S&P warns Egypt at risk of credit downgrade on external financing worries

Wednesday, 26 Apr 2023

S&P warns Egypt at risk of credit downgrade on external financing worries

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Today at a glance

Economy

S&P affirms Egypt’s credit rating, but downgrades outlook to negative.

BUDGET WATCH

Madbouly gov’t to up social support, subsidy spending by c.50% next fiscal year.

Diplomacy

Thousands are pouring over the border into Egypt from Sudan as ceasefire appears to break down.

Also on our Radar

Egyptian, Indian investors eye USD 80 mn pharma raw materials venture.

What We're Tracking Today

National Council for AI sets guidelines for responsible use + India’s population will overtake China’s this week.

PLANET FINANCE

USD’s dominance as a reserve currency has taken a deep hit.

HARDHAT

GCC, int’l investments pour into state’s provincial capitals development project.

What We're Tracking Today

THIS MORNING: Daylight savings is coming on Friday. PLUS: India will soon be the world’s most populous country + Egypt releases AI guidelines

Good morning, wonderful people, and welcome back from a much-deserved long break. We hope you enjoyed it as much as we did — and that today and tomorrow are quietly productive for all those of you who are not bridging.

The BIG STORY TODAY: We’ve got a couple of big economy stories to get us back into the swing of things. S&P Global Ratings has left our credit rating unchanged, but downgraded its outlook on our debt to negative on worries over our ability to secure external financing. The Madbouly government, meanwhile, is boosting its spend on social support programs and subsidies in what it is positioning as a bid to take some of the bite out of high inflation.

PSA #1a- Daylight savings is coming this Friday: That’s right, folks. Get ready for some semi-jet lagged confusion and tardiness. Friday, 28 April, will be the first day of daylight savings — our first since 2016 — which will see Cairo Local Time (CLT) pushed forward by one hour. The move, which breezed through the House of Representatives earlier this month, was made with an eye towards potentially cutting down our natural gas consumption.

PSA #1b- Make sure you check your departure time if you’re flying out — expect your flight to leave one hour later.

PSA #2- Next week is another short one: We’ve got a three-day weekend next week to ease us all back into work mode, after Prime Minister Moustafa Madbouly made Thursday, 4 May, a holiday for the public and private sector to mark Labor Day, which falls on 1 May.

SOUND SMART- India will become the world’s most populous country this week: India’s population is expected to surpass China before the end of the week to reach 1,425,775,850, Reuters reports citing UN projections.Go deeper into what this means here.

DATA POINT-Imports worth USD 23 bn have been released from our ports since January, said Finance Minister Mohamed Maait, adding that priority continues to be given to key commodities, food, medicine, and manufacturing components, according to a ministry statement.

One reason inflation has remained sticky in recent months is “supply issues including a backlog” of imports resulting from since-scrapped regulations on goods entering the country, central bank governor Hassan Abdalla noted earlier this month.

ALSO- We now have our own charter for AI: The National Council for Artificial Intelligence has launched a charter for the responsible use of AI. The charter (pdf) encourages the consideration of five main principles when developing and implementing AI:human-centered design, transparency, justice, accountability, and security, according to a cabinet statement.

Other countries are looking to set boundaries for the new tech: In China, new rules mean AI-generated content will have to “embody core socialist values and must not contain any content that subverts state power.” US and EU regulators, meanwhile, are looking into “guardrails” for AI to reduce the risk of spreading harmful content.

Correction 26 April 2023:

A previous version of this article incorrectly stated that EGP 23 bn worth of imports have been released since the beginning of the year.

THE BIG STORY ABROAD-

The international press is all over Biden’s 2024 re-election bid: US President Joe Biden yesterday officially announced (watch, runtime: 3:04) that he will run for re-election next year to “finish the job.” Current Vice-President Kamala Harris will run alongside him once again. If Biden secures another four years in office he will leave the White House at age 86, extending his run as the oldest serving US president. Biden may once again face off against former US President Donald Trump, who has already launched his bid for the Republican nomination despite being the subject of ongoing criminal investigations. (Reuters | AP | New York Times | FT | BBC | CNBC | WSJ| Washington Post)

SPEAKING OF ELECTIONS- Greece will hold parliamentary elections on 21 Mayafter President Katerina Sakellaropoulou approved the move to dissolve the country’s current parliament and elect a new one, Reuters reported.

