The Egyptian economy has faced many challenges in recent years, including a two-time devaluation of the Egyptian pound, soaring inflation and a foreign-exchange crunch, which has resulted in restrictions on credit usage in foreign currencies. 

What does the economic landscape look like in Egypt right now, and what can we expect moving forward? We spoke with Ahmed Abou-Zaid, professor of economics at AUC, to learn more.

The Central Bank of Egypt has recently banned the use of debit cards abroad and restricted credit usage for transactions in foreign currencies.  Why has it taken such steps?

Central banks across the world adopt various targets and objectives, ranging from price stability and high employment to fostering economic growth. In the case of the Central Bank of Egypt, its current primary focus is maintaining stability in the foreign exchange market. Recent decisions made by the CBE, such as banning the use of debit cards for foreign currencies, serve as a reflection of the foreign currency shortages Egypt is currently suffering from. The Central Bank aims to stabilize the market by retaining a significant portion of foreign currency within the country's borders. Recently, there have been reports of individuals being sent to foreign countries with numerous debit cards to withdraw dollars from their Egyptian pounds’ accounts. This practice has resulted in a substantial decline in Egypt's foreign reserves, worsening the existing problems.

What does this signify?

Egypt's focus on foreign exchange market stability, while confronting foreign currency shortages and inventive practices to access foreign currency, underscores the importance of prudent Central Bank policies to safeguard the country's economic well-being. These measures are pivotal in addressing the challenges posed by capital flight and depletion of foreign reserves.

Do you expect another devaluation? If so, approximately when?

Given the current state of Egypt's foreign reserves, it's evident that the price of the U.S. dollar in the black market has surpassed EGP 42, which represents a considerable premium of approximately 10 pounds over the official exchange rate. Given these conditions and in the context of Egypt's agreement with the International Monetary Fund, there is a strong likelihood of another devaluation occurring by January 2024. This impending devaluation should be seen in the broader context of Egypt's economic challenges and its commitment to agreements with international financial institutions like the IMF.

How do you foresee people's cost of living and general expenses being affected amidst the current economic conditions? 

Two recent currency devaluations, sluggish wage growth, limited economic subsidies and a rapid population growth, have contributed significantly to a notable decline in the living standards of the Egyptian population. The elevated value of the U.S. dollar has played a major role in raising the cost of imported goods, the majority of which encompass essential products, such as food and medicine, as well as crucial inputs for manufacturing and agriculture.

Should we expect inflation to rise?

Official data published by the Central Bank underscores a consistent upward trend in inflation over the past two years, averaging at around 40%. With another devaluation on the horizon, it's a straightforward projection that prices will continue to surge, given that foreign components or inputs are integral to nearly every product in Egypt.

What do you foresee for the Egyptian economy through the end of this year? Into next year? In the long term?

Forecasting the trajectory of Egypt's economy is an easy task as it depends on multiple factors. In the short term, the foremost concerns include persistent inflation and depreciation of the Egyptian pound, posing significant challenges that will lead to higher prices and lower standards of living. 

Looking ahead to the mid and long term, Egypt's economic prospects can be enhanced through the implementation of a range of policies, such as attracting foreign investments, managing population growth, advancing infrastructure projects and adopting sustainable practices. By strategically employing these measures, Egypt can chart a path toward economic improvement and sustainability in the coming years.

What advice would you give to people living in Egypt to cope with these challenging conditions?

A very difficult question, but what I can think of is “work hard and budget wisely”. 

As part of AUC’s ongoing commitment to experiential learning, construction engineering undergraduates visited Egypt’s New Administrative Capital to explore hands-on the advanced construction methods and state-of-the-art electromechanical systems being employed. Students ascended to the top floor of the Iconic Tower, the tallest in Africa, where they were able to witness the advanced construction systems that comprise it in action. 

“Seeing such a mega structure, the Iconic Tower, in real life and listening to industry leaders delve into how such buildings are constructed is a real privilege,” says Mohamed Elnakeb, construction engineering graduating senior and president of the student-led Construction Engineering Association (CEA). “We also viewed the mechanical systems inside the tower. This experience is an added value for us as students since we actually see things firsthand and understand how it all works in real life.”

The initiative is a collaboration between CEA, the Department of Construction Engineering, Career Center and American Society of Civil Engineers AUC Student Chapter. 

At the Central Business District, students were granted a unique opportunity to study the technological advancements of the area and gain insights that extend far beyond the confines of traditional classrooms. Additionally, the students visited the highrise twin towers, interconnected by a sophisticated truss bridge at the top. “This provided a rare opportunity for them to examine the intricate structural elements and construction methodologies that underpin these towering edifices,” says Ibrahim Abotaleb, associate professor in the Department of Construction Engineering. 

