Skip to content Skip to Search
Skip navigation

Bahri links with Suez as Saudi and Egypt revamp trade alliance

Suez Canal Supplied
Saudi shipping firm Bahri signs a memorandum of understanding with Egypt’s Suez Canal Authority
  • Saudi-Egypt joint venture to transport cargo, chemicals and oil
  • Kingdom seeking return for economic support 
  • Egypt’s non-oil economy remained in downturn in February

Saudi shipping giant Bahri has signed a memorandum of understanding with Egypt’s Suez Canal Authority to set up a joint venture to transport general and bulk cargo, chemicals and oil.

Bahri, also known as The National Shipping Company, and the Authority, which manages and operates one of the world’s most heavily used shipping lanes, aim to establish an Egyptian joint-stock company which will own, lease, charter and operate vessels.

The MOU, which is non-binding, comes as experts say trade between the two countries is evolving into a more commercially driven relationship.

Bilateral trade between Saudi Arabia and Egypt surged last year. Trade between the two countries reached $9.5 billion during the first 11 months of 2022, up by over 19 percent compared to $7.9 billion in the previous year. 

Egypt exported goods worth $2.2 billion to Saudi Arabia in January-November, up 7.5 percent, according to the Central Agency for Public Mobilisation and Statistics (Capmas) while Egypt’s imports from the kingdom rose by 23 percent to $7.3 billion.

In addition, the Gulf kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), set up the Saudi Egyptian Investment Company (SEIC) as a vehicle to direct flows.

Michael Bessey, GCC regional representative for global public affairs consulting firm ASG, believes the bilateral relationship is evolving.

Saudi Arabia is seeking more substantial return for its economic support and the kingdom is unlikely to offer further “blank cheques” without a commitment from Egypt to implement reforms, he says.

Last March Saudi Arabia deposited $5 billion in Egypt’s central bank as the Egyptian economy faced pressure as a result of the war in Ukraine.

In total, Gulf states deposited a total of at least $13 billion in 2022, bringing their total deposits to $28 billion, according to central bank and finance ministry data.

Boat, Transportation, VehicleReuters/Mohamed Abd El Ghany
Suez Canal transit fees are expected to play a significant role in Egypt’s economic recovery. Picture: Reuters/Mohamed Abd El Ghany

“I do think the Saudis will increasingly attach more strings to any aid given to Egypt and move from making direct deposits to support the Egyptian economy to a more commercially driven approach, led by PIF, of investing in select Egyptian assets,” Bessey said.

He pointed to Egypt’s plans to privatise up to 32 state-owned companies over the next year as opportunities for Saudi investments, adding that assets could be picked up at lower prices.

When PIF set up SEIC in August, it said it would invest in priority sectors including but not limited to, infrastructure, real estate development, healthcare, financial services, food and agriculture, manufacturing and pharmaceuticals. 

Yazeed Alhumied, deputy governor and head of Mena Investments at PIF, said at the time: “SEIC will capitalise on lucrative investment opportunities within a number of promising Egyptian economic sectors, which will also support the expansion efforts of Saudi businesses and other PIF portfolio companies.”

In December Saudi Arabia also announced the formation of a Saudi-Egyptian Business Council. At the time, Ahmed Samir, Egypt’s trade and industry minister, said Saudi Arabia ranked second in the list of countries investing in Egypt with total investments of $6.1 billion in more than 6,000 projects.

In June a joint Saudi-Egyptian communique said Saudi Arabia intended to invest $30 billion in Egypt. The announcement came after a visit by Crown Prince Mohammed bin Salman to Cairo while companies from both countries signed deals worth $7.7 billion.

But foreign investment outside the oil and gas sector has been described as paltry, leaving receipts from remittances, Suez Canal transit fees and tourism to play crucial roles.

And talks between Saudi Arabia and Egypt regarding the sale of the United Bank in Cairo reportedly stalled last month following disagreements over how to value the multimillion-dollar deal.

The Bahri JV announcement comes at a time of economic stress for Egypt. After three devaluations in 2022, the Central Bank of Egypt floated the pound in January to meet a condition for a $3 billion loan from the International Monetary Fund, the country’s fourth bailout since 2016. 

Egypt’s non-oil economy remained in a steep downturn in February, according to the latest S&P Global purchasing managers’ index (PMI) survey, as demand continued to be hit by high inflation and supply chain pressures. 

As a result, job numbers fell at the fastest rate in nine months last month and business confidence was at a near-record low. On the plus side, inflationary pressures softened from January’s recent highs.

David Owen, senior economist at S&P Global Market Intelligence, said: “Continued demand weakness, persistent inflation and ongoing import controls to restrict FX flows mean that companies are likely to face a prolonged downturn in 2023.”

Latest articles

WTO director general Ngozi Okonjo-Iweala said Iraq and Lebanon both want to resume talks and the organisation will 'try to go as fast as possible'

Iraq and Lebanon face long wait to join WTO

Iraq and Lebanon have indicated a desire to resume talks aimed at joining the World Trade Organization (WTO), but history suggests the two could be in for a long wait. To join the WTO, a government has to bring its economic and trade policies into line with the organisation’s rules and principles and negotiate with […]

PIF enlists global banks for second debt market issue

Saudi Arabia’s Public Investment Fund (PIF) has hired banks for its upcoming Shariah-compliant dollar bond, marking its second venture into the bond market this year. The sovereign fund, which manages over $700 billion in assets, has mandated Goldman Sachs, HSBC and Standard Chartered as joint global coordinators, Reuters reported, citing a PIF document. Investor meetings […]

Gulf bidders want to develop land for tourist resorts in the Ras Ghamila area of Sharm El-Sheikh, Egypt

Saudi and Qatari funds bid for new Egyptian project

Consortiums backed by Saudi Arabia’s Public Investment Fund and Qatar Investment Authority are among several Gulf bidders seeking to develop land in the Ras Ghamila area in Sharm El-Sheikh, Eygpt, a local Egyptian media outlet reported. The winning consortium will be announced within two months after evaluating the submitted offers, Daily News Egypt reported, citing […]

A cafe in Dubai Mall. Consumers' tastes are changing, according to food producer Agthia Video length: 05:02

Made in UAE: consumers turn to local food brands

UAE consumers are increasingly turning to locally produced products, according to the head of a multi-billion-dirham food and beverage conglomerate.  Consumption patterns in the region are changing rapidly, prioritising healthy lifestyles, time-saving and convenience while maintaining authentic tastes.  “If you can produce something locally, give them good value for money, they are much more open […]