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Tuesday, 5 Sep 2023

What We're Tracking Today
Economy
Investment Watch
M&a Watch
Energy
Energy
Commodities
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Going Green
Calendar

Banque du Caire looks to bring on a strategic investor

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Today at a glance

1

What We're Tracking Today

There are less than two weeks until the Enterprise Finance Forum — check out our full agenda.
2

What We're Tracking Today

Banque du Caire is looking to bring on board a strategic investor.
3

Economy

Are we on track for the September IMF review?
4

Investment Watch

AfricInvest to invest USD 40 mn in British University in Egypt.
5

M&A WATCH

Beltone Financial to acquire 100% of Egyptian microlender Cash, launches VC arm
6

Energy

Israel, Cyprus + Greece are getting together to make a decision that could change the East Med energy game.
7

Energy

SDX Energy has found a buyer for its Egyptian assets.
8

Commodities

Egypt buys almost 500k tons of Russian wheat.
9

What We're Tracking Today

Japan FM to hold talks with Sisi and Shoukry today.
10

PLANET FINANCE

Economists expect slower global growth in 2024.
11

Going Green

How tech can help Egyptian farmers adapt to climate change.

Tuesday, 5 Sep 2023

What We're Tracking Today
Economy
Investment Watch
M&a Watch
Energy
Energy
Commodities
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

Banque du Caire wants a strategic investor + Japan’s FM to hold talks with Sisi, Shoukry today

Good morning, friends, and happy hump day. From fresh investments to energy, we have an absolutely packed issue for you this morning, so we’re going to jump right in after this brief programming announcement:

COUNTDOWN- There are just 13 days until the Enterprise Finance Forum, taking place 18-19 September (Monday and Tuesday) at the St. Regis Hotel on the Nile Corniche. This flagship forum is the latest in our must-attend series of invitation-only events, where CEOs, bankers, investors, founders, and corporate leaders will meet to discuss the trends shaping the future of banking, finance, NBFIs, and fintech — and of their clients.

You won’t want to miss this one: Join Todd Wilcox (CEO and deputy chair, HSBC Egypt), Akef El Maghraby (vice chairman, Banque Misr), Tarek El Nahas (group head of international banking, Mashreq), Nivanne Mortagy (North Africa lead, upstream, financial institutions group, IFC), Mounir Nakhla (founder and CEO, MNT Halan), Leila Serhan (group country manager and senior VP for North Africa, Levant and Pakistan, Visa) and many others for talks on everything from investing in uncertain times, to the coming of AI and digital banks. Stay tuned for the unveiling of our full list of speakers in the coming days.

Tap or click here to REGISTER or view the FULL AGENDA.

We are honored to count some of the region’s most important financial institutions as our partners for this special event. The Enterprise Finance Forum could not take place without the support of our partners including Banque Misr, Al Baraka Bank, FAB Misr, HSBC, Mashreq, CI Capital, Global Corp, Visa, Hassan Allam Utilities, and the IFC.

WATCH THIS SPACE #1- Banque du Caire (BdC) is looking to bring on board a strategic investor: That’s according to Banque Misr chief Mohamed El Etreby, who told Asharq Business yesterday that the state-owned lender has started the sale process and is looking to finalize an agreement sometime during 2024.

Is this instead of — or in advance of — the bank’s long-awaited IPO? El Etreby didn’t disclose any information about the transaction, stopping short of saying how large a stake is on offer, the advisors working with Banque Misr on the sale, or perhaps most importantly, what this means for the bank’s plans to go public on the EGX.

Remember: The bank has been considering an IPO for years, only to be thwarted by successive bouts of market instability. Fresh rumors surfaced in the local press as recently as last month claiming the bank could sell 49% of its shares to investors before the end of 2023. BdC is one of three banks that the Sisi administration has officially earmarked for privatization.

UPDATE- Whose are the faces behind Eastern Company’s new largest shareholder? Two leading Emirati business families are behind Global Investment Holding (GIH), the firm that agreed this week to the USD 625 mn purchase of a 30% stake in Eastern Company from the Holding Company for Chemical Industries (CIHC).

So, who’s buying? Abu Bakr Al Hussaini, whose wide family interests are rooted in trade and distribution, holds a 90% stake in GIH, A l M al writes, while Emaar Properties and Noon founder Mohammed Alabbar is also a shareholder. The newspaper writes separately that the two also hold stakes in United Tobacco, the Egypt-incorporated company that manufactures cigarettes under license for Philip Morris. The newspaper quotes CIHC chief Emad El Din Mostafa as saying GIH is more than 99% owned by the same two Emirati shareholders who hold stakes in United.

