Agreements and MoUs totalling EUR 67.7 bn inked at Egypt-EU Investment Conference

Monday, 1 Jul 2024

Agreements and MoUs totalling EUR 67.7 bn inked at Egypt-EU Investment Conference

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INVESTMENT WATCH

Egypt inks EUR 67.7 bn worth of agreements and MoUs at Egypt-EU Investment Conference.

Development finance

Egypt is in line for fresh funds from the EU, EIB, Germany, EBRD.

Banking

Net foreign assets record their first surplus in over two years.

What We're Tracking Today

Electricity bill hikes put on hold until September -Electricity Ministry source.

What We're Tracking Today

Gov’t IPO program to restart in October with shares offered up in service and fintech companies.

Also on our Radar

Wastewater plants, schools, and electricity projects to soon be offered up for the private sector.

Commodities

Egypt receives EUR 56 mn grant to boost its silo capacity.

PLANET FINANCE

BIS warns against slashing interest rates too soon.

BLACKBOARD

Private, int’l schools demand flexibility on tuition fee hikes to cope with financial headwinds.

What We're Tracking Today

Electricity bill hikes put on hold until September -Electricity Ministry source

Good morning, folks. We may have only had an extra day off over the weekend, but it feels like we’ve been off for weeks by the amount of local business and economy news we’ve picked up. In today’s issue, we’ve got a rundown of everything you need to know about the Egypt-EU Investment Conference that wrapped yesterday, unidentified gov’t sources suggesting that the new cabinet line-up will be announced this week, and much, much more.

And remember, we’re back to our normal power cut schedule, after the country had to deal with three hour (and occasionally longer) cuts throughout last week. With planned outages back to two hours a day, the countdown has begun until the third week of July when the government is aiming to do away with blackouts for the summer.

WATCH THIS SPACE-

#1- Electricity price hikes postponed until September as blackouts persist: The government has decided to postpone any hikes to electricity prices until September, a source from the Electricity Ministry told Enterprise on the condition of anonymity. The government has put off implementing the hikes until the electricity crisis is resolved, the source said.

#2- Is this the week we see a new government sworn in? The new government lineup could be sworn in within a few days, following Prime Minister Moustafa Madbouly meeting with more than 65 potential candidates over the last month, unidentified government sources told local news outlets over the weekend (here, here, here, and here).

#3- State IPO program to ramp up again in October: Shares in government-owned service and fintech companies will be offered up in IPOs beginning in October, Sovereign Fund of Egypt CEO Ayman Soliman reportedly told Al Arabiya Business. The companies will include ones that have previously been offered to investors, Soliman added.

#4- A fresh renewables target: The Electricity Ministry wants renewables to make up 58% of Egypt’s total energy mix by 2040, up from its current target of 42% by 2030, Electricity Minister Mohamed Shaker said at the Egypt-EU conference, according to Reuters.

PSA-

Restrictions on retail hours to stay till late September: The new opening hours schedule for shops, malls, cafes and restaurants are effective as of today and will last until Thursday 26 September, according to a statement from the Local Development Ministry.

The details: Shops will be allowed to open until 10:00 pm, while cafes, restaurants, and malls will have to close their doors at 12:00 AM, except on weekends and public holidays, in which shops and malls will be allowed to close one hour later. Supermarkets, groceries, pharmacies, and other essential facilities are exempted from the restrictions.

WEATHER- It’s another summery day in Cairo today, with a high of 39°C and a low of 25°C, according to our favorite weather app.

It’s a little cooler in Alexandria and the North Coast, with a high of 34°C and a low of 22°C.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Want to subscribe? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

NEWS TRIGGERS-

It’s the first week of July — here are the key news triggers to keep your eyes on this month:

Checking in on the non-oil private sector: S&P Global will publish Egypt’s PMI figures for June on Thursday 4 July, measuring the country’s non-oil private sector activity. Last month saw business activity in Egypt inch closer to growth after 42 straight months of contraction.
Fresh inflation data incoming: Capmas and the CBE are expected to publish June’s inflation data on Wednesday 10 July. Policy makers and the business community are hoping for the recent downward trend in inflation levels to continue after annual urban inflation cooled to its lowest level in 16 months in May.
Foreign reserves: The CBE is expected to release June’s foreign reserves figures this week. Reserves hit a record USD 46.1 bn in May after the final tranche of the Ras el Hekma funds landed in state coffers.
Interest rates: The central bank’s Monetary Policy Committee will meet on 18 July to review interest rates. The CBE left rates unchanged when it last met in May.

CIRCLE YOUR CALENDAR

The third tranche of our IMF package could be days away: The IMF Executive Board is scheduled to meet on 10 July to discuss the third review of our USD 8 bn loan program. The greenlight from the board will see the Fund disburse a fresh USD 820 tranche into the state coffers and will allow Egypt to apply for an additional USD 1.2 bn in climate finance. Egypt and the IMF reached a staff-level agreement on the third review early last month.

