Egypt subsidy reforms to slash wheat imports

Updated 17 July 2014

Egypt subsidy reforms to slash wheat imports

CAIRO: Egypt, the world’s top wheat importer, said reforms to its bread subsidy program alongside an improved storage system should cut its import needs by as much as 30 percent.
Supplies Minister Khaled Hanafi said a new smart card system for bread distribution launched in April is now operational in five provinces and should be implemented nationwide by October.
“We took quick steps toward the new bread system and overcame a lot of the bureaucratic obstacles...,” Hanafi said in an interview.
“With the completion of the new system our imports will fall around 30 percent,” he said.
One cash-strapped government after another has resisted tackling problems in the system, fearful of a backlash from the public.
But in an effort to rein in its budget deficit to 10 percent of gross domestic product in the next fiscal year, Egypt’s new government slashed subsidies for car fuel and natural gas, increasing their prices by more than 70 percent earlier this month.
President Abdel Fattah El-Sisi and Prime Minister Ibrahim Mehleb have not announced similar drastic cuts to the food subsidy system but reforms to the way the government hands out the subsidy have been in the making since April in an attempt to decrease waste and corruption.
Under the new system Egyptians use electronic smart cards for bread purchases and around 20 different subsidised goods at grocery stores across the country.
The cards follow a points system which raises incentives for Egyptians to buy only as much subsidised bread as they need, helping reduce spending on wheat by as much as 5 billion Egyptian pounds ($699 million), Hanafi said.
Food and energy subsidies traditionally eat up a quarter of state spending.
Officials say wheat consumption is kept artificially high in part by citizens who purchase subsidised loaves for the equivalent of one US cent and feed them to their livestock because the bread is cheaper than animal feed.
Under the old system, Egyptians only have the option of buying infamously poor quality rice, sugar, and oil but Hanafi said the list of items available to purchase would now be expanded first to 20 and then to 100 within months. Meat and poultry will be among the new products on the initial list.
He said smart card holders would accrue points if they bought less than the quota of five loaves per family member per day, a number that officials hope can later be reduced. The points would allow them to purchase other subsidised goods.
Hanafi, who retained his position after Sisi took office earlier this month, has been outspoken about the need to reform wasteful subsidies.
Egypt imports around 5.5 million tons of wheat annually for its bread subsidy program. The country also bought 3.7 million tons of local wheat in the 2014 season.
Hanafi said Egypt’s enhanced storage capacity should help it increase its local wheat purchases and cut waste.
Egypt is making progress in increasing local storage capacity with the help of one of its major Gulf backers, the United Arab Emirates.
The UAE has committed to funding silos that can store up to 1.5 million tons of wheat.
“We purchased from farmers all the quantities that were available to us and we aim to buy 4 million tons next year,” he said.

Innovation jobs flocking to a handful of US cities

Updated 09 December 2019

Innovation jobs flocking to a handful of US cities

  • Economists fear job clustering could have a “destructive” influence on society

WASHINGTON: A new analysis of where “innovation” jobs are being created in the US paints a stark portrait of a divided economy where the industries seen as key to future growth cluster in a narrowing set of places.

Divergence in job growth, incomes and future prospects between strong-performing cities and the rest of the country is an emerging focus of political debate and economic research. It is seen as a source of social stress, particularly since President Donald Trump tapped the resentment of left-behind areas in his 2016 presidential campaign.

Research from the Brookings Institution released on Monday shows the problem cuts deeper than many thought. Even cities that have performed well in terms of overall employment growth, such as Dallas, are trailing in attracting workers in 13 industries with the most productive private sector jobs.

Between 2005 and 2017, industries such as chemical manufacturing, satellite telecommunications and scientific research flocked to about 20 cities, led by well-established standouts San Francisco, Seattle, San Jose, Boston and San Diego, the study found. Combined, these mostly coastal cities captured an additional 6 percent of “innovation” jobs — some 250,000 positions.

Companies in those industries tend to benefit from being close to each other, with the better-educated employees they target also attracted to urban amenities.

Brookings Institution economist Mark Muro said he fears the trend risks becoming “self-reinforcing and destructive” as the workforce separates into a group of highly productive and high-earning metro areas and everywhere else.

Even though expensive housing, high wages, and congestion have prompted some tech companies to open offices outside of Silicon Valley, those moves have not been at scale. Most US metro areas are either losing innovation industry jobs outright or gaining no share, Muro wrote.

Over this decade, “a clear hierarchy of economic performance based on innovation capacity had become deeply entrenched,” Muro and co-author Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote in the report. Across the 13 industries they studied, workers in the upper echelon of cities were about 50 percent more productive than in others.

For much of the post-World War Two period labor was more mobile, and the types of industries driving the economy did not cluster so intensely, a trend that started reversing around 1980.

Concerns that the US is separating effectively into two economies has sparked support for localized efforts to spread the benefits of economic growth.

The Federal Reserve has flagged it as a possible risk to overall growth, and some of the presidential candidates running for office in 2020 have rolled out proposals to address it. One aim of Trump’s decision to impose tariffs on imports from China and elsewhere is to revive ailing areas of the country.