Building Egypt's new capital is a global effort

Egypt’s new administrative capital, now under construction in the desert 45 kilometres east of Cairo, is potentially an admirable idea – but one fraught with many a pitfall.

The US$45 billion new city, which will eventually house as many as 7 million people, will sprawl over a massive 685 square kilometres. It will become the new home for the government and for the country’s banks and financial institutions. The government has started building residential districts adjacent to the ministries for the civil servants who will work there.

All sorts of expensive projects have been proposed: residential districts, shopping malls, a 30-feddan (12.6 hectare) mosque, an Islamic museum, an exhibition centre, a 5,000-seat conference centre that would be the largest in Africa, a smart village and industrial zones.

The idea, according to the government, is to reduce congestion in Cairo, one of the most densely populated cities in the world.

Hardly had the housing ministry formed a company in May to manage the new capital when companies and institutions began to rush in to offer their services, many bringing their own finance. The New Administrative Capital Company has a capital of 6bn Egyptian pounds (Dh2.48bn) and is owned jointly by the army and the New Urban Communities Authority, which itself is controlled by the housing ministry. Brigadier General Mohamed Abdel Latif was appointed chief executive.

The new company is putting 10,500 feddans (44.1 square kilometres) of land up for lease in the capital’s first phase, from which it expects to earn an initial 30bn Egyptian pounds. It expects to collect an annual income as well. In this way it hopes to generate an income flow, thus avoiding placing a burden on the state’s general budget. The army will remain the ultimate owner of all the land.

The Chinese-government-owned China Fortune Land Development Company agreed last week to invest $20bn in Egypt, primarily to help develop the new capital’s second phase over the next 10 years, according to an Egyptian presidency spokesman. The company plans to set up the smart village, an industrial zone and residential districts.

Saudi Arabia’s Al Hokair Group has taken a 50-year lease on a 100-feddan plot of land in the new capital that it will use to build a 30-feddan mosque, an Islamic museum and a branch of the Mall of Arabia, the presidency said.

Last month, the China State Construction Engineering Corporation agreed in principle to build the capital’s $3bn government block and was looking at other projects in the capital worth more than $40bn.

An Indian company is proposing a medical city three times the size of the Kasr El Aini Teaching Hospital in central Cairo. It would include a university, nursing institute and hospital.

This week, Egypt’s government announced it was speaking with the Chinese to build a university in the city.

State and private contractors have already begun work on parts of the residential quarters. The aim is to provide 30,000 flats ranging from 90 to 200 sq metres that will be allocated to people of various income levels.

About 18 ministries, including foreign affairs, interior, transport, justice, power, supply, higher education and health, as well as cabinet and parliament are scheduled to move to the new city by mid-2018. China has agreed to develop 12 of the ministry buildings, as well as an exhibition centre, a conference hall and the cabinet.

All very wonderful. But I have a few reservations.

Why the rush to get the city built? Egypt is entering a period of harsh austerity. Wouldn’t it make more sense to divert the country’s scarce resources into projects with a quicker payoff, such as mass transit within Cairo itself? The third metro line, now under construction, is said to cost about $2bn.

At that rate, the new capital’s cost is the equivalent of about 22 metro lines. But imagine how much 22 metro lines could relieve congestion and improve people’s lives in Cairo.

And as Egypt enters this period of austerity, does the country really need the added disruption of clearing out and transferring dozens of institutions? Why not slow the pace of the project until the worst of the austerity measures have been digested?

How will the 20-30 million people who remain behind in Cairo get back and forth to the new capital? There seems to be no plan for rapid transit into central Cairo. If citizens seeking government services have to travel 45km by car or bus each way, won’t this increase congestion to an intolerable level?

Where will the water come from? Early maquettes of the city showed vast networks of gardens, lakes, canals and swimming pools. Nile water is limited. The new city is conveniently close to the Gulf of Suez, where desalting plants could be placed. But these are terribly expensive and take lots of time to build.

How will the government persuade the tens of thousands of civil servants needed in government to give up their homes in and around Cairo to move to the new city? Will they be forced to move or will they be given financial incentives? How much might these incentives cost?

Patrick Werr has worked as a financial writer in Egypt for 26 years.

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