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

DATA POINT-

Egypt’s external debt decreased some USD 7.4 bn to USD 160.6 bn in 1Q 2024, down from USD 168.0 bn recorded at the end of 2023, according to Planning Ministry figures.

THE BIG STORY ABROAD-

It’s once again all politics, all the time on the front pages of the world’s business press, and centrist and left-of-center politicians, pundits, and journalists are wringing their hands across much of the northern hemisphere.

#1- France’s far-right Rassemblement National took the first round in snap parliamentary elections called by President Emmanuel Macron. Projections see the RN taking 33.2% of the vote. The leftist Nouveau Front Populaire likely took 28.1%, while Macron’s Ensemble took just 21%. Turnout was high — 20% points better than in 2020, France’s Les Echos writes.

It’s the second round run-off that really matters, Germany’s Handeslblatt notes, and it’s scheduled for July 7. “The final result will depend on days of horsetrading before next week's run-off,” Reuters writes.

Want more? Wall Street Journal | Financial Times | Reuters

#2- British voters go to the polls on Thursday, and Labour still enjoys what the BBC calls a “big lead” (about 20 percentage points) over Rishi Sunak’s Conservatives.

#3- Joe Biden’s top advisors are fighting calls that he step down as the Democrats’ nominee, portraying his poor performance on Thursday night as a “blip” and the result of “bad preparation and exhaustion” as his family tells him to keep fighting and plots the ouster of his top advisors, who they blame for the performance.

The bottom line: A new poll on Sunday showed that nearly three quarters of voters think he should end his re-election campaign.

ALSO WORTH KNOWING on this hot summer morning:

EY has a new boss. Today is Janet Truncale ’s first day on the job;
Hungary takes over the rotating EU presidency today;
Ultra-Orthodox men in Israel have taken to the streets to protest that they’re now subject to mandatory military service.

CIRCLE YOUR CALENDAR- For our fellow tech nerds: Samsung will hold its Unpacked event on 10 July and Google will unveil its Pixel 9 on 13 August — two months ahead of what most tech-watchers had expected.

WATCH THIS SPACE- The US Fed’s Open Markets Committee will release meeting minutes and its latest economic forecast on Wednesday.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed.

In today’s issue: We speak to a number of education sector veterans to find out what their demands are in terms of tuition fee hikes, what challenges they are facing, and how the government can help out.

Tags:

electricity Electricity Ministry WHAT WE’RE TRACKING TODAY

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INVESTMENT WATCH

Egypt inks EUR 67.7 bn worth of agreements and MoUs at Egypt-EU Investment Conference

A flurry of fresh agreements with our EU partners: European firms inked a whole lot of agreements with their Egyptian counterparts during the two-day Egypt-EU Investment Conference that wrapped up yesterday. Prime Minister Moustafa Madbouly took the stage at the end of conference and told the audience that 29 agreements and MoUs had been signed over the event totalling EUR 49 bn with EU-affiliated entities. On top of this, a further six agreements and MoUs with non-EU-affiliated entities that export to the EU inked a further EUR 18.7 bn.

TL;DR: The two-day conference brought together over 1k private sector players from both sides and officials including President Abdel Fattah El Sisi and EU Commission Head Ursula von der Leyen. We’ve also got all the development finance updates from the conference you need to know in the news well, below.

ENERGY-

It’s not an Egyptian investment conference without fresh green hydrogen agreements, and this conference was no exception, with investments in the sector bringing in the biggest investments.

Remember: Renewable energy and especially green hydrogen targets are central to the economic strategy for President Abdel Fattah El Sisi’s third term, which outlines plans to turn Egypt into a regional hub for green hydrogen production by 2026 and a global hub by 2030. The country aims to produce 3.2 mn tons of green hydrogen per year by 2029 and 9.2 mn tons per year by 2040.

#1- Four energy players link up to set up a USD 15 bn green hydrogen project: Our friends at renewables firm Infinity Power, Hassan Allam, UAE’s Masdar, and global energy giant BP will set up a USD 15 bn green hydrogen project in the Suez Canal Economic Zone under an agreement inked yesterday during the conference, Infinity Chairman Mohamed Mansour told Enterprise. The project, currently in the feasibility studies phase, will be fully operational in ten years time.

#2- A EUR 24 bn green hydrogen facility in Gargoub: An international consortium led by Belgian energy firm DEME Group will set up a green hydrogen and green ammonia plant in the Port of Gargoub’s industrial zone after the firm inked an agreement with the New and Renewable Energy Authority (NREA) and the Alexandria Port Authority, according to separate statements from the cabinet and the company.

