Egypt’s infrastructure sector spent much of 2024 hampered by continued headwinds — but the end of the tunnel may now be in sight. After facing down a couple of tough years, the infrastructure sector was handed a mixed bag in 2024 as it navigated continued stumbling blocks, high-impact government decisions, and significant supply chain shocks.

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The USD 35 bn Ras El Hekma agreement kicked the year off in earnest: The Madbouly government in February inked a USD 35 bn agreement with ADQ giving the Abu Dhabi wealth fund and longtime investor in Egypt the development rights to the North Coast’s Ras El Hekma. Described by Prime Minister Moustafa Madbouly as the “largest direct investment agreement in Egypt,” the 170-mn sqm stretch of coastal land will see a variety of tourist, residential, and commercial projects developed — all overseen by ADQ-tapped master developer Modon Holding.

The EGP float galvanized investors in 1Q: A report by global real estate consultancy firm JLL in 1Q found that the floatation of the EGP had ushered in greater price transparency, curtailed speculation, and revitalized investor confidence in Egypt’s real estate sector. The first quarter also saw the completion of over 7k residential units and a sharp jump in real estate prices y-o-y in satellite cities, with residential sale prices rising 83% y-o-y in Sixth of October and 95% y-o-y in New Cairo.

But the state’s pullback on public infrastructure spending dampened sentiment: In February, the cabinet greenlit a 15% cut in allocated investment funds for FY 2023-24 in an effort to dampen public spending and external debt. The move was expected to save EGP 150-200 bn in expenditures, and left state entities unable to ink contracts or issue tenders for new projects in 1H 2024.

Authorities remained reluctant to fund infrastructure spending throughout the year: The Planning Ministry’s socioeconomic development plan for FY 2024-25 capped funding for public investments at EGP 1 tn, at the behest of the International Monetary Fund. Authorities prioritized projects that were already 70% finished and expected to start operating within two years.

Macroeconomic headwinds also presented a significant hurdle, with supply shocks due to shipping disruptions in the Red Sea, energy price hikes, and a jump in financing costs all posing problems.

On the bright side, the PPP map expanded: The government inked 10 public-private partnership (PPP) contracts valued at EGP 20 bn earlier this year, including strategic commodities warehouses, the Tenth of Ramadan dry port project, and solid waste conversion projects, a government source told EnterpriseAM last month.

There are more PPPs in the pipeline, too: The government plans to invite bids for USD 3.2bn worth ofinfrastructure projects under the PPP framework before the year ends. Furthermore, the government is gearing up to offer 11 new projects valued at EGP 62 bn, including power distribution networks, a power transformer station, a wastewater treatment plant, and the second phase of the education PPP program.

Regulatory misalignment adversely impacted the industry: Sector players continued to be hampered by an underdeveloped regulatory framework — encapsulated in the 2018 Public Contracts Act — that only provides clear rules of the road for government contracts. With the sharp decline in state infrastructure spending and a rise in foreign-funded projects, local players saw themselves sidelined as foreign investors turned to foreign companies to develop their projects in order to avoid regulatory ambiguities with Egyptian firms.

But legislation came to the rescue, too: Authorities reinstated the 2008 Building Law, expediting the outdated 15-step process required to obtain a building permit. The government also extended the validity of administrative building permits to five years, up from one. The Housing Ministry also moved to mitigate risk in the sector by fixing notoriously volatile land prices, which previously could change between signing a contract and beginning a project, as well as capping the interest rate on installments for real estate developers at 15%.

Infrastructure diplomacy marched forward: Egyptian firms — both state-owned and private players — continued their international expansion in 2024, delivering on the country’s infrastructure diplomacy strategy. Iraq was a key destination for construction companies, with Talaat Moustafa Group and Ora Developers among the parties moving into Iraq’s fast-growing market. Saudi Arabia also saw significant activity from Egyptian firms, with the Saudi National Housing Company set to offer up to USD 200 bn worth of construction projects to Egyptian firms.

Egyptian companies are also expanding into the rest of Africa: Elsewedy Electric began work on a power plant in Libya and the Zimbabwe-Zambia-Botswana-Namibia power interconnection, while Arab Contractors is set to build three road and infrastructure projects in Libya’s Derna and has signed contracts to build a USD 70 mn road in Uganda. Additionally, Organi Group's real estate arm is collaborating with Libya’s Reconstruction and Development Fund on construction projects in Libya, while the Holding Company for Maritime and Land Transport is negotiating over projects in Djibouti.

Resilient infrastructure is key: With climate change exerting growing pressure across sectors, the need for resilient infrastructure has never been greater, VP of the Asian Infrastructure Investment Bank (AIIB) Ludger Schuknecht emphasized during a virtual meeting with local sector players in September. Schuknecht called for more adaptable infrastructure systems that can withstand shocks like natural disasters, alongside greater transparency in infrastructure governance.

Big wins for transport infrastructure: The government introduced three key legislativereforms to reshape maritime transport in 2024, including updates to the Maritime Trade Law, ship registration fees, and maritime inspection regulations. In its push to build robust port and logistics infrastructure, Egypt launched its new Egypt-Italy roro shipping line connecting Damietta and Trieste. October also saw the inauguration of the country’s latest and largest railway station, built at a cost of EGP 2.5 bn.

Power interconnection projects gain traction: Work began on installing the first transformer at the Egypt-Saudi Arabia power interconnection station in Badr City, with the first phase of the USD 1.8 bn project set to be completed by June 2025. Also, Greece's renewable energy developer Elica Group — the company behind the Egypt-Greece electricity linkup dubbed GREGY — launched two tenders for the project in April.

Your top infrastructure stories for the week:

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  • The Dabaa Nuclear Power Plant is set to see major progress in 2025, with the arrival of the first reactor’s core vessel in July. The second reactor’s core vessel will arrive in January 2026, with plans to expedite the delivery of the third and fourth reactors. (Al Mal)
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