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Egypt Struggles to Get Subsidized Food to Poor Amid Dollar Crisis

  • Reuters

A worker sells subsidized food commodities at a government-run supermarket in Cairo, Egypt, Feb.14, 2016.

A worker sells subsidized food commodities at a government-run supermarket in Cairo, Egypt, Feb.14, 2016.

"Any rice?" says the woman, leaning into a shop in Cairo and brandishing a green smartcard that carries her family's food credits. The shopkeeper shakes his head: "Only sugar."

Behind him, more than half the shelves are empty. Rice and cooking oil are nowhere to be seen.

Tens of millions of Egyptians rely on state subsidies provided as credits on smartcards they redeem against household staples each month. But in recent weeks, imported commodities like cooking oil have been in short supply as a dollar shortage makes it harder for state importers to secure regular supplies.

Shortages persist across the capital and in cities from Alexandria in the north to Minya in the south.

"When we ask the grocer he says there's nothing but sugar.

Every day he says, tomorrow, tomorrow, but we are halfway through the month now and it's not resolved," said Samia Mohamed, a housewife, at a grocery in southern Cairo. "Prices elsewhere are expensive. We don't know what to do."

Affordable food is an explosive issue in Egypt, where millions live a paycheck from hunger and economic discontent has helped unseat two presidents in five years.

The dangers are not lost on President Abdel Fattah al-Sissi, whose government has sought to protect poor Egyptians from the worst effects of double-digit inflation.

The smartcards are accepted at a network of government-run supermarkets as well as 26,000 privately owned grocers and grant each family member 15 pounds ($2) of credits a week plus five loaves of bread a day from participating bakeries.

The Supply Ministry also oversees a network of stores and kiosks offering subsidised food outside the smartcard system.

Goods of all kinds are available at ordinary supermarkets not participating in the smartcard scheme but poor consumers would have to fork out market prices that many can ill-afford.

But even at the discount shops, stocks are low.

At a kiosk, emblazoned with the Egyptian flag and the words "together against high prices" in a historic part of Cairo, a shelf labeled "local rice, 3.25 per kilo" is bare.

"Oil is in short supply. The supplies of oil aren't stable," said the manager of the kiosk, which opened in December as part of a government effort to ease food inflation. "Sometimes we are short of rice, sometimes sugar ... Sometimes people don't like the variety. We don't get enough."

Supply Minister Khaled Hanafi said on Thursday that stocks at state food companies were being replenished with dozens of products which would be available to smartcard-holders in March.

"Like Beggars"

Though essential foods are high on the priority list, a foreign exchange shortage has made it more difficult for Egypt's state food importers to pay promptly over the past year. Worst affected by the shortages has been cooking oil, with payment problems putting suppliers off bidding in state tenders.

Egypt's state importers have cancelled three cooking oil tenders in the last three months alone after not receiving enough offers or because prices were too high. Traders say they now have to factor in the cost of expected delays, particularly after the government brought in measures which mean they are not paid for up to six months.

"You are talking millions of dollars here. These delays are costly," said one trader. "They make you feel like a beggar when you chase your money, not answering calls, not responding."

Egypt has struggled to revive its economy since the 2011 Arab Spring uprising drove away tourists and foreign investors.

Foreign exchange reserves have more than halved since then, leaving Egypt with scarcely enough to cover three-months worth of imports.

Pressure has mounted on the central bank to devalue the pound but it has resisted a major adjustment for fear of stoking inflation. Instead, it has imposed strict limits on dollar deposits and transfers, making it harder to clear shipments.

A lack of clarity on rice policy has also caused confusion in the market. Egypt banned rice exports in 2008 but lifted the ban in October after a bumper harvest. It issued a rice import tender last month only to cancel it again and grocers say there is not enough rice in state stores.

Bread Rations

Occasional shortages have been the norm for the past year, but supply issues were compounded in recent weeks by a change in the rules surrounding unclaimed bread rations.

Participating grocers source most of their goods from the state-run Food Industries Holding Company (FIHC) but until this month would receive cash from the Supply Ministry equivalent to any unclaimed bread credits. They would then use the cash to buy other goods on the open market to meet the demand.

Since Feb. 1, they have been refused cash and been offered goods supplied by the FIHC instead.

But grocers say the FIHC is unable to meet demand.

"The issue is not one of oil and sugar. We used to buy 100 products and now we can't find 10 ... More than 50 percent of the supply stores are empty and there are no goods," said Majed Nadi, spokesman for the General Grocers' Syndicate. "They expected to be able to meet all the needs but they couldn't."

Hanafi, the Supply Minister, said 2,000 tonnes of rice and 2,500 tons of oil were being supplied daily to replenish stocks in addition to goods including pasta, tea, and canned tuna, which have not been in short supply.

FIHC bought 42,000 tons of sunflower and soy oils on Wednesday. A previous shipment was due to arrive on Feb 10-20.

Supply Ministry spokesman Mahmoud Diab said the change was intended to reduce prices because FIHC could secure economical bulk deals that individual grocers could not.

"The idea is to bring citizens higher quality goods at lower prices," he told Reuters. "It is for the good of the people."