We’re still seeking confirmation on whether Philip Morris is involved. The global tobacco giant owned an economic interest of around 25% of United Tobacco as of the end of 1H 2023, while another 24% of United is held by Eastern Company. Eastern Company’s stake in United is not impacted by GIH’s 30% buy-in to Eastern, it said in an EGX filing (pdf) yesterday.

SIGN OF THE TIMES- Egyptians living abroad can now purchase land in new cities from abroad (in FX, of course) after thegovernment yesterday opened reservations, Housing Minister Assem El Gazzar said yesterday. More than 2.3k plots of land in 14 new cities have been made available to purchase by expats. Reservations close in three weeks time.

HAPPENING TODAY-

#1- PMI figures: S&P Global will publish August purchasing managers index figures for Egypt this morning at 6:15 CLT. Private-sector activity has finally been showing signs of life in recent months, with the perma-contraction easing gradually over the past four months. That’s one data point that adds to our feeling that the business community is starting to find its own solutions to (some) of the problems presented by FX pricing and availability (to say nothing of inflation). The question on our minds: Did that modest rally survive the dog days of summer?

#2- The Japanese FM is in Cairo: Japan’s chief diplomat Yoshimasa Hayashi will hold talks with President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry on the second day of his visit to Egypt today. He will also hold a three-way meeting with Shoukry and Jordan’s foreign minister, Ayman Safadi.

This comes four months after the Japanese prime minister visited Egypt, during which the countries upgraded bilateral ties to a strategic partnership.

#3- The economy takes center stage at the National Dialogue today, with participants set to discuss debt, the budget deficit, inflation and industrial policy.

#4- Climate leaders from across the continent are in Nairobi for the second day of the Africa Climate Summit. Prime Minister Moustafa Madbouly, Environment Minister Yasmine Fouad, and Egypt’s UN high-level climate champion, Mahmoud Mohieldin, are among the Egyptian delegation attending the summit, which wraps tomorrow.

On Day 1 in Nairobi:

#5- Africa pharma expo: It’s the final day of the Pharmaconex exhibition at the Egypt International Exhibition Centre. The event runs through to Tuesday.

HAPPENING THIS WEEK-

Foreign reserves figures will be out any day now. Expect the central bank to release figures for August before the week is out.

G20 summit: G20 leaders (sans Xi and Putin) will gather in New Delhi for the 2023 G20 summit on Saturday and Sunday. We’re also expecting an Egyptian delegation at the gathering, though it’s unclear which ministers will be in attendance.

FURTHER AFIELD- Other local news triggers to keep your eyes on as we move through September:

  • Inflation: Capmas and the CBE will publish the latest inflation data on Sunday, 10 September.
  • Interest rates: The CBE’s Monetary Policy Committee will gather to discuss interest rates on Thursday, 21 September.

CLARIFICATION- N ew patisserie Fôu is open for business from tonight — order from the comfort of your couch. The grand opening of Farah El Charkawy’s new online-only patisserie Fôu, which we wrote about in yesterday's AM, is an invitation-only event. Excusez nous for the faux pas. But pastry fiends can still get their fix by ordering through Fôu’s website, which goes live tonight. Arbitration lawyer El Charkawy — late of Zulficar and Partners — attended top European culinary schools (including Alain Ducasse in France) to perfect her craft and we can’t wait to taste what she’s creating.

THE BIG STORIES ABROAD-

Russia + Turkey are leading the front pages in the global press this morning for a number of reasons:

  • The fate of the grain pact: Turkish President Recep Tayyip Erdogan expressed optimism that the Black Sea grain pact will soon be revived following talks with Vladimir Putin in Sochi yesterday. Moscow suspended the agreement in July and resumed a partial blockade on Ukraine’s ports because of what it said were unfair Western sanctions on its exports. (Associated Press | Reuters)
  • A Russo-Turkish gas hub could be in the offing: Moscow and Ankara are close to agreeing to set up a gas trading hub in Turkey, a move that will provide Russia with another avenue to export gas and strengthen Turkey’s position as a major energy player in the region. (Bloomberg)
  • Putin x Kim? The US is claiming that North Korean leader Kim Jong-Un will travel to Moscow later this month to discuss arms sales with Vladimir Putin. (Associated Press | Washington Post | Financial Times | New York Times | Wall Street Journal)

CIRCLE YOUR CALENDAR-

Calling all prospective master’s students: Applications for the UK government’s Chevening scholarship will open from Tuesday, 12 September and close on 7 November. The scholarship offers full financial support for students to pursue an eligible master’s degree at over 150 UK universities. Applications will be open here.

