Family planning in Egypt - Benefit cost of family planning

No. of pages: 70

Publication date: 20 April 2015

Author: CERFS

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This study is a follow up study of an earlier study conducted by the Policy

Project (Chao,2005) aimed to demonstrate the financial benefits and costs of family

planning programs in Egypt, and to help governments in their decision to allocate

their scarce resources to such programs. It measured the financial benefits and costs of

family planning programs in Egypt over a thirty years period (2000-2030), and

compared its monetary costs to the monetary benefits in terms of reduced levels of

social services required at lower levels of fertility, or in other words the savings in

government expenditures on social services.

The study at hand gains its importance from the recent significant increase of the

population problem, and aims to update the estimation for the benefits and costs of the

family planning program in Egypt. It is noteworthy that this report extends the

projections timeframe to more than thirty years (2014-2050), to align the timespan to

the National Strategy for Family Planning in Egypt. We rely on the actual expenditure

on social services according to the Egyptian budget for the fiscal year 2012/2013.

We also provide results for the thirty year period (2014-2044) in Appendix A and B.

The results in Appendix A are based on the actual expenditure on services for the

fiscal year 2012/2013.The estimation in Appendix B, is based on the expected

expenditure on services for the fiscal year 2014/2015.

Hence the main purpose of this report is to update the analysis by Chao (2005) using

the same methodology (benefit-cost analysis) to compare the current situation with the

results of the previous study on the Egyptian family planning program.

It is also important to note that Chao’s report was a follow up of Moreland study that

was conducted in 1996 to support a strong public family planning program in Egypt.

This study also indicated significant financial returns for investment in family

planning programs in Egypt.

The objective of this report is comparable to the objectives of Chao’s study (2005)

and can be summarized into the following:

(1)” To estimate the impacts of family planning programs on government

expenditures for social services such as health, education, housing, and food

subsidies;

(2) To compare reductions in government social services spending as a result of

family planning programs to the costs of family planning services; and

(3) To show the financial viability of family planning programs, and their

effectiveness in improving the quality of social services”.

This report estimated the number of births averted due to the family planning program

at 43.31 million births for the period (2014-2050), at an estimated cost for family

planning programs of around EGP 8 billion.

The benefit- cost ratio increased from EGP 40.27 (Chao, 2005) to EGP 56.12 in this

study, which means that the average return on each Egyptian Pound spent on the

family planning program, is estimated at EGP 56.12 for the period (2014-2050). The

benefit - cost analysis is based on the projection of government expenditure on family

planning over the period 2014-2050 and the saving in government expenditure on

health, education, food subsidy and housing due to the number of births averted by the

family planning program over the same period. The saving in expenditure is only

focused on public expenditure that is directly related to population growth. The

projection of government expenditure saving includes total saving as well as sectorial

saving on health, education, food subsidy and housing.

The benefit- cost (EGP 56.12) is the sum of the benefit-cost of health (EGP9.24),

education (EGP31.15), food subsidy (EGP11.52) and housing and utilities (EGP4.21).

These results show that the major saving will occur in the education expenditure,

followed by food subsidy, health and housing and utilities. These results depend on

the 2012/2013 actual expenditure figures.

The net savings stream was used in the calculation of the internal rate of return (IRR),

which refers to the discount rate that makes the net present value of all cash flows

from a particular project equal to zero. In other words it equates the present value of

all costs with the present value of all benefits. The higher a project’s IRR, the more

desirable it is to undertake the project. The IRR for the family planning program

2014-2050 is 199.4%, compared to 182% for the Chao (2005) study. This is a

relatively high IRR compared to ordinary investment projects and would suggest the

approval of this project.

For sensitivity reasons the authors calculated in Appendix A, of this report the

benefit-cost ratio over the period 2014-2044 which also shows an increase in the

benefit- cost ratio from EGP40.27 (Chao, 2005) to EGP 46.56 for the period. The

benefit- cost analysis presented in the Appendix A depends on the actual budget

figures of 2012/2013. The forecasted increase in government expenditure will lead to

an increase in the benefit-cost ratio, as everything else being equal the higher the

expenditure of the government on social services and the more expenditure per person

the higher the benefit- cost ratio for the family planning program. In Appendix B we

show a benefit-cost ratio reaching EGP52.78 for the period 2014-2044. The benefitcost

ratio in Appendix B depends on the expected budget figures of 2014/2015, with a

projection of the actual 2012/2013 figures of educational costs to the year 2014/2015.