Understanding Egypt’s Economic Woes: An In-Depth Look at Ras al-Hekma and Cairo’s Decision to ‘Sell’ it to the UAE
Exciting news from February 23 as Egypt and the UAE have officially sealed a hefty $35 billion deal for Ras al-Hekma, marking a significant step in their partnership. The UAE has secured a majority stake of 65 percent in this ambitious project.
Nestled on a picturesque cape about 212 kilometers west of Alexandria and roughly 350 kilometers northwest of Cairo, Ras al-Hekma is a captivating resort destination on the rise. With its mesmerizing turquoise waters and pristine white sandy beaches, the area has become a magnet for substantial investments in luxurious developments, potentially even from the United Arab Emirates.
Exciting news from Egypt! The Egyptian government, in partnership with UN-Habitat, is working on an innovative project to create a sustainable and inclusive waterfront city known as Ras Al Hekma Waterfront New City. This development aims to revamp the North Coast region and shape the future urban landscape of Egypt. The completion of the first phase of the project is anticipated by 2028.
Ras al-Hekma has been making headlines recently following reports the cash-strapped Egyptian government is in talks to to sell it to the UAE for US$22 billion, amid a currency and debt crisis pushing down the Egyptian pound (EGP) in the black market against international currencies with dire implications for the import-dependent nation.
Will selling Ras al-Hekma help Egypt’s economic crisis?
Egypt’s main recipe for attracting foreign currency has relied on making big bets on natural gas exploration, expanding the Suez canal, doubling down on tourism in a restive region, and pouring billions of dollars into megaprojects (including building a huge new administrative capital) hoping to both employ thousands of Egyptians while attracting foreign investments, mainly from the oil-rich Gulf.
That recipe worked for a while until it didn’t. But it’s not stopping Egypt from doubling down on the same approach while seeking a bailout from the International Monetary Fund (IMF) although that may require the kind of reforms Egypt’s military-dominated economic model is incapable of conceiving.
The involvement of a United Arab Emirates consortium has been confirmed by Hossam Heiba, CEO of Egypt’s General Authority for Investment and Free Zones, to local television outlets. While Egypt may retain a 20% ownership stake, including entities like the Talaat Moustafa Group, according to Bloomberg.
Egypt’s government said Thursday a committee is studying “investment offers for important projects that are set to generate large resources of foreign currency”.
Abu Dhabi’s involvement aligns with its history of supporting Egyptian President Abdel-Fattah El-Sisi, with previous investments and economic assistance. Egypt hopes the deal, if successful, would help it in managing currency devaluations and securing liquidity, reinforcing its position in talks with the IMF.
