Global project opportunities

Egypt starts long road to economic recovery

Economic potential following elections lends hope to contractors for revival of major developments

The news that a contract award on the estimated $770m Mall of Egypt development in the suburbs of Cairo is close provides the latest sign that Egypt’s construction market is beginning to recover.

UAE developer Majid al-Futtaim (MAF) Group, the client for the project, is now evaluating the final proposals from two groups before it makes a decision by the end of September. Progress with the project provides a welcome boost to Egypt’s construction sector, which, as with most of Egypt’s industries, has suffered since the uprising that ousted President Hosni Mubarak in February 2011.

Egypt’s construction sector has been at a standstill since the president was removed and the government disbanded in early 2011. Developers and contractors were left hanging as investment dried up and banks became wary of financing real estate schemes.

Despite some political uncertainty persisting, the election of a new president in June this year and an underlying confidence in the economic potential of Egypt has resulted in renewed impetus for major development projects.

The estimated $1bn Grand Museum is one scheme that has gained momentum. The tourism sector is a major contributor to Egypt’s economy, and the new museum will form a cornerstone of the country’s tourism industry. Cairo is aware of the importance of ensuring such schemes go ahead and after numerous delays ground was broken on the project in June.

Contracts have also been awarded for hotel projects, bank headquarters and an 85,000-seat stadium in recent months. With uncertainty and controversy still surrounding Egypt’s new government, and the country’s economy continuing to struggle, it will be a long road to recovery for Egypt’s construction sector. The country’s long-term potential will ensure that it offers attractive propositions for contractors when stability returns.

It is governed by Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah, ruler and head of state since January 2006. Although the emir has the final say in all political matters, Kuwaiti rulers generally have much less influence than their regional counterparts thanks to the increasingly influential National Assembly (parliament).

In recent years, this has resulted in increasing political turbulence. Over the last six years, Kuwait has seen 10 governments formed and then later dissolved as they face growing challenges from the National Assembly to the power of the ruling Al-Sabah family. The result has been delays to major infrastructure development projects and increasing frustration among ordinary Kuwaitis.

The state is split into six administrative governorates - Ahmadi, Farwaniyah, Capital, Jahra, Hawalli and Mubarak al-Kabeer. Its main city is the capital Kuwait City, one of the largest cities in the Gulf.

The population is about 3.8 million, of which only 1 million are local nationals. The majority of immigrants are skilled and non-skilled workers mainly from India and Pakistan. A large number of Syrian and Egyptian workers also live in the state.

Islam is the state religion. The majority of Kuwaitis are Sunni Muslim, although there is a sizeable minority of indigenous Shia Muslims too. A growing rift between the two communities has been the source of some concern in the last few years.

Government

Parliament is composed of 50 lawmakers, elected from 25 constituencies, although this will be brought down to five constituencies from the next election. Cabinet members, who do not necessarily need to be elected, are ex-officio members with voting rights, bringing the total number of parliament members to a maximum of 66.

Bills can be proposed by either the government or the national assembly and are enacted by a simply majority vote in parliament. Due to parliament’s increasing opposition to the government, it has been extremely difficult for any major legislation to reach the statute book in recent years.