As many of us know, Egypt stands to be one of the poorest countries of the world. As a third world country, it suffers from many economical and societal drawbacks. Poverty has been quite a persistent problem for centuries in Egypt, but how aware are we of where Egypt actually stands? What reasons could we possible link poverty to and what are the chances that poverty will decrease in the coming years?
Shockingly, the last Central Agency for Public Mobilization and Statistics (CAPMAS) report on poverty in Egypt was conducted back in 2015. With a whopping 27.8% of Egyptians officially living under the poverty line, Egypt’s future stands to be in jeopardy. Put into millions, out of 90.2 million Egyptians, approximately 25 million Egyptians live under the national poverty line! The average poverty line stood at an income of 482 EGP per month, whereas the extreme poverty line stood at the income of 322 EGP per month. This is the highest poverty rate Egypt has witnessed so far during the 2000s. On top of it all, the CAPMAS study also showed that food subsidies prevented another 4.6% from falling under the poverty line.
As for Egypt’s children, the last report done on child poverty was in 2012/2013 and at that time, according to the United Nations Children’s Fund(UNICEF) , 9.2% of children between the ages of 0 to 17 were living under the national lower poverty line and 16.7% under the upper poverty line.
Unsurprisingly, the highest poverty rates were found more in rural areas than in urban areas, especially in upper and lower Egypt; an indication that there is a vicious cycle taking place. They call this cycle inherent poverty, which happens due to illiteracy; meaning that families living in rural areas choose not to educate their children, which in turn leads to more poverty. To tackle that, we must increase spending on public education. According to UNICEF, the government expenditure budget on education is only 11.1%, which is lower than any spending Egypt has witnessed in years.
The question is, where will Egypt stand now after all the changes it has undergone? Since no reports on the topic were done last year, we do not know what happened in 2016. However, it is such a controversial topic as to whether the statistics improved or not. With the devaluation of the Egyptian pound at the end of 2016, Egypt was promised a new beginning and a new chance to flourish. Egypt was promised that more foreign currency will flow into its economy and its market. Add to that Foreign Direct Investments (FDI), the collapse of its black market and above all the $12 billion loan given by the IMF. Fortunately, foreign investments did increase, as guaranteed, through the past months since the devaluation. This is a new assurance for new job opportunities which would consequently lead to higher employment rates.
However, what we have been witnessing is an immense increase in commodity prices, and what was inevitable, due to inflation, was how hard it was going to hit the mid and low classes and certainly the already poor. According to Business Monitor International (BMI) research, this floatation is bound to affect inflation -and not in a positive sense. This increase in inflation was also felt by the semi-existent middle class and by the lower, upper social class. According to the World Bank, the inflation caused by the devaluation, energy subsidy reforms and food price shocks directly affect all Egyptian households -most importantly the poor and the vulnerable.
To top it all off, the World Bank states that this inflation will probably lead to the limitation of poverty reduction. Moreover, with the slow removal of subsidies, like fuel, food and electricity, poverty rates are expected to grow. Many suggest that population control is the solution, but research conducted by the Harvard School of Public Health concluded that population control is not the answer to poverty reduction and that there is no actual evidence to prove so, that “coercive policies could cause welfare losses by limiting choices.” The study suggests that what should take place is that there should be programs promoting family planning that will, in the long run, help with the reduction of poverty and instantly contribute to a drop-in fertility rates. Moreover, for poverty reduction, there should be policies for employment, promoting saving and channeling those savings into productive investment.
Over the past few years, Egypt was facing a lot of turmoil and as for now, we could say that it is starting to stabilize. As we have seen, the government has already decreased the public spending on education, which goes against most research on reducing poverty. The devaluation came with a guarantee of new job opportunities, however, with limited education, how far can employment rates increase? Will the poor and uneducated be qualified for such opportunities? All we have to do now is wait and see whether the conditions of the poor will actually improve and where Egypt will be heading in the next couple of years. The debate on poverty is never-ending; many contribute the spike in poverty to the increase in population, while others argue that it is the other way around. What do you think? What does Egypt’s future hold?