2022 Yearender: Protection from the fall

Safeya Mounir , Saturday 31 Dec 2022

Experts discuss with Safeya Mounir whether the social protection measures Egypt adopted this year to protect the vulnerable from the repercussions of global crises were enough.

baladi bread
baladi bread


Perhaps 2022 saw the largest number of government decisions taken to protect the vulnerable and impoverished groups. And, indeed, the year has been the toughest on local and global markets due to the Ukraine war that broke out on 24 February and resulted in price spikes of almost all commodities and a sharp decline in the purchasing power of people.

When the war erupted and the cost of imported strategic commodities — especially from Russia and Ukraine — was beginning to increase, Egypt raised the income of employees to enable them to withstand the wave of price hikes.

Initially, according to a statement by President Abdel-Fattah Al-Sisi in August 2021, the government was planning to partially lift subsidies on baladi bread, a staple for Egyptians. Al-Sisi had stated it was time to increase the price of bread to allocate the necessary budget to support school nutrition programmes estimated at LE8 billion. He had added that the subsidies system needed to be revised in its entirety. 

The Ukraine war has put the brakes on the plan to lift subsidies on bread. 

Instead, more social protection measures and financial support were extended across several economic strata.

When the war broke out Al-Sisi ordered raising the minimum wage to LE2,700. He also approved dispensing two bonuses at a cost of LE8 billion: one for civil servants making up seven per cent of their wage, the other for other public and private sector employees at 13 per cent of their basic salary.

Hania Al-Shalkami, a researcher at the American University in Cairo research centre, said the protection procedures were necessary but that there was no tool to measure whether they were enough. There has not been a study that explained the size of the gap n between wages and consumption in order to determine whether the gap was bridged or not, Al-Shalkami said.

Seeing that the price hikes of commodities across the board threatened the stability of household budgets, especially with the appreciation of the dollar against the Egyptian pound, the government increased pensions in April by 13 per cent, or a minimum of LE120 and a maximum of LE1,222.

The raise benefits 10.7 million Egyptians and costs the government LE3.8 billion monthly.

According to the National Organisation for Social Insurance, the early disbursement of pensions cost the state LE11.4 billion in April, May, and June. Hence, pensions during this fiscal year amount to LE321.5 billion.

Moreover, the government decided to disburse LE300 starting November for pensioners with less than LE2,500 in pension and for employees who receive a wage less than LE2,700.

In August, Prime Minister Mustafa Madbouli announced a host of exceptional measures to be implemented for ration card holders for six months and which would benefit 9.1 million families, or 36.5 million individuals. According to the decision, ration cards with one family would receive an additional LE100. Those with two or three families registered on the same ration card receive an extra LE200, while cards with more than three families receive an additional LE300.

This package did not benefit all ration card holders but was directed at the neediest families, people who receive Takaful and Karama pensions, and social security pensioners. The families were selected according to a database prepared by state institutions and monitoring entities.

The package targeted people with pensions less than LE2,500 or wages no more than LE2,700. It benefits 620,000 families who did not have ration cards but should be receiving support from the government.

Still, there is no identifiable means to determine whether these support bonuses were enough or not, commented Al-Shalkami.

This package costs the government LE1 billion a month, in addition to LE36 billion the government shoulders to subsidise goods on ration cards, rendering the total amount of subsidies the government pays from the state budget at LE42 billion.

With these ration cards families can buy 29 food items and each individual in the family can buy goods worth LE50 available at outlets that sell subsidised commodities. 

Al-Shalkami noted there is not much difference in the price of commodities in these outlets and other supermarkets, for example, but in the end families have felt the commodities they could buy have increased in number.

In late July, Al-Sisi ordered an expansion in social protection measures and increasing the number of families benefiting from the Takaful and Karama social protection programmes by one million. 

At present, more than 20 million citizens nationwide benefit from the programmes. According to Minister of Social Solidarity Nevine Al-Qabbaj, the programmes kicked off targeting 4.1 million families, and the figure has been raised to 5.2 million. The programmes’ allocations in the general budget increased from LE19 billion to LE22 billion this fiscal year.

The conditional cash support programme offers help to the poorest and most impoverished, targeting families with low social and economic indicators and who cannot buy their basic needs and protect the health and education rights of their children. This programme also targets groups unable to work, such as the elderly and disabled.

Thanks to the state’s database, the government can easily reach the people that need help, said Al-Shalkami, especially those who did not meet the criteria necessary to join the Takaful and Karama programmes.

Gouda Abdel-Khalek, former minister of supply, believes this host of measures by the government is not enough to alleviate the burdens of people and lift the pressure on the national currency and imports.

The main problem, Abdel-Khalek opined, is the weak monitoring of the market and not adopting strict measures against vendors who raise prices of commodities such as rice, he added.

Inflation in November recorded 19 per cent, up from seven per cent in 2021, Abdel-Khalek stated, noting that the protection measures were able to compensate the people for a small part of the increase in living expenses.

In early December, the cabinet’s Information and Decision Support Centre report stated that in addition to the social protection measures the government has increased budget allocations for the health and education sectors by 18 and 23 per cent respectively, in the 2022-23 draft budget.

*A version of this article appears in print in the 22 December, 2022 edition of Al-Ahram Weekly

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