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Wednesday, 17 May 2023

What We're Tracking Today
Enterprise Exports + Fdi Forum
Economy
Investment Watch
Investment Watch
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Around The World
Hardhat
Calendar

Foreign investors still want in on Egypt — but local firms need to get the fundamentals right

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Today at a glance

1

ENTERPRISE EXPORTS + FDI FORUM

 Foreign investors still want in on Egypt — but local firms need to get the fundamentals right.
2

What We’re Tracking

 Gov’t announces new measures to attract FDI — PM to give the details today.
3

Economy

 EBRD downgrades Egypt growth forecast.
4

Investment Watch

 Egypt is the region’s FDI magnet thanks to green hydrogen.
5

Investment Watch

 EIB could invest EUR 50 mn a year in Egypt-focused VC, PE firms.
6

Also on our Radar

 Taqa Arabia to establish JV with Saudi gas distributor.
7

Diplomacy

 Egypt joins African nations to push for Ukraine peace.
8

What We're Tracking Today

 The verdict on Netflix’s Cleopatra is in, and it’s not good.
9

PLANET FINANCE

 Huge investor demand as Adnoc kicks off IPO of its logistics arm.
10

HARDHAT

 A look at the state’s infrastructure spending priorities for FY 2023-24.

Wednesday, 17 May 2023

What We're Tracking Today
Enterprise Exports + Fdi Forum
Economy
Investment Watch
Investment Watch
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Around The World
Hardhat
Calendar
1

What We're Tracking Today

Egypt PM to give presser on investment regs today

Good morning, dear readers.

What we’re watching today:We can expect some color on yesterday’s announcement from the Supreme Investment Council when Prime Minister Moustafa Madbouly holds a press conference later today.

Announcement? The state’s investment body yesterday approved 22 measures to help attract more foreign direct investment into the country. The details thus far are fairly sketchy so we were pleased to hear on Ala Mas’ouleety last night that the PM would be stepping in front of the cameras today to elaborate on some of the proposals (watch, runtime: 2:27).

Here’s what we can expect:

  • More incentives: New incentives for priority sectors, improved terms for special economic zones and faster tax refunds could now be on the table.
  • More golden licenses: The government will consider expanding golden licenses beyond national and strategic projects.
  • Less red tape: Faster approvals and simpler rules for property ownership are on the list.
  • More transparency: Greater independence for regulators, better data collection on state-owned enterprises, and less preferential treatment for public-sector firms are being looked into.

The Cabinet website, in latin characters: The cabinet’s website is now available in English, providing economic and investment news, info on public projects, and access to economic indicators such as growth rates, employment, and inflation. Investors can also apply for a “golden license” from the site.

HAPPENING TODAY-

Shoukry in KSA: Foreign Minister Sameh Shoukry is in Jeddah today to prepare for this week’s Arab League summit scheduled for Friday, the Foreign Ministry said.

REMEMBER- Syria will attend this Arab League summit, marking its first meeting in 12 years after the group of Arab states earlier this month voted to restore the country’s membership.

India’s army chief is in Egypt for a two-day visit: It’s the second day of General ManojPande’s visit to Cairo, where he’s holding talks with Defense Minister Mohamed Zaki and other military leaders.

CDIS continues: The Egypt Cybersecurity & Defense Intelligence Systems (CDIS) expo is on its second day at the Egypt International Exhibition Center. The three-day event will bring together experts from across the world to discuss the present and future of cybersecurity in Egypt and the world. Check out the agenda here (pdf).

HAPPENING THIS WEEK-

Tomorrow is interest rate day: The Central Bank of Egypt (CBE) will hold its policy meeting on Thursday, 18 May.

A majority of analysts we’ve spoken to expect the central to leave rates unchanged:

Seven of nine respondents in our regular poll told us last week that the central bank will likely hold off on further rate hikes, before HC Securities’ Heba Mounirjoined the ‘hike’ camp earlier this week.

Another analyst in the ‘hold’ camp: “We are 45 days away from the end of the current fiscal year and the government doesn’t want surprises. Rate hikes hurt the state budget … so I think for this upcoming meeting rates will remain unchanged,” economist Mostafa Badra told Yahduth Fi Masr’s Sherif Amer last night (watch, runtime: 5:45).

