A new programme will boost public and private investment in Upper Egypt

After two years of turbulence and an uncertain economic environment, new policy initiatives in Egypt have been – unsurprisingly – fairly limited, which makes the recent establishment of the Upper Egypt Development Initiative by the Ministry of Investment (MoI) all the more welcome. Bringing about a tangible rise in both public and private spending in Upper Egypt will not be easy – ensuring more inclusive growth in Egypt has been a focus of both government rhetoric and popular protests in the years since the toppling of the Mubarak regime, but realising it has been a tricky proposition, particularly in light of the number of other equally pressing and immediate problems – but if it can be done, the programme could herald an improvement in the country’s business environments, and for public-private partnerships in particular.

Regional Challenges

During a conference convened in late 2013 to launch the initiative, which included representatives from the MoI, the General Authority for Investment and Free Zones, the Egyptian Union for Investors Association, senior state officials and business leaders, the social and economic plight of Egypt’s more remote regions – and Upper Egypt in particular – was highlighted. In the case of those governorates in the south of the country, these challenges include a poverty rate of 50% in some areas, rising to 80% in the villages, a low rate of formal company establishment and high levels of youth unemployment – these are, to a certain extent, problems faced across the country, but exacerbated in Upper Egypt after years of underinvestment.

The solution, as envisaged by the Egyptian Union for Investors Associations, which is a key supporter of the new initiative, lies in a three-pronged strategy: to cooperate with the government in establishing projects in the regions, such as building roads, which will create employment opportunities; to encourage the armed forces, the business interests of which span a wide swath of the economy, to establish a programme of residential unit construction, which would also provide a route to employment; and, finally, the proposal that businessmen should familiarise themselves with the problems facing the industrial areas of the southern parts of the country, and direct investments towards Upper Egypt.

New Projects 

Other suggestions aired at the event included the creation by investors of an LE1bn ($142m) holding fund, which could be used to create projects which might provide yet more job opportunities for young people. This proposal chimes with a similar LE2.9bn ($411.8m) initiative overseen by the Minister of Local Development which aims to establish small-scale projects in the provinces in a bid to address social issues – such as the provision of drinking water and hygiene infrastructure – and tackle problematic unemployment.

A number of new projects are already under way. For instance, the new port at Safaga, which is due to be developed from a small mining harbour to an eight-platform import-export port capable of handling livestock and bulk cargo, will provide Upper Egypt with a direct link to Asia, especially as the port is to be connected to the cities of Assiut, Qena and Sohag by a new highway. Furthermore, Korean electronics giant Samsung has set up a LE1.7bn ($242m) plant in Beni Suef (also in Upper Egypt and around 120 km from Cairo), and had announced that it began the initial production stage by September 2013. The plant will focus on producing television screens and LCD displays, and is expected to create 1400 jobs. The idea is to assemble goods for the Egyptian market, and eventually for export.

Given the broader issues Egypt is facing, jump-starting growth in lesser-developed regions will necessarily take some time to bear fruit. However, to avoid social strife further down the line, the initiatives are certainly encouraging and with momentum appearing to pick up, the medium-term outlook for the region is brighter than it has been in years.