HOUS~IG MECHANISMS ~I EGYPT: A CRITIQUE

Ahmed Soliman

Housing systems The housing of low-income groups in Third-World countr ies has been analysed in two ways: radical and l iberal . Radical analysis within a Marxist i n t e r - p re ta t ion has tended to emphasise the production of housing and the way in which it is made avai lable . This is c losely linked to f i rs t ly , the in te res t in maintaining a labour pool at a minimum housing-cost , secondly, the domina- t ion of cap i t a l over the housing process, and f inal ly the s t a te ' s role within housing provision (Burgess, 1978; Harms, 1982). The l iberals focus on housing production as an indicator of the degree of involvement be tw e e n communi ty , market , and the s t a t e . Focusing on issues of government responsibi l i ty , der ived from this is an in te res t in policies of regula t ion which gua ran tee access to basic resources. It lays emphasis on the four ex i s t en t i a l f ea tu res , of iden t i ty , par t ic ipa t ion , oppor tuni ty and secur i ty (Turner and F ich te r , 1972; Turner, 1976; Payne, 1977, 1982). Between the radica l and l ibera l in- t e rp re ta t ions t he re a re diverse and conf l ic t ing views (labour and cap i t a l versus communi ty and market) , and amicab le al l iances between them (the role of the s ta te) (for fur ther deba te see Lea, 1979; P e a t t i e , 1979; Ward, 1982). One then comes to see the housing of tow-income groups as opera t ing not in isolat ion but as par t of a complex soc io-economic and pol i t i ca l in- s t i tut ion, within which various groups compete and in which the product ive processes ope ra t e .

Therefore, housing as a commodi ty or a product (Turner, 1972; Burgess, 1978) is the outcome of ac t iv i t i es and the funct ions of cap i t a l , s t a t e in- volvement and the communi ty concerned. In o the r words, the housing sys tem is defined here as t he ou tcome of cap i t a l which is genera ted by a number of d i f ferent in teres t groups (private and public, wha tever thei r legal form and economic status) uti l is ing the main co l lec t ive commodi t ies within the marke t (land, labour, mater ia l s , as well as the leg is la t ive process which controls the opera t ion of these commodit ies) in construct ion, dis t r ibut ion and control of the housing units, in terac t ing within the development s t r a t egy of the government .

In this context housing provision in Egypt has occurred in the form of a dual sys tem, formal and informal housing.

Informal or non-conventional housing (Drakakis-Smith, 1979~ 3ohn- stone, 1983), or a subordinate pe t ty commodi ty (Burgess, 1978) is subdivided into two groups, semi- informal and squa t te r housing. The l a t t e r involves the i l legal occupat ion of most ly publicly-owned land, and is of ten cons t ruc ted

Neth. 3. of Housing and Environmental Res., Vol. # (1989) No. 1.

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using se l f -he lp techniques. Semi- informal housing is not developed through establ ished, regula ted procedures , and does not ut i l ise the recognised in- s t i tu t ions of housing; but i t has l ega l i ty of tenure with formal occupation permits . Turkey and Egypt a re two countr ies in which such phenomena have been recorded (Waterbury, 1973; Drakakis-Smith and Fisher, 1975). As a par t of the economic e f f e c t s of informal housing, low- income groups increase the size of the labour marke t (by offer ing a supply of labour, and a t low cost) and also increase the m a r k e t for goods and services (though they a re l imited in their ab i l i t y to buy them).

Formal housing has th ree subgroups: pr iva te , public and slum housing. Each is fo rma l in tha t it is built) by af f luent groups and organised ins t i - tutions, in the form of individual or mass production, and uses a capi ta l i s t form of product ion. It follows local building codes and regulated styles of construction) and controls drawn up by professionals. It ranges from a build- ing of two s tor ies high to a high-rise public or pr iva te building. It is con- s t ruc ted with the labour of people who are d i f fe ren t from those who con- sume the final housing product . The final product is usually consumed by higher- and middle - income groups and, to a cer ta in extent) is dominated by the pr iva te sec tor . Re la t ive ly l i t t l e formal public-housing is obta ined by the mass of the Egypt ian population (Wheaton, 1981; Mourad, 1983)) as in o ther Third World countr ies (Gi lber t and Ward, 1985).

Figure I i l lus t ra tes a model which represen ts the re la t ionship between the d i f fe ren t fo rms of housing product ion in Egypt, and which ident i f ies the housing types within the country . Modes of housing production are based on the degree of supply, demand) and const ruct ion, linked to various forms of cap i ta l , within which d i f fe ren t types of housing provision can be ident i f ied . To a ce r t a in ex ten t , formal housing product ion is cons t i tu ted within lega l ins t i tu t ions and depends on a large amount of capi ta l , which de te rmines the level of supply, demand and const ruct ion . On the o the r hand) informal hous- ing production fol lows the same steps as formal housing but on a smal ler sca le , with a var ia t ion in c a p i t a l involved in t e rms of semi and pe t ty c a p i t a l - ist (Pea t t i e , 1982), legal ins t i tu t ions , and mode of construct ion, according to the requ i rements of middle- and low- income groups. Semi- informal housing is pr imar i ly for use and exchange value, and squa t t e r housing for use value. The d i f fe rences be tween formal and informal housing re la te spec i f ica l ly to the l ega l i t y of tenure , t he increased d i f fe ren t i a t ion of the wor ldorce , the more genera l i sed use of waged labour) the increased s igni f icance of the means of production and the purpose of acquiring the housing unit.

