Multibillion dollar pledges from GCC investors to fund port and real estate projects in Egypt dominated an economic conference held in the north coast town of Marsa Matrouh at the end of last month.
The UAE and Saudi Arabia took centre stage with multibillion dollar pledges, mainly for property development and plans to build “the north coast’s largest trading port”.
The Matrouh the Future of Investment conference showcased investment opportunities in Egypt’s north-western most province, which shares a border with Libya and spans about 500 kilometres of Egypt’s Mediterranean coastline.
Two of the crowning projects include the development of seaside resorts, Aguiba Plateau and Rommel Beach, with price tags estimated at US$3 billion and $4bn respectively, the latter to boast “the largest dancing fountain in the Middle East”.
But proposals for a new port are on an even larger scale, which according to the Matrouh governor Alaa Abu Zeid – a retired army major – will require about $10bn for the first phase of construction alone.
The town governor’s grand plans for Matrouh, however, might take longer to reach fruition than expected.
The optimistic target advertised in the lead-up to the event of about $24bn in signed contracts never quite materialised. Instead, what emerged were more Memorandums of Understanding (MoUs) and suggested deadlines for the submission of feasibility studies.
But what the conference failed to deliver in cash it offered in political significance, emphasising the military-backed government’s continued drift towards the Arabian Gulf and the UAE in particular.
In his opening conference remarks, Mr Abu Zeid gave special thanks to the UAE for “continual and unending support to its sister, Egypt”.
The town’s leader, who until recently was a member of the military establishment as intelligence director of the western region, was appointed by the president Abdel Fattah El Sisi as Matrouh governor in February.
Indeed, the Matrouh economic conference is just the most recent example of Egypt’s growing economic and political cooperation with the UAE. Egypt has been on the upswing since the removal of the former president Mohammed Morsi in 2013.
Immediately upon Mr Morsi’s stepping down, the UAE transferred $1bn in assistance to Egypt’s military-backed interim government, followed by an additional $3.9bn aid agreement to fund Emirates-led development projects.
And since the election of Mr El Sisi last year, the UAE has appeared in nearly all of the military-backed administration’s ambitious “national projects”.
The $1.5bn New Suez Canal project, completed amid much fanfare in August this year, was executed by a consortium led by Abu Dhabi-based National Marine Dredging Company.
And the glittering $45bn plans for a new Cairo Administrative Capital were unveiled by the Dubai-based real estate developer Mohamed Alabbar alongside Mr Sisi at the Egyptian Economic Development Conference (EEDC) held in March.
The UAE also played a leading role in preparations for the EEDC itself, where Mr El isi revealed his “economic road map” for country, and secured investment pledges of $38.2bn in addition to the $12.5bn of promised aid and development projects from GCC countries.
According to Mr Abu Zeid, the Matrouh conference was inspired by the Egyptian president’s March economic extravaganza, attended by international investors and world figures including the IMF managing director Christine Lagarde, and former British prime minister Tony Blair.
And while the Matrouh conference was not nearly as high- profile, much of the event’s trappings suggest a practice in imitation.
“I am trying to replicate president Sisi’s amazing accomplishments,” Mr Abu Zeid said outside the conference.
He explained that the conference represented a wider attempt by the Egyptian government to decentralise and reproduce Mr El Sisi’s mega projects at a local level.
Many of Mr El Sisi’s national projects, particularly in the real estate sector, have yet to prove their worth.
The ostentatious plans for the new Cairo Capital, for example, have hit stumbling blocks after reported disagreements over profit-sharing and land-provision negotiations.
Meanwhile, the proposed $40bn deal for the building of one million low-income housing units, originally signed in the lead up to the 2014 presidential elections between Mr El Sisi and UAE-based Arabtec, has been subject to reports that it has been scrapped after a similar dispute regarding land, originally offered by the Egyptian military without charge.
But these problems have not seemed to deter Mr Abu Zeid.
Instead, the Matrouh conference was dominated by the conspicuous presence of real estate developers, many of them also sharing Arabian Gulf connections.
Marseilia Holding Company, whose Marseilia Egyptian Gulf Real Estate Investment company has been investing in Matrouh’s north-coast tourist resorts for 15 years, served as the conference’s main sponsor.
Also receiving special thanks by Mr Abu Zeid for its generous support was the Dubai-based Bin Haider Group, with interests in trade and real estate, as well as a one of the Egypt’s largest developers, listed on the EGX, Palm Hills.
Adam Haneih, senior lecturer at London’s SOAS (School of Oriental and African Studies) University and a specialist in the political economy of the Middle East, says recent developments are a reminder of Mubarak-era practices, which facilitated state corruption in speculative real estate.
“Land was sold off cheaply to wealthy developers – mostly from the Gulf – as government officials profited from kickbacks and connections to these companies,” he says.
Following the January 2011 unrest, a number of cases were raised against major Gulf and Egyptian real estate developers including the Matrouh conference sponsor, Palm Hills.
According to Alaa Amr, executive director of Egypt’s General Authority for Investment and Free Zones, investors should expect full government support regarding property concerns. “There are some projects where [the government] might offer investors land for free. Others for 50 per cent of its market value. It depends on the size of the project and activities.”
Mr Amr explained that a “one-stop shop” approach would be implemented for acquiring land and completing necessary paperwork, in a bid to sideline the much bemoaned Egyptian bureaucracy.
Hany Ganena, head of research at one of Egypt’s leading investment firms, Pharos Holding, said the lack of investor willingness to commit to more binding agreements should have come as no surprise.
“Economic and legal uncertainties still dominate the investor space in Egypt,” he says.
“The idea of implementing a one-stop shop has been announced many times, but has always faced too much resistance by government bodies who don’t want to give up powers. I don’t think this will change any time soon.”
Follow The National’s Business section on Twitter