#3- USD 10 bn green ammonia project in East Port Said: The Sovereign Fund of Egypt (SFE and DAI Infrastructure signed a USD 10 bn agreement to set up a green ammonia project at East Port Said, DAI Infrastructure Vice Chairman Mourad Sami told Enterprise. Dubbed Ra, the project will include a USD 4.4 bn ammonia facility and a USD 5 bn renewable energy facility to power the ammonia plant, Sami added. Once fully operational, the East Port Said facility will have a production capacity of 2 mn tons per year and is expected to bring in USD 2 bn each year, Sami told us, adding that DAI will break ground on the project in Q1 2026.

Who else is on the project? Several European groups and financial institutions, including Greek shipping firm Naftomar — which will provide shipping services and take off some of the project’s production — are co-investors with DAI on the project, according to Sami. Sami confirmed to Enterprise that most of the funds will be secured from the US and Europe, with Allianz credit ins. subsidiary Euler Hermes providing export credit agency coverage.

#4- A EUR 7 bn plant by EDF + Zero Waste: Egypt's NREA and the Red Sea Ports Authority signed an agreement with France's EDF Renewables and Egyptian-Emirati firm Zero Waste for a EUR 7 bn three-phase green hydrogen and ammonia project at Ras Shoukair, according to a cabinet statement. The EUR 2 bn first phase of the project aims to produce 1 mn tons of green ammonia annually with the production earmarked to supply ships with green fuels and for exports.

#5- USD 4.3 bn green ammonia facility in Ain Sokhna: Abu Dhabi-headquartered Ocior Energy has inked a USD 4.3 bn agreement with the SFE to develop a green ammonia plant at the Port of Ain Sokhna, according to a cabinet statement. The plant will primarily cater to European markets, addressing the growing demand for sustainable ammonia.

#6- Another USD 3.5 bn green ammonia project at Ain Sokhna: A consortium of Taqa Arabia and France’s Voltalia will build a USD 3.5 bn green ammonia project at Ain Sokhna, under another agreement inked with SFE.

#7- Inching closer to the Orascom-Scatec-Fertiglobe green hydrogen plant: The SFE inked a binding offtake agreement with Orascom Construction, Scatec, and Fertiglobe to produce 100 MW of green hydrogen from its Ain Sokhna plant, according to a statement. The plant kicked off a trial phase in November 2022 and aims to produce some 13k tons of green hydrogen a year, which will be used to create green ammonia at Fertiglobe’s ammonia plants. Solar and wind power plants, with a combined capacity of 270 MW, will be set up to power the plant. Fertiglobe will buy the plant’s production of green ammonia for the coming 20 years — marking the world’s first long-term green ammonia purchase agreement, SFE boss Ayman Soliman said.

#8- Green ammonia production in Damietta: The Egyptian Petrochemical Holding Company, and Misr Fertilizer Production Company (Mopco), along with Norwegian firms Scatec and Yara International, will produce green ammonia in Damietta with initial investments of around USD 890 mn, according to a cabinet statement. A seawater desalination plant and a maritime terminal will be set up to export the production from the Damietta port, with operations expected to begin in 2027. The parties will produce around 150k tons of green ammonia annually in Mopco’s factories before selling it to Norway’s Yara.

#9- And on the solar energy front: Danish wind turbine manufacturing giant Vestas wants to set up a USD 600 mn production facility in Egypt to manufacture wind turbines, according to a Trade Ministry statement. The green energy company will soon start preparing a feasibility study for the project and begin looking for sources of funding.

Vestas is no stranger to Egypt’s renewables sector: The Danish company spearheaded a consortium that signed a EGP 4.3 bn agreement with the NREA back in 2020 to construct a 250 MW wind farm in the Gulf of Suez, which began a trial operation last November.

MANUFACTURING-

El Araby Group to invest USD 500 mn in Quesna complex: El Araby Group will invest USD 500 mn in an industrial complex in Menoufia’s Quesna in partnership with Taiwanese company Rechi, Japan’s Sharp, and another Japanese company, CEO Mohamed El Araby told Asharq Business.

It’s been in the works for some time now: We’ve first heard of El Araby’s plans to set up its second industrial complex for household appliances in Quesna back in 2021.

AND- El Araby partners with Germany’s Heller: El Araby Group inked an MoU with German home appliance manufacturer Heller signed an MoU to manufacture its products using local components, according to a cabinet statement. El Araby will start manufacturing the components needed for Heller products during 4Q 2024 with investments of EUR 70 mn over the first three years of manufacturing.

WATER-

German firm wants to manage our drinking water plants: German water utility firm Bamag submitted a proposal to manage and operate a number of drinking water plants in Egypt via a private-public partnership, a cabinet statement said.

