A report published recently by Egypt’s Ministry of Planning has revealed that the government has spent more than 1.3 trillion Egyptian pounds (around $3.7 billion) on social protection programmes during the past five years. According to Social Solidarity Minister Gada Wali, the Egyptian government implemented eight social protection programmes, including the Solidarity and Dignity initiative, as well as state benefits card for the disabled.
In the meantime, the Central Agency for Public Mobilisation and Statistics has announced a rise in poverty levels across the country up to 32.5 per cent of the population by the end of the fiscal year 2017/2018 compared to 27.8 per cent for the fiscal year 2015/2016. This is the biggest rise in poverty levels in Egypt for 19 years.
Economists consider this to be evidence of the failure of the social protection programmes launched by President Abdul Fattah Al-Sisi. Why, though, have these programmes failed to provide protection from poverty for millions of Egyptians?
According to economist Abdul Hafiz Al-Sawi, the programmes launched by Sisi are nominal in terms of the subject matter and the number of people who benefit from them. Speaking to Arabi 21, Al-Sawi stressed that they have been forced on Egypt by virtue of the agreement signed with the International Monetary Fund in August 2016. This was the deal that resulted in Egypt getting a $12 billion loan over a period of three years. He explained that the lack of interest on the part of the Sisi government has led to them being implemented half-heartedly, just so that the Egyptian authorities could “prove” to the IMF that they have done what was required.
Al-Sawi also noted that the funds used to finance the social protection programmes — the latest of which was the “Dignified Life Initiative” — come from World Bank loans. Describing this as a disaster, he added that it places a huge burden on Egypt’s treasury.
Last week, Sisi relaunched this particular initiative during the 7th National Youth Conference at the new administrative capital with the aim of fighting poverty and elevating the economic, social and environmental position of the more needy families in poor villages. The intention is to provide employment opportunities and maximise their production potential in such a way that they have a dignified life.
When Egypt launched the Solidarity and Dignity programme in November 2015, it was said to provide monthly financial support to those above the age of 65; those who are unable to work for health reasons; and those without an income of at least 350 Egyptian pounds (about $20) per month. This was supposed to be implemented through a selection process conducted by the Ministry of Social Solidarity. However, Al-Sawi pointed out that the programme offers a maximum of 450 pounds per month per family and not per person. This means that many families continue to live in abject poverty. He noted that 2 million families who applied for help through the Solidary and Dignity programme have not received anything according to the state budget statistics for the fiscal year 2018/2019; while 3.5 million families are getting this bare minimum of support, 5.5 million actually applied.
Al-Sawi explained that the Central Agency of Public Mobilisation and Statistics chose deliberately to set the national poverty line at 735 Egyptian pounds, which is lower than the rate set by the World Bank, at 950 pounds. The purpose, he claimed, was to cut the official poverty rate. However, he pointed out that if the Agency had adopted the World Bank’s criteria for assessing poverty, the poverty rate in Egypt would have been much higher than what is announced in official figures.
“Social protection programmes should not be merely an amount of money,” he insisted. “They should provide a real fence for beneficiaries, protecting them from an undignified life; protecting them from disease; driving them toward the right education; and qualifying them for the employment market. The reality, though, is very different.”
The economist noted that the charitable societies closed down by Sisi used to provide a broad social security network for the poor and played a major role in providing essential items to impoverished families. He noted that the Egyptian government’s assessment of the value of charitable work during 2007/2008 was 17 billion pounds. Current assessments are much higher than this.
“The closure of charities contributed significantly to exposing the inadequacy of the state’s role in providing protection for the poor. Even such societies which still exist are not working as efficiently as they used to because they face severe security oversight and many donors refrain from supporting them because they fear accusations of funding terrorism.”
Months after the coup that toppled President Mohamed Morsi on 3 July 2013, the Egyptian government announced the creation of a committee that was commissioned with the task of seizing Muslim Brotherhood assets. The committee was replaced in April 2017 by a law “organising the seizure, administration and dispensation of the assets of terrorist groups and terrorist individuals.” Since 2013, the assets of more than 1,200 charities and hundreds of private institutions and hospitals have been targeted, but no official data is available to let citizens know how much has been taken by the state, or where it has all gone.
Speaking to Arabi 21, the head of the Department of Economic Studies at the Istanbul-based International Relations Academy, Ahmad Dhikrallah, said: “Egypt has implemented an economic reforms programme in conjunction with the IMF according to which it obtained a $12 billion loan. Yet, it has laid the burden of implementing this programme on the shoulders of the Egyptian citizens. As a result, most Egyptians have fallen below the poverty line and have not benefited at all from this programme.”
Egypt announced this week that it has received $2 billion, the last segment of the IMF loan, in accordance with the agreement signed by the government in August 2016. According to this agreement, Egypt has implemented austerity policies and reduced subsidies on fuel, electricity and other services in addition to devaluing the currency.
As a result of these measures, inflation has rocketed to a record level of 35 per cent, which is unprecedented over the past few decades. Thus, the value of incomes in real terms has been cut by about 10 per cent in recent days. Experts have cast doubt on the credibility of these low levels. The net foreign reserves at the Egyptian Central Bank were recorded to be $44.351 billion at the end of June, while Egypt’s foreign debt rose by the end of last year to $96.6 billion, which amounts to 35.1 per cent of the GDP.
“The economic reforms programme implemented by Egypt stipulated the levying of a value added tax, tripling customs duties and reducing subsidies on power and fuel five times,” added Dhikrallah, “and the government is still pursuing more measures.” He stressed that all social protection programmes associated with the IMF programme are extremely fragile.
“It was expected that citizens would benefit from this programme,” the senior economist concluded. “However, according to the internal research bulletin of the Central Agency of Public Mobilisation and Statistics, whose publication has been put on hold, 32 per cent of Egyptians live under the poverty line while 25 per cent are very close to the poverty line or are susceptible to poverty. This means that nearly 57 per cent of Egyptians are poor. This is exactly the ratio that was confirmed by the World Bank in its recent report in which it stated that poverty in Egypt runs at the rate of about 60 per cent. This ratio is expected to rise to 70 per cent in the aftermath of the new hikes in the prices of fuel, which would mean that around 70 million Egyptians are living below the poverty line.”
Quite simply, Abdul Fattah Al-Sisi has failed to protect the vast majority of Egyptians from poverty.
This article first appeared in Arabic in Arabi21 on 5 August 2019
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.