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Tuesday, 28 Mar 2023

What We're Tracking Today
Economy
M&a Watch
Industry
Tourism
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Going Green
Calendar

“Large-scale” privatization key to ending Egypt’s FX crisis -Morgan Stanley

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Today at a glance

1

Economy

 “Large-scale” privatization key to ending Egypt’s FX crisis -Morgan Stanley.
2

M&A WATCH

 Eagle Chemicals ups bid for Pachin.
3

Also on our Radar

 Global Carbon Council to list carbon credits on EGX.
4

Industry

 Four industrial developers receive land in New October City.
5

Tourism

 Tourism Ministry to introduce multi-year, multiple entry tourist visas.
6

What We're Tracking Today

 Eastern Company hikes cigarette prices for third time in a year.
7

What We're Tracking Today

 EGX + Oil Ministry discuss potential oil IPOs.
8

What We're Tracking Today

 Markets price-in peak global interest rates, easing later this year.
9

What We're Tracking Today

 Netanyahu pauses controversial judicial reforms amid huge protests.
10

PLANET FINANCE

 Al Ansari raises USD 210 mn in Dubai IPO.
11

Going Green

 With climate change continuing to bite, there are legislative + tech solutions cropping up for Egyptian farmers.

Tuesday, 28 Mar 2023

What We're Tracking Today
Economy
M&a Watch
Industry
Tourism
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Going Green
Calendar
1

What We're Tracking Today

EGX-Oil Ministry discuss oil IPOs

Good morning, everyone. It’s the first hump day of Ramadan — and our reward is a brisk news day.

Have you checked out our new home on the web? We launched our brand new website last week — check itout here. It looks great, loads fast, and has tons of new features, including deep dives into topic pages, story tags to let you follow the issues and companies that matter most, and an audio feature to listen to — instead of read — individual stories. If you have any suggestions or would like to report a bug, hit reply to this email.

WATCH THIS SPACE- Discussions about IPOing companies held by the Oil Ministry are continuing, with EGX boss Ramy El Dokany meeting with Oil Minister Tarek El Molla yesterday to talk about potential listings, according to a ministry statement.

Firms in the oil and petchem industry feature prominently on the list of companies included in the state’s rebooted privatization program: As many as six of the first eight companies set to offer shares as part of the state privatization program are oil or petchem players, a recent report suggested. A preliminary list reportedly includes Enppi, Midor, Assiut Oil Refining Company (ASORC), Ethydco, and El Wady for Phosphate Industries and Fertilizers (WAPHCO).

DATA POINT-The number of payment cards in use in Egypt jumped more than 10% year-on-year in 2022 to 57.5 mn, according to a central bank report (pdf). The figure includes debit, credit, and prepaid cards.

Your smokes just got more expensive: State-owned Eastern Company has hiked the prices of most of its cigarettes by EGP 1.00-3.00, it said in an EGX filing (pdf)earlier this week.

The price hike is the third in 12 months: The Cleopatra-maker has raised prices by as much as 36% over the past year in a bid to protect its margins from rising raw material costs, the devaluation of the EGP, and increased VAT.

EGX-listed Eastern expects higher revenues on price hikes: Eastern Company will see its annual revenues increase by EGP 7 bn (USD 226.5 mn) on the back of the price hikes, an unnamed government source is quoted as telling Asharq Business. The increase would represent a more than 40% rise in the company’s revenues, which increased 7% y-o-y to EGP 17.1 bn during the 2021-2022 fiscal year.

HATS OFF this morning to our friends at USAID, who will fund five applied technology schools in partnership with private-sector players. The aim is to make sure grads from the program have skills they need to succeed in the labor force — and that private businesses desperately need in their workforce. We have more in Also On Our Radar, below.

A trend in the making? The EU is also interested in stepping up support for technical education here, European Union Vice President Margaritis Schinas said yesterday during a visit to Cairo. We have details in Diplomacy, also below.