R e c e n t studies (Pea t t i e and Ald re t e -Haas , 198l; Drakakis-Smith , 1981; Johnstone, 1984; Gi lber t and Ward, 1985) have shown tha t the two m a r k e t s - formal and informal - a r e in tegra l ly linked, and housing ac t iv i ty outside the formal cap i ta l i s t marke t cannot be cal led non-cap i ta l i s t , as if i t were un- a f f e c t e d by the prevai l ing mode of production. The th ree housing types, fo r - mal, semi- in formal and squa t t e r housing, are linked to each other in that the formal housing is dependent on a f low of labour from the o the r two, while t he l a t t e r two obta in their cap i ta l and resources from the f i r s t . Thus as Taylor (1979) writes: "The spec i f i ca l ly cap i t a l i s t relat ions of production be tween worker , objec t , means and non worker define a distr ibution of the means of product ion in which the l a t t e r a r e e f f ec t i ve ly owned and contro l led by non-product ive workers ( the capi ta l i s t ) , with the worker having to sell his labour-power as a commodi ty to the cap i ta l i s t . "

However, t he three types may change ca tegor i e s through t ime . Formal housing may o p e r a t e outside building regula t ions and thus i t might become informal housing (a phenomenon which has occurred recent ly in Egypt; for

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examples see Tipple et al., 1985). The squatter housing may later be legal- ised and serviced, turning into formal housing, for example in the case of upgrading programmes for squatter settlements, that may observe govern- ment regulations on rent rises and building controls. Subsequently, by receiving back the invested capital with a prof i t i t changes its category into another kind of housing. However, the mode of housing production in relation to the dual system wi l l be examined below.

Mode of supply Mode of supply is defined as a relationship between the amount of capital or the scale of resources and the people involved who organise the basic re- sources for housing production. There are four important factors affecting the mode of housing supply. These are: imbalance of housing production, financial and capital resources, human resources, and f inal ly rent control. Each wi l l be examined below.

Imbalance of housing production Table 1 shows the contribution of formal housing construction in Egypt from 1960 to 1983. The proportion of public-housing units was far less than the share of private-housing production, where the la t ter represents around two- thirds of production during that period. In the period 1977-1983 public hous- ing represented around 150~000 units, while private formal housing produc- tion was around 619~000 units, giving a proportion of around 80% of the total formal housing production.

Government policies have contributed to the housing shortage. In November 1979 a national housing policy set up an intensive programme to overcome the housing shortage t i l l the year 2000. I t planned to build 3.6 mil l ion units during that period in response to the following issues. First, to meet the current housing-shortage, which was estimated to be 831,000 units. Second, to meet the need for replacement and renewal units up to the year 2000, which was estimated to be around 589,999 units. Finally, to meet the need generated by the rapid increase in population from 1981 to 2000, which

TABLE 1. Production of formal housing, 1960-1983, by public and private sectors.

Period Public Private Total Growth of units units population

(million) (a)

1960-6r 61,O00(b) 79,000 1#0:,000 3.27r 1965-70 56,000(b) 110,000 166,000 3.000 1971-76 + r 86,902 127,5142 2.961 1977-83 + 150,000(d) 6199309 770,096 %r

Total + 307,000 895,211 1,203,638 18.663

SourCes: (a) CAPMAS (1976 and 1983). (b) Waterbury (1973). (c) Bayad (1979). (d) Calculated by subtracting the number of housing units in

the period 1960-76 from the total housing production from 1960-83 as recorded in AI-Ahram (198#c).

3r

was e s t ima ted to be around 2,180,000 units . According to this policy, i t was es t ima ted tha t 675,000 units would be provided during the current plan (1981-85)~ less than a third of the required houses have in f ac t been buil t . On the o ther hand, the Egyptian housing product ion in the f iscal year of 1987- 1988 is 198,000 housing units~ 9#.4% of which is const ructed by the pr iva te sec tor and the rest in the government . Giving an annual capac i ty of the housing construction sec to r of around 3.8 housing units per a thousand people, a dec l ine of 1.9 housing units in less than ten years. There is an urgent need to increase this capac i ty to reach I0 uni ts annually to meet the above requirements in the coming twenty years (Soliman, A., 1989). The cheapest public-housing unit in the current plan cos t s about ~E 4,000, and would without subsidies be beyond the reach of low- income groups (Wheaton, 1981). As a result , the public-housing programme, al though l imi ted in scale, has increased the drain on sca rce publ ic-resources , and the housing built has quickly de te r io ra ted (for examples see Steinberg, 198#).

Although there a re shor tages of housing a t all levels , the burden of the urban-housing def ic i t fa l ls most heavi ly on the poorer groups. The poor have la rge ly resor ted to semi- informal housing construction and squat t ing on un- serviced blocks.

Informal housing is closely connected with the absence of a f iscal pol- icy which would have secured revenues for the cons t ruc t ion of public fac i l i - t ies . The absence of a balance in the inves tment mix be tween pr ivate and public res ident ia l deve lopment is a t the root of the present condit ions in informal housing, of which four impor tan t a spec t s are worth emphasis ing. Fi rs t , a valuable e f f o r t has been made by individuals to build dwellings of reasonable quali ty. Second, the absence of planning (owing in large pa r t to the inabi l i ty of the public sec tor to f inance the equipment of res ident ia l subdivisions) makes these areas unserviceable in the future (no s t r ee t r ights of way) should public resources become avai lable . Third, specula tors use these c i rcumstances , through i l legal subdivisions of pr iva te land, to make a high prof i t . Final ly , the re has been the loss of a valuable amount of national capi ta l in the form of cu l t iva ted a r eas as a resul t of the i l legal subdivision of agr icul tural a reas (Richards and Mart in, 1985). I t is e s t ima ted tha t up to 85% of the to ta l construction since 1976 in the Gre a t e r Cairo Region was in- formal (PADCO, 1981).

