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Spotlight: Egypt's construction material market plunges over building suspension, COVID-19
From:Xinhua  |  2020-09-20 20:47

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by Mahmoud Fouly, Abdel-Maguid Kamal

CAIRO, Sept. 20 (Xinhua) -- The market of construction materials in Egypt has been facing recession over the past few months due to the government's decision to suspend construction, which coincided with a general downturn over the outbreak of the novel coronavirus COVID-19.

In late May, the Ministry of Local Development suspended issuing construction licenses for private buildings in big and main cities nationwide for six months, to limit random and illegal construction and ensure that all the terms and conditions of proper construction are met.

Since irregular and random buildings represent approximately 47 percent of the buildings in Egypt, according to official statistics, the government works on developing new plans for construction in cities and neighborhoods.

Consequently, the sales of factories and retailers of construction materials, including steel, cement and bricks, have declined by more than 70 percent and they are not operating at full capacity.

"The construction sector in general, and the factories of building materials in particular, have already been negatively affected by the COVID-19 crisis," said Ahmed al-Zaini, head of the General Division of Building Materials at the Cairo Chamber of Commerce.

"The government's decision to suspend building permits for six months has deepened the COVID-19 impact and caused further recession in the field," Zaini told Xinhua.

Egypt has registered 101,900 COVID-19 cases till Saturday night in total, including 5,750 deaths and 88,666 recoveries.

Zaini expects that work in the construction field will resume normally after the end of the six-month period included in the government's decision, which seeks to encourage citizens to reside in new cities and relieve the pressure on utilities and services of old cities.

He pointed out that the profits of construction materials companies have been greatly affected, while many traders and retailers suffered losses.

"The prices of building materials will not increase during the coming period in light of the recession in the construction sector, especially amid the current declining sales in the real estate market," Zaini added.

Cement sales declined by nearly 80 percent, according to several factory owners and retailers.

As for brick factories, some of them had to shut down and lay off workers, said Ahmed Osama, manager of a clay brick factory in Beni Suef province south of the capital Cairo.

"Hundreds of brick factories nationwide have already stopped operation due to both the novel coronavirus and the government's decision to suspend construction," he pointed out.

However, the factory owner stressed that the prices of bricks will not decrease despite the recession, due to the high cost of electricity and fuel used for the operation of factories.

Some other factory owners, like Ahmed Motaz who owns a brick factory in Menoufia province north of Cairo, struggle to continue the operation of their factories and reduce the wages of their workers in order not to lay them off.

"I cannot afford paying them full wages amid such recession and suspension of construction," Motaz explained, calling on the government to ease the construction suspension so that the sales of relevant materials might be revived.

Many retailers of construction materials showed understanding and respect for the government's decision and the state efforts to protect the citizens from greedy contractors who illegally build residential towers without construction licenses, but they still hoped the current recession in the construction material market would soon come to an end.

On Saturday, Egyptian Prime Minister Mostafa Madbouly said during a visit to the new administrative capital city, a giant national project east of Cairo, that the government is planning to continue launching social housing projects for citizens via properly planned construction with full services.

"Enough with random, unplanned and unorganized construction, because it cost the state a lot, ruined massive agricultural lands and created a form of construction that is not befitting Egypt," said the Egyptian prime minister. Enditem

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