It is expected that the Suez Canal Axis development projects will have 14 direct benefits on the Egyptian economy, in addition to political benefits, said Ezz El-Din Hassanin, a banking and economy expert.
Hassanin said that the Suez Canal is Egypt’s gate to the future and to internationality, both politically and economically. It is the key to convert Egypt from a developing country into an “economic tiger”.
According to an expanded study by Hassanin, among the project’s most important economic benefits are the projects to be established in the zone, which can potentially generate approximately $150bn annually. The projects will also contribute to increasing Egypt’s gross domestic product (GDP).
Hassanin expects that the current number of 18,000 ships passing annually will double within five years. He also expected that the current added value per container will increase from $150 to the minimum average of $4000, like what happened in the ports of Singapore, Shanghai and Notre Dame.
He said that the new expansions in the canal’s axis would participate in creating international economic compounds along the axis. These compounds will include logistic projects, manufacturing ships and containers, supplying ships, international commercial agencies as well as international malls.
Huge industrial projects will also be established in Port Said, East Port Said Port, Ismailia and Suez. Also industrial free zones will be established, especially in Northwest of Suez Gulf.
An international centre for storing and trading grains and seeds will be established with the capacity for seven tonnes in Damietta and Northwest Suez Gulf. Egypt then will become the country with the most control over seeds in the world. Other complementary industries, related to seeds, will be established as well.
Additionally, foreign currency will be available through the expected foreign direct and indirect investments, thus the foreign exchange reserve at the Central Bank of Egypt (CBE) will increase. This will help the CBE to adjust the exchange market and decrease inflation rates.
Hassanin believes that these benefits are dependent on two conditions: recovering security in Sinai; and the absence of a “secret economic siege” by the major countries to put economic pressure on Egypt through preventing the investment flows of certain countries to Egypt.
Hassanin believes that the New Suez Canal Project as well as development of the canal axis will benefit Egypt on the political side as well. The most important of these political benefits would be that the world would recognise that Egyptians are standing behind their political leadership.
The message aimed to be delivered to the world is that Egypt is witnessing an unprecedented political and popular change, which the entire world should respect, said Hassasin.
He suggested that, after the New Suez Canal opening, the government should promote and intensively advertise for the national projects and the available investments in Egypt. A good example was utilising the Egyptian Economic Development Conference’s success (EEDC), with the help of international offices specialised in this field.
Hassanin added that Egypt can develop international protocols with some of its allies such as China, Russia, India as well as some European countries such as France, Spain, Cyprus and Italy. Egypt can also link the Suez Canal traffic fees to the Egyptian pound.
If Egypt manages to implement these agreements, the Egyptian pound (EGP) would be an international currency such as the US dollar, Euro, Japanese Yen, Chinese Yuan, Hassasin believes. As a result, the demand for dollar liquidity, to fund imports coming from the countries with whom these agreements are to be signed, would decrease. This would decrease Egypt’s inflation rate and help it reach the global rate, which is 2%., Hassasin said.
In his study, Hassanin urged banks to increase the size of funding directed to the small, medium as well as major companies and factories. He also urged them to transform from being entities that only invest citizens’ deposits with the government, through the debts instruments, treasury bills and bonds, into a real supporter of development and economic recovery.
Hassanin added that the CBE should restrict and limit bank investments in the public debt instruments. It should push them to pump their money in the economy through financing local projects.
He concluded that the CBE should increase the banks’ capital, so they could be capable of financing huge projects that are expected to be launched during the upcoming period.