The World Bank has approved $500m of financing for Egypt’s Inclusive Housing Finance Programme, via the Washington-based International Bank for Reconstruction and Development.

The Egyptian government will contribute another $1.5bn for the $2bn programme.

The scheme is intended to improve access to home ownership and rental for 4.2 million low-income Egyptians, including 1.6 million who live below the poverty line.

It is expected to create 1.5 million jobs in the construction sector.

The Housing Finance Programme subsidises rents and mortgages for low-income households. It uses vacant and unfinished units, of which there are an estimated 3 million in urban areas alone.

The programme will also develop incentives for private rental investors to rent units to low-income tenants.

Egypt’s cities suffer from chronic housing shortages, made worse by the lack of affordable housing, with a backlog of up to three million units. The country requires approximately 500,000 new units a year, including 300,000 annually to house newly formed households. Over the next five years, Egypt also needs a further 254,000 new units annually just to reduce the backlog of housing. However, only around 200,000 units are completed a year, mainly targeting the mid-level and high-end markets. Many lower-income Egyptians live in informal housing.

The UAE-based Arabtec Holding is set to sign an agreement with Egypt’s Defence Ministry for the development and construction of up to one million low-cost housing units at 13 locations.

The project is estimated to be worth up to E£280bn ($40bn).

At Egypt’s Economic Development Conference in March, a number of housing schemes were announced. this included the development of a new administrative capital, with the first phase costing $45bn, along three major mixed-use and residential projects on the outskirts of Cairo, at a cost of $12bn.

Since the announcements in March, one of those three schemes has made headway, after local developers Palm Hills and Madinet Nasr for Housing and Development signed an agreement in early April to develop a 433,643 square metre mixed-use residential and commercial project.