COMMUNICATIONS-

WE-4iG joint venture for high-speed fiber networks: Telecom Egypt (WE) inked a MoU with Hungarian telecom company 4iG Group to develop and operate a joint venture for building and managing fiber-to-the-home (FTTH) and fiber-to-the-tower (FTTT) networks, with a total investments of at least USD 600 mn, a cabinet statement said. The JV aims to create a state-of-the-art, high-speed fiber network reaching around 6 mn residential and commercial units in Egypt, with a focus on expanding and modernizing Egypt’s non-active fiber infrastructure to enhance the country’s digital connectivity.

The international press also covered the conference: Reuters | Associated Press.

Tags:

Abdel Fattah El Sisi BP Deme East Port Said Elaraby Group EU Fertiglobe green ammonia green hydrogen Hassan Allam Holding Infinity investment watch Manufacturing Masdar Mopco New and Renewable Energy Authority Orascom Construction renewables Scatec Sovereign Fund of Egypt Suez Canal Economic Zone TAQA Arabia Telecom Egypt Vestas Wind Systems Voltalia

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Development finance

Egypt is in line for fresh funds from the EU, EIB, Germany, EBRD

We’re getting EUR 1 bn from the EU before the end of the year: Egypt and the EU inked an agreement that will disperse EUR 1 bn in macro-financial assistance during the second half of 2024 — the first of two packages of concessional loans that will total some EUR 5 bn — the International Cooperation Ministry said in a statement. The first tranche will be delivered in the form of soft-financing with long repayment terms and low interest, the statement said.

Remember: The total EUR 5 bn in concessional loans stems from a wider EUR 7.4 bn package of loans, grants, and investments through 2027 that was agreed to under a joint strategic and comprehensive partnership inked between the two sides back in March. In addition to the EUR 5 bn in macro-financial assistance, the EU pledged EUR 1.8 bn of “additional” investments under the Southern Neighborhood Economic and Investment Plan and EUR 600 mn in grants, including EUR 200 mn for migration management.

What about the rest of the concessional loans? The remaining EUR 4 bn will be disbursed between 2025 and 2027, the statement said. The packages aim to address Egypt’s external financing needs and “underpin the delivery of an ambitious policy program containing strong, immediate adjustment and structural reforms to help put Egypt's economy on a sustainable economic path.”

What they said: “One hundred days ago we opened a new era in the relations between Egypt and the European Union, with our strategic and comprehensive partnership. Today, we deliver. We deliver for Egyptian businesses and entrepreneurs with EUR 1 bn in macro-financial assistance, which will incentivise the reforms that businesses and entrepreneurs in the private sector need,” EU Commission President Ursula von der Leyen said during her opening remarks to the conference.

We knew this was coming: Back in April, the European Council approved fast tracking the release of EUR 1 bn in short-term financial assistance as the first tranche of a wider EUR 5 bn package. The EU will deliver the short-term funds by applying an emergency funding mechanism that side-steps the EU Parliament’s approval as well as an evaluation of the funding’s effects.

THE EU ALSO UNVEILED EUR 300 MN IN GRANTS-

We’re in line for nearly EUR 300 mn in grants: The EU signed four financing agreements with Egypt that will see it provide almost EUR 300 mn (EGP 15.4 bn) to support the development of the country’s private sector, labor force, child protection systems, and medicine and vaccine manufacturing, according to a cabinet statement.

The majority of the funds will go towards the private sector: The EU will direct EUR 263 mn to Egypt’s private sector, as part of the third phase of its Cross-Border Cooperation for Mediterranean Basin Countries program. The funds will target private sector players operating in sustainable tourism, cultural heritage, digital transformation, agriculture, education and training, energy, and green construction as well as the blue and circular economy and creative industries, the statement said.

What about the rest? Some EUR 25 mn will go towards providing young Egyptians with technical and vocational skills to help them find fair income jobs and boost entrepreneurship, while EUR 8 mn will be used to bolster Egypt’s child protection systems, focusing on implementing child protection frameworks and combating child labor as well as ensuring children’s access to education, healthcare, nutrition, and housing. The remaining EUR 3 mn will support the local manufacturing and development of vaccines and medicines.

EIB INKS EUR 621 MN WORTH OF AGREEMENTS-

The European Investment Bank also got out its checkbook: The European Investment Bank (EIB) and the EU have inked a EUR 271 mn agreement with the government to back the transition to a green economy, according to a statement from the International Cooperation Ministry. The agreement will channel EUR 135 mn in soft financing from the EIB, with an additional EUR 30 mn grant from the EU administered by the EIB. The remaining funds will come from the French Development Agency and other financiers, the statement reads.

The how: The project aims to assist Egypt in transitioning to a green economy by reducing industrial pollution and carbon emissions. It will focus on key industrial zones across the country, addressing air, water, and soil pollution. It will also support the use of renewable energy, green hydrogen, and biogas, and enhance sustainable industrial practices through energy efficiency, resource management, and circular economy interventions.

