Saving money no longer option for Egyptians under price hikes 

Sarah El-Sheikh
10 Min Read

Egyptians, especially members of the middle class, have been gradually changing their lifestyles over the past years, not only by cutting their expenses, but also by giving up many things that were once essential to their daily routines.

Members of the middle and upper middle classes had been enjoying many things seen by lower classes as privileges, while the current economic situation has caused them to recognise these as privileges that can no longer be part of their monthly plans.

Going out with friends on the weekend, or even on weekdays, travelling several times throughout the year, driving cars, buying clothes on a regular basis, having high-end products, and monthly visits to the supermarket and beauty salons were always viewed as essentials in their lives, not privileges.

The recent changes in Egypt’s economic situation have caused prices to double and increase even higher, obliging people to change their priorities, while also diminishing their ability to save money.

Saving money is one a common practice among people all over the world. It was always normal to save some money for emergencies, for certain goals, or to maintain significant sums of money, especially for the middle class.

Egyptians were very successful in doing this; over the past years, many families managed to save significant amounts of money, which enabled them to build houses, buy savings certificates, buy apartments for their children, own properties, and store money for emergencies, which they are now spending.

With stagnant salaries amid rising prices, consumers have changed their financial behaviour by looking for different methods that could help reduce expenditure.

In November 2016, the Central Bank of Egypt (CBE) floated the pound as part of the requirements set by the International Monetary Fund (IMF), with which Egypt agreed to a $12bn loan over three years. The pound’s flotation raised the prices of different products, including food, medicine, electronics, and fuel, as well as electricity services, making life harder for Egyptians.

The inflation rate in May increased by 0.3% from the previous month, reaching 274.7 points from 273.9, according to the monthly bulletin released by Egypt’s official statistics body, the Central Agency for Public Mobilisation and Statistics (CAPMAS).

Daily News Egypt interviewed citizens of different social statuses and ages. Some agreed that they still can save money despite the worsening conditions, while others believed that it has become difficult to save as long as the value of their incomes are unstable.

Some of the interviewed citizens narrated their experiences on how they were able to save money during the early years of the 21st century.

Saving money is no longer affordable

“I have no doubt that saving money became something unbearable at all now. People who still can do this, really, God is with them,” said Mai Khater, a senior officer who has been working at telecommunications company Etisalat Egypt for 10 years.

“My first salary was EGP 2,700; four months later, it was raised to EGP 5,700. Could you imagine? There was money at that time. I managed to buy a car and apartment for myself and help my family. I was even able to travel three times per year to different places in Europe,” Khater said.

She continued, “my salary at that time was equivalent to EGP 25,000, which actually now is valued as EGP 10,000. The pound’s value has strongly impacted our income. If someone is really earning the amount of the previous salary now, they would never be able to achieve what I did in 2008. And apparently, thank God, I have an apartment—mine is 90 sqm and I got it for EGP 90,000—which I can now sell for EGP 400,000. Look at the difference.”

Currently, she said that she now has a higher salary and owns a private company but is in debt. Things she used to buy, for example, for EGP 100 now cost over EGP 200.

A majority of people continue to receive the same salary as before the flotation, which is the main reason that led them to feel the pressures of inflation.

“Saving money is completely a privilege now. I stopped smoking shisha in fancy coffeeshops, meeting my friends on a daily basis, ordering fast food at work—not to save money, but to afford the expenses of marriage preparations, and it is still not enough,” Ahmed Hussien, a 29-year-old restaurant manager, said when asked how he saves money after the price hikes.

Hussien said that he was scheduled to reserve his wedding in October, but financial difficulties led him to postpone it to January so that he can handle several marriage requirements. His family has provided him with some assistance.

“In the beginning, one year ago, I agreed with the family of my fiancée to arrange a good wedding together, but the plan changed. Now, both of us are not facing financial stability, so we will only do a small reception.”

He continued, “we spent more money than was expected due to the price hikes; for instance, we thought the electronic appliances would cost only EGP 40,000, but they reached EGP 60,000. This is not only applicable for electronics, but to everything else in the apartment, from decoration to furniture. So how can I save? Any amount saved will be paid after a while. Saving is a really hard task.”

Moreover, Salma Abdel Rahman, a 25-year-old public relations officer living in the Mohandessin district, said, “I wish I could really save money, but there is no way as long as my salary is unstable and prices are increasing.”

Abdel Rahaman is completely independent, but by the end of some months, she finds herself having to borrow money from her father or mother. She receives a monthly salary of EGP 5,000, explaining that her expenses include fuelling and cleaning her car, buying medicines and beauty products, and going to the hair dresser.

“I am living with my family, but I only sleep and eat with them. I rarely take money from them, even when I want to visit my doctor or perform medical tests. Now, my family has to help to prepare me for marriage, but they can’t get me all the things I need, so I must save, but I really don’t know how,” she said.

“This is good that I can afford my needs, but I want to do more things. I am in my early 20s; I have to enjoy life, but I am really too poor to do this, even though I am categorised as an upper middle class citizen.”

Money-pooling continues as solution to save money

Money-pooling, commonly known as “gamaaya”, is when individuals borrow and save money together. The neediest people were those practicing it the most, but middle-class citizens have been performing it for years and are increasingly doing so now. It is an old custom amongst mainly rural Egyptians.

Saeed Hamdy, a 26-year-old retail banker, said the only solution to save money, especially now, is joining money pools, which is better than taking loans from banks with high interests.

“Most of the male youth are using a large amount of their salaries in money pools. In some cases, it might not be in one pool, but in two or three, since it is the best and fastest way that can help them to save money,” Hamdy said.

“After inflation, all that I have saved last year will do nothing after the prices have increased. Now I am stuck. I can’t reserve an apartment or buy a car. Not only this, but I can’t be committed to any pool any longer, because then I would not be able to live,” he concluded.

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