Thursday,21 June, 2018
Current issue | Issue 1311, (8 - 21 September 2016)
Thursday,21 June, 2018
Issue 1311, (8 - 21 September 2016)

Ahram Weekly

Sacrificing basics

For many families price increases and fears of tough times ahead are putting a damper on this year’s Eid, writes Sherine Abdel-Razek

Al-Ahram Weekly

Households already struggling to make ends meet view the extra expenses that come with Eid Al-Adha, the Muslim Feast of Sacrifice, with trepidation.

“Buying a sheep to sacrifice is a luxury I can’t afford this year and I’ve already told my two kids we are not buying new clothes this feast,” says Hisham Kamel, a 35-year-old engineer from Heliopolis.

It’s not just that the sheep is more expensive than last year. Every single item in Kamel’s budget now costs more. “The kids’ school uniforms, food, the electricity bill, even the fees for the school bus are higher. It means there is no money left for extras.”

Eid starts next Monday, at a time when Egypt is suffering its highest inflation rate in seven years. Inflation hit 14.8 per cent in July.  

The price of a sheep is 20 per cent higher than last year. The increase is fed by a hike in the price of fodder, a result of the collapsing value of the pound against the dollar, according to Mohamed Sharaf, deputy head of the Butchers’ Division at Cairo Chamber of Commerce.

Eighty per cent of Egypt’s fodder needs are imported and the increased cost of the dollar has also raised the price of imported livestock.

“So far the number of people buying sheep or buffalos for sacrifice this year is down by 40 to 50 per cent and I don’t think there will be a significant upswing as Eid approaches,” says Sharaf.

Sacrifice vouchers, issued by charitable organisations which gather money to buy and slaughter sheep and buffalos, most of the meat of which is then distributed among the poor, also cost more this year.

The cost of vouchers for buffalo meat has increased by 60 to 70 per cent. Some organisations are now offering to collect the money in six monthly installments.  

The Food Bank notes on its website that buyers of its vouchers will no longer receive the customary five kilogrammes of meat because “the numbers of the needy are increasing and this year we will distribute all the meat to the poor.”

Kamal, whose monthly income is around LE8,000, says not buying a sheep is just one of many sacrifices he and his wife are making. Like many people they worry about what lies ahead, especially given the economic reforms the government is now pursuing as a prerequisite to access money from the International Monetary Fund (IMF).

The IMF loan is being touted as a lifeline for Egypt’s economy at a time when the budget deficit reached 11.2 per cent of GDP for the first 11 months of 2015-16, domestic debt has almost reached 100 per cent of GDP and the scarcity of foreign currency is paralysing the economy. On the black market, the only source of dollars for many Egyptian businesses, the pound was trading at 12.8 to the dollar earlier this week.

“The newspapers say economic reforms will add to the inflation rate but I don’t know what else I can cut to make up for any increase. It’s very depressing,” says Kamel.

The government’s reform agenda includes slashing energy subsidies, introducing a value added tax, applying the controversial civil service law and reducing government spending. It also includes further devaluation of the pound to the level at which it is currently being traded on the parallel market.  

“With bold reforms, we shorten the road”, read billboards and street signs erected in Cairo as a part of a public relation campaign to sell the government’s reform programme to a worried public. Other messages on the billboards — “Fear and scepticism will lengthen the road” and “We can rationalise our consumption and reduce our imports” — ask Egyptians to believe in the efficacy of the economic reforms.

“The government understands that the programme is unpopular and that what is to come will be tough. It is trying to prepare people for it,” says Omar Al-Shenety, managing director of Multiples Group.

Commentators warn that last week’s demonstration by dozens of mothers protesting against the scarcity of baby formula is evidence of growing anger on the street.

Intervention by the army to solve the problem provoked mixed reactions. Some saw the military’s move to supply baby formula as further proof that the army is the saviour of the economy. Others criticised the widening economic role it is playing.

The Armed Forces has always had a role in the economy, says Al-Shenety. It is only increasing now, he argues, because the public sector lacks resources and the private sector is afraid of investing in such turbulent times.

But Osama Mourad, managing director of Acumen Securities, worries that the expanding economic presence of the military is crowding out the private sector.

According to the purchasing managers’ index prepared by Emirates NBD Egypt, Egypt’s non-oil private sector shrank for the 11th consecutive month in August.

Output, new orders, and employment figures all fell on subdued demand. Meanwhile, purchase prices rose sharply amid the hard currency shortage.

Managers answering the survey which forms the basis of the index said employment levels at their companies had fallen more sharply than at any time since the data series began in April 2011.

Jason Tuvey, an economist at Capital Economics, says the dip in Egypt’s PMI — the first real economy indicator to be released covering the period since the government announced that it had reached a financing agreement with the IMF — suggests that while financial markets have welcomed the announcement of an IMF deal business sentiment doesn’t appear to have received a boost.

Adding to Kamel’s frustration is that while he tightens his family’s budget as much as possible he is bombarded by stories about “officials stealing millions of pounds, as happened most recently in the wheat buying scandal”.

“Corruption,” says Kamel, “has become the preferred way officials survive the pressures ordinary people must put up with.”

Al-Shenety believes the media’s recent focus on corruption cases is deliberate.

“The government wants to send the message it is doing its best to deal with the economic crisis but bureaucracy and corruption are slowing down its reforms,” he says.

The report of a fact-finding committee investigating fraudulent billing for tens of millions worth of wheat supplies concluded that the government played a key role in “wasting public funds”. The report says government agencies overlooked their own storage facilities in favour of less regulated private sites and pointed to government mismanagement which facilitated graft in the payment of subsidies intended to encourage wheat growers and feed tens of millions of people.

“The government needs to be a role model in dealing with the crisis. Yet we are asking people to abandon luxuries at the same time that we are importing hundreds of thousands of sheep for millions of scarce dollars,” says Mourad. “Sacrificing sheep is a sunna, an imitation of what Prophet Mohamed did. It is not one of the Islamic pillars or obligations so those who can’t afford it shouldn’t do it,” he says.

Mourad argues that the last thing the government needs are billboards with shallow messages to convince people to accept bitter reforms.

“Instead, the government has to be open with the people, reveal all the facts about the reforms, bluntly explain their consequences and highlight the goals. That is the only way it can include the public in setting the priorities for the coming period.”

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