Social Protection and Economic Reform Policies in Egypt
Dr. Salah Ahmed Hashem
Many terms related to the concerns and worries of the simple and low- income citizens have been discussed in the global development writings. Among the most important of these terms is the social protection, which some Arab academics considered a concept synonymous with the concept of social welfare. In order to cope with the latest international writings and ride the wave, they only content themselves with changing the covers of their old books.
Then they changed its connotation from a scientific term that can be described and used in developing social policies, primarily aimed at reducing poverty, into “easy money”, for which they presented tens of books and hundreds of researches and studies. However, all they came up with was just replacing the term “social welfare” with the term “social protection”, a matter that made all their writings and studies completely separate from reality and unrelated to the factual development presented in the writings of the world newly emerged social protection policies, although both types of writings only share the same “Title”.
Anyone who wrote one line or made a simple study in which the term social protection was addressed was mistakenly considered an expert or consultant in social protection, a misconception that made these writings no more than wasted efforts and merely some artifacts locked up in the drawers of academics and shelved within the research institutions’ libraries.
As for the Egyptian Ministry of Social Solidarity, it has had a different view of the concept of social protection, especially since 1939, the year that witnessed the establishment of the Egyptian Ministry of Social Affairs. The Ministry of Social Solidarity used the term “social welfare” besides the term “social security”, and when the term “social protection” began to appear on the horizon of the funding international institutions after 2011, the Ministry of Social Solidarity began to adopt that term, and the Egyptian state began to use the phrase “social protection networks”. What the Ministry did was limiting the concept of social protection to “the programs that provide temporary financial assistance to families with low incomes”, while linking the concept of social welfare to institutions, and making the concept of social security limited to the monthly pension based on its subscribing members. Despite these differences between academics and researchers on the one hand, and the Ministry of Social Solidarity and its institutions on the other hand, international institutions have adopted a concept that was completely different from either what we adopted or what we disagreed over. The United Nations, for instance, defined social protection as completely synonymous with social security, and considered that if social security itself is deemed a human right, according to what is stated in the international human rights document and in line with the synonymy of the two terms in the United Nations doctrine, social protection was considered one of the Human rights by default. The ministry added to the writings on social work a new term, which is “social protection grounds” which was meant by all legislations to aim at reducing poverty and ensure not falling into it. It is a term that has not yet been circulated in our research books in Egypt or even the Arab world. The concept did not receive significant attention from policy makers in the governments of third world countries.
As for the International Labor Organization, which is one of the first international institutions that have used the concept of social protection, it has limited the use of the term social protection to securing the status of social workers, especially those working in vulnerable jobs and professions.
Perhaps this introduction is necessary to enter into what I would like to present in this article, As I view it, social protection is a more general and comprehensive concept than all the other terms, and greater than these variations and differences. It is a caste term with a broad meaning and a narrow meaning. Breadth and narrowness are related with the resources available to achieve social protection goals. When the broad meaning of social protection lies in reducing poverty and preventing more citizens from entering the world of abject poverty, social protection becomes a corresponding rather than equivalent concept to the one of social welfare. If social welfare aims to reduce the number of poor people, though I assume that in reality it aims at keeping the poor in a position of poverty without tangible improvement in their livelihood and without change, then social protection aims to stabilize the poverty rate at 20% of the population, and work to increase the proportion of the rich, then increase the proportion of the middle class in the social pyramid. An increase in the numbers of the rich and middle- class will inevitably lead to a decline in the number of poor people. As international experiences have proven, countries’ policies which have worked only to reduce poverty by devoting attention to the poor and providing aid to those below the poverty line leaving out the middle-class citizens proved their failure. Perhaps the Egyptian experience is a realistic model of these policies.
Usually, governments in developed countries follow protective policies that include the broad meaning of social protection, which means providing full support to all strata of society so that poverty does not extend and affect the vast majority of the population, and then adopt their policies in light of and based on this concept in order to develop programs to confront poverty. Confrontation in this context does not mean reducing poverty as much as it means increasing the rate of wealth. Most of the developed countries’ assistance is conditional on education, health care and participation in production. Ultimately, the aim is to elevate those with limited income to a stage where they can become self-reliant. The decrease in the rate of financial support allocations year after year becomes an important indicator of the success of social protection policies and recovery of the poor.
As for the governments in poor countries, they usually tend to adopt the narrow, or even very narrow, concept of social protection, which can be confined to the traditional concept of social welfare, targeting within all of their programs the weak citizens with denied rights. Activities of such governments do not exceed simple aids that do not satisfy more than 30% of the needs of the poor, in addition to some activities related to the feeble portion of human fabric, such as women, children, the disabled and the elderly, which are usually educational activities. In general, it appears that the difference over the concept between academics, field researchers, and decision-makers has caused, to a large extent, the lack of clearly defined social protection policies. This, in turn, has caused a lack of integration among social protection programs that are practiced within various sectors and perhaps within the same service sector, which is considered a real waste of countries’ efforts and resources. Perhaps this is what calls us to demand that governments in poor societies adopt a clearer concept of social protection that stands comparison with the globally agreed-upon concept. Accordingly, social protection policies are developed and all state institutions are obligated to implement, through complementary programs that target different society classes, each according to their need and their capacity.
