Saudi money in Egypt
Egyptian Prime Minister Mostafa Madbouli visited the Kingdom last week and met Saudi Crown Prince Mohammed bin Salman, who subsequently directed the Public Investment Fund (PIF) to inject $5bn of investments into Egypt "in the first phase".
The pair tackled the safety of shipping in the Red Sea and its economic impact on Egyptian revenue from the Suez Canal, as well as the huge number of refugees currently in Egypt, which is putting pressure on the Egyptian economy. Additionally, they discussed the strengthening of bilateral relations, plus a pending agreement to protect and promote Saudi investments in Egypt, which is expected to enter into force before the end of 2024.
The Kingdom is a primary and principal investor in Egypt in sectors such as food, pharmaceuticals, fertilisers, construction, infrastructure, transportation, real estate, agriculture, energy, tourism, and the digital economy.
Read more: Treating Egypt to a bright future: How a push to localise drug production has paid off.
The Egyptian government aims to attract new Saudi money in the next phase by offering unprecedented incentives such as the "golden licence." According to the Central Agency for Public Mobilisation and Statistics, the Kingdom was the top investor in Egypt during 2021-22. Total investment topped $10bn by the end of 2023.
This is set to rise—bilateral trade was more than $33bn in 2022-23, according to Saudi Minister of Investment Khalid Al-Falih. Saudi Arabia was also the biggest Arab importer of Egyptian goods last year, with around $2.7bn of Egyptian exports to the Kingdom.
Moreover, Saudi Arabia ranked first among Arab countries in the value of remittances sent from Egyptians working in Saudi Arabia for the fiscal year 2022-23. Three million Egyptians working in Saudi Arabia sent around $8.3bn back home.
Saudi companies in Egypt
In terms of close Arab cooperation, Egyptian-Saudi relations are a model to emulate, given their strategic depth and shared interests. Commercially, more than 6,200 Saudi companies operate in Egypt, and the pair share significant business links. In addition, the PIF has a big presence in the Egyptian stock market, where it has sizeable interests in chemicals and real estate. Notable recent deals include investments in a bank and a fertiliser producer.
The Egyptian state wants to enhance cooperation with Saudi Arabia and attract more Arab and foreign investors by offering a package of tax facilitation measures as a first step to improving relations between investors and the tax authority. Cairo also wants to accelerate the removal of tax barriers to economic activity.
King Salman's programme for developing the Sinai Peninsula is another prominent opportunity for cooperation involving the government and the Saudi Fund for Development, particularly due to the strategic importance of this region in Egypt. The fund has financed ten projects in Sinai, in areas such as water, higher education, scientific research, and agriculture, and funded the construction of a drainage treatment and recycling plant, grain storage silos, and a hospital.
Future opportunities
It continues to finance projects in health, supply, irrigation, electricity, transportation, roads, agriculture, housing, and the King Salman International University. The Kingdom has deposited $10 billion with the Central Bank of Egypt, which it intends to invest in areas like tourism, including resorts like Ras Banas and Ras Gamila. Saudi students are also showing an increased interest in enrolling in Egyptian universities, particularly to study medicine, engineering, commerce, and law.
Taken together, relations between these two important Arab countries are expected to continue to flourish. If links can be fostered at the educational stage, it augurs well for the long-term nature of the states' bilateral ties.
