Four Egyptian banks are arranging loan worth E£20bn ($2.25bn) to finance construction of 500,000 low-income housing units.

The financing, will be the biggest in the Arab world’s most populous nation, according to Amwal al-Ghad, which cited unnamed sources familiar with the situation.

The state-run Social Housing Fund is expected to receive the loan from the National Bank of Egypt (NBE), Banque Misr, Banque du Caire, and Housing and Development Bank (HDB).

NBE, Banque Misr, and Banque du Caire are contributing around E£6.33bn each to the loan; while the HDB’s share will amount to one E£1bn.

NBE and HDB could not comment on the news when contacted by MEED. Banque Misr and Banque du Caire did not respond to requests for comment.

The project to build housing units is part of the country’s national agenda to build one million homes for low-income citizens, the source added.

The loan deal, which will have a life span of four years, will be formally signed between the fund and the four lenders within the current month, Amwal al Ghad added.

Egypt, which has struggled to boost its economy after 2011 popular uprising which ousted President Hosni Mubarak is planning several large housing initiatives including building one million units and developing the new Capital city.

The UAE’s Arabtec Holding was to build Egypt’s one million housing projects with an estimated value of $40bn but the negotiations fell through and the project was put on back-burner last year.

The country is facing shortage of housing it has seen a total of 7,560 residential units delivered in its capital throughout 2015, compared with the scheduled delivery of 30,000 units forecast by developers at the beginning of 2015. This represents a materialisation rate of just 25 per cent, according to a report by US-based JLL.

Egypt’s government in April had set a new timeline for the completion of public and middle-income housing units, according to a cabinet statement. which aid that Egypt has committed to delivering about 300,000 units by the end of 2016. Cairo also plans to deliver about 750,000 housing units by the end of 2018, in addition to the 135,000 units for those currently living in informal housing.

The government, however, is pushing ahead with the development of New Capital City. The Arab Union for New Urban Communities has submitted a request to the Egypt’s Ministry of Housing to build 30,000 residential units in the project, according to the local media reports in April, which cited chairperson of the union’s board of directors Adel Rahoma.

The project is estimated to cost £E30bn and will be financed by private investment. The Arab Union for New Urban Communities consists of 40 companies, most of which are Egyptian, with the rest made up of Saudi Arabian, UAE and Yemeni firms, according to Rahoma.

In March MEED reported that a company made up of Egypt’s Ministry of Housing, Utilities and Urban Development and the Armed Forces has been established to serve as the master developer for the proposed New Capital City.