Back to the complete issue
Wednesday, 12 December 2018

Egypt faces USD 230 bn investment gap in infrastructure, and most of it is in transportation

Egypt faces a USD 230 bn investment gap in infrastructure over the coming 20 years — and the vast majority of that is in transportation, according to a World Bank analysis. Some USD 180 bn of the projected gap is in transport, while water infrastructure needs USD 45 bn in investment above current baseline projections.

Pay attention to agriculture and energy, too: While the investment gap is significantly lower here, the agriculture and agribusiness sector accounts for 30% of GDP and “has the highest potential for job creation” among the four priority sectors the Madbouly government and the World Bank identified for the study.

Before you get too down, remember: This means massive potential investments. The solution? Empower the private sector, the WB says, and transition from “taxpayer funding to user funding” — with plenty of emphasis on public-private partnerships.

Among the World Bank’s key recommendations by sector:

Transport: A USD 10 bn, 10-year investment plan to rehabilitate the railroad. Also: “Invite the private sector to develop … container and cargo terminals, river transport, railway projects, dry ports, bus rapid transit and light rail.”

Energy: USD 10 bn in fresh investment to upgrade and build new refineries. Also: Build another 3.6 GW in generation capacity right away to “eliminate power outages,” bring the private sector into a liberalized electricity market, and find new ways to promote private investment in renewables.

Agriculture: Improve water management systems and irrigation networks, reclaim more land, develop logistics networks that will sharply cut the massive percentage of crops lost between farm and market, develop the food processing industry through “efficiently located agro-industrial parks” and restructure the Agricultural Bank of Egypt.

Water and wastewater: The recommendations are the most bland here, talking about “fiscal policy reforms to encourage sustainable consumption patterns of water” (we’re reading that as “price hikes”), improved management systems and awareness campaigns.

But all of this will need the government to loosen price controls, stick to a clear policy framework against which businesses can budget and plan — and develop the ability of state institutions to run as full partners of the private sector by improving their abilities to plan and manage bid processes.

The document is more than 100pp long. What should I read? Page 5 focuses on short-term solutions for each sector — it’s essentially a great list of business ideas if you let your mind wander as you read. The World Bank’s recommendations are summarized on pp 15-16.

Visit the landing page for the reportor download the full document here (pdf).

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.