IN THE GLOBAL BUSINESS PRESS- The banking crisis lives on: US lender First Republic Bank’s shares saw nearly half their value wiped out on Tuesday after the bank’s 1Q 2023 earnings (pdf) registered bigger outflows than expected amid banking volatility in March, the Wall Street Journal reports. Customers pulled some USD 100 bn from the bank amid fears of contagion following the abrupt collapse of Silicon Valley Bank, the 1Q results showed — leading First Republic’s shares to drop 49% to close at a record low of USD 8.10. The bank will need “to pull off the mother of all pivots to survive,” one analyst wrote.

AND- Alexandria’s Mohamed Mahdy has taken home a World Press Photo award for his multimedia chronicle of a fishing community in El Max.

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May. The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help Egypt build an export-led economy that makes us a magnet for foreign direct investment (FDI).

Why exports & FDI? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what Egypt as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories.You can learn more on our conference website here.

And what better place to discuss moving our goods than Egypt’s original logistics zone — the Nile. That’s why we’re looking forward to holding the event by the river’s vistas at the Four Seasons, Nile Plaza.

Some of the biggest names in business and finance are on board — are you? The Enterprise Exports and FDI Forum is taking place with the generous support of our friends, including:

Banking partners: Banque Misr | Al Baraka Bank | Emirates NBD | HSBC

Event partners: Beyti | Concrete | Global Corp | Grant Thornton | Hassan Allam Utilities

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

HAVEN’T REQUESTED AN INVITE YET? If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

CIRCLE YOUR CALENDAR-

The NBA Basketball Africa League Nile Conference group phase kicks off today, 26 April, and runs through 5 May at Hassan Moustafa Sports Hall in Sixth of October City, according to a Youth and Sports Ministry statement. Six African teams will go head-to-head in Cairo to secure one of four slots in the playoffs and finals in Kigali, Rwanda in May, where they will face the top four teams from the Sahara Conference group phase that took place in Senegal in March, the NBA said.

Sustainable Debt Coalition Initiative to launch in 3Q 2023? Some 20 countries are interested in formally joining the sustainable debt alliance announced at last year’s COP27 summit when it makes its official launch in September, local media reported Finance Minister Mohamed Maait as saying at the IMF / World Bank Spring Meetings earlier this month. The coalition brings together debtor and creditor countries, ratings agencies, DFIs, and MDBs in a bid to increase access to affordable green finance, reduce the cost of green debt and encourage fresh green investments among developing countries.

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

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: GCC and international investment is pouring into the government’s Darah Provincial Capitals Development Project to improve housing and infrastructure in key cities beyond Cairo.

Colorful spring activities come alive this spring at Somabay: A memorable action-packed week from April 21-28 for everyone. From spirited beach parties, commercial nights, sunset brunches, fashion shows and a bazaar, kids’ camps, adrenaline-pumping classes, selective food trucks and much more awaits you. Every corner of the destination will radiate inescapable Spring vibes, inviting the community to live it up. For more information, please contact book@somabayholidays.com or 16390.

Economy

S&P Global Ratings revises Egypt’s debt outlook downwards on bleak forecast

S&P Global Ratings has cut its outlook on Egypt’s debt to negative, warning that the country risks not being able to meet its external funding needs if it doesn’t deliver on economic reforms tied to its IMF assistance program. The downbeat forecast “reflects risks that the policy measures implemented by the Egyptian authorities may be insufficient to stabilize the exchange rate and attract foreign currency inflows,” the ratings agency said in its latest review on Friday, which held the country’s credit rating at B.

Some USD 37 bn is needed by June 2024: S&P estimates our external financing needs at USD 17 bn for FY 2022-2023 and USD 20 bn for the following year, with USD 26 bn of this required to finance the current account deficit. The ratings agency currently expects these requirements to “largely be met,” with almost USD 10 bn in FDI and the remainder to come from GCC investment, portfolio flows and fresh borrowing. “We assume that any external funding gaps will be covered by additional GCC government support,” S&P wrote.

