Both CI Capital, Thndr are expanding into the Gulf

Wednesday, 29 May 2024

Both CI Capital, Thndr are expanding into the Gulf

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Today at a glance

PHARMA

Pricier pharma products ahead.

Capital markets

Thndr gets regulatory greenlight to hit the UAE market.

WHAT WE’RE TRACKING TODAY

Egypt wants to welcome up to 16.5 mn tourists this year.

LAST NIGHT’S TALK SHOWS

What can we expect from El Sisi’s time in China?

WHAT WE’RE TRACKING TODAY

Another green methanol facility incoming?

DEBT WATCH

Tasaheel raises EGP 3.8 bn from second securitized social sustainability bond issuance.

EARNINGS WATCH

Palm Hills, CI Capital, Raya Holding, GB Corp report earnings.

PLANET FINANCE

Yellen’s take on voluntary carbon markets.

What can local contractors do to expedite their expansion abroad? Hardhat)

WHAT WE’RE TRACKING TODAY

More SFE sub-funds incoming?

Good morning, friends. The news flow has picked up following a couple of slow days with news of not one, but two Egyptian financial companies heading to the Gulf — and a whole lot of earnings.

BUT FIRST, a programming note: We are postponing our Enterprise Optimism Forum. We’re really looking forward to debating with many of you the case for optimism in general — and, more specifically, how business leaders should be thinking about building a resilient business that can thrive in any economic cycle. We’re also incredibly grateful to the hundreds and hundreds of you who asked to be invited — and to the start-studded list of speakers who had agreed to appear on stage. We’ve pushed the date back for external reasons and will let you know soon when we’ve rescheduled. Folks who let us know they were interested in attending will get a separate email from us later today.

WATCH THIS SPACE- We’re very excited to announce the next event in our conference lineup: Our flagship Enterprise Finance Forum, which returns this September. More details next week, friends.

DATA POINT-

Egypt is looking to welcome some 15.5-16.5 mn tourists this year, Tourism Minister Ahmed Issa told Sky News Arabia (watch, runtime: 9:30). The ministry has revised its initial target of 17-18 mn due to geopolitical tensions.

This would still be the biggest year for tourism on record: Even the lower end of this year’s targets would see over 1.5 mn more tourists set foot in Egypt than they did in 2023 — when Egypt welcomed in a record 14.9 mn tourists, beating its previous high of 14.7 mn set in 2010.

Remember: Tourist arrivals to Egypt increased 27% y-o-y in the first four months of the year, with visitors from Arab countries accounting for around 54% of all arrivals.

FACT CHECK-

No tax hikes, says FinMin: There will be no increase to income tax rates or brackets, Finance Minister Mohamed Maait said on Tuesday, in response to media reports that claimed otherwise.

WATCH THIS SPACE-

#1- Another green methanol facility in the works? ADQ’s AD Ports has inked an MoU with Egyptian shipping giant Transmar and Orascom Construction to explore the possibility of setting up a green methanol storage and export facility targeting maritime transport, according to a statement.

#2- Yet more SFE sub-funds on the way? The government is looking to launch a telecom-focused sub-fund under the Sovereign Fund of Egypt (SFE) within weeks, reports Al Borsa, citing unnamed sources. The fund’s legal advisor Baker McKenzie is close to completing the necessary procedures to set up the fund, the sources added. The government is also in the process of establishing an agriculture sub-fund.

Also in the pipeline: The government is working to launch an industry-focused sub-fund in July, which Al Borsa’s sources say will have a capital of EGP 12 bn.

HAPPENING TODAY-

#1- The two-day Solar & Storage Live MENA conference kicks off in Cairo today, featuring 150 industry leaders, 150 exhibitioners, and a string of networking sessions. Those working in utilities and independent power producers will meet with financiers, government bodies, regulators, distributors, and contractors, to discuss all things green transition. Register for the event here and check out the agenda here.

