Egypt new, but not untroubled, mega-city is a magnet for investors

On a once barren stretch of desert east of Cairo, Chinese engineers recently oversaw the pouring of a five metre thick concrete base for what will be Africa’s tallest tower.

The 80-storey Iconic Tower will be a focal point of Egypt’s new administrative capital, a key part of President Abdel Fattah el-Sisi’s strategy to reboot the economy of the Arab world’s most populous state.

The new city, announced in 2015 with a seven-year deadline and a $45 billion budget, already has the largest mosque in Egypt and the Middle East’s largest cathedral. But as yet it has no people and no name.

Construction is well advanced, with high-rise apartment buildings already towering above the desert. By next year, 50,000 state employees are due to transfer to the new 700 sq km city zone, which is intended eventually to be home to as many as 6.5 million people. The new administrative capital is destined to house the presidency, ministries and foreign embassies. Its public park will be twice the size of New York’s Central Park and a planned theme park will dwarf Disneyland.

Prime minister and housing minister Mostafa Madbouly, who trained as a civil engineer, has rejected criticism that the government would do better to improve conditions in the present capital rather than starting afresh. “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,” he has said.

Egypt has hoped from the start that the new city would be a magnet for foreign investment, and a poster child for how the economy can diversify. Traditionally the country has had difficulty raising foreign investment outside the oil and gas sectors.

In the year the plan was announced, the government signed a memorandum with UAE-based Capital City Planners to undertake the project but the Egyptian side withdrew within months citing lack of progress. The entire project has since been overseen by a company in which the Egyptian military plays a majority role.

Later the same year the government signed with China State Construction Engineering Corporation (CSCEC) to build administrative buildings such as the president’s office, parliament and government ministries. Then Egyptian media reported that progress had stalled on the government’s agreement with China Fortune Land Development Company (CFLD) to build the commercial, industrial, residential and cultural districts. The reports cited the Chinese developer’s demand for a larger slice of the $20 billion project than had previously been agreed.

In December, talks also broke down between Egyptian officials and Dubai-based Emaar Properties to develop a 1,500 acre plot after the company was reported to have offered below market price for the land.

However stuttering progress has been, the fact is that the city still represents opportunity for many. The Chinese, who have a strategic interest in building their relationship with Egypt linked to Beijing’s Belt and Road trade routes strategy, are likely to remain for the long term. And Western companies are also involved as technology providers in what Egypt plans will be a “smart” city.

US company Honeywell is setting up a city-wide surveillance system with a control centre that will use internet technology to summon security forces in the event of an emergency. In February, information technology minister Amr Talaat met an executive of Mastercard to discuss the government’s plans to boost e-commerce with the aim of turning the new administrative capital into a “cashless” city.

As for Cairo itself, the loss of its administrative and financial functions might call into question its status and desirability as a place to live, particularly among the country’s upwardly mobile and those driving economic development. Prime Minister Madbouly responded to concerns this year when he said a plan was being put together to develop Cairo, which would remain Egypt’s official capital even after the state apparatus and embassies had moved.

He said the new city would reduce the burden on Cairo and provide an opportunity to enhance its cultural and historical role. The new city, in other words, is not intended to bury Cairo but to save it.