A new Pharaoh Energy Hub is Born
North Africa’s largest economy Egypt is undergoing major changes. After years of economic recession, mainly due to the effects of the Arab Spring and the reign of the Muslim Brotherhood, the country is showing growing strength and vitality. Still fighting the negative effects of a major economic recession, and years of high inflation, the first positive signs are showing. The unexpected and still ongoing offshore gas success stories in the Eastern Mediterranean, where trillions of natural gas are being monetized, will support a sustainable economic growth. At the same time, Cairo has stepped up its efforts to gain control over its vast government budget deficit by removing subsidies on energy and other resources, bringing back deficits to manageable levels. A continuing boom in oil and gas exploration, combined with multimillion investment programs in infrastructure and housing, are putting the country back on track to attract new investments and companies in future. After a years of mainly Arab and Chinese investment projects in Cairo and around the Suez Canal, Western companies are back. Renewed interest in Egypt’s potential is not only based on its vast natural resources, but also due to a high-level of education, availability of cost-effective workforce, and the opening up of new economic sectors. Egypt is starting to regain its historical place in the region, in which it not only was an economic power but also a military and geopolitical power player to reckon with. The ongoing cooperation with most GCC countries, especially Saudi Arabia and the UAE, in combination with its bridgehead function between Europe and the Middle East, is now again a major point of attraction.
The coming years, Egypt will again become a major investment hub, as the ongoing immense real estate projects, such as the construction of New Cairo and New Capital, are combined with a continuing string of projects next to the Suez Canal, Red Sea and the Mediterranean region. Its ongoing diversification, looking at renewables, manufacturing, infrastructure and high-tech, is presenting investment and operational opportunities for all.
At the same time, companies and investors will need to address the still existing instability in parts of the country, possible regional conflicts and shifting alliances. Egypt, with its historical ties to Europe and the USA, has also opened up again to other power brokers. The role of Asian and Russian powers should not be underestimated, as Cairo, after the Arab Spring and Western choices, has realized that it will need to spread its risk to mitigate internal and external threats. Opening up its economy to foreign investors and operators presents an opportunity for all, but also has upped the ante for competition.