#2- Key tech players meet in Morocco: Tech summit GITEX Africa 2024 gets started today in Marrakesh and runs until Friday. The event gathers startups, entrepreneurs, government officials, tech leaders, and industry experts from 130 countries. Expect forums on cybersecurity, Africa’s AI talent pool, tech regulation. and the ethics of AI, as well as networking and training sessions. Check out the full agenda here.

PSA-

WEATHER- It will continue to cool down in Cairo today, with a high of 30°C and a low of 20°C, according to our favorite weather app.

It’s even cooler in Alexandria, with a high of 25°C and a low of 19°C.

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

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

CIRCLE YOUR CALENDAR-

#1- National Dialogue to discuss national security: The National Dialogue’s board will meet on Saturday to discuss issues of national security and foreign policy, General Coordinator Diaa Rashwan said on Monday. The meeting will also address government efforts to implement the outcomes of the dialogue’s first phase, Rashwan added.

#2- Sudanese peace talks in Egypt next month: Egypt will host a conference that brings together Sudanese civilian political groups and regional and global parties at the end of June, according to a statement from the Foreign Ministry spokesperson. The conference will aim to produce a comprehensive and permanent peace agreement “within the framework of Sudan’s sovereignty and territorial integrity, not interfering in its internal affairs and preserving its institutions,” the statement said.

Remember:Egypt has been attempting to put an end to the Sudanese civil war between the country’s army chief and de facto ruler General Abdel Fattah Al Burhan and the Rapid Support Forces led by General Mohamed Hamdan Dagalo.

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

THE BIG STORY ABROAD-

A big US M&A and another fresh high for Wall Street are the big business stories this morning, but they’re being largely overshadowed in the US and UK by political news.

UP FIRST- The tech-heavy Nasdaq Composite has hit a fresh high at yesterday’s close, rising 0.6% to break the 17k barrier for the first time as traders returned from a three-day weekend. (CNBC)

AND- Shareholders of Hess voted yesterday to sell their company to Chevron in a USD 53 bn transaction. It’s still far from certain that sale will go through, because…

…Exxon is still looking for a way to scupper it. The story is perhaps a bit less dramatic than the 1980s oil patch soap Dallas, but if you want the inside dirt of what’s keeping the energy industry in thrall, go read: The leaders of Exxon Mobil, Chevron and Hess are duking it out over a generational oil discovery in Guyana in the Wall Street Journal. Both the WSJ and the FT are giving the shareholder vote prominent play on their front pages this morning.

IN EUROPE, an “investment shock”: Emmanuel Macron wrapped a three-day visit to Germany with the announcement that Paris and Berlin will work together to deliver an “investment shock” to the European Union to provide more incentives for manufacturers and business working on advanced technologies, writes Handelsblatt. Macron and his German counterpart, Olaf Sholz, telegraphed the move in an op-ed for the Financial Times earlier this week that argued the EU needs “more single market, innovation and investment to secure a common future.” The impetus? Countering China.

IN WAR and politics:

#1- Israeli tanks and troops have reached the center of Rafah in “a sign the military could be nearing its goal of taking full control of the southern Gazan city.” The story leads the front pages from Bloomberg through to the Financial Times.

Oh, and that US pier that was going to feed Gaza? Satellite imagery shows that it’s broken apart, CNN reports.

#2- Closing arguments wrapped late yesterday in Donald Trump’s criminal hush-money trial, with the prosecutor taking six hours to bring the case home and the defense three. The jury should get the case today to start deliberations and could deliver a verdict anytime afterward.

FOOD FOR THOUGHT this morning: There are no signs that traffic will soon return to the Suez Canal as Dubai and Jeddah open new routes to Saudi Arabia and major players continue to steam around the Horn of Africa rather than transit through Egypt. The FT goes deep into how pirate attacks, instability in the Middle East, and climate change are putting “mounting strains on global shipping.”

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We take a look at what local contractors can do to expedite their expansion abroad.

Tags:

Sovereign Fund of Egypt WHAT WE’RE TRACKING TODAY

Experience the thrill of the Somabay Endurance Festival with six races to test your limits over three days of adventure. It’s your ultimate opportunity to challenge yourself and become a true champion. Get ready to conquer running, swimming, cycling, and shooting in an epic adventure from 30 May to 1 June.

