Egypt has finally finished widening its Suez Canal and is hoping the reconstruction will revitalize its weakened economy after four years of political unrest and economic stagnation.
On August 11, President Abdel Fattah el-Sisi issued a decree establishing the canal and part of the surrounding area as a 460 km economic zone for the country, stating that the area will be used to help create industry that will bring in much needed foreign investment to the country.
Additionally, the Egyptian government believes that the newly expanded canal and economic zone will eventually make up a third of Egypt’s economy.
This comes after years of a failing tourist market which was severely reduced by the Arab spring, putting millions of Egyptians out of work.
According to Harshjit Oza, the assistant director at Naeem Brokerage, an Egyptian investment firm, the new addition to the canal has brought Egypt once again to international level of trade, as well as created a positive trend of economic growth in Egypt.
“It is not going to change things significantly in the short term, given the slowdown in global economic trade, but certainly it will benefit Egypt in the long run when the recovery happens,” Oza said, further stating that the canal will indirectly benefit outlying cities centred around the canal like Suezm, Port Said and Ismailia.
Following the canal’s opening, several officials have stated that it is already seeing an influx in shipping, with 63 vessels passing through on its second day of operations alone.
The Egyptian government’s second phase of the Suez canal, will be to expand and develop the surrounding areas in an attempt to raise the prices of duty, provide employment for a “hard hit” Egyptian market as well as to provide better service to vessels that use the canal.
“The New Suez Canal is the first step of a thousand other steps,” said President Abdel Fattah el-Sisi at the inauguration of the canal on Aug. 8.
The expansion of the Suez canal is one of several projects the government is using in an attempt to re-ignite the country’s staggering economy. Another project undertaken this year was the Egypt Economic Development Conference (EEDC) which was held in Sharm-El-Sheikh in March this year. The conference brought in $12 billion in aid as well as deals with foreign countries valued at $60 billion.
Egypt’s Minister of Investment has stated that over half of the pledged investments have come through since March, despite criticism from several government and academic sources claiming that a majority of the investments were targeted to less risk sectors such as energy and real-estate.
Egypt is also in process of constructing a new administrative capital, which was heavily discussed during the EEDC but was recently dropped by Capital City Partners (CCP), the initial investor due to differences over the source of financing. The proposed project was expected to cost nearly $45 billion over a five year period and was to be overseen by the Engineering Authority of the Armed Forces.