Banks report huge demand for Suez Canal investment certificates

Buyers sank LE6 billion in Suez Canal investment certificates on Thursday, the first day they were made available for sale at the four public banks, according to Central Bank of Egypt (CBE) Governor Hesham Ramez.

At this rate, it would take about two weeks to raise the LE60 billion needed to finance the mega-scale development project that seeks to extend and deepen the existing canal by a total of 72 km.

Earlier this week President Abdel Fattah al-Sisi ratified a law that allows the Suez Canal to issue investment certificates through Egypt’s four main public banks in a bid to locally finance the project, which is billed as a national endeavor.

Certificates were made available for purchase on Thursday at the National Bank, Banque Misr, Cairo Bank and the Suez Canal Bank, and will be available at private banks at the request of customers starting Sunday.

The value of non-tradable certificates range from LE10 to LE100 and LE1,000 with a 12 percent interest rate, and are exempt from all taxes and administrative fees. 

Banks reported a significant turnout of Egyptians seeking to purchase the certificates, despite a widespread power cut that essentially paralyzed most parts of the country on Thursday morning, according to the state-owned Al-Ahram news site. In the first hour after banks opened, state media began reporting several million pounds’ worth of investment certificate purchases.

Bank hours have been extended to 6 pm daily to cater to the expected surge in foot traffic.

There was higher demand for certificates of LE100 and LE1,000, Al-Ahram reported.

An Alexandria man who works at the water company said he invested all his savings in certificates amounting to LE50,000, said Al-Ahram. A woman at the same bank, identified as a housewife, said she purchased LE100,000 worth of certificates to help finance the canal project with local money, asserting the importance of supporting Egypt at this time.

The Ministry of Endowment’s Social Solidarity Fund for Workers invested LE400 million of its capital into certificates to finance the canal project. Al-Wafd Party has also approved the investment of LE10 million of its money into certificates.

Despite the rush to purchase these certificates, concerns have been raised about the financing scheme, as well as the viability of the long-term goal to increase the canal’s annual revenue to US$13 billion by 2023, from its current US$5 billion in revenues. Questions have also been raised regarding the thoroughness of the feasibility study conducted before the digging began, as well as the sudden announcement that the project’s time frame shrank from three years to one.  

On Wednesday, the UK-based newspaper The Guardian reported that thousands of inhabitants of two villages have been evicted from their homes without compensation to make way for a bypass to the Suez Canal. They say that 1,500 homes have already been destroyed, with a total of 5,000 under threat.

“Asked by the Guardian for a comment, an army spokesman said he would look into the matter before issuing a response,” the paper reported.