Saudi Crown Prince Mohammed bin Salman announced a substantial $5 billion investment in Egypt during a meeting with Egyptian Prime Minister Mostafa Madbouly in Riyadh on Tuesday. The pledge, made through the Public Investment Fund (PIF), highlights the strengthening economic ties between Saudi Arabia and Egypt, two of the largest and most influential nations in the Arab world. This move comes as part of Saudi Arabia’s broader strategy to enhance its regional partnerships and diversify its economy under the ambitious Vision 2030 plan.

The investment announcement was well-received by the Egyptian government, with Prime Minister Madbouly conveying greetings from Egyptian President Abdel Fattah Al-Sisi to King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman. Madbouly praised the solid relationship between Cairo and Riyadh, emphasizing the ongoing efforts to finalize agreements aimed at protecting joint investments, which will significantly boost economic cooperation between the two countries.

Strengthening Economic Partnerships

“We are currently working on finalizing the agreement on the protection of joint investments, which will contribute to increasing investments between the two countries,” Prime Minister Madbouly said during the meeting. “A significant number of Egyptian investment companies operate in Saudi Arabia, in addition to Saudi investments in Egypt.”

Over the years, the economic relationship between Saudi Arabia and Egypt has flourished, with both countries making significant strides in various sectors. Saudi investments in Egypt span multiple industries, including real estate, tourism, and energy. Conversely, Egyptian companies have found fertile ground in Saudi Arabia, capitalizing on the Kingdom’s large consumer base and expanding infrastructure projects.

Madbouly praised Saudi Arabia’s progress under Vision 2030, describing the development as unprecedented. Launched in 2016, Vision 2030 is a transformative economic and social reform plan aimed at reducing Saudi Arabia’s dependence on oil, diversifying its economy, and developing public service sectors such as health, education, infrastructure, and tourism. The plan includes significant investments in technology and renewable energy, positioning Saudi Arabia as a global leader in the green energy revolution.

Vision 2030 and Egypt-Saudi Collaboration

Prime Minister Madbouly acknowledged Crown Prince Mohammed bin Salman’s central role in driving these developments, highlighting the Crown Prince’s vision to strengthen the Arab world’s economic and political stability. Madbouly emphasized the importance of regional cooperation, particularly in leveraging the African Continental Free Trade Area (AfCFTA) to expand market access for both Egyptian and Saudi products. The AfCFTA, the world’s largest free trade area by the number of participating countries, provides an excellent opportunity for Egypt and Saudi Arabia to establish a dominant presence in African markets.

“Egyptian products have already established a successful presence in African markets,” Madbouly noted. “We believe that through collaboration and understanding between Egypt and Saudi Arabia, and with the support of the Egyptian-Saudi Business Council, a strategic objective can be achieved: establishing a significant presence in the African market within the next three years across specific sectors, with a clear focus on priorities.”

The automotive sector was one of the key areas of discussion during the meeting. Given Saudi Arabia’s significant progress in automotive manufacturing, especially with its NEOM project and efforts to attract electric vehicle (EV) manufacturers, Egypt is keen to collaborate in this field. Egypt has also introduced incentives to attract automotive manufacturers, and the two countries’ cooperation could lead to joint ventures aimed at producing vehicles for both the Middle East and African markets.

Bilateral Discussions and Future Cooperation

During Madbouly’s visit to Riyadh, he met with several key Saudi ministers, including the Minister of Industry and Mineral Resources, Bandar bin Ibrahim Alkhorayef, to explore avenues for joint cooperation. The two officials discussed initiatives to foster industrial integration and expand the trade exchange base between the two countries.

“Egypt was one of the most significant countries we engaged with following the launch of Saudi Arabia’s industrial strategy in 2023,” said Alkhorayef. He emphasized the importance of industrial integration between the two nations, which he believes will serve as a catalyst for sustainable cooperation and growth.

