Economics and logic

Sunday, 31 Mar 2024

Economics and logic

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Today at a glance

The Big Story Today

Madbouly greenlights new EGP 120 bn program to subsidize loans financing for industrial and agricultural production.

INSIDE INDUSTRY

Smartphone production in Egypt is back after the FX crunch has passed.

FOR YOUR COMMUTE

A focus on Daniel Kahneman: Psychology professor and trailblazer in behavioral economics.

Sports

Arsenal vs Man City tonight.

Ears to the Ground

If you miss The Daily Show then tune in to Trevor Noah’s ‘What Now?’

WHAT WE’RE TRACKING TONIGHT

THIS EVENING: Madbouly greenlights new EGP 120 bn program to subsidize loans financing for industrial and agricultural production.

Good afternoon, folks and happy Sunday. Welcome to the last full week of Ramadan which is still busy with news updates.

So, when do we eat? Maghrib prayers are at 6:13 pm in the capital city, and you’ll have until 4:16 am tomorrow to hydrate and caffeinate ahead of fajr.

THE BIG STORY TODAY

Prime Minister Moustafa Madbouly approved a new EGP 120 bn subsidized loan program for industry and agriculture, in a bid to boost private sector involvement in the economy, industry localization, and the competitiveness of made-in-Egypt products in foreign markets, Finance Minister Mohamed Maait said in a ministry statement.

ICYMI-Finance Ministry sources Enterprise spoke with previously told us that the government is looking at introducing fresh financing initiatives after allocations from the last program introduced last year ran out.

The details: The new program will offer manufacturers financing at an interest rate of 15%, which is four percentage points higher than the 11% interest rate offered in the last initiative. EGP 105 bn of the package will go to financing working capitals, while the remainder EGP 15 bn will be allocated to buying machinery and equipment for production lines.

We heard this before: After doling out some EGP 88 bn worth of financing over the past five years through various industrial financing packages, we expected the government to hike rates on new financing. Sources told us last week that the 15% was the proposed increased rate, and that it might increase up to 20%.

THE BIG STORY ABROAD

Another round of truce talks is being held today in Cairo: An Israeli delegation is in town as ceasefire negotiations resumed today. Hamas told Reuters that it will not be present at these talks as it waits to see if Israel presents a new offer on the conditions of a ceasefire. Israeli strikes have meanwhile killed dozens of Palestinians in Gaza today while Israeli forces continue to blockade two major hospitals in the south.

On Easter Sunday: Pope Francis made a strong call for a ceasefire in Gaza and the Ukraine from St Peter’s Square in Rome.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

IMF money incoming: The International Monetary Fund’s Executive Board has signed off on the USD 5 bn extension for Egypt’s extended fund facility (EFF) and completed its long-delayed first and second reviews of the facility.
Another successful t-bill auction — this time at a significantly lower interest rate. The Finance Ministry raised some EGP 25 bn worth of one-year t-bills and EGP 35 bn worth of six-month bills on Thursday.
New projects coming to the SCZone: The General Authority of the Suez Canal Economic Zone (SCZone) has greenlit a number of projects when it met yesterday.

*** It’s Inside Industry day —your weekly briefing of all things industrial in Egypt. Inside Industry focuses each Sunday on what it takes to turn Egypt into a manufacturing and export powerhouse, ranging from initial investment and planning to product distribution, through to land allocation to industrial processes, supply chain management, labor, automation and technology, inputs and exports, regulation and policy.

In today’s issue: With the FX crunch now behind us and manufacturer concerns about importing production materials beginning to ease, electronics firms are now moving again to locally produce smartphones.

?️ TOMORROW’S WEATHER- It’s going to be a partly cloudy day with a high of 33°C and a low of 19°C, according to our favorite weather app.

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Finance WHAT WE’RE TRACKING TONIGHT

FOR YOUR COMMUTE

Daniel Kahneman, one of the founders of behavioral economics, dies at 90

Daniel Kahneman, the Princeton University psychology professor whose work laid the foundations for behavioral economics,passed awayon Wednesday at age 90. The author’s work — much of which was a collaborative effort with his friend and fellow psychologist Amos Tversky — challenged traditional economic theory, which assumes people make rational decisions with their self-interest at heart. Instead, he argued, people use mental shortcuts, get swayed by emotions, and otherwise simply make choices that frequently fail to yield the best economic outcomes.

