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Egypt: economic crisis pushes middle class to brink of poverty

January 18, 2023 at 9:15 am

An Egyptian man arranges fruits at a shop in a market in Cairo. [KHALED DESOUKI/AFP via Getty Images]

Egypt’s economic crisis is pushing the country’s middle class to the brink of poverty, Agence France-Presse has reported. Currency devaluation and rampant inflation are forcing many families to take radical decisions and change their lifestyles.

The report cited the example of Manar, a 38-year-old mother of two, who said that like many Egyptian families she is concerned for the future in a country that is carrying out painful economic reforms in response to the demands of the International Monetary Fund (IMF). “We are like someone who has been hit by an earthquake and is forced to give up everything,” she explained. “We used to live a decent life. Now all I think about is the price of bread and eggs.”

With the Egyptian pound losing half of its value against the US dollar since March, inflation has risen to 21.9 per cent. The country imports most of its needs from abroad, and the price of food has increased by 37.9 per cent, according to official figures.

However, economist Steve Hanke of Johns Hopkins University measures inflation based on purchasing power parity and factoring in black market exchange rates. He has estimated Egypt’s real inflation rate at 101 per cent.

READ: Egypt expands access to subsidised bread

The Egyptian economy is still suffering from the repercussions of years of political crises, security issues and violence, followed by the Covid pandemic and the Russia-Ukraine war. Both Russia and Ukraine are key exporters of wheat and sources of mass tourism to Egypt.

In 2016, a $12 billion bailout saw the regime in Cairo enact a slate of measures, including a sharp currency devaluation and wide-ranging subsidy cuts. Nevertheless, a third of Egypt’s 104 million people now live below the poverty line, according to the World Bank, while another third are “at risk of becoming poor”.

Salma is a 41-year-old translator who asked for anonymity. She said that “military-grade discipline” in the supermarket is no longer enough. “My husband’s salary has lost 40 per cent of its value in six months,” she told AFP. Giving up some commodities leads to little savings, but what worries her is the “house, car and school fees” for her six-year-old son.

According to Ahmed Hisham, an official with the Abwab El-Khair charity, more and more middle-class Egyptians, including “private sector employees making 4,000-6,000 pounds” ($135-202) per month, have been coming in for financial support. “A lot of people had life savings they were keeping aside,” he explained to AFP. “Now they’re using them for healthcare or daily expenses.” Hisham added that such people used to make a good living. “Now they can’t make ends meet. They’ve never been in this position before, and they’re mortified to come to us. One man told us that he can either feed his children or put them through school, but not both.”

Defining what the middle class actually is these days is difficult, said the deputy director of the Alternative Policy Solutions research project at the American University in Cairo. “The concern is that those who were not near the poverty line… could find themselves getting closer and closer,” said Soha Abdelaty. “These are people for whom life is no longer affordable, but they’re still not eligible for social assistance from the government.”

The latest study published in 2020 put the average wage in Egypt at 69,000 pounds a year ($2,300), slightly above the poverty level set by the World Bank of $3.80 per day. “Those who receive this income are no longer able to secure basic living needs, but the conditions for obtaining social assistance granted by the government do not apply to them,” added Abdelaty.

READ: Egypt to sell discounted bread to fight inflation

For many Egyptians with university degrees, there is said to be no solution but to find a job abroad. Many have resorted to websites advising them on job opportunities in wealthy Gulf countries, or on how to have their degrees recognised in Europe.

For families who cannot travel abroad, like Manar’s, education is a top priority to improve their life chances. Such families resort to private education because the public school system is marked by notoriously overcrowded classes and outdated curricula.

“The schools are a disaster, forcing families to pay 20,000-40,000 pounds ($675-1,350) per year for basic elementary schooling,” Manar pointed out. “You have to be ready to sell everything you have to give your children an education, in the hope that things will be better for them tomorrow. The problem is that we don’t know if this is as bad as it gets. The way things are, all you can do is take it one day at a time.”