Investing Egyptians’ money abroad… Will it be the salvation for the dollar crisis in Egypt? | economy

Cairo- The idea of ​​establishing a company to invest the money of Egyptian expatriates came back to the fore after the Minister of State for Immigration and Affairs of Egyptians Abroad, Suha Gendi, announced work on establishing a company to invest the surplus savings of Egyptians living abroad.

The idea, which the Egyptian government is seeking to implement, has resurfaced in light of the country’s dollar resource crisis, which has negatively affected the local currency, which has lost more than half its value since last March.

The Egyptian pound fell to more than 24.5 pounds to the dollar in local banks, after Egypt’s central bank decided to adopt a flexible exchange rate regime, along with reaching an expert-level deal to secure a $3 billion loan from the International Monetary Fund that has yet to be approved. entered into force.

During a meeting with some members of the Egyptian community in Saudi Arabia, Gendi expected the company to be completed next year and its shares listed on the Egyptian stock exchange, noting that Egyptians abroad can invest directly in the company or by buying shares, without revealing more details. .

According to the Egyptian minister, the new company is one of the demands of Egyptians abroad, and that all national activities and projects targeted for investment are investigated and identified in order to achieve high returns on investment.

The idea of ​​establishing an Egyptian joint-stock company for the purpose of investing Egyptians abroad in national projects is one of the recommendations arising from the third conference of Egyptian entities abroad, which was held in mid-August 2022 in the New Administrative Capital.

Initiatives that did not see the light of day

In the last few years, we have witnessed numerous initiatives to exploit the savings of expatriates, which is one of the most important sources of hard currency in the country, especially after it reached record levels, but this remained only wishful thinking and did not materialize on the ground.

In July 2018, the first forum for Egyptians abroad, organized by the Egyptian Ministry of Immigration, recommended a series of proposals, including investing Egyptians’ money abroad by launching a fund to invest their money to support the Egyptian economy.

At the beginning of the same year in 2018, initiatives were launched to establish a fund of 10 billion dollars to invest the money of Egyptians abroad. The idea was popular in the domestic media, some supported it, and others were not enthusiastic about it.

Remittances from Egyptians working abroad saw a big jump in 2021, recording $31.9 billion, up 1.6% year-on-year and up $500 million, supported by the recovery from the effects of the Corona pandemic.

However, it decreased slightly in the first eight months of this year, by 2.3%, to $20.9 billion, from $21.4 billion on an annual basis, according to data from the Central Bank of Egypt.

Egypt is among the top 5 countries that receive labor remittances abroad, and it took fifth place among the countries in the world that receive the most remittances in 2020, according to the World Bank.

Opinions about the new company

Opinions differed on an Egyptian minister’s announcement of the government’s intention to launch a company next year to take advantage of the rapid growth in remittances to support Egypt’s economy, which is facing a crisis of lack of hard currency.

The Secretary General of the Union of Arab Investors, Ambassador Jamal Bayoumi, described the step as “important” but attributed its success to “ensuring the right media and investment climate, and taking into account previous experiences aimed at attracting savings to Egyptians abroad, because savings at home is not sufficient to finance investment projects.”

He said – in statements to Al-Jazeera Net – that this idea was previously implemented by the Egyptian state in the eighties of the last century, by establishing a company for the sons of Egypt abroad, and I was a shareholder of the company and it is headquartered in the center of Cairo, but since then I have been nothing heard about it.

One of the surprises, according to Bayoumi, who also served as a former assistant minister of foreign affairs, is that the investments of Egyptians outside of Egypt are estimated at tens of billions of dollars, and there are Egyptian businessmen who invest 90% of their money outside of Egypt, and this cautious national investment is the result of the absence of the right investment climate.

Bayoumi expected the idea to succeed if it is applied professionally, avoids bureaucracy, improves the banking system that complicates financial procedures, and thoroughly studies projects and their returns. He warned against bad record keeping because its consequences would be catastrophic.

The government agreed to exempt cars from abroad from taxes, in exchange for their deposit in dollars to the account of the Ministry of Finance (Shutterstock)

Various initiatives

As part of maximizing the benefits of Egyptians’ money abroad, the Egyptian government has approved a draft law allowing foreign workers to import passenger cars duty-free, provided a dollar deposit equivalent to the duty value is deposited with the government. account for a period of 5 years without interest, provided that it is returned at the end of the year. The period is in Egyptian pounds at the current exchange rate.

And Egypt’s finance minister said last month that the decision to exempt the cars of Egyptian workers abroad from duties and customs would only be available for a period of 4 months, and he expected the dollar revenue from the decision to reach $10 billion.

There has been some concern among expatriate Egyptians. In this regard, the head of the Customs Administration, Shahat Al-Ghatouri, said that the low demand of expatriates to import cars from abroad is caused by fears, including the fear of imposing taxes on their accounts after transferring deposits, which is not possible and not true.

The Egyptian government has launched an electronic platform for an initiative to facilitate the importation of cars for the personal use of Egyptians living abroad, which shows that the number registered on the platform is constantly increasing.

The dollar crisis is an incentive

Economic researcher Elhamy Al-Mirghani attributed the reason for the re-announcement of the company to manage the money of Egyptians abroad to “the lack of dollar funds. In this context, the government has resorted to more than one method to attract funds from abroad, such as allowing the import of cars in exchange for deposit in dollars and offering land and housing units in dollars.”

He added to Al Jazeera Net that remittances from abroad are pumped in different ways, and the investment decision is up to each expatriate separately, and savings owners have the right to choose the form of investment or savings cocoon without imposition.

An expert in the field of economic and administrative consulting warned against playing with the savings of Egyptians abroad, and that one must be careful with them. Because this will lead to the reluctance of Egyptians to send their money to their country through legitimate methods and channels, and thus the results will be counterproductive.

Al-Mirghani believed that the prospects for success in establishing a company were weak, pointing out that there was no previous experience to build on, especially in light of the difficult economic conditions the country was going through, and the existence of a history of frustration between citizens and governments.

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