Report of the lecture “Statizing Informality – Unbundling Rights: Neoliberalism and Infrastructure in Cairo’s Ashwa’eyat”

Thursday June 10, 2021, at the CEDEJ headquarters in Cairo, Egypt, Deena Khalil (CEDEJ postdoctoral fellow and American University in Cairo lecturer in Sociology) introduced her research on the complex relationship between neoliberalism and access to basic infrastructure (particularly water and electricity) in Cairo’s informal areas. As part of the Atelier de Recherche series, organized by CEDEJ, Khalil discussed this relationship along three questions:

1. How have informal areas accessed water since they emerged in the late 1960s, given that the state has mostly regarded them as illegal? 2. How has that access changed over the years, particularly during the past two decades as neoliberal reforms have been implemented within Egypt’s potable water sector? 3. How has this affected how the state perceives informal areas and their residents?

The following provides a summary of what ideas were discussed during this event.

The Neoliberalization of Infrastructure in Egypt

Egypt has been depicted by some observers as the a neoliberal state, particularly after the adoption of the ERSAPs during the 1990s, as well as the more recent IMF package in 2014. But even after the ERSAPs, the utility sectors (particularly water and electricity) remained stagnant for several years. One major shift took place in the early 2000s when the water agency (as well as the electricity agency) were converted into national holding companies, in order to adopt a more “business-like” mentality. Tarrifs were raised slightly but still very low and not cost recovering. As Egyptian urbanism expert David Sims mentioned in 2010:

“water consumption charges are among the lowest in the world […]. In spite of endless lecturing by donor agencies, under current tariff rates the water authorities in Greater Cairo cannot even cover system operating and maintenance costs from water consumption revenues”. Until recently the water and electricity sectors were considered some of the least “neoliberalized” sectors in comparison to other sectors such as housing, healthcare and education.

Basic Infrastructure Access in Cairo’s Informal Areas

Informal areas make up around 75% of all urban areas, and around 60% of the Egyptian population. They emerged during late 1960s and have very sophisticated real estate markets, and they relied for decades on informal water and electricity access mechanisms. Khalil carried out fieldwork at different times between 2014 and 2019 in the neighbourhood of Ezbet El-Haggana, which is an informal area. The term informal, of course, means different things to different people/institutions, and its associated conceptualization is the topic of a vast body of scholarly literature. For her research, Khalil decided to follow the Egyptian state’s classification of “unplanned” areas, since her study focuses as much on state practices and discourses as it does on resident practices. Ezbet El-Haggana is an area in Eastern Cairo that the Egyptian state has classified as an unplanned area, which means an area that has been built without the involvement or supervision of the state planning apparatus. It is today part of the East Nasr City district.

Interviews with the residents of this area showed that when the area first emerged, residents relied on public standpipes installed by the military. After a few years, local strongmen tried to control the standpipes and force residents to pay for using them.

Public standpipes. Source: Abu El-Ela, 2006

This was the main method of accessing water through the 1970s, but during the 1980s a group of people began selling water to residents by the barrel. These informal water vendors offered a respite from the arduous journey to and from the standpipe, but they eventually formed a sort of mafia that controlled the local water market and made prices almost unaffordable.

It is during the 1990s connecting one’s household to the public water network became even a possibility in the minds of the residents. This development was due to a local politician named Thuraya Labana who was running for parliament to represent the Nasr City district. Given Ezbet El-Haggana’s size it has always been a substantial voting bloc, causing many local politicians to vie for the voices of its residents. Labana spent months campaigning in Haggana, promising residents that if they voted for her she would make sure to connect the neighbourhood to the water and electricity networks. Through her campaign, several parts of Haggana were connected to the public utility networks, and through the campaigns of subsequent politicians, such as Mostafa El-Sallab and Abdelmeneim Omara, many other parts of the neighbourhood were connected as well.

During the early to mid 2000s some local popular figures, referred to in the NGO literature as “neighbourhood elders” or “community leaders”, began organizing alternative means of accessing water and electricity for those parts of Haggana that had not been connected by any of the politicians. These individuals, usually male, tended to be on good terms with the Local Popular Council (LPC), or were themselves members of the LPC, and often managed Community Based Organizations in the area. These individuals would collect money from residents and hire plumbers to tap into the water mains and install taps, sometimes in-home taps, and sometimes street taps shared by several households.

Meanwhile, the water sector had been undergoing a significant restructuring, as Egypt’s public electricity agency was converted into a national holding company in 2001, and its public water agency was converted into a national holding company in 2004. Part of the new mandates of the two companies were to focus more on cost recovery and financial sustainability, and this meant trying to improve rates of bill collection particularly in neighbourhoods that were consuming water and electricity without paying for it. Thus, the companies began developing plans to install its networks in informal areas, and during the late 2000s the companies began construction in Haggana. However, the construction process progressed very slowly, and when the Egyptian uprising began in 2011, the process was completed halted for several years. This entailed that as recent as 2016 there were several parts of the neighbourhood that still relied on shared taps and self-built networks.

Working around informality

During the post-2013 era, as the post-2011 dust began to settle and the utility companies began focusing again on cost recovery and bill collection.  During this time, there were several ways in which the water and electricity companies worked around informality in order to collect payments from non-metered users who could not apply for a meter due to their lack of tenure documents. One of these methods was formalizing (tasaluh) the informal connection (wasalat khelsa) using alternative paperwork, and this often entailed paying very high arrears. This was mainly used by the water company. Another of these methods was called practice (Mumarsa) where users have no meters or contracts with the company. Their connections are considered informal even if installed by the company. The meter-reader makes an estimate based on number of apartments. This was used mainly by the electricity company and is slowly disappearing.

