October 27, 2014 / 6:08 PM / in 3 years

Egypt must target neediest in food subsidy reforms: WFP

People queue for bread at a bakery in Cairo March 2, 2014. REUTERS/Al Youm Al Saabi Newspaper

CAIRO (Reuters) - Egypt’s reform of its subsidized food system must do more to help the neediest if the government is to begin reducing “huge pockets of poverty”, the top World Food Programme official in the country said on Monday.

Failure to tackle those issues could revive popular discontent that has toppled two presidents in three years.

But reform will be a tall order in the Arab world’s most populous country, where some 68 million - about 75 percent of Egyptians - have ration cards that entitle them to such subsidizes, and where, according to U.N. data, four million of the poorest Egyptians have fallen through the system’s cracks.

Bread in particular is a politically explosive issue in Egypt, where for decades millions have depended on subsidized loaves that sell for less than a seventh of the real cost.

“(The government) needs to do more on the targeting and they are very conscious of the fact, but first I think they want to strengthen the systems and then (work) on targeting,” WFP’s Egypt representative and country director, Lubna Alamen, told Reuters in an interview.

In the Arab world’s most populous country, with a population of 84 million, four million without access to government food aid might seem relatively small number, Alamen said. “But it’s sizeable,” she argued. “Four million in another place who need assistance makes it a big emergency.”

“FLOUR MAFIA”

However, instead of helping the most vulnerable, bread subsidies have fostered a thriving black market and a “flour mafia”, according to government officials and industry experts.

President Abdel Fattah al-Sisi’s government has begun targeting leakages in that system and has also moved quickly on the previously untouchable issue of fuel subsidies, another inefficient, budget-draining expenditure.

Subsidies of food and energy products have traditionally eaten up at least a quarter of Egypt’s budget, and the government is trying to reduce that burden to rein in a budget deficit that last fiscal year stood at 12 percent of GDP.

The fuel price hikes, introduced last summer shortly after Sisi took office, were accompanied by relief measures including free transport, and the government has said it will soon start a new cash benefit program targeting the most vulnerable.

These are steps in the right direction toward creating a “social safety net” but reforms should also include phasing out beneficiaries who do not need subsidized food, Alamen said.

She praised Supplies Minister Khaled Hanafi for widening the range of subsidized commodities offered to citizens with ration cards, saying that offering goods beyond bread, oil and a small number of other items is important for a population suffering from high malnutrition rates and poor access to a diverse diet.

“The issue of food security in Egypt is purchasing power, it’s an access issue: food is available but (people) can’t afford to buy it,” she said, citing WFP research that found poor citizens resort to “coping mechanisms” such as cutting down on buying protein and dairy foodstuffs and relying exclusively on carbohydrates such as bread, rice and potato chips.

She said that the economic fallout of the 2011 uprising that ousted Hosni Mubarak had made life harder on poor Egyptians, especially in regions like Upper Egypt, where high poverty rates go hand in hand with what the WFP calls a “triple burden of malnutrition: high stunting rates, anemia, and obesity”.

Alamen said that gradually reducing rates of chronic stunted growth, caused when children do not receive adequate nutrients before the age of two, is a long-term task.

It will be made easier, however, when more citizens in need are given state aid to buy more meat and vegetables.

Another effort is linked to subsidizing school meals, an incentive for parents to keep their children at school. WFP funds this program in Upper Egypt and in other poor areas such as Fayoum, a governorate south of Cairo where farming is a main industry and children often work family fields.

“The government has taken a very strong decision that they will have ‘safety nets’ as one of the key things to give to the people,” Alamen said. “They have done a lot ... but I think there is a long way to go to reform everything.”

Editing by Louise Ireland

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