It's not smart at all for an African country. That's why Egypt is close to default.
1. First you should only build infrastructure to address bottlenecks. Is building a city in the dessert and a 90k stadium to bid for Olympics the biggest economic bottleneck of Egypt? Even this stadium alone does it have a tenancy plan? No it doesn't.
2. African countries finance these projects by borrowing foreign currency. Typically these projects are not viable and do not stimulate export growth so the country's budget is constrained to pay debt. Which means you have less money for development and you end up in a vicious cycle.
3. Egypt does not have the social or economic environment to stimulate anything. The military and crony capitalism is the norm in Egypt. Like this dessert city is being built by the friends of Sisi using public money a great deal at the expense of Egyptian people. What you need is more economic freedom so people can innovate and most competitive companies can win. This goes hand in hand with socio-political freedom. Egypt does not have this.
I have not enough knowledge about this project in the desert. What I know is that Egypt contemplates to organise the Olympic games. If Egypt is appointed as the country organiser of such Olympic games, the return on invest will be high for sure.
On the other hand, I think that there are a lot of projects in Egypt, not only this city in the desert. At my point of view, investments are always good for the economy. Investments are also a good sign when you analyse the economy of a country due to the fact that it will have a positive impact for the economic growth at term which will then be beneficial for the population.
So, I recognize that the system in Egypt - in particular regarding the role of the military - is not favourable anymore. What I hope is that some funds and/or holdings held by rich Egyptian individuals and/or private equity actors will invest a lot in different key sectors of the economy such as telecommunications, infrastructures, green energy, railways, motorways, real estate, agriculture, tourism, manufactures,… this is the way of success today in our world.