A New Republic, A New Capital: Chinese Money and Egypt’s New Urban Agenda

“A birth to a new nation, comes with the opening to the New Administrative Capital. An announcement to the second republic” [i]

The audience applaud, and the camera moves away from a close shot of Abdel-Fattah El-Sisi sitting in front of a row of Egyptian flags on a blue background. The date was 9 March 2021, and the Egyptian president was proclaiming a ‘New Egypt’ – a new republic manifested in a New Administrative Capital (NAC). The idea of the NAC was first mooted by El-Sisi six years earlier, on 15 March 2015, at an economic conference convened in Sharm el-Sheikh. This new mega-scale project had a budget of $45 billion and was planned across 700 square kilometers. It was viewed as an integral part of a Sustainable Development Strategy (SDS 2030) that placed mega-projects at the core of urban development.

In the few months after the 2015 announcement, designs and plans started to circulate, including a master plan of two phases of the NAC (figure 1) and its zoning (figure 2). Located in the Eastern desert areas between Cairo and Suez, the NAC will eventually include eight residential zones, two governmental zones, entertainment zones, investment zones, a diplomatic district, a central business district, a presidential palace and more.

Figure 1: New Administrative Capital master plan.

Figure 2: New Administrative Capital zoning of usage.

The source of funding for this construction project was not revealed, although state officials had announced in 2015 that foreign investors would finance the NAC construction. But the real costs of the scheme were not shared publicly and urban planners and economists did not believe that it was feasible at the publicly announced budget of $45 billion[ii]. Some initial agreements were made with the United Arab Emirates to fund construction, but this was canceled.

External Debts  

Given the lack of financial clarity surrounding the NAC it is important to explore the wider economic background to this project. Let’s start from Egypt’s external debt, which has increased massively over the last ten years: from $33.7 billion in 2010 to $123.5 billion in 2020[iii], a growth in the debt per capita from $413 (2010) to $868 (2020). The largest part of this debt comes from international organisations (notably an IMF loan) followed by loans from Arab countries. Most of Egypt’s debt to non-Arab countries is owed to China, Germany, Japan, France, and the United States (ranked from highest to lowest).

Egypt’s debt to China is $6.1 billion (5% of 2020 external debt), from both public and private sectors including the construction projects associated with the NAC. The flow of Chinese money to Egypt is closely connected to the new urban agenda of the Egyptian government, which is qualitatively transforming the Egyptian landscape and embodies ideological and economic logics. These geographical transformations involve processes of urbanisation at both the mega-project level (such as the New Administrative Capital, or another project called New Almien), as well as the macro level of neighborhoods and towns (such as Cairo self-built housing evictions, and urban redevelopment projects in popular neighborhoods inside Cairo). 

Egypt’s debt statistics are not easy to track as there has been a significant change in the borrowing institutions. It is not only the central government that receives loans, but also the Egyptian Central Bank, other banks, and governmental institutions such as the Petroleum Association and Ministry of General and Physical Planning among others. This makes much of the debt invisible and borrowing is used to cover deficits rather than for transparent development purposes[iv].

Part of the loans from China to Egypt are invested in the transportation infrastructure that will serve NAC, as well as the energy sector. During a visit to China in 2018, Egyptian President El-Sisi signed an agreement with the Chinese government for a loan of $2.1 billion for the construction of the 68 km electric train[v], that will be called the Cairo New Administrative Capital monorail (figure 3). This monorail is planned to connect the western parts of Cairo, where NAC is located, to the eastern parts of Cairo where 6th of October and New Giza districts are located.

Figure 3: Monorail map.

Chinese Construction Companies

Another connection between China and Egypt’s construction economy is through Chinese construction firms. The most important of these is the China State Construction Engineering Corporation (CSCEC), which is a leading construction engineering company headquartered in Beijing that is responsible for constructing three towers in the Central Business District of the New Administrative Capital (figure 4&5).

The Central Business District contains an iconic tower, and multiple buildings spread across 170 feddan (about 71 hectares), with a budget of $3 billion for the iconic tower, while the budget for the other two towers (buildings C07 and C08) are not clear yet. According to their height and construction costs it is estimated that this will be around $2.5 to $3 billion (Table 1).

ICONIC TOWER	BUILDING C07	BUILDING C08
Height 393.8 m floors 77	Height 163.0 m floors 32	Height 163.0 m floors 32
Status Structurally Topped Out	Status Structurally Topped Out	Status Architecturally Topped Out
Expected Completion 2023	Expected Completion 2022	Expected Completion 2022
Function Hotel / Residential / Office	Function Office	Function Office

Table 1: information to building at the CBD, NAC. Source: Council on Tall Buildings and Urban Habitat

CSCEC is paid via an Engineering, Procurement and Construction model. The funding comes via Chinese banks who pay to Egypt’s New Urban Communities Authorities (NUCA) and NUCA pays the contractors, designer, and other construction-related fees. Egyptian firms are the designers of the project, while the Chinese contractor takes the responsibility for constructing the skyscrapers. The Egyptian government announced in 2017 that the Iconic Tower located in the CBD will be the tallest in Egypt and in the African continent.

Figure 4: Central Business District, designed by Dar Al-Handasa, source: Dar al-Handasah Shair & Partners

Figure 5: Central Business District, in June 2021, source: Xinhua/Sui Xiankai.

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This cooperation between the Egyptian and Chinese governments helps China leverage its connection to Egypt and strengthens the Belt and Road Initiative. For Egypt, China is seen as a good partner in revitalizing the Egyptian economy.

As noted, China is the largest lender to Egypt compared to any other non-Arab country and unlike other states (such as the United States) these loans come without political obligations or human rights expectations. Moreover, for the Egyptian government, this kind of institutional cooperation with China in the construction sector enables it to hide the country’s true level of external debt, even though this debt will have significant impact on the future of Egypt.

The claims made in 2015 and 2016 that Egypt’s new urban agenda is attracting new investors to the market were simply not true. The money that comes from China is debt owed to Chinese banks and is closely bound up with the urban transformation of the ‘New Egypt’. This is a transformation that serves only a minority of wealthy individuals who can inhabit spaces such as the NIC.

The new urban agenda of the current Egyptian regime also has a political goal connected to the aftermath of the 2011 revolution and the 2013 coup. It aims at asserting and portraying a vibrant ‘New Egypt’ in the making yet the changes at the heart of this model has caused a massive disruption to many people. The Egyptian government depends upon many institutions around the world to bring this plan to fruition – but it is ultimately a model of economic development that gives political support to the current Egyptian regime but has little to offer the majority of the Egyptian people.

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[i] March 9th, 2021, El-Sisi speech https://www.youtube.com/watch?v=_dJSoGJMvF4

[ii] March 22nd, 2015, Egypt’s new capital: A city for investments or for alleviating overpopulation?, Mada Masr. https://www.madamasr.com/en/2015/03/22/feature/economy/egypts-new-capital-a-city-for-investments-or-for-alleviating-overpopulation/

[iii] Central Bank of Egypt, 2020 Bulletin.

[iv] EIPR report, by Salma Hussein.

[v] Construction Review online, https://constructionreviewonline.com/biggest-projects/monorail-project-to-be-constructed-in-egypts-new-administrative-capital/