The real estate sector has not received sufficient attention from the state so far, despite this sector being linked to 115 other industries, and being the locomotive of the economy, deputy chairman of Egyptian Arab Land Bank (EALB) and member of the Board of Federation of Egyptian Banks, Adnan El-Sharqawi said.
In an interview with Daily News Egypt, El-Sharqawi said a government committee, headed by the minister of housing, must be formed to assess and resolve all the problems related to this sector.
The real estate financing initiative launched by the Central Bank of Egypt (CBE) only overcame problems of high interest rates and the long period of financing, as it encountered many problems, according to the chairman.
What is your opinion of the real estate sector’s performance in Egypt?
Real estate activity is incredibly important all around the world, not only in Egypt. It really is the locomotive of the economy in any country.
This sector is linked to 115 other industries, both huge and simple industries, all of which provide a large number of jobs. In addition, this sector provides job opportunities in an indirect way, such as for temporary day labourers working in the field of construction.
Despite the importance of this sector, it has not received sufficient attention from the state, whether in terms of issuing and organising legislation or finding solutions to investors’ problems.
What is the solution in your opinion?
I believe a government committee headed by the minister of housing must be formed to assess and resolve problems related to the real estate sector. The committee must also develop a vision for dealing with the sale of land and issue new legislation to manage this matter; support serious investors to solve the housing crisis; and avoid the flaws that have emerged in the past so as to not repeat them.
The Central Bank of Egypt (CBE) launched an initiative in February 2014 which aimed to finance low- and middle-income citizens and to stimulate the real estate sector. What is your evaluation of this initiative?
The initiative was intended to deal with the high price of the return on investment (ROI), from which low-income citizens in need of housing suffered. So the CBE set that funding interest a lower cost, in addition to lengthening repayment period to 20 years.
Although the CBE assigned EGP 10bn to implement the initiative, and promised to assign another EGP 10bn, only EGP 1bn of this amount was used.
Why was the full amount not used?
The initiative’s implementation faced many obstacles. Banks were surprised to find that there were no residential units suitable for low-and middle-income citizens who were involved in the initiative itself. There were also obstacles regarding provision of utilities for units.
Regarding the problems in the sector, in an earlier interview with Daily News Egypt you criticised the performance of some ministers. What is your evaluation of the reshuffle?
I did, I thought the performance of some ministers, especially the economic group, was not as good as the performance and speed of the president. The recent cabinet changes came in line with our requests.
It’s a bit early to judge the new cabinet yet, but we hope that the new ministers be able to achieve the hopes and aspirations of the people.
When we asked you a year ago about your vision for the future of the Egyptian economy, you said you were very optimistic; do you still feel the same?
Yes, I’m still optimistic, despite the difficulties we face from time to time, for many reasons. The most important of which is the beginning of the Suez Canal Development project. It will bring in direct foreign investment, which we so desperately need.
To add to this, the recent discoveries of gas will place Egypt among the ranks of the major exporters of natural gas. This will add to the output of national resources, and provide foreign exchange and new resources that were not present before.
I’m also optimistic because I see a new commitment to implement projects on time, something we have been lacking for so long.
What do you think the government should do to support the economy?
Initially, it is necessary to establish a clear economic programme for Egypt with a strict timetable. This programme must be reviewed by the government every three months, to ensure its implementation in a timely manner.
The priority for each project must be determined according to its necessity to the state, so that some projects will be implemented in the short-term, and others in medium- or long-term trends.
The implementation of small- and medium-sized enterprises (SME) must also be supported in parallel with other major projects.
It is no secret that the results of major projects usually appear in the medium- and long-term, while SMEs quickly show results, especially regarding youth employment. I would to point out that there are many economies of many countries—such as India, Brazil and Pakistan—which are based on SMEs.
How can it be ensured the government programme is reviewed every three months or so?
I always stress the importance of communication between the government and the people in any way, as there is a big gap between the government and actual public opinion. I was hoping that the Ministry of Information would perform this role.
In the absence of the Ministry of Information, we can create a sector within the government, whose task will be to reveal the government’s vision and work plan to the people, as well as the impact of these projects on the people. I suggest opening a television channel affiliated to the government to communicate with the outside world.
What other measures can be taken to support the economy?
The state should also confront corruption with all its strength, and I do not mean administrative corruption only, but corruption in all areas. Customs evasion is the worst type of corruption and causes billions of dollars of losses.
I also urge the government to apply progressive taxation, which is applied in major countries, including the United States and some European countries, where people are taxed up to 40 and 45%.
The application of progressive tax would have a positive impact on the poor and on low-income citizens, as these funds will be allocated to support the poor.
There are many Egyptian people in business calling for the application of this tax, but it has not been implemented yet, I do not know who benefits from the delay of this tax.
I would like to send a message through you to the president: I urge him to support young people.
Why young people in particular?
Young people represent 54% of Egypt’s population and they are the strength and future of this country, and I think that the Ministry of Youth does not do its part in supporting youth.
The Ministry of Youth could play a significant role in resolving many problems dogging the state, such as unemployment and its resultant disasters.
I also believe that this ministry should be directly supervised by the president, and it should adopt a significant national project that can attract young people and eliminate unemployment. The ministry can also establish an integrated community for young people only, and the government can provide the infrastructure and services.
If the state managed to achieve this, they will regain the potential power of the youth, and defeat terrorism.