Summer brings a second private-sector minimum wage hike

Wednesday, 21 Jun 2023

Summer brings a second private-sector minimum wage hike

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Today at a glance

Economy

Private-sector minimum wage to rise by 11% from July.

IPO

Taqa Arabia won’t be trading on the EGX until after Eid.

NBFS

GB Corp launches SME lender Kredit.

Privatization

Meet the Madbouly cabinet’s special privatization unit.

Investment Watch

Tons of Indian investor interest as the SCZone visits New Delhi.

LEGISLATION WATCH

MPs give first nod to new Intellectual Property Authority.

Also on our Radar

Real estate giant SODIC to more than double construction capex this year.

PLANET FINANCE

EM currencies may have put their rockiest days behind them + Gulf firms on a shopping spree.

HARDHAT

The real estate sector wants more incentives.

What We're Tracking Today

Public sector is getting seven days off for Eid + IMF’s Georgieva speaks on our reform agenda

Good morning, wonderful people. Welcome to almost-THURSDAY — and to summer. The summer solstice will occur today at 5:59pm CLT, according to the National Institute for Astronomical and Geophysical Research, which would also like you to know that this year, summer will last 93 days, 13 hours, and 52 minutes. Make the most of them, folks — starting with a nice long Eid break.

REJOICE- The public sector will have a seven-day break starting next week in observance of Eid Al Adha and the anniversary of the 30 June revolution, cabinetsaid earlier today. The holiday will run from Tuesday, 27 June until Monday, 3 July. The Manpower Ministry, Central Bank of Egypt, and EGX are yet to confirm the dates for the private sector and the banking sector.

THE BIG STORY here at home this morning: The private-sector minimum wage is rising by 11% to EGP 3k from July, marking its second increase this year amid persistently high inflation. We have all the details in the news well, below.

Also making headlines this morning: The IMF’s Georgieva wants us to strengthen our foreign reserves. “Egypt needs to “think of ways in which [it] can make [its] reserve position stronger,” International Monetary Fund (IMF) Managing Director Kristalina Georgieva told Asharq Business (watch, runtime: 2:46) in an interview yesterday. “How exactly Egypt goes about it . . . is not only an economic question; it’s also a question of political economy,” she said, adding that it “is important that actions are taken to [prevent] this leakage of foreign reserves. Otherwise, it’s like putting water in a bucket that has holes.”

…And (no surprises here) eliminate the parallel exchange rate: “When you have multiple exchange rates, you actually create privileged positions for some and not for others. We also know that when there is support for the currency but not enough foreign exchange that drains reserves and makes the situation of the country more difficult,” Georgieva said. She also reiterated the IMF’s view that the state should up its efforts to reduce its economic foothold, making way for the private sector.

Not all negative: Georgieva told Asharq yesterday that the country “had done many things right” in its economic reform agenda and said she was “confident” there would be progress in the IMF’s talks with the government, adding that she has “high respect” for President Abdel Fattah El Sisi. The Fund has postponed the first review of our USD 3 bn loan program, which was due in mid-March, due to a lack of progress in the country’s commitments to float the currency and raise bns of USD via sales of state-owned assets.

The Enterprise Finance Forum is our flagship gathering — the one so many of you have been waiting for. The two-day event takes place this September and will be the latest in our must-attend series of invitation-only, C-suite-level gatherings. Stay tuned for more information on the location.

TAP OR CLICK HERE if you want to express interest in attending. We’ll be sending out the first batch of invitations just after the 30 June holiday.

Do you want to become a commercial partner? Please click here.

STAY TUNED for more detail about our exciting agenda in the weeks to come.

HAPPENING TODAY-

The Egypt Infrastructure and Water Expo and the Big 5 Construct conclude today at the Egypt International Exhibition Center. The conferences bring together contractors, financial institutions, policymakers and consultants to discuss potential projects in Egypt’s infrastructure and construction sectors. The three-day events close tomorrow.

IN THE HOUSE-

The House is today set to discuss and vote on four bills allowing the Egyptian General Petroleum Corporation and Trident Petroleum to explore for oil in the Gulf of Suez; and two presidential decrees on Egypt joining an int’l convention on nuclear energy safety and establishing the Egypt-based HQ of the African Space Agency.

Also in the House committees:

The Economic Affairs Committee will review the role of consumer cooperatives in mitigating the impact of inflation and high prices on vulnerable people.
The Industry Committee will discuss a draft unified industrial law that aims to unify industrial legislation and eliminate obstacles facing industrial investors.
The Energy and Environment Committee will look into questions on the rise in prices of engine oils and used by contracting companies.
The Agriculture Committee will review the role of agricultural cooperatives in boosting exports.
The Housing Committee will discuss and vote on loan agreements from the African Development Bank to rehabilitate Upper Egypt’s sewer networks.