Delivering on reform is key: There has been “relatively limited” evidence that authorities are implementing the IMF-backed reforms, which is placing further pressure on the EGP and increases the risk that lenders could “potentially delay or do not provide Egypt with the agreed funds,” the ratings agency said. Under its USD 3 bn program with the IMF, Egypt committed to maintaining a flexible exchange rate, reducing the state’s economic footprint via a large-scale privatization program, and improving the transparency of state- and military-owned companies.

Investors are looking for clarity on exchange rate policy + fair competition: Advancing the privatization program “hinges on more clarity from the authorities on exchange rate policy,” S&P wrote, adding that investors may also be concerned about doing business in Egypt if more isn’t done to increase transparency and level the playing field. Negotiations with Saudi Arabia, the UAE and Qatar to unlock the bns of USD of investment pledged last year have stalled in recent weeks amid currency uncertainty and signs that the country’s Gulf allies want to see more reform progress before investing.

S&P expects the EGP to fall further: The ratings agency expects the EGP to decline 53% in FY 2022-2023 and to continue to drop slightly in the following years. The official exchange rate has remained little changed since early March amid a continued shortage of foreign currency, causing the rate in the parallel market to widen and raising speculation that the central bank will have to further devalue the currency. The currency has fallen 39% so far this year, according to our math.

The IMF is also reportedly insisting on reform progress: Bloomberg reported earlier this month that the IMF will not go ahead with the first review of the loan program until authorities begin selling down state assets and transition to a flexible exchange rate. The review was initially scheduled to take place in mid-March.

S&P isn’t the first ratings agency to take negative action on Egypt in recent months: All three of the major ratings agencies have now issued warnings on Egypt’s debt sustainability in recent months, with Moody’s downgrading Egypt’s rating for the first time since 2013 in February and Fitch cutting its outlook to negative in November.

Egypt to raise spend on subsidies + social protection to alleviate inflation

The Madbouly government is set to increase spending on subsidies and social safety programs by almost 50% in FY 2023-2024 as it looks to offset the impact of soaring inflation on household budgets. Spending on social safety programs will rise to EGP 529.7 bn from EGP 358.4 bn in FY 2022-2023, and more money will be allocated to food and fuel subsidies, the Finance Ministry said Sunday. “This enables the state to expand the social protection network that targets the most vulnerable and needy families . . . to improve [their] standard of living,” the statement reads. The fiscal year runs from 1 July 2023 to 30 June 2024.

Food + fuel subsidies to rise: The ministry has allocated EGP 127.7 bn to food subsidies, up 42% from the current fiscal year, and EGP 119.4 bn to subsidize petroleum products.

That’s more than we anticipated: A draft budget approvedby the Madbouly cabinet in March put social spending for FY 2023-2024 at an estimated EGP 455 bn, food subsidies at EGP 108 bn, and fuel subsidies at EGP 35.9 bn.

Remember: Inflation climbed to its highest level since mid-2017 last month due to a series of currency devaluations triggered by the fallout from the war in Ukraine. Headline urban inflation reached 32.7% during the month, underpinned by soaring food prices which reached new record highs.

ICYMI- The budget increase follows other gov’t moves aimed at cushioning inflation: An EGP 150 bn government package came into effect at the start of April that includes EGP 10 bn in wage and pension hikes and a 25% increase in cash transfers under the Takaful and Karama social support program.

MORE EXPORT + INDUSTRY SUPPORT-

Export subsidies and subsidized loans for industry to expand: The ministry has allocated EGP 28.1 bn to export subsidies, up more than fourfold from the EGP 6 bn paid out this year, and will increase spending on its subsidized loan program for agriculture and industry players to EGP 19.5 bn — up from the projected EGP 13 bn.

Remember: Developing local industry and raising exports are two of the government’s top economic priorities. Recent months have seen a raft of new policies designed to attract foreign investment and localize industrial production.