PHARMA

Egypt will see pricier pharma products starting next week

Price hikes to hit pharma sector: Some 200 pharma products could be subject to price hikes ranging from 5-20% starting next week, a pharma source told Enterprise, adding that the price hikes will eventually hit a total of 1.5k products over the coming 12 months.

The details: Each pharma company’s best-selling items will be subject to price increases. The price hikes will be determined based on the increase in cost of production and whether or not the med is for chronic illness, our source added, explaining that chronic medication will be subject to a smaller increase.

Is it enough? The increases are in line with what pharma players wanted, the source said, adding that prices will be reevaluated in three months. Future price hikes — or reductions — will follow the USD / EGP exchange rate.

Less than they wanted: Pharma players were initially demanding a 50% price hike, but were bracing for the hikes to be around 25%, prior to the pharma division’s meeting with the Egyptian Drug Authority.

ICYMI: The news follows statements from Prime Minister Moustafa Madbouly on Monday that hinted at the government raising the prices of subsidized bread, fuel, and electricity.

Tags:

Capital markets

Egyptian investment platform Thndr is hitting the Emirati market. PLUS: CI Capital eyes GCC expansion

Thndr heads to the UAE: Homegrown digital investment platform Thndr has received the greenlight from the Abu Dhabi Global Market Financial Services Regulatory Authority to enter the Emirati market, according to a statement from the startup.

What’s next? Emirati Thndr users will be able to invest in US securities — including stocks, exchange-traded funds, and fractional shares — on the app, with no minimum investment. More investment products will be rolled out over time, the statement added.

Thndr? Founded in 2020 by former Uber execs Ahmad Hammouda and Seif Amr, Thndr is an equities trading platform that allows people to invest in Egyptian mutual funds and publicly listed companies, as well as US stocks, using its mobile app. It’s the most popular investment platform in the country by number of trades and some USD 1.8 bn was traded on the app last year. Some 8.5% of all retail transactions in the Egyptian market were made via Thndr as of April 2024. First time investors make up 87% of the platform’s user base.

The company’s four guiding pillars have helped build its success and will guide its approach in the UAE, the statement said. The four pillars include “the creation of an investment superstore, offering a variety of investment options based on individual needs”, the company’s “belief and commitment to local regulator” that has helped it stay ahead, its efforts to “demystify investing through content,” and finally the platform being user-first in how its designed, “making it easy-to-use and tailored to the needs of everyday young investors.”

CI CAPITAL TO FOLLOW SUIT-

CI Capital announces GCC expansion plans: State-owned financial services group CI Capital has announced its intentions to set up an “on-the-ground presence” for its investment bank in Saudi Arabia and the UAE, group CEO Hesham Gohar said in a press release (pdf). Gohar described the two countries as “two very important markets with robust growth, deepening capital markets and significant investor appetite.”

Tags:

capital markets CI Capital financial services Fintech Thndr UAE

DEBT WATCH

Egypt’s Tasaheel raises EGP 3.8 bn from second securitized social sustainability bond issuance

Tasaheel issues social sustainability bonds for the second time this year: MNT-Halan microfinance subsidiary Tasaheel Finance has issued its second EGP 3.8 bn tranche of a wider three-year EGP 13 bn program, the transactions’ financial advisor CI Capital said in a statement (pdf). The issuance came in six tranches rated A- and P1 by Middle East Rating Services (MERIS) with maturities ranging from 6-32 months.

Remember: Tasaheel kicked off the program in January, with a EGP 3.8 bn issuance, which marked the first time that a securitized social sustainability bond issuance had taken place in Egypt and Africa.

SOUND SMART: Social sustainability bonds are bonds whose proceeds are used to finance projects with a positive social income, including poverty alleviation, improving electricity access, and making education more accessible. In this case, the proceeds will be used to finance projects “with a social dimension” that “contribute to sustainable development goals,” the company said during its initial issuance at the start of the year.

