Recent news shows that major North African countries have begun to propose a form of "barter" trade to circumvent the impact of dollar shortages.

A few days ago, Kenyan Finance Minister Nedungu mentioned at a public event in the capital Nairobi that the Egyptian ambassador to Kenya had previously told them that Egypt now has no way to obtain Kenyan tea because the country does not have US dollars, so now these teas It can only be parked in the port of Mombasa (Kenya).

Egypt proposed that Kenya would come and see what Egypt could produce in exchange for tea.

Nedungu said that Kenyan President William Ruto has assigned the Minister of Agriculture to negotiate a "barter" trade agreement with Pakistan. "We are still in a global dollar shortage, which is why countries like Egypt and Pakistan want to trade in exchange," Nedungu concluded.

In 2022, due to the impact of currency depreciation and foreign debt, the Egyptian government forced the use of L/C to pay for imported goods, and the slow financial review process resulted in a large number of containers being unable to clear customs and stranded at the port.

Egypt realized that this would not work, so it announced in a statement at the end of 2022 that it would stop using the mandatory requirement for importers to use L/C payment from 2023 and return to the traditional D/P or D/A model.

But that doesn’t solve their problem of having no money.

Although there is no accumulation of goods at the port, there are delays in foreign exchange purchases for some goods. The main reason is that the financial market cannot provide enough U.S. dollars for importers of raw materials and goods from abroad. Parts of the interbank lending market have also stopped, so there is not enough flow. to meet import demand.

Egypt is currently experiencing its worst foreign exchange crisis in years.

Since March 2022, the Egyptian pound has doubled in value, with the exchange rate against the US dollar plummeting from 15.7:1 in the past two years to 30.9:1 now, and has even exceeded 40:1 on the black market.

Fitch International, an international credit rating agency, predicts that the Egyptian pound will fall to 35 Egyptian pounds per US dollar in the near future and gradually depreciate to 38 Egyptian pounds per US dollar by November.

In order to increase foreign exchange earnings, the Egyptian government now even charges US dollar residence fees for foreigners in Egypt. Egypt's new decree issued on August 31 requires foreigners in Egypt to pay visa, residency application and other fees in US dollars, and illegal residents must pay US$1,000 within three months to obtain legal residency.

At the same time, life is not easy for ordinary Egyptians.

Under the triple attack of rising prices, high inflation, and continuous depreciation of the currency, Egypt's working class are scrimping on food and clothing. Many Egyptians can no longer buy 10 kilograms of beef with a month's salary, but the prices of imported goods in Egypt are rising rapidly. , supermarkets don’t even bother to update their price tags.

In response to the rapid rise in prices, Egypt has currently suspended tariffs on a variety of basic commodities for six months to reduce the prices of related commodities by 15% to 25%.

Items affected include beans, dairy products, white cheese, mixed oils, pasta, sugar, lentils, poultry products, eggs and rice. In addition, Trade and Industry Minister Samir said the government will further simplify the procedures for releasing imported goods at ports.

In addition to Egypt, Pakistan is also one of the top two buyers of Kenyan tea.

According to data provided by the Kenya Tea Management Board, in the first eight months of this year, the amount of tea purchased in these two countries fell by 23% and 13% year-on-year. For Kenya, tea and agricultural exports are the country's largest source of foreign exchange. The Kenyan shilling has fallen nearly 20% against the US dollar so far this year.

In the past two years, due to the impact of the strong US dollar, the foreign exchange reserves of some emerging markets have almost been exhausted, and each of them has launched a "currency defense war". The import costs of local importers will also increase.