Egypt's currency crisis is killing young people's dreams
In a bustling café in downtown Cairo, a young man throws his hands in the air in despair after he converts the price of a plane ticket to Germany from euros to Egyptian Pounds.
The Egyptian Pound (EGP) has lost half of its value in less than a year, reaching record levels of 32 EGP to the euro at the time of writing, from 17 EGP to the euro one year ago.
Young Egyptians have seen their savings effectively halve and plans put on hold overnight as they fear further mark-downs and economic instability.
"Since Sadat, Egypt's economic model has been characterised by poor job creation, low wages, a high trade deficit, and overspending from the state. I am sceptical that Sisi will change this soon, if ever"
“The devaluation changed my future. I'm more motivated to work abroad or simply earn a non-EGP wage. It makes marriage, moving out of your parents’ house, buying your own apartment or a car more difficult. All of my future plans changed,” one Cairene with a steady job in the tech sector told The New Arab on the condition of anonymity.
Another young Egyptian, a graduate working in Europe, has equally seen their future path erode. “My plans of settling in Egypt have been postponed. Salaries have decreased in value sharply and it is unlikely that any increase will cover the difference. The situation is unstable and I’m unlikely to move back during a time of uncertainty.”
Egypt’s Central Bank has been gradually devaluing the pound to match black market levels as part of the nation's pledge to pivot to a floating exchange rate. Last year, Egypt approached the IMF for new funds for the fourth time since 2016 and following months of negotiations, Egypt agreed to move to a flexible exchange rate as one of the terms to secure a much-needed $3 billion loan.
Egyptians are also reeling from significant price hikes as inflation rises above 20 percent and is expected to continue increasing in 2023.
Almost everyone The New Arab interviewed noticed a lifestyle degradation as wages have not kept pace with inflation and prices for imported foreign goods have skyrocketed due to a combination of currency devaluation and import hold-ups driven by dwindling foreign reserves.
Fears of a worsening economic future
Young professionals voiced a mixture of frustration and resignation about the economic landscape.
“It’s been a long time in the making so it doesn't come as much surprise. For the past few years I’ve only accepted pay in ‘hard’ currency and what’s currently happening is only another incentive to continue to do so in the future,” one graduate working in consultancy admitted.
According to Amy Hawthorne, Deputy Director for Research at the Project on Middle East Democracy (POMED), the economic issues impacting young people today have been looming for years, with little respite on the horizon.
“The invasion of Ukraine has affected the Egyptian economy, especially in regards to wheat prices, as has the Covid-19 pandemic. However, the underlying problems and roots of the crisis have been brewing for years as the economic crisis is largely driven by political economic choices which President Sisi has made," Hawthorne said.
"Young Egyptians have seen their savings effectively halve and plans put on hold overnight as they fear further mark-downs and economic instability"
“Unfortunately, I’m pessimistic about Egypt’s short-term economic future. I expect Egypt to avoid a full-blown meltdown, because of the international financing that is coming in. But on the level of the real, day-to-day economy, tens of millions of people are living in poverty, more and more young people are seeking to leave, and most of all, I'm doubtful of President Sisi's political will to change the economic model,” she added.
“Since Sadat (1970s), Egypt’s economic model has been characterised by poor job creation, low wages, a high trade deficit and overspending from the state. I am sceptical that Sisi will change this soon if ever.”
During the past decade, President Sisi has positioned himself as the ‘father of the nation’ and government announcements are largely communicated via state-owned media outlets. The lack of information and forewarning from the government has created a sense of powerlessness and heightened anxieties among young people trying to plan their futures.
“I feel disappointed and helpless as there are many things I wanted to do in the near future that are completely smashed by the collapse which came without previous notice or preparations,” a civil servant commented.
Plans of studying and travelling abroad out of reach
With domestic opportunities becoming less attractive by the day, many expressed a desire to study for a postgraduate degree in Europe to boost employment opportunities, but were worried about the heightened costs, with some saying they would only consider it now if they were granted a full scholarship.
“Traveling abroad is not affordable anymore. I want to travel to do my master’s now, as living in the EU means I need a master's degree to be competitive in the work market. It will, however, be a lot more challenging as all my savings are in EGP and paying rent, tuition and food is more expensive now,” a computer science graduate told The New Arab.
“I feel very terrible, looks like we’ll be joining Lebanon soon… we are on the same trajectory. Banks are already putting limits on the amount of foreign currency you can withdraw from your own accounts,” they added.
Towards the end of last year, several Egyptian banks announced that Egyptians overseas could only withdraw EGP 5,000 (€155) per day or up to EGP 20,000 (€620) per month from their accounts. The Central Bank later circulated a note saying those paying for education or healthcare abroad would be exempt from restrictions.
Light at the end of the tunnel?
Since the recent devaluation, there have been new developments which could benefit the youth-heavy workforce. “On the other hand, it is very motivating for foreign investors as labour is getting less expensive,” the computer science graduate said.
According to the Central Bank of Egypt, foreign investors transferred $925m into the Egyptian market last week on the back of the currency devaluation and several other short-term economic boosts are expected to emerge in the coming months.
"Looks like we'll be joining Lebanon soon… we are on the same trajectory"
“Following the recent IMF negotiations, Egypt is likely to benefit from the pumping in of hot money through debt financing, increasing tourism and Suez Canal revenues, remittances, and new money from Gulf States. But this is just a band-aid,” Hawthorne added.
For those young Egyptians who do make the leap to working abroad, they continue to dream of Egypt and the homeland they left behind.
As one ex-pat confessed, “I feel devastated knowing so many people will not survive the economic crisis. Guilty that I have the opportunity to leave and will not be as economically affected by it. But I also feel as though it makes sense with all the policies that have been adopted for the last few years”.
Lara Gibson is a Cairo-based journalist closely following Egypt's economic and political developments.
Follow her on Twitter: @lar_gibson