• Umm Abdo prepares bread for the family in her home on the west bank of the Nile, by Egypt's southern city of Aswan. All photos: AFP
    Umm Abdo prepares bread for the family in her home on the west bank of the Nile, by Egypt's southern city of Aswan. All photos: AFP
  • Russia's invasion of Ukraine has disrupted wheat imports to many countries, fuelling fears of higher prices and shortages.
    Russia's invasion of Ukraine has disrupted wheat imports to many countries, fuelling fears of higher prices and shortages.
  • With global supply chains already under strain due to the Covid-19 pandemic, a wheat-buying frenzy in Egypt, Libya, Tunisia, Algeria and Morocco – all of which depend heavily on imported wheat to feed their populations – lays bare the magnitude of the challenge governments face amid sharp rises in food prices.
    With global supply chains already under strain due to the Covid-19 pandemic, a wheat-buying frenzy in Egypt, Libya, Tunisia, Algeria and Morocco – all of which depend heavily on imported wheat to feed their populations – lays bare the magnitude of the challenge governments face amid sharp rises in food prices.
  • The crisis was highlighted by the UN food agency, which this week predicted that poorer countries in northern Africa, Asia and the Middle East that depend heavily on wheat imports risk suffering significant food insecurity because of the war in Ukraine.
    The crisis was highlighted by the UN food agency, which this week predicted that poorer countries in northern Africa, Asia and the Middle East that depend heavily on wheat imports risk suffering significant food insecurity because of the war in Ukraine.
  • Of the five nations in northern Africa, Egypt’s wheat predicament is perhaps the gravest. The world’s largest wheat importer with a population of 102 million, Egypt relies on Russia and Ukraine for 80 per cent of its supply.
    Of the five nations in northern Africa, Egypt’s wheat predicament is perhaps the gravest. The world’s largest wheat importer with a population of 102 million, Egypt relies on Russia and Ukraine for 80 per cent of its supply.
  • Egypt’s wheat is chiefly used to make the flatbreads provided for about 60 million citizens who are entitled to subsidised food.
    Egypt’s wheat is chiefly used to make the flatbreads provided for about 60 million citizens who are entitled to subsidised food.

Egypt bans export of wheat and other staples for three months


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Egypt will impose a three-month ban on the export of several essential food items, including wheat, from March 11.

The Ministry of Supply and Domestic Trade order, published in the national gazette, covers lentils, pasta, wheat, flour and fava beans. It coincided with a significant rise in the price of foodstuffs in Egypt that's partially blamed on the adjustment of the supply chain in the aftermath of the worst phase of the Covid-19 epidemic.

Alarm over the impact of the Ukraine war has also been cited for the rising prices since 80 per cent of Egypt's wheat imports - about 13 million tonnes in 2021 - come from Russian and Ukraine.

Egypt is the world's largest wheat importer.

The minsitry gave no specific reason for the ban, which appeared designed to bolster supply of these items in the hope that would check the surge in prices.

The most-populous Arab nation with 102 mllion people, Egypt's wheat imports and local production are chiefly used to make bread, the country's main staple and the cornerstone of a bread-subsidy programme that benefits about 60 million people.

The remainder of the population relies on "free market" bread, which is bigger and more expensive.

Surging food prices have sent the inflation rate in urban parts of Egypt to the highest level since mid-2019, adding to the likelihood of an interest-rate increase this month.

Consumer prices were up 8.8 per cent in February, compared with 7.3 per cent the previous month, the state-run statistics agency Capmas said on Thursday.

A 17.6 per cent increase in food and beverage costs, the biggest single component of the inflation basket, was the main driver. On a monthly basis, inflation was 1.6 per cent.

The steep hike in food prices, including fresh produce, has led to calls for the government to step in to protect consumers, particularly middle-class and poor Egyptians. About 30 per cent of Egyptians live under the poverty line.

Cairo residents are reporting increases in food prices of up to 50 per cent over the past two weeks. Food prices routinely rise in the weeks before the Muslim fasting month of Ramadan, which begins in the first week of April. During that month, many Egyptians treat themselves to elaborate meals at sunset, when they break their daylong fast.

The prices of non-subsidized bread in Egypt increased over the past few days, as the Russian aggression on Ukraine has affected the price of wheat worldwide. EPA
The prices of non-subsidized bread in Egypt increased over the past few days, as the Russian aggression on Ukraine has affected the price of wheat worldwide. EPA

But the current price increases are far higher than they usually are in the run up to Ramadan.

The price of a loaf of bread, outside the state subsidy system, has risen from 0.50 to 1.50 Egyptian pounds (about $1).

And fuel prices, which are adjusted by the government, are widely expected to be raised soon to reflect sharply higher prices on the world market.

The chief prosecutor's office said in a statement on Thursday that 12 people had been detained in eight provinces, including Cairo and the port city of Alexandria, on suspicion of hoarding food items with the intention of selling them later at inflated prices. It said authorities were determined to find and prosecute hoarders.

The surge in food prices and the likely rise in fuel prices will compound the hardship faced by most Egyptians to make ends meet as the government of President Abdel Fattah El Sisi presses on with an ambitiious programme to overhaul and modenize the economy that began in late 2016.

The programme, initially launched as part of a deal to secure a $12 billion IMF loan, has seen the government removing most state subsidies, raising utility charges and intoducing a vast range of taxes. The pound's exchange rate to the US dollar was also floated in 2016 with a devaluation that stripped the local currency half its value.

The reforms hit the poor and middle class hard, but the government has sought to cushion the upheaval with a range of economic support initiatives for the most vulnerable among them.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Updated: March 10, 2022, 3:38 PM