On the o the r hand, squat t ing s e t t l e m e n t s grew rapidly in the last two decades . As i l lus t ra ted in Table 2 squat t ing s e t t l e m e n t s represented 20% of the to ta l population of Cairo, I I % of Alexandria , 18.4% in Ismall ia , 25% in Suez, and 12% in Por t Said in 1978.

By examining t o t a l housing production in the period 1960 to 1983 it appears tha t formal housing (public and pr ivate) represents less than half of to ta l housing provision, while informal housing production is around 54%, given around 1.5 million housing units (AI-Ahram, 1984b). On the one hand, the da ta recorded that the output of formal housing is very low compared with the populat ion growth, with an average of 9.1 units per thousand per - sons annually. On the o the r hand, p r iva te housing - formal and informal - const i tu tes 9096 of to ta l housing production, while the share of government housing is only I0%.

This government contr ibution to housing production is very low, and this provides evidence tha t the government is no longer relying on public housing to mee t the increasing demand of the Egypt ian urban-poor . The pr i - vate sector (formal and informal), in par t i cu la r the informal , is the main source of increasing housing s tock for low-income groups.

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TABLE 2. The pe rcen tage of the population who are squa t te rs in se lec ted c i t i es in Egypt.

C i ty Year Total population % No of (Million) squa t te r s

(million)

Ismailia(a) 19 78 0..35 18.4 0.064 Suez(b) 1978 0.26 25 0.065 Port Said(c) 1978 0.38 12 0.0r Cairo(d) 1978 5.7 20 1.140 Alexandria(e) 1984 2.8 I I 0.3 I0

Total 9.5 1.64 A ver age (%) 17.3

Sources: (a) Davidson (1981). (b) S t ewar t (1981). (c) Welbank and Edwards (19gl). (d) World Bank (1978). (e) Author 's survey of squat t ing areas in Alexandr ia 1983-84. For

fu r the r de ta i l s see Soliman (I 985a).

F inancia l and capital resources Financial resources for housing provision are var ied according to the type of housing, the providers of housing f inance, and the amount of c a p i t a l inves t - ed. Broadly speaking) government) in te rna t iona l inst i tut ions) banks, and the pr ivate sec to r f inance the formal housing-sectors . Inadequate government and in te rna t iona l f inance and/or a subs tant ia l proport ion of p r iva te f inance a r e inves ted in the informal housing-sector . Figure 2 represen ts the d i f fe ren t f inancial sources and their scale of inves tmen t within within d i f fe ren t types of housing.

There are four main o f f ic ia l bodies f inancing the formal housing-sec- tor. F i r s t , the government f inances formal public housing, including the purchase of land and mate r i a l s , through a pe rcen tage of government invest- ment . It is e s t ima ted tha t the government inves ted around EE 599 million in the period 1968-1973, and EE 682.4 million in t he following f ive years . Despi te the inc rease of inves ted c a p i t a l in the las t period, the pe rcen tage of GDP devoted to housing has decreased from 5 . l% in 1968 to 2.4% in 1979 (CAPMAS, 1980). The cur ren t f inancial pol icy is to supply publ ic ly-f inanced housing to middle- and lower - income groups under two systems) for owner occupat ion and rent through the of f ic ia l unions within the country.

Second, bank loans for p r iva te developers are avai lab le for 50% of the to ta l value of r eg i s t e red land and the e s t i m a t e d building costs a t a r a t e of in te res t of 15% (1982) or with a benef i t of 1.5 t imes the building rent . These loans a r e given a f t e r building permission has been obtained) and re la te to formal housing for middle- and h igher- income groups, but not low-income groups who l ive in the informal housing-sector) because they do not have building permission nor l ega l i t y land tenure .

Third, the Genera l Author i ty for Building and Housing Co-opera t ion (GABHC) prepares housing co -ope ra t ive pro jec t s and provides loans to co- opera t ives throughout the country . It is f inanced by the cent ra l bank. The GABHC has no deposi tors and genera tes funds in terna l ly . It supervises the deve lopment of housing co -ope ra t ives and ac ts as a liaison between the

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FIGURE 2. Sources of f inance for housing consumption.

Housing f inanciers Scale Housing Sector

[ Government inst i tut ions- ~ ~ Formal

Banks:

[International ~ '

~ S m a l l H S q u a t t e r Housil Housing ]

ministry and co -ope ra t ives . Many benef i t s of the GABHC go only to those able to become co -ope ra t i ve members .

Four th , in te rna t iona l ins t i tu t ions are f inancing fo rma l public-housing schemes through long- t e rm loans to the government , a t a r a t e of i n t e r e s t of between 3-696 over 20-25 years . These in te rna t iona l bodies (such as US AID and ODA) a re engaged in low-cos t housing, basic in f ra s t ruc tu re , and s i t e - and-serv ices and upgrading programmes. Most of these loans are cancel led ei ther because of the de lay in implement ing the proposed p ro jec t s or through tha t engendered by the routine work of government ins t i tu t ions .

The pr iva te sec tor f inances both formal and informal housing. The f inancial resources are varied, from earnings of workers abroad which are used to f inance land purchases and const ruct ion , sales of p roper ty (common in agr icul tura l fr inge areas), sales of j ewe l le ry , and, mainly, t rad ing in the formal and informal sectors . Lenders within the pr iva te sec to r a r e l imi ted in number for religious reasons .

Public subsidies are another way of f inancing both fo rmal and informal housing in Egypt. These have taken d i f fe ren t forms, re la t ing to the provision of building mater ia l s , in f ras t ruc ture , capi ta l , and opera t ing costs , publ ic sec tor housing, and s i t e -and-se rv ices and upgrading programmes . These sub- sidies are somet imes regress ive , inequi table , ine f f i c i en t and cause problems in financing the order ly expansion of housing oppor tuni t ies and access by all c i t izens to bas ic accommodat ion and in f ras t ruc tu re . For example , building mate r ia l s subsidies tend to go to b e t t e r - o f f households and probably lead to an increase in the pr ice of unsubsidized mate r ia l s for less well=off house- holds.