HAPPENING TODAY-

Climate talks continue in Luxor: The committee set up to move forward discussions on the landmark loss and damage fund agreed at last year’s COP27 summit is holding its first meeting in Luxor; talks kicked off yesterday and run until Wednesday. Representatives from 33 developing and developed countries are attending the talks, which are being led by Egypt’s top climate negotiator, Amb. Mohamed Nasr.

Day 1: In a recorded opening statement, COP27 President Sameh Shoukry emphasized the importance of the committee’s responsibility to implement the loss and damage agreement, and said that he will continue to support discussions in the lead up to COP28 in November.

SO, WHEN DO WE EAT? We’ll be breaking our fasts tonight at 6:11pm and Fajr prayers are at 4:21am tomorrow.

HAPPENING THIS WEEK-

It’s interest rate week: The Central Bank of Egypt will meet on Thursday to review interest rates. Six of seven analysts we polled expect the Monetary Policy Committee to hike rates by at least 200 bps as it tries to tamp down on inflation and boost FX liquidity amid continued pressure on the EGP. A Reuters poll out yesterday forecasts similar moves: The median forecast in its survey of 15 analysts is for a 200-bps hike, while seven expect a rise of 300 bps.

We can expect to get our first proper look at the state’s spending plans for the coming fiscal year when the Finance Ministry delivers the draft FY 2023-2024 budget to the House of Representatives.

Cambodian Deputy Prime Minister and Foreign Minister Prak Sokhonn will visit Cairo tomorrow and Thursday for talks, the Cambodian foreign ministry said Friday. Sokhonn will visit Morocco on Monday and Tuesday before arriving in Egypt.

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-

Israeli politics continue to dominate the front pages of the global press: Prime Minister Benjamin Netanyahu yesterday announced that he will delay his government’s controversial judicial reforms, finally bowing to weeks of intense domestic and international pressure. Huge protests and a general strike brought much of the country to a standstill yesterday after Netanyahu sacked his defense minister, who had come out in opposition to the reforms a day earlier. “From a will to prevent the rift in the nation, I have decided to delay the second and third reading in order to reach a broad consensus,” said in televised statements yesterday (watch, runtime: 8:25). (Reuters | AP | Bloomberg | Financial Times | Wall Street Journal | BBC)

Also among the stories making headlines this morning:

MARKET WATCH-

That’s a wrap on global tightening? Global interest rates are likely to already have peaked due to the turmoil in the US and European banking sectors, according to recent moves in the markets, the Financial Times reports. Derivatives markets are now pricing in no further rate hikes by the world’s key central banks, and forecast some to start easing policy before the end of the year, the salmon-colored paper says. “The suddenly fragile global banking system is putting pressure on central banks to end their rate hikes sooner rather than later,” said Mark Zandi, chief economist at Moody’s Analytics, one of a number of analysts telling the FT that peak rates are here.

Yes, but: Much will depend on how inflation plays out in the coming months. Should price pressures persist, central banks could “sacrifice their economies to get inflation back to their targets,” Zandi said.

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WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

*** 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 technologies and legislative tools that could be deployed to help farmers survive the threats posed by climate change.

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2

Economy

“Large-scale” privatization key to ending Egypt’s FX crisis -Morgan Stanley

Egypt’s limited fiscal space means that a “large-scale” privatization program is essential if it is going to bring an end to the ongoing FX liquidity crisis and plug our multi-bn USD financing gap, Morgan Stanley analysts wrote in a note yesterday.

The bulge bracket investment bank estimates that Egypt could bring in as much as USD 7 bn through asset sales by next year (USD 2 bn by the end of the fiscal year in June and USD 5 bn in FY 2023-2024), helping to increase FX liquidity, bolster public finances and narrow its financing gap, which it puts at USD 23-24 bn through to the end of FY 2023-24.

“This in turn should tame further expectations of FX depreciation and ensure a smooth transition to a durably flexible regime, potentially lowering the bar for portfolio investors and buying time for the authorities to implement the structural reforms to level the playing field and boost FDI inflows further,” the bank writes.

