Thursday,19 July, 2018
Current issue | Issue 1207, (24 - 30 July 2014)
Thursday,19 July, 2018
Issue 1207, (24 - 30 July 2014)

Ahram Weekly

Below the poverty line

The number of poor people in Egypt has been increasing since the revolution, with the trend set to continue, writes Hayat Hussein

Al-Ahram Weekly

The number of Egyptians living beneath the poverty line increased in 2012–2013 to 26.3 per cent, compared to 25 per cent in 2010–2011, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).

Poverty rates have been increasing at a notable pace since the beginning of the century, going up from 16.7 per cent in 2000 to include more than quarter of all Egyptians in the past year.

Experts fear that the inflationary impact of the recent changes in the energy and electricity subsidies, together with the absence of an efficient social safety net, could lead to an increase in the number of those in need.

Prices have been on the rise since the subsidies reduction was enforced. Transportation fares of privately owned microbuses have increased by between 35 to 80 per cent.

Food commodities like milk, vegetables, fruit, and meat have all risen in price, while poultry has increased by LE2 per kg. The Cairo Chamber of Commerce’s poultry division said chicken prices would likely rise by 25 per cent in the coming period because of added transportation costs. Also, food prices are expected to surge more if the government gives in to fertiliser producers’ demands for increases in prices.

The annual urban inflation rate registered 8.2 per cent in June, the last month before applying the price increases and the beginning of the new fiscal year in July. Inflation in June was pushed up by a hike in poultry and vegetable prices, and annual food inflation reached 11.2 per cent.

Abu Bakr Al-Guindi, the head of CAPMAS, said at a press conference two weeks ago that it was expected that the rises would lead to increases in the prices of other products and services other than transportation.

Having a well-established social safety net should be a pre-requisite of any price increases to protect the poor from their negative effects, according to Heba Al-Leithi, a professor at Cairo University.

Al-Leithi, who has worked on a study on the effect of the recent decisions on the poor, expected that prices would rise by 30 per cent in the coming months. “If the government fails to offer an efficient social safety net, the number of the poor will increase by about 1.5 million persons,” she said.

Prime Minister Ibrahim Mehleb has noted that money saved from energy subsidies would benefit other key services, such as health and education.

Chronic illness pushed seven per cent of Egyptian families into poverty in 2012, according to a study by Ahmed Rashad, a research fellow at the Philipps-University in Marburg, Germany.

Rashad told Al-Ahram Weekly that upping health care subsidies might help to reduce the negative effect of the energy subsidies cut, although “it is still unclear how the increase in healthcare spending will be used.”

So far, there is no plan on how to protect those close to the poverty line from the effect of price increases, but there are many stand-alone measures.

For instance, the government has said that it aims to amend the social security pensions’ law to increase the number of beneficiaries, including the elderly and disabled, to three million people.

Sherine Al-Shawarbi, manager of the social equity unit at the Ministry of Finance, told the Aswat Masriya news site that the government expected to offer monthly cash support ranging from between LE300 to LE450 to 216,000 poor families to help ease their burdens.

Al-Shawarbi said that the Ministry of Finance had allocated LE5 billion in the 2014-2015 budget for cash support for poor families, pointing out that more than 1.2 million citizens would benefit from the new system.

The ministries of local development, social solidarity and finance are working to execute the plan, along with building a database of poor people, she said.

The initial results of the survey by the three ministries say that the poverty rate in 180 villages might reach 75 per cent soon.
Al-Leithi added that the government did not have enough information about the poor, making it harder to help them.

Rashad thinks that people will not only suffer from the expected hikes to the inflation rate, but also from the effects of other austerity measures, like the new tax taxes.

The main aim of the new measures, according to the government, is to reduce the budget deficit to 10 per cent, compared to 12 per cent last year.

It targets a growth rate of 3.2 per cent, with the expectation that the economy will grow gradually by between 4 and 5.8 per cent over the next three years.

Egypt recorded growth rates of 5-7 per cent during the last years before the 25 January Revolution, but it did not succeed in lowering the poverty rate.

The UN Food and Agriculture Organisation (FAO) said in a 2012 study on world food insecurity that economic growth was necessary but not sufficient to accelerate a reduction in hunger and malnutrition.

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