Egypt: Import dependent

the only countries, along with China, that continued growing during the COVID-19 pandemic, according to Lamyaa El-Enany, regional manager of the Malaysian Palm Oil Council (MPOC) in Egypt. The country posted an economic growth rate of 4.4% in the first quarter of fiscal year 2022/23, she wrote in a report on 31 January.

Oil Imports

With a population of around 110M inhabitants that is growing at a rate of 2%/year, Egypt has a large consumer base and is uniquely positioned at the crossroads between Africa, Europe and the Middle East.

The country – through the stateowned Suez Canal Authority (SCA)owns, operates and maintains the Suez Canal, the waterway which connects the Mediterranean Sea to the Red Sea through the Isthmus of Suez, dividing Africa and Asia. The 193.3km canal is a key global trade route between Europe and Asia, with some 20% of international container trade, 10% of seaborne business and 18,000 ships passing through each year.

Egypt has been one of most robust economies in the Arab region and one of

However, the country was hard hit after Russia’s invasion of Ukraine on 24 February 2022, which sent wheat and vegetable oil prices spiralling, piling pressure on Cairo’s foreign currency reserves.

“The fragile state of Egypt’s food security stems from the agricultural sector’s inability to produce enough cereal grains, especially wheat, and oilseeds to meet even half of the country’s domestic demand,” Professor Michaël Tanchum, a non-resident fellow with the Middle East Institute (MEI)’s Economics and Energy Programme, wrote last year.

“Cairo relies on large volumes of heavily subsidised imports to ensure sufficient and affordable supplies of bread and vegetable oil for citizens. Securing those supplies has led Egypt to become a top importer of wheat and among the world’s top 10 importers of sunflower oil.” wheat came from Russia and Ukraine, along with 73% of its sunflower oil.

With costs driven up by the war and rising global energy prices, official inflation in Egypt hit 21.9% in December and food prices rose 37.9% year-on-year, piling pressure on households, according to a 13 February Aljazeera report.

Last year, Egypt devalued its currency twice, with a pledge in October to adopt a flexible exchange-rate policy which eventually helped the country clinch a US$3bn loan from the International Monetary Fund (IMF), Aljazeera wrote.

Agriculture

Agriculture has traditionally been a key driver of economic activity in Egypt, accounting for 28.8% of GDP in 1974 but falling to 11.5% (US$28.3bn) in fiscal year 2020/21, due to industrialisation and diversification, according to a 2022 Oxford Business Group report.

The share of arable land has remained at just under 3% of total land area since the early 2000s, while the percentage of agricultural land reached almost 3.9% in 2018. The fertile Nile Delta enables Egypt to grow a wide variety of crops –including cereals, cotton, sugar, fruits and vegetables – but due to its arid climate, Egypt relies on irrigation for much of its agricultural activity.

The Russia-Ukraine war catapulted prices to unsustainable levels for Egypt, increasing the price of wheat by 44% and that of sunflower oil by 32% virtually overnight, he said. It also threatened Egypt’s physical supply since 85% of its u

Total crop production in Egypt has risen markedly in recent years – specifically, by 20% between 2010 and 2020,