But large-scale privatization is not going to be easy: Vested interests and difficulties changing the regulatory framework will pose obstacles to achieving the kind of overhaul necessary to put the country’s economy on a more sustainable path. And the challenge of selling off state assets could increase as the government moves deeper into the program, when it focuses on smaller companies with less well-kept records, the bank says.

Delays could be costly: Stalling sales between now and the end of the fiscal year in June could “deteriorate investor sentiment and lead to prolonged FX liquidity issues,” the bank writes. This would raise expectations of further EGP depreciation and higher inflation, putting further pressure on the current and the interest rate.

It’s not enough to let the EGP slide further against the greenback: “While preventing a persistent misalignment of the exchange rate is crucial, relying on FX adjustment alone, i.e., letting the EGP depreciate further until it starts to attract foreign flows, is not a panacea given already high levels of inflation and the social costs associated with it,” the analysts write.

The government can only do so much to limit the impact of inflation:

  • Fiscal space is limited: The country’s debt / GDP ratio of 92%, and high spend on bread and fuel subsidies, means that the government doesn’t have much room to provide relief for inflation;
  • As is monetary policy: The Central Bank of Egypt can only raise interest rates so far due to the country’s large interest burden and tight global financial conditions.

FDI + portfolio inflows could total almost USD 44 bn by June 2025: Reform uncertainty and tight global financial conditions means that Morgan Stanley’s base case for reserves and inflows from FDI and portfolio investments are below the IMF’s projections. The bank expects reserves to climb by USD 5.4 bn by the end of FY 2024-2025 — below the IMF’s projections of USD 20.3 bn. Its estimates for FDI and portfolio inflows are USD 7.1 bn and USD 5.8 bn below IMF forecasts. Morgan Stanley thinks Egypt will attract USD 28.3 bn in FDI and USD 15.6 bn from portfolio investors by June 2025.

Key forecasts:

  • Inflation is forecast to to peak at 38% by September and fall to 13.6% by the end 2024;
  • Interest rates: The bank expects the CBE to raise rates by 400 bps to 20.25% by July. Last month’s red-hot inflation figures and rising pressure on the currency means that this will likely be front-loaded, with rates rising by at least 200 bps this month.
  • Economic growth will slow to 4.3% this fiscal year before rising to 5% in FY 2023-2024.
  • The budget deficit will widen to 7.6% this fiscal year and 8.1% in FY 2023-2024 even as the primary surplus inches upwards.
  • Debt-to-GDP: Egypt’s debt as a proportion of GDP will increase from 92% to 96% in FY 2022-2023, before falling back to 94% next year.
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3

M&A WATCH

Egypt’s Eagle Chemicals raises offer for Pachin amid bidding war with UAE’s National Paints Holding

Bidding war for Pachin continues to heat up: Eagle Chemicals yesterday boosted its offer for EGX-listed Paint and Chemical Industries (Pachin) in response to Dubai-based National Paints Holding’s (NPH) new bid last week, the Financial Regulatory Authority (FRA) said in an EGX disclosure (pdf) yesterday. Eagle Chemicals is now offering to purchase at least 75% of Pachin for EGP 37.00 per share, EGP 1.00 higher than the bid NPH put in at the end of last week. The Egyptian chemicals company’s revised offer values Pachin at some EGP 888 mn, according to our math.

Up next: The FRA is studying Eagle Chemical’s revised offer. Pachin shareholders have until Tuesday, 4 April (one week from today) to respond to NPH’s mandatory tender offer.

Is Compass still in the running? Compass Capital had offered to buy 51-90% of the company’s shares at EGP 30.00 per share back in January and hasn’t revised its offer since.

Market reax: Pachin’s shares fell 3.1% to EGP 36.00 yesterday.

It’s all part of the state’s privatization plans: The play for Pachin comes amid the government’s privatization push, which should see it reduce its involvement in or exit certain industries to make way for the private sector. Pachin is currently approximately 54% owned by state-owned companies and banks.

Advisors: Al Ahly Pharos is providing financial advice to Pachin while Shalakany Law Office is counsel.

