Since coming to power, Egypt’s President Abdul Fattah al-Sisi has undertaken various mega infrastructure projects with dubious economic benefits. Despite a worsening debt crisis, these projects remain a government priority. The debt crisis has grown with the percentage of the total debt of the GDP at 101 percent as of the end of 2018 and the cost of servicing the debt reaching 31 percent in the 2016-2017 budgets.

One of the notable challenges of the debt crisis is the budgetary strain of meeting interest payments. This has prompted the government to plan debt restructuring, reliance on longer-term loans, and the issuance of zero-coupon bonds, which have no interest payments and are sold at a major discount. Despite the strain on the budget, the push for mega-infrastructure projects remains.  

These projects are touted as essential for the revival of the Egyptian economy, but more importantly serve two important functions. First, they provide the military with additional opportunities to increase its involvement in different aspects of the Egyptian economy.

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Sisi denied this in May 2019, stating that the role of the military in these projects is purely "supervisory". However, recent reports have traced the growth of the military owned firms under President Sisi, particularly military-owned firms involved in mega-infrastructure projects.

Make way for Egyptʹs New Administrative Capital

A city of some 20 million people combining charm and squalor, Cairo may soon witness an exodus by well-heeled residents, state employees and foreign embassies to the New Administrative Capital. By Hamza Hemdawi

A massive undertaking: the new city is being built on 170,000 acres about 28 miles east of Cairo and is nearly twice its size. Construction began in 2016, and the first of its forecast 6.5 million residents are scheduled to move there next year

The flight of the rich: billboards across Cairo advertise luxury homes with "breath-taking" views in compounds with names like "La Verde" or "Vinci" in Egypt's new capital that is under construction in the desert, miles from the Nile-side city which has been the seat of power for more than 1,000 years

The Presidentʹs pet project: the new capital – a proper name has yet to be found – is the $45 billion brainchild of Abdul Fattah al-Sisi, the biggest of the mega-projects he has launched since taking office in 2014. He contends the projects, ranging from new roads and housing complexes to a Suez Canal expansion attract investors and create jobs

The needs of ordinary people: critics argue its cost could have been better put to rebuilding the wrecked economy and refurbishing Cairo. After all, what lies behind the billboards are Cairo's most overcrowded neighbourhoods, with shoddily built homes and dirt roads frequently inundated with sewage water

Wrong priorities: "Maybe Sisi wants to go down in history as the leader who built the new capital, but if Egyptians don't see an improvement in their living conditions and services, he will be remembered as the president who destroyed what is left of the middle class," says political analyst Hassan Nafaa

Concerned about space: the government argues that Cairo is already bursting at the seams and will grow to 40 million by 2050. The city will house the presidency, Cabinet, parliament and ministries. Planners promise a 21-mile-long public park, an airport, an opera house, a sports complex and 20 skyscrapers, including Africa's highest, at 345 metres

For all Egyptians? The smallest apartment there – 120 square metres – is expected to cost 1.3 million Egyptian pounds ($73,000), out of reach for a mid-level bureaucrat, who may make the equivalent of about $4,800 a year. "Those targeted to live in the new capital constitute a very, very limited segment of society," says political analyst Hassan Nafaa

Hampering private sector development

The most notable example is the military-owned El Arish Cement Co, which has recently constructed Egypt’s largest cement factory, worth $1 billion. As of 2018, the factory’s capacity for cement production is at 12.6 million tons a year, with Egypt’s production capacity at an estimated 79 million tons. The military had previously stated that these new constructions and new projects would increase the size of the market.

The growth of the military’s economic reach prompted the International Monetary Fund (IMF) to issue a warning in September 2017 that job creation and private sector development "might be hindered by involvement of entities under the Ministry of Defence."

Sisi himself had previously commended the military in November 2014 to deliver mega-infrastructure projects three to four times faster than the private sector – an indication of the intention to rely on the military to implement these projects – which increases its economic power.