Also in the budget: The government will spend some EGP 8 bn to provide healthcare, EGP 6 bn for health ins. and medicines, and EGP 10.2 bn to support social housing. It will also spend some EGP 45 bn on local wheat during this harvest season after hiking its purchase price by 74% to EGP 1.5k per ardeb, the Finance Ministry said in a separate statement.

** We’re still waiting to see the draft budget in full: The government handed the draft budget over to the House for discussion earlier this month after giving its sign-off on the proposed spending plans for the year ahead.

Tags:

budget watch commodities inflation social welfare subsidies wheat

Diplomacy

Egyptian troops, civilians evacuated from Sudan as fighting rages on

Fighting continued in Sudan late last night even after warring factions consented to a 3-day ceasefire mediated by the United States and Saudi Arabia, Reuters reported. The continued violence came after the UN’s special envoy to Sudan told the security council that the ceasefire between Sudan’s army and the Rapid Support Forces (RSF) militia “seems to be holding in some parts,” but admitted that there was no real appetite for negotiation on either side.

The situation has become dire for Sudanese civilians with at least 459 people having lost their lives and more than 4k people wounded, according to Reuters. Tens of thousands have fledto neighboring countries like Egypt, Chad, and South Sudan.

Nearly 10.2k people of various nationalities fled Sudan into Egypt via the Arqeen and Qastal border crossings in the past five days, according to the Transport Ministry. Foreign embassies in Egypt — including those of China and Hungary — are coordinating with the authorities to follow up with their citizens who have made the crossing, the statement reads.

Amid the chaos, Egyptians continue to make it to safety: Over 1.5k Egyptian citizens have evacuated from the country’s capital in recent days. The Foreign Ministry said yesterday that 1.5k people have now returned to Egypt, with 635 leaving the country on Tuesday.

Egyptian troops evacuated: Some 177 Egyptian troops returned safely to Cairo after being airlifted from Sudan in three separate flights (watch, runtime: 0:37).

And detained soldiers freed: Twenty-seven Egyptian soldiers detained by the RSF at the Meroe air base earlier this month have been freed following mediation by the UAE, Emirati news agency WAM reported Thursday. Statements from the Egyptian Armed Forces and the RSF confirmed the news, with the soldiers arriving at the Egyptian embassy in Khartoum after being handed over to the International Committee of the Red Cross.

Death of a diplomat: An assistant administrative attache in Egypt’s embassy in Khartoum, Muhammad El Gharrawi, was killed during the clashes between different military factions in the Sudanese capital, the Foreign Ministry said Monday. El Gharrawi was en route to the embassy to oversee the evacuation of Egyptians when he was killed, the ministry said, without providing further details. Initially, there was confusion about the identity of the victim, as the Sudanese army had reported that it was Egypt’s assistant military attache who had been killed.

Foreign diplomats, citizens evacuate en masse: Western governments have begun to evacuate diplomatic personnel in recent days and nations around the world are mounting rescue operations for stranded citizens.

Egyptian high school students returning from Sudan will have the option to postpone their finals to August, the Education Ministry said in a statement yesterday.

High-level talks:In an effort to address the crisis, President Abdel Fattah El Sisi has spoken to the leaders of the UAE and the UK in recent days about how to bring the fighting to an end.

Tags:

DIPLOMACY Egypt-Sudanese relations Middle East politics

LAST NIGHT’S TALK SHOWS

Egyptian talk shows celebrate the return of Egyptians from Sudan. PLUS: El Sisi’s speech to mark Sinai Liberation Day

Another night without our go-to talk shows: The talking heads are still on their Eid break, leaving us with only the news bulletins, which yesterday focused primarily on the situation in Sudan and Sinai Liberation Day.

A warm welcome for Egyptians returning from Sudan: Egyptian authorities welcomed those citizens who have been repatriated from the country — who now number more than 1k — with flowers and flags. DMC had coverage (watch, runtime: 5:05 | 11:12). We have the latest on Sudan in our Diplomacy section, above.

A love letter to Sinai: President Abdel Fattah El Sisi marked Sinai Liberation Day yesterday with a speech (watch, runtime: 6:05), saying that “25 April will remain a remarkable day in the history of our nation.”