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4

Industry

Four industrial developers allocated land in Egypt’s New October City

Four industrial property developers have been awarded more than 1.8k feddans of land in New October Citythrough the New Urban Communities Authority’s (NUCA) new online bidding system, Hapi Journalreports, citing sources it says are in the know.

The players: Our friends at Industrial Development Group (IDG), Elsewedy Industrial Development, PolarisParks, and CPC Egypt Industrial Development were each awarded plots, the newspaper says, without specifying how the companies plan to use the allocated land.

More to come: NUCA agreed earlier this month to allocate some 12 mn square meters in four cities — New October, New Fayoum, New Alamein, and New Aswan — to industrial developers who placed bids through the authority’s online portal.

The government is on a drive to boost domestic industry: The new platform for buying and selling land and efforts to increase the use of golden licenses are among policies launched in recent months to streamline project approvals and stimulate industrial investment.

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5

Tourism

Tourists to Egypt could soon get multi-year, multiple entry visas

Tourists could soon be able to apply for a new five-year, multiple entry visa,which would set them back USD 700, Tourism Minister Ahmed Issa said at a press conference yesterday (watch, runtime: 6:36). The measure is one of several meant to ease entry restrictions for tourists as the ministry works to double the number of tourists to Egypt to 30 mn annually by 2028. More details will be announced soon, the ministry said.

More travelers eligible for visa-on-arrival: Chinese, Turkish, Algerian, Moroccan, Indian (with GCC residency) and Iraqi (those with visas for developed countries) can now obtain a USD 25 entry visa upon arrival, according to the ministry statement. Meanwhile, Iranian nationals can now get an entry visa on arrival in South Sinai, while Israelis are allowed to travel to Hurghada (as long as they are traveling with a tourist company). The government last year added more than 100 nationalities to the list eligible for entry visas upon arrival.

The move comes against the backdrop of shifting alignments in the region: Potential reconciliation between Egypt and Turkey is in the cards, and Tehran has said it wants to strengthen ties with Cairo following the Saudi-Iranian rapprochement.

REMEMBER- The Tourism Ministry is expecting to receive a record 15 mn tourists this year, up 28% from last year. The industry had a strong 2022, quickly shaking off the impact of the Russia-Ukraine war as operators replaced low-margin Ukrainian and Russian package tours with higher value travelers from Europe and the US. We also saw a strong uptick in Chinese visitors last year.

Museums opening soon: The Imhotep Museum at Saqqara archaeological site will open in the coming weeks, as will the Greco-Roman Museum in Alexandria, which has been closed for 17 years.

GEM when? We’re still waiting on news about when the ministry plans on finally opening the doors to the Grand Egyptian Museum.

ICYMI- Hilton regional president JJ Sleiffer sat down with us recently to talk about ways to grow the sector — including why making it easier for visitors to get a visa is a smart idea.

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6

LAST NIGHT’S TALK SHOWS

El Sisi tells gov’t to consider National Dialogue’s proposals for Egypt elections

It was another chill night on the airwaves last night, withAla Mas’ouleety featuring the only notable coverage.

National Dialogue’s election proposal has gotten traction: The Madbouly government will review a proposal put forward by the National Dialogue’s board to extend the National Election Authority’s (NEA) run to supervise next year’s presidential elections after President Abdel Fattah El Sisi “directed the government and concerned entities to study this proposal and its implementation mechanisms.” Ala Mas’ouleety’s Ahmed Moussa had coverage (watch, runtime: 3:26).

REMEMBER- The National Dialogue is kicking off on 3 May after the Eid break.

ALSO-

  • New tourist visas: Moussa called the policies announced by the Tourism Ministry yesterday “the first real step to boost tourism” (watch, runtime: 10:41).
  • More coverage of Israel protests. Moussa continued his coverage of the current tensions in Israel, with protests taking over the streets of Jerusalem and Tel Aviv (watch, runtime: 6:31).
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7

EGYPT IN THE NEWS

Egypt’s poultry companies continue to struggle amid inflation, currency volatility

The poultry crisis is getting attention in the foreign press this morning: The country’s chicken production has fallen by around half since last October to 60-70 mn birds per month on the back of the rising cost of imported feed, Reutersreports. The FX crunch, the currency devaluation, and import difficulties have seen feed prices double since last September, according to the news outlet. “There's no stability in feed prices,” said one farmer who has been forced to shut down five of the twelve chicken farms he manages in Fayoum.