As has been descr ibed, f o r m a l housing has the pr ivi lege of formal financial channels, while informal housing has rel ied, to a large ex ten t , on the res idents ' savings from di f fe ren t sources. A substant ia l proport ion of the urban poor - even those with regular employment - have no formal access to the f inancial marke t for housing and o ther co l l ec t ive goods.

H u m a n r e s o u r c e s Egypt s t i l l suffers from a lack of construct ion workers, who cons t i tu te the main e l emen t of housing production and a f f ec t the e x t e n t of housing supply. This shor tage of construct ion personnel is due to a large ex t en t to emi- grat ion to oil=rich countr ies and to a lack of t raining cen t res .

Almost two million Egyptians are migrant workers in neighbouring oil=

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rich countries. This has advantages and disadvantages. The migrants may be improving their economic situation, and gaining net benefits for the coun- try's economy. These net benefits were around ~E 1,000 mill ion in 1977 (Ikram, 1980), which is equivalent to the Suez Canal revenue in 1985 (Ai- Ahram, 1985). On the other hand, the home economy is subjected to short- ages of their skills. During the implementation of the Third Five-Year Plan (1970-1975), construction wages increased rapidly, by around 58.4% by 1975 (CAPMAS, 1976: 192).

Although the Ministry of Housing and Reconstruction (MOHR) set up a five-year plan (1975-80) to establish 65 new training-centres in the country, it only created 24 centres during this period (CAPMAS, 1982). The labour force is growing very slowly. The total number of construction workers in 1975 was 142,000 and in 1980 was 160,000, an increase of only 18,000 workers in six years (CAPMAS, 1982).

Both the shortage of skilled labour, and labour emigration, have af- fec ted housing supply and its quality in both the formal and informal hous- ing-sectors. The scarcity of skills has led to the employment of semi-skilled and even unskilled labour to replace skilled labour. This has resulted in a poor quality and quantity of housing construction, and the wastage of both materials and time. This labour shortage has resulted in higher wages, which in turn have resulted in increased housing prices in both housing sectors.

Rent control Between 1952 and 1982 seven major housing laws were enacted at the na- tional level Under these laws, the annual level of 'fair rent' was defined as one not exceeding 5% of the value of the land on which the building was erected plus 896 of the cost of construction. This was below the market price. These laws categorised the different types of housing according to the space and the price of each square metre, and are applicable within the formal housing sector only.

Because of the restrictions imposed by these laws, developers would obtain a return below the market level, hence the introduction of furnished f lats and key-money within the Egyptian housing market (for further details of the key money system, see Wheaton, 1981). In recent years developers, in conjunction with professionals (architects, lawyers, etc.), have adopted the following procedures: (a) They build blocks of f iats to be used for com- mercial purposes, e.g. clinics, offices, hotels ... etc. in commercial locations in which they can make a prof i t of more than 30096. (b) Others keep the buildings empty to make them increase in value, as demand for them grows. (c) Owner-occupied units started in mid-1975 where developers sell units they propose to build, with down payments of between I;E 3,000 and/=E 8,000 for each unit, and payment of the rest of the price during the construction process. In this way, the developers can benefit from investing the down payment (usually in land trading), and make a net prof i t on the building of around 40-50% or more. This phenomenon has spread rapidly in recent years, especially in Cairo and Alexandria. I t is estimated that the number of hous- ing units kept empty in the recent years has reached around 1.8 mil l ion units (CAPMAS, 1986).

The private developer controls the housing market for his own prof i t through the procedures that have been outlined. In order to reduce the in- fluence of the developers in the market, the government has made various attempts to reduce rent charges within the formal housing-sector~ to bring i t within the reach of the urban poor. Most of these attempts have fai led.

In short, all this has meant that i t is very d i f f icu l t to rent a f la t ,

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especia l ly for low-income groups who became the main vict ims of this crisis in Egypt. They can nei ther af ford such accommodat ion, nor can they choose their res ident ia l locat ions. The only way to accommodate themselves in these c i rcumstances is through the informal housing-sector , in par t icular by squat t ing on public land.

Mode of demand Housing demand is a var iab le dependent on the ant ic ipated costs and benef i t s of the act ions and products required to mee t the demand, tha t is, the f e l t needs of the par t ic ipan ts , and the means they possess and are willing to in- vest (Turner, i972). This inves tment cons t i tu tes the housing commodi ty which a t a l a t e r s tage re turns as valuable revenue to the consumer, acco rd - ing to his housing locat ion, its pr ice, and the level of provision of in f ra - s t ruc ture within the res ident ia l a rea . Each will be discussed below.

Locaticm The demand for housing depends to a la rge e x t e n t on the locat ion of the res- ident ia l area , the t ype of housing, and what the consumer can afford. Formal public-housing may be viewed as an exerc ise that embodies locat ion from the standpoint of producers (usually the government) , who provide the required capi ta l and dec ide housing locat ions, regard less of consumers ' wishes. Most public housing is l imi ted and designed for ce r t a in groups of the population, and is in unsui table locat ions for consumers (for fur ther de ta i l s see Wheaton, 195I; Mourad, 1983). With respec t to the p r iva te formal housing-sector , the producers or developers decide where new housing should be loca ted , depend- ing on land values, the loca t ion of work places, of d i f ferent fac i l i t i es , the environmental qual i ty of the area, and f inal ly avai lable cap i ta l .