Tags:

Abdel Fattah El Sisi Egypt-Sudan relations LAST NIGHT’S TALK SHOWS

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EGYPT IN THE NEWS

Inflation leads the conversation on Egypt in the foreign press. PLUS: Sudanese flee to Egypt amid war

It’s a mixed bag for mentions of Egypt in the global business press this morning: The impact of inflation on Ramadan celebrations continues to feature in the business pages as the Wall Street Journal reports that the burden of rising food prices left many Egyptian families reliant on communal meals to break their fasts this holy month.

Also making headlines:

Sudanese citizens flee to Egypt:Reuters profiles a Sudanese woman and her family who last week fled war torn Khartoum for Aswan by bus.
The power of TV: Two MPs are calling for a review of the country’s guardianship law, prompted by a Ramadan TV series that drew attention to the law's negative impact on women and families. (The Guardian)
Ancient Egyptian coffins hold surprising archaeological find: Researchers at the British Museum discovered lizard remains inside 2.5k-year-old Egyptian coffins, thanks to the use of a non-destructive imaging technology. (Smithsonian Magazine)
A team from El Beheira just won the Uefa Champions League (sort of): Local football fans have competed in the annual Ramadan tournaments, receiving replica trophies for competitions such as the English Premier League and Uefa Champions League. (Reuters)

Tags:

archaeology economy Egypt-Sudan relations human rights inflation Legislation Watch Ramadan sports

Also on our Radar

Indian private investment in Egypt’s pharma manufacturing sector. PLUS: ACWA Power solar plant + Chevron’s East Med exploration

MANUFACTURING-

A USD 80 mn Egyptian-Indian pharma project brewing: The Madbouly government is in talks with unnamed private Egyptian and Indian pharma companies to establish a USD 80 mn pharma raw materials plant, Public Enterprises Minister Mahmoud Esmat said yesterday. The project will work to meet local demand and boost exports, Esmat said, without elaborating further.

We already reportedly have new pharma factories in the making: State-owned pharma manufacturer HoldiPharma plans to build five new factories at a cost around EGP 2.5 bn in partnership with private-sector firms, including an unnamed Indian manufacturer that will act as technical expert, Asharq Business reported last month.

DEBT-

Kom Ombo solar plant receives USD 123 mn in financing: Saudi renewable energy developer ACWA Power yesterday inked a USD 123 mn financing package to develop the 200 MW Kom Ombo solar power plant, according to a company statement. The financing package has been in the works since 2021.

Where is the money coming from? Multilateral lenders including the European Bank for Reconstruction and Development (USD 36 mn), Green Climate Fund (USD 34.5 mn), the African Development Bank and affiliated funds (USD 24.4 mn), the Arab Bank (USD 14.8 mn), and the OPEC Fund for International Development (14.6 mn).

ENERGY-

#1- Chevron to issue lease tender for drilling ship for East Med exploration: USenergy major Chevron is preparing to issue a tender to lease a drilling ship for natural gas exploration off Egypt, Cyprus, and Israel, Reutersreported Monday, citing a statement by the multinational corporation. The firm will potentially issue the tender during 2Q 2023, it said, without disclosing when it expects to begin drilling. This comes on the heels of a Reuters piecelast week which claimed that the company had already issued the tender.

#2- The FX crisis is making it harder for EGPC to pay its dues to international companies: The total receivables that the Egyptian General Petroleum Corporation (EGPC) owes to international oil and gas companies has more than tripled to USD 3 bn from USD 850 mn in mid-2020 — the Oil Ministry’s last report of the figure — amid the ongoing FX crunch, Meesreports.

#3- Egyptian-German JV to build two solar plants in Al Wadi El Gedid: A joint venture between Egypt-based Smart Engineering Solutions (SES) and German solar company Frenell will build two solar plants utilizing concentrated solar technology, Al Mal reports. The companies will establish two facilities with a combined 70 MW of power at a cost of some EUR 340 mn, the newspaper says, citing SES CCO and co-Founder Ahmed Naguib. The German partner will fund the project, according to the news outlet.

