Why Buy Locals? During the previous months, egypt has been facing radical changes that are affecting its currency, population, economy and future.
Egypt has been facing one of the major struggles in its history. In November 3, 2016, the Central Bank of Egypt (CBE) floated the Egyptian pound (EGP), by which it devalued against the U.S. dollar (USD) by 48%, due to the lack of resources that provide foreign currencies.
“Low investment levels and the shaky tourism industry have been the primary causes of the dollar shortage in Egypt, a country that is heavily dependent on imports,” said Doaa Farid, in the Daily News article, Negligence of foreign currency resources aggravates ballooning dollar crisis.
The EGP continues to free-fall until it currently reaches 19.2 as the buying price and 19.5 as the selling price per USD, by which it is only controlled by supply and demand principle.
The monetary policy, which means that the Central Bank updates the deposit interest rate in order to impact and influence the nation’s economy, was implemented by the CBE for the aim of reviving the economy.
It decided to raise the percentage of the deposit interest rate in order to raise the funds, by which it could increase the demand on the EGP and increase the supply on the USD. In 2016, the new deposit interest rate is 14.75%, however it was 11.40% in 2015, which means that the rate of increase from the previous year is 29.38%.
Consequently, the Egyptian President, Abdel Fattah El Sisi issued a decision to raise the import tariffs by 60% and increase the custom duties on 320 products, due to the high price of the USD.
“Egypt must not do like Saudi Arabia when it announced that they will not import wheat for two years then they failed to satisfy their needs due to the lack of the competitive advantage in water, which is used heavily in wheat agriculture,” said Amina Ghanem, the former assistant of the Minister of Finance and the executive director of the Egyptian National Competitiveness Council.
According to the Ministry of Finance, this decision is supposed to encourage the importers to produce Egyptian products by reducing or even eliminating the previously imported ones.
“I used to be a partner in a company that imports food products. Now, I am producing stroopwafels, which I also used to import in the old days. The idea came to me when the exporter threatened me that he will withdraw the agency from my company after one week of paying the full payment of five from hundred shipments,” said Adham Saad, the CEO and the owner of Class A company in Egypt.
Some Egyptian producers are currently taking advantage of the economic problem by producing goods that would substitute the previously imported ones as Melty, Moltobella, and Spread Juna that are substituting Nutella spreadable chocolate, Dreem Cocoa to replace Hershey’s Cocoa. In addition to Bonjorno cafe that is producing coffee and creamer instead of Nescafé coffee and Néstle coffee mate.
While other Egyptian companies, who existed since a long time ago, as Temmy’s for Breakfast cereal, Corona chocolate, Bisco Misr biscuits and wafers, Katakito chocolate, Gersy chocolate, Président cheese, Mandolin chocolate, others, are taking advantage of the economic problem by strengthening their advertisement campaigns in order to convince their customers in the light of the absence of imported goods.
The major problem that cannot be solved yet is that even if many Egyptian producers tend to produce goods instead of the imported ones, they will always struggle to find adequate raw materials to satisfy their needs.
“Raw materials are the biggest challenge in a country like ours because we’re looking to make very good quality products and this makes it very hard to find suitable raw materials. Unfortunately, we have to go through the whole importation process again to be able to provide the raw materials needed, which puts us in a big risk because the importation now is very hard so we are into the risk of running off the raw materials,” said Mohamed Hussein, owner of Foodica company, who used to import food products before the raising tariffs decision.