EIPR: Total Failure of the Government’s Housing Policy to Guarantee Citizens’ Right to Adequate Housing Revealed in Budget Analysis for FY2014/2015

Press Release

22 July 2014

The Egyptian government has failed to adopt policies to support the poor’s right to adequate housing as per Article 78 of the Egyptian constitution, an analysis of FY 2014/2015’s budget has revealed.

11.2 EGP billion were allocated to either investments or subsidies for various state-sponsored housing projects in the budget of FY2014/2015. Only 60 EGP million of the total allocation, a mere 0.5%, is likely to benefit the poor according to a policy paper recently released by the Egyptian Initiative for Personal Rights.This money will fund small non-family dwelling units of 42 m2 in the “Awla bel-re'aya” project, a component of the National Housing Program, or “Iskan Mubarak”, which should have been completed back in FY 2011/2012.

As for the remaining investments, the methods for allotting the completed housing units to the poor are opaque or unjust. The real problem lies with the largest housing program, the “National Program for Social Housing” (NPSH) which was allocated 9.5 billion EGP to cover three projects, namely the “Social Housing Project” (SHP), commonly known as the “Million Units,” which consists of completed housing units targeted to low-income families; the “Family Housing Project,” which consists of small plots of land for middle-income families; and a project which provides tracts of land for the wealthy and includes the “Beit al-Watan” project.

No breakdown of how much each of these projects costs is available. Thus, it is unknown how much real spending is going specifically to the “Social Housing Project” for low-income families, rendering claims by the government that allocations for this project are “contributing to the achievement of social justice for Egypt’s citizens” highly dubious. As a matter of fact, the billions of pounds allocated to the NSHP serves the middle, upper-middle and the rich income brackets.

In addition there seems to be no clear plan for the NSHP and no bias towards the poor. The Ministry of Housing has recently announced a protocol of cooperation with the Engineering Authority of the Armed Forces to build 100,000 housing units- 50,000 units of which are for low-income families, and are already included in the current budget as the “Social Housing Project”. However, there is no clear budget item or plan for the remaining 50,000 units, which will target middle-income families. This protocol raised much concern over the government's housing policy for the poor, as it is treating low-income and middle-income families equally, as well as announcing a new project after the budget has been ratified.

There is a further injustice with the “Social Housing Project”. By allocating its units through mortgages, nearly half of all Egyptians – the poorer half – will be denied access to these units. This is because mortgages, like any system of lending, set a minimum income level for borrowers. In Egypt the mortgage-to-income ratio is 25%, or in other words, a monthly installment may not exceed 25% of monthly household income- an acceptable rate. However, the housing units are too expensive compared to poor incomes. The lowest monthly installment for a mortgage is 480 EGP which means the household’s monthly income must be at least 1920 EGP –with an annual household income of nearly 23,000 EGP.

By comparing this to the income levels of the CAPMAS Household Income, Expenditure and Consumption Survey 2012/2013, it is clear that the families being described as “low-income” by the government are not poor families but actually middle-income earners. This further means that those described as middle-income really have above-average incomes, and so forth (for more information about this analysis, see Housing Policy Paper I: Recommendations for the Social Housing Programme).

The housing budget analysis recently released by EIPR concludes that the government is not showing real interest in providing financial support for the poor to acquire adequate housing. The total value of housing subsidies – both in terms of cash allocations and subsidized interest for mortgages and loans – is 1.4 billion EGP -a mere 0.6% of the 229.6 billion EGP allocated for subsidies in the FY2014/2015 budget. Furthermore, most of these meager housing subsidies target the middle-income brackets and above in the form of mortgages, with no benefit worth mentioning going to the poor.

The Ministry of Finance's Fiscal Statement for the FY2014/2015 Budget and the Ministry of Planning's Economic and Social Development Plan for FY2014/2015 succeeded only in revealing the total failure of the state’s housing policy in guaranteeing the right to adequate housing.

The government is carrying out several projects including projects, like “Iskan Mubarak” that were supposed to have been completed two years ago. But instead, they’re still underway to this day. Other projects lack sufficient information about their beneficiaries, particularly those implemented by the General Authority for Construction and Housing Cooperatives. In the “Social Housing Project”, the government is making unrealistic promises to achieve the impossible including the completion of a million units between 2012 and 2017. So far, only 50,000 units were completed in two years.

To read the full report Housing Policy Paper III : Analysis of Budget Allocations for Housing Projects for FY2014/2015, please click here

Other papers in the series:

Housing Policy Paper I: Recommendations for the Social Housing Programme

Housing Policy Paper II: A Proposal for a Just Housing Policy in Egypt.