Egypt’s construction boom will not be a cure-all
As far back as the 1950s, the engaging stories of Najib Mahfouz, the great novelist and winner of the Nobel Prize for Literature, depicted mundane characters — most often Cairo residents — dealing with the pressures of urban modernization, among other challenges.
For anyone visiting Cairo for tourism or business today, the strains on this fascinating capital quickly become obvious: Heavy traffic, air pollution, and often-unfinished housing blocks encroaching on the already overcrowded city. Its metropolitan area, the most populous in Africa and the Middle East, harbors more than 20.5 million people.
Last week, a Chinese delegation met in Cairo with Prime Minister Mostafa Madbouli to discuss construction projects in Egypt’s massive administrative capital, still unnamed but rising fast to the east of the current capital.
The delegation included representatives from the China State Construction Engineering Corp., the Asian giant’s largest construction and real estate conglomerate. The meeting resulted in the signing of another multibillion-dollar construction deal for the new capital’s central business district.
Improving infrastructure quality has rightly been identified by the government and its regional and international backers as critical for development, economic diversification, and to make the country more liveable and business-friendly for Egyptian citizens and foreigners. It is also crucial to revitalize strategic sectors such as energy and shipping.
In the past four years, the government has launched various major infrastructure projects worth an estimated $335 billion across all sectors. But there are many challenges and some concerns about all the expectations surrounding this construction boom, both as a driver of economic growth and a significant source of government spending.
Skeptics note that Egypt has a history of failed new cities, and Cairo’s problems — which will still need plenty of attention and investment — may face even more neglect. More generally, infrastructure may be an important step, but it will not go all the way to addressing many of Egypt’s other pressing challenges.
The new capital is the government’s flagship construction project, in size and ambition. Most of the key organs of state, not to mention millions of Cairo residents, are expected to move there.
But, especially since 2016, Egypt has been witnessing a construction frenzy across the board. Among the high-profile projects are high-speed railway systems, such as the ones connecting Luxor to Cairo and Hurghada; power plants, including El-Dabaa nuclear power station, the country’s first; and even a new amusement park.
The country’s main challenges are essentially governance-related: Unbearable levels of bureaucracy in the state apparatus, corruption, the poor state of the education system, and a sclerotic job market unable to absorb many of Egypt’s youths.
Dr. Manuel Almeida
In 2014, President Abdel Fattah El-Sisi launched the Suez Canal Corridor Area Project, which created another shipping lane that doubled the canal’s capacity and allows maritime traffic to circulate in both directions simultaneously. The massive project also comprises the New Ismailia City and industrial and technological zones.
Securing in 2016 a $12 billion deal with the International Monetary Fund (IMF) — with the backing of China, Saudi Arabia and the UAE — was key for the Egyptian government to move on with all these major infrastructure projects.
That same year saw the launch of the Sustainable Development Strategy: Egypt Vision 2030. Very much in line with the programs of some of its key allies — such as the UAE’s Vision 2021, launched in 2010, and Saudi Vision 2030, launched in April 2016 — it is a broad socioeconomic reform plan.
It is divided into three main dimensions — social, economic and environmental — with various key performance indicators to measure progress and impact. Among the most pressing issues listed in the document is precisely the unsuitability of Egypt’s infrastructure and urban areas.
Beyond the severe problems with its inadequate infrastructure, the country’s main challenges are essentially governance-related: Unbearable levels of bureaucracy in the state apparatus, corruption, the poor state of the education system, and a sclerotic job market unable to absorb many of Egypt’s youths. Two-thirds of the population (60 million people) are below the age of 29, and youth unemployment stands above 31 percent.
Another issue is environmental degradation, including water scarcity, which is increasingly pressing in the face of a growing population and an agricultural sector that consumes much of Egypt’s freshwater supplies. On this front, there are some positive signals. The government has stressed its commitment to the UN’s Sustainable Development Goals, and has vowed to reconcile environmental concerns with economic needs.
Apparently, there has been an emphasis on building smart, environment-friendly buildings for the new capital. Also, a few weeks ago El-Sisi inaugurated a giant wind farm along the Red Sea coast, which a government spokesperson classified as “the world’s largest” — an important step in the slow but critical transition from fossil fuels to renewables.
Other countries have bet on large infrastructure projects to boost development and mark the beginning of a new national project. Take for example Brazil’s capital Brasilia, built from scratch in the country’s interior. What Egyptian decision-makers should bear in mind is that a construction boom of this magnitude may prove an important enabling factor for progress in other key areas, but it will not in itself resolve the country’s pressing governance challenges.
• Dr. Manuel Almeida is a political analyst and consultant focusing on the Middle East. He is the former editor of the English online edition of Asharq Al-Awsat newspaper and holds a Ph.D. in International Relations from the London School of Economics and Political Science.