Taqa shareholders to vote on board shake-up post-stake sale: Taqa Arabia shareholders will convene for a general assembly meeting on 26 September to vote on restructuring the board and appointing new members, the company said in a bourse filing (pdf) yesterday. The meeting comes six weeks after the military’s National Service Projects Organization acquired a 20% stake in the firm.

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

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: Can Egyptian farmers tackle climate-related challenges with high-tech precision agriculture?

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Get ready to embark on a sensational journey of entertainment. From October through December, London will be illuminated by the brilliance of three remarkable events, sponsored exclusively by Somabay. The laughter will be unstoppable at the uproarious Egyptian Trilogy comedy tour, followed by the enchanting Samar Tarik. Brace yourselves for a captivating finale with the mesmerizing Farah El Dibany. Somabay brings you an unforgettable trifecta of events that will leave you utterly captivated and eagerly anticipating each spectacular moment.

2

Economy

Will the IMF arrive in Cairo on 15 September?

Are we on track for the September IMF review? There are conflicting signals from government officials regarding the IMF’s anticipated review of our USD 3 bn loan program. An official at the Finance Ministry we talked to yesterday expressed optimism that the Fund will complete the review — scheduled for 15 September under the original agreement — on time, paving the way for the disbursement of the second and third loan tranches. Asharq Business is less sanguine, quoting an unnamed source as telling it that it is unlikely the review will wrap up this month.

The first review was originally supposed to take place in mid-March but was postponed after we fell short on meeting several key conditions of the loan agreement. The IMF was reportedly waiting for progress on the state asset sale program and the transition to a fully flexible exchange rate. The delay means that the IMF is expected to roll the first and second reviews into one when it next comes to Cairo, which would see the disbursement of almost USD 700 mn.

No date has been set: Our source and Asharq’s agree that the IMF has not yet set a date for the visit, but emphasized that the relationship is on a good footing and that the government is regularly following-up with Fund officials. The worst case scenario? We could be waiting until the end of the year before Fund officials arrive in town, according to Asharq’s source.

Gov’t is moving in the right direction on some reforms: “The Fund is happy with recent government moves — investment incentives, updated privatization program, and efforts to boost FDI,” our Finance Ministry source said. The Fund has publicly welcomed the government’s recent decision to sell USD 1.9 bn of state-owned assets, a step towards fulfilling its privatization goals under the loan agreement. It also made moves to improve the investment environment for the private sector and level the playing field, such as making amendments to the investment law and passing legislation to end tax exemptions for some state-owned and military companies.

The elephant in the room: What happens to the EGP? Transitioning to a fully-flexible exchange rate was one of the key conditions for the loan program and one of the factors that postponed the first review, leading to the widespread assumption that the first and second reviews would be dependent on a further devaluation of the EGP. The central bank has allowed the EGP to devalue by almost half against the greenback over the past 18 months, though the EGP-USD exchange rate has remained unchanged since March. President Abdel Fattah El Sisi suggested in June that he would not allow the currency to further devalue if it came at the expense of the nation’s citizens.

But could privatization momentum persuade the IMF to look the other way (for now)? The latest update to privatization plans “may help the two sides reach an agreement and could push the IMF to postpone some of its other requirements,” according to the source cited by Asharq Business.

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3

Investment Watch

AfricInvest to invest USD 40 mn in British University in Egypt

AfricInvest buys into BUE: Pan-African private equity firm AfricInvest is investing USD 40 mn (EGP 1.2 bn) in British University in Egypt (BUE) to boost the university’s growth plans, BUE (pdf) and the cabinet said in separate statements yesterday. The investment will be made through a capital increase; the founding Khamis family will remain the majority shareholder of the university, the statement reads, without disclosing the size of the stake AfricaInvest is purchasing.

Is AfricInvest getting a 25% stake? A local media report back in April said the PE firm was eyeing a 25% stake in BUE in return for an investment of more than EGP 1 bn.

Big ticket: The investment “would be one of Egypt's largest foreign direct investments in education to date,” the statement reads. It also marks AfricInvest’s first investment in Egypt’s education sector, and third in the country after Masria Digital Payments and Carbon Holdings, according to its website.