Kahneman was awarded the 2002 Nobel Memorial Prize in Economic Sciences “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty,” according to the Nobel citation. Tversky, who died in 1996, would have likely been a joint recipient of the prize had he been alive.

His 2011 book Thinking, Fast and Slow popularized the duo’s research. The book is premised on the idea that people are guided by two modes of thought: System 1, an automatic process led by intuition and emotional reactions, and System 2, which is a slower and more deliberate process in which the mind operates more analytically and corrects errors made by System 1. Kahneman suggests that the default setting, most of the time, is System 1, with the mind often employing rules of thumb, cognitive biases, and other mechanisms to shorten the judgment process.

Case in point #1: The framing effect. Experiments conducted by the two psychologists explored the framing effect, a cognitive bias whereby the way something is worded or presented — positively or negatively — can trick your brain into picking one option over another, even if the outcome is the same. Their research demonstrated, for example, that people would be more likely to undertake a 20-minute trip to save USD 5 on the price of a USD 15 calculator than to make the same trip to save the same USD 5 on a USD 125 calculator.

Case in point #2: The conjunction fallacy. Also known as the Linda problem, this reasoning error leads us to believe that a combination of two or more attributes is more probable than any one of the sole attributes — an assumption that goes against the laws of probability.The most widely cited example of this fallacy is a fictitious Linda, a bright 31 year-old philosophy major who is “deeply concerned with issues of discrimination and social justice.” When asked to pick a scenario that more likely describes Linda, the majority of participants opted for “bank teller . . . active in the feminist movement” rather than just “bank teller" — even though the latter encompasses the former.

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FOR YOUR COMMUTE

ENTERPRISE RECOMMENDS

Khaled El Nabawy and a family of Ms bring back the much-beloved story of Embratoreyet Meem

? ON THE TUBE TONIGHT-
(all times CLT)

A modern remake of the old classic Embratoreyet Meem: Starring Khaled El Nabawy as Mokhtar Aboul Magd, Embratoreyet Meem is a Ramadan series adapted from the 1965 classic of the same name by the late Ehsan Abdel Quddous. Aboul Magd is a widowed father of six children, who he raises with the help of his sister Madiha (Nashwa Mostafa). All of his children bear names starting with the letter M, in an attempt to build an empire of Ms who are ministers in different sectors.

Mukhtar begins to juggle a number of issues, including his failing company. He also grapples with newfound feelings for his neighbor, Mai (Hala Shiha), a divorced single mother, which causes a rift between him and his children. Then there is the threat of house displacement by a real estate company followed by a power dynamic shift in the house due to constant clashes with his children when it comes to rule flexibility that prompts an election to see who is more fit to run the house.

The story is not that different from the film, with some tweaks here and there: While adding Madiha to the mix — bringing herself into a maternal role — the change falls more onto the new identities of the children and the more in-depth dive into their lives. Marwan (Nour El Nabawy) isthe president of his university's student union and is also navigating his new relationship with a polar opposite Maddy (Mayan El Sayed). The eldest, Mona (Hagar El Sarrag), is a law professor and struggles to convince her father to allow her to go on a work trip, which leads her on to start a relationship with her colleague. His other children also struggle with identity crises — especially Maya (Elham Safi El Din) — as well as their jealousy of Mokhtar and Mai’s developing relationship.

The show is a bit of a drag at times but it packs up relatable moments and laughs — occasionally. Aside from the exaggerated incidents, we were excited to see a real-life father-son Nabawy duo on screen but were let down with the occasional mediocrity of performances. However, the dynamic developed into something more meaningful and authentic over time which made it worth the wait.

WHERE TO WATCH- You can watch Embratoreyet Meem on Shahid and Watch IT or catch the trailer here (watch, runtime 00:29).

