Al-Sisi stops building in old cities to save his losing projects

Acting upon instructions from President Abdel Fattah al-Sisi, the Egyptian Minister of Local Development issued a decree that freezes construction operations in four of the largest and most important governorates in Egypt, which are Cairo, al-Qalyubia, Giza, and Alexandria. This decision, seemingly taken to ease traffic congestion in these governorates, will have advantages for the regime but a disastrous effect on the people there.

During the opening of the Bashayer el-Khair 3 project in May, al-Sisi instructed his government to stop all construction works in Cairo, Giza, and Alexandria. This was followed by a decree issued by the Minister of Local Development General Mahmoud Shaarawy, ordering the governors to stop issuing licences for construction works, expansion, elevation, modification, or reinforcement. This decree is to be applied to the houses in Greater Cairo, Alexandria, and all the other major cities to ease traffic congestion in these cities and governorate. There are, however, ulterior motives behind the decision.

“The decision killed dozens of birds with one stone,” said contractor (H.Y.) in an interview with Egypt Watch. “Al-Sisi has directed by this decree the entire real estate market to the cities and projects he built that remained almost empty and did not yield any sales. At the top of these projects are the New Administrative Capital and el-Alamein City, places which buyers were completely reluctant to invest in,” he added.

He further elaborated: “The cities built by al-Sisi are not for the poor or even the middle class, but when the construction market is suspended in Egypt, the prices for the available units across all the low, middle, and high segments will increase. That is because the demand is fixed while the supply is declining as a result of stopping the construction works. Consequently, some of the higher and upper-middle classes will be forced to buy from al-Sisi’s projects because there is no other alternative.”

“It is obvious that the regime wants to monopolise the entire construction market in Egypt, no matter how much economic damages this might cause,” M.A., an economic researcher, told Egypt Watch. He adds: “The state did not take into consideration the huge number of people working in the real estate and construction sector when it took such a decision, just considered the benefits it will reap only. There are millions of temporary and permanent workers in that sector, besides the contractors and construction companies, whose businesses are already suffering because of the coronavirus pandemic.” He further stated: “Besides all the above, the state will monopolise the entire sector through the only remaining party capable of working and obtaining licences, which is the Armed Forces Engineering Authority and whoever reaches an agreement with [it] and can work under it. Add to that the fact that it will be the only consumer of the construction materials, which will affect the military factories’ sales of concrete, steel, and bricks among others and it will subject the rest to its orders. Although this decision will indeed affect the congestion and traffic, its damages to the economy will be much harder and more severe than they can possibly imagine.”

According to the press statements of Hassan Abdel Aziz, former chairman of the Egyptian Federation for Construction, 35,000 companies work at the Egyptian construction market with an average number of around 3.5 million permanent labourers and about 12 million temporary labourers.

As for A.S., the political economy researcher, he says: “What happened could only be described as forced displacement or, at the very least, resettlement, but an ill-considered one at that. Mubarak, Sadat, and Abdel Nasser all did the same thing. Al-Sisi, however, treats people as a person who gives orders to his soldiers without sparing their fate a single thought. He is now forcing millions of people to leave their towns to other uninhabitable cities.” He added: “Besides these points, he is trying to get his hands on as much of the Egyptians’ money as he can, starting with building violations’ fines, which will earn him several billions. Add to that that anyone who had prepared himself for building, expanding his house, or any other construction works will not find anywhere to keep his money except the banking sector. This, in turn, will lead to plans to seize that money with high interest, followed by procedures to devaluate the currency, thus decreasing people’s fortunes considerably. That way he will be the one to reap the benefits, just like what happened with the Suez Canal Expansion project, where he collected more than EGP 60 billion ($3.75 billion), then floated the currency so that people’s savings became worth half their value compared to their value at the time they paid them to al-Sisi for his project.”

Prime Minister Mustafa Madbouly announced a reconciliation plan for building violations under the slogan, “Serious Reconciliation.” This plan consists of making down payments until reconciliation is complete in the following manner: Architectural schematics’ violation will be fined EGP 5,000 ($312.85) in rural areas and EGP 20,000 ($1,251) in urban areas. Setback violation fine is EGP 10,000 ($625.70) in rural areas and EGP 40,000 ($2,502) in urban areas. Increasing the surface area of the roof violation is EGP 12,000 ($750.73) in rural areas and EGP 50,000 ($3,128) in urban areas.

The violation for converting the basement for an unlicenced activity is EGP 30,000 ($1,877) in rural areas and EGP 120,000 ($7,507) in urban areas. Building without permission is EGP 40,000 ($2,502) in rural areas and EGP 160,000 ($10,009) in urban areas and EGP 250,000 ($15,639) for serious reconciliation in the case of building without a permit in the governorates’ capitals and new cities. The payment process starts from July 15 until September 30. The amount of serious reconciliation will be deducted from the violation’s fine value after it was issued. The prime minister stated that the number of those who applied to reconcile violations was 325,000 cases before the plan was issued, which means than the state has collected tens of billions in fines.

The social sciences researcher A.T. told Egypt Watch that this decision is going to increase the people’s suffering, more in the rural areas than in the urban ones, although the opposite seemed to be the case.

People in the villages are used to living in their families’ homes. When a new person is born into the family, they build a new floor for that person to live in after marriage, or they would live in one of the rooms of the house. That is because families there are deeply attached to each other and there is limited available space in the village. This suspension of construction and expansion will suffocate the family.

The same will happen in the old cities because the regime did not provide means of subsistence in the new cities, yet they forced people to live there, thus compelling them to travel daily from these new cities to their workplaces. That way they are burdening them with the rents in new cities. Transportation expenses went up almost ten times during the past few years, the fact that the cost of water, electricity, and fuel have multiplied. All these expenses fall on the shoulders of the families and the young at a time when even ordinary life is an unattainable dream.

In recent times, people are exerting all and above their efforts just to be able to live. A person who used to have one job is now working two. He who had a car started using it to work after hours with the transportation companies like Uber. The wife who stopped working after marriage started working once more. People are turning desperately to work in brokerage, sales, and offering services from homes like cooking and selling food and students are working in shops. It is as if an ongoing relentless and arduous struggle was forced upon the people.

On the other hand, a parasitic tier of the wealthy has emerged and is suspiciously rising. Most of that class are army officers or directly related to the army. Also, the operating and retired officers have developed an unprecedented appetite for business and brokerage which coincided with a marked increase in corruption more than anyone can imagine. This is faced with total silence from the community out of fear of the security tyranny. The decisions to stop construction works will increase the suffering of the people, which might yield completely undesirable consequences, all of which involve violence.