Tags:

ALSO ON OUR RADAR Chevron economy Egyptian General Petroleum Corporation energy foreign exchange Frenell infrastructure oil and gas renewables Smart Engineering Solutions

PLANET FINANCE

Is the USD losing ground as a global reserve currency? PLUS: Central banks are goldbugs + the new head of Israel’s sovereign fund

The USD has “suffered a stunning collapse” as a reserve currency, economist Stephen Jen writes in a briefing note picked up by the Financial Times. Adjusted for changes in its price, the greenback’s market share of global reserve currencies fell to 47% in 2022 from 73% in 2001. The drop was “accelerated precipitously” by the war in Ukraine, with US sanctions against Russia leading large reserve-holding countries, predominantly those in the Global South, to seek alternative currencies for international trade and reserves. “What we witnessed in 2022 was sort of a ‘defund-the-global-police’ moment, whereby many reserve managers in the world disagreed with the conduct of both Russia and the US,” Jen writes.

The USD is still the currency of global trade: The power of the greenback is twofold — as a reserve currency and a medium for global finance and trade. While the Global South is turning away from holding USD assets, it doesn’t have “the ability to divest from the US dollar as an international currency, particularly for financial transactions,” Jen says.

ALSO WORTH NOTING-

Central banks are buying gold at a record rate: Purchases of gold by central banks around the world hit record levels last year — and in a recent poll two-thirds of 83 central banks expect gold holdings to increase further this year. The cause? US-led sanctions on Russia, which are driving countries to de-dollarize and insulate themselves from a weaponized USD, according to Rockefeller International Chairman Ruchir Sharma. (Financial Times | Financial Times)
Israel’s wealth fund finally has a full-time boss: Israel's central bank has appointed Lena Krupalnik as the full-time manager of the country’s sovereign wealth fund, which was established in 2014 following the discovery of significant natural gas reserves. Krupalnik was formerly head of global investments at Israeli asset manager Menora. (Bank of Israel)
Binance calls off plan to buy Voyager: Crypto exchange Binance US has called off its USD 1 bn acquisitionof bankrupt crypto broker Voyager without providing a reason behind its decision. (Bloomberg)

EGX30	17,516	-0.1% (YTD: +20.0%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	18.25% deposit	19.25% lending
Tadawul	11,265	+0.9% (YTD: +7.5%)
ADX	9,646	-0.1% (YTD: -5.5%)
DFM	3,506	+0.2% (YTD: +5.1%)
S&P 500	4,072	-1.6% (YTD: +6.1%)
FTSE 100	7,891	-0.3% (YTD: +5.9%)
Euro Stoxx 50	4,378	-0.5% (YTD: +15.4%)
Brent crude	USD 80.77	-2.4%
Natural gas (Nymex)	USD 2.25	-2.3%
Gold	USD 2,007.80	+0.2%
BTC	USD 28,277	+2.9% (YTD: +71.0%)

THE CLOSING BELL-

The EGX30 fell 0.1% at Wednesday’s close on turnover of EGP 1.9 bn (about 3% above the trailing 90-day average). Local investors were net buyers. The index is up 20% YTD.

In the green: Taaleem Management Services (+7.7%), e-Finance (+5.2%) and GB Auto (+4.9%).

In the red: Heliopolis Housing and Development (-3.2%), Oriental Weavers (-2.1%) and Elsewedy Electric (-2.0%).

Tags:

Binance commodities currencies Financial Markets Google Planet Finance Voyager

HARDHAT

GCC, international investors flock to Egypt’s Darah Provincial Capitals housing development project

GCC + international investments are pouring into the government’s Darah Provincial Capitals Development Project: Egypt’s real estate market is seeing plenty of appetite from foreign investors looking to get in on government-led development projects, with the Darah Provincial Capitals Project attracting regional and international investors. These investors are looking at ways to partner with local players on implementing large-scale projects like Darah, several sources told Enterprise. Private sector investments have become particularly important as the government looks to alleviate the financial burden on state coffers, our sources tell us.

REFRESHER- The Darah Provincial Capitals Development Project, which was announced atthe end of 2020, aims to generate more housing and improve the quality of services and infrastructure in the capital cities of governorates outside of Cairo. The initial phase of the initiative was expected to cost some EGP 120 bn, sources told us at the time. The project is expected to cost a total of EGP 262 bn upon completion. The project is designed to construct residential and commercial units and services, and is ultimately meant to discourage cross-governorate migration by providing older provincial cities with services comparable to those found in more newly developed cities.

