Remittances from Egyptians working abroad rose significantly in 2011, continuing to provide the country a steady source of income, officials and analysts said.
"Data circulated by the [Egyptian] Central Bank indicate that remittances from Egyptians working abroad rose to a historic high in 2011, spiking from $12.5 billion in 2010 to $14.3 billion in 2011, with the vast bulk of remittances coming from Egyptians in Saudi Arabia," said Tareq al-Shafi, director of incoming remittances at a Cairo money transfer company.
Al-Shafi said incoming remittances are subject to strict Central Bank controls designed to inhibit funding of terrorist sources and money laundering. The remittances, even if transferred by way of a private money transfer company, take a compulsory path through the Central Bank so they can be regulated, he said.
Remittances are an important tributary to the Egyptian economy and a solid source of hard currency, according to Mahmoud Auf, former Egyptian ambassador to Saudi Arabia.
Auf announced during a ceremony on July 28th to mark the end of his service in Saudi Arabia that remittances from Egyptians in Saudi Arabia reached $8 billion in 2011, or around 60% of the country's total remittances that year.
This amount surpasses the income generated by the Suez Canal and tourism in 2011, he said, adding that the Egyptian community in Saudi Arabia swelled by about 150,000 new arrivals after the January 25 revolution.
Majed al-Mahmoud, head of the Workers Bureau of the Emigration and Egyptians Abroad Sector at the Ministry of Manpower and Emigration, said the actual volume of remittances may be higher than reported by the Central Bank, especially since many Egyptians use informal money transfer routes, including friends, acquaintances or relatives.
"Saudi Arabia is the largest contributor to the Egyptian national income through remittances, followed by the United States, Kuwait and the UAE," he said.
Dr. Yahya Salem, an economics professor at Cairo University, told Al-Shorfa that remittances from expatriate workers represent a solid financial source for many countries, including Egypt, which views expatriates working abroad as collectively representing an essential component of its national income.
"Egypt's labour force, which rose to prominence during the Gulf oil boom of the 1970s, is the most robust in the Arab world," he said, adding that the high unemployment rate and economic difficulties that beset the country after last year's revolution have driven many workers to seek higher paying jobs abroad.
Salem said last year's remittances from Egyptians in Saudi Arabia had an important impact.
"The latest figures have significant implications, especially since remittances from Egyptians abroad were among the factors that helped reduce the deficit in the balance of payments in 2011 as foreign exchange reserves declined," he said.
He said Egypt could bolster the economy by also focusing on savings and developing programmes that attract them.
"Savings are a treasure trove that will stimulate the Egyptian economy to an unprecedented extent. Moreover, the abundance of liquidity will enhance the value of the pound against the US dollar and limit the extent of borrowing in foreign currency," Salem said.
The government has already started to take steps to attract savings, such as making land available for industrial, construction and service sector investment. "This will channel more remittances to the Egyptian treasury and Egyptian banks," he said. "Subsequently, these factors will collectively help revive small- and medium-size enterprises, curb the rampant unemployment problem and increase the rate of economic growth."