Where the money’s going: The capital injection will help the university expand its existing faculties, establish new ones, diversify its curriculum, and implement “enhanced governance tools,” per the statement. AfricaInvest will also help BUE expand beyond the local market through partnerships “in Africa and the region.”

What’s next: The transaction still needs sign-off from regulators, the statement reads.

What they said: "This injection of capital, with ongoing support from the Egyptian government, will allow us to further the legacy of our founder — my late father, Mr. Mohamed Farid Khamis — by broadening the capabilities and academic reach of the university to ensure our leading role amongst educational institutions, not just in Egypt, but in the Middle East and Africa,” said Farida Khamis, chair of BUE’s board of trustees.

Advisors: Zilla Capital acted as the sole financial advisor to BUE on the transaction.

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4

M&A WATCH

Beltone Financial to acquire 100% of Egyptian microlender Cash

Beltone to complete Cash takeover in 3, 2, 1… Beltone Financial Holding has inked a share purchase agreement to acquire 100% of Minya-based microfinance provider Cash after completing due diligence on the company, the company said in a filing to the EGX (pdf) yesterday. The acquisition of Cash will be executed through the company and a number of its subsidiaries, according to the disclosure. Beltone declined to comment yesterday on the value of the transaction or its plans for Cash.

What’s next: Beltone is waiting on the approval of the Financial Regulatory Authority before finalizing the acquisition, it said.

Remember: Beltone last month received the greenlight from the FRA to conduct due diligence on Cash, almost a week after it inked an MoU to acquire the company.

AND- Beltone launches a new VC arm: Beltone launched a VC arm, dubbed Beltone Venture Capital, earlier this year with the aim of providing early stage funding to tech-enabled startups in impact sectors, the company’s communications chief Mamdouh Abdelwahab told us. BVC is looking to invest with average ticket sizes of USD 250k, he said, adding that the firm currently holds a minority stake in healthcare startup Sehatech, and has also invested in Bosta and Wayup Sports. Abdelwahab declined to comment on the size of the firm’s current portfolio or its targeted investments.

ICYMI- Beltone has plenty of dry powder after in July closing a landmark EGP 10 bn capital increase, placing some 5 bn new shares on the EGX.

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5

Energy

Israel, Cyprus + Greece are about to make big decisions about the future of East Med gas

Big decisions will soon be made about how to get Israeli gas to Europe. Israel, Greece, and Cyprus agreed yesterday to form a deeper trilateral energy partnership to export Israeli gas to Europe and connect their energy grids, Reuters reports. The leaders of the three countries held a summit in the Cypriot capital yesterday amid new momentum behind a proposal to establish a gas pipeline connecting Israel and Europe.

Remember: Greece, Israel and Cyprus are — individually and in combinations — both partners and competitors of Egypt when it comes to energy exports to Europe. There are multiple competing projects on the drawing board to build an electricity interconnector from Egypt to Greece. Egypt has for years been working to bring fresh stocks of natural gas from both Israel and Cyprus, and Greece has emerged as a key Egyptian partner on East Med energy policy.

Israel is clearly mulling its options: “We will have to decide soon about how Israel exports its gas and the same decisions have to be made by Cyprus. We are looking at the possibility of cooperating on this,” said Israeli PM Benjamin Netanyahu. “Those decisions will be made, I think, in the next three to six months, probably closer to three months.”

Egypt is currently the only way Israel can ship its gas out of the region: With no pipelines or LNG terminals of its own, Israel currently sells around 4.6 bcm of natural gas a year to Egypt, which then exports a portion to Europe via its LNG facilities and uses the rest for local consumption.

The problem: Declining natural gas production in Egypt means that less of this Israeli gas is going to be destined for the EU. That’s a problem for Europe, which is pushing hard to find new energy sources to replace Russian hydrocarbons — and a problem for Israel, which faces limitations on how far it can take its energy partnership with the Europeans. Increasing gas supplies to Egypt could help remedy the situation, something that Tel Aviv wants to do but likely won’t be able to achieve for at least another two years.

Israel + Cyprus have been looking for other options: Long-term plans for a direct, 2k-km pipeline between Israel’s gas fields and Cyprus have been dusted off in recent weeks despite concerns about the cost and technical challenges of the line, with officials from both countries discussing the idea and Italian energy firm Edison throwing its weight behind the plan.

