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EGYPT: Can’t Wait a Generation to Eat
EGYPT: Can’t Wait a Generation to Eat
A World Bank official said this month it could take as long as "a generation" for the effects of Egypt’s recent economic growth to be felt by the poorest segments of the population. But as "neo-liberal" economists urge patience, retail prices for essential foodstuffs continue to skyrocket, stretching many household salaries to breaking point.
Friday, March 28,2008 17:33
by Adam Morrow and Khaled Moussa al-Omrani IPS

A World Bank official said this month it could take as long as "a generation" for the effects of Egypt"s recent economic growth to be felt by the poorest segments of the population. But as "neo-liberal" economists urge patience, retail prices for essential foodstuffs continue to skyrocket, stretching many household salaries to breaking point.

"Prices of most basic food commodities are increasing dramatically," Nagla Badr, a 35-year-old housewife and mother of two from Cairo, told IPS. "Within the last few months alone, one kilo of rice has gone up from two Egyptian pounds (roughly 0.35 dollar) to five Egyptian pounds (about 0.90 dollar] in many places. This is simply too expensive for many families."

The current bout of inflation, however, has not stopped Egyptian officialdom from trumpeting a raft of positive macro-economic indicators in recent months.

In a December policy statement, Prime Minister Ahmed Nazif described Egypt"s economic performance over the last two years as "remarkable", noting that the economy had grown 7.1 percent in 2007. Nazif cited record-breaking showings by traditional moneymakers, including Egypt"s thriving tourism industry and the lucrative Suez Canal.

Foreign currency reserves in the Central Bank of Egypt, he noted, had hit an unprecedented high of some 31 billion dollars.

International financial institutions and government officials have hastened to attribute the rosy figures to the "reformist" policies of the current government.

Appointed in 2004 by long-time President Hosni Mubarak, Nazif and his business-friendly cabinet have implemented a number of major "structural adjustments" ostensibly aimed at economic liberalisation. These have included reductions on import tariffs, subsidy decreases and the privatisation of long-held state assets.

The Nazif government has also aggressively sought foreign investment in Egypt with the stated objective of nurturing the local economy and funding national development projects. In his policy statement, the PM noted that Egypt had attracted a whopping 11 billion dollars in foreign investment last year.

But according to critics, the upbeat economic figures have yet to be felt by the vast bulk of Egypt"s teeming population of 80 million. In fact, with average living costs rising steadily, most Egyptians say that times have never been harder.

"People"s low salaries simply can"t keep up with skyrocketing food costs," said Badr, echoing a common complaint. "And rising food prices are affecting everything else: workers are charging more for services, while prices for clothes and shoes are also going up."

Even experts concede that inflation is fast running out of control.

"Inflation now stands at more than 12 percent in urban areas and 18 percent in the countryside -- and those are official figures," Hamdi Abdel-Azim, economist and former head of Cairo"s Sadat Academy, told IPS. "In very short periods of time, we"re seeing record jumps in the price for a number of staple food goods.

"Most household salaries can"t keep pace with the inflation," Abdel-Azim added. "As a result, living standards are falling across the board."

The public has not held back from expressing its frustration. Last year witnessed an unprecedented number of strikes at both private and state-owned companies, with workers angrily insisting on higher wages.

Earlier this month, a strike was organised in Cairo by thousands of university professors who demanded salaries more attuned to economic realities.

Recent weeks have also seen the appearance of long and often unruly queues outside of bakeries mandated with distributing state-subsidised bread, which sells for roughly one-fifth of normal market prices. According to the local press, bread lines are frequently becoming the scene of violent incidents.

"The fights erupting outside these bakeries are unprecedented in Egypt"s history," a writer said in opposition daily al-Wafd. "How is it that Egyptian citizens can no longer obtain five or ten loaves of bread to feed their families?

"Normal people are beginning to fight over bread," said Badr. "The inflation is making everyone angrier -- it"s affecting social cohesion."

In an effort to ease the situation, the government announced last week that the armed forces would soon establish ten major bread production units in and around the capital to meet local market needs for subsidised bread.

Regardless of rising levels of public aggravation, newly appointed World Bank managing director Juan Jose Daboub lauded the Nazif government"s reformist trajectory while on a recent three-day visit to Egypt.

"The results of economic reform in Egypt offer a platform to ensure improved living standards for all segments of the population," he said Mar. 1. "There are challenges that the government has to face responsibly, consistently, and in a way that doesn"t necessarily make people happy today."

Daboub went on to say that the current government"s ongoing reform programme would "take approximately one generation" to bear fruit. "It takes between 25 or 30 years (to go) from lack of development to development," he was quoted as saying.

Many Egyptians, however, wonder whether the poorest segments of the country"s population can wait that long.

"What is this generation supposed to do for the next 25 years?" Badr asked. "Die of hunger?"

According to World Bank estimates, the number of Egyptians currently living in poverty -- on a dollar a day or less -- stands at roughly 20 percent of the population. But according to Abdel Wahab al-Massiri, prominent Egyptian writer and general coordinator of the pro-democracy Kefaya movement, the number is probably closer to 50 percent -- and climbing fast.

"The middle class is shrinking every day," al-Massiri told IPS. "The problem isn"t just poverty -- it"s the rising gap between Egypt"s rich and poor."

In his policy statement, Nazif cited increasing global prices, particularly for oil and wheat, as the chief cause of rising local food prices. Nevertheless, many critics place the blame squarely on official corruption, which they say is widespread.

"Inflation in Egypt is higher than the world average chiefly because of rampant government corruption," said al-Massiri. "If we stick it out with the current regime, Daboub"s predictions will no doubt be realised. But if we can achieve a change in political authority, we won"t have to wait so long for economic relief."

Abdel-Azim agreed for the most part, attributing runaway inflation to the government"s unwillingness to act against market monopolies on a number of essential commodities.

"The government must take steps against monopolies on vital goods, which have served to distort the laws of supply and demand," he said. "Although the Prime Minister has the legal right to set prices for strategic commodities, he refuses to employ it."

According to al-Massiri, the critical state of affairs could end up having momentous political consequences.

"Public anger is rising across the board," he said. "But this anger has to be mobilised by the opposition in order to bring about peaceful political change."

For much of the public, however, political considerations have taken a backseat to more immediate concerns.

"Ultimately, the people don"t care who"s in charge -- the Mubarak regime or the Islamist opposition," said Badr. "We just want leadership capable of providing the public with the bare minimum of food." (END/2008)

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