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First since 2000: Poverty declines in Egypt

Poverty rates in Egypt were down in the 2019-20 financial year, according to CAPMAS research

Safeya Mounir , Thursday 10 Dec 2020
Declining poverty
Poor families spend the bulk of their income on food photo: Reuters
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Egypt’s poverty rate declined to 29.7 per cent in fiscal year 2019-20, down from 32.5 per cent two years earlier, according to poverty, consumption, and income research conducted by the Central Agency for Public Mobilisation and Statistics (CAPMAS).

This is the first time Egypt has seen a decrease in its poverty rate since 1999-2000.

More than 3.4 million Egyptians are no longer living on the poverty line thanks to the social-protection programmes the government has tailored with the neediest economic strata in mind, said CAPMAS Chairman Khairat Barakat.

The research concluded that the rate of households suffering from extreme poverty had decreased from 6.2 per cent in 2017-18 to 4.5 per cent in 2018-19.

Poverty rates had hiked, according to CAPMAS poverty, consumption, and income research in 2017-18, due to the repercussions of the economic-reform programme Egypt launched in November 2016, starting with the floatation of the Egyptian pound, which led many households to sink into poverty.

The more recent research, the results of which were announced last week, was based on surveys conducted during the six months prior to the outbreak of the Covid-19 coronavirus pandemic in Egypt, Barakat noted.

When comparing the two CAPMAS reports for 2019 and 2017, it was found that the average annual spending of a household had increased to LE61,000, up from LE53,000. Average annual income had gone up from LE60,000 to LE69,100, recording a 15 per cent increase.

The monthly income of families of two individuals had increased to LE1,932, up from LE876, while that of families comprising two adults and two children had increased to LE3,218. Families with incomes less than these figures are considered under the poverty line.

In 2019-20, poverty indicators improved in the majority of Egypt’s governorates, particularly in Lower Egyptian rural areas, said Heba Al-Leithi, a CAPMAS advisor.

However, according to the research, 48 per cent of Upper Egypt’s inhabitants in rural areas are poor, and 43 per cent of Egypt’s poor live in rural Upper Egypt.

CAPMAS defines poverty as the lack of some of the minimum basic needs for an individual or a family. These basic needs include food, housing, clothing, education, healthcare and transportation. The national poverty line is the cost of obtaining basic goods and services.

The 2019-20 research revealed that Egyptian families covered under the government’s food-support scheme had decreased to 63 million individuals, down from 68.5 million in 2017-18.

Barakat said the decrease was the result of the government’s target of delivering support to those who need it and the exit of individuals and families that do not from the system. The average cost of annual food subsidies to families is estimated at LE1,420 nationwide, LE1,559 in rural areas, and LE1,244 in urban areas.

Subsidies and social-protection programmes such as Takaful and Karama have helped to lower the number of Egypt’s poor. The programmes target 3.6 million families, said Dina Armanios, a professor of statistics at the Faculty of Economics and Political Science at Cairo University.

The recent CAPMAS report stated that 87 per cent of those who benefit from the Takaful and Karama programmes are from the poorest 40 per cent of the population, “which reflects the state’s success in targeting families that need subsidies the most,” Al-Leithi commented.

Moreover, the mega-projects implemented by the government have contributed to decreasing unemployment among the poorer strata of the population, she said. Providing a monthly income for people working on these projects had taken their families out of poverty, Armanios noted.

Prime Minister Mustafa Madbouli stated during the press conference held to announce the results of the CAPMAS report that Egypt’s national projects had provided five million job opportunities.

Armanios added that the decline in the inflation rate had contributed to reducing poverty, in addition to an increase in wages, which had reached 10 per cent on an annual basis, helped by the bonuses the government allocates to public-sector employees.

These factors had resulted in a rise in real incomes, which had come in tandem with the opening of new factories, leading to an increase in job opportunities.

Sherine Al-Shawarbi, dean of the Faculty of Economics and Political Science at Future University in Cairo, said the CAPMAS report covered the pre-coronavirus period, which had seen an increase in spending as a result of the rise in incomes.

The 2017 report, she added, had a higher poverty percentage due to the government’s decision to float the Egyptian pound, resulting in a hike in the inflation rate to 30 per cent. People’s consumption pattern had changed, with many people opting to buy cheaper commodities.

In 2015, Al-Shawarbi said, people had spent less money on commodities and services, but the rise in growth rates since 2018 had meant better living conditions for many Egyptian families and lifted four per cent of families from below the poverty line.

Egyptian families spend money in 12 categories, the first of which is food and drinks, followed by housing, healthcare, transportation, education, clothing, and restaurants and hotels.

Average spending on education averaged 12.5 per cent, rising in urban areas to 15.7 per cent and decreasing in rural areas to 9.2 per cent, the report stated, adding that families with at least one individual receiving education had reached 58.4 per cent of the population.

The indicators say that the more education rates increase, the more poverty rates decline. Some 9.4 per cent of the poor have received a university education, while 33.3 per cent of the poor are illiterate.

Subsidies received by families also affect poverty positively. Research has showed that electricity subsidies lessen poverty rates by 2.8 per cent, and that people in rural areas benefit more from subsidies on butane-gas cylinders than do those in urban areas.

State institutions depend on CAPMAS poverty, consumption, and income research to chart people’s needs and to be better able to provide them, Barakat said. “Egypt has wiped out 90 per cent of shanty areas. Likewise, thanks to this data, we are working on decreasing poverty,” he added.

*A version of this article appears in print in the 10 December, 2020 edition of Al-Ahram Weekly.

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