Partnerships will solve gridlock in Egypt

04 April 2008

The Egyptian government has reformed the stock exchange, the telecoms market, its customs and courts. The electricity market will soon follow. Its greatest challenge, however, will come later this year when it starts to overhaul Cairo’s creaking transport network.

The city of 24-hour traffic jams gets by with road and metro networks suitable for a city a fraction of its size, while the national infrastructure has held back economic growth.

Later this year, the government will start a massive programme of infrastructure investment. Transport will be the centrepiece: a metro line will link west and east Cairo, a giant ring road will encircle the capital, and rail lines will connect the cities of the Nile Delta.

Previous governments have backed away from work on this scale because of the cost. Egypt already has one of the region’s biggest budget deficits, estimated to be 6.9 per cent this year, and the government cannot finance these projects on its own.

Instead, Investment Minister Mahmoud Mohieldin is using public-private partnership deals - where the private sector pays for the building of the infrastructure and the public sector pays to use it. This means the huge cost of building road and rail links will not lead to an even larger budget deficit.

Public-private partnerships on this scale are new to the Middle East. If they can end the traffic jams in Cairo, other cities and governments are sure to take a close look.

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