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8

Also on our Radar

Global Carbon Council to list carbon credits in Egypt. PLUS: USAID funding for tech schools, Azimut app

CAPITAL MARKETS-

#1- Global Carbon Council to list carbon credits on EGX: The EGX will list carbon credits issued by international provider Global Carbon Council (GCC) on its planned carbon market under a MoU signed by the two sides, it said in a statement (pdf) yesterday.

Not that GCC: The GCC is a Qatar-based voluntary carbon offsetting program that works with groups in MENA region and beyond to reduce emissions. It issues carbon credits for a range of emission-reduction projects, and has been approved by international organizations including UN International Civil Aviation Organization and the International Carbon Reduction and Offset Alliance.

REFRESHER- The EGX is set to launch Africa’s first voluntary carbon market in mid-2023and is partnering with the Agricultural Bank of Egypt and Enara Group’s Libra Capital to establish Libra Carbon, an Egyptian company that will develop, manage, and issue carbon certificates.

#2- Azimut to launch app: Asset manager Azimutplans to roll out a mobile app for its investment funds after the Eid El Fitr holiday, financial advisory head Ahmed Morshedtold Al Mal. The app will allow Azimut customers to subscribe to its funds and monitor their performance.

The company wants to introduce up to four new funds this year: The firm is currently readying two investment funds for 2023 debuts and may launch another fund or two if it finds that there’s demand for them, Al Mal reports. Azimut has already launched three funds this year including AZ valU, which it created in partnership with our friends at EFG Hermes Holdings’ fintech platform valU.

EDUCATION-

USAID to fund five applied tech schools: The Education Ministry and USAID inked five MoUs to establish five international applied technology schools under the USAID-funded Workforce Egypt project, according to a statement. The schools include two in Sadat City and Qena that are specialized in the operation and maintenance of heavy industry equipment, two schools in Giza specialized in robotics and pharma and food industry equipment, and one in Qalyubia focused on facility management tech.

The private sector is involved: Five private-sector companies will be involved with the operations of each of the upcoming tech schools. They include Eva Pharma, fertilizer producers EverGrow and CFC Feed and Chemicals, local manufacturer Mobica, and real estate developer Mountain View.

HEALTHCARE-

The Tahya Misr Fund will provide EGP 1 bn to reduce waiting times in hospitals for critical cases, according to Ittihadiya.

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9

PLANET FINANCE

Al Ansari raises USD 210 mn in Dubai IPO

Al Ansari just closed Dubai’s first IPO of 2023: Emirati foreign exchange company Al Ansari Financial Services raised AED 772.5 mn (USD 210 mn) in an IPO that values the company at AED 7.7 bn (USD 2.1 bn), it said in a statement yesterday. The company sold 750 mn shares at the top of the price range, attracting more than AED 12.7 bn worth of bids, it said. Emirati cornerstone investor National Bonds Corporation committed AED 200 mn to the IPO. Excluding this, the sale was 22x oversubscribed. Trading on the shares is set to begin on 6 April.

REFRESHER- Al Ansari hired our friends at EFG Hermes Holding and Emirates NBD to quarterback the IPO last year. The company is one of the largest forex and money transfer firms in the UAE and also offers remittance transfers and corporate services such as payroll solutions, according to its website.

ALSO- Presight AI shares rocketed on their ADX debut, surgingas much as 176%. The G42-owned company closed 142% higher at AED 3.25, having sold shares for AED 1.34 in its IPO earlier this month. Presight AI’s share sale attracted huge investor demand, attracting almost USD 26 bn of orders for its USD 496 mn IPO.

