By Dahlia Ali
Egypt and Nigeria’s combined share of remittances contributed 64% of the total amount that flowed into Africa last year, the African Development Bank (AfDB) said in its African Economic Outlook of 2013 issued Monday.
Millions of Egyptians living abroad transferred about $18bn to their homeland last year, the report said, outlining that the share of North African countries represented 90% of the $3.9bn increase in remittances in 2012. AfDB estimated the total value at about $60.4bn.
Egypt’s ratio of average remittances to Gross Domestic Product (GDP) from 2005 to 2011 reached 5.3%, placing it as the ninth highest African country in terms of dependency on this source of foreign funding. According to World Bank figures, Egypt received $14.3bn in remittances in 2011, representing 6.2% of its GDP.
Since the end of 2010, a month before the outbreak of the 2011 revolt which toppled former President Hosni Mubarak and pulled the country into ongoing political unrest, Egypt has so far used up about 60% of its foreign currency reserves. International reserves reached $14.4 in April according to data published on the Central Bank of Egypt’s website.
Although Egypt saw an increase in its Foreign Direct Investment (FDI) to $3.5 billion in 2012, which the report said could only be a temporary boost stemming from planned investment projects that were delayed due to the political unrest of 2011, the continuation of this instability diminishes the country’s chances of sustaining such growth. “In Egypt, the realisation of two of Africa’s largest announced greenfield projects in 2012, worth more than $5bn, will depend on the return of political stability and reaching an agreement on an IMF loan,’’ the report said.
FDI flowing into Africa witnessed an increase in 2012 after three consecutive years of decline, firstly triggered by the global financial crunch. According to figures in the IMF’s World Economic Outlook, FDI to Africa recovered to $49.7bn last year, compared to $42.7bn in 2011, with expectations of a growth by more than 10% in 2013, bringing it back to pre-crisis levels in 2008.
As for outflows, Egypt reported a negative portfolio for the second year, according to the report. Citing IMF estimates, about $3.9bn have left Egypt in 2012, which the report said was “a serious threat to the economy”. As a whole, outflows from Africa decreased from $8.5bn in 2011 to an estimated 6.5bn in 2012, in which South Africa and Angola’s share was 78%.