HAPPENING THIS WEEK-

It’s interest rate week: The Central Bank of Egypt is expected to leave interest rates unchanged when it holds its policy meeting on Thursday. That’s according to our customary rate poll, where seven of nine analysts forecast a pause due to slowing global tightening and lower prospects of a near-term EGP deval.

CNBC + Reuters agree: Seven of the 10 people polled by CNBC Arabia forecast a hold, while all of 17 analysts surveyed by Reuters said the same.

Modi in town: Indian prime minister Narendra Modi will land in Egypt for a two-day visit on Saturday, 24 June, according to Indian media.

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

There’s no one BIG STORY ABROAD dominating the international headlines this morning:

The US press is focused on Hunter Biden: The son of US President Joe Biden has struck an agreement with US federal prosecutors that sees him plead guilty to misdemeanor tax and firearms charges, likely avoiding a prison sentence. (AP | WaPo | WSJ| NYT| Reuters)
Hopes are dwindling for a rescue of the submersible that went missing on a trip to view the remains of the Titanic. The combined search and rescue capabilities of several countries as well as private firms are scouring a 10k-mile area for signs of the submersible, which has five passengers aboard. (AP)

ENTERPRISE IS LOOKING FOR SMART, TALENTED PEOPLE of all backgrounds to help us build some very cool new things. Enterprise — the essential morning read on all the important news shaping business and the economy in Egypt and the region — is looking for writers, reporters and editors to help us build out new publications. Today, we run four daily Egypt and MENA-focused publications, five weekly industry verticals, and a weekend lifestyle edition designed to make our readers feel just a bit smarter.

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That said, we're looking for gifted story-tellers from all walks of life and across all professions, as long as they show a keen interest in learning to write about the stories, topics, businesses, and figures moving markets. Egyptian and foreign nationals alike are welcome to apply. So are job-switchers: If you’re an equities analyst tired of the rat race, we’re a great place to come work.

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*** 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: Real estate players are angling for more incentives and government support. We break down what they say is needed to keep the sector afloat.

Tags:

EGP foreign exchange foreign reserves IMF Kristalina Georgieva What We're Tracking Today

Kick off Eid and a sensational summer at Somabay: A weekend of tailored entertainment for families and friends includes music, performances, fitness activities, kids' activities and a daily dose of partying from 28 June to 2 July.

An exciting commercial night at Sobar Rooftop on 30 June will feature superstar belly dancer Johara and a DJ while exclusive deals for families and children await you at Playpark. Last but not least, we’re offering exclusive deals, events, and surprises to stayr guests. Enjoy Eid the Soma Way.

Economy

Egyptian private-sector minimum wage to rise 11% to EGP 3k in July

Private-sector minimum wage to rise again: The private-sector minimum wage will rise by 11% from July after the National Council for Wages (NCW) decided to raise the threshold for the second time this year to support workers amid soaring inflation. In a statement yesterday, the Planning Ministry said that private-sector firms will have to pay their employees at least EGP 3k a month from 1 July, up from EGP 2.7k.

This is the second time the council has hiked the minimum wage this year: A 12.5% increase came into effect in January, raising the minimum wage from EGP 2.4k a month. The latest increase means that private-sector employees on the minimum wage will have seen their monthly income rise 25% in the past six months.

BUT- This is still lower than the public-sector minimum: Some members of the council werehopingto raise the minimum wage to EGP 3.5k and match the new minimum for public-sector workers introduced in April.

Annual bonuses remain unchanged: New rules introduced in January oblige private-sector firms to pay out annual bonuses equal to at least 3% of the employee’s ins. (or a minimum of EGP 100) as of their 2023 financial years.

Cushioning the blow from the economic crisis: The minimum wage hike is the latest in aseries of measures announced by the government to soften the impact of the economic crisis. Three major currency devaluations have helped to push inflation to a near-record high of 32.7% in May, putting pressure on low-income households.

Industry bodies aren’t happy:Mohamed El Bahey, a member of the Federation of Egyptian Industries (FEI), told us that without sector-specific exemptions companies will be forced to lay off workers to shoulder the higher wage costs. “It’s expected that we see layoffs in sectors that depend heavily on untrained workers and those where workers earn lower salaries as a result of the new hike,” said El Bahey, who heads up the pharma manufacturing division at the FEI.

No problem for the industrial sector: The new hike will not present a challenge to businesses in the industrial sector owing to the fact that many of the workers in this sector are already paid above the new minimum wage, El Bahey added.

