Monday, February 7, 2011

Protests Leave Egypt in Economic Peril

A re-post from LeAnne, on the economic repercussions of the recent protests, from a Cairo perspective.

Protests Leave Egypt in Economic Peril

Popular expat spa is empty after many foreigners evacuated Egypt
With nearly $310 million a day estimated to have been lost as a result of 10 days of demonstrations, Egypt now faces a long, hard road to recovery. The government is currently meeting with opposition factions in order to determine a transitional government, but a regime change is not the only concern on the table.

In 2010, Egypt saw a 24% increase in tourism revenue in the first quarter of 2010 standing at $2.7 billion. Tourism accounts for more than 12% of jobs, according to the country’s Ministry of Tourism. In addition to tourism, Egypt relies heavily on the Suez Canal with revenue rising to $379.4 million in March 2010, up from $327.9 million the year prior. And another important factor to Egypt’s bustling economy is foreign direct investment.
And many small business owners are starting to feel the repercussions of change. One person I hold dear is my manicurist and friend Noha. She began Beautique in 2005 with an American partner offering salon and spa services in the mostly expatriate Cairo community Maadi. Over the past year Noha took control as the sole owner of the establishment and continues to cater to her mostly foreign clientele offering manicures, pedicures, facials, massages, and waxing.

However, evacuations have left her usually busy appointment book nearly bare. Not only has curfew restricted operating hours, but banks have just begun a soft opening. Only 10% of banks opened today between the hours of 10am-1:30pm with crowds lining up making it almost impossible to receive service. Noha said, “I don’t know what I’m going to do. Most of my clients left.”

Expatriates total over 95% of Noha’s clientele and with the uncertainty of their return, she is unsure if her business will remain afloat. “Right now, I can only make enough to pay my employee’s salary. If this continues, I will have to close Beautique in two months.”

The salon owner isn’t the only one to feel the strains of change. She told me that even cab drivers in Maadi were also feeling despair. “My cab driver today told me that he couldn’t afford to pay for his car now because foreigners used to be the main source of his income.”

While anti-government protesters chanted for change over 10 days, it’s hard to imagine if many of them thought about the repercussions of change.

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