A presentation/note discussing poverty in Egypt, and putting policy recommendation for social justice

1. Analytical Overview on Social Justice in Egypt
from a Poverty Perspective
21 June 2014

2. Context
 Poverty rates have increased steadily since 2000 despite achieving high
economic growth and employment rates in 2005-2010.
 Poverty is concentrated in Upper Egypt, rural areas, and frontier
areas/communities.
 Poverty rates decrease as education level increases.
 The disparity between economic growth and poverty indicators is due to:
- Low productivity rates
- High inflation rates
- Absence of social protection programs targeting the poor
- Low quality of public social services
 What is social justice?
Justice in income and wealth distribution?
Justice in empowerment?
Justice in the opportunity to compete?

3. Overview
 Poverty rates have increased by 10
percentage points since 2000.
 Poverty rates deteriorated during
the period 2005-2010, despite
achieving high economic growth
and employment rates. (structural
factors).
 A large percentage of Egyptians
live near the poverty line, hence
are vulnerable to economic shocks
and crises.
 If the poverty threshold of EGP
3,920 per year per person
increases by 20%, the poverty rate
will increase by 20% to reach
46.3%.
16.7
19.6
21.6
25.2
26.3
0
5
10
15
20
25
30
2000/1999 2005/2004 2009/2008 2011/2010 2013/2012
%
Poverty rate (according to the national poverty line)
Economic growth rate
Unemployment rate
Source: CAPMAS, MOF and Dcode EFC

4. Poverty Characteristics
in Egypt

5. Education
 Low educational level remains the most correlated factor to poverty.
 Although the incidence of poverty decreases as educational level increases, poverty
appeared among masters and doctorate degrees holders for the first time in the year
2013, and has generally been increasing among university graduates.
4
9
13
16
21
3029
37
0
5
10
15
20
25
30
35
40
‫على‬ ‫حاصل‬
‫أو‬ ‫ماجستير‬
‫دكتوراه‬
‫على‬ ‫حاصل‬
‫جامعي‬ ‫مؤهل‬
‫على‬ ‫حاصل‬
‫فوق‬ ‫مؤهل‬
‫المتوسط‬
‫على‬ ‫حاصل‬
‫العامة‬ ‫الثانوية‬
‫على‬ ‫حاصل‬
‫متوسط‬ ‫مؤهل‬
‫القراء‬ ‫يستطيع‬‫ة‬
‫والكتابة‬
‫على‬ ‫حاصل‬
‫أ‬ ‫ابتدائية‬ ‫شهادة‬‫و‬
‫اعدادية‬
‫ي‬ّ‫م‬‫أ‬
2008/09 2010/11 2012/13
Poverty rates by educational level (%)
Illiterate Primary or
prep
education
Reads and
writes
Intermediate
degree
Secondary
education
Above
intermediate
degree
University
degree
Masters or
doctorate
degree
Sources: CAPMAS and Dcode EFC

6. Geography
 Poverty is concentrated in Upper Egypt (75% of the poor).
 Poverty rates are higher in rural areas relative to urban areas ( because employment is
concentrated in agriculture and informal activities). However, poverty rates have decreased in
2012/2013 compared to 2010/2011 in Upper Egypt
 Recently, poverty rates relatively increased in urban areas compared to rural areas due to the
security and economic instability since 2011.
7.3
16.7
21.3
43.7
10.3
17
29.5
51.4
11.7
17.4
26.7
49.4
0102030405060
‫البحري‬ ‫الوجه‬ ‫حضر‬
‫البحري‬ ‫الوجه‬ ‫ريف‬
‫القبلي‬ ‫الوجه‬ ‫حضر‬
‫القبلي‬ ‫الوجه‬ ‫ريف‬
2008/09 2010/11 2012/13
Lower Egypt
(Urban)
Lower Egypt
(Rural)
Poverty rates by geographical distribution
Upper Egypt
(Urban)
Upper Egypt
(Rural)
Source: CAPMAS and Dcode EFC

7. 62
60
56
48
43
37
32
30
22
19181717
1513
119
54
0
0
10
20
30
40
50
60
70
‫أسيوط‬
‫قنا‬
‫سوهاج‬
‫سيناء‬‫شمال‬
‫أسوان‬
‫األقصر‬
‫سويف‬‫بني‬
‫الفيوم‬
‫المنيا‬
‫الجيزة‬
‫مطروح‬
‫الجديد‬‫الوادي‬
‫القليوبية‬
‫البحيرة‬
‫كفرالشيخ‬
‫القاهرة‬
‫بورسعيد‬
‫المنوفية‬
‫الشرقية‬
‫الدقهلية‬
‫األسكندرية‬
‫اإلسماعيلية‬
‫الغربية‬
‫دمياط‬
‫السويس‬
‫األحمر‬‫البحر‬
‫سيناء‬‫جنوب‬
Poverty rates across governorates in 2013 (%)
National Average = 26.3%
SouthSinai
Redsea
Suez
Damietta
Al-Gharbia
Al-Ismailia
Alexandria
Al-Dakahlia
Al-Sharkia
Al-Mnoufia
Port-Said
Cairo
KafrEl-Sheikh
Al-Beheira
Al-Kalyoubia
NewValley
Matrouh
Al-Jizah
Al-Minia
Al-Fayoum
Beni-Suef
Luxor
Aswan
NorthSinai
Suhag
Qena
Assiout
 Poverty rates are concentrated in Upper Egypt and frontier areas, but even richer
governorates witness poverty pockets
Source: CAPMAS and Dcode EFC
Geography