G7 meeting this week: Expect the war in Ukraine and China containment to be top of the agenda when G7 leaders meet in Hiroshima, Japan on 19-21 May.

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-

High stakes debt ceiling negotiations in Washington are dominating the global front pages this morning as President Biden prepares to cut short an overseas trip in an attempt to find a breakthrough and avoid a debt default. Republican House Speaker Kevin McCarthy yesterday told reporters that an agreement could be sealed this week but said that the two sides remain far apart. Biden will return from Asia on Sunday following the G7 summit. (Associated Press | Reuters | Bloomberg | Financial Times | NYT | Washington Post | Wall Street Journal | CNBC)

The markets are being remarkably calm about the potential for a US default: The US may default at the beginning of June if the debt ceiling is not raised, but markets are yet to panic despite Treasury Secretary Janet Yellen’s almost daily warnings of the apocalyptic consequences. There have been no sharp swings in the equity markets, bond yields have been calm, and the VIX — a key measure of market risk — has remained low. The reason? Investors don’t think US politicians will be stupid enough to voluntarily send the country into default.

Having said that: Credit default swaps — derivatives that act as insurance against default — are spiking, with spreads on one-year contracts hitting record highs last week, and five-years reaching their highest level since 2009.

For more: Bloomberg| Financial Times | Politico.

SIGN OF THE TIMES-

No one seems to be enjoying black Cleopatra: Netflix’s controversial black Queen Cleopatra is making history — holding one of the worst-ever scores on Rotten Tomatoes. The 2% user rating is described by Forbes as an “unprecedented low” for the movie review aggregator, with viewers flooding the site with complaints about historical inaccuracies, poor writing and bad acting.

It’s not just Cleopatra’s race that seems to be an issue: Critics weren’t happy about the series either citing lack of “context, personality, and a reason for being made” and it being “too soapy for serious history fans.” The production currently holds a 10% rating among critics on the platform.

Amazon is the latest tech giant to race into AI: Soon you’ll be able to converse with a Chat GPT-esque chatbot while you shop on Amazon as the e-commerce giant follows Microsoft and Google in integrating generative AI systems into its platforms, according to Bloomberg.

First Buzzfeed, now Vice: Vice Media has filed for bankruptcy, becoming the second digital media giant to bust following Buzzfeed last month, Reuters reported . Both outlets were part of a new generation of digital-only news sites that rose to prominence in the 2010s in a challenge to legacy media. Reuters has more.

COME WORK FOR OUR ADVISORY ARM-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.

We’re running a four-month training program for fresh grads and career switchers and will hire every successful grad of the program.

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

*** 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: We look at the state’s infrastructure spending plans for the coming fiscal year.

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Miss Elite 2023 at Somabay Red Sea, 10-20 May: For the third time in Egypt and second year in a row at Somabay, Miss Elite will once again host its global-scale international beauty pageant that celebrates beauty and brains of women across the globe. Sponsored by Somabay Red Sea, The Cascades Golf Resort, Spa & Thalasso, Stayr by Somabay Holidays, the spectacular event will feature 33 contestants representing the beauty, culture and traditions of their countries.

2

ENTERPRISE EXPORTS + FDI FORUM

Foreign investors still want in on Egypt — but local firms need to get the fundamentals right

The economic outlook is uncertain — but good Egyptian businesses remain attractive to investors: That was the key takeaway from a panel at the Enterprise Exports and FDI Forum on Monday that featured Hossam Abou Moussa, partner at Apis Partners, Hassan Massoud, associate director and head of private equity for the Southern Mediterranean at the European Bank for Reconstruction and Development (EBRD), and Cheick-Oumar Sylla, the International Finance Corporation’s director for North Africa and Horn of Africa.

“Egypt is and has always been investable,” Abou Moussa said, pointing out that Apis “doesn’t have allocations, and we choose to invest in Egypt.” Economic uncertainty “is a little bit higher” right now, “but this doesn't prevent investors from investing in Egypt. They just need to price it in,” he said.

