Egypt and the World Bank signed yesterday a USD 500 mn loan agreement aimed at supporting the state’s K-12 educational reform strategy. “The five-year project aims to expand access to quality kindergarten for around 500k children, train 500k teachers and education officials, while providing 1.5 mn students and teachers with digital learning resources. In addition, more than 2 mn students will benefit from the new student assessment and examinations system,” the WB said in a statement.

The skills business is looking for: “Fostering skills such as critical thinking, managerial skills and working collaboratively, will usher in a new economy, where learning, innovation, and technology are front and center,” said WB MENA Vice President Hafez Ghanem.

Background: The new system will be implemented as of the new academic year starting in September for kindergarten and students in the first years of primary and secondary education. It’s expected to cost a total USD 2 bn when all is said and done. Education Minister Tarek Shawky had said last week that President Abdel Fattah El Sisi had instructed government officials to open talks with the World Bank for a larger USD 1 bn funding package for the reform program. Read our Spotlight on the educational reform plan for a refresher.

The agreement was signed on the sidelines of the World Bank and IMF Spring Meetings in Washington, DC, which wrapped up on Friday and saw Nasr, Finance Minister Amr El Garhy, and CBE Governor Tarek Amermeet with various state officials and leading figures from the international business community

IMF boss Christine Lagarde showered Egypt with praiseat the gatherings,commending the economic reforms of the last two years, among them the float of the EGP, rebuilding the country’s FX reserves and expansion of the social safety net, which she said have already made an impact, as evident by the levels of increased investment in the country — both foreign and local. The reform program also received praise from World Bank President Jim Yong Kim and the IMF’s Middle East & Central Asia Department Director Jihad Azour.

Nasr and El Garhy also met with a number of US investors to discuss ongoing reforms in Egypt. El Garhy sat down with executives from Merrill Lynch, officials from the Council of Foreign Relations, as well as representatives of rating agencies Moody’s, S&P, and Fitch, according to a Finance Ministry release, with whom he discussed the state IPO program, as well as plans to increase revenues from tax collections and gradually reduce the budget deficit and Egypt’s sovereign debt as a percentage of GDP. Companies such as Mirasco expressed interest in entering the Egyptian market.

Egypt, EU to sign energy cooperation agreement this week: Egypt and the EU are expected to sign an MoU on "Strategic Cooperation in Energy" this week during EU Energy Commissioner Miguel Arias Cañete’s three-day visit to Cairo, which begins today. It’s unclear when exactly the signing will take place and what the agreement will entail. Oil Minister Tarek El Molla had said last week that the agreement is part of a larger plan to turn Egypt into an export hub for East Mediterranean gas, a topic that is expected to feature strongly in Cañete’s talks with Egyptian officials this week, according to a ministry statement picked up by Al Masry Al Youm. “Egypt can lead the way of the clean energy transition in the Eastern Mediterranean and thus contribute to the Paris climate goals and the worldwide decarbonisation effort,” Cañete said. “The EU stands ready to support Egypt in its energy market reforms and to boost sustainable energy investment.”

Background: Cañete and El Molla had agreed, when they met in Brussels last December, to increase energy cooperation, after Cairo reached a preliminary agreement with Cyprus on establishing a pipeline connecting fields in the Cypriot Economic Zone with liquefaction plants in Egypt’s Idku or Damietta, which would pave the way for EastMed gas exports to Europe. Cypriot Foreign Minister Nicos Christodoulides had said earlier this month that the contracts would be signed soon, once ongoing negotiations over terms and purchase agreements have concluded. Egypt’s Dolphinus Holdings has also signed a USD 15 bn agreement that will also see it import gas from Israel.

Funding packages to connect households to natural gas grid: Cañete is also expected to hold a press conference to announce the details of the EU and French Development Agency’s support packages for the government’s drive to connect households to the natural gas grid. The funding will be directed primarily towards densely populated governorates, with Upper Egypt topping the priority list.

Also on the agenda: In addition to El Molla, Cañete will also meet with President Abdel Fattah El Sisi, Prime Minister Sherif Ismail, Electricity Minister Mohamed Shaker, and the heads of European oil and gas companies operating in Egypt to discuss ways the EU can boost its support for Egypt’s energy sectors. The EU official will also inaugurate the Egypt-EU Sustainable Energy Business Forum and pay a visit to the Zohr gas field.