No exceptions: The new decision didn’t exempt any sectors from complying with the new minimum and all of the old exemptions have been scrapped, head of the NCW’s complaints committee Abdelhamid Belal told Enterprise yesterday. Manpower Minister Hassan Shehata will request exemptions for a list of nonprofit organizations that he will present to the NCW, Khaled El Fiky, a member of the council’s board, told Enterprise, without giving further details.

Background: The private-sector minimum wage is relatively new in Egypt. It wasintroducedat the beginning of FY 2021-2022 at EGP 2.4k a month. The raise earlier this year was met with push back from companies who complained that they couldn’t afford the higher wage bill.

Tags:

economy Hassan Shehata labor Manpower Ministry minimum wage regulation watch

IPO

Taqa Arabia postpones EGX debut

Energy distribution company Taqa Arabia has postponed the start of trading of its shareson the EGX until after Eid, Al Borsa reports, citing sources it says have knowledge of the matter.

What we know:Asharq Business reported earlier this month that the company’s shares would begin trading on the EGX by Monday, 19 June, just weeks after it received regulatory approval to go public. The exchange earlier this month gavethe Qalaa Holdings subsidiary the greenlight to list its 1.352 bn shares on the bourse. Rather than going the conventional route of holding an initial public offering, the company will sell shares directly on the bourse.

And what we don’t: Al Borsa’s sources did not disclose the reason for the delay. The company did not respond to our request for comment yesterday. It is also unclear how many shares the company plans to sell to the public or how much it hopes to raise.

About the company: Taqa Arabia is one of the country’s leading energy distribution and utility companies, with operations spanning gas transmission and distribution, power, renewable energy and water. The company has EGP 676.2 mn of capital split between 1.352 bn shares. Qalaa owns about 55% of the company, with the remaining shares reportedly split between at least 300 other shareholders.

Tags:

EGX IPO watch TAQA Arabia

NBFS

GB Corp launches SME lender Kredit

GB Corp is bidding to capture a slice of Egypt’s growing SME lending market with the launch of a new subsidiary, Kredit, it announced in a statement (pdf)yesterday. The lender has acquired a license from the Financial Regulatory Authority (FRA) and is now providing financial services to SMEs, which remain an underserved segment in the local market.

About the company: Kredit provides lending and mentoring services to local SMEs. It offers a range of specialized products and services including short, medium, and long-term financing. The firm will offer tailored financing schemes to priority areas including the manufacturing sector, women-led businesses, and green projects.

SMEs power the economy but continue to face problems accessing finance: SMEs account for more than 75% of Egyptian businesses and create the bulk of the jobs in the economy, but continue to face challenges accessing finance. “Many SMEs face challenges in obtaining credit from traditional sources due to their size, lack of collateral, or limited credit history. This creates a [chance] for alternative lenders to fill the financing gap and cater to the underserved SME segment,” GB Capital CEO Tamer El Emary told Enterprise.

This is the latest addition to a growing line-up of non-bank financial services offered by GB Capital:“Kredit represents the natural progression of our already established and fast-growing NBFI portfolio of offerings in leasing, consumer finance, micro financing, factoring, securitization, fleet-leasing, mortgage finance and life ins. to cater to a wider segment of clients,” El Emary said. “GB Capital intends to identify new opportunities to further expand its presence in the financing space.”

Not just a car company: The company (FKA GB Auto) recently rebranded itself as GB Corp, reflecting its growing footprint in other sectors such as finance (GB Capital) and logistics (GB Logistics).

Tags:

financial services GB Capital GB Corp Kredit non-banking financial services SMEs

Privatization

Egyptian gov’t to set up body to fast-track privatization process

The Madbouly cabinet will form a special unit to fast-track the government’s privatizationprogram, a Finance Ministry official told Enterprise yesterday. The unit — which will hold its first meeting soon — is designed to expedite the decision-making process for the cabinet by supervising the program and working directly with the International Finance Corporation (IFC), our source explains. The news was first picked up by Daily News Egypt.

Remember: The government earlier this week appointed the IFC to act as an advisor for the privatization program.

More: The unit will supervise the program, follow-up on acquisition offers, collaborate with the IFC and receive its recommendations, see to investor requests, track progress, and prepare periodical reports for the cabinet, our source tells us. The unit will also set time frames for the stake sales.

Who’s in? Members of the unit include Sovereign Fund of Egypt head Ayman Soliman, Deputy Finance Minister Ahmed Kouchouk, head of cabinet’s Information and Decision Support Center Osama El Gohary, and Mohamed Abdelaziz, an assistant to the chairman of the Financial Regulatory Authority, according to Daily News Egypt.