⚽ Zamalek is going head to head with Modern Future in the first leg of the CAF confederation cup quarter-final at 9pm, with the second leg of this match scheduled for Sunday, 7 April. Future secured their place in the quarter-final after ranking second place in their group, while the White Knights landed in the top spot of their group.

Will there be changes in the English Premier League standings today? The competition for the top spot in the Premier League closes off gameweek 30 today with a showdown between Arsenal (leading with 64 points) and Man City (63 points) at Emirates Stadium at 5:30pm.

Meanwhile, Liverpool — currently in second place on goal difference — is playing against Brighton in a fixture that began this afternoon at 3pm.

Over to La Liga:Real Madrid is playing against Atletico Bilbao at 9pm tonight in gameweek 30 of the Spanish league.

Important matches in the major European Leagues tonight:

Girona vs Real Betis (La Liga, 4:15pm)
Marseille vs Paris Saint-Germain (PSG) (Ligue 1, 8:45pm)

? OUT AND ABOUT-
(all times CLT)

TONIGHT-

Don’t miss out on the iconic Medhat Saleh’s concert tonight, asmusician Amr Selim will accompany the singer on stage at the Cairo Opera House tonight at 9:30pm. Doors will open at 8:30pm and you can book your tickets here. This event calls for formal attire and little ones under seven aren’t allowed.

This show will leave you with more questions than answers.No Time Lost is being performed at Rawabet Art Space tonight at 9pm, and employs techniques used in dream theater, where events unfold as they would in your sleep. Even the actors aren’t sure what’s going on. You can find tickets here.

THIS WEEK-

Get in the Ramadan spirit with Fi El Leila El Kebira performed by Fabrica in the Rawabet Art Space starting tomorrow from 9pm. The musical performance is based on the beloved puppet masterpiece by Salah Jahin and Sayed Mekawy. Don’t miss out on all your favorite characters who are brought to life on stage through song. Tickets will be available on Ticketsmarche.

Watch a Sawt El Aseel which is a folkloric performance at Rawabet Art Space on Tuesday, 2 April, starting from 9pm to 10:30pm. Listen to wedding songs, mawawil, gypsy music,and countryside love stories told through song.

If you can’t make it to Rawabet you can still attend Fi El Leila El Kebira at Theatro Arkan on Wednesday, 3 April, starting from 9pm. Get a hold of your tickets here.

THIS WEEKEND-

Bibliothek is bringing back the cultural salon. On Friday, April 5, Bibliothek will be hosting El Warsha band as part of an evening that will contain songs, stories, and sketches. Experience Sufi ballads, Chekov’s parables, and music from the roaring 20’s. More details can be found here.

Round off Ramadan with Iftar at Wadi Degla.VAMOS is hosting a light hike ahead of Maghrib before settling down for Iftar with a view of the valley at sunset. Huddle around the campfire and enjoy some post-Iftar tea prepared on charcoal under the stars on Friday, 5 April. The EGP 500 price tag includes the meal and the entrance ticket to the protectorate. Bring your own plates, cups, and utensils, but don’t worry about the TP. The campsite has four spic and span bathrooms.

Vibe at a Mevlevi Night this weekend. The group will be performing their signature ballads and traditional dances at Royal Park Mall starting at 9:30 pm on Friday, 5 April. Booking details can be found on the events page. Tickets range from EGP 250 to EGP 2.5k.

COMING UP-

Not too early to make Eid plans. Grab yourself some fast-selling tix to El Hadaba’s Eid concert in El Gouna on Wednesday, 10 April.

? EARS TO THE GROUND-

Trevor Noah takes advantage of his star-studded rolodex for his podcast, What Now? The former Daily Show host brings on guests each episode for a candid chat all from different industries — sports, acting, business, etc.— and gets them to spill the beans using his talk-show charm.

You’ll feel like you’re sitting backstage in a green room getting the inside scoop from those in the spotlight. Noah’s schtick is to get his friends comfortable to trigger an honest conversation away from their public personas and because there’s a pre-established camaraderie, there’s a nice back-and-forth between him and his guests.

