by Ghada Al-Thani, the Middle East and North Africa Editor for IR Today and an International Relations student at King’s College London. She writes about the financial and social implications of Egypt’s possible new capital city, yet to be named.
Cairo has served as the heart and capital of Egypt for over a thousand years. However, 40km to the east, construction on a new city which will serve as the new seat of the Egyptian government has begun. Announced in March of 2015, the Egyptian government promises a bigger, better and newer capital. This yet to be named City is provisionally known as the new administrative capital. As the brainchild of President El Sisi, it is projected to be completed by 2022, with the first permanent inhabitants expected by mid 2019. At its completion, it is expected to hold 6 million people in an area of 700 km². To put this into perspective, it is the size of Singapore or double that of Cairo. Additionally, most institutions are expected to relocate, including the presidency, cabinet, parliament, ministries and foreign embassies are encouraged to follow. In regards to its urban structure, the plans include large green spaces, a brand new parliament building, a business district to hold Africa’s largest skyscraper, a new central bank, an airport larger than London’s Heathrow, a theme park larger than Disneyland, and finally a presidential palace eight times larger than the White House.
Clearly, the project does not lack ambition, reflected in its current $45 Billion price tag, the calculations of which remain unknown. The project supervisor – the administrative capital for urban development – has stated it will settle the budget on a case-by-case basis as each part undergoes construction. Historically however, projects of this nature and magnitude are known to grow out of budget. Although assigned to administrative capital for urban development, 51% of the project is owned by the military with funding from China and Saudi Arabia indicating the construction of Egypt’s new capital is not merely commercial or urban in nature.
Geo-economic and Geo-political Motives
Currently, 90% of the Egyptian population live on only 4% of the country, with 96% remaining uninhabitable. Cairo itself as of 2017 houses 97 million people, with population predicted to grow to 151 million people by 2050. Cairo is currently ranked as one of the world’s fastest growing cities with an annual growth of about half a million people, predicted to reach a population of 40 million people by 2050. It is easy to see how cities will become increasingly crowded and congested, compounding the pre-existing issues of traffic and air pollution. The depreciating infrastructure and quality of life, coupled with the worrying demographic predictions seemingly warrant El Sisi’s ambitious project. With this predicted surge in population, housing is expected to be insufficient causing real estate prices to rocket, contributing to social tensions.
Economic motives for El Sisi’s project revolve around employment. The new capital will include malls, educational facilities, housing units and medical centers; all boosting the construction center contributing to GDP. Upwards of a million jobs are expected to be created. The city’s new location sits between the recently invested in Suez Canal and Cairo, allowing a stretch of human resources to flow between the two. The investments include expansion plans and the creation of a new industrial zone, illustrating the country’s desire to expand opportunities in insurance, banking and shipping.
With regional contenders such as Saudi Arabia and Turkey seeking to increase their influence in the Red Sea, Egypt may be trying to push back and reclaim their position in the Arab world. Saudi Arabia’s proposed ‘Neom City’ may act as a rival to Egypt’s new capital, competing for foreign investors. However, this may equally present an opportunity for cooperation between the two regional powers. If efforts were coordinated, a mutually beneficial endeavor may present itself.
Critics have proclaimed the new city as a ‘White Elephant’, warning that the ambitious $45 billion endeavor may be a waste. The approval and subsequent construction of the city was fast-tracked with little public debate. Some have voiced their concerns stating funds may have been better allocated to refurbish and expand Cairo itself. Egyptians themselves have questioned the efficacy of this project when lower and middle-class citizens are continuously hit with more taxes and inflation, while the state was awarded with a $12 billion loan from the International Monetary Fund.
Currently, Egypt have at least twenty-two unfinished cities in the desert, some dating back almost thirty years. These satellite towns hold around one-million people with most houses remaining uninhabited. The most prominent example being ‘New Cairo’. Initially meant to house around one-million people, a decade later it only holds 200,000. It failed to attract residents due to the lack of infrastructure, employment opportunities and the high-cost of resettlements which lower and middle-class Egyptians simply cannot afford. Worryingly, housing prices in the new capital remain beyond the reach of these very same Egyptians due to the developing real estate bubble. To fix this requires the Egyptian government to manage the underlying issue of the real estate bubble, something that has yet to take place. Without this, the new city is unlikely to be populated. High-class Egyptians that can afford to make the move risk turning it into a symbol for the social and economic divide in Egypt, fueling social tensions.
It is apparent that Egypt is in need of a new capital. Debates on whether this entails refurbishing Cairo or creating this new city is no longer relevant. El Sisi elimination of food, water and energy subsidies to improve the country’s finances fixed Egypt’s balance sheet, but generated resentment. If this project fails to live up to expectations, Egypt’s government may feel the backlash.