The same debate is playing out in Cyprus right now: Whether to export its gas via Egypt or cut us out (in whole or in part) and get its own LNG terminal is currently being contested between the Cypriot government, the operating company of its biggest gas field, Chevron, and apparently Washington, where the Biden administration is reportedly backing Chevron’s bid to link the massive Aphrodite field to Egypt.

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6

Energy

SDX Energy has found a buyer for its Egyptian assets

SDX signs sale agreement for local assets: London-based, Egypt-focused SDX Energy has inked a heads of terms — a non-binding letter of intent — to sell its entire Egypt portfolio to an unnamed “large multinational operator,” the company said in a statement (pdf) last week. The company expects to close the transaction by the end of the year.

Nothing’s set in stone: “The heads of terms are non-binding and, therefore, there can be no certainty that the disposal will complete,” the statement reads. It’s considered unusual in the industry for a company to disclose a non-binding agreement to transact, a veteran industry player tells us.

Remember: The company in June said that it had received multiple offers for its Egyptian assets and that its board was evaluating them. SDX — which currently operates only in Egypt and Morocco — has a 55% working interest in two gas fields and a 100% working interest in a third field at the South Disouq concession in the Nile Delta. It also holds a 50% working interest in two blocks in the West Gharib concession in the Eastern Desert, according to its website.

The company wants to focus on operations in Morocco: “The disposal will position the

company for upcoming diversification into Morocco's energy transition sector,” the company said. “SDX, re-energized with new management, will focus on monetizing exciting opportunities around its Moroccan assets and related energy transition sector-plays,” Managing Director Daniel Gould said.

There are quite a few requirements to fulfill: SDX still has to negotiate the final transaction and secure the approval of its shareholders and the Egyptian government.

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7

Commodities

Egypt buys almost 500k tons of Russian wheat

Big Russian wheat buy: GASC bought 480k metric tons of wheat from Russian commodity trader Solaris in a direct purchase on Friday, Reuters reports, citing four unnamed traders. The state grain buyer reportedly bought the wheat for USD 270 per metric ton on a cost and freight basis (C&F).

With a side order of Bulgarian wheat: GASC also directly bought one cargo of Bulgarian wheat at the same price C&F on Friday, Reuters says.

When the price is right: The price is lower than the offers submitted by Russian traders in an international tender last week, where they apparently stuck to an unofficial price floor set by the Russian government at some USD 270 per ton on a free-on-board (FOB) basis — meaning shipping costs are not included in the offer. GASC chose to buy from Romanian and French suppliers in that tender, with traders telling Reuters that the price floor had hampered the competitiveness of Russian offers. The price secured is also lower than the typical offers in an international tender.

There’s a lack of consensus regarding Russia’s wheat price floor, which has been varying based on the type of sale and the month in which the sale occurs, with discounts for lower grades of protein wheat, according to traders. The wheat floor is not legally binding but traders are expected to adhere to it.

REMEMBER- GASC began to buy directly from suppliers — rather than through its traditional international tenders — last year, after the war in Ukraine triggered a surge in global food prices.

Russia is our biggest supplier: Egypt has imported close to 2 mn tons of Russian wheat so far in 2023, according to our math. This week’s direct purchase is the second big buy this year after GASC bought 600k tons in May.

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8

Moves

EBRD appoints new East Med director

EBRD has a new East Med director: The European Bank for Reconstruction and Development (EBRD) has appointed Gretchen Biery as its eastern Mediterranean director effective 1 September, the lender said in a statement yesterday. Briery will lead the bank’s operations in Jordan, Lebanon, and the West Bank and Gaza, reporting to SEMED Managing Director Heike Harmgart.

Biery has been working with the EBRD since 2018, first heading up its operations in Lebanon before becoming a senior advisor to Harmgart. Prior to that, Biery held positions at the US Treasury and several multilateral development banks, as well as working as a consultant to bilateral investment agencies. She succeeds Philip ter Woort.

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9

LAST NIGHT’S TALK SHOWS

Africa climate talks earn a mention during a graveyard night on the airwaves

Have we reached peak boredom on the nation’s talk shows? Last night continued this week’s run of low-info, low-interest coverage on the talk shows, having us reaching for the calendars to count the days before the rest of the nightly cast of talking heads are back from their summer vacations.

The highlights, such as they were: Half-hearted coverage of the African Climate Summit came up on Al Hayah Al Youm (watch runtime: 8:16 | 3:46) and wihile a new population control initiative launching this week got a bit of airtime on Al Hayah Al Youm (watch, runtime: 7:18) and Masaa DMC (watch, runtime: 2:51).

