On 6 August 2015, the New Suez Canal Axis will be opened. On the day of its inauguration, it sends eight important messages to the local and foreign financial community, according to Mohamed Abdel Aal, Vice President of the Arab Sudanese Bank and Suez Canal Bank Board Member.
Abdel Aal told Daily News Egypt that the new Suez Canal Axis Development project is not just another canal dug to be another waterway to face current or potential future competition from other canals. It is, rather, a huge project for development, economic revival, and social renaissance, making the Suez Canal Axis an international trade centre.
Abdel Aal said the second message is that the new Suez Canal carries conclusive evidence that Egypt has the ability to implement major projects, and in record time.
He explained that the people who collected nearly $8bn in only eight days to finance the project, as well as complete it in one year, are able to make solutions to eliminate the problems of traffic, security, unemployment, as well as sanitation, health, education, and bureaucracy.
The third message, according to Abdel Aal, is that the annual fiscal and financial income of the new canal will increase from an average of $5.3m to an average of $13bn over the upcoming years. This is due to an increase in the capacity of the number of ships that pass through the canal from 49 ships per day to 97, meaning that there is a guaranteed increase of foreign currency.
He explained that the increase in foreign currency from the canal, along with other sources, will help to achieve a balance in Egypt’s foreign currency requirements. This will, in turn, bridge the budget deficit gap, and stabilise the balance of payments. It will also help Egypt repay external debts and their interests, as well as improve the Egyptian economy’s image abroad, which could improve its credit rating. This will, in turn, stimulate the flow of foreign direct investment (FDI), and support Egypt’s foreign currency reserves.
As a fourth message the new canal is sending out to the world, Abdel Aal added that increasing the sources of foreign currency and supporting the foreign currency reserves will increase the offer of the foreign currency in the banking system. This will directly lead to a reduction of the pressure on the Egyptian pound, and give the Central Bank of Egypt (CBE) the tools and opportunities to adopt flexible policies in terms of price exchange.
The fifth message covers the operation of the new Suez Canal, revealing the maps, nature, and types of the new projects to be established in the Suez Canal Axis. Those projects are expected to include logistics projects, which can provide nearly 1.5 million jobs.
Abdel Aal added that the sixth message covers the Suez Canal Axis projects after the completion of the three phases, and which is expected to make a profit of nearly $300bn by 2030. This means that within 15 years, there will be enough income to gradually support and finance comprehensive economic and social development.
The seventh message, according to Abdel Aal, is that the Suez Canal project and the development of its Axis do not aim to achieve Egypt’s economic interest alone. The benefits will extend to the whole world. The canal is set to become one of the shortest, fastest, and cheapest waterways, compared to any existing or potential alternative.
The eighth message from the canal to the Egyptian banking sector, businessmen, and Egyptian investors has one meaning: the Suez Canal Axis Development project is approaching, and they all have to cooperate with the state in the preparation of the projects’ maps.
He added that the will of Egyptian banks and investors to play a financial role will be the main factor in motivating and attracting foreign banks, international financial institutions, and foreign direct investment. They will be encouraged to come and engage seriously and effectively in the financing and establishment of such huge projects.