Advisors: CI Capital acted as financial advisor, arranger, general coordinator, promoter, and transaction manager. Matouk Bassiouny & Hennawy was legal counsel and Russell Bedford was the auditor.

DATA POINT- Companies have raised EGP 13.8 bn from securitization so far this year, according to data tracked by Enterprise.

Tags:

debt debt watch securitization Tasaheel

EARNINGS WATCH

PHD, CI Capital, Raya Holding, GB Corp report 1Q earnings

It’s raining earnings. Companies continued to publish their first quarter earnings. This morning we have very healthy earrings from Palm Hills, Raya Holding, CI Capital, and GB Corp.

PALM HILLS LOGS RECORD SALES IN 1Q 2024-

Real estate developer Palm Hills Developments (PHD) saw its top line rise 77% y-o-y to EGP 6.2 bn during the first quarter of the year, according to its latest earnings release (pdf). The developer’s net income after tax and minority interest jumped 297% y-o-y to just over EGP 1 bn during the same period.

New sales hit a record EGP 32.3 bn during the quarter, up 377% y-o-y on back of “strong demand across all the operating regions,” the company said.

Looking ahead: “Our real estate and commercial development pipeline will sustain their pace of expansion throughout the remainder of the year, and we will continue to actively explore opportunities through strategic land bank replenishment — in line with our strategic objectives — complemented by new launches in the existing projects,” said Executive Chairman Yasseen Mansour.

CI CAPITAL SEES “STRONGEST EVER” QUARTER-

CI Capital’s net income after minority interest and taxes rose 194% y-o-y in the first quarter of the year to EGP 939 mn, which CEO Hesham Gohar attributed to “solid top-line growth across all verticals in addition to solid treasury and liquidity management,” according to a press release (pdf).

The company’s top line climbed 79% y-o-y to EGP 2.9 bn in the quarter. Revenues from its corporate leasing activities were up 68% y-o-y to EGP 1.6 bn, while its mortgage finance wing saw its revenues rise 177% y-o-y to EGP 99 mn. Revenues from its investment bank also saw a strong growth of 104% y-o-y to EGP 528 mn. The group’s total financing portfolio was up 4% y-o-y in 1Q 2024 to EGP 20.7 bn.

RAYA HOLDING NET INCOME ON THE RISE-

Raya Holding saw its net income after minority interest climb 125% y-o-y in 1Q 2024 to reach EGP 378 mn, mainly driven by the company’s thriving exports-oriented businesses such as its IT wing Raya IT, business process outsourcing wing RCX, and F&B supplier Raya Foods, according to its latest board of director’s report (pdf) to accompany its consolidated financial statements (pdf) for the first quarter of the year.

Revenues were up 59% y-o-y to EGP 10.4 bn during the three months to March, fueled by foreign currency revenues — which account for 26% of the group’s business — increasing by 65% to EGP 2.7 bn, and strong performance across Raya’s subsidiaries.

The breakdown: Raya’s trade and distribution business unit generated 45% of Raya’s total revenues for the year, reaching EGP 4.7 bn in 1Q 2024, up 66% y-o-y. The second biggest contributor was the firm’s IT arm and its subsidiaries with 24%, amounting to EGP 2.5 bn, with a 98% y-o-y increase, while the group’s NBFS business came in third contributing nearly 13% of total revenues with EGP 1.3 bn for the period, up 23% y-o-y.

GB CORP BOTTOM LINE SPIKES IN 1Q-

GB Corp’s net income surged 481.6% y-o-y to record EGP 626.3 mn in 1Q 2024, “mainly driven by increased revenues and enhanced efficiency across the majority of lines of business as well as improved improved supply,” the company said in a press release (pdf). Revenues almost doubled during the quarter to record EGP 9.0 bn “as the market started to acclimate to the floatation of the EGP.”

