Thursday,21 February, 2019
Current issue | Issue 1363, (5 - 11 October 2017)
Thursday,21 February, 2019
Issue 1363, (5 - 11 October 2017)

Ahram Weekly

Saving on subsidised bread

A revision to Egypt’s bread subsidy programme aims to curb misuse and waste, investigates Mona El-Fiqi

The new system will save LE1 billion of wasted subsidies
The new system will save LE1 billion of wasted subsidies

The Ministry of Supply and Internal Trade (MOSIT) last week banned the sale of subsidised bread to ration card holders except in the governorates in which the cards are issued. This is a revision to the old system under which cardholders were able to buy their quota of subsidised bread (five loaves per person at LE0.05 each) by smartcard in any governorate.

The decision is a way of curbing misuse, since the ministry has announced that over the past three months more than 100,000 ration cards have been registered to receive quotas of subsidised bread in two different governorates.

The move is expected to save around LE1 billion from the total of LE37 billion allocated for subsidised bread in the state budget for 2017/2018, according to MOSIT. Ali Moselhi, the minister of supply and internal trade, said the new system would be applied immediately in order to reduce wasted subsidies.  

On 26 September bakery owners and consumers were surprised to find that the bread smart system did not recognise a large number of ration cards, giving an “incorrect data” message when the cards were inserted because of the sudden change in the system.    

The bakeries said the ministry should have informed them of the changes before their application, so that they would have been able to explain to consumers the reasons behind the problems with the machines.  

Consumers living in cities like Cairo, Giza and Alexandria, but with ration cards issued in other governorates, were furious as the new system prevented them from buying their quotas of bread.

“Last week I had to buy bread at LE0.5 per loaf instead of the subsidised price of LE0.05 because the machine did not recognise my card. This is too expensive for me,” said Aliaa Ahmed, a mother of two whose card was issued in Sohag but lives in New Cairo where she works as a maid.

In response to consumer complaints, on 27 September the ministry decided to postpone the application of the decision in Cairo and Giza for a week and permit cardholders to change their address to their current residence.  

Consumers have to visit the supply office in their current city or district to register the new address where they can get subsidised bread. The ministry has instructed its offices and the three companies that produce the smartcards to accelerate the process so that addresses are changed within 48 hours of consumers applying to change their data.  

The minister said that once a consumer’s address is updated, he will once again be able to buy subsidised bread.  

Omnia Helmi, a professor of economics at Cairo University, said the new decision was an attempt to reduce waste in the country’s subsidies system, but it made it more difficult for low-income people to buy subsidised bread.

She explained that thousands of low-income people had been obliged to immigrate from their governorates due to the lack of development projects and fewer job opportunities. These people often came to Cairo and Giza to earn their livings, she said, often moving from one governorate to another.

“It does not look good to postpone the enforcement of the decision only one day after it was issued,” Helmi said, criticising the government for taking decisions without studying their implications.  

Important decisions concerning subsidised bread should be shared with the cabinet and society before they are issued, she said.

Egypt’s daily consumption of subsidised bread is between 2.5 million and three million loaves a day, according to figures from MOSIT. In order to reduce the bread consumption, the ministry has applied a bonus system that gives cardholders LE0.1 at the end of each month for each loaf of bread saved from the quota.  

The ministry is studying a suggestion to double the bread bonus to LE0.2 per loaf in order to encourage people to reduce their consumption of subsidised bread and thus the foreign currency used for importing wheat.

The government imports around six million tons of wheat annually, in addition to locally produced wheat estimated at four million tons, to cover the production of subsidised bread. The smartcard system introduced in April 2014 includes 19 million ration cards serving about 80 million people.  

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