Stegman (1969) and Richardson (197I) argue tha t neighbourhood con- s iderat ions are more impor tan t res ident ia l f ac to r s than access ib i l i ty to p lace of work, where the role of the costs of the journey to work is re lega ted to tha t of another cons t ra in t . For example Ma'adi, Heliopolis and the Pyramid areas in Cairo are a long dis tance f rom the c i ty cen t re but in good environ- menta l areas . Thus the formal p r iva t e - sec to r has pr imari ly concen t ra ted on this aspect in recen t years because most units a r e owner occupied, and are adequate to mee t cur rent levels of household format ion among the top 1096 of the income distr ibut ion.

With respec t to the informal housing-sector , low-income groups have re l ied on informal access to urban a reas for housing themselves (Soliman, 1985b). Semi- informal housing is usually loca ted on the margin of the cul- t iva ted areas , which have an a f fordab le pr ice and have the pr iv i lege of secur i ty of tenure , while the urban squat te rs occupy - i l legal ly - public land, and some may occupy the tops of buildings as roof-dwel lers , who build huts, shacks and so for th on the roofs of dwellings in the poor d i s t r i c t s of the big c i t ies (Cairo, Alexandria) . It is e s t ima ted tha t over half a million Calrenes might be living on the roof tops, which form Cairo's so cal led 'second ci ty ' (Waterbury, 1973).

The most impor tan t considerat ion is tha t low-income groups de te rmine their equil ibrium loca t ion by maximising u t i l i ty sub jec t to a budget con- s t ra in t . For example , they may l ive in popular d is t r ic ts , or in the back s t ree ts (Wikan, 1950), or squat on public land and pay nothing - the cheapes t way to find she l te r . The urban poor usually occupy s i tes which have cons ider - ably higher dens i t ies than those occupied by middle- income or high-income groups. The l a t t e r two groups are capable of choosing housing locat ions within wel l -serviced areas , with good t ranspor ta t ion fac i l i t i e s and the leas t

39

pollution. The aff luent groups regard the trban poor's use of land as temporary and expect that eventually they wi l l vacate i t to make way for the most profitable use of every plot in the ci ty. An example of this is the demolit ion of the Bulag area in the ci ty centre of Cairo) and its replacement with luxury residential properties and hotels.

In short) access to reasonable locations, and thus to affordable housing, increasingly reflects economic relationships between persons and groups and results in residential segregation within a c i ty (Abu-Lughod, 1971). The market economics of Egypt are rapidly transforming land into a commodity which can freely be bought and sold by people who can afford i t . Participa- tion in the land market is largely barred from people with low earnings and small savings who are forced into informal access to land.

Housing price The differences between housing types - formal and informal - in relation to their location and standards (as independent variables), and associated with housing inflation (as a dependent variable), are the major factors in deter- mining housing prices in Egypt.

First) the quality of the environment and of housing characteristics) in relation to the size of dwelhng and available space) are dependent attributes in determining housing prices. As explained earlier~ formal housing is in re lat ively good locations in terms of social amenitiesj and the quality of the environment is good, whilst the reverse is true in the informal housing-sec- tor. In the latter9 space consumption is far less than in the formal sector, ut i l i t ies are only partial) construction quality is lower) and this is a l l reflected in a lower housing price. In informal housing) low-income groups t ry to house themselves in a relat ively small space) so reducing the price of land. But this is not necessary in private formal housing because people can afford the expense of the plot. In short, the more formal the housing the higher the price of the unit) the fewer the numbers of low-income farnilies) and the more one finds residential segregation (Soliman) A.) 1987, 1959).

Second, the cr i t ical period of housing inf lat ion in Egypt is considered to be the period 1960-1976 (Barrada and Wheaton) 1979/g0). Table 3 shows that in the period of 1960-1976) the average housing cost per square metre, the construction cost index and the construction material index9 rose by around 40096) 50096 and 40096 respectively, while the nominal income of Egyptian families only sl ightly more than doubled. At the same time the real purchasing-power of an average Egyptian income sharply decreased) espe- da i l y after the )open door' policy. To afford the same house, new or old) the typical Egyptian would have had to have spent three times as much of his income in 1977 as he did in 1960. There were two reasons for this sharp inflation. First was the decrease in housing investment from 5.1% to 1.996 in the period 1960-1978. This level of housing investment did not match either housing demand) the growth of population, or the increase in the level of average incomes. Second) the black market in building materials had a direct ef fect on housing prices.

Each of the three types of housing makes its own contribution to market prices) and all have acted as parallel and competing markets. The increasing demand for housing has resulted in) rising housing prices in the informal sector) increasing prices for both building materials and the l imited land available in the semi-informal sector) and f inal ly the declining parti- cipation of owner builders and an increase in the number of tenants within the three types. Three points are worth emphasising. First) in many respects the semi-informal sector represents a free market in housing by being out-

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TABLE 3. Trends in income, costs and housing inves tment .

1960 1966 1970 1972 1973 Variable

Housing cost EE per m2(a) 10 12.5 15.5 17 25.3 Construct ion Cost Index(a) 100 121 159 n.a . 220 Construct ion Mater ia l Index(a) 100 137 160 178 n.a. Average fami ly income

]~E per year(a) n.a. 275 n.a. n.a. n.a. Housing Inves tment

EE million(b) 107 108 118.2 121 125 % of housinginves tment(b) 5.7 5.1 5.3 n.a. n.a.

