Good morning, friends, and happy FRIDAY. We hope you survived our first full workweek in ages, and that you have some fun plans coming up this weekend to take your mind off work.

May we suggest some of the spots in Cairo, Alexandria and beyond that you won’t usually find in any tour guide? We break down what those spots are — and the stories behind them — in today’s Enterprise Guide, below.

Enterprise Weekend comes out each Friday at 9:00am CLT. We’ll be back on Sunday at 6am with EnterpriseAM. Until then: Enjoy the weekend.

LAST WEEK IN 3 MINS-

It was a busy week on both the macro and privatization fronts last week, as the government unveiled its FY 2023-2024 budget and as it looks to accelerate progress on the state privatization program.

Some of the highlights include:

#1- The government now sees the budget deficit finishing the current fiscal year at 6.4%, up from 6.1% in FY 2021-2022. The budget document presented to the House of Representatives had forecast an “adjusted budget deficit” of 8.0% in FY 2022-23. Spending in FY 2023-2024 will increase 34% to EGP 2.99 tn on higher wages, borrowing costs, and subsidy allocations.

#2- The country’s debt-to-GDP ratio will rise to 96% by the end of FY 2022-2023, before falling to 91.3% in FY 2023-2024. New borrowing is set to increase by 22% in FY 2023-2024, with the government expecting to sell EGP 2.04 tn in new treasury bills and bonds.

#3- Some EGP 70 bn (USD 2.26 bn) are expected to come in through our privatization program next year.

ECONOMY-

#1- Inflation eased to 30.6% y-o-y in April from 32.7% the month before for the first time in 10 months in April thanks to a favorable base effect, the stabilization of the FX rate, and a slight slowdown in food price growth.

Expect it to pick up next month as the government hiked diesel prices by 14% raising it by EGP 1.00 to reach EGP 8.25 per liter. The decision comes as the government’s cost of purchasing diesel reached EGP 12.25 per liter due to higher prices in the global market and the EGP devaluation. Public transport fares grew by some 10% nationwide in response.

#2-Fitch Ratings downgraded Egypt’s sovereign credit rating for the first time since 2013, relegating the country’s rating to B from B+ and maintaining its negative outlook. The downgrade has been attributed to “high external financing requirements, constrained external financing conditions and the sensitivity of Egypt’s broader financing plan to investor sentiment,” the ratings agency said.

#3- JPMorgan + Moody’s delivered the latest warnings about the consequences of delaying reform: Moody’s signaled it could downgrade our credit rating for the second time this year if our external position continues to deteriorate, while JPMorgan agreed that delays on the state privatization program could weaken liquidity and noted that it puts into question the sustainability of Egypt’s debt.

On the bright side, JPMorgan said that Egypt should be able to seal a staff-level agreement with the IMF next month, putting us on course to getting board approval and the next loan tranche by the third quarter.

PRIVATIZATION WATCH-

#1-The Sovereign Fund of Egypt acquired a 49% stake in pharma chain El Ezaby Pharmacy, enabling the company to almost double its branch count to 600. The SFE’s healthcare sub-fund and private equity firm B Investments are also setting up a pharma logistics and distribution firm in partnership with El Ezaby to offer logistics and administrative support and trade and distribution services to local pharma companies.

#2- Abu Dhabi wealth fund ADQ is reportedly close to acquiring a 20-25% stake in Egyptian Linear Alkyl Benzene (Elab) in a transaction that is expected to be completed by the end of this month.

#3- Progress on the TE stake sale? The government’s plans to sell a minority stake in Telecom Egypt (TE) to investors look to be back on the table, with reports saying that it could begin the process of selling a 10% stake in the state-owned telecom giant this week.

Selling at a discount: The government will be selling shares at EGP 22.25 apiece, a 3.8% discount from TE’s current share price of EGP 23.14. The transaction would be worth around EGP 3.8 bn (c. USD 122.8 mn) at that price.

#4- Wind farms attract investor interest: Saudi Arabia’s ACWA Power, the UAE’s Alcazar Energy and our friends at local renewables firm Infinity are reportedly among seven companies interested in acquiring Egypt’s two largest wind farms. The government-owned 580-MW Gabal El Zeit and 545-MW Zafarana wind farms were both included in the list of 32 companies and assets earmarked for privatization in February and have attracted significant interest among investors, with the sales reportedly expected to be completed before the end of 2023.

WHAT’S HAPPENING NEXT WEEK-

Next week is interest rate week: Figures released last week indicating inflation is cooling might give the central bank the chance to keep rates on hold at its next meeting on Thursday, 18 May, EFG Hermes Research’s head of macroeconomic analysis, Mohamed Abu Basha, wrote this week. CI Capital, on the other hand, is penciling in 100-bps worth of hikes across the committee’s next two meetings. The CBE has raised interest rates by 1000 bps over the past year after delivering a jumbo 200-bps rate hike in March. CBE Governor Hassan Abdalla last month expressed doubts on the effectiveness of monetary policy to curb inflation, and said that policymakers need to be “very careful” about tightening policy further.

** Keep an eye out for our customary interest rate poll on Sunday ahead of the central bank meeting.

The National Dialogue meetings kick off this coming Sunday, after President Abdel Fattah El Sisi recently inaugurated the opening session of the National Dialogue after a year of preparations. The dialogue will hold three meetings a week for an unspecified duration to discuss more than 100 political, economic, and social issues. Some 800 individuals have been invited to participate. All sessions will be broadcast to the public.

We can also expect to see some more movement on the state’s privatization program. Military-owned bottled drinks firm Safi and fuel retailer Wataniya will start receiving offers from strategic investors this month, and government officials are confident we’ll see stake sales between now and the end of June, sources with first-hand knowledge of the process tell us.