Egypt, EU to sign cooperation agreements at the end of the month during Mogherini visit: Egypt is set to sign a number of agreements with the European Union at the end of the month, during EU foreign policy chief Federica Mogherini’s visit to Cairo on 30 April, which should see both sides cooperate on various projects under the 2017-2022 cooperation framework. Nasr discussed ways to boost cooperation under the framework, in fields including energy, transport, sanitation, health, education, and the empowerment of women, with the EU with Regional Policy Commissioner Johannes Hahn ahead of Mogherini visit, the Investment Ministry said in a statement. Nasr, who also discussed progress on the Sinai development strategy with Saudi Fund for Development VP Yousef Albassam, said that the EU is Egypt’s largest lender with a portfolio of c. EUR 11 bn in grants and loans.

IPO WATCH- CI Capital IPO’s institutional offering 6.1x oversubscribed, share priced in at EGP 7.70, trading to begin on 30 April: CI Capital announced yesterday (pdf) that it has successfully concluded the bookbuilding process for its initial public offering, which it is pricing at EGP 7.70 per share. The company — which is hoping to raise as much as USD 100 mn (EGP 1.8 bn) from the sale of c. 41.5% of its shares — said that the institutional offering to international investors was c.6.1x oversubscribed. The market capitalization of the group prior to the closed subscription was EGP 3.17 bn (USD 179.0 mn). CI Capital also set aside 22,563,728 shares to Egyptian retail investors and said that some selling shareholders have agreed to subscribe to 132,727,813 of newly-issued shares worth EGP 1 bn. The subscription period for the retail offering will close on Tuesday, 24 April. Shares are expected to begin trading on 30 April. The company had previously said that shareholders could re-inject as much as EGP 1 bn from the proceeds of the IPO into the firm through a follow-on capital increase.

Advisors: Jefferies International Limited and CI Capital Investment Banking are acting as joint global coordinators and bookrunners on the IPO. Norton Rose Fulbright was tapped as international counsel to the issuer, while White & Case is the underwriters’ counsel. Matouk Bassiouny will serve as local counsel; Pharos Securities Brokerage and HC Brokerage are acting as placements agents.

INVESTMENT WATCH- Carbon Holdings aims to reach financial close on its USD 10.6 bn Tahrir petrochemicals complex by year’s end, CEO Basil El Baz says. Carbon Holdings is covering 26% of the project’s cost, with the remainder set to be funded by development finance institutions from the US, Germany, and the UK. Tahrir Petrochemicals will be built in the Suez Canal Economic Zone and will produce petrochemicals used to make a wide range of consumer and industrial goods.

M&A WATCH- Bloomberg was out on Thursday with a piece suggesting that SODIC and MNHD have “reached an initial understanding on a tie-up that would create one of the biggest private property developers in the country,” adding that, “we reached out to both companies and were told there’s nothing new. EFG Hermes is advising MNHD, while SODIC has yet to hire an advisor.

M&A WATCH- New York-based private equity firm Yorktown Partners is planning to sell its Egypt-focused oil and gas producer Merlon International to raise USD 400 mn, banking sources tell Reuters. Citigroup is managing the process, which is expected to be finalized by July. All of Merlon’s oil and gas assets are located within the Fayoum concession in the Western Desert, where it produced 7,900 bbl/d of oil equivalent last year from more than 50 wells.

INVESTMENT WATCH- Canada-based Amel Group is planning to set up a USD 250 mn glass production facility using silica sand in the Suez Canal Economic Zone (SCZone), Al Shorouk reports. The company is looking for partners for the project and is in talks with SCZone officials to hammer out a timeline. The facility is expected to have a production output of 1,000 tonnes, all of which would be exported.

INVESTMENT WATCH- Pioneers Holdings is planning to invest EGP 2.9 bn “in a variety of sectors” this year, according to an EGX disclosure (pdf). The investments will be financed partially through EGP 1.8 bn in divestments, including a partial exit from Rooya Real Estate Investment Company and other ventures. Pioneers had previously announced its intention to list 40% of Rooya on the EGX in 1H2018. The remaining EGP 1.1 bn of its investments will be financed through its 30% capital increase.

