Unlocking economic potential: Transforming Egypt's ports into global hubs

Egypt is working on developing its seaports, which in turn helps boost its economic growth. This comes due to Egypt’s geographical location, which has shorelines on both the Red and Mediterranean Seas. Accordingly, the country is developing its ports, establishing free zones, and creating added value to lure investments and activate the flow of importation and exportation.

Egyptian Ports Development

Egypt has a number of key ports at the Mediterranean Sea, including Alexandria, Damietta, and Port Said. It also has significant Red Sea ports, such as Ain al-Sokhna, Suez, and Nuweiba, in addition to specialized tourist and petroleum ports. This makes up 90% of Egypt’s trade volume with the world, which passes through seaports, according to a report issued by the Egyptian Center for Strategic Studies (ECSS) in June 2023.

Moreover, the Egyptian Ministry of Transport has adopted short-term and medium-term plans until 2024 and 2030, respectively. The plans aim to employ all the capabilities available as well as the comparative advantages of the ports in the Red and Mediterranean Seas and in the Suez Canal.

The plans aim at boosting the efficiency of Egyptian ports by enhancing infrastructure and developing industrial cities near these ports. Additionally, Egypt intends to increase the ports’ capacity by improving the efficiency of existing storage yards, berths, navigational channels dredging, and gates, according to Rabab Sobhy’s report entitled ‘Transforming Egypt into Global Trade Hub’, issued by the Cabinet’s Information and Decision Support Center (IDSC).

As a result, the country has been attracting investments for port development projects. Mohamed Hafez, Geoeconomist and Special Economic Zones (SEZs) Advisor, tells Arab Finance: “The significant infrastructure investments carried out by the Egyptian government and its development partners, coupled with efficient customs and trade facilitation reforms, have opened the gate for foreign investors to capitalize on that success. Most recently, Chinese companies and Abu Dhabi Ports are the latest partners investing and cooperating in Egypt’s ports upgrade and management.”

The Egyptian government can further attract investments by offering a number of incentives. “Fiscal incentives, a robust governance framework, and facilitation are the major pillars foreign investors are looking for,” Hafez points out, adding that “Egypt has recently started to focus on fostering well-structured public-private partnerships while retaining oversight and control. This model enhances port standards and attracts quality investment.”

Strategic Positioning and Economic Returns

Egypt seeks to transform into a global center for trade and logistics within the framework of the directives of President Abdel Fattah El-Sisi, while inspecting the Port of Alexandria and laying the foundation stone for the Tahya Misr multi-purpose station on docks 55 and 62.

Hafez states that “establishing and developing various types of ports is a key strategic move by Egypt to leverage its advantageous location and position itself as a global maritime hub connecting the East with the West.”

Meanwhile, Egypt has been working on providing logistics services as it adds and develops fuel-supply tankers, which helps achieve the country’s goal of becoming a regional energy hub. Moreover, in July 2023, the Economic Committee of the House of Representatives approved the project submitted by the Cabinet to grant commitment, design, construct, manage, operate, maintain, and re-deliver a multi-purpose terminal in the East Port Said Port of the Suez Canal Economic Zone.

The terminal will be implemented on a 900-meter-long pier and a 380,000-square-meter goods handling yard, with $65 million in investments. The project will offer about 550 direct job opportunities.

Egypt is developing its ports and their application through different steps, including improving the work environment, developing customs systems, forming strategic partnerships with major industrial and commercial countries, and reforming the legislative environment and regulating laws to ensure ease, fluidity, and freedom of movement of goods, according to the State Information Service Website.

Establishing New Free Zones

When it comes to Egyptian ports, the economic value does not only exist in the ports but also in the nearby free zones. Industrial zones, free zones, and special economic zones are all under the umbrella of free zones. “SEZs could offer a successful way to drive sustainable development in the country, provided that economic zone is appropriately established and customized to fit Egypt’s needs,” according to the AUC Knowledge Fountain’s thesis published in 2020, entitled ‘The use of special economic zones to drive sustainable development in Egypt: A case study on the Suez Canal region’.

???Egypt has established several economic zones near coastlines and ports, such as the Port Said free economic zone, the Alexandria free trade zone, the Damietta free trade zone, and the Seuz Canal Economic Zone (SCZONE).

According to Hafez, “12% of global trade passes through the Suez Canal, and 60% of exports from China, the world’s factory, to Europe also pass through it.”

“Therefore, the SCZONE is designed to capitalize on this strategic global trade advantage of the canal and diversify economic clusters and activities beyond shipping; the incorporation of manufacturing, logistics, and technology into the economic landscape of the zone serves to broaden its industrial scope, reducing susceptibility to economic fluctuations within the canal corridor,” he explains.

Egypt is further developing the port and industrial city of Jarjoub. The port is set to be a gateway to northwest Egypt for foreign trade and modern industries by creating a sustainable urban community that adopts sustainable development and clean energy and creates job opportunities for local and targeted residents, Prime Minister Mostafa Madbouly said in November. The Jarjoub Industrial City includes the industrial zone, logistics and business center, in addition to urban development areas, as well as tourist development areas.

The development and modernization of Egyptian ports have the potential to transform the country into a logistical and commercial hub in the Middle East and Africa. It will also help attract more investments and create added value, which will boost economic growth and international trade. These developments, along with establishing free zones, can boost the economic returns of the Egyptian ports and their surrounding areas.