The IFC is in for the long haul: “We believe in the future and we are not stopping any investments [in Egypt],” Sylla said. “The short term will be difficult, we’re more optimistic on the medium term, but the important thing is that investment decisions are still moving ahead.”

The best-placed firms to ride out challenges? Exporters have an upper hand in navigating the uncertainty around the FX rate, Massoud pointed out. Looking ahead, the next question will be which businesses can weather inflationary pressures, he said, highlighting NBFS firms as good candidates. Abou Moussa pointed to the fintech sector as particularly resilient to economic challenges as tech-enabled financial inclusion brings a “wave of digitization that is benefiting the bottom of the pyramid” and creating business opportunities.

Lending a helping hand: “Progressive legislation” targeted at facilitating investment from the likes of the Financial Regulatory Authority and the central bank is also helping to attract FDI, Abou Moussa said.

A good time to look to private equity? “Private equity at large has a huge role to play in this period of economic dislocation that we're living through, because PE capital can be flexible [and] go places where capital has not gone before,” the EBRD’s Massoud said. The current economic situation, “as difficult as it is at this point for a lot of folks,” is also “opening up opportunities [and] places where private equity and private capital has not really spent a lot of time looking.”

All three organizations invest heavily here:

  • The IFC has invested a little over USD 3 bn in Egypt over the past five years, Sylla said. Its current active investment portfolio amounts to around USD 1.4 bn and includes investments in private-sector renewables, healthcare, and financial firms.
  • The EBRD has a mandate to invest c. USD 1 bn here each year across various sectors, Massoud said. That investment comes largely in the form of lending to state-owned enterprises and large-scale infrastructure projects, though the organization has also invested in private outfits like local solar player Infinity as well as co-investing alongside PE firms in local companies.
  • Apis Partners “provides growth capital to innovators” across emerging markets and Europe, including here in Egypt, said Abou Moussa. The firm is sector-specific, focusing solely on funding those companies that “sit at the intersection between financial services and technology.”

SO, HOW CAN LOCAL FIRMS ATTRACT FDI?

Build a solid reputation: A strong reputation gives investors confidence, indicating that a company has built trust and credibility within its industry and with stakeholders, the panelists said.“At IFC we do extensive market mapping where we identify and collect intelligence about sectors and players before engaging with any companies,” Sylla said.

Values, not valuation: Companies should pay close attention to whether their values and objectives align with potential suitors, “not the valuation or who’s paying the highest price,” Abou Moussa said. Foreign partners and local firms need to see eye-to-eye “on value-creation expectations and level — basically that they’re pulling in the same direction.” With this foundation set, investors like Apis can then support a company on management, product development, and cross-border expansion to achieve those shared goals, he said. The IFC “can really engage at a very early stage and if we believe that the project makes sense, we can help to make it investible,” Sylla said.

ESG is here to stay and companies need to get on board, said Sylla. Adopting an ESG (environmental, social, and governance) framework that encourages corporate transparency and sets standards for how a business treats workers, the wider community, and the environment is now a minimum requirement for any business looking to export or attract FDI, he said. “Whatever you do, you have to take care of your staff and your customers.” Massoud agreed, pointing out that 40-50% of EBRD’s investments are “in one way or another green.”

And doing the right thing is by no means at odds with generating returns: As an ESGI investor — where the “I” stands for impact — Apis invests “to achieve the highest level of return to our investors responsibly with a strong impact agenda — and we mean that,” Abou Moussa said. Helping businesses improve on ESGI factors is “part of value creation .. it’s not to take away from the return,” he said. “A well-governed business that has a strong ESG and impact agenda would have a premium to it — it would actually be valued higher” when seeking FDI, he noted.

Local businesses don’t have to check every single box, the panelists said. Potential partners can help smaller business and family outfits improve on the advisory and business development fronts. The IFC has also seen strong demand for sessions on helping family businesses — which make up the majority of private Egyptian firms — get good governance structures in place, Sylla said. While the EBRD invests in later-stage businesses, private equity firms are well placed to help younger businesses improve governance, Massoud noted. Abou Moussa agreed, saying that Apis can show a business the ropes on good corporate practice, from “how to run a board meeting and have independent directors” to “how to have proper governance in terms of audit committees.”