We like that he doesn’t just stick to Hollywood. The guests are diverse so it’s not all awards show BTS and such. Mark Cuban, who you might know from Shark Tank, comes on one episode that’s more business-oriented if that’s your thing, but you can also listen to Emmy-winner Quinta Brunson talk about her show Abbott Elementary and much more.

NOTE- Noah doesn’t get as political as he often did on The Daily Show, the show is more about chit-chatting with friends.

You can listen onApple Podcasts and Spotify.

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GO WITH THE FLOW

What the markets are doing on 31 March 2024

The EGX30 fell 2.8% at today’s close on turnover of EGP 2.1 bn (57.9% below the 90-day average). Local investors were net sellers. The index is up 7.6% YTD.

In the green: Ezz Steel (+7.8%), Talaat Moustafa Group (+5.2%) and Elsewedy Electric (+1.5%).

In the red: Egypt Kuwait Holding (-6.7%), GB Corp (-6.7%) and Ibn Sina Pharma (-6.6%).

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EGX Go with the Flow

Our weekly look at the issues, trends, and policies that are shaping Egypt's manufacturing industries.

Published every Sunday in EnterprisePM.

Read Inside Industry

INSIDE INDUSTRY

Smartphone production is back on the table

Electronics companies are reviving their plans to manufacture smartphones locally: With the FX crunch now behind us and manufacturer concerns about importing production materials beginning to ease, electronics firms are now moving again to locally produce smartphones.

ICYMI- We looked at the state of Egypt’s smartphone industry in a two-part Inside Industry series last October, here and here.

The market has come a long way since the first homegrown smartphone producer cropped up six years ago: Sico Technology debuted the first locally produced smartphone back in 2018. In the years since, the government has been working over the past several years to localize the country’s electronics manufacturing industry, launching a number of measures and incentives including the Information Technology Industry Development Agency’s (ITIDA) Egypt Makes Electronics (EME) initiative, the elimination of development fees for imported smartphone components, and tech parks.

Egypt now has eight electronics firms producing their smartphones locally, including Xiaomi, Vivo, Oppo, Infinix, Nokia, and Samsung.

It’s a huge market: Egypt enjoys favorable demographics that create a large consumer market, with some 102.9 mn mobile phone plan users as of April 2023, according to CIT Ministry data. Smartphone ownership is also on the rise in the country, according to a BMI report (pdf). The growth in ownership numbers comes “as first-time buyers enter the market, but this flow is mainly from low-income areas where consumers are highly price-sensitive,” BMI says in the report. “There is also scope for vendors to develop a higher value sales mix as incomes rise over the medium-term, with an increased share for mid-range and premium smartphones as purchasing power increases for the middle-class.”

With smartphone imports plummeting, it’s time to turn inwards to local production: With our recent FX crunch, Egypt’s imports of smartphones dropped to USD 5.24 mn by the end of 2023, down 98.5% y-o-y. The government is now looking to localize 40% of smartphone production, meaning that 40% of total manufacturing inputs — including components, design, development, and software — will be sourced locally.

We have solid potential when it comes to producing smartphones locally: The government is offering plenty of incentives, including tax exemptions and easing import restrictions for components, KMG Egypt CEO and head of the Federation of Egyptian Chambers of Commerce’s Digital Economy division Karim Ghoneim told Enterprise. MPs also voted last year to slash customs duties and eliminate development fees on imported mobile phone components in a bid to boost manufacturing and localize the industry. Under the amendments, the 5% state development fee is no longer applied to components, while customs tariffs were cut to as low as 0% for some items.

And things are moving forward as shipments previously stuck at ports are now getting through: The Customs Authority has begun releasing imports of production requirements that were stuck at ports, which puts KMG Egypt on track to begin producing after Eid El Fitr at its Sadat City industrial zone factory, Ghoneim said. The company plans to start production with smart watches, before moving forward with feature phones and smartphones at later stages, Ghoneim told us. Other local firms are also getting their imports cleared from customs, according to General Manager of Al Safi Group’s Mobilaty, Khaled Fahmy.