Social Policies and the Acrobat Citizen Theory
On the general level, to be able to develop serious social protection policies that ensure a real confrontation against increasing poverty rates, especially in developing countries, we should look at the citizen inside our society as an “Acrobat” performing in a circus, who has to move from one rope onto another without falling, in a way that leaves him constantly vulnerable to falling or occasionally to death. For a citizen to be able to live safely, he must go all the way to achieve his goals under oppressive conditions that always threaten him with impoverishment or falling into the abyss of poverty. These conditions are typically due to protective policies that are absent, incomplete, or unfair. The poor members of society try to manipulate their compulsive circumstances in various ways, in the same way the acrobat jumps from one rope onto the other, risking his or her own life.
If every time the “acrobat” participates in the “show” he or she falls to the ground, it only means that the acrobat has not gotten enough training, preparation, or assistance, not to mention the lack of a circus procedure to ensure that the acrobat is instructed and protected from falling. Moreover, if every time the acrobat falls he or she bleeds to death, this means that the circus does not have a course of action concerning how to rescue the acrobat in the event of falling. In many cases, the acrobat dies because of both factors, and by analogy with poverty, governments are responsible for setting policies and laws to protect their citizens from the trap of poverty in the event of their fall and loss of income. Since poverty rates in developing countries, including Egypt, are increasing, it has become necessary for governments to adopt “sustainable policies” for social protection that deal with poverty, not as an emergent problem, but rather, as a constant, prolonged, and historical crisis. That can be obtained by adopting programs and policies that save the citizen from falling victim to the different and multiple burdens of poverty. However, in a scenario where the number of times the acrobat fails are few or rare, i.e. if the count of citizens who belong to the poor class is small or limited, their government may opt for protective “emergency” policies that are fairly focused on saving the victims and helping them to survive.
The Developmental Profits of the Economic Reform Program:
Three years have passed since the Egyptian government implemented its brave economic profit program, with direct support from the International Monetary Fund, which loaned the Egyptian government $ 12 billion in stages linked to the rates of development and achievement pursuant to the targeted economic reform program. The government started the first steps of economic reform with a daring decision by the Central Bank, which approved letting the Egyptian pound to float against US dollar to determine its currency’s actual value. Accordingly, the government took strict measures to control the black market and prevent financial transactions outside the banks. This was followed by a package of financial reforms, after which Egypt approved broad social protection policies, aimed in its entirety to preserve the middle class, and protect the poor and low-income groups from falling into the clutches of hunger, disease, and crime.
Indeed, Egypt did not limit itself to adopting an ambitious program for economic reform, but rather adopted an integrated plan for reform, the most prominent axis of which was the promotion of economy, along with other parallel reform axes. There has been a financial reform program, a second one for educational reform, a third for directed social protection policies, a fourth for policy reforms related to public culture, a fifth for the inclusion of young people in the political process, and a sixth for career reform and workforce support, not to mention the policies related to industrialization, food security, tourism enhancement, and foreign relations, as well as healthcare and anti- corruption reforms. Let alone the policies of building and strengthening the Egyptian armed forces. Now the question is: Has Egypt been able to gain success in all these fields. One can be securely convinced when they know that the Egyptian state has ranked first in the world in terms of the achievement rate over that particular period of time, no one can ignore such size of success attained by the Egyptian government with regard to all those files.
The questions that have come up while we are on the threshold of a new year are: Has Egypt been able to establish a solid base for heading toward development in a way that makes it stand the storms that threaten the global economy? Have all the successes Egypt achieved at the level of infrastructure programs, the economy, and investment contributed to improving the life quality of the Egyptian population in general and the average citizen in particular? To what degree have the Egyptian policies participated in the restoration of Egyptian expatriate intellectuals and to what extent was Egypt able to benefit from them? To which degree have these programs been able to reduce illegal immigration rates? And lastly, have these policies been able to make progress in the ranking of Egypt according to the index of transparency, human development, and among the most vulnerable countries?
The answers to those questions require no political bias that is likely to take us away from objectivity, as much as we need an in-depth reading of the international reports concerned with the interpretation and analysis of these files. By reading here I mean here overall comprehension, in other words, placement of the Egyptian situation in light of similar regional and international situations, as well as scientific and accurate indicators from well-renowned institutions concerned with reading, analysis, and assessment.
This article may not be able to answer all these questions, noting there are still files in need for more time to be evaluated; however, I am going to offer some so-far evident answers to name a few. The basic education development file is still passing through an uncertain phase as for the level of progress achieved, since no single educational plan is capable of paying fruit in less than 12 years, the period students take to complete their pre-university education. Furthermore, we may also need to wait for a final evaluation, until the students have finished university studies, so that we can have a scale for measuring the ability of education to respond to the job market, as well as measuring the level of demand for Egyptian workforce locally, regionally, and internationally.
