Why is Egypt building a new capital?

And who will this multi-billion project benefit the most?

This picture taken on March 13, 2020 shows an aerial view of ongoing construction development at Egypt's "New Administrative Capital" megaproject, some 45 kilometres east of Cairo. [Khaled Desouki/AFP]

In Egypt, a huge “New Administrative Capital” is being built, approximately 45km (28 miles) to the east of Cairo, on a swath of desert equal to the size of Singapore.

If you take a walk or drive across Cairo, you may be tempted to think that the Egyptian government embarked on this multi-billion-dollar project to meet an urgent need.

Indeed, the current capital is hardly functioning. Ministries and embassies surrounding Cairo’s central Tahrir Square are clogging the city’s arteries. With many streets blocked to ensure the security of these buildings and their occupants, it is at times impossible to go from A to B in the city. Moreover, the already overcrowded capital’s 22-million population is expected to double by 2050.

So it is easy to believe the New Administrative Capital, which is expected to house embassies, government agencies, the parliament, 30 ministries, a spiralling presidential compound and some 6.5 million people when completed, is a necessity. It seems that it will not only move administrative buildings out of Cairo, but also create much-needed housing. Moreover, the government committed to allocate 15 square metres of green space per inhabitant in the new development. The new capital will have a central “green river”, a combination of open water and planted greenery twice the size of New York’s Central Park. So the project is also being sold as an effort to tackle pollution and make Egypt “greener”.

But if you look beneath the surface, and most importantly, follow the money, you will clearly see this project is much more than an altruistic effort by the government to decongest Cairo and improve the living conditions of the city’s inhabitants.

The army pays, the army benefits

The New Administrative Capital is expected to cost about $40bn. Fifty-one percent of the Administrative Capital for Urban Development (ACUD), the company which oversees the project, is owned by the Egyptian military and the remaining 49 percent by the Ministry of Housing.

The military’s enormous role in funding the project is further proof of the conflation of the civil and the military in a country ruled by a former army general – Current President Abdel Fattah el-Sisi came to power on the back of a “coup” that removed Mohamed Morsi, Egypt’s first democratically elected president.

And the military is not only “paying” for the project. It will also reap enormous financial benefits from this ambitious endeavour. The ACUD, in which the military has the majority stake, is in charge of selling housing units in the new capital. Moreover, the company is also responsible for selling or operating the buildings in Cairo that will be vacated after agencies, ministries and embassies move to their new locations. Some of these buildings are in the very heart of Cairo, overlooking Tahrir Square, and have significant value.

This means the military will see huge financial returns once the new capital is completed. Moreover, these gains will not be inspected by a civilian authority, as the government has little oversight over the military’s finances.

The construction effort itself is a huge economic opportunity. To build a new city you need not only funds but also cement, bricks, electrical appliances, carpentry, security equipment and, most importantly, manpower. Thus, this project is an opportunity to create much-needed jobs and rejuvenate Egypt’s core industries, such as construction.

But there are fears that the project will not only help the country’s backbone industries and struggling businesses to get back on their feet, but also allow the military to spread its tentacles further across the Egyptian economy. The military, for example, has the capacity to provide much of the steel and cement needed to complete the construction of the new city. Furthermore, it has access to cheap manpower in the form of low-paid conscripts. As such, it will likely be the military that gains the most from this unprecedented construction drive.

A new city for the privileged few

It is also not clear who will be able to live in the new capital once it is completed. The housing units there are being sold at very hefty prices. A two-bedroom apartment in the new capital goes for about $50,000 – a huge sum that is out of the reach of many in a country where the gross domestic product (GDP) per capita is about $3,000.

Thus it seems the New Administrative Capital is going to serve as yet another gated community for the rich and will do little to meet the housing needs of Cairo’s poor and underprivileged residents.

If the government does not take urgent steps to ensure the gates of this new city are also open to poorer citizens, this new project will achieve little in helping underprivileged Egyptians. This is why the New Administrative Capital is already being seen by many as a colossal waste of resources. Critics say the money spent on building the new capital should have instead been used to improve living conditions in the impoverished parts of what would soon be known as “old Cairo”. In response to these critics, the government said the city will eventually also include social housing, but provided no details as to when these units will be built and made available to those in need.

All this brings to mind the regime of Hosni Mubarak and its fall. The final decade of Mubarak’s rule was underpinned by the rise of rich capitalist cliques helping the economy grow, but simultaneously blocking the benefits of this growth from reaching the poorer sectors of society. And one of the most prominent slogans in the January 2011 protests that toppled the Mubarak regime was “social justice”. With this project – which will likely make the country’s rich richer, the military stronger, and contribute to the ever-increasing misdistribution of resources – el-Sisi appears to be repeating the mistakes that led to Mubarak’s downfall.

