Egypt makes changes in grain handling to fight corruption

Egypt makes changes in grain handling to fight corruption
In an announcement on Oct. 19, Egypt Supply Minister Mohamed El-Sheikh said the country will “seek to end procurement of wheat to open air silos” within a year.

The announcement in the form of a press release comes as Egyptian officials look at setting prices for this basic commodity.

The report also cites widespread corruption in the handling of the country's wheat supply, which, according to Egyptian officials, has “wasted billions of pounds worth of public funds.”

An investigative journalism piece from Reuters in March of this year provides a deeper look at what it calls “Egypt's dirty wheat problem.”

Reuters explains that the country imports large amounts of grain for a bread subsidy program to assist low-income residents by the tens of millions.

In order to fight corruption where bakeries sell government-subsidized flower on black markets, Egyptian agencies have created a smart card system to monitor wheat rationing -- buyers enter a pin with a smart card when procuring bread from local merchants. Supply information goes back to the government.

However, hackers have made master cards to override the system, and inaccurate harvest numbers are just part of a problem in which misinformation fuels more confusion and graft in the national wheat industry.

Reuters
quotes whistleblowing advocates saying that the Egyptian government doesn't have the will to take on the issue of wheat corruption.

With the latest news that Egyptian planners are trying to tightly control physical access to this important commodity, the question becomes how the government found itself in this situation in the first place, and what it can do to innovate its way out of the wheat crisis and other major economic problems on the horizon.

According to Dr. Matthew Marlin, professor of economics at Duquesne University, setting prices for commodities is not the way to go.

“You put a price control on something, you're going to have problems,” Marlin said.

Other parts of the world, he said, provide a model for moving up in the chain of emerging markets.

“What they need to do is look at the Asian tigers,” Marlin said, citing education and job growth as imperatives.

South Korea, he said, is an excellent example -- while 20 years ago, the country had little notoriety in global markets, today Americans are often proud owners of a Samsung kitchen appliance or television, or a Hyundai car.

By contrast, Marlin said, the Egyptian landscape shows how things like a lack of education can impair the ambitions of younger citizens.

In addition to the other challenges that Egypt faces, Marlin suggested, there is a political system in place that makes certain kinds of change difficult -- and that, in some ways, hearkens back to preindustrial times.

“How many places in the world do you still have kings left?” Marlin said.

Getting Egypt’s current problems wrong, he said, could lead to another “Arab Spring” and more unrest in an area of the world known for tumultuous changes in government.

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