Background: The government aims to sell stakes inat least 32 state-owned companies by March 2024 via public offerings on the EGX, sales to strategic investors, or a mix of both.

Tags:

International Finance Corporation privatization watch regulation watch state privatization program

Investment Watch

Indian industrial, energy firms express interest in Egypt’s SCZone during roadshow

Indian energy, industrial, and construction companies expressed interest in projects in the Suez Canal Economic Zone (SCZone) during an ongoing roadshow led by SCZone boss Walid Gamal El Din to the Indian capital, he said in a statement yesterday.

#1- Orascom + Flex PET agree to expand storage area in SCZone: Orascom Industrial Parks signed a contract with plastic manufacturer Flex PET for its storage area expansion in its industrial area near Sokhna, the zone said. The expansion is worth USD 120 mn. The SCZone board approved the project earlier this month. In April the company began construction on its USD 110 mn plastics plant, which will produce 30k tons of polyethylene a month and is expected to be fully operational by mid-2025.

#2- Talks with ACME over proposed green hydrogen plant: Clean energy company ACME could soon sign a framework agreement with Egyptian authorities for a proposed USD 12 bn green hydrogen plant in the SCZone. The plant would have an annual production capacity of 2.2 mn tons when fully operational, and would produce 100k tons a year in a pilot phase, according to the statement. An initial MoU for the plant was signed last August.

#3- Jindal Steel could turn to SCZone to manufacture green steel: Steel company Jindal Steel and Power wants to establish an environmentally-friendly iron and steel plant with a production capacity of 5 mn tons a year. The plant would be built over two phases and be powered using renewable energy sources such as green hydrogen, the SCZone said. It aims to make the zone a hub and export its products to foreign markets. The statement didn’t include a projected investment cost.

#4- Platinum Industries eyes PVC plant: Plastics producer manufacturer Platinum Industrieswants to establish a USD 10 mn PVC and CPVC factory at the zone, according to the statement. The plant would be built over two phases, and would export 70% of its output overseas.

#5- Sterlite Power wants to help keep the lights on at Sokhna: Indian power transmission developer Sterlite Powerwants to establish electricity transmission and distribution networks within the Sokhna zone.

#6- Shapoorji eyes SCZone for multiple projects: Construction giant Shapoorji Pallonji is interested in infrastructure projects at the SCZone, including water desalination plants.

Remember: This is the second SCZone roadshow in as many months. A number of Chinese companies expressed interest in investing hundreds of mns of USD in new projects in the zone during a roadshow last month. The SCZone’s roadshow has also been to Japan, the Netherlands, and Vietnam so far this year.

Tags:

ACME Egypt-India relations Flex PET industry investment watch Jindal Steel Manufacturing Orascom Industrial Parks Platinum Steel Sterlite Power Suez Canal Economic Zone

LEGISLATION WATCH

Egyptian lawmakers preliminarily approve setting up new intellectual property agency

The Egyptian Intellectual Property Authority is coming: MPs yesterday gave their preliminary approval to a draft bill establishing the Egyptian Intellectual Property Authority, a public body to strengthen and protect intellectual property rights. “The bill will unify all institutions responsible for protecting intellectual property rights into one agency in line with the constitution and international standards,” read a report from the House’s Education Committee. The draft legislation got cabinet’s approval in November.

Part of a bigger plan: The authority will act as a key part of the Madbouly government’s five-year intellectual property strategy, unveiled last year as part of broader efforts to improve business conditions, strengthen the private sector, and boost innovation. The authority would be tasked with preparing and overseeing the implementation of the strategy, coordinating policy making, and raising awareness of IP rights.

What’s next?The bill will be up for a final vote in an upcoming session.

Tags:

House of Representatives intellectual property Legislation Watch

Moves

Walid Hassan Hamza appointed head of Egypt’s National Elections Authority

Walid Hassan Hamza was appointed head of the National Elections Authority, succeeding Ahmed Abdel Azim Matar, according to a decision published in the Official Gazette. Hamza is the vice president of the Court of Cassation. The authority also welcomed Mourad Fakry Habil, vice president of the State Council (Maglis El Dawla), as a member of its board.

Tags:

moves National Elections Authority

LAST NIGHT’S TALK SHOWS

Private-sector minimum wage hike dominates Egyptian talkshows. PLUS: IMF’ Georgieva on the EGP

The nation’s talking heads last night focused on fresh hikes to the private-sector minimum wage, with some also giving airtime to the latest headlines on our economic reform agenda.

Some 21 mn employees will benefit from the National Council for Wages’ (NCW) decision to hike the private-sector minimum wage by 11% to EGP 3k per month, NCW Coordinator Hanan Nazeer told Sherif Amer on Hadith fi Masr (watch, runtime: 6:57). We have all the details on the wage hike in the news well, above.

