By Mahmoud Fouda
Over the past year, and since the Central Bank’s decision to put restrictions on Companies input to a $50,000.00 per month. The market has been strained, most Middle sized firms & companies have dealings that bind them to transactions beyond this figure and had to maintain their market stand through either usage of their stocks, using up there US Dollar savings or resorting to the black market. The Central Bank though believes that their elevated reserves of US Dollars in May is positive, I regret that figures come at a very high cost to the country’s falling middle class businesses.
The startling fact is that the Central bank has not conducted a sensitivity analysis to businesses that will be affected by the $50,000 constraint, and how deep will that impact the current Middle Class businesses in a market that operated for years relying on imports and succeeded in developing a re-export hub throughout the MENA Region. Such a market transformation from consumption to production needs an integrated transparent Government vision, with special development to sectors that rely on imports whether as raw materials that are part of the current exporting engine or services and products that are essential for market sustainability and development. Like educational textbooks and references needed by our Pharmaceutical companies or educational textbooks & references needed for educational and research purposes. MERIC, is one of these companies that has long operated as one of the most credible suppliers of academic books and journals to Universities and research centres in Egypt and the middle east.
We represent over 100 academic publishers & Educational Institutions in the Middle East disseminating the latest journals, books and educational textbooks with a working force of educated personal, we have been in business for nearly 17 years, a time through which our credit terms granted by International Publishers have developed and increased, as well as our distribution rights all over the MENA region as a hub for these Publishers, which lead to re-exporting and educational co-publishing partnerships. Over the past year, and due to restrictions set by the Central Bank, we have barely managed to survive, we lost over 6 Publishers who transferred the Egyptian market to UAE where transfers are less complicated, on the other hand, we are loosing the credit privileges granted by our suppliers due to our delayed transfers. I tried with the banks for an exception to input cash to avoid the further growing miss-trust between us and our publishers, yet the bank response I always got is that you can not input more than $50,000.00 per month, I even explained that we have commitments and fines on delayed payments, but the Bank personal said “It is the Central Bank’s decision that we can not accept in the company’s account more than the amount set”. The bank officer unofficially told me that we have multiple cases of similar businesses and suggested that I either down-size our business to the limit level which will lead me to letting go of 90% of my staff and narrowing our business operations or moving out of the country for a more flexible banking terms which is the option most of our clients choose. Both scenarios seemed startling in march as we have no plans for either options, yet over the past 2 months our problems with our suppliers grew due to this dilemma and we are having great trouble committing to our Educational Institutions and academic research requirements in Egypt, as we are running out of stocks, and it is getting harder to sustain the business operations and settle our publishers dues. For the first time in 17 years, we are starting a plan to release part of our staff, at a time the market of educational technology is evolving and had plans in expanding into, we are only meeting for downsizing our operations.
A big sector of the poor population relies on the active middle class employed population. With a downsize of operations over the coming 6 months, we will face an increase in poverty levels accordingly an increase in the level of dependency on the government. Figures of the elevated foreign currency reserves are false to imply a movement towards a health economy. The country is striving for investors and strangling its healthy sector of Middle class Businesses who need the government’s help in transformation, and regrettably disregards the fact that banking regulations set will never incubate or attract Middle Size operations, as for Big size investments and operations, I believe they are not entitled to these regulations, as each investor needs to guarantee complete access and free flow of their cash, as for the Egyptian Middle Class entrepreneurs denying them the flexibility needed for their operations will only lead to either elevated poverty levels or a further brain & cash drain from the Egyptian Market, and our loss will not only be in loosing tourism due to lack of innovative and professional international marketing, or attracting investors due to bank regulations, or striving to increase exports through strangling imports. Such a distorted vision may lead the market towards a deeper economic dilemma of loosing its private Middle Class entrepreneurs or as I may prefer to call the actual body of investors inside the market.
I urge the Government and the Central Bank to terminate the limitations on the $50,000.00 before it is too late and conduct a proper analysis on who to implement these restrictions to avoid a new economic dilemma which we are sharply running into. We need a transparent integrated Government vision towards achieving a positive impact on the short term while working on a parallel line towards achieving our vision of transforming Egypt to be one of the 30 top economies in the world on the long term.
