Kuwait's AlShaya Group curbs Egypt operations due to economic downturn
Kuwaiti brand franchise conglomerate Alshaya Group has announced the closure of dozens of shops in Egypt, considerably scaling back its operations due to the economic crisis in the North African country.
The retail giant holds franchises in Egypt for prominent western brands such as department store chain Debenhams, Mothercare, H&M, Victoria’s Secret, American Eagle, and Starbucks.
“As a result of the economic situation over the last three years and the difficulties faced by overseas businesses trading in Egypt, we have taken the very difficult decision to reduce our operations in the country,” Alshaya said in the statement.
The company will close 60 shops, including The Body Shop, Mothercare, Debenhams, Pinkberry and Claire’s, and lay off around 375 employees, it said in a statement to Bloomberg.
Staff at branches of Debenhams and Mothercare in the Cairo City Festival Mall said they had signed resignation letters this week, Reuters reported.
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The closures are expected to take place in the coming weeks.
Alshaya, which has been in the Egyptian market for 18 years, said it is “committed to the market and look forward to continuing to trade and hopefully growing again in the near future.”
Egypt has been grappling with its worst economic crisis in recent history that has seen the devaluation of the pound three times since March 2022 and inflation soaring. It has also been suffering a chronic shortage of foreign exchange, which has suppressed imports and affected many businesses.
Economists expect another devaluation in the first quarter of this year, according to Bloomberg.
The official rate of the pound has held steady at about 30.9 to the US dollar in the past year, however, the rate is nearing double on the black market for the first time.
A borrowing spree under President Abdel-Fattah el-Sisi has tripled the national debt.
Sisi has, since 2016, undertaken a number of economic reforms that include high-cost projects that have failed to deliver promised benefits.
Many Egyptians have criticised the state for prioritising mega-projects while nearly a third of the country of over 113 million people live in poverty.
Cairo is currently in discussion with the International Monetary Fund to potentially double a $3bn loan programme.
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