Egyptian entrepreneurs have warned that uncertainty over the exchange rate is suffocating business and impeding their ability to plan and invest, as the country endures its worst foreign currency crisis in years.
A series of devaluations since March last year has halved the value of the Egyptian pound against the dollar but failed to boost foreign exchange inflows. A new devaluation is expected, economists and business leaders say. Meanwhile, the dollar shortage has led to a black market in foreign currency.
The crisis began when foreign bond investors pulled about $20bn out of Egyptian debt following Russia’s February 2022 invasion of Ukraine, in a flight to havens.
Gulf states stepped in with $13bn in deposits and another $3.3bn in asset purchases, but portfolio investors have mostly stayed away and the private sector has struggled to fund imports.
Adham Nadim, who heads his family’s company Nadim Group, which makes furniture for hotels and corporate clients, said he was having problems importing crucial inputs such as hinges, accessories and paints.
“Everyone gives me speculative prices based on what they think the price of the dollar on the black market will be if I plan to purchase in two months,” he said. “It is a bigger problem if the project extends to six or 10 months.”
Samih Sawiris, a leading Egyptian tourism and real estate investor, told Saudi Arabia’s Al Arabiya television this month that the foreign exchange situation had deterred him from further investments in Egypt.
“Everyone is waiting for clarity on the exchange rate,” he said, describing the issue as “hurdle number one, two and three” for investors. “How can I know if a project would make profits or losses?” he said. “Which rate should I use — the international [forward] rate, the black market rate or the official rate?”