Driving the growth: The company’s automotive assembly and distribution unit GB Auto — which contributed 85% of the group’s total revenue — saw its revenues rise 97.7% y-o-y to EGP 7.7 bn, led by “dynamic pricing strategies and diverse product mix across its lines of business,” the release said. The group’s NBFS arm GB Capital saw its revenues rise 43.2% y-o-y to EGP 1.4 bn driven by “an expansion in the company’s offerings, which cater to the rising demand for alternative financing solutions,” the company said.

The fine print: GB Corp’s auto segment now encompasses both its Egyptian and Iraqi operations (including sales and after-sales), a move adopted in 1Q 24, the statement said.

Tags:

CI Capital earnings watch GB Auto GB Capital GB Corp Palm Hills Developments Raya Holding real estate

LAST NIGHT’S TALK SHOWS

What can we expect from Egypt’s El Sisi’s time in China?

It was a diplomacy-heavy night on the airwaves: The nation’s talking heads last night brought us coverage of President Abdel Fattah El Sisi’s time in China and a number of nations officials recognizing Palestine.

El Sisi in China: The president landed in Beijing yesterday and his schedule is packed during his time there, which includes talks with Chinese President Xi Jinping to discuss strengthening Egyptian-Chinese relations and cooperation across various fields. The two sides will also discuss a number of regional and international issues, including the war on Gaza. Ala Masouleety (watch, runtime: 3:23), Al Hayah Al Youm (watch, runtime: 5:58), and Masa’a DMC (watch, runtime: 7:01) had coverage.

Palestinian recognition: Ireland, Norway and Spain formally recognized the state of Palestine yesterday, a move that received coverage from Ala Masouleety (watch, runtime: 9:56) and Al Hayah Al Youm (watch, runtime: 1:35). “The decision came at the right time,” Irish Foreign Minister Micheal Martin told Ala Masouleety (watch, runtime: 3:35), calling on EU countries to follow suit.

Tags:

Abdel Fattah El Sisi China LAST NIGHT’S TALK SHOWS Middle East politics

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ALSO ON OUR RADAR

Egypt an export hub for palm oil?

COMMODITIES-

Malaysia has plans to turn Egypt into an export hub for palm oil: Malaysia intends to set up a logistics and marketing center for palm oil in the Suez Canal Economic Zone to enhance the country’s exports to Africa, the country’s Plantation and Commodities Minister Johari Abdul Ghani said on the sidelines of the Malaysian Palm Oil Forum in Cairo yesterday, Al Borsa reported. Malaysia currently exports 2.5 mn tons of palm oil to African countries every year, Abdul Ghani added.

What’s next: Abdul Ghani will be paying a visit to the SCZone today to learn about incentives on offer.

Tags:

ALSO ON OUR RADAR commodities Egypt-Malaysia relations Suez Canal Economic Zone

PLANET FINANCE

Voluntary carbon markets are no panacea. Plus: Wall Street moves to T+1 settlement cycle.

Voluntary carbon markets aren’t going to solve the climate crisis by themselves, US Treasury Secretary Janet Yellen argued yesterday. Voluntary carbon markets “have the potential to support significant decarbonization,” but that’s only if we make sure that the carbon credits on offer in the market “meet high-quality atmospheric integrity standards.”

ICYMI: The Biden administration along with the departments of treasury, energy, and agriculture released their Voluntary Carbon Markets Joint Policy Statement and Principles (pdf) yesterday.

Not all carbon credits do what they say on the tin: Yellen called for greater “supply integrity,” pushing for carbon credits offered up on the market to “represent real emissions reduction and removals” and for there to be regulations in place to “avoid negative environmental and social impact.” In this relatively unregulated market, “we’ve seen too many examples where credits fail to meet this criteria,” Yellen added.

Yellen also called out corporate buyers: “Corporate buyers should prioritize reducing their own emissions, particularly through transition planning, adopting net-zero targets, and transparently reporting on progress,” Yellen argued in her pitch for “demand integrity,” rejecting the notion that companies can just rely on offsetting their emissions through carbon credits to fill their responsibilities to the climate.

