Saudi Arabia is set to invest up to $400m in the Sinai region as part of an agreement signed between Cairo and Riyadh in April 2016, according to a statement from the Egyptian Ministry of Investment and International Cooperation.
The investments will come from the Saudi Fund for Development (SFD), say sources close to the deal, who have told MEED that total SFD investments in Sinai have reached $900m since 2016.
It is understood that the fund will be used to support development projects being managed by the state-owned National Company for Sinai Investment (NCSI).
In late 2016, MEED reported that NCSI was planning to sell approximately 6 million shares at £E100 ($11.3) each in a public offering on the Egyptian stock exchange, although the company has not yet appointed an advisor for the transaction.
Earlier in 2016, a memorandum of understanding (MoU) was signed between Saudi Arabias Public Investment Fund (PIF) and Egypts Ministry of International Cooperation to establish an economic free zone in the Sinai area.
The two nations also signed agreements to develop a $2.2bn electricity plant with a generation capacity of 2,250MW, set up agriculture complexes in Sinai, and develop a canal to transfer water.
In 2015, Egypts President Abdul Fattah al-Sisi issued a decree aimed at accelerating what the government has called the full development of Sinai. Al-Sisi amended 10 legal articles in a bid to ensure national security is not compromised as the area is developed. Amendments include a requirement that land owners in Sinai must carry Egyptian citizenship with Egyptian parents. Despite this, the laws allow dual-nationals to own real estate, although land ownership is still prohibited.
Sinai has been neglected by Cairo over the past three decades, since its reclamation from Israel in 1982. Egypts Nile Delta-centric policies of development and infrastructure continue to hinder efforts to alleviate any local disenfranchisement that often leads to extremism in the area. Since the ousting of the Muslim Brotherhood in 2013, Cairo has witnessed a surge in militant activity in the area.