By Hisham Allam
Cairo, Apr 6 2023 – Egypt intends to sell shares in 32 state-owned businesses within a year, including three banks, two military-owned businesses, and numerous businesses in the energy and transportation sectors. This is part of the administration’s efforts to reduce the role of the state in the economy and attract foreign capital.

That also follows the government’s December USD 3 billion deal with the IMF to resume privatization initiatives.

The IMF approved the USD 3 billion loan to strengthen the private sector and reduce the state’s footprint in the economy.

Egypt planned to sell 23 state-owned enterprises in 2018, but the plan was postponed due to the worldwide crisis.

The Russia-Ukraine conflict has put pressure on the Egyptian economy and currency, making the proposal more urgent.

According to Rashad Abdo, head of the Egyptian Forum for Economic Studies, Egypt had already received sovereign loans from many donors, including international institutions, such as the International Monetary Fund and Gulf countries, and these parties either set harsh lending conditions or would be reluctant to lend due to increased risks.

The State Ownership Policy Plan, adopted by President Abdel-Fattah El-Sisi in December, outlines how the government would participate in the economy and how it would increase private sector involvement in public investments. Egypt wants to increase the contribution of the private sector to the nation’s economic activity from 30 percent to 65 percent within the next three years. One-quarter of these enterprises will be listed by the government within six months.

Egypt announced the offering of these companies, intending to sell them to strategic investors, specifically Gulf sovereign funds. Egypt is expected to sell enterprises worth USD 40 billion within three years, including those held by the army.

Attracting foreign investment requires strengthening the investment climate, lowering inflation rates, and expanding anti-corruption efforts, Abdo told IPS.

The State Ownership document states that 32 Egyptian state companies will be listed on the Egypt Exchange (EGX) or sold to strategic investors within a year, beginning with the current quarter and ending in the first quarter of 2024. Stakes in three significant banks, Banco du Caire, United Bank of Egypt, and Arab African International Bank, are among the scheduled transactions. Insurance, electricity, and energy companies, as well as hotels and industrial and agricultural concerns, will also be on the market. Prime Minister Moustafa Madbouly announced that the first stakes would be offered in March and a quarter by June, and more businesses could be added over the next year.

Abdo pointed out that the Monetary Fund affirmed the Egyptian government’s commitment to implementing the State Ownership Document when it agreed to grant it this loan and the Egyptian government saw it as a favorable opportunity to implement the terms of the document set by the Organization for Economic Cooperation and Development.

Mohamed Al-Kilani, professor of economics and member of the Egyptian Society for Political Economy, said the privatization effort seeks to eliminate the dollar gap in Egypt and thus provide indirect compensation in the form of services and benefits from the International Monetary Fund’s debt.

The state would also send a message to foreign investors that it responds to the private sector and is willing to withdraw from certain sectors to benefit the private sector.

“The state is attempting to exploit this proposal to stimulate and revitalize the Egyptian Stock Exchange while taking into account the fair valuation of these companies in comparison to the global market. However, the state was unclear about the details of this offering and whether it is a long-term or short-term investment, and it has not clarified the size of employment or the percentages offered in terms of ownership and management,” Al-Kilani told IPS.

“The state is trying to create new types of foreign investment to attract foreign currency due to the fluctuation in exchange rates and high-interest rates,” Al-Kilani added.

According to external debt data published on the central bank’s website in mid-February, Egypt’s external debt fell by USD 728 million to USD 154.9 billion at the end of last September, but its foreign exchange reserves remain low, prompting renewed demand for state assets. The Russia-Ukraine conflict has further pressured the economy and local currency, prompting the proposal for new urgency.

Despite its relatively modest improvement in the latest data from the central bank at the beginning of February (USD 34.2 billion), it lost about 20 percent of the level of USD 41 billion at the end of February last year.