8. Structural factors leading to high poverty rates despite achieving
high growth rates in previous years
 Rising inflation rates, especially for food items which has a direct impact on inflation
 Rising employment rates in informal sector which is characterized by instability and low
productivity.
 Low productivity rates, and wages, and low government spending on public services.
0%
10%
20%
30%
Average Annual Inflation (Urban) Average Annual Inflation in Food & Beverages
6%
1.40%
3.60%
2.30%
0%
2%
4%
6%
8%
Energy
subsidies
HealthEducationInvestments
Government spending on selected key
items (% of GDP)
0
20
40
60
1998 2006 2012
Percentage of workers in the informal sector
and temporary jobs
‫الرسمى‬ ‫غير‬ ‫القطاع‬ ‫الدائمة‬ ‫غير‬ ‫االنشطة‬Informal Sector Non-permanent activities
Source: CAPMAS, World Bank, MOF, and Dcode EFC

9. Selected socio-economic
indicators
(Egypt vs. peer countries)

10. Share of private expenditure on healthcare in Egypt is relatively higher than peer
countries ($1000 – $2000 income per capita)
Egypt
Arab World
Lower middle income
0
10
20
30
40
50
60
70
80
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Out-of-pockethealthexpenditure(%oftotalexpenditure
onhealth)
GDP per capita (constant 2005 US$)
Out of pocket spending on Heath
(selected middle income countries)
Source: World Bank and Dcode EFC

11. Egypt’s government spending on Education is low relative to peer countries ( ranging between
$1000 – $2000 income per capita)
Egypt
Arab World
Lower middle income
0
1
2
3
4
5
6
7
8
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Publicspendingoneducation,(%ofGDP)
GDP per capita (constant 2005 US$)
Spending on Education as a per cent of GDP among selected middle income countries
Source: World Bank and Dcode EFC

12. The percentage of vulnerable employment in Egypt is low relative to peer countries due to the
large size of the public sector which employs almost one third of all workers
Egypt
Lower middle income
0
10
20
30
40
50
60
70
80
90
100
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
Vulnerableemployment,total(%oftotalemployment)
GDP per capita (constant 2005 US$)
Percent of vulnerable employment
(selected middle income countries)
Source: World Bank and Dcode EFC

13. Per capita income is directly proportional to urbanization
rate
Egypt
Arab World
Lower middle income
0
10
20
30
40
50
60
70
80
90
0 1000 2000 3000 4000 5000 6000 7000 8000 9000
RuralPopulation(%oftotalpopulation)
GDP per capita (constant 2005 US$)
Percent of Rural Population
(selected middle income countries)
Source: World Bank and Dcode EFC

14. International Experiences
• International experiences emphasized the importance of having a national vision and
plan adopted by all national entities/ authorities in order to avoid fragmentation and
misuse of available resources.
• Social security programs should cover all eligible individuals regardless of their
employment status.
• Studies have shown that programs that aim at increasing the productivity of its
beneficiaries and connecting them to the labor market lead to more effective and
sustainable results.
• It is important to consider the social conventions and preferences as well as
institutional capacity of each country on its own when developing social programs
• A positive relationship exists between the increase in per capita income and
expenditure size, and hence the ability to achieve development goals and reduce
poverty rates.

15. Recommendations

16. Recommendations
1. It is important to achieve high and sustainable growth and employment rates in
order to avail job opportunities that exceed the number of new entrants to the
labor market.
2- Providing job seekers with human development skills to prepare them for the
requirements of the labor market by expanding professional and vocational
programs training.
3- Working on the national level to decrease the inflation rates and especially prices
of food commodities, which consume a major share of low income families’
expenditure and creating and mechanisms that avail food commodities to all
citizens with affordable prices especially to the low income categories.
4- Adopting policies that help achieve justice in the distribution of income,
generated surpluses and subsidies in a way that guarantees minimum income for
low-income families as well as reward incentives linked to performance and
productivity.

17. 5- Special attention should be given to women empowerment programs and
to raising women's wages and capabilities.
6- Developing an integrated social insurance network (by developing an
accurate and consolidated database) targeting in particular the poor and
low income categories.
7- Working on extending the scope of beneficiaries to cover all those who are
eligible for support regardless of their employment status.
Recommendations

18. 8- In the same context, it is required to guarantee the existence of programs
that provide job training and skills in order to help the poor families move
from being beneficiaries of social welfare to being active participants in the
workforce and hence increasing the productivity of the labor market.
9- Mobilizing and reinforcing the capabilities of central and local authorities to
provide citizens with high quality public services, especially with regards to
health and education and hence decrease the need for private spending in
those categories.
10- Capitalizing on linkages with the private sector, local communities and civil
society organizations which have better knowledge of localities, especially
with regards to low income and marginalized areas.
Recommendations

19. Recommendations
11- Beneficiaries should be engaged in the choice and evaluation of social
security programs and the services provided to them.
12- Expanding the use of modern Information technologies (mobile phones,
GPS, smart cards) in order to broaden and improve social services and
develop programs with the lowest possible cost.
14- Using technology in developing mechanisms for the accountability and
evaluation of the performance of social security programs.

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*Quintus Cicer 63 B.C