International players are also picking up the pace: Samsung is now pushing ahead to complete the construction of its new factory in Beni Suef, after facing some delays as it waited on imports of construction materials and equipment, a company source told Enterprise. The company doesn’t see a significant issue with the investment cost of its new factory, the source said, adding that the main impediment was the availability of FX to allow for imports.

The priority now is going towards exports: The current priority for both KMG Egypt and Samsung is speeding up production to increase supply in the local market and shift more towards exports, Ghoneim and our source at Samsung said. The companies are both looking at export markets in Europe and Asia.

Your top industrial development stories for the week:

GAFI hands out six golden licenses: The General Authority for Investments and Freezones (GAFI) has awarded six golden licenses for projects worth a combined EGP 5.6 bn.
Our industrial zones are a big hit with foreign investors: Egypt signed three separate industrial investment agreements with companies from China, Poland, and France collectively worth USD 349 mn for projects to be implemented in the country’s industrial zones.

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INSIDE INDUSTRY Manufacturing

THE ENTERPRISE ENTERTAINMENT CALENDAR

MARCH

31 March (Sunday): Medhat Salah concert at Cairo Opera House.

31 March (Sunday): No Time Lost performance at Rawabet Art Space.

APRIL

1 April (Monday): Fi El Leila El Kebira performance at Rawabet Art Space.

1 April (Monday): ARTicaria musical comedy show at ROOM New Cairo.

2 April (Tuesday): Folkloric Night at Rawabet Art Space.

3 April (Wednesday): Fi El Leila El Kebira performance at Theatro Arkan.

3 April (Wednesday): Karim Zidan concert at Elsawy Culturewheel.

4 April (Thursday): Sarah Morgan performance at The Drive.

4 April (Thursday): Red Sea Heritage Musical performance at ROOM Garden City.

4 April (Thursday): Qahrawya’s Iftour in Desert of the Mamluks.

5 April (Friday): Sufi dance performance at Dawar Arts.

5 April (Friday): Barzakh concert at Studio Nasibian Theater.

5 April (Friday): Amar Al Din musical performance by Al Warsha band at Bibliothek Egypt.

5 April (Friday): Iftar at Wadi Degla with VAMOS.

5 April (Friday): Evodia performance at The Drive.

5-6 April (Friday-Saturday): Mevlevi Night at Royal Park.

6 April (Saturday): Sufi singing with Mostafa Mohalel at ROOM New Cairo.

9 April (Tuesday): Eid El Fitr (TBC).

10 April (Wednesday): Amr Diab concert at Cubix El Gouna.

11 April (Thursday): Oscar and the Wolf concert at the Pyramids.

11 April (Thursday): Om Kalthoum puppet theater performance at Elsawy Culturewheel.

12 April (Friday): Amr Hassan concert at Elsawy Culturewheel.

13 April (Saturday): Hilarity Heights standup comedy show at ROOM Garden City.

13 April (Saturday): Komedy Koshk Comedy Night at ROOM New Cairo.

18 April (Thursday): Massar Egbari x AUC Tahrir CultureFest at AUC Tahrir Square.

19 April (Friday): Keinmusik at the Giza Pyramids by Panorama 2.

20 April-June 8 (Saturday-Saturday): Sketching Course at Art Square Academy.

23-24 April (Tuesday-Wednesday): Omar Khairat concert at Cairo Opera House.

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

25-27 April (Thursday-Saturday): Insomnia Egypt Gaming Festival at the International Exhibitions Center.

30 April-5 May (Tuesday-Sunday): Next Level International Summer Camp.

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC).

3 May (Friday): Youth to Business (Y2B) event at The GrEEK Campus.

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (TBC).

23-25 May (Thursday-Saturday): The Design Show at Cairo International Conventions Center.

24 Mary (Friday): The Glow Run by The TriFactory at Palm Hills Sports Club.

25 May (Saturday): Techne Summit at the Cairo International Stadium.

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC).

30 June (Sunday): June 30 Revolution Day (TBC).

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

23 July (Tuesday): Revolution Day (TBC).

SEPTEMBER

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

OCTOBER

6 October (Sunday): Armed Forces Day.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

Q1 2024: Opening of the newly developed Pyramids Plateau in Giza.

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