EGYPT- UAE-based agribusiness Al Dahra and the Abu Dhabi Exports Office (ADEX), the export financing arm of state-owned Abu Dhabi Fund for Development, have signed a US$500 million deal to supply Egypt with wheat.
The five-year agreement, worth US$100 million per year, will provide Egypt with imported milling wheat “at competitive prices”.
Egypt has one of the highest per capita consumption of wheat in the world. At 180kg, the country’s per capita is almost thrice the global average.
With such high demand, Egypt is forced to rely on imports as local wheat production, despite being the highest in Africa, is unable to meet the local demand.
Lately, the country’s imports have been affected by the Russo-Ukrainian war and especially so after the Black Sea Grain Initiative came to an end.
Moreover, Egypt has been suffering a foreign currency crunch, especially after the Ukraine war delivered a broad shock to its economy as a result of price volatility.
Egypt’s currency has tumbled by about 50% against the dollar and official headline inflation has soared to an all-time high of 36.5%.
As a result, the country started deferring payments for wheat imports and has been facing an increasingly difficult task of raising cash for foreign debt repayments.
“The low-cost financing package from ADEX helps us procure high-quality wheat at the lowest cost financing available, with comfortable payment terms,” Egypt’s supply minister Ali Moselhy said in a statement.
According to a recent report by Reuters, many recent wheat purchases have been made with loans from the International Islamic Trade Finance Corporation (ITFC), which last year doubled a credit facility extended to Egypt to US$6 billion, and from the World Bank, which funded wheat imports earlier this year.
The finance ministry said funding for subsidies on food, mostly bread, will rise 41.9% to 127.7 billion Egyptian pounds (US$4.1 billion) in the fiscal year from July 2023 to June 2024.
Under the recently-announced deal, Al Dahra will supply Egypt with imported wheat this year.
The Emirati company already supplies the government with locally produced wheat at the government-set procurement price via its Egyptian subsidiary, which farms 28,000 hectares in Egypt.