Last week I had the pleasure of participating in the conference organised by the Ministry of Social Solidarity to mark one year on the beginning of the Karama and Takaful social programs.
Both programs provide direct cash assistance to the poor, Karama to elderly and disabled people who cannot work and Takaful to the poorest families.
During the meeting, the ministry announced that the two programs now cover three million people in the ten neediest governorates, most of them in Upper Egypt, and work was underway to extend the programs to other eligible beneficiaries in the remaining governorates.
I have been a zealous supporter of these programs since the idea was first proposed in 2008 under then Minister of Social Solidarity Ali El-Meseilhi, who also championed it, but political conditions were then unfavorable and inadequate attention was paid to social issues.
The idea rose and fell in the priorities of successive governments and parliaments, until the government of Ibrahim Mehleb finally made it a reality. Having actually implemented the programs over the last two years, the Ministry of Social Solidarity deserves fulsome praise, since implementation is ultimately the biggest challenge and the true measure of success.
The programs are significant because they diverge from conventional pension schemes and proceed from a fundamentally different understanding: that social justice can be realised by providing a comprehensive umbrella of social protection based on redrawing the poverty map in Egypt, examining wealth and income data, building a comprehensive database of all cash, in-kind, and service support received by citizens, and then using this to draft a plan to deliver subsidies to those who need them and limit waste and corruption in social spending.
This new approach distinguishes the Takaful and Karama programs from their predecessors, making for a more targeted, fairer provision of social protection and giving future decision makers an instrument for the application of other social policies.
There are two important dimensions of this type of targeted program. First, direct cash support is not necessarily an alternative to the in-kind subsidies provided for years in Egypt. It is instead a complementary mechanism allowing cash assistance to go where it is needed.
Second, the principle of targeted subsidies for the poor, whether cash or in-kind, means accepting the periodic review and assessment of recipients’ circumstances, and excluding them if their conditions improve or the grounds for their eligibility no longer apply.
Otherwise, the protection umbrella would continue to expand, ultimately again bringing in people who need no support.
The shift from comprehensive support that makes no distinction between rich and poor, needy and non-needy, lies at the core of a much-needed change. The sad truth is that over the last two decades, the exponential increase in social spending to cover all forms of comprehensive subsidies—which now account for 25 percent of public spending—has not been matched by reductions in the poverty rate. On the contrary, poverty has continued to grow.
This trend cannot be corrected without moving from the concept of comprehensive social protection to targeted spending for poverty and the poor.
But the Karama and Takaful programs are a significant beginning, not the end of the road. Several challenges have yet to be addressed.
First, the programs require ongoing follow-up, revision, and review to remedy implementation problems. In addition, these programs cannot be funded in perpetuity by loans and foreign grants.
The state must devote adequate resources from the public budget to ensure their sustainability without being at the mercy of shifts in political tides and international relations—the programs are a fundamental right, not a nonessential handout.
Moreover, in the longer term, we should not stop with these two programs. A social protection network must be based on sound, standardised data on all pension and support programs, up-to-date, accurate poverty maps, integrated social spending, and the provision of jobs.
I’m pleased that the Ministry of Social Solidarity declared its intention to incrementally build on this system, including by reviving the school meal project—a major pillar of the program that requires a more in-depth look.
However, the greatest challenge is for the state to recognise the importance of popular and community oversight of social protection programs. No matter how hard-working and sincere officials are and regardless of the many regulatory systems, records, and instruments they devise, these programs will inevitably stumble and be corrupted and diverted from their goal if they are not subject to the oversight of parliament, civil society, parties, and associations that represent stakeholders.
Community oversight does not interfere with or obstruct the work of official agencies; it is a necessary, positive contribution and a realisation of every citizen’s right to know how the state is spending its resources and whether it is meeting its declared objectives.
*The writer holds a PhD in financial law from the London School of Economics. He is former deputy prime minister, former chairman of the Egyptian Financial Supervisory Authority and former chairman of the General Authority for Investment. This article was published in Arabic in El-Shorouq newspaper on Monday, 6 June.