Soft Launch
Minister of Finance: A Cash Subsidy Program to Enhance Social Safety Net 
 

- Deputy Minister: Other States’ Experiences Studied, Databases of Charities Used

The ministerial committee for social safety nets formed by the Prime Minister’s decree No. 83 of 2014 is studying mechanisms and ways of enhancing the existing social protection nets, and linking actually the databases of different subsidy programs supervised by some ministries as part of a new policy the government is focusing on, namely, targeting the neediest groups.

The ministerial committee for social safety nets is a subdivision of the ministerial committee for social justice comprising ministers of Finance, International Cooperation, Planning , Social Solidarity and Administrative Development , in addition to the Secretary General of the Social Fund for Development.

Minister of Finance , Dr. Ahmed Galal declared the ministry, with members of the ministerial committee for social safety nets, studies applying a cash subsidy system that focuses on the most favored categories by targeting to provide monthly financial transfers to about 2 to 3 millions of the most needy families to contribute to enhancing the social security net.

He added the new system comes within the framework of the government’s efforts to re-prioritize public spending in line with the principles of social justice and economic objectives for achieving high growth rates under stable macro economy.

He said the social spending of the state budget has been spiraling over the last decade to no avail on poverty rates which reached 25% of population in the last census.

He indicated these facts made such system of social protection with no option to continue for its lack of financial sustainability and its inefficiency as studies proved a high waste of subsidy and smuggling of subsidized goods, meanwhile its inefficiency attributed to failing to reach the poor; a large part of it goes to non deserving categories.

He added that the common recommendation of all studies conducted over the last ten years was to reconsider the system of social protection and rationalize spending on it by targeting the most needy and favored groups and supporting them properly to ensure them a decent standard of living, which means turning from targeting programs or goods into targeting most favored families.

 The program of cash subsidy program aims at reaching more of the poorest groups to support them with cash assistances funded by the surplus resulting from reducing and excluding the non-subsidy eligible categories from the standing social protection programs.

Dr. Sherine Al-Shawarby , Deputy Finance Minister indicated that the work team at the Ministry of Finance, in cooperation with the concerned ministries, is currently developing a full and detailed design of a new program for cash transfers identifying the beneficiary families , ways to reach them , amounts of money to be transferred to them , determining regions to start with , in addition to the mechanisms and strategy of exiting the program when financial position of the beneficiary families improve , and they come out of the poverty circle. Experiences of other countries that have implemented such programs of cash subsidy are being examined to identify and avoid the problems Egypt may face.

She hinted some of such problems related to beneficiaries such as spending a lot of money and wasting time  to prove their eligibility to benefit from the program; in addition to indirect problems such as finding a negative incentive for some beneficiaries to continue benefiting from the program despite their illegibility as a result of a change in their social status such as the daughter’s marriage or the breadwinner ‘s travel abroad for work , as well as problems resulting from slashing the size of the informal subsidy nets.

She pointed out the dependence of the new system on a number of databases to identify the targeted families such as the poverty map designed in 2004/5 then upgraded in 2012/13, alongside with databases of families of the social security pensions including 1.4 million, the most favored families registered at the Ministry of Social Solidarity reaching two millions, families benefiting from The Social Fund Program for Development , from charitable societies whose funds have been frozen and managed by Ministry of Social Solidarity, and from charitable societies such as Bank el-Taam , Miser El-Khair,  Al-Ourman  and Resalla. Databases of such entities are to be made use of in the new program.

On mechanisms to identify such families deserving cash subsidy, she indicated to studying a number of mechanisms to identify the poorest groups, top of which home or field visits and consultancy provided by doctors or teachers. This method can be applied at the level of small villages, but in cities “we study depending on calling on potential beneficiaries to fill in questionnaires of enrolling on the targeting programs by contacting a short telephone number working daily around the clock or to go to the governorates of social solidarity to fill in a form requesting to join the program, it is the most applied option in most countries in the world” she added.

“To avoid bureaucracy, the national ID card will be merely used as a document to benefit from the program, with upgrading the database of the new project periodically by providing incentives for beneficiaries to update their data simply and periodically,” the deputy added.

On the period of carrying out the program, the deputy Minister indicated that gradual application of the program is planned over 3 or 4 years to cover all parts of Egypt, “we are now studying launching the program initially in Upper Egypt governorates, then in all the countryside regions of the republic.” Dr. Sherine Al-Shawarby, Deputy Minister of Finance concluded.

(Source: Ministry of Finance)