Egypt has seen scores of human cases of bird flu, the largest number in any country outside Asia, since the first known appearance of the H5N1 virus in humans more than four years ago. Bird flu deaths in Egypt are now at 22 and climbing, and as if that weren’t enough the threat of the swine flu virus (H1N1) is also hanging over the country.
The livelihoods of pig breeders, and of those who raise chickens in home gardens to help feed a family or generate extra income, have been threatened by government culls of swine and fowl to combat the two forms of influenza. Most bird flu victims are those who look after chickens, typically poorer people in the countryside. Though raising pigs is not a big deal in Egypt, rearing poultry at home is important for the incomes of a significant number of people in rural areas; recent government measures to stamp out bird flu have forced families to stop keeping chickens. Though losses to bird owners may be outweighed by a lowered risk of flu, the pig cull designed to prevent the H1N1 virus from taking hold is controversially not seen as useful — and evaded by some. No cases of swine flu have been reported by the Egyptian authorities, but up to 300,000 pigs are to be slaughtered.
Needless to say, all of this is hitting the poor more than the affluent. Regarding the situation of the latter — far from infected birds or dead pigs — the glitzy developments springing up in parts of Cairo and in seaside resorts such as Sharm el-Sheikh, are mainly benefiting the country’s businesspeople and better-heeled urbanites. For the rest of the country, especially the population of rural areas or slums, the standard of living is stagnant. One fifth of Egyptians survive on less than $1 per day. Poverty, food insecurity and malnutrition remain significant. For example, in Upper Egypt alone, 36 percent of the population (close to 11 million people) consume less than the recommended minimum caloric intake, presumably including some who are eating less chicken or pork than before.
The state response has been to continue subsidizing basic necessities with an even stronger social safety net. As household expenditure on food rose by almost 50 percent in the first six months of 2008 due to inflation, the government fought back with sharply higher budgetary allocations to the social safety net, extending subsidy ration cards to a further 10 million people (hence reaching around 60 million Egyptians). The subsidy system, which covers a large portion of basic living costs — food, energy, water, housing, medical expenses etc. — contributes to a sizeable budget deficit, roughly 8 percent of gross domestic product, and is ultimately non-sustainable.A large proportion of imported food is channeled into the vast subsidy scheme of the government, which covers about half of the total Egyptian consumption of sugar, flour and rice, and three-quarters of the vegetable oil, as well as much of the meat consumed in the country.
Of course all this is now cheaper thanks to lower commodity prices. For example, from March 2007 to March 2008, the price of wheat on the international market increased by 48 percent; in the 12 months since, however, it dropped by almost the same percentage. The price falls also dampened inflationary pressure: in 2008 the government’s economic policy was mainly focused on reducing inflation, reaching a year-on-year peak of 24 percent in August 2008. Yet, prices have steadily decreased in the past few months: inflation fell to less than 12 percent at the end of March and is projected to drop to 10 percent in June, although it will remain above the government’s target rate of 6 to 8 percent.
However, inflation is not yet under control. The sharp retrenchment in international commodity prices, which had begun in the second half of 2008, has not been fully reflected in domestic price levels due to lack of competition. The government still has to beware of increasing liquidity to the point where domestic demand starts to overheat. While inflation still looms, the authorities have to tread a fine line between providing liquidity to maintain sagging growth on the one hand, and over-heating the economy on the other.
Dampened inflation and a stronger social safety net have brought limited respite to Egypt’s poor (including some of those whose pigs and chickens have been killed). Few of the less affluent in the slums and countryside have benefited from the Egyptian mid-decade boom; now, with economic expansion waning, policies such as a strengthened social safety net create a feel-good factor. In the long-term, however, the task of getting Egypt out of its slump and on the path to equitable growth that will underpin social stability may be a lot more complicated.
Riad Al Khouri is a senior associate consultant at the William Davidson Institute of the University of Michigan