The EIB also put its financial backing behind mid-cap companies in the region: The EIB has committed EUR 350 mn to support the SPE Capital-run SPE PEF III — an private equity fund that focuses on mid-cap companies in Africa, according to a statement from the International Cooperation Ministry. The funds will be used to invest in high-growth sectors, such as healthcare, pharmaceuticals, education, manufacturing, financial services, logistics, and consumer goods, aiming to create over 10k jobs and bolster economic development in the region.

Sludge fund: A Housing Ministry project to study sludge management will also get a grant worth EUR 2 mn from the EIB under an agreement inked at the conference.

FUNDS FROM GERMANY-

Egypt to see EUR 104 mn from Germany: Germany will deliver financing worth EUR 103.5 mn (EGP 5.3 bn) to support three Egyptian development programs. Banque du Caire will receive EUR 65 mn in soft-financing for its fourth phase of on-lending to SMEs in addition to EUR 3 mnin supplementary grants. The Education Ministry will see EUR 20.5 mn in financial support for the third phase of its comprehensive technical education initiative and the Central Bank of Egypt will receive EUR 15 mn for the risk management mechanisms program.

Debt swap also on the menu: The two sides also discussed the latest phase of the Egyptian-German debt swap program worth some EUR 100 mn — the first EUR 50 mn tranche recently received parliamentary approval in Germany and the second tranche is currently under discussions between the two sides.

More from Germany soon: Joint Egyptian-German government negotiations will be held in Berlin in 4Q 2024 to discuss projects that will receive funding between 2024-2026, the statement added.

USD 60 MN FOR ON-LENDING FROM THE EBRD-

CIB secures EBRD funding: The European Bank for Reconstruction and Development (EBRD) will provide CIB with USD 60 mn for on-lending to local women-led businesses and green investments, the lender said on its website.

The breakdown: Some USD 50 mn will fund investments in climate change mitigation and adaptation, namely businesses operating in “agribusiness, manufacturing and services, logistics and distribution, and information and communications technology.” The rest of the funding will target women-led businesses, with a focus on those with less than 250 employees and deriving annual revenues of less than EUR 50 mn.

Tags:

CIB development finance EBRD EU European Investment Bank

Banking

Egypt’s net foreign assets record their first surplus in over two years

Egypt’s net foreign assets recorded their first surplus in over two years, as the second and final tranche of the USD 35 bn Ras El Hekma agreement brought in some USD 14 bn of fresh inflows — USD 6 bn of which the central bank poured into the nation’s banking sector. Egypt recorded a net foreign asset surplus of just under USD 14.3 bn at the end of May, up from a deficit of USD 3.7 bn in April, according to Enterprise calculations based on Central Bank of Egypt figures. This is the first time Egypt’s net foreign assets have been in the green since February 2022, when the war in Ukraine triggered capital outflows of almost USD 20 bn.

The central bank’s net foreign asset position once again drove the trend: The Central Bank of Egypt saw its net foreign assets record a surplus of USD 9.7 bn, up from a deficit of USD 763 mn in April. Foreign assets in the central bank rose USD 4.8 bn, while foreign liabilities were down by USD 5.6 bn.

Commercial banks also left deficit territory: Commercial banks saw their net foreign assets record a surplus of USD 4.6 bn in May, from a deficit of USD 2.9 bn in April. Commercial banks saw their foreign assets rise by USD 6.9 bn, while foreign liabilities were down USD 625 mn during the same period.

Data point: “Net foreign assets of Egypt’s banking system have improved by a staggering USD 43 bn since January. International support likely played a role, especially the USD 35-bn mega investment from the UAE. But the scale also suggests portfolio inflows are back,” Bloomberg Chief Emerging-Markets Economist Ziad Daoud said.

Remember: Egypt’s net foreign liabilities hit an all-time high back in January, recording USD 29.0 bn, before starting to gradually drop in the months that followed following the Ras El Hekma agreement, float of the EGP, and the flood of inflows that followed.

Tags:

banking Central Bank of Egypt foreign exchange

Commodities

Egypt receives EUR 57 mn grant to boost its silo capacity

Egypt secures fresh funds to expand silo capacity: The French Development Agency (AFD) will provide us with a EUR 56.7 mn grant to help expand the country’s field silo capacity, Supply Minister Ali El Moselhy said on the sidelines of the Egypt-EU Investment Conference, which was confirmed by a later International Cooperation Ministry statement. MPs gave final approval to the grant in late January.

The details: The grant will help the state build over 20 new field silos over the coming 12-14 months, targeting governorates known for their high wheat production like Minya, Sharqia, and Dakahlia, El Moselhy added. The expanded capacity will help the state cut down on waste and increase the efficiency of local wheat trade.