The market also needs to be more transparent: In her third pillar for sorting out the voluntary carbon market in the US, Yellen called for market integrity, adding that the voluntary carbon market is “a fragmented market, with high search costs and low transparency.”

ALSO- Traders in the United States, Canada, and Mexico are under a bit of extra time pressure this morning after they moved back to T+1 stock trading, having enjoyed for the past century a more leisurely settlement schedule. Look for a bit of short-term stress this week as folks adapt to the shift, which is meant to reduce risk in the financial system, Bloomberg writes.

Sound smart: T+1 trading means settlement comes one business day after the trade — the buyer gets the stocks the next day, and the seller the money at the same time. The previous standard in the US for most equity transactions was T+2; Wall Street was last on a T+1 settlement schedule back in the 1920s.

In our part of the world: Most Egyptian stocks are on a T+2 schedule, but some brokerages can trade select equities T+0, with settlement happening the same day trades are executed. Saudi’s Tadawul is T+2, as is the Dubai Financial Market.

MARKETS THIS MORNING-

Asian shares are in the red this morning even after the IMF upgraded its China growthforecast to 5%, with the Shanghai Composite being the only major benchmark in the green this morning. US and European equities futures are down slightly after yesterday’s fresh Nasdaq record.

EGX30	27,195	-0.3% (YTD: +9.2%)
USD (CBE)	Buy 47.45	Sell 47.59
USD (CIB)	Buy 47.46	Sell 47.56
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	11,660	-1.5% (YTD: -2.6%)
ADX	8,742	-1.0% (YTD: -8.7%)
DFM	3,987	-1.0% (YTD: -1.8%)
S&P 500	5,306	0.0% (YTD: +11.2%)
FTSE 100	8,254	-0.8% (YTD: +6.7%)
Euro Stoxx 50	5,030	-0.6% (YTD: +11.3%)
Brent crude	USD 84.22	+1.4%
Natural gas (Nymex)	USD 2.67	+3.1%
Gold	USD 2,382	+0.1%
BTC	USD 68,285	-2.0% (YTD: +61.6%)

THE CLOSING BELL-

The EGX30 fell 0.3% at yesterday’s close on turnover of EGP 3.1 bn (36.4% below the 90-day average). Local investors were net buyers. The index is up 9.2% YTD.

In the green: Palm Hills Development (+3.6%), Elsewedy Electric (+2.0%), and Heliopolis Housing (+1.1%).

In the red: Qalaa Holdings (-15.4%), Abu Qir Fertilizers (-2.4%), and Madinet Masr (-2.4%).

CORPORATE ACTIONS-

Rameda’s board approved a EGP 3.2 mn capital increase, bringing the company’s total authorized capital to EGP 378.2 mn, according to an EGX disclosure (pdf).

Tags:

carbon credits Climate Financial Markets Janet Yellen Planet Finance

HARDHAT

What can local contractors do to expedite their access to offshore projects?

More local contractors are looking to go global: Local contracting companies are turning towards private sector investments — both local and foreign — and are also eyeing ventures abroad as the government is scaling back on construction projects to preserve its FX buffers and adhere to the IMF guidelines.

There are a lot of challenges restricting Egyptian contractors’ success abroad, most of which are due to local companies being accustomed to local standards in the sector, Mohamed Sami Saad, head of the Egyptian Federation for Construction and Building Contractors (EFCBC), told Enterprise. Saad emphasized the importance of adopting new regulatory standards that align with the International Federation of Consulting Engineers (FIDIC). Efforts in that direction will make Egyptian contractors recognized and accepted by international funding institutions, Saad said.

Even locally, the sector still has ways to go: Last week’s Hardhat looked at the construction sector’s calls for updated contract standards to keep up with the industry.

Current state: According to Saad, only 40 companies out of the 23k contractors registered with the EFCBC are currently able to access contracting work abroad.