ELSEWHERE- Ahmed Moussa turned Sada El Balad into the National Food Channel for a few hours, while Masaa DMC scraped the bottom of the barrel with a segment on sea foam (watch, runtime: 5:11).

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10

Also on our Radar

Egypt’s future credit rating agency #2? PLUS: MidBank meets InstaPay, Banque Misr meets Tatweer Misr + EgyptAir meets Sao Paolo

CAPITAL MARKETS-

First entrant in the race to set up a second credit rating agency: MGM Financial and Banking Consultants Chairman Gamal Moharam have partnered up with unnamed investors to bid for a license to build a new credit agency, he is quoted as telling Al Ma l.

We had an idea this was coming: Moharam’s consortium has been in talks with the FRA to form the country’s second credit rating agency since last year. The investors were at the time looking to hire an ex-Moody’s industry expert to head the firm, Dreny and Partners Founding Partner Moataz Dreny told us.

REMEMBER- The FRA last month opened applications for a new local credit rating agency, saying that it would award a license to just one company. Firms have until 22 November to apply. The country currently only has one domestic credit rating agency, the Middle East Rating and Investors Service (MERIS).

BANKING-

#1- Midbank gets on the Instapay bandwagon: Midbank has announced that its clients will have access to instant payment network Instapay, it said in a LinkedIn post. Instapay allows users to transfer money instantly between bank accounts and digital wallets.

#2- Banque Misr x Tatweer Misr: Banque Misr is set to provide real estate developer Tatweer Misr’s smart cities, BM said in a statement (pdf). Banque Misr will roll out its services to customers across six of the developer’s smart projects in Cairo, Ain Sokhna, the Red Sea, and the North Coast.

CONSTRUCTION-

Local construction companies eyeing business in Iraq: The Housing Ministry is putting together a list of local construction companies that it recommends for taking on infrastructure projects in Iraq,Housing Minister Assem El Gazzar said in a meeting with Iraqi Ambassador to Egypt Ahmed Al Dulaimi. El Gazzar met with his Iraqi counterpart last month to discuss the potential involvement of Egyptian construction companies in Iraqi development projects. Egypt has long advocated to get our firms involved in the country’s reconstruction.

TRANSPORT-

EgyptAir lands in Sao Paulo: EgyptAir yesterday touched down in Sao Paulo, Brazil, for the first time, according to Youm7. The national flag carrier will make two flights a month between Cairo and the Brazilian city.

PHARMA-

Some relief for the pharma sector: A backlog of pharma raw materials imports worth some USD 120-130 mn stuck at our ports could be cleared this month, Gamal El Leithy, head of the Federation of Egyptian Industries’ pharma division, is quoted as telling Al Borsa. The FX crunch has meant that companies have only been able to access 30% of the needed imported raw materials in recent months, putting pressure on local medical supplies and triggering fears of shortages.

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11

PLANET FINANCE

Economists expect slower global growth in 2024

Could we be looking at slower global growth in 2024? Some economists are growing more cautious about global growth prospects for 2024 as central banks in major economies look poised to delay rate cuts, the Financial Times reports. Globally, “output will expand 2.1% in 2024, according to an aggregation of forecasts by the consultancy Consensus Economics, down from the 2.4% the economy is expected to log this year,” the salmon-colored paper writes.

EGX30

18,911

+1.0% (YTD: +29.5%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

19.25% deposit

20.25% lending

Tadawul

11,431

-0.2% (YTD: +9.1%)

ADX

9,748

-0.4% (YTD: -4.5%)

DFM

4,069

-0.5% (YTD: +22.0%)

S&P 500

4,516

+0.2% (YTD: +17.6%)

FTSE 100

7,453

-0.2% (YTD: 0.0%)

Euro Stoxx 50

4,280

-0.1% (YTD: +12.8%)

Brent crude

USD 89.00

+0.5%

Natural gas (Nymex)

USD 2.67

-3.6%

Gold

USD 1,964.20

-0.2%

BTC

USD 25,821

-0.8% (YTD: +56.6%)

THE CLOSING BELL-

The EGX30 rose 1.0% at yesterday’s close on turnover of EGP 2.19 bn (4.1% above the 90-day average). Foreign investors were net sellers. The index is up 29.5% YTD.

In the green: Alexandria Containers and Cargo Handling (+5.3%), TMG Holding (+5.0%) and Ezz Steel (+4.1%).