We could not have made the Enterprise Exports and FDI Forum without the support of…

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3

Economy

EBRD downgrades Egypt growth forecast

The European Bank for Reconstruction and Development (EBRD) has cut its Egypt growth forecast for the current fiscal year as the economy continues to face headwinds due to a protracted currency crisis and heightened inflation. The multilateral lender now sees the economy growing at a 4.0% clip this year, down 0.7 percentage points from its last forecast three months ago, it said in its latest Regional Economic Prospects report (pdf).

This is lower than government forecasts: Projections in the government’s new budget see economic growth slowing to 4.2% in the current fiscal year from 6.6% in FY 2021-2022. GDP will fall again to 4.1% in FY 2023-2024.

The year so far: Economic growth has slowed to4.2% during the first half of FY 2022-2023, down 9% from the same period last year. The EGP devaluation against the greenback, soaring inflation, and back-to-back rate hikes have all weighed on economic growth this year, the EBRD said.

2024 forecast trimmed: The EBRD now sees the economy growing at a 4.8% clip in FY 2023-2024, down from its forecast for 5.0% growth in February.

Pros: Rising gas exports, the country’s increasing clout as a regional energy hub, and expected structural reforms to take place under the IMF loan program are all pluses for the Egyptian economy, according to the EBRD.

Cons: “Headwinds could arise from further inflationary pressures, tighter monetary conditions, challenges in obtaining external financing, and any slowdown in the implementation of structural reforms, including delays in the sale of state assets,” the bank wrote.

Debt problems: Egypt is expected to spend 60% of its revenues on servicing its debts this year, and 70% in 2024, the bank said. The draft budget sees debt servicing costs rising to EGP 1.12 tn in FY 2023-2024, 52% of projected revenues.

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4

Investment Watch

Egypt is the region’s FDI magnet thanks to green hydrogen

Egypt was the largest recipient of FDI in the MEA last year and the second largest recipient globally, according to fDi Insights’ 2023 report (pdf) on global greenfield investment trends. Egypt drew around USD 107 bn of FDI in 2022, which went towards 148 projects — more than double the number of projects that received foreign investment in 2021.

Thank green hydrogen: The increase in FDI projects was “fuelled by several mega projects being announced in renewable hydrogen,” the report said, pointing at the 19 green hydrogen mega projects, most of which are expected to be established in the SCZone. These projects accounted for 97% of all of Egypt’s total inbound FDI, and made Egypt the “world’s top destination for mega projects in terms of capital investment in 2022.” The new investment meant that Egypt accounted for 41% of FDI in the Middle East and Africa.

Is it FDI if it’s all talk? No final investment decisions have been made by the raft of companies that signed MoUs and framework agreements last year to establish green hydrogen plants.

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5

Investment Watch

EIB could invest EUR 50 mn a year in Egypt-focused VC, PE firms

More EIB money for VC, PE outfits: The European Investment Bank (EIB) will invest EUR 50 mn every year into Egypt-focused private equity and venture capital firms, the lender’s Vice President Gelsomina Vigliotti told Ahram Online.

Sawari Ventures could be one of the recipients: EIB is doing due diligence on a possible investment in Sawari Ventures’ next fund, Vigliotti said.Local media reported earlier this month that the VC is in talks with investors to launch a USD 200 mn tech fund. The EIB was one of the biggest investors in Sawari’s first fund that deployed USD 70 mn into 20 Egyptian companies, including fintech startup Money Fellows, which attended a meeting alongside Sawari with Vigliotti last week.

The EIB is no stranger to PE + VC in Egypt:Ezdehar, Silicon Badia, and Lorax CapitalPartners are among the firms that have received backing from the multilateral lender. It recently signed off on a EUR 15 mn contribution to Mediterrania Capital Partners’ new fund, which will invest in mid-cap companies in Egypt, Morocco and Tunisia.

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6

Moves

Jinu Johnson appointed CEO of EFG Hermes’ Tanmeyah

EFG Hermes Holding’s microfinance arm Tanmeyahhas appointed Jinu Johnson (LinkedIn) as its CEO,succeeding Hossam Al Naggar, EFG Hermes said in a press release yesterday. Johnson has more than 20 years of banking experience, most recently serving as acting head of retail banking in Egypt at Mashreq Bank.

