EGYPT: Does it really need a new capital?

General Al Sisi achieved  by a military coup the presidency of Egypt in 2013, after overthrowing Mohamed Morsi (previously associated with the Muslim Brotherhood). Morsi, who was the first democratically elected president, in his words sought to be "the president of all Egyptians", but what really happened was a constant worsening of political tensions and living conditions, consequently, demonstrations against the established administration, became part of everyday life.

In such circumstances and with the deterioration and antagonism also prominent with the Armed Forces, Al Sisi eventually became the new protagonist of Egyptian politics, having even reinforced his legitimacy last April when he was re-elected president with more than 97 %.

The military power installed in Egypt turns out to be a "déjà vu", having this time as main character  General Sisi.

The Egyptian plans to build a new capital east of Cairo, is at least controversial. This new capital, whose name is still non-existent, will be located in the middle of the desert between the Suez and the city of Cairo (45 km).

Its designation, for the moment, is "the new administrative capital" of the country and his project started just over 3 years ago.

The main goals are:

- the construction of a modern city that can reach between 5 and 7 million inhabitants.

- Depopulating Cairo, which has more than 20 million inhabitants and will double by 2050 if nothing is done. Related with the overpopulation of Cairo one may also verify the famous and worrying issues associated to the high level of pollution and traffic congestion.

- Infrastructures include the construction of hotels, residences, a park twice the size of Central Park, schools, mosques, universities, hospitals, an airport, among other facilities.

- All strands of the apparatus state will move to the new capital. Presidential palaces, embassies and the seats of Parliament and the 18 ministries that make up the Government.

- Job creation and economic and commercial dynamism in the Northeast region (Cairo - Suez).

This new city began to be built in 2016 and shall occupy an area of ​​about 700 km2, with the relocation of the government office scheduled for June 2019.

It will cost $ 45 billion at an early stage, although, presumably, part of that investment is recovered through property sales and corporate taxes. To implement the project, the government decided to create a company called New Administrative Capital for Urban Development (ACUD), which has 51% of the Armed Forces and the remaining 49% belongs to the Ministry of Housing.

In addition, we also note the Chinese presence, this time mainly through the China Fortune public company and Chinese banks with the aim of bringing investment and commitment in building an extensive area in this region.

The connection between Cairo and the new capital is also being developed. The major novelty expected is the connection between the two cities via a high-speed train line (electric train).

All this, a priori, seems to be a driver development for the country, but can we contemplate this  current scenario so lightly?

Egypt needs first of all, to safeguard the well-being of its citizens, and this is still far from being achieved. The question is, what are the priorities of a country?

The country is facing a serious economic crisis. It needed the help of the IMF and has a deficit of almost 11% of GDP.

Another issue to consider : the construction of this city is being carried out in the middle of the desert and this will imply enormous expenses of water resources. . Two water stations will pump about 200,000 cubic meters of water per day, and as a result they will absorb water from nearby satellite cities. When the project is completed, it is planned to use about 1.5 million cubic meters of water per day.

As for reducing road congestion, this simply does not work simply by transferring a few thousand employees! There is little assurance that the high cost of housing will allow anyone other than the elite to occupy the new capital, and so the project risks becoming profitable but empty, similar to the "ghost towns" that exist in China. Cairo is already surrounded by an array of cities that have been planned and are half empty, which is a huge failure since it cannot attract the majority of the population living downtown.

One can detect some strong factors, namely for the creation of jobs, especially in the construction sector. However, the country of the "pharaohs" has gone through a rather perilous situation. Thus,  there are remaining priority  issues which are much more important to solve.

Omar Tchilombo - Senior Consultant