Good morning, friends, and happy hump day. As we get ready for PMI data later this morning that will give us insight into the health of our non-oil private sector, El Sisi’s trip to Turkey tomorrow, news of Chinese investments from Madbouly’s trip this week to Beijing, and the central bank’s decision on whether to cut interest rates at the end of the week, we’ve got plenty of M&A news to keep us busy in the meantime.

In today’s issue, we’ve got an interest rate poll conducted by yours truly, M&A news aplenty, auto industry localization updates, and much, much more. We have a packed issue today, so let’s jump right in.

WATCH THIS SPACE-

#1- An African investor-focussed freezone is in the cards: The industry, transport, and investment ministries are mulling the creation of a freezone for African investors as part of the government’s long-term goal of increasing trade with the continent, Al Borsa reports, citing unnamed sources. According to the outlet’s sources, African investors are increasingly turning to countries with better-developed infrastructure to produce their goods, after which they re-export them to their home markets.

Remember: The new Madbouly cabinet has placed a special emphasis on increasing trade with the rest of Africa via the African Continental Freetrade Area (AfCFTA) — which seems to be picking up steam — and the COMESA. African exports will also be supported by new trade missions, with added support for companies targeting exports to Africa also on the cards.

#2- Could we be in line for a wave of Indonesian investments? Indonesia plans to ink USD 3.5 bn worth of trade and investment agreements with African countries — with a particular focus on Egypt, Kenya, South Africa, and Nigeria — as it looks to expand its investment portfolio outside its usual trade partners, Bloomberg reports, citing a senior diplomat, who singled out the gas, healthcare, and agriculture sectors. These agreements will be announced during the Indonesia-Africa Forum that will wrap up today, according to the country’s Deputy Foreign Minister Pahala Mansury.

#3- Fertilizer subsidy system set for a shakeup? Only eight crops — wheat, corn, soybeans, beets, sugarcane, cotton, rice, and sunflowers — will be eligible to receive subsidized fertilizers starting next year, Al Mal reports, citing unnamed sources it says have knowledge of the matter.

Remember: Urea fertilizer producers have been calling on the government to give them the greenlight to almost double the prices for the 55% of their monthly output that they are obligated to sell on to the Agriculture Ministry to be distributed as subsidized fertilizers. The cost of production has skyrocketed in tandem with the float of the EGP and rising cost of natural gas — which represents about 65% of the raw materials used to create fertilizers.

HAPPENING TODAY-

#1- Will today be the day that the non-oil private sector activity break its 44-month streak in the red? S&P Global will publish Egypt’s PMI figures for August later this morning measuring the country’s non-oil private sector activity. Last month saw business activity hit its second highest level since August 2021, sitting just below the threshold that marks growth.

#2- Madbouly heads to Beijing: Prime Minister Moustafa Madbouly will land in Beijing this morning to represent Egypt at the Forum on China-Africa Cooperation that will kick off tomorrow and run until Friday, according to a cabinet statement.

We here at Enterprise will be on the look out for news of fresh Chinese investments: In addition to attending the forum, Madbouly is also expected to meet with Chinese officials and business leaders. The prime minister is set to ink a number of MoUs and contracts related to investments in the Suez Canal Economic Zone and the Egyptian telecommunications sector, the statement notes without providing any further details.

Madbouly is also booked in to speak at the forum: On the docket for the visit are a number of high-level sessions, with Madbouly expected to give a speech for a session entitled Industrial Transformation, Agricultural Modernization, and Green Development.

#3- It’s the second and final day of Seamless North Africa: Mechants, enterprises, and SMEs in the e-commerce space as well as players in the fintech, banking, and retail sectors will be gathering for the last day of the event today “to drive forward the future of digital commerce.” Take a look at the schedule here and register to attend here.

#4- We have lift off at the Egypt International Airshow, which is entering its first day in El Alamein today The event will cover all things aviation from now until Thursday — be it commercial, defense, and even space — and feature exhibitions from 200+ companies, discussions from industry leaders, and even aircraft flyovers and displays.

AT THE CENTRAL BANK-

Bond bonanza ahead of upcoming interest rate meeting on Thursday: The Central Bank of Egypt sold some EGP 23.2 bn of EGP-denominated three-year treasury bonds yesterday — over 3.5 times its target of EGP 5 bn — according to data from the bank. The bonds carry an average interest rate of 25.2%, down slightly from 25.3% in the previous auction.

Remember: Earlier this month, foreign investors sold some USD 600 mn worth of local debt instruments — 7-8% of total foreign investment in the market, according to Prime Minister Moustafa Madbouly — amid a global sell-off that wiped USD 6.4 tn from global stock markets. While the CBE doesn’t report what portion of treasury purchases are made by foreign investors, strong demand for our long-term debt likely signals higher investor confidence in the economy.

PSA-

WEATHER- It’s another late summer day in Cairo today, with a high of 35°C and a low of 27°C, according to our favorite weather app.

It’s only a little cooler in Alexandria and along the North Coast, with a high of 33°C and a low of 24°C.

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CIRCLE YOUR CALENDAR-

Upper Egypt-focussed startup accelerator Athar is showcasing ten green startups from its Climate Action Accelerator program this Thursday in Minya. Athar is also set to launch its Green Manifesto during the event. You can RSVP to attend here.

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

THE BIG STORY ABROAD-

Developments related to the war in Gaza remain the main item across most international headlines, as Israeli prime minister Benjamin Netanyahu holds out on his added conditions for a ceasefire agreement with Hamas amid ongoing mass Israeli protests and news that the UK is halting some arms exports to the country.

Netanyahu continues to reject increasingly vehement calls from the Israeli street and international community to reach a ceasefire agreement with Hamas, saying yesterday that maintaining an Israeli troop presence in the Philadelphi corridor on the border between Gaza and Egypt remains a non-negotiable condition for an agreement. The comments come as a general strike, ongoing protests, and public spats in the Israeli cabinet continue to roil an increasingly divided country.

Meanwhile, the UK is banning the sale of some arms to Israel — including aircraft components — that risk being used in Israeli actions that seriously violate international law. The suspension constitutes the first such action by a major ally of Israel since the war’s inception.

While over in int’l business news, Volkswagen is considering closing factories in Germany for the first time in its 87-year history, with potential to renege on a promise to not cut jobs in Germany until 2029. The move comes as the car-maker has struggled to cope with a shrinking European and Chinese market for its EVs as new competitors and cheaper models increasingly take center stage.

Plus, Kamala Harris has expressed her opposition to Japanese Nippon Steel’s USD 15 bn bid for US Steel, saying at a campaign event late last night that the company “should remain owned and managed by Americans.”

And Georges Elhedery began his tenure as HSBC’s new CEO yesterday, saying in an internal memo that he plans to build on the bank’s current strategy as the bank seeks to shift from restructuring to growth in the coming period.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: We look at what the state is doing to ensure we’re on the right track to boosting the percentage of renewables in our energy mix.

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