New Suez Canal Project: A Passage To Economic Recovery For Egypt

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Wednesday - 15 July 2015

Egypt one of biggest economies and tourist destination in Africa, has started its path to economic recovery with the construction of New Suez Canal which is set to be commissioned in Cairo in August.
The News Suez Canal are the most important drivers of economic recovery in Egypt and a mark of turning point for a country that has been marred by continuing instability.
This projects is meant to transform several cities along the canal, and importantly will create “one million jobs’’ over the years.
The project aims to attract private investment to the area surrounding the canal, transforming several cities into a regional and hopefully global logistics hub. Investments have already been pledged by companies in the maritime, infrastructure and tourism sectors to finance the urban transformation.
The construction of the new canal itself was initially scheduled to take five years. It was then first reduced to three years and finally ordered by President Abdel Fattah el-Sisi to be completed in one year only.
The New Suez Canal is one of the most recent of several manmade waterways in Egypt, expanding the existing Suez Canal between the Mediterranean Sea and the Red Sea. Launched simultaneously with plans to build six new tunnels under the canal and to transform a 76,000 km area on both banks of the canal into an international logistics, commercial and industrial hub.
In order to realize the full potential of this important regional waterway, the Egyptian government has recently begun construction of this second Suez Canal that will run parallel to the original canal. The government also will deepen and widen the existing canal to accommodate super-sized vessels. The Suez Canal Authority expects the new canal to double the number of ships passing through the canal daily, which is currently around 50 ships by 2023, and to generate an estimated $12-13 billion of increased revenue over the same period. As a result, the expanded canal will enhance Egypt’s global visibility and its economic standing worldwide.
The works are expected to be 72 km (45 mi) long, this will involve 35 km (22 mi) of dry digging, and 37 km (23 mi) of “expansion and deep digging”, whereas the whole canal is 164 kilometers (102 mi) long. Six new tunnels for cars and trains are also planned to end the isolation of the Sinai Peninsula, connecting it better to the Egyptian heartland. As of 2015, there was only a single tunnel under the Canal, the Ahmed Hamdi Tunnel that connects Suez with the Sinai.
The original Suez Canal first opened for navigation in the 19th century and has survived Egyptian government transitions, two World Wars, and regional instability by remaining an essential part of world trade networks. When determining how to raise the capital to finance the Second Suez Canal project, Egypt unconventionally turned to its people for the support and issued bonds. NBC News reported that individuals, as opposed to institutions, made up about 82 percent of the investments in the canal. In just one week the government raised an unprecedented $8.5 billion dollars.
The overwhelming support of both of these projects signifies the belief of the Egyptian people in their country and confidence that the New Suez Canal and the transformed urban areas along the Canal will bolster the country’s economic future. The improved fiscal health and job growth will go a long way to stabilize the economy. However, these are not the only notable projects Egypt has undertaken. In March 2015, Egypt will host a major economic summit aimed at encouraging international corporations to invest in the growing economy.
Minister of Investment Ashraf Salman and Minister for International Cooperation Naglaa Al-Ahwany are expected to unveil at the summit $10-12 billion of investment opportunities for 20 projects in a number of different sectors.
It is hard to ignore the growth and development occurring in Egypt that will, in turn, lead to restoring economic health to the country. It is clear that both for the citizens of Egypt and for the world, the Suez Canal Development Project and the Canal expansion have sparked renewed optimism in Egypt. The world should take notice of the monumental investment the Egyptian people have made in their own country and to view Egypt as a promising investment destination for the future.
The chairman of the Suez Canal authority, Vice-Admiral Mohab Mamish, announced that the revenues from the Suez Canal would jump from 5 billion dollars to 12.5 billion dollars annually.
The expansion of the canal and the tunnels are expected to cost around 60 billion Egyptian pounds (US$8.4 billion). 30 billion Egyptian pounds will be for digging the new canal and the other 30 billion will be for the 6 new tunnels.
President el-Sisi refused to allow foreign investors to invest in the project, but rather he urged Egyptians to participate in funding the project.
After President el-Sisi announced the project, Egypt’s stocks briefly rose to the highest level in the past six years, but dropped again sharply in the course of September.
During a state visit to Russia, President Abdel Fattah el Sisi said that he had agreed with his Russian counterpart President Vladimir Putin to establish a Russian industrial zone as part of the new project. When Egyptian President Abdel Fattah el-Sissi announces the “new” Suez Canal is open for business on August 6.
It’s arguably the most strategic waterway in the world. One that affects most lives on the planet. The Suez Canal may cut Africa off from Asia but it’s a vital lifeline connecting the East and West.
Now Egypt’s President Abdel Fatah el-Sisi hopes its facelift will breathe new life into Egypt’s economy.
Everything about this project is ambitious. The funds needed for the new 70 kilometers of canal was raised within eight days. Only Egyptian citizens could invest in the project.
The President gave responsibility of completing the task to Vice Admiral Mohab Mameesh of the Suez Canal Authority. After consulting experts he concluded it would take five years to complete, but that wasn’t good enough.
“It would take five years, but we pushed and we made a pressure at the time and it will arrive in three years,” Mameesh said. “But when (President el-Sisi) told me in one year, I said yes and changed all the plans.”
Since the project began 10 months ago, 41,000 people have been working around the clock. They’ll move a total of half a trillion cubic meters of earth, equivalent to moving 200 Great Pyramids.