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7

LAST NIGHT’S TALK SHOWS

National Dialogue, Supreme Investment Council lead the agenda on Egypt’s talk shows

It was a mixed bag on the airwaves last night, led by coverage of the second day of the National Dialogue, the government’s latest efforts to boost investments, and Yahduth Fi Masr’s exclusive sit-down with FM Sameh Shoukry.

Day two of the National Dialogue focused on the economy, with two sessions discussing social protection programs and the other two the tourism sector and efforts to boost tourism investment. “We are aiming to bring in 30 mn tourists by 2028 but we are lacking performance indicators and standards. We don’t have anything to indicate we are on the right track or to tell us what we are missing,” Senator Mahmoud Al Kot told Al Hayah Al Youm (watch, runtime: 20:20). Masa’a DMC (watch, runtime: 4:03) and Ala Mas’ouleety (watch, runtime: 6:25) also had coverage.

The Supreme Investment Council’s first meeting got some airtime: The council approved22 measures aimed at attracting more foreign investment at its first meeting yesterday. Ala Mas’ouleety (watch, runtime: 29:33) and Masa’a DMC (watch, runtime: 7:15) had the news.We’re expecting to learn more about the decisions from Prime Minister Moustafa Madbouly who will give a press conference today.

REMEMBER- The council was established to replace the investment council that was established in 2016 as part of the state’s efforts to boost investment and stimulate economic growth. The council is chaired by the president and includes 22 ministers and state officials, including the prime minister and the central bank governor.

A one-on-one with FM Shoukry: Foreign Minister Sameh Shoukry joined Yahduth Fi Masr for an exclusive focusing on Syria’s return of the Arab League. Egypt was one of the early movers to accept Syria, Shoukry said (watch, runtime: 3:23). “Over the past few years there was a lull in dealing with the Syrian crisis and it had a negative impact on the Syrian nation,” he said, adding that the Egyptian diplomatic mission will be back in Syria but the timing depends on negotiations and communication between the two sides. “Joint Arab action needs to take advantage of its capabilities to have an impact not just Arab issues but also issues beyond the Arab region and global issues,” Shoukry said (watch, runtime: 2:05), highlighting the importance of Arab countries having a joint vision (watch, runtime: 3:51).

Shoukry downplays Iran normalization as “unfounded speculation”: “Our relationship with Iran continues as is, we are studying the development between Iran and Gulf countries ….and when there is an interest in changing our approach, we certainly will look into it,” Shoukry said (watch, runtime: 23:52). His comments come following a media report that claimed Egyptian and Iranian officials have been in normalization talks since March, and optimistic statements from several Iranian officials about warming ties with Cairo.

El Hadidi ditched the politics for the night: Kelma Akhira’s Lamees El Hadidi spent the night talking to actor Khaled El Nabawi about his portrayal of Imam Mohamed Ibn Idriss Al Shafei’ilast Ramadan (watch, runtime: 4:27).

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8

EGYPT IN THE NEWS

FX crisis + Telecom Egypt stake sale in focus in the foreign press

The economy is leading the conversation on Egypt in the foreign press this morning: The Financial Times is out with a piece on how uncertainty over the USD-EGP exchange rate has put a brake on private investment, while an article in Al Monitor questions how much foreign-currency was brought into the country by the sale of a 9.5% stake in Telecom Egypt last week.

AND- The New York Times reports that archaeologists now think they know why ancient Egyptians collected severed hands as wartime trophies while the Washington Post is running an op-ed by formerly imprisoned writer Abdelrahman El Gendy calling for the release of his friend Ayman Moussa, who remains in jail.

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9

Also on our Radar

Qalaa Holding’s Taqa Arabia to establish JV with Saudi gas distributor. PLUS: Network International, Moussy Malt

ENERGY-

The Saudi Natural Gas Distribution Company will establish a company in Saudi Arabia with Qalaa Holdings’ Taqa Arabia, it said in a disclosure to the Saudi stock exchange. The disclosure did not reveal any details. The two sides signed an MoU last year to explore ways to develop and operate gas distribution services in the country.