Last January, the IMF suggested that the volume of the financing gap in Egypt would reach about USD 17 billion over the next 46 months in light of its decline in foreign exchange resources and the high cost of its imports as one of the largest countries in the world to import its food and the first importer of wheat in the world.

IPS UN Bureau Report

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);  

By Daniel Gutman
BUENOS AIRES, Apr 6 2023 – It’s a Monday morning in April on Florida, a pedestrian street in the heart of the Argentine capital, and a small crowd gathers outside the window of an electronic appliance store to watch a violent scene on a TV screen. But it is not part of any movie or series.

The scene, broadcast live, is happening a few kilometers away, in a poor suburb of Buenos Aires: colleagues of a city bus driver who was murdered during a robbery throw stones and fists at the Minister of Security of the province of Buenos Aires, Sergio Berni, who had come to talk and offer the government’s condolences in front of the cameras.

No one seems surprised among the office employees watching the scene on TV, and several make no effort to hide a certain sense of satisfaction that other ordinary people have decided to take action against a representative of the political leadership, the target of widespread discontent, as reflected by the opinion polls.“There is growing social polarization in Argentina, with an increasingly weak middle class. Each crisis leaves another part of society outside the system.” — Agustín Salvia

“This was bound to happen sometime, if the politicians earn a fortune for doing nothing and we work all day to earn a pittance… And on top of that you go out on the street and they kill you just to rob you,” comments one of the viewers, as the rest listen approvingly.

The scene reflects the climate of tension and the sense of being fed-up that is felt in large swathes of Argentine society, in the midst of a long, deep economic crisis, which in the last five years has constantly chipped away at the purchasing power of wages, due to inflation that occasionally stops growing for a couple of months, only to surge again with greater force.

If there was room for modest optimism in 2022, as the result of a recovery in economic activity after the peak of the COVID-19 pandemic, it seems distant today, since the beginning of this year brought news that reflects the magnitude of the breakdown of the social fabric in this Southern Cone country.

On Mar. 31, the official poverty rate for the second half of 2022 was announced: 39.2 percent of the population, or 18.1 million people in this South American country of 46 million, according to the most up-to-date figures.

Since 2021 ended with a poverty rate of 37.3 percent, this means that in one year a million people were thrown into poverty, despite the fact that the economy, thanks to the rebound in post-pandemic activity, grew 4.9 percent, above the average for the region, according to the Economic Commission for Latin America and the Caribbean (ECLAC).

But these data are already old and the figures for 2023 will be worse due to the acceleration of inflation, which is surprising even by the standards of Argentina, a country all too accustomed to this problem.

The price rise in February reached 6.6 percent, exceeding the 100 percent year-on-year rate (from March 2022 to February 2023) for the first time since 1991.

When you look a little closer, perhaps the worst aspect is that prices grew much more than the average, 9.8 percent, for food, the biggest expense for the lowest-income segments of society.

To this picture must be added an extreme drought that has affected the harvest of soybeans and other grains, which are the largest generator of foreign exchange in Argentina. The estimates of different public and private organizations on how much money the country will lose this year in exports range between 10 and 20 billion dollars.

This is one of the reasons why the World Bank, which had forecast two percent growth for the Argentine economy this year, revised its estimates at the beginning of April and concluded that there will be no economic growth in 2023.

Luis Ángel Gómez sits in the soup kitchen that he runs in the municipality of San Martín, one of the most densely populated areas in Greater Buenos Aires. For the past 10 years, he has been serving lunch and afternoon snacks to about 70 children, but lately he has also been helping their parents and grandparents. CREDIT: Daniel Gutman/IPS

Soup kitchens

About 15 kilometers from the center of Buenos Aires, in the Loyola neighborhood, the cold statistics on the economy translate into ramshackle homes separated by narrow alleyways, with piles of garbage at the corners and skinny dogs wandering among the children playing in the street.

In a truck trailer that carries advertising for a campaigning politician, a dentist extracts teeth free of charge for local residents, who have increasing problems accessing health services.

