“We are changing the map of the world,” say the billboards that have sprung up in Cairo’s streets celebrating the expansion of the Suez Canal — an $8.2 billion engineering project to allow two-way traffic through the strategic waterway, a cherished symbol of Egyptian sovereignty.
Visitors arriving at the airport now get a stamp on their passports with an image of two ships sailing past each other and the legend “Egypt’s gift to the world”.
As the country gears up for the canal’s inauguration on Thursday, with dignitaries arriving from all over the world, the official message is that revitalisation of the canal will help jump-start a moribund economy.
“[Global] trade is increasing and sizes of ships are increasing, if I can’t handle this and turn it into revenue for the Egyptian treasury, alternative routes will emerge to benefit from this growth,” Mohab Mamish, head of the Suez Canal Authority, said in a recent television interview.
The figures involved in the expansion are certainly big: some $8.6bn in investment certificates were sold to the public in only eight days last year to fund it. Completed in just 12 months, the project involved hiring 80 per cent of the world’s dredging capacity to dig a new, parallel 34-kilometre canal, and to deepen and widen parts of the old channel.
This should, officials argue, attract more shipping by enabling vessels travelling in both directions to sail through at all times. It will also reduce waiting time from the current 11 hours to just three hours.
The outcome, they say, will be a doubling of the number of ships using the canal to a daily average of 97 by 2023 and a 250 per cent increase in its annual revenue to more than $13bn. The expansion is also conceived as the first step towards attracting billions in investment in a grand plan to convert the region surrounding the waterway into a transport and industrial hub with the aim of creating millions of jobs.
“The main economic benefit will be from the industrial zone to be built around the channel, but in the short term, there are intangible benefits such as the feel good factor which comes from completing such a large project within a year,” said Angus Blair, president of the Signet Institute, a Cairo-based economic think-tank.
Still, many analysts remain wary about predictions of a vast expansion in shipping traffic. “Canal traffic is driven mostly, not by the size of the channel, but by factors such as global trade, the oil price and the health of the Chinese economy,” said Issandr al-Amrani, head of the North Africa programme at the International Crisis Group.
Capital Economics, the London-based consultancy, this week said government projections of future canal revenue were based on “implausibly optimistic assumptions about world trade” and that while there were likely to be some benefits to the economy, these would be “smaller than the authorities seem to be hoping for”.
“By our estimates, to achieve its Suez Canal traffic goals, global trade volumes would need to rise by about 9 per cent year on year. This is higher than the 3 per cent year-on-year average seen over the past four years,” said the consultancy.
Suez already gets most container traffic between Europe and Asia, and the International Monetary Fund predicts that economic growth will remain in the region of 4 per cent in the coming years.
While Peter Hinchliffe, secretary-general of the International Chamber of Shipping in London, praised the expansion implemented in record time as a “remarkable achievement” which will make Suez “much more efficient”, he was more circumspect about expectations that traffic will double by 2023. “This is an incredibly difficult thing to predict,” he said. “The fact that large ships can go through the canal and that it is more efficient will make it probable that more ships will use it.”
For Egyptians, good news on the economic front has been in short supply, despite efforts by Abdel Fattah al-Sisi, the president and former army chief who ousted his elected Islamist predecessor in 2013, to instil hopes of an economic take-off.
In March, a high-profile international business conference hosted by Egypt and intended to mark its return as an investment destination after the 2011 revolution, raised expectations of a revival led by foreign investors.
But although billions of dollars worth of foreign investments in energy and power generation projects were unveiled, sectors which provide employment have yet to take off. Tourism, a major employer and foreign currency earner, remains in the doldrums.
Much-hyped projects to build 1m new housing units in five years and to construct a new capital to take some of the load off Cairo appear to have stalled. To millions of struggling Egyptians, there has been no perceptible change in their lives.
It is unclear if the revitalisation of the canal can live up to their hopes. “The economy is improving in headline numbers, but the recovery is from a low base and it needs to move faster to create enough jobs and keep up with population growth,” said Signet Institute’s Mr Blair.
Source: The Financial Times
