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Spending in Egypt’s housing sector increases by 276% in FY 2017 - Daily News Egypt

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Spending in Egypt’s housing sector increases by 276% in FY 2017

A report by the Finance Ministry projects that only 30% of the planned budget will be spent by the end of FY 2016/2017, reducing last year’s spending gain to only 19%

Egypt’s built environment has witnessed gains for planned spending to an extraordinary high of 276% in housing during fiscal year (FY) 2017, according to 10Tooba for Applied Research.

The news came from the organisation’s Built Environment (BE) Observatory’s second annual report for 2016/2017. 10Tooba for Applied Research group works to analyse public spending on the built environment sectors in Egypt. The BE Budget for FY 2016/2017 continues to shed light on spatial justice in Egypt through the analysis of public investment in Egypt’s 27 governorates, based on the six sectors that constitute the Egyptian built environment: housing, urban development, drinking water, sanitation, electricity, and transportation.

The report showed that all six sectors witnessed an increase in spending, the lowest being the transport sector which witnessed an increase by only 10%. The highest was the housing sector, increasing by 276%, followed by spending on existing building environments raising by 122%. The electricity sector followed the giant increase with a smaller 45%. Furthermore, spending on water projects increased by 44%, sanitation projects by 21%, and urban development by 18%.

The report noted, however, that these gains failed to outdo regional differences in per capita spending. Regions defined as deprived in last year’s report also came out as so this year. Alexandria had consistently been placed below average, or well below average per capita spending in all five sectors analysed: housing, sanitation, water, urban development, and electricity. The Delta region had below average spending in four of the five sectors, with barely above-average spending for sanitation. In Upper Egypt, per capita spending was below average in two sectors, sanitation and urban development, and average in the rest. Greater Cairo came as average in all sectors, except in urban development, which was above average; however, the Suez Canal governorates and frontier governorates were above average.

Per capita spending on the existing BE in Greater Cairo’s housing sector registered 1,076 per person and the average spending at EGP 663. Sanitation came as EGP189, and the average being EGP73, water EGP12, and 1and average at EGP 49. Urban development spending was recorded at EGP 115 with the average at EGP 24, which makes spending on this sector in Greater Cairo above average. Spending on electricity amounted to EGP 12 per person and the average was at EGP 11.

In Alexandria’s housing sector, spending registered EGP 451per person, sanitation at EGP 40, and water at EGP 10. The city’s urban development spending was recorded at EGP 9 per person, and spending on electricity amounted to EGP 2 per person.

Frontier governorates and the Suez Canal registered the highest in spending in all built environment sectors; housing spending in Suez Canal registered EGP 8,541, sanitation EGP 648, and water EGP 406. Frontier governorates registered similar spending. Housing spending recorded EGP 7,332 per person, sanitation EGP 302, water EGP 382, urban development EGP 113, and the electricity sector at EGP 283 per person.

In all four sectors, the spending-to-deprived population ratio (SDPR) varied considerably within each sector, ranging from well below par, (1.0 portion of spending equal to portion of deprived population), to well above par.

The report noted that the complex web of government agencies hinders equitable development. It explains that 12 agencies affiliated to 4 central ministries, in addition to 2 agencies affiliated to governorates along with offices of 27 governorates, make for a highly complex and inefficient administrative body that operates on national, regional, and governorate levels, through branches and subsidiaries.

There is a clear and unjustified duality of the existing BE. The divide between cities and villages where 98% of Egyptians live, and new cities, where the remaining 2% live, have produced massive inequality in public spending. Spending on local electricity networks was higher in 14 of the 20 governorates that had new cities, according to the report.

In water, spending on new cities was higher or close to equal in seven of the governorates. The most glaring difference was the Sharqeya governorate where one new city, 10th of Ramadan City, received 2.8 times more spending than the 15 cities and almost 500 villages that make up the existing BE. For sanitation, three governorates saw more public spending in new cities than on the cities and villages of the existing BE. The other three governorates had spending close to equal.

Regarding public spending on housing projects, amounting to EGP 72.8bn, the report mentioned that the two types of government-built housing—subsidised and for profit—will remain the same this year. 90% of the housing budget has been allocated to subsidised housing, almost all of which goes to the Social Housing Project (EGP 65.1bn), while less than 1% goes to rural housing, cooperative housing, and repair projects (EGP 0.16bn). The remaining 10% of public spending on housing is allocated to the profitable Dar Masr project (7%), which amounts to EGP 5.2bn, as wells as for-profit housing in the New Administrative Capital (3%) with EGP 2.2bn, both of which are exclusive to new cities.

The report added that the total spending on urban development in existing build environment amounted to EGP 2.2bn, out of this amount EGP 0.5bn is designated to developing the Egyptian villages that constitute 23% of total spending. Upgrading unsafe areas constitutes 68% of spending, recorded at EGP1.5bn; spending on the most needy villages represents 4% of total spending (for a total of EGP 0.097bn); and comprehensive development constitutes 5%, at an amount of EGP 0.11bn.

The Ministry of Finance recently projected that by the end of FY 2016/2017, only 30% of its planned budget would be spent, thereby reducing spending gains on last year to only 19%.

The report recommended eliminating the administrative and fiscal duality of new cities the existing BE to ensure spatial justice between regions, governorates, as well as the existing BE and new cities.

Short-term restructuring through merging national-level funding agencies, namely the Social Housing Fund, the Guarantee and Subsidy Fund, and the Informal Settlements Development Facility into a National Urban Development Fund (NUDF), would allow spending on all six sectors in the built environment according to needs and governorate-level deficits. The rearranged structure would also allow the transfer of one-third of revenues from the New Urban Communities Authority (NUCA) to the NUDF to fund its various needs-based projects.

Besides restructuring, there could be changes that would be done to a merge of governorate-level funds (sanadiq khassa) that fund housing and development into Local Urban Development Funds (LUDFs) and move them to fund all six built environment sectors according to needs.

Other ideas are to merge national-level executive agencies that work on local-level projects, namely the Construction Authority for Potable Water and Wastewater (CAPWW), the National Organisation for Potable Water and Sanitary Drainage (NOPWSD), into the existing Central Agency for Construction (CAC). This agency would receive funding from the NUDF and implement projects in all six sectors locally through its existing regional branches, such as a transfer all regional highway projects that the CAC have been implementing to the General Authority for Roads, Bridges, and Land Transport (GARBaLT) that already are entrusted with regional highways.

On the long term restructuring, the report suggested the transfer of the executive arm of the city agencies into governorate-level local agencies for construction, and the administrative/fiscal arm to local administration (municipalities).

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