Egypt to review investment proposals ahead of imminent Ras El-Hikma mega tourism deal

Ahram Online , Thursday 8 Feb 2024

Prime Minister Mostafa Madbouly announced on Thursday the formation of a legal and technical committee within the cabinet to evaluate investment proposals for projects expected to generate substantial foreign currency revenues ahead of proceeding with a much-anticipated Ras El-Hikma $22 billion tourism development project in the North Coast.

Egypt's Prime Minister Mostafa Madbouly chairs the Cabinet meeting on Thursday. Photo courtesy of the Egyptian Cabinet


PM Madbouly said a global law firm is assisting in finalizing the legal frameworks of the agreements and contracts of these projects, given the intricate financial, legal, and technical details involved, according to a cabinet statement.

Madbouly's announcement comes a day after CEO of the General Authority for Investment and Free Zones (GAFI) Hossam Heiba said the Ras El-Hikma deal “may exceed $22 billion."

The PM stressed that it is solely the responsibility of the cabinet to announce the details of these major investment projects once they are finalized.

Madbouly noted that these major investment projects aim to achieve national development targets, provide hundreds of thousands of job opportunities, and boost Egyptian companies and the industrial sector.

"These investment projects will bring about a qualitative leap and multiple benefits for Egypt," he said.

Ras El-Hikma attracts $$$

In an interview with CNBC on Wednesday, Heiba confirmed the commencement of investments in the Ras El-Hikma project.

"We received offers from several international investment alliances, and an Emirati alliance was selected to execute the project," said Heiba, noting that the initial investments -- $22 billion – “would not be injected all at once."

He stated that the Emirati alliance would be responsible for financing, developing, and managing the Ras El-Hikma project, adding that local and foreign companies would participate in implementing projects within Ras El-Hikma.

“We have concluded negotiations and are now preparing to sign the contracts,” Heiba said.

Ras El-Hikma beaches stretch from Dabaa, 170 km west of Alexandria, to Matrouh, 220 km west of Alexandria.

The Ras El-Hikma project is part of Egypt's North Coast development plan.

The project, which targets positioning the area on the global tourism map, aims to inject billions of dollars into the Central Bank of Egypt.

The tourist project would include an airport, hotels, commercial centres, and residential developments, according to various reports.

Last week, MP and TV anchor Mostafa Bakry reported that Emirati investors are planning to spend between $22 and $42 billion to transform Ras El-Hikma into an international tourist hub.

“These incoming billions will alleviate the current foreign exchange shortages which the country has been facing since early 2023,” said Bakry.

“Ras El-Hikma is just one of several projects that will attract foreign investments and help solve the foreign exchange crisis."

Bakry dismissed social media accusations that land at Ras El-Hikma would be sold outright.

“The Egyptian government is not selling land, but using it to create investment opportunities,” he said.

Facilitating land investment in new cities

Earlier this week, the Egyptian government announced the launch of the "Foreign Investment Gateway" for facilitating land investment in new cities.

The gateway allows investors to inquire about investment opportunities or request specific investment opportunities for all service activities in new cities, payable in US dollars from abroad.

It is one of the recent measures Egypt has taken to secure more foreign currency and attract foreign ‎investments to solve the dollar liquidity crunch the country is currently facing.

In January, the cabinet approved the sale of specific tracts of land to foreign companies in dollars.

In the same month, Egypt's House of Representatives approved an amendment to the Desert Land Law, which grants foreigners the right to own lands for investment projects.

The amendment grants Arab investors the right to own lands on an equal footing with Egyptians.

A government official announced in September that the total investments in Egypt’s new cities have reached EGP 705 billion ($22.82 billion).

In May 2023, the restructured Supreme Council for Investment authorized 22 decisions aimed at promoting foreign direct investments (FDIs) and private investments in Egypt.

The Cabinet followed that with a decree in July 2023 allowing foreigners to buy real estate properties without restrictions while requiring them to pay in hard currency.

Boosting the economy

Egypt has been implementing the State Ownership Policy Document, aiming to expand the participation of the private sector in public investments from 30 percent at present to 65 percent within three years.

Going into effect late in 2022, the State Ownership Policy Document identifies the sectors from which the state plans to withdraw, decrease, or increase its presence over the coming three years.

As part of the document, the state is implementing its Initial Public Offering (IPO) programme, supported by advisory services from the International Financial Corporation (IFC), the financial arm of the World Bank.

Egypt's IPO programme aims to offer 35 state-owned companies to strategic investors by the end of June 2024.

In December 2023, Madbouly said Egypt has secured $5.6 billion from the partial and full sale of stakes in 14 state-owned companies, adding that the government, in collaboration with the IFC, has conducted preliminary studies on 50 state-owned companies in preparation for offering.

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