He met a traveler from Egypt and the traveler told him about something he saw in Egypt.
Is it right to say "saw" or we should say "had seen"?
In this case, “had seen” (past perfect tense) is correct because the event is in the past tense and so is what the traveler told him.
We use Simple Past if we give past events in the order in which they occured. However, when we look back from a certain time in the past to tell what had happened before, we use Past Perfect.
You should replace the second mention of “the traveler” with “who” to avoid being redundant. Similarly, you should replace “in Egypt” with “there” because it’s a location that was already mentioned at the start of the sentence.
“He met a traveler from Egypt who told him about something he had seen there."