The socioeconomic landscape in Egypt has been witnessing numerous challenges over the last decade. On the economic front, prices are soaring day by day, the Egyptian pound is plummeting and the inflation rate has reached 40% as of July 2023[1]. The external dept has been on the rise since 2020, going up from 123 to 165 billion USD[2]. The government has been trying to contain the situation for years without listening to citizens by applying quick fixes, such as encouraging foreign direct investment, an area in which the government has achieved some success given the country’s economic standing. The government strategies also included, lifting off subsidies, limiting imports to reduce the outflow of foreign currency [https://ec.europa.eu/commission/presscorner/detail/en/IP_22_578] (note: lifted in 2022 after pressure from IMF and with conditions on loans) and introducing regulations that increases financial burdens on citizens (costs of electricity, public transportation, issuing official documents and tolls). The containment strategies, that influence the poor strata in the Egyptian society has led to increased frustrations from the current situation over the years as reported in several prominent media agencies [3]. Such frustrations from the economic, and political situation led several Egyptians to migrate north to European countries in staggering numbers. According to the EU report released in 2022 (https://euaa.europa.eu/sites/default/files/publications/2022-08/2022_07_MDR_Egypt_Origin_EN.pdf), there are three main reasons for Egyptians migrating out of Egypt: economic situation, human rights and security considerations.
, Egypt has been witnessing However, with such economic challenges domestically, there is a surge in consumption rates like never before, with Egyptians heavily buying consumer goods according to both local and international official statistics[3]. The question arises: where do Egyptians get the money, and why does consumption not seem to be affected by the insane price hikes? Why haven’t Egyptians protested the situation as they did during the bread riots in 1977?
In 1980, waves of migration from Egyptians seeking a better life began to flow towards Saudi Arabia and the Gulf countries. This coincided with the country’s openness and the death of leader Gamal Abdel Nasser, who staunchly opposed the mass migration of Egyptian labor abroad, preferring to keep them within the country to support development and industry. However, after his death and as Egypt turned towards globalization, a significant number of Egyptian men opted to seek work abroad in the Gulf. This migration not only brought back cash flow in terms of remittances to families from overseas workers but also brought ideological flows, particularly the Salafi-Wahhabi ideology that had dominated Saudi Arabia for over 300 years[4]. Saudi Arabia was the primary destination for Egyptian labor since the 1980s. This wave of migration brought about numerous social and ideological changes in Egypt, challenging the prevailing moderate Islamic thought or Sufi ideology that once dominated the country. As a result, multiple political, social, and religious movements emerged, finding acceptance within Egyptian society at that time.
As the new millennium began, Egyptian migration took a contrasting turn. Unprecedentedly, Egyptian migration shifted towards Western countries, while declining in the Arab Gulf states. This shift was driven by the pursuit of work opportunities and education to partake in the growing Western economy. According to the World Bank, Egyptian labor in Germany doubled between 1990 and 2000, while labor migration to Saudi Arabia remained at the same level during the same period[5]. By 2013, the Western countries, represented by the Organisation for Economic Co-operation and Development (OECD), became the largest recipient of Arab labor globally, with a 37% share, surpassing the Gulf states by 7%[6].
Notably, migration programs in Canada and Australia have attracted and continue to attract significant numbers of Egyptians. Egypt ranked second globally in the total number of immigrants to Canada in 2011[7]. After the economic downturn in Egypt following the January 2011 revolution, and simultaneous economic and political crises in Saudi Arabia and other Gulf states, along with the spread of poverty, there was a surge in Egyptian migration. The Kingdom of Saudi Arabia resorted to Saudization, replacing Saudi labor with Egyptian workers. Meanwhile, highly skilled labor from Egypt sought opportunities in other countries for better prospects, not just for financial gains, but for better education, health, and a cleaner environment.
According to a study from a European university in 2016, nearly two million Egyptians migrated to non-Gulf countries between 2011 and 2015, accounting for around 2% of Egypt’s total population[8]. These figures represent only the licensed workforce in Western countries and do not include illegal immigrants or students studying abroad, who constitute a potential future workforce in those countries. Notably, the number of illegal immigrants from Egypt to Europe also increased significantly in early 2016, with around 7,000 migrants crossing the Mediterranean to Italian shores[9], raising serious concerns among border authorities.
