Why Egypt is asking people to eat chicken feet

Egypt’s economic situation is so dire that the government is asking people to eat chicken feet.

The Arab world’s most populous nation is suffering a record currency crisis and its worst inflation in five years, making food so expensive that many Egyptians can no longer afford chicken, a staple food.

Poultry prices rose from 30 Egyptian pounds (at the time US$1.9) per kilogram in 2021 to as high as 70 Egyptian pounds (US$2.36) on Monday, according to state media.

The rising cost has led the country’s National Nutrition Institution to ask people to switch to eating chicken feet.

“Are you looking for protein-rich food alternatives that will save your budget?” she asked in a Facebook post last month, listing a series of items starting with chicken feet and cattle hooves.

Many Egyptians are furious that the government is asking citizens to turn to foods that are symbols of extreme poverty in the country. In Egypt, chicken feet are seen as the cheapest meat item, considered by most to be animal waste rather than food.

“(We have entered) the era of crow’s feet, the collapse of the Egyptian pound… and drowning in debt,” tweeted Mohamed Al-Hashimi, a media personality, to his 400,000 followers.

But others seem to be heeding the call. After the recommendation to switch to chicken feet, the price of a kilo of the product would have doubled to 20 Egyptian pounds (US$ 0.67).

Authorities say that about 30% of Egypt’s population is below the poverty line. The World Bank in 2019, however, estimated that “about 60% of Egypt’s population is poor or vulnerable”.

Here’s what you need to know about Egypt’s economic spiral:

How did Egypt get here?

Egypt has gone through a series of financial crises over the past decade, which has forced it to seek bailouts from creditors such as the International Monetary Fund (IMF) and Gulf Arab allies.

But the country has become trapped in a borrowing cycle that analysts say has become unsustainable. Its debt this year is equivalent to 85.6% of the size of its economy, according to the IMF.

Some of the factors contributing to Egypt’s economy include the outsized role of the military, which analysts say weakens the private sector, as well as the allocation of huge sums to mega-projects such as Africa’s tallest tower and a new capital in the desert that houses a defense ministry that officials brag is bigger than the Pentagon.

Egypt’s economy has taken a significant hit over the past two years as the effects of the Covid-19 pandemic and the war in Ukraine have reduced its foreign currency reserves and rising fuel prices have driven up inflation.

The pandemic saw investors withdraw $20 billion from Egypt in 2020, and the economic fallout from the war in Ukraine prompted a similar amount to leave the country last year, according to Reuters.

“Twenty billion dollars is the equivalent of every penny Egypt has borrowed from the IMF since 2016, and it disappeared within weeks (last year),” said Timothy Kaldas, a non-resident fellow at the Tahrir Institute for Middle East Policy in Washington. A.D.

These events contributed to the currency crisis that Egypt faces today. The Egyptian pound has lost nearly half of its value over the past year, and last week it briefly hit an exchange rate of 32 pounds to the US dollar, its lowest in history.

In its latest bailout agreed in December, the IMF loaned $3 billion to Egypt, which it hopes will catalyze an additional $14 billion in support from Egypt’s international and regional partners, including oil-rich Gulf nations.

What does the IMF need Egypt to do differently this time around?

This year’s IMF loan was conditional on Egypt’s implementation of a series of structural reforms. And this time, the creditor is going head-to-head with Egypt’s mighty military.

Along with introducing a flexible exchange rate – which would allow the currency’s value to be determined by the market rather than the central bank – the IMF has also called on Egypt to reduce the role of the state, including the military, in the economy, and slow down national projects in order to limit pressures on the currency as well as inflation.

“What’s exceptional about this is that it also encompasses Egypt’s military companies,” wrote Yezid Sayigh, a senior fellow at the Malcolm H. Kerr Carnegie Middle East Center in Beirut, Lebanon. “This contradicts the initial impression given by the loan agreement announcement in October 2022 that the IMF had not used its influence to put military companies on the agenda.”

The IMF also required all companies – including those owned by the military – to publish an annual report “with details and estimates of tax exemptions and incentives”.

It remains to be seen whether these reports will be published. Kaldas says many Egyptians want to know how rich the military is and also “the level of risk that Egypt’s military economic empire poses.”
“One of the challenges right now in understanding Egypt’s level of economic risk is that we don’t know how much money the military companies have borrowed,” he said.

Why is the role of the military in the economy so controversial?

The private sector in Egypt has been shrinking over the past seven years, according to Kaldas.

The December S&P Egypt Global Purchasing Managers’ Index (PMI), which measures the health of Egypt’s non-oil private sector, showed a “solid deterioration”, remaining below the 50 mark needed for healthy economic growth. for 25 consecutive months.

Egypt’s military owns and operates a significant number of companies that private companies struggle to compete with. From gas stations and pharmaceuticals to meat and dairy, military companies make up a large proportion of Egypt’s economy.

But these companies do not operate like private companies, enjoying special privileges without disclosing their financial data to the public.

The military also spearheads President Abdel Fattah el-Sisi’s vast national projects, which critics say have sucked up much of Egypt’s funds.

Authorities have pledged to list state-owned companies, including military companies, on the stock exchange, a plan aimed at involving the private sector in their management. The plan has yet to be fully implemented, and analysts are skeptical of the secrecy with which these companies typically operate.

Is it possible for Egypt to heed the IMF’s call?

Sayigh of the Carnegie Middle East Center says the delay in listing military companies on the stock exchange and disclosing their finances is evidence of the military’s reaction to the conditions.

Experts have questioned why international lenders have not leveraged their loans to drive Egypt’s military out of the economy. The institution is powerful in Egypt, both financially and politically.

It was only with the support of the military that Sisi was able to rise to power. The former field marshal spearheaded a 2013 military coup that toppled former president Mohamed Morsy, the country’s only democratically elected president.

Speaking to Becky Anderson of CNN in Abu Dhabi on Monday, Egyptian Foreign Minister Sameh Shoukry said that state-owned companies “will be sold to the private sector to encourage more investment” and that Egypt “is supported by the IMF in this regard”.

Asked when the government would review the military’s involvement in the economy, Shoukry said Egypt was tackling the challenges “holistically” while “recognizing the social dimension” at the heart of the country’s financial problems.

Kaldas of the Tahrir Institute said there are ways for the government to get around IMF conditions, making changes that look like concessions but do not change the structure of the economy.
“If everything in this agreement is really followed, there will almost certainly be a reduced role (for the military in Egypt),” he said.

Why should the rest of the world care?

When Egypt devalued its currency in October, the US embassy in Cairo issued a “riot alert”, warning of possible unrest.

More than a decade ago, Egypt and other Middle Eastern states descended into a wave of protests that toppled governments, crippled economies and even sparked civil wars that drove millions of refugees to flee the region.

In 2011, when millions took to the streets demanding regime change, the most chanted slogan in Egypt was “Bread, freedom and social equality”.

Egypt is home to more than 106 million people, more than half of whom live in precarious economic conditions. Many are unable to afford staple foods, limiting their spending and even restricting diets, and analysts have warned of unrest if the situation deteriorates significantly.