SNB boss steps down after Credit Suisse comments: The chairman of Saudi National Bank (SNB), Ammar Al Khudairy, has resigned in the wake of comments that triggered the near-collapse of Credit Suisse earlier this month. Al Khudairy, whose bank became Credit Suisse’s largest shareholder last year, sparked huge deposit outflows and a share sell-off after saying that he would “absolutely not” be open to investing further in the troubled Swiss lender. (Bloomberg | Financial Times)

SNB ate hefty losses:The Saudi lender has lost USD 1.2 bn on its investment in Credit Suisse after UBS agreed to take over the bank in a USD 3.2 bn rescue — less than half the bank’s USD 8 bn market cap at the previous close. SNB purchased a 9.9% stake in the bank last year for USD 1.5 bn.

AND- Aramco expands in China: Saudi oil giant Aramco has signed agreements to acquire a 10% stake in China-based petrochem firm Rongsheng Petrochemical for RMB 24.6 bn, it said in a statement yesterday.

EGX30

15,950

-0.2% (YTD: +9.3%)

USD (CBE)

Buy 30.84

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

16.25% deposit

17.25% lending

Tadawul

10,464

0.0% (YTD: -0.1%)

ADX

9,423

-0.8% (YTD: -7.7%)

DFM

3,326

-0.7% (YTD: -0.3%)

S&P 500

3,978

+0.2% (YTD: +3.6%)

FTSE 100

7,472

+0.9% (YTD: +0.3%)

Euro Stoxx 50

4,165

+0.8% (YTD: +9.8%)

Brent crude

USD 78.16

+4.2%

Natural gas (Nymex)

USD 2.09

-5.7%

Gold

USD 1,976.00

-1.3%

BTC

USD 27,174

-2.5% (YTD: +64.3%)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 2.02 bn (3.3% below the 90-day average). Local investors were net buyers. The index is up 9.3% YTD.

In the green: Eastern Company (+7.4%), Juhayna (+6.3%) and Oriental Weavers (+4.0%).

In the red: Credit Agricole Egypt (-6.0%), GB Auto (-4.5%) and Egypt Kuwait Holding -EGP (-3.3%).

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10

Diplomacy

European Union wants to boost technical education in Egypt

The EU is ready to provide support to help Egypt develop technical education, EU Vice President Margaritis Schinas told Education Minister Reda Hegazy in talks yesterday, the Education Ministry said.

REMEMBER- The Madbouly government has big plans for technical schools, planning to set up 400 new vocational schools. The schools’ coursework is being designed in accordance with what manufacturers need, in order to create a trained and skilled workforce.

More education cooperation on the horizon: Schinas expressed the EU’s interest in converting a number of schools into hospitality management schools and overhauling agriculture, trade, and tourism technical schools.

It could get easier for Egyptians to relocate to Europe: The EU could soon establish a center to help Egyptians develop their skills ahead of working in the EU, after Schinas proposed the move during his meeting with Emigration Minister Soha Gendy. Schinas said that the aim of his visit is to introduce a new system for bringing skilled and trained Egyptians into EU countries.

ALSO- More money from the EU to curb illegal immigration: Egypt will receive most of the EUR 110 mn recently earmarked by the EU for slowing illegal immigration, Schinas said in an interview with state news agency MENA yesterday. The EU last year handed Egypt’s coastguard a EUR 80 mngrantto clamp down on boats leaving its shores.

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Our weekly deep dive into the green economy and ESG issue in Egypt.

Published every Tuesday in EnterpriseAM.

Read going Green
11

Going Green

With climate change continuing to bite, there are legislative + tech solutions cropping up for Egyptian farmers

New legislation and agritech solutions are cropping up to help Egyptian farmers with the continued impact of climate change: Over the past several years, extreme weather conditions, rising temperatures, and water shortages in Egypt have led to crop losses and fluctuations in the market value of agricultural products. In a bid to help farmers — both large and small scale — better prepare for changing weather patterns and minimize crop losses, we’re seeing new agritech solutions being introduced. Meanwhile, the government has been working to introduce and expand legislative frameworks designed to help farmers offset financial losses from unexpected weather events.

