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Egypt sees revenue in Suez Canal corridor project
Straddling one of the world’s great sea routes, the Suez Canal corridor is set to become a bridge connecting Africa with Asia if a grand plan by Egypt’s new government comes to fruition.President Mohamed Mursi’s administration is reviving and expanding a series of projects initiated in the late 1990s under former President Hosni Mubarak to turn the banks of the Suez Canal into a world trading and industrial centre, hoping it will earn billions of dollars and address a growing unemployment crisis.
The plan aims to transform the corridor along the 100-mile length of the canal from an area of mostly flat, empty desert into a major world economic zone.
The waterway, the main thoroughfare for the transport of cargo between Asia and Europe, i s a vital source of revenue for Egypt. But Egyptian planners believe a lack of vision and poor administration have prevented the country from maximising its location at the crossroads of two continents, something they wish to address by expanding transit facilities and slashing red tape for investors.
Goods worth $1.6 trillion a year pass through the canal, or 10 percent of the world’s total shipped goods, said Ashraf Dowidar, a consultant who has been studying the project. “We’re only getting $5.4 billion of this, through the tolls of the ships going through.”
“Ships don’t want to stop to do anything here. So this is the lost opportunity we have. If they can make them stop, at least do maintenance, do repair - a logistics area - then the whole thing will move,” said Dowidar, who until recently worked for the Ministry of Trade and Industry.
The government is targeting annual revenue of $100 billion from the canal in several years’ time, as new projects come on stream and old ones are expanded, he said.
The canal zone was heavily bombed during Egypt’s wars with Israel. Suez, at the canal’s southern end, is now a depressed industrial town that saw some of the most violent protests during the uprising that ousted Mubarak in February 2011.
Egypt began developing an industrial and port complex at the northern end of the canal near Port Said in the late 1990s, and a second at the southern end.
The government will soon create a single authority for the corridor’s development to cut through its own red tape, said Walid Abdelghaffar, a government coordinator for the corridor project. The authority’s chairman will have the rank of deputy prime minister and report directly to President Mursi.
Once established, the authority will quickly start drawing up a master plan to combine all the various elements around the canal under one administrative entity to make it easier for investors and to implement policy without excessive bureaucracy.
“We dream that the whole of Egypt might become a logistics centre and I think the ministers have this vision,” Abdelghaffar said.
The government is also putting the final touches to the first highway connecting the country with Sudan and another highway across the Nile Delta that connects Port Said with Alexandria and beyond to Libya.
The canal, which opened in 1869 to great fanfare and which has twice been closed since World War II due to war between Egypt and Israel, is operated by the Egyptian government through the Suez Canal Authority.
Revenues from the waterway linking the Red Sea with the Mediterranean rose 3.6 percent to $5.2 billion in the financial year ended June 30 and are a key source of foreign currency for Egypt’s economy, along with tourism, oil and gas exports and remittances from Egyptians living abroad.
Mursi, a U.S.-educated engineer, is under pressure to revive the economy, which has been hammered by political turmoil, and tackle domestic problems, including rising unemployment, which triggered the uprising against Mubarak.
Officials say Egypt’s unemployment rate is running at about 13 percent but is double that for recent entrants into the workforce. As well as creating jobs, the government, which is running a budget deficit of 11 percent of GDP, needs to find more revenue sources.
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