Egypt prepares to issue law merging informal economy with legal system

CAIRO – 6 August 2019: Egypt is preparing to issue a law to merge the informal economy with the legitimate economic system in the coming period, Deputy Minister of Planning, Follow-up and Administrative Reform of Planning Ahmed Kamali said Tuesday.

Kamali added in a statement that the integration of the informal economy into the formal system of the economy helps combat poverty, which contributes significantly to the acceleration of growth.

He clarified that Egypt has two types of economy: official and informal, noting that the proportion of workers in the informal economy represents 50 percent and that this type of economy records 40 percent of GDP.

Vice President of the Federation of Industries Tarek Tawfik said in April that the informal sector represents more than 50 percent of Egypt's economy.

As per the poverty rate, Kamali stated that it recorded 32.5 percent during 2017/2018, compared to 27.8 percent in prior years.

The deputy minister of planning stressed that the increase in the rate of inflation leads to an increase in the poverty rate and a reduction in the purchasing power of citizens, referring that increasing the number of family members to 10 people causes a rise in the poverty rate to more than 70 percent.

On the state's efforts to meet the needs of the poorest villages, Kamali said that the state made investments worth LE 1.3 billion in the needy villages during 2018/2019. “The number of villages benefiting from these investments hit 158 villages with 2.5 million citizens in five governorates.”

Kamali added that the rehabilitation of the provinces' infrastructure is an important step to attract investments.

Furthermore, Kamali said Sunday that poverty rates in Upper Egypt have decreased compared to previous years, because of the focus on social protection programs in the governorates of Upper Egypt.

Earlier, the Central Agency for Public Mobilization and Statistics (CAMPAS) announced that the percentage of Egyptians, who live in extreme poverty, rose to 32.5 in 2018 from 27.8 percent in 2015, with an increase of 4.7 percent.

According to CAPMAS’s latest survey on income, expenditure and consumption for 2017/2018, Egypt announced that he who earns less than LE 8,282 (US$ 501.03) annually and $1.3 daily lives under the poverty line.