Ship Ever Given is seen after it was fully floated in Suez Canal, Egypt. Reuters
The World Bank’s Board of Executive Directors approved a $400 million development financing agreement to enhance the performance of the logistics and transportation sectors in Egypt and to support the shift towards low-carbon transportation along the Alexandria-the 6th of October-Greater Cairo Area (GCA) railway corridor.
Egypt’s rail system is one of the most extensive in Africa, with a generally heavier focus on its passenger services, and three freight trains per direction per day in the Greater Cairo Area with the rest dedicated to passenger trains.
The Cairo Alexandria Trade Logistics Development Project will implement a railway bypass to the congested Greater Cairo Area.
The bypass will provide freight trains between the Alexandria Sea Port and the newly constructed 6th of October Dry Port, with an alternative route to the west of Greater Cairo.
The operational bypass will also allow 15 container trains per day by 2030, and as demand increases, 50 trains by 2060 to this dry port.
Additional freight trains will flow between the Alexandria Port, Upper Egypt, and the Red Sea.
The transportation sector is the second-largest contributor to Egypt’s greenhouse gas (GHG) emissions after energy-contributing approximately 19 per cent. Transporting containers and other freight by train has a lower carbon footprint than by road. The Bank estimates the project will reduce greenhouse gas emissions by 965,000 tonnes over 30 years.
“Reforming the transportation and logistics sectors is vital to Egypt’s competitiveness and economic development,” said Lieutenant General Kamel El Wazir, Egypt’s Minister of Transportation. “This new project introduces several improvements in those vital sectors. The improvements are aligned with Egypt’s pressing development priorities, which include decarbonization, trade facilitation, private sector participation, and gender balance in the workplace.”
“Increasing the number of containers moved by rail from zero to 184,000 per year is one of the project’s key objectives. This flow of containers is primarily between the Alexandria Sea Port and the 6th of October Dry Port, both privately operated and railway oriented.”
The project will support Egypt’s integration into global value chains and its efforts to become a regional trading hub. This project will significantly contribute to Egypt’s 2050 Climate Change plan, given the expected reductions in greenhouse gas emissions. “This operation is part of a wider set of efforts dedicated to offering timely and comprehensive support to Egypt’s economic development and climate change plans,” said Marina Wes, World Bank Country Director for Egypt, Yemen, and Djibouti. “We hope that through supporting more job creation, including for women, a cleaner environment, and providing safer mobility, the operation will contribute towards a brighter and more prosperous future for all Egyptians.”
Meanwhile Egypt weakened its currency on Monday by the most in more than four months, with the Egyptian pound falling by more than 0.10 pounds to the dollar, according to Refinitiv data.
The pound was trading at 19.62 to the dollar at 1337 GMT, down from 19.49 at the open.
Foreign currency has dried up in Egypt over the last six months, forcing banks and importers to scramble to find dollars to pay for imports and putting pressure on the central bank to let its value weaken.
Dollars have disappeared in part because of the higher cost of imported commodities, a drop in Russian and Ukrainian tourists and a flight of dollars from Egyptian treasury markets.
The last time the central bank allowed the currency to weaken so quickly was from May 22 to May 25, when it fell by 0.34 pounds against the dollar in three days.
The pound weakened to a record low on Dec.21, 2016, when it traded at 19.80 pounds per dollar during intraday trade, according to Refinitiv. But in subsequent years it rebounded.
Egypt since March has been negotiating a financial support package from the IMF, which has long been urging it to allow greater exchange rate variability.
Egypt’s net foreign assets (NFAs) fell by 18.06 billion Egyptian pounds ($925 million) in August, resuming a near year-long decline that had paused the month before, central bank data showed.
The central bank has been relying on NFAs, which represent banking system assets owed by non-residents minus liabilities, to help support the currency. They include foreign assets held by the central bank.
NFAs fell to a negative 385.9 billion pounds at the end of August from a negative 367.8 billion pounds a month earlier. In July they rose by 2.27 billion pounds after nine months of decline.
In September 2021, before the decline began, NFAs stood at a positive 248 billion pounds. Russia’s invasion of Ukraine in February sparked further investor unease, unleashing an even bigger flood of outflows.