Experts voiced cautious optimism for Egypt’s plans to erect a US$45 billion new capital between Cairo and the Suez Canal, the most outstanding undertaking presented during the country’s latest investors summit, a report by CNBC reveals.
Housing Minister Mostafa Madbouly said in press statements on Monday that the new capital is planned across 700 square kilometers over the next 40 years. He added that the first phase, covering 105 square kilometers, is expected to be completed within seven years.
Economist Mohamed El Dahshan, a non-resident fellow at the Tahrir Institute for Middle East Policy, called it a "pie-in-the-sky" project, according to the CNBC report.
"We'll be left with a cluster of skyscrapers in the desert, a testimony to grandiose government plans that lead nowhere. I'd love to be proven wrong," he told CNBC via email, adding that he'd rather invest that amount in renovating the current capital.
Though the plans for the new capital will gain momentum with regards to moving government offices there, funding will remain a source of concern, Sven Richter, managing director at Renaissance Asset Managers told CBC via email.
"The difficult part is going to be the funding, as it's a huge project, but this will be a multi-year project and is in line with Egypt's growth prospects. I think that the project will be a success but I am not sure when they will be able to start," said Richter.
The fact that the capital will be funded by private UAE investors is a good omen as it saves the project “potential delays and other vulnerabilities related to Egypt's high budget deficit and public debt”, according to says Zeynep Kosereisoglu, a Middle East and North Africa analyst at the Frontier Strategy Group, who also spoke to CNBC via email. If the project were to be carried out by the government, all those issues would be a factor.
"We will be watching whether enough funding can be attracted to sustain the project and how shifts in the external environment (such as a change in global oil prices and the security situation in Egypt) impact the expected timeline for completing it”, Kosereisoglu added.