Another wage hike coming? The NCW will consider raising the minimum wage again before the end of the year, Alaa El Sakty, a member of the NCW and head of the SME Investors Association, told Amer (watch, runtime: 3:43). The increase also got coverage from Mostafa Shardy on Al Hayah Al Youm (watch, runtime: 5:10) and Ramy Radwan on Masa’a DMC (watch, runtime: 5:21).

Ala Mas’ouleety’s Ahmed Moussa seemed less than pleased with IMF chief Kristalina Georgieva after she urged the country to transition to a fully flexible exchange rate regime in an interview with Asharq Business. “Are we selling out Egyptians for USD 3 bn?” Moussa asked (watch, runtime: 5:12 | 3:27). We have more on Georgieva’s comments in What We’re Tracking Today, above.

As is customary, state pensions will be disbursed before Eid: Some 11 mn beneficiaries of state pensions will get around EGP 29 bn in total disbursed to them ahead of Eid, the head of the National Social Ins. Authority told Ahmed Moussa last night (watch, runtime: 10:44).

Tags:

EGP foreign reserves IMF Kristalina Georgieva labor LAST NIGHT’S TALK SHOWS minimum wage state privatization program

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EGYPT IN THE NEWS

Nine Egyptian men deny smuggling charges over Greek migrant shipwreck

Suspected smugglers in migrant shipwreck deny wrongdoing: Nine Egyptian men have denied charges including manslaughter and people smuggling over the shipwreck that killed hundreds of migrants off the Greek coast last week, Reuters reports. The nine men denied any wrongdoing in the incident before a Greek court on Tuesday to face charges regarding their alleged involvement in the tragic migrant shipwreck. They were arrested after being identified by survivors. The Associated Press and the Financial Times also had the story.

Also making headlines: The New York Times looks at the life of Magda Saleh, the Cairo ballet prima ballerina who died last week aged 79. Reuters has video (watch, runtime: 00: 52) of the paramotor pilots who took to the skies over the Giza Pyramids earlier this week.

Also on our Radar

SODIC to double construction capex to EGP 6 bn this year. PLUS: Acasia Angels invests in med tech Precision + EGX futures exchange in 3Q 2023 + Damietta’s new freezone + Hela expands in Egypt + e-Finance x MSMEDA + Alexandria Port tender

INVESTMENT-

SODIC to double construction capex this year: Leading real estate developer SODIC plans to spend EGP 6 bn on construction during 2023, Al Shorouk reports, citing an interview with the company’s general manager, Ayman Amer. This is almost double the EGP 3.12 bn spent in 2022. Construction capex in the first quarter of the year increased to EGP 861 mn from EGP 634 mn in the same period in 2022, according to the company’s latest earnings release (pdf).

It’s eyeing fresh land acquisitions: The company intends to purchase more than 300 acres of land on the North Coast and new plots in east and west Cairo, according to the newspaper. The expansion follows the company’s down payment on 180 acres of land south of its North Coast project Caesar last month.

And will study real estate developers up for privatization: “We are waiting for the government to announce real estate companies within the state privatization program, and will participate if the shareholders want,” the newspaper quoted Amer as saying. Four state-owned real estate companies were among the 32 names announced by the prime minister earlier this year: El Nasr Housing and Development, Maadi for Development and Construction, El Mostakbal For Urban Development and Salhia Investment and Development Co.

STARTUPS-

Acasia invests in UK-based, Egyptian-run med tech: VC outfit Acasia Angels participated in a USD 750k seed round for London-based medical device startup Precision Cardiovascular, Acasia said in a press release (pdf), without disclosing how much it invested. Precision is working towards developing a micro-sensor implant that can detect heart problems at an early stage. The company’s CEO is Egyptian venture fund partner Mohamed Abou Alam. Heart surgeon Magdi Yacoub sits on the board of the company, which is housed in the clinical research center that carries his name.

CAPITAL MARKETS-

Bourse to launch futures exchange, shariah compliant index by 3Q 2023: The EGX futures exchange could launch the third quarter of this year, Al Borsa and Asharq Businessquote EGX boss Ramy El Dokany as saying.

REMEMBER- The FRA, EGX, and Misr for Central Clearing and Depository (MCDR) are working to launch the futures exchange. The plan is for the exchange to initially allow traders to buy and sell index futures contracts, before launching stock futures and stock and index options at a later date. The shariah-compliant index, meanwhile, is set to replace the EGX50 index.

