Egyptian official says Suez Canal ‘not for sale’ amid fears of foreign investment
The head of Egypt’s Suez Canal Authority (SCA) announced Thursday that the waterway is open to foreign investment, but he stressed that foreigners would have no control over management of the canal or over a proposed sovereign wealth fund to assist the authority with economic and investment activities.
Speaking to reporters, SCA Chairman Osama Rabie said, “We cannot sell the canal or rent it. It is the property of Egypt and the Egyptians.”
Rabie was responding to public criticism following discussion of a draft law in parliament earlier this week.
What happened: Earlier this week, lawmakers held a session addressing legal amendments that would allow for the SCA to form a private fund with a capacity of 100 billion Egyptian pounds ($4 billion).
While the fund has been under discussion for years, this week’s debate sparked widespread condemnation among some lawmakers as well as Egyptians on social media, who said that if approved it would allow foreigners to buy and own shares in Egypt’s Suez Canal.
Mohammed Abdel-Alim Daoud, a parliament member from the New Wafd Party, said the fund would effectively empty Egypt of its money and represented an “imminent danger.”
The SCA’s Rabie sought to allay these fears Thursday, stressing the fund would be separate from the canal authority. “The investor will come in connection with the project that is being done, they will not come to the fund,” he said.
Being the quickest sea route between Asia and Europe, the Suez Canal is considered an issue of national pride and a major source of foreign currency to Egypt. Rabie expects revenues to reach $8 billion in the current fiscal year. The canal was nationalized in 1956 by late President Gamal Abdel Nasser.
Why it matters: Egypt is struggling economically with growing foreign debt, a depreciation of the local currency against the dollar losing 14.5% of its value and a tremendous increase in the prices of basic necessities. More foreign investment could help ease a hard currency shortage facing the country.
On Dec. 16, the International Monetary Fund (IMF) approved a 46-month loan of $3.1 billion. Arab backers are also coming to the rescue: Abu Dhabi Developmental Holding Company, a United Arab Emirate wealth fund, announced a number of investments in Egyptian publicly listed companies amounting to $20 billion. In August, Saudi Arabia’s Public Investment Fund established the Saudi Egyptian Investment Company with investments of $1.3 billion in different Egyptian businesses.
Know more: Egypt’s economy has been struggling for years. In 2016, the IMF signed a deal with President Abdel Fattah al-Sisi granting the country a $12 billion loan. As conditioned by the IMF, several austerity measures were implemented, including the floating of the Egyptian currency and cutting subsidies on fuel and electricity. According to analysts, Egypt’s chronic problem is attributed to the country’s inability to revitalize the economy, manage loans efficiently and uncontrollable spending on mega-projects.
According to a World Bank report published in 2019, “Some 60% of Egypt’s population is either poor or vulnerable, and inequality is on the rise.” In November 2022, it stated that “Egypt’s overall macroeconomic environment during FY2022/23 is expected to be undermined” by Russia’s war on Ukraine and lingering effects of the coronavirus pandemic.