Amr El-Abyad
Last updated: 20 July, 2016

“People need a strong state working for the well-being of its citizens”

Amr El-Abyad calls for an intervention by the government to make Egypt's capital a less messy place.

Cairo is among the most polluted and crowded capitals in the world. A couple of factors contributing to the problem seem uncontrollable in the short-term, particularly when it comes to population explosion and the concentration of economic activities and development to Cairo. Other factors, however, are directly linked to the deterioration of the Egyptian state and its incapacity of proper planning; consider for instance the urban sprawl and mushrooming shanty towns, as well as the corruption of the government which leads to buildings springing up in areas without proper consideration of space. Hence, the capacity of many districts is exceeded by far. In addition, we’re also seeing a lack of investment in economical housing in Cairo’s desert belt.  There is an element related to cultural attitudes here, attitudes that assign a disproportionate social status to car ownership. The attitude is augmented by the government’s mismanagement of the rickety public transportation networks.

Mongolia, a country in the low-middle income category, offers an eye-opener for a radical solution to the traffic congestion problem, as was pointed out by the freelance automotive markets expert Matt Gasnier, with whom I had the pleasure of working on a fuel economy project. In Mongolia there are no import taxes on hybrid cars (cars which work on a mix of battery-powered electric motor and an internal combustion engine). Also, until the last decade, prohibitive taxes in Denmark kept a firm check on the growth of the number of automobiles on the streets.  This, of course, is coupled with a large and efficient bus network that runs on time. However, Denmark should only serve as a hint for the sort of impact government policies could have on the number of cars on the streets since the Scandinavian conditions – e.g. good governance, certain cultural norms – are significantly different from those in Egypt.

The fuel savings of hybrid cars can range from 20%-70%. The highest sales of passenger cars in Egypt were for Chevrolet Lanus and Aveo, Hyundai Verna, Elentra and Accent, Kia Cerato and Carens. None of these fare well on fuel savings compared to more sophisticated and expensive cars. Meanwhile the cheapest hybrid, Toyota Pirus, can cost around $20,000.

An intervention from the government with a policy package can make Cairo a less polluted and crowded place.  Exorbitant taxes on non-hybrid cars and minimal taxation on hybrid cars can reduce the number of cars considerably as the cheapest hybrid is still more expensive than the average car running on the streets of Cairo. And the measure should be coupled with a limit on car licensing for a period of 7 years.

Another part of the package would include eliminating cheap credit for car purchases.  It would be much wiser if credit resources were geared towards supporting productive small and medium enterprises. The savings from subsidized fuel consumption can be used to invest in more efficient and modern bus networks in Cairo, while car access to congested areas would be restricted to residents’ cars and buses. The bus network should be extended to access points in the shanty towns to connect them to Cairo proper in order to phase out the heavily polluting and unruly micro-buses, which run amok in the streets of Cairo, clearly immune to police scrutiny due to their shady connections with corrupt police officers.

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Adverse impacts on the local car manufacturing industry can be tackled by gearing the industry towards export to Africa and Europe through a program that includes assistance with standards, and the establishment of state-of-the art automotive vocational schools. Germany and Korea may support the program in order capitalize on the opportunity of cheap labor in Egypt provided that a serious, competent government is dedicated to support the program and protect it from the debilitating influences of the vested interests through transparency and strong lean and clean cabinet oriented towards boosting Egypt’s competitiveness.

A downside of the policy is the expected popular resistance. This is a very crucial factor, with resentment simmering in the streets and portents of chaos looming in the near distance due to the inability of the regime to delve into the core of Egypt’s woes. Nonetheless, the political energy flowing in the Egyptian streets can be turned upside down and transformed into an agent of change. People need a strong state working for the well-being of its citizens, one that is making an impact on the quality of people’s lives. Trust is built by supporting the indiscriminate sovereignty of the law and policies which citizens can connect to because of their positive impact on health and well-being.

Tunisia is a case in point as, prior to the Jasmine revolution, it had a unique system of car quotas allocated to each manufacturer, though quotas were assigned to politically connected importers. That Tunisia boasts one of the best public transportation networks in Africa was of course an enabling condition for such a policy. There had been considerable popular resentment due to the limited choice and availability of cars, but if the government instead of quotas (for politically connected actors) had just used tax and tariff tools to control the number of cars in the country on the basis of, say, fuel efficiency or engine size regardless of the manufacturer, there would have been lesser room for popular discontent.

Stern resistance from the all too powerful automotive franchise business is surely expected. The fact that this multi-billion dollar rent-seeking market keeps the government’s machinery of corruption well oiled is a constraint on any governmental thinking aimed at altering the status quo. This leads us to the long-term dimension of the new policy package which is pushing the bulk of Cairo’s population into its desert belt. Cheap credit and government incentives to economical housing outside Cairo can have a palpable impact on pollution and congestion in Cairo. Yet, here again we bump into the corruption machinery, for the Egyptian banks orient the bulk of their credit resources to new upmarket suburbs. Here the cumbersome spider web of corruption is a rabbit hole since the lucrative real estate business is a clandestine conduit of profiteering for Egypt’s centers of power and government officials who exist in symbiotic relation with the rent-seeking crony capitalist class.

Finally, the starting point should be a demonstration of political will. The benign elements in the regime can count on popular support once they go down a track of transparency showing resolve and determination towards change.