INDUSTRY-

Damietta inks MoU for new freezone: Damietta Governorate has signed an MoU with the Italian Finestra consortium to establish a freezone in Damietta, the cabinet said yesterday. The zone will consist of 220 industrial units dedicated to manufacturing, storage, and administrative offices covering an area of more than 183 acres. The project will be divided into four phases, each consisting of 50-60 fully-equipped and operational units, the consortium’s Managing Director Pasquale Russo said. The first phase is expected to launch next year, he added.

MANUFACTURING-

Sri Lankan clothing company to up production in Egypt following investment: Sri Lankan clothing company Hela has received a USD 5 mn loan, in part to expand the company’s production at its factory in Egypt. The ESG First Fund, a USD 250 mn investment fund jointly owned by Indian asset manager Aavishkaar Capital and German development bank KfW, will provide the financing, Aavishkaar said in a statement (pdf) Monday.

FYI- Hela more than quadrupled its revenues in Egypt to RS 2.6 bn in 1Q 2023, according to the company’s earnings presentation (pdf).

SMEs-

E-Finance on board to manage digital platform for SMEs: The Micro, Small and Medium Enterprises Development Agency (MSMEDA) has signed a contract with E-Finance’s e-commerce subsidiary e-Aswaaq to manage and operate its online platform for SMEs, the agency said in a statement Sunday. The platform will launch within three months, the statement said.

TOURISM-

Companies invited to bid to manage Alexandria Port commercial center: The Alexandria Port Authority is planning to tender a contract to manage and operate the commercial center at the port’s passenger terminal to local and international companies, Al Mal reported Sunday. Companies have until 16 July to bid for the 10-year contract, which starts in February 2024.

Tags:

Aavishkaar Capital Acasia Angels Acasia Group ALSO ON OUR RADAR capital markets e-finance EGX Finestra Hela industry investment watch Kfw logistics Manufacturing Precision Cardiovascular real estate SME Development Authority SMEs SODIC startups tourism

PLANET FINANCE

EM currency volatility on the decline. PLUS: Gulf state firms go shopping spree

Traders seeEM currency volatility tapering off in the three months ahead: Options traders have dialed down their expectations for the volatility of emerging market currencies to their lowest levels since the war in Ukraine broke out, Bloomberg reports. The JPMorgan Emerging Market Volatility Index, an estimate of foreign-exchange swings for the three months to come, dropped on Friday to 8.86% — its lowest since October 2021 and the first time it has closed below 9% since the war began.

That’s because global monetary tightening is expected to peak: The drop is underpinned by expectations that the USD will continue to decline this year as the US Federal Reserve hits pause on its interest rate hikes and developing nations follow suit. “The probability of larger-than-expected rate hikes . . . is dramatically lower. And this lower rates volatility is mapping into currency markets,” says Simon Harvey, head of FX analysis at Monex Europe.

MENA state firms on a buying spree: State-run Gulf entities have been linked to almost USD 20 bn worth of potential acquisitions in plastics, metals, and more in the past 24 hours alone, Bloomberg reports, as oil-rich nations embark on a global buying spree to help diversify their economies:

Abu Dhabi National Oil Company (Adnoc) is considering its biggest foreign acquisition, a bid for German chemicals maker Covestro that values the company at almost EUR 11 bn;
Saudi Arabia’s sovereign fund PIF could buy a c. USD 2.5 bn stake (10%) in Brazilian miner Vale’s base metals unit;
The Abu Dhabi government is investing USD 739 mn in Chinese EV maker Nio;
Abu Dhabi sovereign wealth fund ADQ was in talks that fell through to take Wall Street’s investment bank Lazard private.

EGX30	17,922	-0.4% (YTD: +22.8%)
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	11,431	+0.1% (YTD: +9.1%)
ADX	9,464	+0.1% (YTD: -7.3%)
DFM	3,774	-0.3% (YTD: +13.1%)
S&P 500	4,389	-0.5% (YTD: +14.3%)
FTSE 100	7,569	-0.3% (YTD: +1.6%)
Euro Stoxx 50	4,343	-0.4% (YTD: +14.5%)
Brent crude	USD 75.90	-0.3%
Natural gas (Nymex)	USD 2.49	-0.1%
Gold	USD 1,948.30	+0.0%
BTC	USD 28,170	+5.1% (YTD: +70.8%)

THE CLOSING BELL-

The EGX30 fell 0.4% at yesterday’s close on turnover of EGP 2.07 bn. Regional investors were net sellers. The index is up 22.8% YTD.

In the green: Credit Agricole (+5.1%), GB Corp (+4.6%) and Cleopatra Hospital (+3.4%).

In the red: Ezz Steel (-4.8%), Mopco (-4.0%) and Abu Dhabi Islamic Bank (-1.5%).

