In a PESTLE study, political factors are those that are influenced by a country's political scenario and

government policies. We will summarize how numerous political factors affect the building business in
this part.

Frequent changes in the government and its policies have had a severe impact on the stability of the
construction sector.

Orascom was affected at the time as one of the leaders, and its investment in this field was reduced until
it had a clear vision

The government's expansion strategy, beginning with the construction of new capital and progressing to
the revolution of power station investment, revitalized the entire sector.

The complexity of the mega projects gave OC an advantage in gaining the largest share in this market,
and it became one of the icons of such special projects.

In addition, the government has maintained its support for the public-private partnership (PPP) model.

The government's directive to assign some special project to a third party as a subsidiary to the
government caused most of the mega companies to limit their investment or transform into
subcontractors,

The government's five-year plan to provide 1 million subsided homes to low-income citizens,
implemented in response to the housing gap, opened a new market for the big companies as OC

Political and financial incentives are critical to ensuring the construction sector's recovery and expansion.

• The army has been heavily meddling in all construction works and projects that impose the existing
scenario of undiversified market clientele, as well as imposing tough payment terms.

• Market disruption caused by war or Russia/Ukraine conflict resulting in material shortages (energy, oil
and gas supplies, construction material supplies, food industry supplies, etc.).

• Tax policies: The new value-added tax (VAT) law and its increase from 13% to 14% have caused the
building industry's costs to rise.
Economic factors are important external factors that influence the operations of any business or
industry. The economic factors affecting the construction industry will be highlighted in this section of
the PESTLE analysis.

• Following the currency depreciation in 2016, many contractors suspended operations, particularly
those who relied on imported parts.

• Governmental compensation was provided to contractors under current contracts at the time in order
to support them.

• During COVID-19, the Ministry of Housing, Utilities, and Urban Communities promised to pay
contractors EGP 3.8 billion in arrears to help pay salaries and expedite construction, particularly on
national projects.

Investment in new projects such as the New Administrative Capital and the Suez Canal Economic
Development Zone has resulted in increased economic growth and improved Egypt's competitiveness,
encouraging most market leaders to invest in residential communities in this new area.

• Egypt's construction industry expanded by 3% in early 2020, which, while positive, was a significant
slowdown compared to recent years, reflecting the disruption caused by the COVID-19 pandemic.

• Funding arrangements have already proven to be a weak point in megaprojects, as plans for the New
Administrative Capital outside of Cairo have shifted several times due to funding and pricing
complications.

Tax interventions that facilitate transactions by increasing liquidity in the real estate market and
strengthening the banking system, thereby increasing incentives for new building investment.

• Growing scarcity of raw materials and natural resources (such as water and energy). Natural resources
are used effectively in the construction industry.

Social Factors
• Population dynamics: The high concentration of the population poses special challenges; this tendency
has also resulted in a sharp rise in house prices.

• Labor skills: A shortage of skilled workers is said to be the construction industry's primary and growing
problem, affecting sector competitiveness.
Educational systems: There are a variety of public and private educational systems that teach
construction labor skills.

• Demographics of the population: The growing population has pushed the growth of construction
sectors, particularly the construction of new cities and residential areas.

People under the age of 25 account for more than half of the Egyptian population; these new
generations will be the purchasing power for the next decade. As a result, the type and location of
property demanded in their new communities are changing.

• Wealth distribution: Private investment in the residential segment is more concerned with a relatively
small segment (about 15% of the population) that can provide them with high profit margins.

Technological factors
Software Solution: - Building software solutions that help streamline business processes and improve
productivity, such as ERP software that records transactions, changes, and updates to documents,
schedules, and other management tools in real time, allowing for better communication and
collaboration.

• Building Information Management (BIM) - also known as 3D rendering software programs, contains the
majority of these solutions and more, allowing you to create a 3D building plan and combine it with a
construction schedule.

- The investment of large corporations such as OC in new high-tech machines that are specialized for
specific fields allowed OC to maintain its position in megaprojects and new skyscrapers because it had
the necessary tools and technology.

To meet the needs of customers in this field, companies created more jobs and internal functions to
cope with the new technologies of smart homes.

AI& Machine Learning: Construction firms can use the massive amounts of data collected over the years
on projects to predict future outcomes and gain a competitive advantage when estimating and bidding
on construction projects, such as sensors, robots, autonomous drones, and rovers.

Augmented reality (AR) is another technology that improves construction site safety. By providing a
detailed safety plan for heavy equipment training on actual equipment on real-world sites with
augmented hazards.

Legal Factors
The government decided to exempt new urban communities from the normal procedures of normal
cities, particularly with regard to permits and regulations, such as height limitations, which resulted in
the horizontal expansion of residential areas. (O)
Following the end of the suspension period, the government announced new building regulations.
Contractors waited for regulations before making new investments. (T)

The changes made by the government to hood any new buildings in major cities opened up new
opportunities in the new urban, while also raising prices in major cities.

The New Urban Communities Authority (NUCA) resolves any issues that may impede the progress of new
city investments. (O)

Tough penalties were imposed on those who violated building codes, which drove many small businesses
out of the market, leaving them without the skilled resources and abilities needed to meet the new
regulations. (T)

Ecological
To meet international standards, OC required its teams to strictly adhere to the procedures that keep the
environment clean in accordance with governmental regulations.

In order to promote excellence and achievement, Onsi Sawirs established a scholarship program in 2000.

Orascom Construction responded quickly to a request from the Professors of Plastic Surgery at Ain-
Shams University's Faculty of Medicine by making a generous donation and purchasing a new Pulsed Dye
Laser machine for the department.

Orascom Construction made a significant donation while serving as the general contractor for Ahl Masr
Hospital, a specialized burn hospital that serves a large number of unnoticed burn injuries.

Environmental factors
Construction contributes 23% of air pollution, 50% of climatic change, 40% of drinking water pollution,
and 50% of landfill wastes, as well as 40% of global energy consumption.

During manufacturing, building materials such as cement, aluminum, and steel are directly responsible
for "large quantities of CO2 emissions"

According to EPA rules, certain discharges are prohibited to protect workers and the surrounding
environment, and OC is adhering to international regulations to keep HSE standards as high as possible.

Go Green, which uses environmentally friendly materials during construction and can save 250 metric
tons of CO2 emissions per year.

The government has prioritized the development of a sustainable energy mix; examples of energy
projects include the construction of renewable energy power plants through collaboration.

Environmental offsets are conservation actions or monetary contributions that a developer or company
is asked to make in order to offset the environmental impacts of their projects.