The Prime Minister assured Saudi investors that Egypt is committed to resolving any remaining issues they face. He acknowledged that while progress had been made in 2024, additional steps are necessary to eliminate obstacles to Saudi investments in Egypt. Madbouly pledged that these concerns would be addressed within the next two to three months.

Saudi investors, particularly those involved in real estate and infrastructure, have faced some challenges in Egypt, including bureaucratic delays and regulatory hurdles. The Egyptian government has taken steps to streamline the investment process, introducing new reforms and incentives to attract foreign capital. These reforms are expected to bolster Saudi investments in the country, particularly in sectors like energy, construction, and tourism.

Renewable Energy and Infrastructure Cooperation

Renewable energy was another key topic during the discussions. Both countries are heavily investing in renewable energy projects as part of their long-term strategies. Crown Prince Mohammed bin Salman emphasized the importance of the power grid connection between Egypt and Saudi Arabia, a project that aims to create an interconnected electricity grid between the two nations. This initiative will not only help stabilize electricity supplies in both countries but also facilitate the exchange of renewable energy, particularly solar power, between them.

Saudi Arabia has made significant strides in renewable energy development, particularly in solar and wind energy. Its NEOM project, a $500 billion smart city initiative powered entirely by renewable energy, is a testament to the Kingdom’s commitment to sustainability. Egypt, too, is advancing in this area, with projects like the Benban Solar Park, one of the largest solar power installations in the world. The collaboration between the two nations in renewable energy could have far-reaching implications for the region’s energy security and sustainability goals.

Regional Cooperation and Geopolitical Alignment

Beyond economic cooperation, the Crown Prince also highlighted the shared geopolitical interests between Saudi Arabia and Egypt. Both countries play pivotal roles in addressing regional crises, including the conflict in Gaza, the war in Yemen, and security concerns in the Red Sea. The two nations have historically worked closely to promote stability in the region, often coordinating their diplomatic efforts in global forums like the United Nations and the Arab League.

The Crown Prince praised Egypt’s efforts in reaching a ceasefire in Gaza and affirmed Saudi Arabia’s support for the initiative. He also expressed his gratitude for the contributions of Egyptian workers to Saudi Arabia’s development, particularly in infrastructure projects associated with Vision 2030. Currently, millions of Egyptians live and work in Saudi Arabia, making up a significant portion of the expatriate workforce that contributes to the Kingdom’s economic growth.

The Role of the Public Investment Fund (PIF)

The $5 billion investment pledge made by the Crown Prince is part of Saudi Arabia’s broader strategy to expand the global footprint of its Public Investment Fund (PIF), one of the largest sovereign wealth funds in the world. The PIF has been instrumental in financing Saudi Arabia’s Vision 2030 initiatives and has made significant investments in sectors like technology, energy, and entertainment.

With assets exceeding $700 billion, the PIF is not only focused on domestic projects but is also seeking international opportunities to diversify its portfolio. In Egypt, the PIF’s investments are expected to focus on infrastructure, renewable energy, and tourism. These sectors align with both Vision 2030 and Egypt’s development goals, creating synergies that could lead to long-term economic benefits for both nations.

Conclusion

The $5 billion investment by Saudi Arabia’s PIF is a significant milestone in the deepening relationship between Saudi Arabia and Egypt. It reflects the growing economic and political cooperation between two of the Arab world’s most influential nations. As both countries continue to pursue ambitious development agendas—Saudi Arabia through Vision 2030 and Egypt through its Vision 2030 strategy—this partnership is expected to yield mutual benefits, not just in terms of economic growth but also in enhancing regional stability and addressing global challenges like renewable energy and climate change.

With joint investments, industrial integration, and collaborative efforts in sectors like energy, automotive, and technology, Egypt and Saudi Arabia are poised to strengthen their roles as regional powerhouses in the coming years. The meeting between Crown Prince Mohammed bin Salman and Prime Minister Madbouly is just the latest example of the enduring and strategic partnership between these two key nations.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

17th September, 2024