The neighborhood is in San Martín, one of the municipalities on the outskirts of Buenos Aires. Eleven million people live in these working-class suburbs (almost a quarter of the country’s total population), where the poverty rate is 45 percent, higher than the national average.

“I have never before seen what is happening today. Before, only men went out to pick through the garbage (for recyclable materials to sell), because the idea was that the streets weren’t for women. But today the women also go out,” Luis Ángel Gómez, 58, born and raised in the neighborhood, who does building work and other odd jobs, told IPS.

Indeed, the carts of the “cartoneros” or garbage pickers, which used to be seen only in the most densely populated working-class neighborhoods of Buenos Aires after sunset, when the building managers take out the garbage, are now seen throughout the city and at all hours.

A market selling clothes at low prices in Parque Centenario, one of the best-known markets in Buenos Aires, located in Caballito, a traditional upper middle-class neighborhood of Buenos Aires. This type of street fair has mushroomed in Argentina in the face of persistent inflation that is destroying the purchasing power of wages. CREDIT: Daniel Gutman/IPS

Gómez has been running a soup kitchen in Loyola for 10 years, where he provides lunch three times a week and afternoon snacks twice a week to more than 70 children and adolescents. It is in a room with a tin roof, a couple of gas stoves and photos of smiling boys and girls as decoration.

“The municipality gives me some merchandise: 20 kilos of ground meat and two boxes of chicken per month. Besides that, I cook with donations,” said Gómez. “This box was given to me by the company that collects garbage in the municipality,” he added, pointing to cartons of long-life milk.

But the soup kitchen cannot meet all the needs of the local residents, said Gómez. “My concern was to give the kids a better future and I fed them until they were 14 or 15 years old. Today I also have to help their parents and grandparents.”

The carts of “cartoneros” or garbage pickers, which until a few years ago were only seen after sunset in the most densely populated low-income neighborhoods, today have become a common image in every part of Buenos Aires at all times of the day. One is seen here in the neighborhood of Flores. CREDIT: Daniel Gutman/IPS

The middle class on the slide

The crisis has picked up speed since 2018 and deepened with the pandemic, but Argentina is going through a period of stagnation, with low economic growth and very little formal private sector job creation for more than a decade.

A study recently presented by the Pontifical Catholic University of Argentina (UCA) shows that since 2010 access to food, healthcare, employment and social security have steadily worsened, despite social assistance, affecting five million households out of a total of 12 million.

“There is growing social polarization in Argentina, with an increasingly weak middle class. Each crisis leaves another part of society outside the system,” sociologist Agustín Salvia, director of the UCA’s Social Observatory on Argentine Social Debt, which is considered a chief reference point in the country, told IPS.

Salvia explained that the improvement in economic activity after the peak of the COVID-19 pandemic drove the creation of new jobs until the third quarter of last year, although poverty grew just the same because they were almost all precarious low-wage jobs.

“The post-pandemic recovery cycle is over. Since the last quarter of 2022 there has been no more job creation, which added to inflation will cause poverty to grow in 2023,” added Salvia.

The expert said structural or chronic poverty used to be 25 or 30 percent in Argentina, but has now held steady at 40 or 45 percent, with a deterioration marked by the stagnation of quality employment, which has pushed many formerly middle-class families into poverty.

By Robert Jenkins
NEW YORK, Apr 6 2023 – With schools now reopened around the world, countries are called to take transformative action on education financing to recover and accelerate learning for all children, especially the poorest and most marginalized.

Findings from our recent study, however, reveal that we have yet to overcome hurdles to equitable education financing: in far too many countries, the poorest children often benefit the least from public education funding.

To transform education for every child, governments must address all three aspects of education financing: adequacy, efficiency, and equity. Our analysis covering 102 countries zeroed in on the equity challenge in education.

Many dimensions of equity are important to address, as vulnerable children can face simultaneous disadvantages related to poverty, disability, gender, location and more.

