UAE, Egypt ink deal to develop Ras al-Hekma peninsula. Can it help the struggling Egyptian economy?

The UAE and Egypt signed a landmark investment partnership on Friday to develop the Ras al-Hekma peninsula, in an effort to help the struggling Egyptian economy by bolstering economic growth and addressing a hard currency crisis.

The deal injects $35 billion of foreign direct investment into Egypt’s economy to help it plug its debt and currency problems. Egyptian Prime Minister Mostafa Madbouly described the project as “one of the biggest deals of its kind,” reported The New Arab.

Egypt’s import-heavy economy facing multiple setbacks

The UAE’s sovereign wealth fund, ADQ, is set to lead an investment consortium with $24 billion earmarked for the coastal region, to turn it into a resort city with a UAE-managed airport. The remaining $11 billion has been set aside for other projects across Egypt.

Egypt expects the project to produce $150 billion. It is expected to retain a 35% stake in it. The agreement comes at a crucial time for the country as the ongoing currency crisis has eroded foreign investor confidence in Egypt’s financial stability.

Egypt’s import-heavy economy has faced multiple setbacks lately, including COVID-related shocks to the tourism industry, high wheat costs due to the Ukraine war and disruptions to Suez Canal revenues due to regional conflicts including the Houthi blockade of the Red Sea.

Ras al-Hekma – Egypt’s up-and-coming resort destination

Facing significant debt accrued through infrastructure projects including a massive new capital city, the country is seeking assistance. The International Monetary Fund has approved a $3 billion loan but its disbursement depends on painful reforms.

Located on a cape approximately 350 km northwest of Cairo, Ras al-Hekma is a flourishing resort destination. It boasts stunning turquoise waters and white sandy beaches – and has been luring attractive investment in luxury developments.