INVESTMENT WATCH- Florida-based iQ Power is planning to invest USD 300 mn in solar energy projects in Egypt, CEO and Global Business Director Sharif Al Haj tells Daily News Egypt.

Sudan’s Ghandour fired — look for strain in Cairo-Khartoum relationship. Sudanese President Omar Al Bashir fired Foreign Minister Ibrahim Ghandour on Thursday, according to Sudan News Agency. The statement does not provide an explanation, but the AP notes that it comes just days after Ghandour told reporters that the Sudanese government is seven months behind on paying diplomats’ salaries.

What does this mean for GERD and Halayeb? Al Bashir has yet to appoint a new minister to replace Ghandour, who was a lynchpin in talks on the Grand Ethiopian Renaissance Dam (GERD) and Sudan’s territorial dispute with Egypt over Halayeb and Shalatin. One of Ghandour’s last moves as foreign minister was filing a complaint to the UN against Egypt for allowing Halayeb residents to vote in the March presidential election and for undertaking development projects in the disputed regions.

As for GERD, Ethiopia and Sudan failed to respond to Egypt’s invitation to hold another round of talks in Cairo on Friday, Foreign Minister Sameh Shoukry said during a televised interview, Al Masry Al Youm reported. Shoukry warned against further delays in holding the talks, adding that Egypt would wait until Ethiopia and Sudan show “the same level” of commitment to resolving the issues before moving ahead with negotiations. Ethiopia is reportedly pushing to host the next round of talks in Addis Ababa next month, Sudanese sources close to the matter tell Al Shorouk. Sudan has largely sided with Ethiopia, which it hopes “would fulfill promises of free electricity generated from the dam.” Sudan’s position on GERD has helped sour ties between Cairo and Khartoum, but Ghandour and Shoukry had been working to slowly mend relations. Former Ethiopian prime minister Hailemariam Desalegn’s surprise resignation in February had also left Egypt concerned that progress made with Addis Ababa on the dam issue would be undone.

Egypt was ranked 167th out of 190 nations in Pricewaterhouse Coopers’ 2018 Paying Taxes report (pdf). “Using the perspective of a medium sized domestic manufacturer, [the report] … assesses not just the amount of tax paid, but how long it takes the company to meet its tax compliance obligations. This includes the time to prepare file and pay the main taxes, as well as the time taken to claim a VAT refund and to [handle] a correction to a corporate income tax return.” Labor taxes account for 27.3% of Egypt’s total tax contributions, while profit and other taxes account for 13.6% and 4.4%, respectively. Corporate income tax takes an average of 69 hours to comply, labor taxes 165 hours, and consumption taxes 158 hours, placing Egypt among the 11 slowest countries in Africa in terms of tax compliance. The report notes that high income economies were more likely to be ranked higher on the post-filing index, possibly “because these economies have better technology and more mature tax systems along with better fiscal resources to make refunds.”

MOVES- Jean-Marc Harion has resigned as Orange Egypt’s CEO, the company announced in a statement to the EGX (pdf). Orange Egypt’s board of directors will approve Harion’s resignation and select a replacement at its next meeting on Tuesday, according to the statement. Harion, who was previously the CEO of Orange Belgium, had led Orange Egypt since July 2016.

MOVES- German software giant SAP has appointed Hoda Mansour (LinkedIn) as its Managing Director in Egypt, Al Mal reports. Mansour was most recently SAP’s COO for the UAE and Oman.

CORRECTION- Amendments to the capital market law gives the Financial Regulatory Authority the power to suspend trading on the EGX by specific investors without a court ruling, not brokerage houses as we reported on Thursday. The confusion arose from the interpretation of the word “المتداول” by the English-language report we cited. H/t Mohamed E. and Abdel Wahab M. The story has been updated on our website.

CORRECTION- Schlumberger will invest USD 60 mn in a new data center in Egypt, not USD 60 bn as we noted in passing in Thursday’s issue — our apologies for the typo. H/t Sam W. The story has been updated on our website.

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