Remember: The Supply Ministry slashed its wheat import targets for 2024 in June as it works to increase its purchases of local wheat. The ministry wants to procure around 3.7 mn tons of local wheat, up from an initial target of 3.5 mn tons, and is aiming to import some 5 mn tons of wheat, down from its initial target of 6 mn tons.

ALSO- Sugar on the EMX and wheat set to return? The Egyptian Mercantile Exchange (EMX) could begin offering wheat and sugar before the end of the year, El Moselhy added. The Supply Ministry temporarily halted wheat trading on the EMX in January “due to crazed price speculations and bids by some traders,” with plans to return the commodity once these issues had settled.

AND- Sugar export ban extended once again: The government has extended its ban on sugar exports for another three months starting today, El Moselhy added. The ban, which will run through September 2024, exempts surplus quantities beyond local market needs and will be the third extension since December.

Tags:

commodities development finance French Development Agency Sugar wheat

DEBT WATCH

EFG Corp-Solutions issues EGP 433 mn-worth of short-term notes

EFG Corp-Solutions issues first ever batch of short-term notes: EFG Corp-Solutions has issued EGP 433 mn of short-term notes, according to a statement (pdf) from advisor EFG Hermes. The statement didn’t disclose how the funds will be used.

Investors lined up: The issuance “attracted a diverse range of investors, including asset managers, insurance companies, and a corporate client,” the statement read.

Advisors: EFG Hermes acted as the sole financial advisor, lead arranger, transaction manager, bookrunner, and underwriter. KPMG acted as auditor and Dreny & Partners was legal counsel, Al Masdar reports.

EFG Hermes has been keeping busy: The issuance comes hot on the heels of EFG Hermes issuing EGP 600 mn of debt in April to its subsidiary Hermes Securities Brokerage in the form of a senior unsecured short-term note.

What they said: “This successful issuance not only marks a significant milestone for EFG Corp-Solutions but also showcases the remarkable cross-selling synergies within EFG Holding,” said EFG Hermes Co-Head of Investment Banking Maged El Ayouti.

Tags:

debt watch EFG Corp-Solutions EFG Holding

Also on our Radar

Wastewater plants, schools, and electricity projects to soon be offered up for the private sector. PLUS: Sidpec, Integrated Diagnostics Holdings, Elsewedy Electric, Infinity

PRIVATIZATION-

Wastewater plants, schools, and electricity projects to soon be offered up for the private sector: The government is preparing to hand over four industrial wastewater plants to the private sector within 3 to 4 months, Ater Hannoura, head of the Finance Ministry’s Private Partnership Unit, told Enterprise. It also intends to offer 26 schools to the private sector in the next two months as part of the second phase of the private-public partnership schools program — that’s two more schools than what was announced in June. Four electricity transformers projects will also be offered up to the private sector, Hannoura added, without specifying when.

INDUSTRY-

Sidpec restarts fertilizer production: Sidi Kerir Petrochemicals (Sidpec) started receiving feed gasses and gradually resumed operations in its factories on Thursday, the company said in an EGX disclosure (pdf). The nation’s power crisis has forced major petrochemicals and fertilizers to halt operations completely over the past few days. Sidpec, Abu Qir Fertilizers, Mopco, and Kima have cited the lack of feed gasses as a reason to power down their factories.

The first of many? While the remaining fertilizer producers are yet to announce they have resumed operations, we believe that Sidpec is the first of many to once again kick off operations following the halt.

CAPITAL MARKETS-

IDH shareholders could get more for delisted shares: Integrated Diagnostics Holdings (IDH) will soon up its delisting buyback price to EGP 20 per share from EGP 18.62, after the EGX deemed the initial price tag too low, saying that it “did not in fact properly take account of certain aspects of the applicable regulations given the low trading volumes in the company's shares,” the consumer healthcare giant said in a statement (pdf). The new price tag will be discussed during an extraordinary general meeting, the date of which is yet to be announced.

Refresher: IDH decided to delist its shares from the EGX due to “limited trading activity” and the “absence of any investment potential in maintaining the listing on the secondary market.” . The decision was approved by IDH shareholder’s during an extraordinary general meeting at the beginning of June.

M&A-

We have a valuation of Elsewedy Electric: Independent financial advisor BDO Key Financial Consulting’s assessment peg Elsewedy Electric’s valuation at EGP 112.1 bn — at EGP 52.38 per share — following Abu Dhabi-based electrical equipment manufacturer Electra Investment Holding’s bid to acquire a 24.5% stake in Elsewedy Electric, according to an EGX disclosure (pdf).

Remember: Electra has been purchasing shares in Elsewedy Electric at USD 1.05 per share in a bid to acquire up to 24.5% stake after receiving the regulatory greenlight. It will continue to purchase shares from shareholders until 9 July.

