Egypt is going through a currency crisis that is negatively affecting its economy. Just like Nigeria, the country has adopted protectionist policies such as pegging the Egyptian pounds keeping it “artificially strong” against the US Dollars. They have also introduced forex restrictions and higher tariffs all in a bid to contain demand for the green back. Yet, dollars is hard to come by and this is affecting imports and increasing the country’s inflation rate.
To address the dollar shortage for companies, it appears Egypt is doing something Nigeria is also likely to consider in the coming weeks. The country’s Central Bank is said to have injected about $14 billion into banks in the last three months to help facilitate imports of essential goods and services.
“The central bank and Egyptian banks have embarked on an urgent plan to facilitate foreign trade in order to provide for production and for essential consumer goods for Egyptian citizens…To this end the central bank has provided more than $14 billion over three months and this has had an immediate impact on foreign trade and industrial activity,”
Nigeria faces similar challenges with importers finding it difficult to source forex for import of essential commodities that Nigerians rely on daily. Manufacturers have also complained severally about their inability to access the dollar and claim that they need it to fund imports of input of their cost of production. The CBN has just under $28 billion in external reserves and is said to have an import bill of over N917 billion monthly. To meet this demand it will have to spend about $4.5 billion monthly which will deplete its reserves within 6 months assuming it gets no inflow.