IN CONTEXT- Over the past 10 years, many farmers in Upper Egypt and the Red Sea governorates suffered from deadly flash floods and the drowning of their crops. In 2015, an extreme heat wave that hit Egypt in May and June caused widespread damage to crops, including losses of up to 40% of wheat production and 30% of fruit production, according to Agriculture Ministry figures. Two years ago, olive and mango crops were hit hard as a result of climate change. Further back, in the 2019-2020 harvest season, crop production fell by some 50%, according to ministry figures. This impact is significant for Egypt because agriculture is a significant contributor to GDP, with the sector employing some 25% of the country’s labor force and generating USD 3 bn in revenues from exports in 2020-2021.

Part of what the government is trying to do to help: Expanding the contractual farming system. In 2015, President Abdel Fattah El Sisi issued a decree to introduce a new council for contractual farming to regulate and promote the practice of contract-based farming for essential commodity crops like wheat, rice, and sugar. Contract farming is a framework under which farmers and buyers (in this case, the government) enter forward contracts to produce and supply crops at certain quantities and quality standards, typically at predetermined prices. Now, the government is looking to expand the scope of its contract farming system to cover 3.4 mn tons of agricultural goods this year, from 1.2 mn tons in 2014, Agriculture Minister El Sayed El Qusier said earlier this year. This is part of the government’s strategy to support smallholder farmers in strategic crops (including wheat, corn, cotton, soybeans, sunflower, and rice) to increase the ability to build a stock of commodities, the minister said.

Startups are also looking at the same solutions: Agritech startups such as mozare3 — an app that helps farmers access contract farming, in addition to helping them with streamlining and digitizing their supply chain — have cropped up in recent years to further expand the scope of contract farming in Egypt.

Ins. products and legislation are being introduced to help farmers secure finance and protect them against potential climate-related losses: As part of the government’s financial inclusion push, with a specific focus on small farmers, the Unified Ins. Actincludes an agricultural crop ins. policy that covers climate-related hazards like rain and floods, drought, and temperature spikes, as well as damaged crops from humidity, pests, and diseases. The bill was ratified by the Senate last year and is currently in committee-level debate at the House of Representatives.

What the legislation would do: The new bill would, if passed, allow farmers to buy ins., meaning they would receive a payout if average crop yields drop below an acceptable level. The legislation is paving the way for pioneering ins. and financing agreements within this space to take shape, including between climate change and farming app zr3i and Misr Ins. Holding. “We are finalizing our agreement with Misr Ins. Holding to provide crop ins. This will be the facilitator for the agriculture industry to get financed because financing is not easy, if you can allocate ins.for this crop, then you can get financed,” Walid Nasr, founder of climate change and farming app, told Enterprise.

With changing rainfall patterns, water availability is becoming unpredictable, leading to lower crop yields and reduced productivity. The long summers and short winters disrupt the cycle of production. “Instead of planting cotton in February and collecting it in September like a farmer would typically do, now it shifted to April, so instead of getting 6 months of absorbing soil nutrients, it is now 4 months, that affects the quantity and quality of produce,” said Shaker Abol Maaty, head of the Agriculture Ministry’s climate change unit told Enterprise.

What are the traditional adaptation and mitigation measures currently used? Most of the climate adaptation solutions revolve around irrigation. Given dwindling water resources, many Egyptian farmers rely on interval-based irrigation where an automated system irrigates land on a fixed, eight-day cycle. Experts in the sector Enterprise spoke with pointed to mist irrigation, overheating, or covering crops with nets and using certain fertilizers and soil nutrients as suggested but costly solutions to help farmers mitigate crop losses.

Besides traditional mitigation measures, tech is also coming into play to help farmers reduce crop losses: Agritech startups like zr3i also help farmers face climate change by providing accurate weather forecasts, crop specific tips, soil analysis, and water and salinity assessment. A joint program between the Agriculture Ministry, the World Food Program, and EFAD introduced a similar app calledEarly Climate Change Alert. The project targeted small holder farmers and focused on raising awareness through community theater, mosque announcements and sending daily alerts specific to each crop online and via SMS or voice notes.

