The contracting and real estate sector in Egypt has been completely paralyzed. 30,000 companies that are members of the Federation of Construction and Building Contractors have stopped working, as a result of the government’s refusal to pay the dues of companies dealing with public authorities, and facing heavy losses due to the daily decline in the value of the pound, and the difficulty in obtaining dollars.
Contracting companies accumulated bank debts, after they were forced to overdraft, to complete projects, and at the same time the government forbade them to spend the value of primary and final insurance, withheld, on projects they received 5 years ago, representing 20% of the value of implemented projects.
The Federation of Construction and Building Contractors, in an emergency meeting of the Federation Council, chaired by Mohamed Sami Saad, warned the government against stopping the withdrawal of stalled projects assigned to companies, due to the inability of contractors to finance or procure building materials.
Saad considered the government’s actions in this regard a severe blow to contracting companies, which have become stuck between implementing projects that the government does not have funds to implement, and debts accumulated to banks during the operating stages, which require a monthly liquidation of debts, otherwise the accounts will turn into personal loans to contractors and companies.
The federation called on the government to stop offering public projects to contractors without securing the necessary financial resources to implement them before offering public tenders, after direct awarding of projects to contractors has become a poisoned sword threatening the necks of corporate officials who rushed behind the government to implement self-financing projects, out of confidence in the state’s ability to finance those projects.
The Federation requested government intervention in controlling the exorbitantly high price of iron and cement, which rose 3 times its price in 12 months, from 16,000 pounds to 45,000 pounds on average, and the severe shortage of operating requirements and spare parts for construction equipment (one dollar = about 30.9 pounds).
Federation members emphasized that government promises, although they are issued by the Council of Ministers and state leaders, remain in place, due to the “armies of bureaucracy” in the state’s administrative apparatus, who obstruct the implementation of decisions, taking advantage of the absence of committees to monitor and follow up the implementation of decisions, and to study the feedback from stakeholders that got lost in the corridors of public offices for years.
The building and construction sector currently represents about 20% of the national product, down from 40% in 2016 and 2017, according to data from the Ministry of Planning.