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UAE-based agribusiness Al Dahra and the Abu Dhabi Exports Office (ADEX) have inked a $500 million contract to supply Egypt with wheat, a statement confirmed on Monday.
The five-year deal, valued at $100 million annually, will ensure Egypt receives imported milling wheat “at competitive rates”.
Egypt, a primary purchaser of essential commodities, has grappled with a foreign currency shortage following the Ukraine conflict, which significantly impacted its economy.
The value of Egypt’s currency has plunged by approximately 50% against the dollar, and the official headline inflation has surged to a record peak of 36.5%.
Consequently, Egypt began postponing payments for wheat imports and faces growing challenges securing funds for foreign debt repayments.
Egypt’s supply minister Ali Moselhy said, “The low-cost financing package from ADEX helps us procure high quality wheat at the lowest cost financing available, with comfortable payment terms.”
A significant number of recent wheat acquisitions were financed through loans from the International Islamic Trade Finance Corporation (ITFC), which last year augmented a credit line extended to Egypt to $6 billion, and from the World Bank, which backed wheat imports earlier this annum.
The finance ministry has announced that funding for food subsidies, predominantly bread, will surge by 41.9% to 127.7 billion Egyptian pounds ($4.1 billion) in the financial year spanning July 2023 to June 2024.
As part of the agreement, Al Dahra will commence wheat supplies to Egypt from this year onwards.
The Emirati firm is already providing the government with domestically cultivated wheat at the state-determined procurement price through its Egyptian offshoot, which oversees 28,000 hectares in Egypt.
ADEX operates as the export finance division of the governmental entity, the Abu Dhabi Fund for Development.