ALSO- Elsewedy to set up copper factory in Saudi Arabia: Elsewedy Electric is setting up a copper factory in Saudi Arabia that will go live in six month’s time, CEO Ahmed Elsewedy told Al Arabiya Business. The company also recently inaugurated an aluminum factory in the kingdom, he added.

EVS-

More EV charging stations incoming: Our friends at the renewables firm Infinity want to set up 350 new EV charging stations by the end of the year, CEO Mohamed Mansour told Asharq Business. This will bring Infinity’s total number of charging points to 1k, which will serve around 10k EVs.

Tags:

ALSO ON OUR RADAR capital markets Elsewedy Electric EVs fertilizers Infinity Integrated Diagnostics Holding Sidi Kerir Petrochemicals

PLANET FINANCE

BIS warns against slashing interest rates too soon

Go slow and steady with rate cuts, says the BIS: The Bank for International Settlements (BIS) warned central banks in its annual report (pdf) against cutting interest rates too soon, cautioning that it could reignite inflation. Despite signs that the global economy is headed towards “smooth landing” with cooling inflation and steady growth, the BIS says central banks need to set a “high bar” for easing policies.

Remember: Central banks around the world are preparing to ease monetary tightening policies this year. The European Central Bank got the ball rolling with a 25 bps rate cut last month, ahead of the US Federal Reserve, which is set to start cutting rates by September.

“A premature easing could reignite inflationary pressures and force a costly policy reversal — all the costlier because credibility would be undermined,” BIS General Manager Agustín Carstens said.

Central banks should keep an eye on potential risks like high public debt and falling commercial property values, as well as inflation spikes in service prices and wages, Carstens said.

Service prices relative to core goods remain lower than pre-pandemic levels, while real wages have yet to keep up with higher costs — but a reversion of these trends that happens too fast will only spur inflation. The BIS estimates that catching up on lost purchasing power could raise inflation by up to 1.5% in major Eurozone economies by 2026.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with the Nikkei and Kospi in the green and the ASX 200 and Shanghai Composite in the red. Markets are closed in Hong Kong this morning for a national holiday. Futures suggest US equities will start the trading week in the green, as will most major European benchmarks. The exception: France, where the CAC 40 looks set to come under selling pressure at the opening bell as investors digest the far-right Rassemblement National’s strong showing in the first phase of parliamentary elections.

EGX30	27,766	+1.0% (YTD: +11.5%)
USD (CBE)	Buy 47.96	Sell 48.10
USD (CIB)	Buy 47.98	Sell 48.08
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	11,680	-0.4% (YTD: -2.4%)
ADX	9,061	+0.6% (YTD: -3.2%)
DFM	4,030	+0.5% (YTD: +4.4%)
S&P 500	5,460	-0.4% (YTD: +14.5%)
FTSE 100	8,164	-0.2% (YTD: +5.6%)
Euro Stoxx 50	4,894	-0.2% (YTD: +8.2%)
Brent crude	USD 85.0	-0.3%
Natural gas (Nymex)	USD 2.60	-3.1%
Gold	USD 2,340	+0.1%
BTC	USD 61,984.40	+1.6% (YTD: +46.8%)

THE CLOSING BELL-

The EGX30 rose 1.0% at Thursday’s close on turnover of EGP 4.4 bn (0.2% above the 90-day average). International investors were the sole net sellers. The index is up 11.5% YTD.

In the green: Fawry (+5.9%), Eipico (+5.1%), and EFG Holding (+4.6%).

In the red: Beltone Holding (-3.3%), Oriental Weavers (-2.3%), and Palm Hills Development (-2.3%).

Tags:

Financial Markets interest rates Planet Finance

Our weekly deep dive into education in Egypt, from K-12 to post-secondary.

Published every Monday in EnterpriseAM.

Read Blackboard

BLACKBOARD

Private, int’l schools demand flexibility on tuition fee hikes to cope with financial headwinds

How does the private education sector envision the road ahead? Faced with high operational costs and strained by the float of the EGP, private and international schools are awaiting the Education Ministry’s decision on how much they can hike tuition fees for the 2024-2025 academic year. While some players seek an extension of last year's tiered system of caps on annual hikes of tuition fees, others are advocating for steeper hikes. We spoke with a number of education sector veterans to find out what their demands are, what other challenges they are facing, and how the government can help out.

Remember: The Education Ministry in September 2023 introduced a tiered system of caps on tuition fee increases at private schools, with higher-priced schools facing tighter limits. Schools charging EGP 35k and above were limited to a 6% increase for the current academic year, while schools that charged smaller fees were allowed to increase fees at a greater level all the way to 25% for schools charging less than EGP 25k. For high-end int’l schools, fee increases for schools charging EGP 200k or more were capped at 5%, while schools charging less could increase fees by up to 10% depending on how much they charged.

The caveat: Schools that fall outside of the ministry’s purview — among them institutions owned by associations and other bodies, such as CAC, MBIS, and BISC — were not impacted by the caps.