1975 1975 1976 1977 1978

Housing cost EE per m2(a) 28.7 33 38 00 53 Construct ion Cost Index(a) 262 375 092 523 n.a. Construction Material Index(a) 278 328 382 550 n~. Average fami ly income

EE per year(a) n.a. 300 556 gg0 n~176 Housing Investment

LE million(b) 127 130 136.3 150 I#9 96 of housing investment(b) n.a. 2.7 2.5 n.a. 1.9

Sources: (a) Barrada and Wheaton (1979/80). (b) CAPMAS

side the control of building regulat ions. But most of these units are not a f fordable by the lower half of the income distr ibut ion (Wheaton, 1951). Second, the formal housing-sector seems to be reserved for special groups, the top 10% of the income distr ibution (Wheaton, 1951). Third, squa t te r housing absorbs the res t of the population because it provides a f fordab le units for rent . In shor t the g rea t e r the increase in housing inf lat ion, the sharper the increase in housing prices, the less is the par t ic ipa t ion of the urban poor within the formal housing m a r k e t and the more is the growth in the informal housing sec to r .

Infrastructure The degree of housing demand in urban areas is related, to a large extent, to the avai labi l i ty of various services (such as water, e lectr ic i ty and sewerage). I t has already been explained that the worst residential locations within the ci ty experience the lowest provision of infrastructure, and have the lowest income groups locating there. Providing infrastructure to the informal hous- ing-sector is the responsibility of the government. Mainly the government provides services to certain areas for both social (consumption) reasons and to stimulate economic growth (production) (for example in the Manshiet Nasser areas in the Greater Cairo Region, and squatter areas in Alexandria, Soliman, 1985a).

The lack of adequate sewage-disposal fac i l i t ies is one of t he larges t technical and economic obs tac les to res ident ia l locat ion, and i t a f f ec t s the degree of demand, especia l ly in the informal housing=sector. This is because

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of a lack of public funds or a lack of government interest in improving such services. The lack of faci l i t ies for sewage disposal results in some streets and buildings in the informal sector being flooded with raw sewage. In Cairo in 1976 and in Alexandria in 1982 the streets were flooded with up to 1,250,000 and 1,335,000 cubic metres of sewage a day respectively (Ikram, 1980) Soliman, A., 1989).

In 1977 a World Bank report on the water supply and sewerage sector est imated that between 10% and 20% ol the urban population was not ade= quately provided with safe water . In Cairo alone over 1.5 million do not have access to drinking water. In Alexandria i t is estimated that around 0.5 mil l ion persons receive no water. Most os this population is l iv ing in informal housing-areas. For example, a survey carried out in Manshiet Nasser (a squatting area) in Cairo by the World Bank (1977) found that less than 1096 of the exist ing plots had access to piped water and of these only 50% had ac- tuai ly paid to be connected. The remaining 90% of plots were served by some g public standpipes, of which only 3 appeared to work, and then only in- te rmi t ten t ly .

In the case of the collection and disposal of refuse, the c i ty council accepts responsibil ity only for cleaning major streets in formal areas and refuse col lect ion Irom houses is le f t to pig farmers (Zabaleen). Unfortunate- ly, the Zabaieen col lect refuse only from wealthy neighbourhoods where the pickings are good, since the refuse is usually sorted out and recycled. I t has been estimated (Nematullah, 1982) that in Cairo alone there is a disposal of of around 3000 tons of refuse per day, of which around lg00 tons are col lect- ed by the Zabaleen, and 900 tons by local councils, leaving 300 tons in the streets every day uncollected. In informal areas refuse is generally disposed of into the streets, in sewer manholes, and other available places, where i t breeds insects and constitutes a serious health hazard. One of the results is a child morta l i ty rate of around g5 per 1000 in squatting areas (World Bank, 1977)o

Elect r ic i ty generation in Egypt is adequate to meet the demands from both formal and informal areas. The problem is not the e lec t r ic i ty genera- t ion, but the supply, which is costly for the government to provide.

In general, infrastructure is monitored, control led and provided by the government in residential areas. The government intervention in favour of special groups has had a major e f fect upon whether or not services are guaranteed to a residential area (Peattie, 1979; Gilbert, 19El). In addition, new policies imposed by the local author i ty for the purpose of urban growth have an indirect ef fect in improving the existing services wi th in both sec- tors. In short, the greater the intervent ion of the government and af f luent groups, the better the services that are provided, and. the less opportunity for the urban poor to gain access to reasonable services.

Mode of conslbruction The mode of housing construction is defined as the relationship between the form of building enterprises, market forces, and the method used for housing production. I t is examined below in relation to two factors, the structure of the construction induslry and the method of construction.

The structure of the construction industry Building enterprises in Egypt nowadays are divided into three types: pubUc, joint ventures, and private enterprises. The three types of f i rm operate wi th in the organized housing-sector - public and private - while the private enterprise mainly operates wi th in the private formal and informal housing-

sectors. In 1980 there were some 13,800 registered firms in Egypt, of which 2696 were public firms.

The public firms are affiliated lx) the Ministry of Housing and Recon- struction (MOHR), the Ministry of Development and New Communit ies (MDNC), and the General Organization for Physical Planning (GOPP). All enterprises are classified according to their field of specialization. Their capital s tructure varies from ]~E 1 million to LE 75 million. Most of these firms have easy access to both internal and external sources of finance because of the government 's holding 5196 of their share value. Arab Contrac- tors Company is considered to be the largest firm in the country and it carried out 5096 of a l l public work, with a value of LE 328 million in 1983. In 1976 the total number of workers in public enterprises was around 96,581 persons, about 22.8% of the 1Dtal number of construction workers (CAPMAS, 1976). These firms had outputs ranging from 100 to 1000 units annually according to the equipment and capital resources available to them.

Within residential construction, most of the public enterprises transfer the work part ly or ent i re ly to registered private contractors , who might pass on the work to unregistered contractors. The final product is officially con- sidered to be the work of the public firms. This process has resulted in increased housing prices through the exchange process of production, especially for middle- and low-income families. For example, in Tenth of Rammdan ci ty the construct ion costs per square metre in a public housing project were est imated to be around ~-E 25, but increased to double this price or more as a result of the work being passed to different contractors .

