The Impact of Egypt’s Currency Devaluation on Local Startups

April 21, 2024

The Impact of Egypt’s Currency Devaluation on Local Startups

Egypt’s currency, the Egyptian Pound, has undergone significant changes since November 2016, greatly affecting the country's tech startup scene. Initially stable and pegged to major currencies like the US dollar until 1989, the pound was partially floated, relying on market forces for valuation. This system continued until a drastic shift in November 2016 when Egypt's Central Bank allowed the pound to float freely, leading to its halving in value.

This devaluation, a part of transitioning to a free-floating currency, was exacerbated by broader economic challenges by 2022. Inflation soared, creating a substantial gap between the official exchange rate and a burgeoning black market rate, which was nearly 50% higher. For example, by the end of 2022, while the official rate was 30.90 Egyptian Pounds per US dollar, the black market rate had escalated to 54.85.

Further strain was added by external factors like the Israel-Gaza conflict, pushing inflation over 35%. By March 2024, the official rate had plummeted by 55%, aligning more closely with the black market rate. These economic pressures have severely impacted Egypt’s startup ecosystem in several critical ways. Startups face dwindling access to essential funding and skilled talent, alongside difficulties in sustaining revenue.

This video delves into the cascading effects of Egypt's currency crisis on its once-thriving startup landscape, exploring how this economic turbulence shapes the opportunities and challenges for local entrepreneurs and the broader tech industry.

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