In the red: GB Corop (-1.9%), B Investments Holding (-1.8%) and Orascom Development Egypt (-1.4%).

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Our weekly deep dive into the green economy and ESG issue in Egypt.

Published every Tuesday in EnterpriseAM.

Read going Green
12

Going Green

How tech can help Egyptian farmers adapt to climate change

Can Egyptian farmers tackle climate-related challenges with high-tech precision agriculture? Rising temperatures, water scarcity, and soil deterioration mean some Egyptian farmers are seeing a decline in the yield and quality of their crops. That’s hurting Egyptian farmers in the pocket and even forcing some to sell their land, as well as contributing to rising food prices — with worrying repercussions for the country’s food security. In this week’s Going Green, we take a look at how tech-driven precision agriculture — which uses tools from data analysis to satellite imaging and AI — could help local farmers adapt to some of the worst effects of climate change.

Farming is getting harder thanks to climate change: Global farming productivity is set to decline 15% worldwide by 2050 as a result of rising temperatures and unstable weather patterns, according to the UN Food and Agriculture Organization (FAO). Key local crops including wheat, rice and maize could see productivity decline by 11-19% by 2050, according to Egypt's Human Development Report 2021 (pdf). In recent years, Egyptian farmers have been forced to adapt to help tackle that decline, planting more heat-resistant crops like cotton and delaying the planting of more sensitive crops including tomatoes as summer temperatures increase.

Local farmers are leaving land fallow thanks to the heat: “Some farmers didn't cultivate all of their land this summer because of the heat wave,” Visual and AI Solutions (VAIS) co-founders Mohamed El Helw and Karim Amer told us.

How can precision agriculture help? Precision agriculture or smart farming is a farm management approach that uses data from high-resolution satellite imagery, remote sensors, machine learning algorithms, and other tech to provide customized advice on what, when, and how to grow. It can also alert farmers to incoming weather, pest, and disease threats that might affect crop yields or livestock welfare, says a UNDP report (pdf).

This data-driven app roach can increase the overall profitability of farming, cut down on physical labor requirements, and minimize overall environmental footprint by reducing the need for artificial fertilizers and pesticides. With monitoring, data collection, and communication often delivered via smartphone, precision agriculture could be an affordable and accessible approach for farmers in emerging countries, writes UNDP.

We’re behind the pack when it comes to agritech: Many emerging markets have seen five to ten years of agritech development, but Egyptian farmers still lack access to advanced, affordable, and accessible agritech tools, Walid Nasr, CEO of digital agriculture and precision farming platform Zr3i, told Enterprise. Where local players are using tech solutions, they’re largely imported, according to Muhammad Salim, CEO of smart devices solutions provider Tomatiki. “If you look into the agriculture sector, there's no real technology at all,” Salim told us. “If you ask the farmers that are smallholders or large agricultural producers, you'll find they depend on technology coming from outside.”

Some Egyptian startups are creating homegrown solutions using satellite data: VAIS combines virtual field probing using data from commercial and public satellites with AI algorithms. The company monitors plant growth, stress, and signs of disease, and supplies climate-related event predictions, irrigation scheduling, and disease scouting. It currently works over some 1k acres of medium- to large-sized farms in Egypt, with an additional 30k acres in the pipeline, Amer said. A similar service from Zr3i has helped farmers increase their yield production by 10%, resulting in a 20-30% profitability increase, CEO Nasr told Enterprise.

Sensors are another way to go: Tomatiki uses sensors and microcontrollers in greenhouses to automatically control the temperature, humidity, sunlight, and CO2 levels, helping determine irrigation and fertilization schedules for optimal plant growth.

Local startups are also working on data-driven ins. products: To mitigate some of the risks of unpredictable and extreme weather, Zr3i plans to introduce satellite data-informed crop ins. in collaboration with state-owned firm Misr Ins. Holding. Using historic satellite imaging of farms and weather patterns from up to three years prior, Zr3i can provide detailed risk assessments to help ascertain the appropriate ins. premium for a farm. In the case of an incident, Zr3i will also provide data from before, during, and after the event that will inform an ins. payout. The company is currently in talks with UNDP to sponsor the first 30 crop ins. policies expected to begin in September.

Technological and legal limitations persist: High-tech solutions in agriculture make sense with the influx of new farmers from non-farming backgrounds, Zr3i’s Walid Nasr told Enterprise. However, Nasr and other industry insiders that spoke to us also stressed that precision agriculture is held back by technological limitations. Poor Wi-Fi in particular complicates the use of potentially easy-to-install and cheap hardware, while legal restrictions on drones make a potentially valuable tool inaccessible.