Secondly, private firms vary according to whether they are registered, unregistered, or illegal firms. Registered firms are allowed to work in both public and private sectors, while the unregistered always work in the private sector or are dependent on subcontract ing work from registered contractors . Their capital base varies from as l i t t l e as LE 100 to a half a million pounds with a maximum construct ion value of LE 500,000 for the public sector and without l imits for cont rac t s for the private sector. These firms employed 78.8% of the total number of construct ion workers in 1978 (CAPMAS, 1980). Their capaci ty varies from one room to 100 units according to their f inancial faci l i t ies and equipment . It is mainly large firms which are involved in formal housing-projects - public and private - while small and unregistered firms carry out most of their work in the informal housing-sector.

Table 4 shows that around If0,000 formal housing-units were built in the period 1980-1981, and around 7796 of these were built by the private sector. I t is evident that housing construction is mainly dominated by the private sector in terms of both ~otal value and volume of construction. I t is also clear that only a small percentage of housing construction is controlled by the government f irms.

Thirdly, the inves tment law No. 43 of 1974 allows for co-operation between Egyptian enterprises (both public and private) and foreign investors. Under this law, many joint enterprises have been established in different types of c o n s t r u c t i o n , with modern equipment enabling the t ransfer of modem building technology to Egypt. Although these new enterprises empha- sise modern c o n s t r u c t i o n methods, such as lift-slab and the like, the costs are very high, to the point where no Egyptian c a n alford it . For example, in the El Matadi project (I0,000 units) it was assumed that the unit cost would be around ~.E 20,000 (in 1977); but a t the end of the project prices had risen to ~E 70,000 (1981). All units have been sold to Arabs from oil countries.

In this respect the construction industry is divided into three or more

43

TABLE 4. Sources of formal and national housing performance in the period 1980-81.

Number ol houses built by sector, and as a 96 of total formal housing-output.

Housing types Public % Private % 3oint % Total % Venture

Low cost dwellings 20350 18.5 3(*100 31 (*(*0 0.(* 5(*890 (*9.9 (f.E30-f.E60 per m2)

Dwellings of average (*785 (*.3 30#70 27.7 5t~5 5 (*0700 37 quality (f.E60-f.Ei20 per m2)

Dwellings of higher (*(*0 0.(* 7920 7.2 6050 5.5 14(*10 13.1 standard (over t~EI20 per m2)

Total 25575 23.2 721~90 65.9 11935 10.9 110000 100

Source: Housing Development (1982).

market systems, controlling housing production in the informal and formal sectors . These market systems can de te rmine forms of distribution, con- sumption and exchange value, leading at the end to a profi t for people who dominate the market .

Methods of construction Broadly speaking the construction process in Egypt can be classified into three methods: traditional) conventional and prefabricat ion. The first two are largely used by private firms within the formal and informal housing-sec- tors. Prefabr icat ion is used only by the public and joint-venture firms in urban areas in connection with large-scale constructions.

The traditional method is mainly used in rural areas and in informal urban housing. It is based on the use of mud for load-bearing walls, and roofs are built of reeds or stalks covered with mud) palm branches or trunks of t rees , bamboo or t imber beams set close together covered with thatch) or corn stalks or any other mater ia l and coated with mud to protec t i t from the c l imat ic conditions. In some parts of Egypt where t imber is scarce, mud bricks are used to construct vaults and domes for roofing (Fathy, 1973). Sometimes straw can be added to the mud to increase i ts strength and to waterproof the mud wall. Foundations for this method are often non-existent or consist of a shallow trench dug through the f i rmer ground) which does not permit more than one- or two-storey buildings. It is very rare for pr ivate firms to be engaged in this sort of construction. Mainly the dweller builds his own house and thus gains independence from the market .

In the traditional method there is no place for cement or steel bars but in the conventional method both these mater ia ls are used. This method is based on the use of red bricks and uses reinforced concre te in two ways, one to construct load-bearing walls and the o ther to build a reinforced concre te f rame. Load bearing walls a r e used for buildings which do not exceed

##

between two and f ive s tor ies . F rame s t ruc tures use re inforced concre te foundations, columns and slabs, and cur ta in wails usually 25 cm. thick for the outer wall to insulate against c l ima t i c condit ions and 12 cm. (half a brick) for in te r io r walls. Both forms of convent ional method a re found in informal and formal housing, with variat ions in qual i ty and quant i ty . Because of misuse of skele ton f rames , there have been many ins tances of buildings collapsing in r ecen t years (Robert , 1983a, 1983b).

From the ear ly 1970s, the author i t ies concen t ra t ed on reducing con- s t ruct ion t ime and costs of houses by introducing pre fabr ica ted methods, most ly in the form of wall bearing and la rge-panel types . Most p re fabr ica - tion methods are control led and dominated by public and jo in t -venture f i rms. Yet most of the output did not mee t the requi rements of the urban poor, and the final product is housing priced far beyond the pockets of the ma jo r i ty of the Egyptian population (Fadil) 1980).

Both convent ional and prefabr ica t ion methods use non-local building mater ia ls ) and const ruct ion techniques which need special t r ea tmen t by the f irms involved. As a resul t , the formal housing-industry is control led by the la rges t f i rms through their abi l i ty to inf luence the avai labi l i ty , pr ices and t r e a t m e n t of these mate r ia l s . In cont ras t , low-income groups have rel ied on t radi t ional methods as the cheapes t and the eas ies t way for the const ruct ion of their informal housing areas .

Conclusion This paper has sketched out the housing system in Egypt. It has outlined three subjec t areas: the na ture of housing provision, the s ignif icance of each type of housing, and the re la t ive role of the government within housing provision.