PSA- The expat car import initiative will draw to a close on 14 May.

And, of course, our very own Enterprise Exports & FDI Forum will be taking place at the Four Seasons Hotel Cairo at Nile Plaza on Monday, 15 May. The event will see CEOs, top execs, bankers, and development finance folks attempt to solve the biggest economic issue of our time: How do we get out of our FX crunch.

Who’s speaking?Hossam Abou Moussa, partner at Apis, Hassan Massoud, associate director and head of private equity (Southern Mediterranean) at the EBRD, Tarek Kamel, CEO of Nestle Egypt; Omar Elsahy, general manager of Amazon Egypt; Khaled Morsy, CEO of DB Schenker; Shady William, managing director of IDG; Mohamed Talaat Khalifa, CEO of Concrete; Mark Wyllie, CEO of Beyti; Kareem Abou Ghaly, chairman and CEO of Pasta Regina; Yasmine Khamis, chair of The Orientals Group, Cheick-Oumar Sylla, director for North Africa and Horn of Africa at IFC; Hossam Sallab, CEO and vice-chairman of Sallab Group and Royal Ceramica; Tarek Hosny, head of investments and projects at Fertiglobe; Helmy Ghazi, deputy CEO of HSBC Egypt; Shams Eweis, corporate affairs director, Egypt, North Africa and Levant at Mars; Nada El Ahwal, CSO of Transmar; Nadia El-Tawil, investment officer at AfricInvest, Mostafa Bedeir, CEO of Giza Seeds and Herbs, Abdallah Sallam, CEO at Madinet Masr, Yassir Zouaoui, partner at McKinsey; and Mohamed ElGebely, team leader at USAID Trade.

Topics and live interviews will include:

  • How to attract foreign partners and figure out what they are looking for;
  • What lessons can we draw from white goods, fertilizers, and garments exporters who have increased our exports;
  • What are the fundamentals to creating an export and / or FDI strategy;
  • What it takes to secure a place in a multinational’s supply chain.
  • How industrial clusters could expedite exports, FDI and possibly be an avenue for SME development;
  • How Egypt’s industries need to be open to evolution to become more competitive.

Tap or click here to explore the full agenda.

Stay tuned for our coverage from the event in EnterpriseAM, EnterprisePM and Enterprise Logistics.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

YOUR MOST CLICKED LINKS-

  • The FY 2023-2024 budget got by far the most attention, with various documents and statements provided by the Planning Ministry getting the most number of clicks. (Enterprise)
  • Also getting a lot of attention: News that our current account turned to a surplus for the first time in years. (Statement, pdf)
  • We are also happy to report that our Exports & FDI Forum got a lot of interest. (Website)
  • Moody’s warning that it could downgrade Egypt’s credit rating for the second time. (Statement, pdf)
  • The Higher Education Ministry’s new electronic portal for students to receive equivalency certificates got a lot of attention courtesy of our Blackboard coverage. (Portal)

AROUND THE WORLD IN SEVEN DAYS-

The US made headlines — in more ways than one:Talks around the debt ceiling in Washington reached an impasse, with senior lawmakers refusing to compromise and come to an agreement to avert a debt default in three weeks time.

Meanwhile, former US president Donald Trump was also everywhere on the global front pages, after a New York jury found him guilty of [REDACTED] abuse and defaming writer E. Jean Carroll and ordered him to USD 5 mn in damages.

In our neck of the woods: Arab foreign ministers voted to bring Syria back into the Arab League 12 years after it was kicked out for its crackdown on Arab Spring protesters following a meeting in Cairo. Damascus is now allowed to attend meetings and it has been suggested that the country’s president, Bashar Al Assad, could chair the next gathering on 19 May.

Over in Sudan,hopes are high that negotiations between the Sudanese army and the rival paramilitary group the Rapid Support Forces (RSF) could end in a proper ceasefire agreement soon.

WANT TO START A CAREER IN INVESTOR RELATIONS ADVISORY?Enterprise Advisory (formerly known as Inktank Communications) is looking for smart, talented people to help us tell the stories of exciting companies. Enterprise Advisory is the region’s leading investor relations advisory company and works on investor and strategic communications issues that take you deep inside the c-suite. Our clients are in Egypt, Saudi Arabia, the UAE and beyond. Egyptian and foreign nationals alike are welcome to apply.

NEVER WORKED IN INVESTOR RELATIONS OR ADVISORY BEFORE? We have the Enterprise Advisory Development Program. The four-month program will see full-time, paid participants take part in workshops and lectures from veteran investor relations and advisory professionals, while also applying their knowledge in a practical setting. Those who successfully complete the program will be offered full-time positions on staff for a chance to work in a flexible and supportive — but still fast-paced — work environment that eschews micromanagement and rewards good work. Enterprise Advisory offers the chance to build a network of high-ranking individuals across some of the largest and most influential companies in the region through direct exposure to clients.

During the program, you’ll learn:

  • Finance for non-finance people;
  • How to analyze businesses, their business models, their strategic advantages, and their strategies;
  • How to take that information and then tell an audience of investors, journalists, and analysts a compelling and well-developed story;
  • How to frame individual companies’ stories within the wider macroeconomic environment.

Career switchers are very welcome.

Apply directly to jobs@enterprisemea.com and mention “advisory development program” in your subject line.

☀️ THE WEATHER THIS WEEKEND- We should be in for yet another pleasant and sunny weekend,with highs of 32°C today and tomorrow, and overnight lows of 16°C, according to our favorite weather app.

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