Tags:

ADNOC ADQ Covestro currencies emerging markets Financial Markets Lazarde M&A Watch Nio PIF Planet Finance Vale

AROUND THE WORLD

New Egypt-Sudan aid corridor opens. PLUS: Does Cyprus want to compete with Egypt on LNG exports to Europe?

Foreign Ministry, WFP open Egypt-Sudan aid corridor: The Egyptian Foreign Ministry and the UN World Food Programme (WFP) in Egypt have opened a humanitarian aid corridor connecting Aswan and Wadi Halfa in Sudan, according to a WFP statement. The WFP, UN agencies, development organizations, and humanitarian partners can use the passageway to transport food and medical assistance to Sudanese citizens affected by the ongoing fighting in the country. “This humanitarian corridor is the result of the great partnerships that the Egyptian government has with development partners. We are now able to take our aid where it is most needed," said WFP Representative and Egypt Country Director Praveen Agrawal.

Mooted Cyprus-Israel gas link could replace plan for EastMed pipeline: Israeli gas fields could be connected directly to liquefaction facilities in Cyprus via a new pipeline that top officials from the two countries will start discussing next month, Reuters reports citing Cypriot Energy Minister George Papanastasiou. The project would be shorter and faster to build than the mooted EastMed pipeline linking Israel, Cyprus, and Greece, which Papanastasiou said was “cost intensive” and faced “technical issues.”

Could Cyprus compete with us to supply Europe with LNG? The new pipeline plan would also “give Israel another export outlet in addition to Egypt” for its gas, Reuters notes. Cyprus could potentially liquefy that Israeli gas for re-export to the rest of the EU — a market Egypt has been looking to corner since Russia dropped out as an energy supplier to the bloc in the wake of the war in Ukraine. Still, with our two liquefaction plants to Cyprus’ zero, that doesn’t look to be an immediate danger.

Tags:

2023 Sudan conflict Around the World energy Foreign Ministry oil and gas UN World Food Programme

HARDHAT

The real estate sector wants more incentives

Real estate players are angling for more incentives + gov’t support: Despite the government rolling out a handful of incentives and support measures for the real estate sector earlier this year, industry players want to see yet more from the government to help them face economic headwinds. The measures were initially helpful, but aren’t enough to keep many companies — especially medium and small-sized players — afloat, several sources told Enterprise.

REFRESHER- What incentives has the government already offered? In February, Cabinetagreed to provide real estate developers with a 20% deadline extension on their projects, and said the government will consider projects finished when they are 85% — rather than 90% — complete. This will enable developers to complete the remaining 15% of construction at their own pace, without being fined for late delivery. Developers were also granted a reduction in the interest rate they pay on installments for state-owned land, bringing the rate to 1% above the central bank lending rate, down from a prior 2%. The New Urban Communities Authority (NUCA) also decided to widen these support measures earlier this month, providing developers with another 20% deadline extension on their projects — even if they’ve already been granted a 20% extension under the February measures, or previously paid to push back their deadlines. NUCA also further reduced the completion ratio requirement to 80%, from the previously-reduced 85%, and loosened various regulatory requirements, including on the maximum building density of projects and the split between buildings, utilities, and services.

But industry players say this isn’t really enough: The government offering these support measures is a testament to the importance of the real estate industry for the economy, “but these incentives are not enough to save everyone,” deputy head of the Federation of Egyptian Chambers of Commerce’s real estate division and chairman of El Bustani Group, Mohamed El Bustani, told Enterprise. Only large real estate developers will really reap the benefits of the incentives and be able to cut some losses, but medium and small-sized players — which actually account for the majority of the industry — are still at risk and need more support measures, El Bustani said.

What would help the small guys? Industry players want to see incentives that are catered to support small players, El Bustani said, suggesting measures for companies working on the administrative towers in the new administrative capital as one example. Developers are pushing for the right to raise the prices of their contracts or units on sale by 10% as long as construction isn’t complete and a unit hasn’t been delivered, El Bustani said. This would allow companies to recoup a small portion of their losses, he said.

There are more incentives in the pipeline: While the government has already signed off on a handful of measures, there are more currently under study, head of the Federation of Egyptian Industries’ real estate developers division Tarek Shoukry told Enterprise. These incentives include changing the ratio that administrative and commercial services account for within real estate projects, which would make the projects more flexible and lucrative. The proposal currently on the table would see the range change to 5-15% of the total project, instead of 8-12%, according to Shoukry. Also being discussed is a review of how industrial lands are priced, as well as potentially granting some leeway on construction rules as long as deadlines are met and companies are serious in their implementation.