Some schools are calling for the caps to be eased: While some private school owners believe that reinstating last year’s maximum allowable increase would be sufficient, others have taken a more hawkish stance. British International College of Cairo CEO Ahmed Samir believes that an increase of no less than 40% is needed — even if that means implementing a one-off hike limited to the upcoming academic year to mitigate current financial headwinds.

Where the requests stand: The Education Ministry is currently deliberating on tuition fees for the next academic year and is expected to issue a decision following the Thanaweya Amma exams — which run until 20 July — a government source told Enterprise. The ministry maintains an open dialogue with private school owners, both to consider their requests and to ensure decisions ultimately safeguard parents from excessive fee hikes, the source added.

The likely outcome? The source expects the government to reinstate the tiered system of tuition fee hike caps for the next academic year.

Schools are stuck between a rock and a hard place: Many private schools are now either being offered for sale or face the threat of shutting down amid soaring inflation and a weakening EGP, which have seen the cost of wages, materials, and maintenance rise significantly, Private School Owners Association Deputy Chairman Badawy Allam told Enterprise. These financial strains are compounded by schools’ inability to hike tuition fees as they await the ministry’s decision.

A precarious situation: A key concern is schools ramping up the costs of extracurricular activities, uniforms, or other expenses to bypass fee regulations, said Magda Nasr, a former member of the House of Representatives’ Education Committee. The road ahead demands a measured approach that strikes a balance between the quality of education and parents’ financial limitations, she explained, adding that an open dialogue between the ministry, schools, and parents is needed.

PULSE CHECK ON THE PRIVATE ED SECTOR-

Private schools make up a small slice of the pie: Private schools constitute 15-20% of the schools in the country, Allam said, adding that this participation rate is unsatisfactory considering Egypt’s high population density. By contrast, in neighboring countries like Jordan, private schools make up 70% of schools.

There is a large gap between supply and demand at the K-12 level, Nasr said, explaining that the country needs more private schools to accommodate the educational needs of its growing population without compromising quality.

Incentives are needed: To encourage private investment in the education sector, the government can offer pre-equipped land for schools across governorates with flexible payment options, Allam suggested. Launching a comprehensive incentive program would reignite interest in the sector, he said, pointing to a decline in new school memberships within the association in the past two years.

HEADWINDS-

Building requirements are stringent: Building requirements issued by the General Authority for Educational Buildings hinder the growth of private schools, Allam said. One such requirement is minimum land area, which stands at 1.25k sqm for private Arabic schools and 2.5k sqm for language schools. Additionally, classrooms must be at least 40 sqm and well-ventilated. Because the land available within residential areas is both limited and expensive, these restrictions force private players to build schools in distant locations or even desert areas. In Cairo, new schools are often built in the new administrative capital or in the city’s north, where land is costly. Lowering the minimum area requirement could lead to a significant increase in the numbers of schools in urban areas, he suggested.

Land scarcity isn't just a private sector problem, a high-ranking government official told Enterprise. The second phase of the public-private partnership (PPP) education program is facing delays due to land shortages across governorates, the source said.

Remember: The state will offer 24 land plots for private sector players to set up 24 schools within the coming weeks under the PPP education program, which was introduced back in 2016 to boost private sector involvement in the education sector. Under the framework, the government will provide private sector operators with land and licenses, while the operators will build and operate the schools.

Tags:

Blackboard Education Ministry public-private partnership

CALENDAR

2024

JULY

2-3 July (Tuesday-Wednesday): Aswan Forum for Sustainable Peace and Development, Cairo, Egypt.

4 July (Thursday) S&P Global to publish Egypt’s PMI figures for June.

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

10 July (Wednesday): CBE and Capmas to publish inflation data for June.

10-11 July (Wednesday-Thursday): The Japan-Arab Economic Forum, Tokyo.

16-17 July (Tuesday-Wednesday): The Egypt Mining Forum, Cairo, Egypt.

18 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

23 July (Tuesday): Revolution Day (national holiday).

AUGUST

4-5 August (Monday-Tuesday): Egypt Expat Forum.

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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

25-26 September (Wednesday-Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-17 October (Sunday-Thursday): Cairo Water Week, Water and Climate: Building Resilient Communities, Cairo, Egypt.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

30 September (Monday): Ban on sugar exports expiration.

NOVEMBER

4-8 November (Monday-Friday): World Urban Forum, Cairo, Egypt.

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

26-28 November (Tuesday-Thursday): Egypt Energy Show, Cairo, Egypt.

DECEMBER

26 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

3Q 2024: Egyptian-Armenian Joint Committee.

November 2024: Egypt to host the World Urban Forum (WUF12).

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

End of 2024: Shalateen Mining Company to launch a gold exploration tender in the Eastern Desert.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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