FINTECH-

Dubai-based fintech Network International has launched a digital payments service in Egypt, it said in a press releaseon Monday. The Networkpay service offers point of sale (POS) and other online payments channels to businesses, as well as payment plans with banks and tie-ins with fintechs offering loyalty programs, including EFG Hermes’ valU and Zeal, the statement reads.

MANUFACTURING-

Moussy: Made in Egypt. F&B player Ayman Shahin Group, in partnership with the Danish brewer Carlsberg, has inaugurated the country’s first Moussy Malt beverage factory, with investments of USD 20 mn, it said in a statement (pdf) yesterday.

DEBT-

Sukuk issuance up Amer Group’s sleeve? Amer Group is reportedly studying an EGP 1.5 - 2 bn sukuk issuance, Al Borsa reported yesterday, citing unnamed sources. The firm plans to take the sharia-compliant securities to market within two months.

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10

PLANET FINANCE

Huge investor demand as Adnoc kicks off IPO of its logistics arm

Adnoc’s logistics unit covers IPO bookbuilding within minutes: The order book for the listing of Adnoc’s maritime logistics subsidiary, Adnoc L&S, was oversubscribed within minutes of opening yesterday, Bloomberg reports, citing a company message to investors. Adnoc L&S will offer a 15% stake (1.1 bn shares) for AED 1.99 - 2.01 apiece in an IPO that could raise as much as USD 607 mn and value the company as high as USD 4.05 bn, it said in a statement (pdf) yesterday.

Cornerstone investors: Al Seer Marine Supplies and Equipment, National Marine Dredging Company, ADQ’s Alpha Oryx, and Abu Dhabi Pension Fund have together committed some USD 180 mn to the IPO, the company said.

What’s next: Retail subscription closes next Tuesday, 23 May, institutional book building wraps a day later, and the final offer price will be disclosed on Thursday, 25 May. Shares are expected to start trading in Abu Dhabi on 1 June.

Aramco’s plans for a secondary offering pick up steam: Saudi oil and gas giant Aramco is working with several unnamed advisers to list more of its shares on the Saudi stock exchange in what would be one of the biggest offerings globally in years, Bloomberg reports, citing sources it says are in the know. Aramco could make a final decision within weeks on whether to proceed with the plan. An offering of just 1% of the company would raise more than USD 20 bn, the business newswire notes, adding that Aramco’s recent move to up its base dividend could help draw fresh investors.

Also worth knowing this morning:

  • Qatar is spending big to up natgas production: QatarEnergy has handed a USD 10 bn contract to Technip Energies and Consolidated Contractors Company to build two LNG trains that will up the liquefaction capacity of the North Field South project by 16 mn tons a year. (Qatar Energy statement)
  • Saudi closes sukuk sale:Saudi Arabia has raised USD 6 bn in a sovereign sukuk sale with maturities of 6-10 years, as it looks to plug its budget deficit triggered by a drop in oil prices. The issuance saw more than USD 17 bn worth of bids. (Bloomberg)
  • Russian oil exports hit post-invasion high: Russian oil exports rose to 8.3 mn bpd in April, generating revenues of USD 15 bn, according to industry data. (International Energy Agency)
  • Vodafone isn’t in good shape: Vodafone plans to cut 11k jobs — around a tenth of its global workforce — over the next three years amid poor results in Germany, its largest market, and other European countries. The company’s share price fell 7.4% in London on the news. (Reuters)
  • Euro area trade bounces back: The eurozone’s trade balance turned positive in March for the first time in 17 months as falling energy prices and a mild winter brought down its import bill. (Financial Times)

EGX30

17,034

-0.6% (YTD: +16.7%)

USD (CBE)

Buy 30.84

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,206

-0.2% (YTD: +6.9%)

ADX

9,476

+0.1% (YTD: -7.2%)

DFM

3,509

-0.5% (YTD: +5.2%)

S&P 500

4,110

-0.6% (YTD: +7.0%)

FTSE 100

7,751

-0.3% (YTD: +4.0%)

Euro Stoxx 50

4,316

0.0% (YTD: +13.8%)

Brent crude

USD 74.63

-0.8%

Natural gas (Nymex)

USD 2.36

-0.7%

Gold

USD 1,992.80

-1.5%

BTC

USD 26,961

-1.4% (YTD: +63.1%)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 2.04 bn. Foreign investors were net sellers. The index is up 16.7% YTD.