We could also see a breakthrough with building material prices: The industry is waiting on a decision from the government to eliminate dumping duties on iron imports, which is currently being studied, said Daker Abdellah, a member of the Egyptian Federation of Construction and Building Contractors’ board. Iron accounts for around 25% of the cost of most real estate projects, Abdellah said. Lawmakers recently called for the introduction of price controls on building materials amid a recent surge in prices, and urged the government to scrap dumping duties on imported steel and cement.

And pushing forward on real estate “exports” could be a big helping hand: The government needs to move forward on new legislative amendments that would allow foreigners to acquire Egyptian citizenship if they purchase state-owned or privately owned assets, Real Estate Export Council Chairman Hisham Shoukry told us. President Abdel Fattah El Sisi ratified the amendments at the end of last month. Real estate developers are waiting on the government to begin implementing the new rules and expediting the necessary licenses and documents, Tarek Shoukry previously told us, saying that the new rules could unlock somewhere between USD 3-5 bn in inflows within the next year.

Your top infrastructure stories for the week:

MSC awarded dry port tender: A consortium led by Italy’s Mediterranean Shipping Company (MSC) will build and operate the 250-feddan Tenth of Ramadan dry port.
Adani eyes our projects: SCZone Chairman Walid Gamal El Din discussedpotential infrastructure projects with Adani Group CEO Sudipta Bhattacharya.
ADP silo tender: Abu Dhabi Ports (ADP) and its subsidiary Transcargo International (TCI) are planning to launch a tender for the construction of nine silos for storing cement and dry bulk cargo at a cost of some EGP 1 bn.

Tags:

Hardhat infrastructure real estate

CALENDAR

JUNE

June: Suez Canal Economic Zone India roadshow.

June: Egyptian-Saudi business forum.

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

18-21 (Sunday-Wednesday): Afreximbank annual meetings, Accra International Conference Center, Ghana.

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

19-21 June (Monday-Wednesday): Big 5 Construct, Egypt International Exhibition Center.

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

24 June (Saturday): Athar Climate Action Accelerator’s virtual demo day.

24-25 June (Saturday-Sunday): Indian Prime Minister Narandra Modi to visit Egypt.

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

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Application deadline for the Smart Green Projects initiative.

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

30 June (Friday): Deadline for paying the first installment of the annual property tax.

JULY

1 July (Saturday): Private-sector minimum wage to rise.

1 July (Saturday): 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.

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

18 July (Tuesday): Islamic New Year.

18-19 July (Tuesday-Wednesday): Egypt Mining Forum, Nile Ritz-Carlton, Cairo.

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.

September: IDH to open first branch in Saudi Arabia.

September: The Egypt-Germany trade and investment joint conference in Cairo.

September: JETRO’s second delegation arrives in Cairo.

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

10-12 September (Sunday-Tuesday): The International Agricultural Exhibition for Africa and the Middle East, Sahara.

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

15 September (Friday): Deadline for FX bureaus to comply with new capital requirements.

17-18 September (Sunday-Monday): Arab Security Conference and Exhibition, Nile Ritz Carlton.

17-19 September (Sunday-Tuesday): Sharm Rendezvous, Rixos Premium Seagate, Sharm ElSheikh.

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.

25-26 September (Monday-Tuesday): Egypt to host the Asian Infrastructure Investment Bank’s annual board meeting, Sharm El Sheikh.

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

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

28-29 September (Thursday-Friday) Medical Tourism Conference, Sharm ElSheikh.

OCTOBER

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

2-4 October (Monday-Wednesday): Sharm Rendezvous - Ins. Market, Rixos Premium Seagate, Sharm ElSheikh.

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

6 October (Friday): Armed Forces Day.

9-11 October (Monday-Wednesday): Arabs Savings and Financial Literacy Conference, Four Seasons Hotel.

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

Late October-14 November: 3Q2023 earnings season.

15-17 October (Sunday-Tuesday): Egypt Automotive Aftermarket Exhibition, Cairo International Convention Center.

26 October (Thursday): Daylight saving time ends.

29-31 October (Sunday-Tuesday): Egypt Energy, Egypt International Exhibition Center.

29 October - 2 November (Sunday- Thursday): Cairo Water Week.

30-31 October (Monday-Tuesday): Intelligent Cities Exhibition and Conference, Dusit Thani LakeView, Cairo.

30-31 October (Monday-Tuesday): Global Business School Network (GBSN), American University of Cairo.

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

NOVEMBER

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

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

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

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

DECEMBER

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

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

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

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.

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.

3Q 2023: E-Finance to launch in Saudi Arabia.

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

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

2024: Standard Chartered Bank to open a branch in Egypt.

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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