I’d like to congratulate the UAE government and people on the historic agreement reached with Egypt for the development of the city of Ras El Hekma, west of Alexandria. Also, I’d like to express my amazement at the UAE’s extraordinary progress in asset and wealth management.
I believe that signing the partnership agreement to develop Ras Al-Hekma by the Abu Dhabi Developmental Holding Company (ADQ), the UAE’s representative, and the Urban Communities Authority, Egypt’s representative, is the most powerful evidence of UAE officials’ skill in managing foreign investments and deliberate perseverance to seize unprecedented opportunities.
These investment opportunities help diversify the UAE’s economy, improve the well-being of its people, and protect the future and wealth of future generations.
It is clear that the UAE employs high caliber personnel to oversee foreign investments in recent acquisitions conducted by Abu Dhabi Developmental Holding Company and ADNEC Group in Egypt is clear.
Recent acquisitions covered a wide range of fields including shares in Commercial International Bank, “Fawry” for electronic payments, “Alexandria Containers and Cargo”, “MOPCO”, “Abu Qir Fertilisers and Chemical Industries”, in addition to “Sixth of October Development and Investment”, and SODIC.
The acquisitions also included Amoun Pharmaceuticals Company for the production of human and veterinary medicines, several hospitals and major medical test laboratories, as well as a 40% stake in the Icon Group, the tourism services arm of the Talaat Mostafa Holding Group, as well as other projects that raised the total UAE direct investment in Egypt to $5.7 billion during the fiscal year 2021-2022, compared to 1.4 billion in the previous fiscal year 2020-2021, an increase of more than 300%.
I believe that the total value of UAE acquisitions in Egypt in 2023, whether through agreements with the Sovereign Fund of Egypt or private sector partners, will exceed the numbers of 2022.
With the signing of a collaboration agreement to develop Ras El Hekma, Egypt-UAE economic relations witnessed a dramatic change by the beginning of 2024. The project, which is anticipated to attract $150 billion in foreign direct investment, entails significant investments in the development of a new metropolis as part of the national strategic plan for constructing the new republic.
Benefits to UAE economy
The UAE begins a completely different chapter in its economic future by signing this agreement, the results of which will be reflected in the entire UAE economy. This partnership will achieve unprecedented leaps for the Gulf state, not only on the economic level, but also on the geographical and political levels as a whole.
Geographical benefits
Geographically, the UAE will enjoy a 50-square-kilometer open sea front on the Mediterranean basin and the northern hemisphere, as well as air and sea ports in this unique geographical location on Egypt’s northwest coast. All of these benefits will provide the Gulf state with exceptional competitiveness, allowing it to diversify its economy in ways that would be impossible to achieve without such a deal.
Political benefits
On the political level, partnering on a strategic development project of this magnitude with Egypt strengthens their bilateral relations from the standpoint of common interests, which affects political convergence and the two countries’ support for each other’s foreign policies.
Economic benefits
On an economic level, this agreement creates a new fixed national income for the UAE, having that nation receiving a majority stake of up to 65% of the total revenue from any project that may be built in Ras Al-Hikma. Any investment made in Ras Al-Hikma with the involvement of the two countries will return 65% to Abu Dhabi and 35% to Cairo for the rest of their lives. This guarantees that the UAE contributes to its public coffers a return on investment in the different types of economic activity expected in a seaside metropolis with unlimited growth potential.
This is in addition to preferential trade advantages for linking with any country in the world as a result of Egypt’s balanced stance and disciplined relations with various blocs, as well as trade agreements that provide preferential advantages for expansion within all international markets.
Through this agreement, the UAE will be able to increase the amount of its exports, trade, and logistics services while also benefiting from the Egyptian state’s road network, which was developed during the last 10 years. This opens up a variety of economic opportunities for export, making use of Egypt’s diverse economy and cheap overall manufacturing costs.
The benefits of this project include a variety of economic activities, such as the establishment of an international airport, ports, ship docks, universities, hospitals, various types of tourist resorts, and residential cities that generate long-term returns for the two countries’ budgets based on their respective stakes.
Through this deal, the UAE will have access to top-tier human resources and low-cost trained labor to carry out the project.
In terms of steady demand for utilities, services, and real estate products to be created in Ras El Hekma City, the Egyptian market is seeing rising demand and spending. The UAE has seen similar benefits in a number of investment projects in Egypt, including the “Emaar” projects, which drew the highest investment returns attained by the business in international markets.
Certainly, these are just headlines of the expected gains for the UAE in light of the initial information available about this agreement. The details may include more competitive advantages that the UAE government and its people will reap through this agreement.
Deal not only rescue to Egypt economy
As a result, I believe that treating this deal as a rescue of the local economy and a correction of the economic path is a great injustice to the Egyptian state, because the set of measures that Cairo has implemented over the last ten years, as well as the massive investments that the people have incurred and the consequences of which they have endured with great patience, make any investment opportunity on Egyptian soil an opportunity for a foreign investor.
I think that the negotiation of foreign investment transactions should be handled in formal public declarations in terms of equitable treatment, mutual interests, and clarity of the significant benefits that foreign investment will bring.
Investors in the Egyptian market would never spend a cent without first doing a return on investment analysis, which will demonstrate that all prospects for sale are extraordinary, create large returns, and achieve high competitiveness.
Certainly, the good consequences of the Ras al-Hikma deal will have a significant impact on the Egyptian economy, which is the focus of all state entities, including the Presidency.
I’m hoping that in the following days, we’ll learn more about the nature of the arrangement and the benefits that the Egyptian economy will gain in addition to the big advance payments of US$35 billion in two months.
Transparency
Certainly, there are several specifics and hundreds of questions that require precise answers concerning the nature of the deal, its timeline, and the rights assigned to each of the two parties to the agreement.
I hope that this information will be made accessible as soon as possible so that rumors and conjecture do not arise, which might have a detrimental influence on the deal’s reception by the business community in particular and people generally.
Finally, opening all doors to foreign investment is the objective of all governments seeking to thrive and achieve prosperity for their citizens.
However, how foreign investment contracts are executed, the types of collaborations with foreign organisations, and all of the little nuances that govern investment ties all influence the amount to which the host nation benefits from these investments.
We must now broaden the application of governance, transparency, and disclosure rules, as they are fundamental legal means of providing information about what is going on within any local or foreign investment activity, and they are required to achieve the people’s right to know, as well as a deterrent to any violations or corruption that may occur.
Local media
During the next stage, Egyptian media must be objective and implement investigative policies seeking information in accordance with the principle of the people’s right to know, rather than continuing with personal opinions, because this is a serious stage that requires objectivity and transparency in order to build an organised collective awareness to serve our goals.
Written by Dina Abdel Fattah
