity, agriculture, real estate, and information and communications technology. The move will facilitate partnerships in industrial and agricultural production between the Egyptian and Saudi private sectors, he noted.

Al-Fayoumi said it was in line with the kingdom’s adoption of open policies and its success in enhancing the investment landscape, simplifying licensing procedures, and facilitating land allocation.

In July, the Saudi Embassy in Cairo informed the Federation of Chambers of Commerce that the Saudi Export-Import Bank had inked cooperation agreements with the Banque du Cairo, the National Bank of Egypt, and the Abu Dhabi Islamic Bank to fund the import of Saudi goods into the Egyptian market.

Sherif Al-Sayad, head of the Export Council for Engineering Industries, dismissed the likelihood of Saudi Arabia venturing into sectors like home appliances and small- and medium-sized industries due to the size and nature of Saudi Arabia’s sovereign funds.

These are aligned more with large-scale, heavy-labour, and capital-intensive industries such as petrochemicals, fertilisers, and energy.

Similarly, Amr Al-Samadoni, secretary-general of the Transport and Logistics Division at the Federation of Chambers of Commerce, ruled out Saudi investments in the transport and logistics sector for the time being. Current state and private-sector plans for near-future projects are more inclined towards self-financing and local investment.

He said that transport and logistics are not typically favoured by the kingdom for foreign investment.

According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), Saudi Arabia is Egypt’s largest Arab trading partner, with Saudi private-sector investments in Egypt exceeding $35 billion across 7,000 companies. The number of Egyptian companies operating in Saudi Arabia has surged from 800 to 2,000.

Egyptian-Saudi trade exchanges stand at $7.9 billion, with $2.7 billion being Egyptian exports to Saudi Arabia and $5.2 billion Saudi exports to Egypt, according to the Egyptian-Saudi Business Council. Egyptian investments in Saudi Arabia total $2.5 billion.

An informed source at the Federation of Chambers of Commerce and the General Federation of Industries said there are prospects for a deal to establish a joint investment venture between Egypt and Saudi Arabia in Ras Gamila on the Red Sea near Sharm El-Sheikh.

Ras Gamila is located close to the Saudi Neom project and is only three nautical miles from the Tiran and Sanafir islands.

The anticipated deal may involve acquiring controlling interests in several state-owned enterprises earmarked for divestment under Egypt’s privatisation programme, including industrial firms and a small-sized state bank, the source added.

The partnership between Egypt and Saudi Arabia has roots dating back to the 1970s, with the Saudi Egyptian Construction Company being one of the earliest collaborations. Established in 1975, the company, co-represented by the Egyptian Ministry of Housing, boasts capital estimated at LE1.9 billion.

Over the past decade, it has delivered 24,000 housing units and 114,000 villas. At present, it is developing seven new projects across Egypt, according to the company’s website.

Mohamed Al-Taher, the company CEO, said at a press conference in November that Egypt and Saudi Arabia are considering raising its capital from $384 million to around LE12 billion to facilitate expansion. Talks are in progress with financial institutions to secure a LE4.5 billion loan to fund a new project in New Cairo, with investments totalling LE18 billion.

In August 2022, the establishment of the Saudi Egyptian Investment Company was announced, aligning with the Saudi Public Investment Fund’s strategy to explore fresh investment avenues in the Middle East and North Africa (MENA) region.

The company is set to focus on various sectors such as infrastructure, real-estate development, healthcare, and financial services, as well as investments in food, agriculture, and industrial projects such as pharmaceuticals, alongside other lucrative opportunities, reported the fund’s website.

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* A version of this article appears in print in the 8 August, 2024 edition of Al-Ahram Weekly