Egypt and Saudi Arabia signed an agreement to set up a 60 billion Saudi riyal (about $16m) investment fund including an economic free-zone to develop Egypt’s Sinai region.
The agreement was signed in Egypt’s Abdeen palace in the presence of the country’s president, Abdel Fattah al-Sisi and Saudi’s King Salman during his four-day visit to the North Africa country.
Egypt has struggled to encourage economic growth in the country since the 2011 uprising ushered in political instability.
This has scared off tourists and foreign investors, the key source of foreign currency in the country.
Egyptian local TV said the agreement was to establish “a Saudi-Egyptian investment fund with a capital of 60 billion riyals between the Saudi Public Investment Fund and the entities belonging to it and the Egyptian government.”
A memorandum of understanding was also signed between the Saudi Public Investment Fund and the Egyptian International Cooperation Ministry to set up an economic free-zone in Sinai.
The two countries also signed an agreement to develop a 2250 megawatt electricity plant with a cost of $2.2 billion to set up an agriculture complexes in Sinai and develop a canal to transfer water.
The company will also develop 6 square kilometers of the industrial zone around Egypt’s Suez canal worth $3.3 billion.
The News Daily reports that the investments are part of a change in strategy from Saudi Arabia to focus more on financial support that will also benefit Saudi Arabia with return on investment.
Saudi Arabia, along with other Gulf oil producers, has pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.
Some of the projects announced on Saturday include private sector investments.
Deputy head of the Saudi-Egyptian Business Council last week said Saudi businessmen are investing around $4 billion in projects in Egypt and have already deposited 10 percent of that sum in Egyptian banks.
Egypt is aiming for direct foreign investment of around $8 to $10 billion in 2015/16.