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Egypt is on the cusp of launch­ing a suc­ces­sion of megapro­jects at the heart of the coun­try’s make-or-break eco­nomic strat­egy, which was launched last week with the “$8.6 bil­lion” (R110 bil­lion) ex­pan­sion of the Suez Canal. No ex­pense was spared on open­ing the highly sym­bolic pro­ject and mar­ket­ing it as a wa­ter­shed in Egyp­tian eco­nomic history.

Thurs­day, Au­gust 6, was de­clared a public hol­i­day and an elab­o­rate cer­e­mony in­volved fly­overs by mil­i­tary jets and he­li­copters, a mas­sive choir of chil­dren wav­ing Egyp­tian flags, fire­works and a per­for­mance of Verdi’s Aida opera on the bank of the canal. Lo­cal news­pa­pers re­ported on lit­tle else all week. The canal pro­ject ( is the corner­stone of the eco­nomic plans of the gov­ern­ment of Ab­del Fat­tah al-Sisi, who was elected pres­i­dent last year af­ter lead­ing a mil­i­tary coup against the elected gov­ern­ment of Mo­hammed Morsi, whose Mus­lim Brother­hood briefly emerged af­ter Egypt’s long­time ruler, Hosni Mubarak, was top­pled in 2011.

De­spite now be­ing a civil­ian pres­i­dent, Sisi at­tended the Suez launch in full mil­i­tary re­galia.

Cairo was decked out in na­tion­al­ist pageantry, with count­less build­ings – from malls to mosques – sport­ing huge Egyp­tian flags and ban­ners fea­tur­ing Sisi and the canal.

Se­cu­rity at the launch was so tight that a bus­load of in­vited in­ter­na­tional media, in­clud­ing City Press, was de­nied ac­cess at the last minute and sat it out at a mil­i­tary road­block.

The ex­pan­sion had ac­tu­ally been an­nounced by de­posed pres­i­dent Morsi, but Sisi made com­plet­ing the ex­pan­sion within one year in­stead of the planned three his first ma­jor eco­nomic goal af­ter be­ing elected.

Although the widen­ing of the canal was in­deed fin­ished in a year, this is re­ally only half of the orig­i­nal New Suez Canal pro­ject.

Half the $8.6 bil­lion bud­get is still un­used and is ear­marked for a set of six tun­nels for road and rail traf­fic that will go un­der­neath the canal – a far more am­bi­tious en­gi­neer­ing en­deav­our.

Of­fi­cially, the ex­panded canal will change Egypt’s eco­nomic for­tunes all by it­self.

Gov­ern­ment pro­jec­tions are that ship traf­fic through the canal will dou­ble, while rev­enue will shoot up from al­most $5.5 bil­lion last year to $13.2 bil­lion in 2023.

These am­bi­tious num­bers were re­peated with­out ex­pla­na­tion at al­most ev­ery men­tion of the canal in the lo­cal press.

The canal is then meant to form the ba­sis of enor­mous new in­dus­trial zones and lo­gis­tics hubs, plans that have been re­vived from the 1970s.

The claims about dou­bling the amount of ships per year, how­ever, use 2014 as a base, while the canal had ac­tu­ally far sur­passed last year’s traf­fic of 17 148 ships be­fore the eco­nomic cri­sis, tolling a record 21 415 ships in 2008.

That means the canal was not even op­er­at­ing at full ca­pac­ity be­fore the up­grade.

The pre­dicted traf­fic and rev­enue seem to as­sume full daily use of about 97 ships a day, which is un­likely, given the state of the global econ­omy.

The state-owned Suez Canal Au­thor­ity has res­o­lutely held on to the forecast in­crease of Suez rev­enue.

The rev­enue mat­ters be­cause the fund­ing wasn’t cheap. In a costly show of in­de­pen­dence, Egypt re­fused to use for­eign fund­ing and in­stead mo­bilised an as­ton­ish­ing amount of do­mes­tic cap­i­tal in a week-long fire sale of bonds last year.

The five-year, tax-free Suez bonds pay 12% in­ter­est a year, mean­ing to­tal re­pay­ments to in­vestors of about $12.8 bil­lion, a fig­ure com­pa­ra­ble to the cost of the Medupi power sta­tion in South Africa.

The tax-free Suez bonds were only avail­able to Egyp­tian in­di­vid­u­als and com­pa­nies, with about 82% of the fi­nanc­ing com­ing from house­holds, in essence mak­ing the canal the na­tional piggy bank.

Com­men­ta­tors have warned that this bond blitz was a one-time weapon that Egypt can­not pos­si­bly use again for the sim­ple rea­son that the Suez Canal has al­ready sucked up much of the coun­try’s liq­uid sav­ings.

The Suez bonds make up 3% of the Egyp­tian bank­ing sec­tor’s as­sets, ac­cord­ing to anal­y­sis by Ez­zat Molouk Ke­nawy, an economist at Egypt’s Kafr El-Sheikh Univer­sity.

The of­fi­cial slo­gan for the open­ing was “Egypt’s gift to the world”, but not ev­ery­one nec­es­sar­ily wants the canal, and the planned in­dus­trial zone next to it, to suc­ceed. The planned lo­gis­tics hubs will di­rectly com­pete with the United Arab Emi­rate’s Dubai, while the other ma­jor global trade routes through the Panama Canal and around the Cape of Good Hope are vy­ing for the same traf­fic Egypt is chas­ing.

The use of ever larger ships, as well as Suez in­creas­ing fees and in­sur­ance premi­ums, was mak­ing the far longer route around the Cape of Good Hope com­pet­i­tive again, said Mark Gregg-Mac­don­ald, Transnet’s group ex­ec­u­tive: plan­ning & sus­tain­abil­ity.

That did not re­ally mean much for South Africa be­cause this traf­fic did not stop here, he said. Van Rens­burg’s trip was spon­sored by

the Suez Canal Au­thor­ity

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