President Abdel Fattah El-Sisi’s decision to allocate over 174 square kilometers of land along the Red Sea to the Ministry of Finance to support sovereign sukuk issuance and reduce public debt has sparked a debate over whether the decision constitutes a sound investment or a concession of national assets.
The move has raised questions about the connection between land and sukuk, parliamentary oversight of public debt tools, and the commercial potential of the specified land.
The presidential decree ties the allocation of vast stretches of Red Sea coastline to sovereign sukuk issuance. Islamic banking expert Ahmed Shawky Suleiman explained to Al Manassa that sukuk, unlike conventional bonds, require backing by tangible assets such as land, which serve as collateral against default risk.
“A plot of land, for example, can be used as security,” said Suleiman. “Sukuk holders are entitled to benefit from the revenues generated by the asset, without owning the asset itself.”
Egypt passed a 2021 law establishing a sovereign sukuk company empowered to issue sukuk on the state’s behalf, while representing the rights of investors who hold usufruct rights over the assets.
Suleiman clarified that investors do not gain full ownership of the land underpinning the sukuk, but may profit through ventures like hotel or tourism developments.
A recent example that sparked public criticism was the Ras El-Hekma deal, under which the UAE acquired coastal land in exchange for debt relief—a move some decried as a sell-off of public assets. The prime minister defended the transaction as an investment partnership, not a sale.
Suleiman argued that sovereign sukuk preserve state ownership and tie debt repayment to productive economic activity. “The sukuk model mobilizes funding by leveraging existing public assets to attract investment,” he said.
He noted that sukuk come in several forms that define investor-asset relationships. “Ijara sukuk, for example, grant returns through shared project benefits rather than asset ownership,” he said. “That makes them a safer instrument that preserves sovereignty while raising funds for sustainable development.”
Egypt’s only sovereign sukuk issuance to date was an international offering in 2023, which came with a high yield of nearly 11%. But Ehab Rashad, vice chair of Mubasher Capital Holding, told Al Manassa that future issues may bear lower interest given global monetary easing.
Rashad said that the US, after tightening policy in response to inflation from the Russia-Ukraine war, began cutting interest rates in 2024. This downward trend may reduce Egypt’s future sukuk yields to around 8%, he added.
Limited parliamentary oversight raises concerns
Even if sukuk are seen as a more responsible borrowing tool than traditional bonds, critics argue that vast tracts of public land are being allocated without parliamentary oversight.
MP Ehab Ramzy, a member of the constitutional and legislative affairs committee, told Al Manassa that land allocation decisions do not require parliamentary approval under Egypt’s constitution.
“Parliament monitors the executive branch, passes legislation, ratifies loans and agreements, and approves the state budget,” said Ramzy. “But land allocation by the government is an administrative act, not subject to our vote.”
Ramzy said that parliament can only intervene if evidence of corruption or illegality emerges. Citing the Ras El-Hekma deal as an example, he said, “Our role is oversight, not pre-approval.”
He sought to reassure skeptics, framing such moves as common in global investment policy. “Egyptians buy land in the UAE and Saudi Arabia for investment. There’s no need for panic,” he said.
MP Abdel Moneim Imam, leader of the Justice Party, called the decision “very smart,” though he withheld final judgment pending more details.
“The idea of leveraging state land to raise funds and pay down debt is sound,” Imam said. “If it’s done through usufruct rather than sale, all the better.”
He added, “I’m not ideologically opposed to selling state assets, provided the process is transparent and competitive. But the overall form and the details matter most.”
What do we know about the land?
Local media reported that the newly allocated land is located in Ras Shukeir, a coastal area near Ras Gharib in the Red Sea governorate.
According to Mamdouh Nadim, head of Ras Gharib city, Ras Shukeir had previously been earmarked for industrial investments, particularly in green ammonia and wind energy.
A senior source in the New Urban Communities Authority told Al Manassa that the government has prepared a full development plan for the area, including housing, commercial zones, and renewable energy projects.
“Land values will likely rise once these plans are executed, but they still rank among the lowest globally in dollar terms,” the source said, noting the area’s attractiveness to Arab investors and foreign tourists.
“Ras Shukeir offers warm winters, coral reefs, and nature reserves,” the source added.
Mostafa Shafie, head of research at Arabeya Online, said the lands earmarked for sukuk are more expansive than those in the Ras El-Hekma deal. Their proximity to Ain Sokhna and nearby logistical zones, he added, enhances their potential for exports and industrial use.
“These are prime assets,” said Shafie. “They can strengthen Egypt’s sovereign sukuk program by attracting long-term investment capital.”