Another instance to be cited is about the Egyptian latest experience in economic reform, which has produced positive results that have been reflected through a remarkable improvement in economic performance indicators during 2019, the year that witnessed the beginning of the “harvest” phase of the economic reform program, which now has unmatched international acclaim. Taking the aggregate tourism revenues of the same year into account, we see they have amounted to 12.5 billion dollars, compared to 9.8 billion dollars during the last fiscal year 2017/2018, with a growth rate exceeding 28.2%, and reflecting the recovery of tourism activities, as well as interpreting the efforts made by the state to promote tourism in its comprehensive concept, as one of the pillars of national economy.
Also, during the previous three years, the productivity of the energy sector increased by 50% to meet domestic demand, as many national projects were established, including the administrative capital, the industrial area of Suez and Port Said, new railways and subways, the construction of the Benban Solar Energy Park, in addition to several greenhouses, which all contributed to creating many job opportunities and a marked improvement in the services provided to citizens.
The Egyptian government has also succeeded, through the electronic implementation of the state’s general budget, in reaching financial and economic targets for the first time in more than 15 years. By achieving an initial surplus of 2% of GDP, the deficit rate, achieving 8.4%, was even better than required.
Regarding the results of the strategic plan for the development of the Suez Canal, the results of the evaluation were promising. The channel’s revenues during the fiscal year 2018/2019 peaked to the highest annual return in the history of the channel, with total revenues of $ 5.9 billion, with an increase of $ 300 million over the previous fiscal year, equal to a growth rate of 5,4 %.
Since the main three sources of obtaining hard currency for Egypt are tourism, the Suez Canal, and remittances from Egyptians abroad, and according to the data of the Central Bank of Egypt, the total remittances of Egyptians working abroad amounted to about $ 6.7 billion, compared to $ 5.9 billion during the previous fiscal year 2018/2019 with a growth rate of more than 13.6%. Perhaps this growth in the three sectors also had fruitful results in terms of both the economic growth rate in general, which exceeded 5.6% as the highest rate achieved by Egypt since 2010, and the decrease in the unemployment rate down to 7.5% after it had reached 13% in 2014. In addition, the overall growth led to a rise in Egypt’s share of the cash reserves to exceed $ 45 billion, compared to $ 15 billion in 2013, with a significant decline in inflation rates to reach 6.5%. This has been clearly reflected in the massive decline in budget deficit so as to unprecedentedly come down to 8.2%, enabling the government to achieve the aforementioned initial surplus of 2%. It is worth mentioning that these figures in their entirety have led Egypt to rank fifth among the Arab countries in terms of the size of monetary reserves following Saudi Arabia, the Emirates, Algeria and Qatar; and ahead of Kuwait, Morocco and Tunisia.
Despite all these successes that Egypt has achieved in the field of economic reform, we noticed two serious concerns. The first of which is that the rate of industrial growth is still quite weak, for it has not exceeded 5% in the budget of 2017/2018, given that it had reached 9% by the end of the sixties of the last century, and that the highest ambition of the Ministry of Planning and Economic Development is to reach an industrial growth rate of 11% in the fiscal year 2021-2022. The second issue is related to the size of the Egyptian economy, which has not increased since 2010, as the size of the Egyptian economy is now equal to 250 billion dollars, the same size that Egypt had in 2010, i.e. 9 years ago. This size is very weak if we compare it to a country like Turkey, whose economy has exceeded 800 billion dollars, or South Korea, whose economy has reached 1.5 trillion dollars, a matter which puts us in bad need to review the policies on industry in Egypt.
All these achievements in the various sectors of the country have had repercussions on social protection programs directed to the poor, where the government adopted, at the onset of economic reform, an effective social protection program, which is the “Solidarity and Dignity Program”. The program is dedicated for conditional and unconditional cash support for low- income groups. A number of 2.7 million families or about 9 million Egyptian citizens benefited from that program, which also required beneficiary families to continue educating their children on one hand, and mothers visiting family planning clinics on the other hand. It also provided unconditional cash support to all handicapped and elderly people over the age of 65. The Ministry of Social Solidarity in Egypt launched a “Two-children-are-enough“ program, in order to support the state’s policies in curbing overpopulation, as well as the “Chance” program to improve the income level of poor families by financing micro-projects. The Ministry also launched a “Decent Housing” program to improve infrastructure services for poor families, which, so far, nearly 350,000 families have benefited from. This is in addition to the Ministry launching a law that protects people with disabilities and guarantees them all rights to education, health care, and job opportunities. Not only that, but the Ministry also launched an “Intimacy” program aiming at reducing divorce rates, as well as another program working to rescue street children.
The bottom line is that social protection as a concept is greater than the economy itself, and it is more difficult to place entirely on the shoulders of governments, and also too broad to be limited to financial aspects. Social protection cannot be achieved unless governments adopt a holistic vision of economic reform and commit themselves to embodying that vision in partnership with the civil society and the private sector.