In the green: Ibnsina Pharma (+10.9%), Rameda (+2.2%) and Elsewedy Electric (+1.0%).

In the red: Oriental Weavers (-4.8%), Mopco (-4.5%) and Heliopolis Housing (-3.9%).

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11

Diplomacy

Egypt joins African nations to push for Ukraine peace

Egypt backs African mission for peace in Ukraine: Egypt along with South Africa and four other African nations will meet with the presidents of Russia and Ukraine in an attempt to bring the conflict to an end, South African President Cyril Ramaphosa said yesterday. Vladimir Putin and Volodymyr Zelenskiy have both agreed to meet the heads of state from the six countries — which also includes DR Congo, Senegal, Uganda and Zambia — in Moscow and Kyiv, he said. No information has been publicly disclosed about the African plan. The Egyptian government is yet to comment publicly on the initiative. The announcement comes a day after Ramaphosa and President Abdel Fattah El Sisi held a phone call.

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12

AROUND THE WORLD

Violence in Khartoum intensifies

Violence continues in Sudan: Khartoum witnessed an intensification of airstrikes and artillery fire yesterday as the Rapid Support Forces (RSF) and Sudanese army continued to fight for control of the nation’s capital, despite ongoing peace talks in Saudi Arabia, Reutersreported.

Updates have been scarce: There have been no updates on the ongoing Saudi- and US-mediated peace talks being held in Jeddah. The RSF and the army haven’t changed their public messaging, with the RSF calling for a civilian government and the army for the defeat of the RSF.

The World Health Organization has so far delivered 30 tons of medical supplies and enough trauma supplies to treat 2.4k people, while the UN’s World Food Program has distributed food supplies to more than 20k refugees, according to UN data.

Egypt sends aid: Egypt has sent two military planes carrying medical aid to Sudan, the army said yesterday.

Also worth knowing this morning:

  • Lebanon’s central bank governor is on the French government’s ‘wanted’ list:French authorities have issued an arrest warrant for Lebanese central bank governor Riad Salameh after he failed to show up for questioning about money laundering allegations. (Bloomberg)
  • Rival Libyan administration just replaced Dbeibah’s challenger: Libya’s parliament has ousted its prime minister, Fathi Bashagha, after he failed to seize power from Abdul Hamid Dbeibah, who has remained the country’s president after canceling national elections in 2021. Members of the eastern-based parliament replaced him with his finance minister, Osama Hamad. (Reuters)
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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
13

HARDHAT

A look at Egypt’s infrastructure spending priorities for FY 2023-24

What are the state’s infrastructure investment priorities for FY 2023-24? Last week, Planning Minister Hala El Said and Finance Minister Mohamed Maait presented the government’s spending plans for FY 2023-24. The government is proposing to invest a total of EGP 1.05 tn over the coming fiscal year, including EGP 587 bn of spending outlined in the FY 2023-2024 budget.

The government is once again prioritizing spending going towards completing ongoing national projects, which are currently 70% complete, according to the sustainable development plan (pdf) for the upcoming fiscal year, which El Said presented to the House of Representatives last week. The projects are expected to be completed by the end of the upcoming fiscal year. The plan notes that the government will not start new national projects unless technical and financial feasibility studies clearly indicate a social or economic return on investment.

For the third consecutive year, transport is the single largest recipient of investments: Like the current fiscal year, transport gets the biggest portion of the investment budget, with EGP 321 bn earmarked for projects in the sector, up about 4.6% y-o-y. The allocations for the next fiscal year will cover upgrading several roads between governorates, such as the Cairo-Ismailia Agricultural Road, the 6th of October-Wahat Road, and the Matrouh-Siwa Road, and resuming construction on 11 other projects, including upgrading the Cairo-Alexandria Agricultural road, and the Nubariya Axis. Railways are getting EGP 4.2 bn to build and develop 164 railroads, and 166 train stations. Transport allocations in FY 2023-24 also cover the 6th of October-new capital monorail, resuming construction on the third and fourth phases of Cairo Metro Line 3 and the first phase of Cairo Metro Line 4, as well as overhauling Alexandria’s Abu Qir, and rehabilitating Alexnaria’s tram.

