The recent depreciation of the Egyptian pound has alarmed analysts and investors greatly, and its effects are anticipated to be felt not only by ordinary citizens as their real incomes decline, but also by the nation’s billionaires and top businessmen as the value of their assets, particularly those domiciled in the country, is anticipated to decline significantly.
On Wednesday, January 11, 2023, during trading hours, the Egyptian pound dropped more than 13% versus the US dollar as the central bank changed to a more flexible exchange rate in accordance with a financial support package from the International Monetary Fund (IMF).
According to Reuters, the Egyptian pound hits a new low of 32.14 to the dollar from about 27.60 at the opening of trade on Wednesday, with Refinitiv data showing the currency has fallen by a cumulative 51 percent against the dollar since March 2022.
The decline of the pound has prompted speculation as to how far the currency might fall. While some analysts hope that a weaker pound will attract foreign investment and encourage Egyptians working abroad to send more of their money back home, the reality is grimmer, as many are also concerned about the negative impact that the devaluation of the pound may have on the economy and the net worth of Egyptian businessmen, as well as their ability to attract foreign investments.
According to a recent report by Forbes, the Sawiris family, known as Egypt’s wealthiest family and the wealthiest family in the Arab world, saw their net worth drop by $800 million in 2022.
The combined wealth of the Sawiris family, which includes the fortunes of three Egyptian billionaires — Naguib, Samih, and Nassef Sawiris — fell by $800 million over the course of the year to $11.2 billion as a result of economic struggles faced by Egypt, including shortages of foreign currencies and a decline in the value of the local currency.
The Sawiris family was not the only African billionaire family to see a significant drop in net worth in 2022, as many, with the exception of the Egyptian billionaire Mansour family, saw a similar drop in net worth.
Ahmed Ezz, whose steel company Ezz Steel is listed on the Egyptian Exchange, is also one of Egypt’s richest men, whose equity investments saw a significant decline in market value in 2022 due solely to the depreciation of the Egyptian pound, and with the local currency’s recent decline to a new low, his net worth is expected to follow the downward trajectory.
Egypt turned to the IMF for assistance after Russia’s war in Ukraine pushed up its bills for wheat and oil while dealing a blow to tourism from two of its largest markets, Ukraine and Russia, a key source of hard currency.
The country reached an agreement with the IMF for a $3 billion financial support package in October, in which it agreed to shift to a “durably flexible” exchange rate. The rebound of the pound to about 29.60 to the dollar offered some relief, but the overall trend of devaluation continues to cause uncertainty and concern among those impacted by it.
The devaluation of the pound is a major concern for Egyptian billionaires and leading businessmen in the country, as it affects their net worth and the value of their assets. It’s also an indication of the broader economic struggles that Egypt is facing.