This immersive trip served as a cornerstone of the Career Center's job-shadowing efforts, facilitating meaningful interactions between aspiring engineers and industry professionals."The Career Center organizes job-shadowing visits in diverse industries to help students visualize their career in action,” says Mary Henry, experiential learning officer at AUC’s Career Center. The job-shadowing program allows students to spend a day with a professional working in their career of interest, giving them the opportunity to experience what the job is like and get their questions answered by professionals in the field.”

Engaging directly with engineers and representatives of the China State Construction Engineering Corporation, the driving force behind the construction efforts in the New Administrative Capital, the students gained valuable insights into the collaborative efforts and meticulous planning involved in such ambitious projects.

“AUC made history during this visit, becoming the second University to explore the Iconic Tower and the very first to venture into the twin towers, which marks a significant milestone in its commitment to fostering hands-on learning experiences for its students,” says Aboutaleb. "Such initiatives not only enhance academic knowledge but also provide students with a glimpse into their future careers, bridging the gap between education and real-world applications."

As part of their shared commitment to safeguarding and maintaining cultural heritage, AUC and the Al-Turath Foundation have partnered to launch a new initiative aimed at developing innovative digital methods for historical preservation.

"The AUC Library and the Al Turath Foundation share a common vision and purpose through the commitment to the preservation and safeguarding of our rich cultural heritage,” says Lamia Eid ’88, ’92, interim dean of AUC’s Libraries and Learning Technologies. “We are dedicated to the creation, production and dissemination of knowledge, not only at the national and regional levels but also on a global scale.”

Holding a central role in the endeavor to explore heritage preservation, the partnership will foster collaboration in literature and translation alongside theoretical and field research initiatives, particularly in the areas of urban heritage and architectural restoration. 

The initiative also aims to spark community interest, pride and investment into preserving national identity and culture. This will be achieved through enhancing the accessibility of cultural heritage through digital platforms and focusing on their documentation through research, publication, documentary film production and collaborative cultural events.

The impact of this partnership will be appreciated for generations to come: “In an era marked by rapid technological advancement, our collaborative efforts are indispensable for ensuring that our unique and rare collections are safeguarded for the benefit of future generations, particularly through innovative digital approaches,” Eid says.

For someone who wants to do everything, AUC rises to the challenge. “I was really, really happy to have the option to study a lot of different things. I couldn’t choose one specific aspect to focus on because that just wasn’t fulfilling to me,” says Mona Nasr, a member of the first cohort of AUC’s Excellence Scholars. 

“Without the Excellence Scholarship, I wouldn't have had the opportunity to study here,” Nasr adds. “I love that it focuses not only on academics, but the person as a whole. You can show your strengths in more ways than one, like in leadership, talent or sports.” 

Nasr’s strengths fall across the board. Already in a host of co curricular activities alongside planning a psychology major and political science minor, the ability to engage in different academic and non-academic endeavors at AUC lets Nasr fully explore her overall interest: working with people. 

“I love the idea of knowing how the world works,” she says. “Psychology allows me to study how our minds function and why we behave the way we do. Political science adds another layer, as politics affect everything about how we live and integrate in society.”. 

What she learns in the classroom is instantly applicable in the many student organizations she has joined, one being Mashroo3 Kheir, a student group that leads educational and aid initiatives focused on giving back to the community. “Working with student groups has been a really great experience,” she says. “Being able to get involved is a big part of why I was so excited to attend AUC.”.

While she’s not studying, Nasr manages to find time to pursue her non-academic passion which is singing. “I've been singing for as long as I can remember, ever since I was 3 years old. It's something that's very much a part of my family,” she says. 

Nasr’s mother is a recording artist and owns a music production company, and they even recorded a song together. “It's always been something that's very related to family for me and a big part of who I am,” she says. “It helps me feel balanced with my academics, like it completes my personality.”

What advice helps guide her during her journey at AUC? 

“I feel like for so many people my age, in this part of our lives, there are so many decisions to make,” she says. “You don't know what you should study, you don't know what's going to make you more successful, and sometimes I see people choose things they don’t actually like just to do things that they think will get them a high-paying job. But for me, the advice that I've gotten from many older family members is that if you do what you love, you'll be happy with what you're doing. And you will eventually, with dedication, find success.”

For someone who does as many things as Nasr, AUC is a great place to showcase her strengths in every discipline – no need to sacrifice any piece of her passion.