The blow is far from painless. It strikes at the very heart of the country, by depriving it of one of its main resources, and for an indeterminate length of time.

Since November 2023, the Houthis, in solidarity with the Palestinians in the Gaza Strip, have been attacking ships in the Red Sea that they believe are linked to Israel or its supporters.

As a result of these attacks, many shipowners have decided to change course and avoid the area. Instead of passing through the Red Sea and the Suez Canal, ships are now circumnavigating Africa. Consequently, revenues are dwindling from the 15% of the world’s traffic that would normally use Egypt’s prized waterway.

As the head of state, Abdel Fattah el-Sissi, pointed out in mid-February, the Suez Canal generates almost $10bn a year for the North African country. For Sissi, this represents a loss of 40% to 50% of its income since the start of 2024.

One of the three mainstays of the Egyptian economy — along with remittances from the diaspora (more than $22bn in 2022-2023) and tourism (nearly $14bn) — is therefore in trouble.

A select club of the world’s weakest currencies

Is there still worse to come? With the spectre of further devaluation looming for the Egyptian pound, which has already lost almost 50% of its value in just over two years, Egypt has joined the unenviable circle of countries with the weakest currencies in the world.

These countries have in common a combination of the same woes: high inflation and colossal debt. All of them — Nigeria, Turkey, Argentina and Venezuela — have seen their currencies turned into Monopoly money since 2022-2023, and are scrambling to find ways of stabilising their currencies.

The case of Egypt is the stuff of bad dreams. The roots of the latest devaluations date back several years, marked by persistent political and economic instability.

Over the course of two decades, the country has been through a transitional phase, allowing the market to set the value of its currency freely and ending its peg to the dollar. As a result, it now costs EGP31 ($0.63) to exchange one dollar, upwards of 60 pounds on the parallel market.

Astronomical debt

The economic reforms launched by the Egyptian government as part of a programme supported by the International Monetary Fund (IMF) — and now on hold — will be replaced by a series of unpopular austerity measures, weighing heavily on an already struggling population.

All sectors of the economy are affected. Rampant inflation, peaking at 12% in 2023, is reducing household purchasing power, while rising prices for basic foodstuffs are putting additional pressure on the most vulnerable sectors of society.

At the same time, Egyptian companies, faced with higher production costs, are seeing a decline in their competitiveness on international markets.

As for the external debt of the world’s largest importer of wheat, it has risen steadily since the start of the war in Ukraine, reaching an estimated 41% in 2023 and 49% in 2024. Public debt accounts for around 90% of Egypt’s GDP and represents an unsustainable burden for future generations.

For all that, Egypt does not seem to be at the centre of the continent’s preoccupations, consumed as it is by various issues, notably a major political and economic crisis in West Africa.

The latest African Union summit, which had a very different agenda, is a case in point. It was not so long ago that Egypt, the third most populous country on the continent, was on top of Africa, ranking second in terms of GDP, at over $475bn in 2022.

In the pre-Covid-19 era, Egyptian national champions dominated the ranking of the continent’s leading companies and international cooperation projects were legion. Are we going to let our neighbour go under? Whatever happens, Egypt will not be content to lick its wounds.