(DNE Photo)
Egypt’s automotive market imports have remained hampered over the past four months, due to the Central Bank of Egypt’s (CBE) activation of the law setting a minimum and maximum daily amount, $10,000 and $50,000, respectively, within a month. This led to a halt in Egypt’s automotive companies, and limited their ability to import new cars during this period to present it to the Egyptian consumer.
Moustafa Hussien, Chairman of Automotive Marketing Information Council (AMIC), confirmed this in an interview with Daily News Egypt. According to Hussien, the market is going through a disruption phase never seen before, and the vision for the future it yet to be clear. The final decision is in the hands of the government, the only entity that can solve this.
What do you think of the CBE’s decision?
I think it’s a wise decision by the CBE, because it limited the manipulation of the parallel market and stopped the significant rise resulting from difference in foreign currencies’ exchange rate to the Egyptian pound, in the parallel market, which reached more than 70 piasters sometimes for only $1. In some currency exchange stores, the exchange rate reached almost EGP 8.20, while the CBE’s rate was at EGP 7.60. This difference was of course borne by the consumer.
How can you think of it as a wise decision and yet suffer to apply and disapprove of it?
I did not disapprove of it. On the contrary, I strongly agree with the decision. However, the issue is with the long implementation period which reached four months starting from January 2015, which led to a complete halt in the import movement until today.
There are no decisions for halting imports, so what is behind the lack of imports?
Indeed there was no decision. However, what happened was that the CBE rejected any huge amounts to be deposited in the company’s bank account to open a credit for importing cars. The bank also refuses to provide foreign currencies, which disables companies from importing. This has been taking place, and still is, until the bank provides currencies and opportunities to open the credits needed for import.
In your opinion, what are the repercussions of this decision on the market?
The main negative repercussion is the millions of pounds lost by the state as customs proceeds from cars, as the automotive market annually pays about EGP 38bn to the state through customs, taxes, and personal car registrations. This amount of money is bound to decrease to 25% if the situation continues this way. If this decision remains, the damage and state of stalemate will frustrate and scare the market and investors generally from investing in Egypt.
How has the automotive market functioned in the last period especially that the decision came in force four months ago?
All companies are currently working on selling their stock of whole cars, as most companies have enough stock to meet their needs for three to four months, which is the period we are currently living. Also With the decline in demand during the first quarter of the current year, which reached nearly 15% drop compared to last year, it is possible to endure a period of not more than six months at the latest.
This is the case for cars, how about spare parts?
There isn’t much difference as the situation is the same for everyone, there is shortage in spare parts as well, and although the CBE’s announcement of providing dollars and opening credit for spare parts and production requirements, the truth is so far all credits are opened for strategic commodities only while the rest are on the waiting list, which is unreasonable.
What is the solution in your opinion?
The solution is in the hands of the government, especially the CBE; it should provide currency and meet the needs of importers, at least for a period of time so the market doesn’t come to a complete halt.