Planting certain crops that are more resilient could also be a solution: “The government should encourage farmers to plant cotton because it is heat and salinity tolerant, instead of maize which is heat sensitive,” climate change expert and head of the Egyptian Association for Sustainable Development Othman El Sheikh told Enterprise.

It’s not just the small guys — medium- and large-scale farmers, producers, and exporters are also heavily affected: With weather fluctuations, more established farmers who are reliant on larger markets and exports can’t guarantee a certain quantity or quality to provide to wholesalers or supermarkets. On the one hand, buyers don’t want to commit to a certain producer before the season starts, and on the other, producers have difficulty controlling the crops’ quantity or quality with more weather surprises every year.“The fruit itself is confused,” cofounder of the Egyptian Growers Organization and founder of major citrus exporter Marei Group Hussein Marei told Enterprise. “It’s never a scenario where you don't have any fruit on the tree, but the fruit may have difficulty growing because the tree doesn't have the nutrient reserve that it normally would build through a normal winter. The fruit itself starts developing poorly and you end up having a fruit that is not in the best health, and when it’s not in the best health that affects shelf life, and the quality of the fruit, also it affects the size of the fruit,” Marei explained.

Your top green economy stories for the week:

  • Eight more green hydrogen MoUs coming? Eight industry players have expressed interest in setting up green hydrogen plants in Egypt and are expected to sign MoUs soon.
  • SFE green fund coming this year: The Sovereign Fund of Egypt is set to pull thetrigger on the launch of its planned green fund this year, allowing investors to invest in green hydrogen and water desalination projects among other assets.
  • UAE, Egyptian firms to partner on renewables: The UAE’s Alcazar Energy and Egypt-based Madkour Group have inked a partnership agreement to work together on renewable energy projects in Egypt and Africa.
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CALENDAR

MARCH

March: 4Q2022 earnings season.

March: IMF to review USD 3 bn program.

March: Gov’t to launch the National Governance Index.

Beginning of March: Rice to be added to the EMX.

26-28 March (Sunday-Tuesday): EU Vice President Margaritis Schinas in Egypt.

27-29 March (Monday-Wednesday): The first meeting of the COP transitional committee, focusing on adaptation, and loss and damage.

30 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

31 March (Friday): Finance Ministry to present draft budget to House of Representative by this date.

APRIL

April: GAFIto launch the country’s first integrated electronic platform to facilitate setting up a business.

April: SCZone roadshow in China.

1 April: President Abdel Fattah El Sisi's social support measures program to be implemented.

1 April (Saturday): Deadline for banks to establish sustainability units.

2 April (Sunday): House to reconvene.

4 April (Tuesday): National Paints Holding’s MTO for Pachin ends.

6 April (Thursday): Al Ansari Financial Services shares to start trading in Dubai.

9 April (Sunday): Senate to reconvene.

10-16 April (Monday-Sunday): IMF / World Bank Spring Meetings, Marrakesh, Morocco.

11 April (Tuesday): Deadline for NGOs to legalize their status.

15 April: Lamees El Hadidi’s startup competition show, El Forsa, closes applications.

16 April (Sunday): Coptic Easter

17 April (Monday): Sham El Nessim.

21 April (Friday): Eid El Fitr (TBC).

25 April (Tuesday): Sinai Liberation Day.

27 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 May (Wednesday): National Dialogue begins.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

12-15 May (Friday-Monday): Egypt Fashion Week.

14 May (Sunday): Expat car import scheme ends.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

18 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

JUNE

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

August: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

15 September (Friday): IMF to review USD 3 bn program.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

DECEMBER

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

1Q 2023: Egypt + Qatar to launch joint business forum.

1Q 2023: FRA to introduce new rules for short selling.

1Q 2023: Internal trade database to launch.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

4Q 2023: EGX to launch its new futures exchange.

2Q 2025: Safaga Terminal 2 to initiate operations.

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