Egypt unveils EGP 50bn initiative to drive tourism growth, hotel construction

Egypt has launched a comprehensive EGP 50bn initiative, aiming to bolster the tourism sector and accelerate investment in hotel rooms. The program, announced during a Cabinet meeting chaired by Prime Minister Mostafa Madbouly, offers both loan facilities and investment incentives to incentivize private sector participation.

Investing in new hotel capacity holds significant economic advantages, as highlighted during the meeting. Every 15,000 additional rooms is estimated to generate EGP 1-2bn in value-added tax and EGP 2bn in commercial and industrial profit tax. Furthermore, the initiative is projected to create roughly 45,000 new jobs directly and indirectly upon completion.

Beyond economic gains, the program also aims to boost foreign currency reserves and reduce unemployment by stimulating private investments. The key features of the initiative, jointly developed by the Ministry of Finance, the Ministry of Tourism and Antiquities, and the General Authority for Investment and Free Zones (GAFI), were reviewed and approved during the Cabinet meeting.

Loan facilities under the program will be tailored to each company’s business volume and adhere to established banking regulations. The maximum credit size per company is capped at EGP 1bn, with a combined limit of EGP 2bn if transactions involve two participating banks. Companies are restricted to a maximum of two partner banks for loan withdrawals.

Funds can be utilized for constructing, establishing, or operating new hotel rooms, as well as acquiring closed rooms that have been inactive for at least 12 months prior to the initiative’s launch. Eligible locations include Greater Cairo, Luxor, Aswan, the Red Sea, South Sinai, and the North Coast.

The program runs from January 1, 2024, to December 31, 2024. However, continued access to the loan facilities is contingent upon adhering to the agreed-upon repayment schedule with the chosen bank. Notably, utilizing the credit to settle existing debts is strictly prohibited.

The executive mechanisms for the initiative will be further developed by a collaborative effort involving the Ministry of Finance, the Central Bank of Egypt, the Ministry of Tourism and Antiquities, and other relevant stakeholders.