Patrick Werr: Egyptian government’s Golden Triangle could be the solution to its own bureaucracy

Egypt's Golden Triangle project is an experiment in creating an economic zone free of the government's usual red tape.

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What does a government do when its own bureaucracy is so mired in red tape that it can get almost nothing accomplished?

Perhaps it should gently shove the civil servants aside and start over from scratch.

This seems to be what Egypt’s government is planning with its Golden Triangle project, which will place about 9,200 square kilometres of land in the country’s impoverished south in a special economic zone largely out of the tentacles of public servants. This is particularly important if Egypt wants to develop its gold mining industry, which many geologists are convinced could earn billions of dollars if only the right framework were put in place.

The Golden Triangle will stretch from the urban outskirts of Qena and Sohag along the Nile, across the mountains to the Red Sea ports of Safaga, Hamrawein and Abu Tartour. The government passed a law on January 29 creating a special authority to develop the area akin to that of the Suez Canal Economic Zone that was created in 2015.

Under a master plan drawn up in 2015 and 2016 by the Italian consultancy D’Appolonia, the Golden Triangle Authority will invite private companies to set up projects in agriculture, tourism, industry and, above all, mining. Its chairman, yet to be chosen, will report directly to the prime minister, bypassing the rest of the government. A detailed plan has been drawn up and approved and is awaiting implementation once the chairman is appointed.

The 30-year plan, divided into five-year phases, envisages US$18 billion in investments, with the first phase accounting for $5.5bn, three-quarters of it private. Infrastructure and utilities projects have been charted out, including a logistics hub to be built behind Safaga Port. The first phase is scheduled to begin by year-end and will involve a series of pilot projects to be expanded over time.

In agriculture, the plan focuses on using groundwater to reclaim a minimum of 36,000 feddans (15,100 hectares) in arid wadis, including some east of Qena and others just west of Qusair on the Red Sea. It includes a project to reform the irrigation system already in place on Nile farmland, hopefully freeing up water for more reclamation. Even more will be reclaimed should enough groundwater be found.

A number of industrial areas are planned as well, some pot­entially taking advantage of the desert sunlight for solar power. In tourism, an initial five projects are planned, including two seaside projects and the renovation of two historic hotels.

But the pillar of the Golden Triangle project, accounting for 60 to 65 per cent of expected investment, is mining, not just for gold, but also for other metals, as well as for phosphate, limestone, ornamental stone and other geological goodies.

The Golden Triangle Authority will be independent of the Egyptian Mineral Resources Authority (Emra) and will issue its own set of terms in a new mining offering planned for 2018. This lets it get around the tortuous conditions laid down by Emra in a mining concessions bid round that opened last month. A number of investors have said these were so onerous that few private companies are likely to submit bids.

Members of the Golden Triangle technical committee promise that its own terms will be far and away more attractive than Emra’s.

“The package that will be used by the authority will be in line with international standards and best practices and even more competitive with those found globally in order to attract the needed investments in the region, which is the main objective of the whole project,” one member, who requested anonymity, wrote in an email.

He expects the state to begin earning significant revenue from mining in the Golden Triangle in six or seven years.

According to its master plan, the Golden Triangle project will attract investment of $19bn, 86 per cent of it private, over the course of 30 years, creating more than 350,000 jobs. It projects the area’s current population of 900,000 to rise to 2.1 million by 2045, with 1.75 million of those people living in nine new urban areas.

Also planned is a new local capital, one-third of which is to be built in the first five years that would be a hub for the mining industry throughout Egypt and perhaps also for East Africa.

If the Golden Triangle succeeds, similar models will be replicated in other parts of Egypt, member of the committee say.

Any projection over 15 years should probably be taken with a large grain of salt and I’m sceptical of the practicality of building new desert cities. But if the Golden Triangle project is what the government needs to get around its own obstructionist bureaucracy, it’s hard not to support it.

Patrick Werr has worked as a financial writer in Egypt for 26 years

business@thenational.ae

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