April 11, 2016

As global oil prices remain at record lows, countries across the Middle East and Africa that have traditionally depended on oil for sovereign wealth are now looking to diversify their interests in the pursuit of economic growth.

Earlier this month Saudi Minister of Agriculture Abdulrahman bin Abdulmohsen Al-Fadhli met with his Egyptian counterpart Dr. Essam Fayed and the Egyptian Minister of Investment, Dalia Khurshid to discuss mutually beneficial investments that can be made within the agriculture sector that will give Saudis a new outlet for revenue while strengthening regional food security.

More recently, the two countries have signed an agreement to establish “a Saudi-Egyptian investment fund with a capital of 60 billion riyals [US$16 billion] between the Saudi Public Investment Fund and the entities belonging to it and the Egyptian government and the entities that belong to it,” report Reuters.

At the same time, a memorandum of understanding was also signed by the Saudi Public Investment Fund and the Egyptian International Cooperation Ministry for the formation of an economic free-zone in Sinai, and an additional agreement was signed for the development of a US$2.2 billion, 2250 Megawatt electricity plant, for the creation of agricultural complexes in Sinai, and for a canal for the regional exchange of water.

In all, more than twelve agreements were signed between the two countries as governments are realizing the need for cooperation and investment in order to meet the needs of their growing populations at a time of decreasing GDPs.

Political and religious power struggles are also playing into the decision to pursue cooperative investments. Since the election of Egypt’s president Sisi in 2013, Sunni Muslim Saudi Arabia has stepped in to help support the Egyptian economy as part of its more aggressive foreign policy aimed at counteracting the emergence of its regional rival, Shiite Iran, reports the Wall Street Journal. These shifting alliances will undoubtedly have an effectupon the political landscape in the region, but will also likely be counted on to affect investments in agricultural production and agricultural trade within the region as well.