Fi rs t ly , housing provision is cons t i tu ted in terms of capi ta l or ava i lab le resources, labour, and the level of government par t ic ipa t ion within the marke t , which has resul ted in formal and informal housing production. To a ce r t a in ex ten t , monopoly groups have control led this dual sys tem and they continue to dominate the formal housing-sector , par t icu la r ly with regard to land, building mate r i a l s , and cap i ta l , and they have excluded the urban poor from par t ic ipa t ion in this marke t . Therefore, the urban poor have found a way out through another t ype of marke t in the form of informal housing and in par t icu lar squat t ing.

Formal housing depends upon urban workers in order to produce the housing commodi t ies , and developers a t t e m p t to minimize wages so as to minimize housing costs . On the o ther hand, i t is hard to escape the f ac t t ha t the form and the or ien ta t ion of the informal housing-sector of the urban poor are d i rec t ly dependent on their connect ion with the formal sec tor in order to obtain the col lec t ive commodi t ies which are contro l led by mono- polies, t t is within the context of t he process of marke t forces tha t the rec iprocal i n t e re s t s of the formal and informal sectors can be unified under a common banner in the in te res t of all the par t ic ipan ts . Formal and informal housing-production have been in t eg ra ted within the local marke t , depend on each other and are hardly to be sepa ra t ed .

Secondly, the s igni f icance of each type of housing varies according to the amount of resources , work, and the degree of government involvement . With respec t to public housing~ it has been impossible for the government to meet the demand from the population, especia l ly considering the large sub- sidies tha t a re necessar i ly involved. This is r e f l ec ted in the pe rcen tage of public housing in the marke t (10% of to ta l housing production in the period 1960-1983). Also, many public housing-projects a re demonstra t ion pro jec ts to

45

begin with and pol i t ica l ly mot iva ted , but they degenera te through favour i t - ism and b l ack -marke t ac t iv i t ies . On the o ther hand~ pr iva te formal housing represented a third of all housing production during the same period (1960- 1983)9 and general ly served upper- and middle- income groups. Therefore~ in- formal housing became a rapid response to the housing needs of low-income groups at expendi ture levels sui ted to their income. This type meets the housing needs of those excluded from public and pr iva te channels in urban areas and represents around 5496 of to ta l housing-production, of which around 5096 was produced by squa t te r dwellers . In short~ informal housing, par t icu la r ly tha t built by squat te rs , remains the main source of she l te r for low-income groups in Egypt. Housing provision is l ikely to be dependent on the people 's own resources and resourcefulness for a long t ime to come.

Thirdly~ government intervent ion has taken various forms within the his tor ical development of housing policies during the las t three decades . These forms of intervention have been linked d i rec t ly with soc io-economic and pol i t ical changes within the country~ and could be ca tegor ized into th ree periods.

Firs t was the 1956-70 period of extensive in tervent ion . Since 1956~ pblic housing has become an impor tan t funct ion of the government~ in order to e l iminate the monopoly of pr ivate en terpr i se within the housing sec tor . To promote equity~ the major cap i ta l and product ive resources of the nation were placed under s ta te management in 1961~ when the f irst F ive-Year Plan was drawn up. In this plan~ the Ministry of Housing considered the country wide al locat ion of public housing~ and this resul ted in housing complet ions of 3.g units per thousand people in the period 1961-1964~ a f igure which decreased to 3.2 units in the course of the following plan (1965-70). The s t a t e could not mee t the increasing demands of the population because os the malfunction of the economic system as a whole~ and it could not con- t empla t e massive involvement in subsidized public-housing.

Second was the 1970-19g0 period of ac t ive but ad hoc in tervent ion. Af t e r the 1973 war~ the government in tervened more posi t ively within the housing marke t by recognizing pr ivate developers as the main method of tackl ing the housing shor tage. This recognition took the form of f ac i l i t a t ing the f low of building mate r ia l s and allowing~ to a cer ta in extent~ a f ree marke t within the formal pr ivate housing-sector . With the introduct ion of the 'open door' policy the country has seen rapid economic growth and massive urbanizat ion. This has resul ted in a boom in housing construct ion and increasing pressure on land and she l te r . Within this rapid economic t rans i - tion~ the s ta te has changed i ts a t t i tude towards the urban poor by encour- aging the upgrading of squat t ing areas (for example in the El Heker project in Ismailia).

In t h e third period~ from the beginning of the 1980s~ the s ta te has played an a rb i t r a ry role within the housing marke t , with new res t r ic t ions being imposed on the pr iva te developers through the introduction of planning procedures and building regulations. These regulat ions to a cer ta in extent~ have slowed down pr iva te formal housing-construction. On the o ther hand, recent ly (AI-Ahram~ 1984a~ 1984b, I984c~ i985) an off ic ial decree has been issued which has led to the provision of land a t a notional price for people to build the i r housing by themselves .

To sum up~ access to housing is in tegra ted with the socio-economic and pol i t ical s t ruc ture of the country. Individuals and groups are par t ic ipa t ing in order to seek the most e f f i c i en t means o5 gaining their object ives . Squat ters have squeezed themselves into the local m a r k e t as a result of the current housing problem. Thus the s t a t e has helped - d i rec t ly or indirect ly - to

46

increase the number of squatter dwellers in the urban areas, where they have become a major corr, ponent of socio-economic change, providing the back- bone of the country's productive worldorce.

Therefore, the professionals should promote the recognition of people's own resources in order to increase housing provision in the country, and to decrease the pressure on public funds. In other words, the creation of a con- dition which would allow the urban poor to participate in housing production rests in the hands of the state and professionais who have a responsibility to make fundamental changes in perception and policy, and who have the power to adjust the system of housing provision in Egypt.

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