24 - 30 January 2002
Issue No.570
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Al-Ahram Weekly Online 24 - 30 January 2002 Issue No.570 |
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Crises, currencies and candy
As the global market struggles to pick itself up from the 11 September knockout, people around the world are fighting to regain local ground. Yasmine El-Rashidi takes a look at what the financial turbulence has done to Egyptians
Economic hardship is no easy thing. For the millions of people around the world who comprise the masses of developing countries, the daily routine of waking up, worrying about work, about money, about food and clothes, is the norm. To any average onlooker it is a daily strain agonising in itself; a feeling stifling in its sheer intensity. A lifestyle, no doubt, of little rest and a striking absence of play, but one, some say, that has gotten significantly worse.
As the global economic situation entered its turbulent state, and the leading nations of the world screeched to a near economic halt, the sudden jolt and following commotion backlashed and sent shock waves through to the poorer corners of the globe. Seemingly overnight, once-promising markets turned bleak, and up-and- coming investment hot- pockets re-rated as high risk.
The effects were furious. Stock markets slowed and went stale, memorandums of agreement were fast retracted or declared obsolete, and two, three and five-year plans were circled in red and labelled "REVISE." While Egypt's efforts to dampen the blow may have absorbed a fraction of the shock, unfortunately, the country has been no exception to the fraying picture.
It takes little for one to recall the stock market's heyday four years ago, when investors' earnings doubled and tripled and quadrupled. Overnight -- literally. And it takes little more to reminisce about a not-so-distant past when the Egyptian pound stood at a stable 3.40 against the US dollar. Then, of course, one must note, 11 September was of little help. That goes for everyone, from the six-figure businessman to the man on the street: the economic crevice cuts social strata wide.
"The tendency is to look at just the top layer of society, at the minority with big bank accounts and big losses," says Steve Martinez, a US-based financial analyst who has worked extensively in the Middle East. "We tend to ignore the real picture. The masses. That is the real population. Yes, their losses may be smaller, but they add up."
Hagg Hussein is no exception to that picture. In his business for 11 years, "the hagg," as he is locally referred to, has considered himself the area's pioneer in his trade.
"It is not as simple as it seems," he says, toying with the grey turban wrap above his head. "You need to know what kind of sweets to sell. You need to know which customer looks for what. You need to know what Egyptian products are considered adequate substitutes for their foreign counterparts. All these things count," he continues seriously. "Of course, there has been a change in business. Huge drop. Especially since this issue of 11 September."
It seems, to the passer-by, to be a basic thing: the ubiquitous kiosk plastered with stickers and stocked with chocolates, sweets, chewing gum and snacks. A pound (LE) devaluation against the dollar, however, hits any such Hagg Hussein hard. Very hard.
"Of course, if the dollar goes up I'm affected," he says, shaking his head and staring into nowhere. "Of course."
What used to cost him LE10 from the importer, climbed to LE11, then LE12, then LE14 and LE15. For as the dollar began its steady climb from LE 3.4, up the ranks of the LE3's, and then LE4's, so too did the cost of his imported goods. And down came his profits, from a likely LE300 a week, to as low as LE60.
"I can increase my prices a bit, but there is a limit to how much people will pay. Even the foreigners," he explains. "Some of the Americans like to have certain American sweets. But still, they won't pay five or six times as much as they do in their country. People are spending less in general. Even, if you'll excuse me, the wealthy. Everyone has been affected by the situation."
He has a point.The ripples of the US recession zap the world with the force of a crashing wave.
"Business is bad," echoes like a constant background drone throughout the country. "Of course, the effect is widespread," Martinez explains. "At the end of the day, it's a chain effect. You won't find a person who isn't affected. Some more so than others, of course, but wealth isn't a measure of security in this context. Contrary, it rears its head as a risk factor in many cases."
Hagg Hussein says he has felt the caution in spenders.
"Some mothers used to come and buy boxes and boxes of things. For their children, for school. Now they take care. They seem to think more, because they were spending up to LE100 on boxes of imported chocolates and sweets. Even these women," he says, seemingly apologetic, "Their husbands are affected by the economic crisis."
His first big blow came at the beginning of last year, when sales dropped and his debts went up. "But thankfully, I got out of that one," he says, the stress of the situation seemingly imprinted faintly on his aging face. "Then, of course, there was this Bin Laden thing. The foreigners don't come as much."
And there may be more to come.
"I hear of the GATT, and imports," he says. "In all honesty, I don't really understand it all, but I know that they may be stopping foreign goods coming in. This will be a huge blow." That, he says, is where he makes his money. It is the KitKats, Mars bars, Bang Bangs and Rowntree ice-cream bars that bring in his real income. "And cigarettes, of course," he mutters. "Of course."
"Stopping foreign goods isn't going to make people buy the Egyptian ones instead," he theorises. "It doesn't work that way. They need to realise this."
His Maadi locale, he says, has just about kept him going, for it is the diversity of customers that has meant that there is always some sort of trickle of buyers.
"It depends on the crisis!" he laughs, saying people come accordingly. "This Bin Laden thing. Ouf! Everyone stopped!"
Not quite, he smiles, but his real fear is what comes next.
"Things change all the time. One day there is one law, and the next there is something else. We know the government is trying its best, but we need to know what's going on. This is how I feed myself. I can't deal with daily changes. Even the importers have problems. One man I deal with lost so much money because his shipment was kept in customs for so long. He couldn't pay -- they changed the law overnight. This destroys people."
He looks forlorn. Not so much for himself, he confides, but for his country and for the future.
"I have grandchildren," he says. "Two. A boy and a girl. Karim and Sahar. I want to feel that they'll be secure and will be able to have good lives for themselves. But unfortunately, I just don't know. These days, the only stability we have is that in our faith."
Faith in God, that is. The rest, he says, is as unpredictable as what happened on 11 September.
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