Egypt 2019 says bye-bye to Cairo: New $45bn capital rising

December 3, 2018 12:54 pm


Cairo is promoting its own demise as a 21st-century city, posting billboard advertising of luxury homes and scenic, exotically named, compounds of its adversary:  A yet to be named new Egyptian capital.

Cairo has apparently outlived its usefulness, and now, a new-look Egypt is looking to rise from the desert with fresh, towering plans.

Can Egypt succeed in this bold, capital swapping, move, in what is the brainchild of president Abdel-Fattah el-Sissi?

Cairo: History in the unmaking

Fancy names adorn the ad space in Cairo, with brands like “La Verde” or “Vinci”, promoting accommodations in the new capital in the desert, just a few miles from the historical city.

“A city of some 24 million people combining charm and squalor, Cairo may soon witness an exodus by well-heeled residents, state employees and foreign embassies to the New Administrative Capital, as the vast project in the desert is provisionally known,” according to the Associated Press (AP).

The government argues that Cairo is already bursting at the seams and will grow to 40 million by 2050.

The move is a shift of the seat of power outside of the city for the first time since the Muslim conquest in the 7th Century.

Read: Egypt pulling safety net from under its citizens for the greater good

Proponents and critics of the new capital

“He (el-Sissi) contends the projects, ranging from new roads and housing complexes to a Suez Canal expansion, attract investors and create jobs,” wrote AP

Senior officials boastfully compare what has been built under el-Sissi to monuments like the Giza Pyramids.

Prime Minister Mustafa Madbouly, also the housing minister, proclaimed:”History will do justice to this generation of Egyptians and our grandsons will remember its achievement, a wave of construction unprecedented in modern-day Egypt.”

Critics call the new capital a vanity project.

Amar Ali Hassan, a sociopolitical expert, believes Cairo’s woes will only deepen.

“It could be neglected, become estranged and left to die a slow death,” he said.

Sameh Abdallah Alayli, an urban planning expert, wrote in the Al-Shorouk newspaper that the idea of a new capital was unacceptable, construction should be halted and the focus put back on overhauling the ancient city.

“Historical Cairo must remain the political capital of Egypt,” he wrote.

“There is something very wrong with the order of priorities,” said political analyst Hassan Nafaa.

The new city is being built on 170,000 acres about 28 miles east of Cairo and nearly twice its size. Construction began in 2016, and the first of its forecast 6.5 million residents are scheduled to move there next year.

The city will feature a new presidential palace, a new parliament, a central bank and business district, an airport and, alongside housing for 6.5m people.

The city will house the presidency, Cabinet, parliament, and ministries. Planners promise a 21-mile-long public park, an airport, an opera house, a massive theme park, a sports complex and 20 skyscrapers, including Africa’s highest, at 345 meters.

Photo: The Gardian

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Is the plan feasible?

Madbouly denied the new city will only attract the well-off, saying it is “for all Egyptians.”

But prices tell a different story, according to AP. Apartments starting from 120 sqm to 180 sqm will sell at prices starting from $614.

“The smallest apartment there — 120 sqms — is expected to cost 1.3 million Egyptian pounds ($73,000), out of reach for a mid-level bureaucrat, who may make the equivalent of about $4,800 a year,” reports AP.

“Those targeted to live in the new capital constitute a very, very limited segment of society,” said Nafaa.

According to CityMetric, Egypt is the latest country to build a new capital city from scratch, with ambitions to move parliament away from Cairo as early as summer 2019.

“Egypt joins more than 30 countries or regional states, which have relocated their seats of power to new cities designed from scratch: Brazil, Australia, Kazakhstan, and Nigeria are among the most famous examples,” says CityMetric.

“Analysts often deride relocated capital cities, describing them as failed utopian experiments or misguided vanity projects of authoritarian rulers. It doesn’t help that some of these new cities are awkwardly built from scratch, such as Brasilia—known for its barren, un-walkable streets—or Naypyidaw, Myanmar, reportedly a glaringly lit ghost town.”

Photo: ACUD.jpg- A map of planned transport links to the new capital shows Cairo on the far left. 

 According to The Guardian, the new capital will also draw on Cairo’s much-needed resources. Two water stations will pump an estimated 200,000 cubic meters of water per day (m3/d), siphoning water from nearby satellite cities. Once the project is completed it will use an estimated 1.5 million m3/d.

“There are few guarantees the high cost of housing will allow anyone other than the upper crust of Cairenes to populate the new capital, and the project risks becoming a lucrative but empty building project similar to the “ghost cities” of China, like Changzhi and Luliang, crippled by debt and low sales,” said The Guardian.

“Government workers will receive an estimated 25% discount, but with the average price per square meter estimated by El-Husseiny at 8000-9000 EGP ($446–$501), it is far beyond the means of the average public sector worker, whose weekly wage was just 1154 EGP ($64) per week in 2016.”

Read: Egyptians, Jordanians top Arab investors in UAE property

Reform-oriented Egypt

Meanwhile, Egypt is borrowing.  Egypt has secured an extra $2bn payout under its loan agreement with the International Monetary Fund (IMF), according to the Egyptian Finance Ministry.

The money would come from the country’s $12bn extended fund facility from the IMF and the extra $2bn would bring the total funds given to the program to $10bn.

IMF staff who conducted the review said in a statement that Egypt’s economy had “continued to perform well” as a result of the reforms the country started implementing reforms in 2014, including (lowering) energy subsidies, the introduction of a VAT law, as well as the devaluation of its local currency.

“Raising revenues will help create fiscal savings to invest in a well-targeted social safety net, human development including health and education, and infrastructure,” said the IMF.

The team said growth had accelerated from 4.2% in 2016/17 to 5.3% in 2017/18. It added that the account deficit narrowed to 2.4% of GDP in 2017/18 from 5.6% the year before.

The unemployment rate declined to below 10%, according to the IMF. The current deficit narrowed to 2.4% of GDP in 2017/2018 from 5.6% the year before

“The Central Bank of Egypt’s monetary policy helped bring down annual inflation from 33% in July 2017 to 11.4% in May 2018,” the IMF added.

The IMF forecasted Egypt’s fiscal year in 2018/2019 will achieve a primary surplus of 2% of GDP.

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.



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