It’s been a couple of strange years, really.. Just think about it, we’ve witnessed some crazy times in modern history - 2 revolutions, a pandemic, 2 economic crises and a war at our borders.. The good news is, we always survive what comes our way. But what if we want more than just to survive?
Say… wanting to thrive.. A very common question when we think about thriving is “where can I start?” and a common demotivating factor for a lot, if not most, of Egyptians is our current national economic state .
Are you familiar with Pink Floyd? There was a time when thinking about the economy brought these lyrics to mind: “and you run and you run to catch up with the sun but it’s sinking. Racing around to come up behind you again.” Not very optimistic, I know. But let’s get to the good part, the part where we can make the sun shine before us again.
When people were at the peak of their financial struggles, uncertain about how and when the Egyptian economy would improve, came the heart wrenching humanitarian crisis in Gaza and unexpectedly taught us a lesson which made the impossible possible. For the first time in a long while, Egyptians’ national pride was renewed and fascination with what’s foreign waned. Suddenly, the idea of self-sustaining by producing our own products and supporting local businesses and brands became the new mindset. Just like that, people became aware of our collective burdening reliance on imported foreign goods and how it’s been dragging our economy down.
The best part about this newfound awareness and the change in mindset that it produced is the general will to explore local alternatives for the imported products we are so used to purchasing. This is a good place “where you can start!” But of course, alongside the hope, some doubts started to emerge, the most common being:
“But can local businesses sustain the demand volumes?”
“What will happen to Egyptian employees working for the big chains?”
“This attitude is only temporary, people cannot sustain that
mindset long enough to see a change come about..”
All these concerns are valid and manageable if we stay steadfast in that change in mindset and behavior. However to maintain that change until we see its results, we must learn to see the full picture by understanding the true impact of buying locally produced vs. imported goods.
Local businesses thriving means economic resilience and the community's future growth.
When we say shopping local we do not only mean local "brands". What we mean is locally produced goods, because what determines the economic benefit of a purchase is not the brand, but rather the item's value chain.
Value chain describes the full range of activities required to bring a product or service from being a concept to becoming a sellable product through its different phases of production (raw material sourcing and production, design, prototyping and manufacturing), all the way to it’s delivery to final consumers (marketing, sales and logistics) and finally, it’s disposal after use.
Figure 1: The economic impact of locally produced vs. imported goods
At each stage of the value chain, there are three points we can consider to understand the impact of purchasing this particular product on our national economy:
Does it reduce inflation?
Imported goods require foreign currency, which increases demand on that currency causing it’s value to increase. As a result, the value of the Egyptian Pound decreases. Therefore, imported goods make inflation rates worse - this concept is called imported inflation.
Is the money reinvested in Egypt?
Locally produced goods cover more stages of the value chain within the country’s borders, meaning money is constantly being reinvested across different local industries, supporting the improvement and growth of our economy.
Does it support Egyptian labor?
Because locally produced goods cover more stages of the value chain within the country’s borders, they create more opportunities for Egyptian labor, business owners and producers to grow and prosper. As demand increases on local products, their production will need to increase, creating countless employment opportunities.
Figure 2: The industries and individuals benefiting from local production as per value chain stage
Last but not the least, local success stories attract and motivate other entrepreneurs to start their own businesses, creating an infectious positive chain of ambition, fulfillment and prosperity - the starting point for a growing economy.
Not only does it spur local entrepreneurs, it can also attract foreign investment which helps the foreign exchange crisis, in turn supporting the nation’s economic growth - but that’s the topic for another blog article!
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