When Egypt took out a second loan from the IMF in 2016, the goal of this package was to reduce the national budget deficit through several measures one of which is reducing utility subsidies. Implementing this within the water and electricity sectors has mainly entailed raising tariffs, but has also focused on reducing non-metered consumption. Thus, in March 2016, the Ministerial Cabinet issued Decree 886/2016, of which Article 1 states:

“The electricity, and water and sanitation companies, as well as other entities responsible for the management of utilities, shall take all procedures necessary to prevent the theft of electricity or water by buildings established in an illegal way (…), through charging transgressors for their illegal consumption. The companies should utilize whatever technical tools they see fit through the installment of numerical temporary meters until the situation of these buildings is legalized, or until any administrative decrees or verdicts regarding these buildings are implemented. This does not entail any legal rights for the transgressors.”

Therefore, one major change from past company practice is that the reduction of non-metered consumption is not achieved by penalizing non-metered users (as it had been done in the past), but rather by giving them a specific type of meter that enables the company to charge them for their consumption even if the buildings are unlicensed and/or there is no proof of tenure documentation: the digital prepaid metre, known locally as al-addad al-cody (the coded metre).

While the postpaid metres (which have been used most widely across Egypt) are based on a personal contract between the user and the company, with the prepaid meter the contract has the housing unit’s number on it, rather than the user’s name. This enables the company to install them in any housing unit even if the applicant does not have the required documentation, and even if the building is unlicensed, because, as per the ministerial decree, the metres are temporary until the situation of the building is clarified.

Dominant discourse about informal areas

Until very recently, the dominant discourse about informal areas in regards to their access to water and electricity has focused on the idea of widespread theft of precious national resources, and how to curtail their access and penalize them for stealing.

For example, in 2009 a spokesperson for one of Cairo’s electricity distribution companies claimed that people within the ashwa’eyat prefer to steal electricity, even if there were legal provisions that allow them to connect formally, thereby repeating a common trope of informal dwellers as deviants. His solution was an intensive campaign in cooperation with the Ministry of Interior to file reports against homes illegally tapped into the network and impose fines, and “these fines are transferred to the prosecutor’s office for either payment or jail time” (Yousif, 2009). The infamous “electricity police” has regularly conducted raids within the ashwa’eyat to catch these non-metered connections, and the water company has resorted to charging incredibly high – and arbitrarily estimated – arrears as a compensation to the company for the water residents have stolen.

But a change happened in the discourse used by public officials during the post-2013 era as the utility companies began focusing less on penalization and more on accommodation and ways to work around informality. The former thieves and criminals suddenly became potential customers to be charged for their consumption just like any other customer. Similarly, the formerly illegal practice of accessing water and electricity in an informal area instead became a source of untapped capital that companies should try to take advantage of.

The above changes and shifts have had three main implications that are discussed in the following sections.

Shifting the burden of governance

Prepaid meters entail that citizens become responsible for tracking their own consumption and ensuring timely payment. The prepaid meters are increasingly being installed in formal areas as well, as it shifts the burden from the state to consumers.

This shift has been described by scholars as citizen “responsiblization” (Von Schnitzler, 2016), a phenomenon often associated with neoliberal reforms, and that can also be seen as a re-materialization of the state-society relationship. Thus, neoliberalism does not merely act through the roll-back of the state and the introduction of the responsible customer, but rather through reshaping the basic ties that traditionally bind citizen and state.

 

Statizing Informality

In much of the early literature on neoliberalism, the phenomenon of neo-liberalization has often been linked with the idea of “state roll-back”. This refers to a weakening of the state’s role, in line with the understanding that neoliberalism entails a strengthening of the private sector where it eventually begins to replace the state in performing much of its functions. Although this has not taken place in Egypt’s utility sectors, the reforms undertaken in the water and electricity sectors fall under what would has been described in some of the literature as the “second wave” of neoliberalism (Smith, 2004). This form of neoliberalism entails not full privatization but rather more hidden forms such as the corporatization of state agencies, and the commercialization of resources that have traditionally been considered part of “the commons”, such as water and electricity. These two sectors in Egypt witnessed the conversion of what were previously state agencies into public holding companies. Although these companies continued to be owned by the Egyptian state, they had become mandated to eventually cover their own costs. In the wake of the water and electricity sectors being neoliberalized through these reforms, and particularly during the last few years with the increased focus on bill collection and removal of subsidies,  informal areas did not see a withdrawal of the state, but rather saw the contrary. The state is becoming more involved, and the different forms of informality are slowly being transitioned into the formal sphere through through mechanisms such as tasaluh, mumarsa, and the coded meter.

Unbundling rights

As opposed to the state being weakened, which is what is expected from neoliberal reforms as mentioned above, what is actually being weakened is the link between rights and citizenship. Generally, citizenship tends to be linked to a set of rights, and in Egypt specifically, the national constitution guarantees the right to adequate housing as a bundle of rights promised to every citizen. This bundle of rights includes access to adequate water and electricity, as well as the right to secure tenure, among other things. Unbundling refers to the conversion of one bundled right into separate instruments each designed to pursue a different objective, operate at different scales, and be managed separately. What the coded meter has insidiously achieved is that it divorces the question of tenure security from the issue of access to services. The decree by the Prime Minister clearly states that the coded meters should be installed in illegal buildings, and should not be considered a proof of tenure in any way. This dismantles the right to adequate housing as a bundle of rights that includes basic services and secure tenure, as promised in the constitution. This allows the state to benefit from informality without having to address it.

 

Deena Khalil

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