Where are the VCs? The local farming industry should be a promising field for investors, yet not many are interested, VAIS’ El Helw told Enterprise. Zr3i’s Walid Nasr put the notable absence of venture capital firms in agritech down to a perception of the industry as high-risk. Accelerators do exist — but they’re more useful for building networks than attracting investment, said Nasr. And while funding from major development institutions is available, the process is lengthy and arduous, El Helw said.

Agritech’s struggle to draw investors in the current climate is a global problem, writes the Financial Times, with VC investments in the agritech and foodtech sectors plummeting 44% y-o-y in 2022 amid rising interest rates, costs, and concerns over startups’ business models.

Your top green economy stories for the week:

  • The future Sohag wind hub is growing: Orascom Construction, Engie and Toyota Tsusho have land in Sohag for their planned 3-GW wind farm.
  • Financial close for Acwa’s Kom Ombo solar plant: Acwa Power has achieved financial close for its 200 MW solar project in Kom Ombo, the largest privately-owned solar plant in the country.
  • Fourth Dabaa reactor approved: The Egyptian Nuclear and Radiological Regulatory Authority gave the all-clear to Rosatom and co. to proceed with the construction of the fourth 1.2-GW reactor at the Dabaa nuclear plant.
  • Another step towards a local carbon credit market: The Financial Regulatory Authority released its carbon credit verification and certification standards, a key part of the regulatory framework for the anticipated voluntary carbon market.
  • SCA inks new agreement with Maersk: The Suez Canal Authority signed an agreement with multinational shipping giant Maersk to collaborate on green transformation projects, tugboat construction, ship recycling, and workforce training.
  • Green hydrogen council set to arrive in cabinet: The cabinet-approved council will be tasked with overseeing the implementation of the government’s green hydrogen strategy.
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CALENDAR

SEPTEMBER

September: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

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.

End of September: ADQ to acquire stakes in Elab, Ethydco and EDC.

3-5 September (Sunday-Tuesday): Pharmaconex, Egypt International Exhibition Centre, Cairo.

4-6 September (Monday-Wednesday): Africa Climate Summit, Nairobi, Kenya.

5 September (Tuesday): National Dialogue.

7-8 (Thursday-Friday): Regional Forum for Sustainability & Development, Cairo.

7 September (Wednesday): National Dialogue.

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.

13-14 September (Wednesday-Thursday): Hydrogen Egypt Summit, Nile Ritz Carlton, Cairo.

13 September (Wednesday): Deadline for settling outstanding military service in FX.

15 September (Friday): Ultraibex Wadi Degla Protectorate clean-up event.

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

15 September (Friday): Deadline for applications to EGYAID scholarship 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, Cairo.

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

18-19 September (Monday-Tuesday): Enterprise Finance Forum, St. Regis Hotel, Cairo.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

20-23 September (Wednesday-Saturday): Cityscape Egypt, Egypt International Exhibition Center, Cairo.

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

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).

26 September (Tuesday): Taqa Arabia’s ordinary general assembly meeting.

27 September (Wednesday): Deadline for bidding in the fifth phase of the investment map offered by the Industrial Development Authority (IDA).

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

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

30 September (Saturday): The start of the new academic year for Egyptian universities.

30 September (Saturday): The start of the new academic year for Egyptian schools.

OCTOBER

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

October: Egyptian-Jordanian Business Council, Amman, Jordan.

October: Gov’t expects to finalize sale of Gabal El Zeit wind plant.

October - November: Gov’t expects to finalize sale of military-owned fuel retailer Wataniya.

1-3 October (Sunday-Tuesday) International Expotec for water economics management, Egypt International Exhibition Center, Fifth Settlement, Cairo.

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.

2 October (Monday): Government meeting with investors to look into liberalizing electricity grid.

6 October (Friday): Armed Forces Day.

9 October (Monday): The Narrative PR Summit, Somabay Red Sea.

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

10-12 October ( Tuesday-Thursday) Ceramica Expo, Cairo International Convention Center.

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.

22 November (Wednesday): Deadline to apply to FRA for credit rating license.

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

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

DECEMBER

December: Gov’t expects to finalize sale of military-owned bottled drinks company Safi.

December: Gov’t expects to finalize sale of Zafarana wind farm.

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.

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.

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

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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