However, our study focuses on the poorest children, often hit the hardest by multiple, compounding barriers to quality education and learning.

Unfortunately, children from the poorest households often benefit the least from public education spending. On average, the poorest learners receive only 16 per cent of public funding for education, while the richest learners receive 28 per cent.

In 1 out of every 10 countries, learners from the richest 20 per cent of households receive four or more times the amount of public education spending than the poorest.

In Guinea, Mali and Chad, the richest learners benefit from over six times the amount of public education spending compared to the poorest learners.

Moreover, despite repeated commitments towards equitable financing – including the Incheon Declaration adopted at the World Education Forum 2015, the Paris Declaration of the 2021 Global Education Meeting, and most recently at the Transforming Education Summit in 2022 – data suggests that progress in delivering on these promises has been far too slow.

Evidence from 46 countries indicates that public education spending has become more inequitable in 4 out of every 10 countries. The data speaks for itself: the poorest learners are not receiving their fair share of public education funding, and we must intensify efforts to address these inequities.

Equitable education spending is critical and can reverse the effects of the global learning crisis before an entire generation loses its future. Our analysis shows that if public education spending stagnates, a one percentage point increase in the allocation of public education resources to the poorest 20 per cent is associated with a 2.6 to 4.7 percentage point reduction in learning poverty rates – translating to up to 35 million primary school-aged children that could be pulled out of learning poverty.

How can we address the equity challenge and ensure education funding reaches the poorest? One way is to ensure public funding prioritises lower education levels.

This financing principle refers to ‘progressive universalism’, by which resource allocation initially prioritises lower levels of education, where poor and marginalized children tend to be more represented. These first few years of learning lay the groundwork for children to acquire basic foundational skills. Then, when coverage at lower levels is near universal, resource allocation is gradually increased to higher levels, with a continued focus on the poorest and most marginalized.

Finally, it is important to note that inequity issues exist not only in domestic education financing, but also in international aid to education.

For instance, over the past decade, official development assistance (ODA) to education allocated to the least developed countries (LDCs) has never exceeded 30 per cent, far from the 50 per cent benchmark set forth by the Addis Ababa Action Agenda.

Moreover, appeals for education in emergencies often receive just 10 to 30 per cent of the amounts needed, with significant disparities across countries and regions. On average, the education sector receives less than 3 per cent of humanitarian aid.

The global community must come together to ensure that children living in the poorest countries and in emergencies can benefit from equitable education financing.

To respond to the equity challenge in education, we call on governments and key stakeholders to take the following key actions:

• Most critically, unlock pro-equity public financing to education through broader coverage and volume of decentralized allocations, resources to schools, resources to students of disadvantaged backgrounds (by education and social protection ministries), and strengthened resource allocation monitoring.
• Prioritize public funding to foundational learning by securing funding for all in pre-primary and primary education and targeting the poor and marginalized at higher levels of education.
• Monitor and ensure equitable education aid allocation in developmental and humanitarian contexts between and within countries, including sub-sector levels, when applicable.
• Invest in innovative ways of delivering education to complement gaps in existing public funding through multiple and flexible pathways, including quality digital learning.

We cannot hope to end the learning crisis if we invest the least in children who need it the most.

We must act now to ensure education resources reach all learners and progress towards achieving the goal of inclusive and quality education for all – allowing every child and young person a fair chance to succeed.

Source: UNICEF Blog

The UNICEF Blog promotes children’s rights and well-being, and ideas about ways to improve their lives and the lives of their families. It brings insights and opinions from the world’s leading child rights experts and accounts from UNICEF’s staff on the ground in more than 190 countries and territories. The opinions expressed on the UNICEF Blog are those of the author(s) and may not necessarily reflect UNICEF’s official position.

IPS UN Bureau

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?’http’:’https’;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+’://platform.twitter.com/widgets.js’;fjs.parentNode.insertBefore(js,fjs);}}(document, ‘script’, ‘twitter-wjs’);