Construction, water, and sewage come in second, with some EGP 237 bn of spending earmarked for these sectors, EGP 119 bn of which will go towards finishing 29 sewage projects to increase the network’s capacity and coverage across the country. There will also be an additional 228 projects to expand sewage networks in governorates. Meanwhile, some EGP 119 bn are earmarked for 25 new water projects focused on expanding existing water projects’ production capacity. This marks a 35.5% increase from the current fiscal year — reflecting increasing prioritization of securing our potable water supply, particularly amid the threat posed by the Grand Ethiopian Renaissance Dam, which officially started generating electricity last year. Social housing projects will include building 130k new homes, resuming construction on 116k units, and finishing about 60k units.

Education, healthcare, and other social services are also getting a big chunk in the upcoming fiscal year, with some EGP 691.5 bn earmarked for education, higher education, and scientific research. (Check out our Blackboard story breaking down education spending for the upcoming fiscal year.) The upcoming fiscal year’s healthcare investment budget is earmarked for a number of projects, including the universal healthcare scheme, which entails building 68 hospitals and 55 health units. The plan also includes projects within the Urban Community Development program, such as upgrading 15 hospitals and 105 health units and purchasing 255 ambulances.

Electricity + renewables is another priority sector: Some EGP 81.4 bn is going to the electricity and renewable energy sector next year, ُEGP 69.4 bn from public investments, with a portion allocated for expanding the coverage of our national electricity grid, and another going towards ensuring electricity provision for construction and developments areas, like East Owainat, North Sinai, and land reclamation projects in Toshka and the New Delta. Get the full breakdown of the government’s plan for the green economy in the upcoming fiscal year in our latest Going Green story.

Also covered in the government’s infrastructure development plans: Irrigation is getting around EGP 12.4 bn of investments to rehabilitate and line canals within the Hayah Karima initiative.

Your top infrastructure stories for the week:

  • Qatar eying the BRT: An unnamed Qatari company wants to manage and operate the Cairo Ring Road bus rapid transit (BRT) system.
  • North Coast infrastructure projects put on hold amid FX rationing: An ongoing shortage of hard currency has led the government to postpone a tender for an EGP 1 bn electricity control center in Alexandria, as well as plans to expand several housing developments in New Alamein City.
  • New container terminal at Damietta port: The Damietta Port Authority is looking tocooperate with private sector players to establish a new 5k sqm container terminal for dry bulk cargo.
  • The local stretch of the 2Africa subsea cable is complete: Telecom Egypt has completed the second landing of the 2Africa subsea cable in Port Said.
  • Loan for high-speed rail approved: MPs approved a loan agreement from a consortium of unnamed international banks to fund the 660-km first phase of the planned high-speed rail network.
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CALENDAR

MAY

16-18 May (Tuesday-Thursday): Egypt Cybersecurity & Defense Intelligence Systems expo, Egypt International Exhibition Center.

17-31 May (Wednesday - Wednesday): Second round of applications for sixth phase of export subsidy program.

18 May (Thursday): National Dialogue session.

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.

21 May (Sunday): Senate to reconvene.

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

24 May (Wednesday): EFG Hermes will host its extraordinary general meeting.

28 May (Sunday): House to reconvene.

29 May (Monday): IEF-IGU Ministerial Gas Forum, Cairo.

30 May (Tuesday): Listed companies have until this date to report and publish their 1Q results.

JUNE

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

June: Egyptian-Saudi business forum.

3-4 June (Saturday-Sunday): OPEC+ meeting, Vienna.

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.

19-20 June (Monday-Tuesday): The forum for insolvency reforms and corporate restructuring in the Middle East and North Africa.

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.

5 - 6 July (Monday - Tuesday): Gov’t to pay out subsidies to first wave of applicants under its sixth export subsidy program.

18 July (Tuesday): Islamic New Year.

19 - 20 July (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

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.

2 - 3 August (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

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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