COVID-19 IMPACT: Livelihood of Egyptian small farmers plagued by remittance slump

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Thu, 25 Jun 2020 - 12:31 GMT

An Egyptian farmer is smiling while he was posing for a photo- Egypt Today/ Hussein Tallal.

An Egyptian farmer is smiling while he was posing for a photo- Egypt Today/ Hussein Tallal.

CAIRO - 25 June 2020: Remittance flow is considered one of the main financial resources of Egypt’s economy; it played a great role in stimulating the African state’s economy in 2016 via increasing the foreign currency reserves.

However, the pandemic of the novel coronavirus (COVID-19) plagued this resource, haunting the livelihood of small farmers.

“We stopped buying meat and cigarettes to save money because we are afraid of the worsening [conditions] of livelihood due to the coronavirus pandemic,” Abdel-Qader Mustafa, a farmer in Upper Egypt’s Qena and whose son was a migrant worker in Saudi Arabia, told Egypt Today.

Mustafa added that his monthly income was gravely affected, as LE 2,000 was deducted from his family income and their livelihood became difficult after his son returned from Saudi Arabia in February.

“Due to the coronavirus, my son could not go back to his work in Saudi Arabia after the end of his annual vacation in February. Since then, he has been taking money from us,” he continued. The repercussions of the lack of remittances pushed the children of Mustafa’s 7-member family to work in the agricultural field for LE 15-20 a day.

Mustafa’s son was one of more than 20,000 Egyptian citizens who returned home or were deported out of 13 million expats abroad, particularly from the Gulf States and Europe since the beginning of the coronavirus crisis, according to the latest figures from the Egyptian Ministry of Immigration on June 6.

Gulf governments have downsized migrant workers in some companies and cut others’ salaries by up to 70 percent, driven by a sharp decline in the oil demand because of the coronavirus crisis, besides the oil price war that erupted between Saudi Arabia and Russia in March.

"The decline in remittances would have a great impact on Egypt generally and on 50 percent of the population in particular, as the number of such farmers and their families constitutes 55 million citizens," Hussein Abdel-Rahman, the head of the Farmers Syndicate told Egypt Today.

According to Abdel-Rahman, remittance flow negatively affected the Egyptian families twice; one during the Arab Spring revolutions in 2011 because thousands of people returned home from war-torn countries such as Libya, Iraq and Yemen. “Nowadays, the plunge of the remittances led to weakness in the purchase power and a decline in the living conditions in the rural areas,” he said, noting that farmers are starting to use low-quality products to an extent that they are starting to eat imported meat.

Abdel-Rahman continued that the drop in the remittances would decrease the cultivated areas as the farmers could plant 3 instead of 5 feddans (one feddan equals 1.037 acres), adding that the government provided facilitations to the agriculture sector to alleviate the coronavirus repercussions, which also led to closure or downsizing the workforce in the agri-industrial factors.

“Also, farmers sometimes find difficulties in taking the remittances as he/she is not allowed [by the banks] to withdraw all amount of the remittances at once from banks,” he said.

Since the outbreak of the COVID-19 crisis in Egypt in March, the Central Bank of Egypt has not revealed the size of Egyptians’ remittance flow. However, it only published the data of remittances that were sent over January and February, where the remittances hit $1.3 billion during the first two months of 2020.

Egypt Today contacted Governor of the Central Bank of Egypt Tareq Amer and his deputies, separately, on Whatsapp to explore the size of Egyptian’s remittance flow since the outbreak of the crisis; however, they declined to comment.

Calls to alleviate repercussions of remittance drop

Drop in remittances has affected several countries around the globe, not only Egypt, pushing the international policymakers to call upon the international community to take the necessary measures for alleviating the repercussions of remittance plunge to not widen the gap of poverty.

"The lockdown of Europe, and America, among other countries, has a direct impact on the amount of remittances that are being sent to the Egyptian families, and therefore it has a direct influence on the livelihood of the family," said IFAD’s President Houngbo in a webinar titled “Global Change in Times of COVID 19: Challenges and Trends for the International System” and conducted by the Brazil Africa Institute on May 22.

Globally, more than 200 million migrant workers are helping around 800 million family members via the remittances they send, according to the latest figures issued by the IFAD on the International Day of Family Remittances (IDFR). The IFAD called upon the governments to reduce the costs of remittances transfer and for greater financial inclusion for remittances.

According to the IFAD, it has been estimated that the global remittances to developing countries could fall by US$110 billion in 2020, and “not return to pre-pandemic levels for many years thereafter.”

In Egypt, the Ministry of Foreign Affairs announced in a statement that it joined an international initiative headed by Switzerland and Britain and launched on May 22 “to limit the economic and social repercussions of the spread of the coronavirus, including limiting its negative repercussions on migrant workers and the remittances of immigrants.”

The initiative is calling for mitigating the negative effects of the coronavirus crisis on the remittances of migrants, their families and countries of origin, in coordination with the International Organization for Migration (IOM) and a number of international institutions and countries.


How did the government act?

At the beginning of the coronavirus pandemic, CBE Governor Tareq Amer said that the bank issued guarantees of LE 100 billion to boost lending for sectors of agriculture and industries via providing loans with a declining rate of 8 percent.

The government planned in the new budget of 2020/2021FY to inject LE 34.5 billion (about $ 2.1 billion) compared with LE 33.9 billion in the previous year, to enhance the state’s food security and rationalize the food imports, amid the crisis of the novel coronavirus, COVID-19.

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