Egypt - The Foreign Exchange Crisis and The Measures in Place.
In this edition of our article, we will discuss the recent difficulties Egypt has faced regarding her foreign exchange shortage, the measures she has put in place to curb the misuse of cards, the opportunity that exists, and the way forward.
Egypt, often considered one of the cradles of civilization, is said to be the origin of some of the world’s earliest developments in aspects such as Urbanization, Agriculture, Central Government, and Religion. The contiguous transcontinental country boasts of a diversified economy with a $477 billion GDP, which is one of the largest in Africa, relying mainly on agriculture, tourism, media, natural gas, and petroleum imports.
In 2020, during the COVID-19 pandemic, Egypt suffered a great loss of foreign currency supply after two of its largest foreign currency generators - Tourism and Oil and Gas, were severely affected. This collectively represented about 23% of the nation’s GDP.
The pandemic shut out tourists completely all through the COVID lockdown and the sector was said to have suffered around one billion dollar loss per month. Reduced industrial activities also caused about a 9% decrease in the consumption of oil during the first month of the lockdown, crippling the supply of foreign currencies to the country. The Egyptian Pound has since experienced devaluation, with the most recent leading to a loss of over 40% of the currency’s value, pegging the official rate to 31 EGP per US dollar.
This devaluation and scarcity of foreign currency affected organizations, businesses, and individuals who have to make transactions on a global scale and hence, some of these affected entities resorted to collecting debit card details from partners abroad to access USD, making withdrawals and performing transactions in other currencies without actually traveling, which further increased the foreign currency drain that Egypt is experiencing.
MEASURES PUT IN PLACE
The Egyptian government saw the need to curb people who were accessing USD without actually leaving the country as the currency situation could not manage that; it had become a case of need-based access to Dollars as seen in some other African countries like Nigeria.
To manage this, the Central Bank of Egypt (CBE) directed commercial banks to restrict credit and debit card usage for foreign currency transactions. Transactions were limited to an equivalent of $250 a month for card users and the maximum limit of $1000 can only be activated when a card user informs the bank of travel plans and such plans are verified.
OPPORTUNITIES THAT ARISE
These restrictions have put a strain on the transaction volume that individuals, business owners, freelancers, companies, and organizations that largely depend on foreign purchases can make monthly, limiting their presence in the global payment space. In 2020, research showed that cash transactions made up 57% of transactions in Egypt, with only 22% being card transactions. This could be attributed to the fact that most businesses were owned by older citizens who were reluctant to let go of the traditional mode of transactions. However, from 2022 till date, the number of Egyptians who now rely on digital banks and mobile phone wallets for their transactions increased to 64.8%, while a much lower percentage have access to cards with domiciliary accounts.
This shift suggests a growing demand for digital solutions to facilitate international trade and payments. Egyptians still require access to USD transactions for online shopping and international education, creating an opportunity to provide this service within regulatory frameworks.
For businesses, companies, and organizations that are committed to providing Africans with a platform that gives them access to participate in the global marketplace, the Egyptian population is a great opportunity to help individuals access digital wallets and products that allow them access foreign currencies, especially the US Dollar.
The Bridgecard Solution
Bridgecard is an organization that is deeply concerned with providing Africans with the opportunity to perform international transactions seamlessly, by providing Physical and Virtual Cards with features that are designed to solve the pressing issues that we encounter.
As a company looking to penetrate the Egyptian market with a platform that gives access to make international transactions digitally, Bridgecard poses to be a partner that provides you with the perfect virtual dollar card to complement your platform. Bridgecard's virtual cards provide:
- A substantial monthly transaction limit of $10,000, a vast improvement over local banks' $250 limit.
- Stability and reliability, ensuring uninterrupted card usage, without the concern of being recalled or rejected.
- Acceptance on various platforms and merchant organizations, so users can purchase, subscribe, or transfer their funds on various global platforms at their convenience.
- Built-in rewards that allow your users access coupon codes, discounts, and promos across top global merchants.
Partnering with Bridgecard also means partnering with an organization that shares the same vision of making global transactions easy for Africans, with a team that is readily available to provide support every step of the way, and expediting the process as fast as possible.
The Time is Now!
Egypt’s economy, like many other countries, has not fully recovered from the impact of the COVID-19 pandemic, especially the foreign currency drain the nation is experiencing. To ease this strain and empower individuals and businesses in the global marketplace, digital innovations and technologies must be harnessed.