Egypt Pulse

Egypt launches new initiative to control goods prices during Ramadan

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Article Summary
In light of the difficult economic situation in Egypt, the Ministry of Supply announced May 20 the implementation of the initiative known as “Ahlan Ramadan,” offering goods at low prices.

Egypt’s economy has been seriously weakened as a result of the successive political events triggered on Jan. 25, 2011, and on June 30, 2013, when revolutions sparked terrorist attacks, domestic economic crises and the exhaustion of sources of income — especially tourism.

This weakness was also felt by Egyptian citizens, who were forced to struggle to survive.

The state apparatus imposed taxes and cut subsidies on some goods, such as the cut of fuel subsidies imposed in 2014. Some — such as businessmen, economic experts and people running websites affiliated with the Muslim Brotherhood — fear that this dire economic situation may push citizens to have reactions with serious consequences such as uprisings or revolutions sparked by hunger.

Within the scope of its endeavors to help citizens, the Ministry of Supply announced May 20 the implementation of the initiative known as Ahlan Ramadan (Welcome, Ramadan), to be launched with the beginning of the month of Ramadan (which started June 6) and offering basic commodities at discounted prices. Indeed, 90 Ahlan Ramadan temporary storefronts were opened across Egypt’s governorates between May 25 and June 13.

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Al-Monitor compared prices listed on news websites and newspapers of basic commodities featured in Ahlan Ramadan stores with prices of the same commodities purchased from the regular market. It was noted that Ahlan Ramadan is offering basic commodities at discounted prices. A 25% discount was given on sugar and rice, 41% on meat, 33% on chicken, 38% on edible oil, in addition to discounts on the prices of vegetables, fruits and Ramadan commodities, especially yameesh (Ramadan nuts).

Al-Monitor met some citizens in front of one of these Ahlan Ramadan stores in the Social Fund for Development Hall in Nasr City to ask for their opinions on this initiative.

One of the citizens told Al-Monitor on condition of anonymity, “Prices are reduced and most basic commodities are available. I hope the store lasts till the end of Ramadan.”

Another citizen said such stores should be open “throughout the year since the citizen is unable to withstand the greed of merchants.”

Another citizen accompanied by his family told Al-Monitor, “These stores fall within the scope of attempts by the state, the armed forces and President [Abdel Fattah al-] Sisi to help out the poor citizens and control the traders’ greed.”

It is worth noting that the armed forces began opening outlets in 2015 — some of which are still open today — for the sale of meat and some staple goods at discounted prices, in light of the hike of market meat prices.

Al-Monitor attempted to communicate with Mahmoud Diab, the spokesman for the Egyptian Ministry of Supply, to inquire about the number of citizens benefiting from these stores, but he did not answer his phone.

Faraj Abdel-Fattah, a professor of economics at Cairo University, told Al-Monitor, “The Egyptian market has become based on monopolies, and the state's attempts to break these monopolies will surely help the impoverished citizen. This is an appropriate policy, especially in that it creates competition in markets plagued by recession and deterioration of quality. The emergence of the state as a competitor would cut prices in general and improve quality, but this will require more time and effort by the state apparatus.”

Khaled El-Shafie, an economic expert, told Al-Monitor, “It is good that the state is trying to help the citizens, but [opening temporary stores] for basic commodities is not a radical solution. The solution is to create a system for prices and a consumer protection system while increasing production.”

In the context, it should be noted that Egypt Prime Minister Sherif Ismail issued a decision May 24 to open an operations room at the Information and Decision Making Support Center to follow up on adjusting and reducing prices of food commodities in the market before the start of Ramadan.

This operations room included representatives of the Ministry of Supply, Ministry of Agriculture, Ministry of Local Development, the General Directorate for the Investigation of Supply, the Central Agency for Public Mobilization and Statistics, the Information and Decision Making Support Center, the Council of Ministers, the Administrative Control Authority, Consumer Protection Department, Food Control Division, the General Authority for Exports and Imports Control, the Principal Bank for Development and Agriculture Credit, and the Federation of Egyptian Chambers of Commerce. The operation room will receive citizens' complaints about high prices and would immediately intervene to resolve them.

Several landline telephone numbers were allocated to the operating room, in addition to hotline No. 16528. Despite positive feedback on the stores, the reactions to the operating room and hotline on social networking sites were negative. Social media users criticized this operations room mainly for not answering any of the allocated landlines and the hotline.

Al-Monitor spoke with a number of these social media users via their accounts on social networking sites. One of them told Al-Monitor, “I called the hotline more than once and no one answered. It is not the first government attempt that turns into a mere show. Many government agencies do not answer hotlines and do not receive any complaints.”

However, when Al-Monitor contacted the hotline, one of the operations room representatives answered the call within minutes.

Another commenter told Al-Monitor, “I did not negatively criticize the idea, but I talked about the need for a list of the maximum prices of staple goods so that the citizen is aware of the cases in which he can complain about high prices. The page of the Information and Decision-Making Support Center promised to communicate with me on my comment, but so far no contact has been made.”

The Ministry of Supply approved in 2013 guiding pricing for some goods such as fruits and vegetables, but Khaled Hanafi, the current Minister of Supply, canceled it in March 2014, saying in a press conference that it “implies the approval of the black market,” without giving further explanation.

Guiding prices are a range of prices for each good, agreed upon between the Ministry of Supply and representatives of wholesalers and retailers. Guiding prices give merchants the ability to decide the goods’ prices within this specific range according to the circumstances of, for example, competition, quality and place of distribution.

The ministry may have decided to cancel these guiding prices in light of their rejection by numerous merchants, since it feared they would resort to illegally bringing in and selling goods on the black market, which could raise the prices and allow the entry of spoiled goods, as the black market would not be under the government’s supervision.

Medhat Nafei, an economy professor at the American University of Egypt, told Al-Monitor, “Guiding pricing does not lead to the creation of a black market unless in light of a weak market supervision. The minister may be right. The problem is not about pricing; a controlled supervision system must be created.”

The adoption of the government-imposed prices was proposed until 2013 during the reign of Minister of Supply Mohammed Abu Shadi; however, when Khaled Hanafi took over the Ministry of Supply in 2014, the guiding prices system was canceled and the imposed prices system was rejected by the ministry. On Feb. 20, Hanafi expressly stated in a press statement that the government-imposed price was no longer an option for reaching a solution for the crisis of prices because it conflicted with the Egyptian Constitution.

The proposal advanced by the Egyptian government may come as a solution to the soaring prices crisis in general. Many citizens have appreciated this as an achievement by the Egyptian government, but it does not seem to be a radical solution. Some citizens and experts stress the need to set prices on the basis of which the performance of traders may be assessed and to establish a supervision system that curbs the traders’ greed and holds them accountable.

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Found in: social media, ramadan, price manipulation, egyptian economy, economic crises, cairo

Ahmed Fouad is an Egyptian journalist working as newsroom assistant manager for Al-Shorouk. He specializes in coverage of Islamists and analysis of the political situation in Egypt, especially since the mass protests of June 30, 2013, the one-year anniversary of Mohammed Morsi's presidential inauguration.

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