But if the project is not going to help the people, and increase their support for the government, why is el-Sisi going forward with this enormous effort?

Stability, legitimacy and legacy

Egypt’s New Administrative Capital may not do much to help ordinary Egyptians, but it will provide some key benefits for President el-Sisi.

First, this new project will help bring Egypt’s powerful businesses to el-Sisi’s side. The private sector had significant economic and political clout in Egypt during Mubarak’s rule. But after el-Sisi’s rise to power, it has mostly been sidelined by the military and reduced to a secondary actor.

In neo-liberal economies such as Egypt’s, authoritarian governments need the support of the private sector to maintain stability. And el-Sisi knows that a huge construction effort – like building a new capital – is the best way to win businesses over.

While the military will likely be the one that benefits the most from the construction of the New Administrative Capital, the project is so large and so lucrative that it will also create opportunities for the private sector.

For example, one of Egypt’s biggest construction companies, Talaat Mustafa Group, has laid the foundations for “Noor City”, a “smart city project” in the New Administrative City. Such projects give the private sector incentive to support the government, and also provide significant tax revenues. Noor City, for example, is expected to generate estimated tax revenue of $7bn.

The new capital will also give el-Sisi much-needed legitimacy.

Personality cults have long been an important aspect of Egyptian politics. Over the years, Egypt’s rulers have repeatedly tried to demonstrate the legitimacy of their authority by naming cities, buildings, roads, and bridges after themselves. There is a city named after Egypt’s former leader Anwar Sadat, and dozens of bridges and roads carrying the name of former President Hosni Mubarak.

While the New Administrative Capital is not named after el-Sisi, it is his flagship project and legacy. His regular visits to the city are being obsessively covered by the state-controlled media. It is impossible to think of the new city without thinking of el-Sisi. The main mosque in the New Administrative Capital is called ‘Al-Fatah al-Aleem’ [the opener, knowledgeable], two names of God, but some take them as connotative references to the president, whose first name is Abdel-Fatah.

Finally, and perhaps most importantly, the new project will help el-Sisi control any future revolt against his regime and consolidate his power.

Back in 2011, it was clear to all of us in Egypt that Mubarak lost power the moment he lost control of the strategic Tahrir Square.

Protesters took over the square on January 28, 2011, and created what they dubbed “the Republic of Tahrir”. They appointed ministers to a symbolic cabinet, created their own security apparatus and burned down the headquarters of the ruling National Democratic Party overlooking the square. Suddenly, the Mubarak regime had no legitimacy.

And in June 2012, on the day of his election, Morsi went to Tahrir Square, greeted the crowds and unbuttoned his jacket – showing the people that he was not wearing a bulletproof vest, and as their representative, was not afraid of them. He was in control of Tahrir Square, and hence, Egypt.

Just a few months later, Morsi’s opponents filled the same square to first call for and then celebrate his removal from power.

Through all this, el-Sisi was undoubtedly taking notes and became aware that Tahrir Square is the key to gaining and holding on to power in Egypt.

Hence, after taking power, he immediately started working towards stripping the square of its status as the arena where the legitimacy of Egyptian regimes is decided.

It is now impossible for the people to take over Tahrir Square and challenge the legitimacy of el-Sisi’s regime. His government dotted the space with Pharaonic monuments and private security guards to ensure it cannot be filled with anti-government protesters.

Now, to diminish the square’s importance further, he is moving the country’s centre of gravity, its leading institutions, and seats of power, to a fortified, artificial desert oasis some 45km (28 miles) away.

On February 11, 2011, the people of Egypt walked from Tahrir Square to Mubarak’s presidential palace to force him to resign. Once the president moves to the New Administrative Capital, however, such a demonstration of public will is not going to be possible again. The state already confirmed that the new capital will be well secured with state of the art electronic monitoring systems. And more importantly, it will be miles away from Tahrir Square and any other public arena where Egyptians can come together to voice their grievances with those ruling over them.

In short, the New Administrative Capital will help the military and the government consolidate their power. It will help the private sector to make money and strengthen its relations with and loyalty to the government. It will allow el-Sisi to give legitimacy to his regime and build a legacy. But the government’s responses to these claims also hold truth – this project will make a tangible difference in the lives of ordinary Egyptians living in the country’s congested capital and the major construction effort will push the national economy forward. So what to make of the New Administrative Capital? As the project will take years to complete, the jury is still out.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.