Hitting the road: Economic growth requires ending the gridlock on the nation’s thoroughfares

While Egypt’s road network continues to expand, along with the numbers of vehicles and pedestrians using it, there is growing concern that more investment is needed to further modernise the nation’s carriageways. With a high accident rate and increasing congestion, developing a more efficient and safer road system is now widely recognised by politicians and businesses alike as a vital part of ensuring future economic growth. With this in mind, the interim government earmarked LE1bn ($142.3m) for improving roads and bridges in its new stimulus package, unveiled in late August 2013. More investment is likely needed, however, with the authorities also looking to public-private partnership (PPP) and build-operate-transfer (BOT) models as ways to bring much needed private capital into play.

BOOSTING SAFETY: According to a 2012 World Health Organisation (WHO), the country regularly records one of the highest fatality rates for road accidents in the world at 41.6 deaths per 100,000 people in 2009, or around 12,000 fatalities a year over the last decade. This compares to 25.2 deaths per 100,000 people in Russia and 5.2 in Sweden. Aside from this, in 2008 the World Academy of Science, Engineering and Technology estimated that fatalities at that time cost Egypt around $1.8bn a year in economic losses. Factors that have resulted in such figures include poor lighting and signalling, poor driver education, lack of road lane separation, roads that are too narrow and winding for modern vehicles and speeds, poor vehicle maintenance and the construction of homes near highways. Poor road and rail crossings are also behind many fatalities.

Meanwhile, the number of vehicles on the roads has been expanding; 2008 WHO figures showed 4.3m registered vehicles in Egypt, a figure that rose to 5.8m by 2010. A 2012 World Bank report suggested the economic cost of the traffic congestion that has resulted in Cairo alone could be as high as 4% of Egypt’s annual GDP, or around $8bn a year. According to the Central Agency for Public Mobilisation and Statistics, in 2012 the country had 121,390 km of roads, up 2% on 2011, while it also had 1530 bridges of all types, up 3% on the previous year. This expanding network requires constant maintenance, with a recent estimate from the Directorate of Roads and Bridges suggesting this work required a budget of some LE2.2bn ($313.06m) a year. Much of the responsibility for this currently lies with local municipalities, working in cooperation with national authorities. With budgets tight, some fear maintenance work is being neglected. The somewhat chaotic traffic system has also led to overloaded bridges, with occasionally fatal results.

OUT OF THE GRIDLOCK: Many of the solutions to the country’s road problems lie in improving awareness among drivers, along with better enforcement of traffic laws. Yet, they also lie in improving and modernising the infrastructure itself. One aspect of this may be in reorganising the way transportation policy is implemented. The Ministry of Transport (MoT) is divided into many sub-branches, while municipal responsibility for certain projects and maintenance further splinters decision-making and accountability, leading to a tendency to non-strategic thinking, meaning transport is approached as an operational issue.

At the same time, with PPPs and BOTs now the favoured mechanisms for funding transportation projects, political risk becomes a significant factor in determining the likelihood of a project generating private sector investors’ interest. Investors that wish to participate in transportation projects, which are often long term, require confidence in the continued support of the administration, whatever the make-up of the government. The challenges to improving the road network are thus many, yet, as ever, so are the opportunities.

DEVELOPING STRATEGIES: Under the former government, in June 2013 the MoT renewed its commitment to BOTs and PPPs, and promised to transport more cargo by river and rail. Certain highway projects that had been stalled, such as the renovation of the Cairo-Alexandria desert road and the conversion of the Cairo-Ismailia and Cairo-Suez roads into freeways, were earmarked for more support, with the latter two likely to cost more than LE3bn ($426.9m) each.

These routes are crucial in the development of the Alexandria-6th of October City and Suez corridors, key long-term pillars of Egypt’s economic development plans. They also illustrate the important international aspect of the road network, as the country is a major hub linking the Arab Mashreq International Road Network and the Trans-African Highway Network. The former links road systems from Yemen to Syria and Kuwait to Egypt, while the latter places Cairo as the origin of two transcontinental highways – the first along the North African coast running as far as Dakar, the second heading south, eventually to Cape Town. Situated as it is at the Middle Eastern land crossing between Asia and Africa, Egypt is also a main highway from the Mediterranean to the Indian Ocean and beyond. Thus, its roads are also a matter of international concern.

FOREIGN FRIENDS: This is one reason why a number of international bodies have been supporting Egypt with transport project development, from the WHO to the EU. The WHO is helping fund a variety of projects aimed at assisting road transport authorities develop effective safety strategies. These have included the installation and usage of new speed cameras on Cairo’s ring road and public awareness programmes highlighting seat belt usage and the dangers of speeding.

Another global agency involved is the World Bank, which funded research with the Greater Cairo Urban Transport Authority on reducing the number of cars in the capital area while also boosting bus and microbus usage. The World Bank also suggests that tackling traffic congestion is a matter of improving public transport while making car use more expensive. This latter point puts extra emphasis on the politically sensitive idea of phasing out fuel subsidies, while also looking to change parking regulations. Establishing parking fees and better parking facilities should reduce traffic, as well as time and fuel wastage. The World Bank also advocates the establishment of a single, metropolitan transport authority for Cairo, capable of coordinating public transport across the city.

EXPANDING OPTIONS: The new interim government has also moved forward on road policy. In late August 2013 it announced a new stimulus package, which includes investment projects worth a total of LE22.3bn ($3.17bn). Amongst these is a plan to complete 17 road projects that would link all the country’s governorates. In addition, the purchase of 600 buses from Turkey was also set to go ahead when the package was announced. The stimulus also directs funds towards railway construction, with this also likely to help boost public transportation and ease pressure on roads (see analysis).

The project to link governorates touches on a long-term need to extend and develop highways outside of Cairo. In Upper Egypt, in particular, a lack of transport infrastructure locally leads to much cargo being shipped north along the existing highway to Cairo before it can be exported, increasing congestion there. The Upper Egypt-Red Sea Road project, launched in 2009 and renewed by the previous government in 2012, is one such effort to address this issue, with a network of roads linking the region to ports on the coast.

All these schemes require considerable investment, with the private sector being encouraged to get involved. Terms and guarantees are naturally key here, if longer-term investment is to be unlocked. Yet, whatever the short-term uncertainties, the long-term picture is clearly one of growing needs in a range of segments. These fundamentals, like much else in Egypt, will not change no matter how Egypt’s political scenario unfolds.

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The Report: Egypt 2013

Transport chapter from The Report: Egypt 2013

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