Nevertheless, the question remains: why do we not feel the full extent of economic decline, and why does consumption not decrease within Egypt? What is the relationship between economic deterioration and migration? The economic, political, and social aspects are closely tied to Egyptian labor abroad. Egypt, according to World Bank reports, is the third-largest country in the Arab world, following Syria and Palestine (only after the crisis), and the eighteenth globally in exporting labor to various countries[10]. Additionally, remittances from Egyptian expatriate workers have reached unprecedented levels in recent years. Egypt ranks first in the Arab world in total remittances from its expatriate workforce and seventh globally, following India, China, and Mexico.
However, how did this impact internal prices and the Egyptian economy? According to the World Bank, total remittances from abroad amounted to $20 billion in 2015, an increase of $1 billion from the previous year. This sum equates to three times Egypt’s income from the Suez Canal and about 90% of its total exports to different countries in the same year. Furthermore, remittances accounted for approximately one-third of Egypt’s budget for the year 2015/2016[11]. These funds arrive in Egypt as bank transfers to immigrant families within the country. The problem with these transfers is that, when spent on domestic consumption, they remain unaffected by fluctuations in the Egyptian pound’s value or domestic inflation and price increases. Consequently, Egyptian families receiving remittances maintain the same level of consumption regardless of rising prices. This dynamic compels many economic activities to continue raising prices, even without justification, as the Egyptian market still tolerates these increases due to its reliance on foreign currency inflows.
However, the majority of the Egyptian population, around 16 million people, are not families of expatriate workers, who constitute around 4.5 million citizens. The gap between these two groups and the consumption habits they can afford widens. The disparity hints at an impending class catastrophe unless attention is directed towards regulating markets and prices in a manner that allows citizens to enjoy a fair distribution. Egypt should implement policies to tap into high-skilled labor domestically, providing better opportunities for its citizens instead of solely relying on increasing interest rates, as is the current policy. This theoretical approach encourages saving and reduces consumption but simultaneously hinders domestic investment and stunts Egypt’s economic growth.
Regarding the impact of remittances on the Egyptian economy, they have mitigated its collapse. The incoming remittances increase Egypt’s foreign currency reserves, which in turn helps resist a devaluation of the Egyptian pound against foreign currencies and facilitates importing necessary foreign goods. This slowdown in the Egyptian economy’s collapse is also a result of expatriate workers offering hope and time for the system to improve its utilization in facing the inevitable economic crisis.
Despite this somewhat pessimistic outlook on the Egyptian economy, there is hope for the political and social aspects in the future. The trend of Egyptian migration to the West holds considerable social and political returns in the long run. The integration of immigrant workers and students with Western cultures and religious communities will inevitably influence Egypt’s general climate, similar to how the Salafi-Wahhabi ideology impacted economic, social, political, and religious activities in Egypt since the 1980s. In this regard, the winds of Noah’s ark will bring more liberal and democratic values, as well as intellectual trends that oppose corruption and encourage hard work, productivity, transparency, and adherence to the law. Consequently, this will reflect on various economic activities within Egypt and influence the emergence and development of democratic movements, affecting political choices for Egyptians, while political funding will favor liberal, democratic, and moderate religious movements.
The time frame for these social and political changes is closely linked to the Egyptian political situation and the passage of time. As conditions improve and expatriate workers return, these changes will naturally take their course. With time, expatriate workers might even establish branches of their companies in Egypt and re-invest their energies in the homeland. Ultimately, it is this glimmer of hope left by Noah’s ark that drives us to persevere and look forward to a future that may differ from the pessimistic view surrounding us now.
Original article in arabic: https://www.sasapost.com/opinion/scenarios-after-migration/
[2] https://www.ceicdata.com/en/indicator/egypt/external-debt
[3] https://www.france24.com/en/live-news/20230104-egyptians-hit-by-soaring-food-prices-as-crisis-bites
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