The Urban Development Fund has been looking to bring in more private sector players as funding for the project has become complicated: The Urban Development Fund’s negotiations with banks to borrow EGP 53 bn have stalled as the fund needs approval from the Central Bank of Egypt to receive a guarantee from the Finance Ministry, head of the Urban Development Fund Khaled Siddiq tells us. The alternative, he explains, is opening up space for the private sector to get in on the development projects with the fund.

Offers are flowing in: There are a handful of offers on the table from the private sector to work on the Darah project, which are currently under discussion, according to Siddiq. Egyptian companies are competing alone and there are also several consortiums of Egyptian companies with Gulf or international players, Siddiq said.

Kafr El Sheikh and El Mahalla in particular are seeing strong interest: A number of the bids the fund is currently looking at are offers to participate in a 180 feddan investment project in Kafr El Sheikh. The contract for the service project will be set up under a public-private partnership agreement, Siddiq said. Another project that’s also piquing investor interest is a residential development spanning 68 feddans in Mahalla, with regional and international investors submitting bids, according to Siddiq.

What’s the timeline for the Darah project looking like? Darah is divided into three phases, with the goal of covering all 27 governorates by the end of the project. The fund opened the door for citizens to book apartments in the first phase of the project in December, with the first phase spanning nine governorates — Dakahlia, Menoufia, Sohag, Qena, Minya, Fayoum, Suez, Damietta, and Kafr El Sheikh. The first phase was initially set to include 14 governorates, but Cairo, Sharqia, Qalyubia, Gharbia, and Luxor were pushed to a later phase. The fund does not currently have a timeline for when it will open the door for bookings in the second phase, considering weakening purchasing power and lower appetite for real estate purchases, Siddiq told us.

The government has been focusing on several urban development projects as of late:Darah is part of an overall network of development projects across the country the government has undertaken in the past few years, including in Cairo with the Fustat Garden development, the Magra El Oyoun development project, and the Old Cairo redevelopment project.

Your top infrastructure stories for the week:

Eni is set to drill a new exploration well at its Mediterranean North East Hap’y concession, according to Al Mal.
The French Development Agency (AFD) will provide EUR 52 mn in financing to expand Helwan’s wastewater treatment plant.

Tags:

Darah Provincial Capitals Development Project Hardhat housing infrastructure investment watch urban development fund

CALENDAR

APRIL

April: SCZone roadshow in China.

April: SCZone to begin providing ship bunkering services in the Suez Canal’s ports.

26 April - 5 May (Wednesday-Friday): African Basketball Championship.

27 April (Thursday): Registration for this year’s Hajj concludes.

28 April (Friday): First day of daylight saving time.

30 April (Sunday) House of Representatives back in session.

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): Deadline for corporate tax returns.

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.

1 May (Monday): Deadline to apply to VC funds program by GIZ Egypt, AfricaGrow and Dutch development bank FMO.

1-5 May (Monday-Friday): African Private Equity and Venture Capital Association annual summit, Four Seasons Nile Plaza, Cairo.

2 May (Tuesday): National Paints Holding’s and Eagle Chemicals’ MTOs for Pachin ends.

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.

7 May (Sunday): Senate back in session.

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.

14 May (Sunday): EgyptAir to launch a new route to Dhaka, Bangladesh.

14 May (Sunday) Egytrans’ shareholders to vote on NOSCO acquisition.

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.

19 May (Friday): Arab League summit, Riyadh.

19-21 May (Friday-Sunday): G7 summit, Hiroshima, Japan.

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

June: Indian representatives to discuss prospect investments in the Suez Canal.

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

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

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.

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

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

SEPTEMBER

September: Sustainable Debt Coalition Initiative agreed at COP27 to launch.

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.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

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

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

OCTOBER

October: Deadline for ins. providers to link their databases with the FRA.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

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.

26 October (Thursday): Daylight saving time ends.

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

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

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.

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.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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