Egypt has wasted billions from public funds over the last four decades building housing for those it has dubbed as "low-income" families through a policy that never managed to reach its target beneficiaries: those who live in inadequate housing.
According to a recent analysis of the state housing policies issued by the Egyptian Initiative for Personal Rights, more than EGP 34 billion in public funds, as well as billions more in private funds, were spent on the "National Housing Program”, also known as "Iskan Mubarak". However, mostly middle income and higher brackets, and not the poor, benefitted. This was due to the policy of allocating most housing units through sale not through rent, in addition to other factors such as political cronyism and nepotism. Simultaneously, the number of families living in inadequate housing - whether due to structural hazards, dangerous location,lack of basic infrastructure, or overcrowding- has increased.
This policy persists with the current "Social Housing Project", also known as the ”Million Units Project”. Already, over EGP 9 billion has been spent on it in the form of subsidies and public investments since 2012. EIPR has proved in a previous study that the beneficiaries of the project are middle-income and higher brackets and not the poor. Furthermore, recent amendments to the Mortgage Law allowed the allocation of publicly-owned land to investors for free to build “low-income” housing. The recent amendment also gave the Egyptian Financial Services Agency the power to raise the mortgage-to-income ratio. All such measures are a continuation of housing policies that marginalize the poor.
The recently released Economic and Social Development Plan for FY2014/15 is further proof of a deficient government housing policy, especially in how it does not support the poor in pursuing their right to adequate housing. (See Housing Policy Paper III: Analysis of Budget Allocations for Housing Projects for FY2014/2015).
In the midst of this, the Ministry of Housing has recently shown some signs that it intends to change this policy. An expert group meeting was held by the Ministry of Housing, Utilities and Urban Development on the 22 May 2014 to discuss a new housing policy for Egypt. Officials from the ministry attended, as well as UN-Habitat, domestic and foreign experts in housing and urbanization and representatives from civil society organizations working on urbanization.
EIPR attended this meeting at the invitation of the Ministry of Housing and encouraged the urgent formulation of a clear housing policy that upholds the right of the poor to adequate housing via legislative reform to realize this right. EIPR also presented a number of recommendations based on studies and work in the field of the right to housing. Key recommendations included:
Oversight and control of the real estate market:
The key purpose of state-funded housing subsidies is bridging the gap between the cost of housing and incomes. However, while the government is spending billions of pounds on subsidized housing projects, it has also been enforcing policies that have increased the gap between prices and incomes, outstripping its own subsidies. These policies included driving up the prices of land and the cost of building material, and the absence of policy planning to promote formal building processes. As such, an independent body must be created to govern the real estate market.
Re-direct housing subsidy to be truly pro-poor:
The prerequisites of the “Social Housing Project” deny the poorest half of the Egyptian people access to the project’s units because they are sold via mortgage. The legal definition of “low income” families must be redefined to only include the two segments with the lowest incomes: the extremely poor and the poor. The projects’ units must be allocated to those beneficiaries through rent, not through mortgage. Also, a uniform database of all beneficiaries of subsidized housing projects must be created. A government body must be created to oversee the enforcement of housing policies and regulate the work involving subsidized housing between the different entities that have access to state resources and funds to build subsidized housing.
Introduce more options for subsidizing housing:
Subsidized housing programs have been mostly confined to fully-finished, government-built housing units, and to a far lesser extent, offering of subsidized plots of land for building, and the provision of soft loans for cooperative housing.
Subsidized housing programs must be restructured to better respond to the different housing needs of families that seek new housing- needs that vary according to rural/urban differences as well as geographical and cultural variations. Such programs must also be directed to families who already have access to housing, though that is inadequate whether due to structural problems, overcrowding, tenure illegality or lack of infrastructure.
To read Housing Policy Paper II: A Proposal for a Just Housing Policy in Egypt click here.
Other papers in the series: