ADVERTISEMENT

5 key details about the biggest deal Egypt has ever signed

In a landmark move that promises to reshape its current economic situation, Egypt has sealed a massive deal, marking a significant milestone in the country's journey toward its economic recovery. The deal was brokered between Egypt and the United Arab Emirates (UAE) in what Egypt’s Prime Minister Mostafa Madbouly called the biggest deal in his country’s history. The deal centers around the development of the Ras El-Hekma.

5 key details about the biggest deal Egypt has ever signed
  • Business Insider Africa presents 5 key details about the biggest deal in Egypt’s history.
  • This $35 billion deal has been described as the largest in the country’s history.
  • The agreement is between the UAE and Egypt. 
ADVERTISEMENT

Recently the United Arab Emirates decided to invest a whopping $35 billion in Egypt’s economy. The deal has since been described as the largest foreign investment Egypt has ever received.

In the wake of this report, here are 5 key details of this major deal.

ADVERTISEMENT

For over a year, Egypt has had to deal with a nagging economic crisis. As a result, this deal is primarily intended to stop its worst foreign exchange crisis in decades. In January, Bloomberg reported that Egypt’s economic problems seemed to be worsening owing to its credit outlook which was cut to negative from stable by Moody’s Investors Service while its currency continued to weaken on the black market. This new deal is designed to mitigate these issues. Currently, the Egyptian pound is 30.90 per dollar on the official market and 60 on the black market.

There are two components to the UAE's $35 billion investment in Egypt. The first is the UAE’s $24 billion purchase of investment rights in Egypt’s Ras El-Hekma project, while the second is an $11 billion direct investment into the economy via the development of other major projects. Wamda capital notes that Ras El-Hekma is a next-generation tourism city which also has, a free zone, and an investment zone combining residential, commercial, and recreational spaces.

ADVERTISEMENT

The Ras El-Hekma development rights would be purchased by the Abu Dhabi wealth fund ADQ for $24 billion. However, Egypt will retain a 35% stake in the Ras El-Hekma development. The ADQ is also going to make the remaining $11 billion available which is set to come from the UAE’s money deposited at the Central Bank of Egypt.

As stated earlier, the primary reason for this investment on Egypt’s part is the recovery and growth of its economy. The fund is intended to help Egypt unify its official currency rate of E£30.90/US$1, with its black market rate of E£60.0/US$1. However for the UAE there is a specified commercial target, and that is the goal of attracting $150 billion in investments for the project.

It is expected that the UAE will make upfront payments in two tranches. The first should be a $15 billion disbursement within the week. A third of this payment is expected from the UAE deposits in the Egyptian Central Bank. The remaining $20 billion is set to be disbursed in the next two months. This $20 billion tranche will consist of $14 billion in fresh financing and $6 billion from the UAE’s remaining deposits. The Ras El-Hekma development is slated to commence in 2025.

ADVERTISEMENT

On a side note, according to the Financial Post, “Egypt’s foreign bonds surged on the news to become the best-performing sovereign debt in emerging markets on Friday. The government’s dollar notes due in 2051 jumped a record 5 cents on the dollar.”

In hindsight, the deal is expected to help Egypt move forward with a highly-anticipated currency devaluation, its fourth since early 2022.

JOIN OUR PULSE COMMUNITY!

ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: news@pulse.ug

Recommended Articles

Top 10 African countries with the most centi-millionaires in 2024

Top 10 African countries with the most centi-millionaires in 2024

Where are the 5 wealthiest cities in Africa located?

Where are the 5 wealthiest cities in Africa located?

200 Ugandans set for skilling in Oil&Gas as TotalEnergies opens academy at UPIK

200 Ugandans set for skilling in Oil&Gas as TotalEnergies opens academy at UPIK

Gov’t releases Shs 267B more for PDM

Gov’t releases Shs 267B more for PDM

Terra Agri Farm denies stolen equipment claims, cites shareholder dispute

Terra Agri Farm denies stolen equipment claims, cites shareholder dispute

Why Africa's billionaires & millionaires are fleeing the continent

Why Africa's billionaires & millionaires are fleeing the continent

10 African countries with the highest price changes in household commodities

10 African countries with the highest price changes in household commodities

3 smartphone makers that Apple should be worried about

3 smartphone makers that Apple should be worried about

10 wealthiest countries in Africa

10 wealthiest countries in Africa

ADVERTISEMENT