Remittances from Egyptians working abroad remain one of the most significant and enduring sources of foreign exchange for Egypt. They play a crucial role in supplying the foreign currency needed to finance strategic national requirements, facilitate foreign trade transactions, and bolster the Central Bank of Egypt’s (CBE) foreign exchange reserves.
The sustained growth of remittances underscores the dedication of Egyptians abroad to their pivotal role in fostering comprehensive and sustainable economic development. Over the past year, the continuous rise in remittance inflows has contributed directly to the stability of Egypt’s foreign exchange and financial markets.
On Monday, the Central Bank of Egypt reported a remarkable 51.3% year-on-year surge in remittances from Egyptians working abroad in 2024, reaching approximately $29.6bn, up from around $19.5bn in 2023. On a monthly scale, December’s remittances reached an all-time high since the exchange rate liberalization, hitting $3.2bn—double the $1.6bn recorded in December 2023.
Notably, remittances have been on an upward trajectory since April last year. This growth is primarily attributed to the Central Bank’s decision to liberalize the exchange rate on March 6, 2023. By unifying the exchange rate and eliminating the black market, remittances were redirected into official banking channels, reinforcing confidence in the financial system.
Furthermore, the Central Bank’s stringent monetary policies—coupled with interest rate hikes—enabled banks to introduce attractive financial instruments tailored for Egyptians abroad. These products offered competitive returns and diverse investment options. Additionally, the psychological boost from the Ras El-Hekma investment deal contributed positively to various economic indicators, including remittance inflows.
To sustain and enhance remittance growth, it is imperative to maintain a flexible exchange rate governed by market dynamics. Moreover, leveraging advanced financial technology to streamline and reduce the cost of money transfers will further encourage expatriates to use official banking channels. The government and financial institutions should continue developing targeted incentives and financial products to strengthen expatriates’ engagement with the Egyptian economy.
The steady recovery of remittances to record levels highlights several key developments:
- The effective eradication of the black market, with exchange rates now fully integrated within the interbank system and licensed exchange companies, has curtailed dollarization.
- The resurgence of remittances as a primary source of foreign exchange—ranking among the top two—necessitates continued efforts to sustain and elevate inflows to historical peak levels.
- As remittances normalize, Egyptian banks will actively compete for a larger market share, favoring institutions that excel in digital banking innovations.
- The expansion of the widely used instant remittance platform “Instapay” marks a transformative step in facilitating remittance transfers for Egyptians abroad, making transactions more efficient, faster, and cost-effective.
Mohamed Abdel Aal: Prominent banking expert