FIDIC STANDARDS ARE KEY TO TAPPING FOREIGN MARKETS

FIDIC will open the doors for large-scale projects abroad: Adhering to international standards and the FIDIC guidelines is a must for Egyptian contractors that want to tap global markets, Mohamed Abdel Raouf, a member of the EFCBC, told Enterprise. He explained that focusing on meeting local standards only would exclude Egyptian contractors from competing in offshore tenders.

Testing the waters in Libya and Iraq: Internationally-funded projects in Iraq and Libya could be a good start for Egyptian contractors, as they have plenty of low-risk projects such as water stations, wastewater treatment plants, power stations, bridges, and housing projects, Abdel Raouf said.

HOW TO GET THEM USD LETTERS OF GUARANTEE?

Securing USD letters of guarantee remains a challenge: Contractors need to secure USD-denominated letters of guarantee to be eligible for bidding in foreign tenders, which has become increasingly difficult amid lower credit ratings of local banks, Mamdouh Morshedy, a member of the EFCBC, told Enterprise.

A Saudi company to handle the letters? The EFCBC has reached an agreement with Saudi officials that will see a Saudi company issue the needed letters of guarantee for Egyptian contractors; in exchange, the latter will be responsible for providing the equipment and building materials needed for the project, Saad told us. The EFCBC plans to implement the same model in other Arab countries to facilitate the entry of Egyptian contractors, he added.

Having more offshore branches of Egyptian banks would make it easier to issue letters of guarantee, EFCBC board member Shams El Din Youssef told Enterprise, noting that there’s only a limited number of recently-established branches of Egyptian banks abroad.

OPENING OFFSHORE BRANCHES + GOING THE REAL DEVELOPER’S PATH

Different standards, same contractors: Contractors that are used to large-scale projects here

at home won’t qualify to take on projects of the same size abroad, as they would be classified in a lower grade by global standards due to FX rate difference, Saad explained. (Expensive megaprojects executed in Egypt would be considered cheaper when their value is measured against USD).

A work-around: Per discussions with Saudi officials, it was agreed that contractors should opt for establishing offshore branches, rather than creating new standalone companies to operate abroad, Saad said. The proposed solution would allow contractors to bid for projects of the same scale they executed at home and put them on track to eventually establish an independent company, after an enough number of projects are executed abroad. The same formula is planned to be implemented in other countries in the region.

Upscaling the craft to real estate development vis-à-vis contracting: If more contractors were able to bid for developing entire projects, such as cities and residential compounds — which would effectively qualify them as real estate developers — rather than signing up for building a single component within such projects, like a bridge, it would accelerate their expansion abroad, Saad said.

The gov’t loves sending real estate developers abroad: The government has shown support for the sector’s expansion abroad by issuing the necessary licenses and permits and addressing obstacles. This shift could bring bn of USD to Egypt, Saad told us. A lot of contractors would qualify to work as real estate developers, Saad said, citing government officials.

WHAT MAKES AFRICA SPECIAL?

The way to tap projects in Africa: While Africa is booming with construction projects, Egypt’s lack of a sufficient number of representative offices that inform Egyptian contractors about ongoing tenders hinders Egypt from tapping into that sea of projects, Morshedy told us. The government should also develop a strategy for providing contractors with the necessary data about such projects, he added.

A tight race: Turkey, China, and Israel are highly competitive when it comes to the construction sector in Africa, Morshedy said.

EU-FUNDED PROJECTS ALSO ON THE LIST-

An upcoming meeting with the EU Commission will take place in June, where the EFCBC will discuss how to facilitate Egyptian contractors’ access to EU Commission-funded projects, after the latter had standardized funding requirements across the EU banks, according to Saad.

Your top infrastructure stories for the week:

A new wind farm inaugurated: The Electricity Ministry yesterday inaugurated a 252-MW wind farm in the Gulf of Suez, which is set to power some 1.08 mn residential units and reduce 2.4 mn tons of CO2.
Pharma warehouses in the pipeline: The government wants to invest EGP 8 bn to set up six strategic warehouses for pharma and med supplies across six governorates.
A pipeline for petroleum products: State-owned oil and gas contractor Petrojet has completed more than half of the construction of a new EGP 1.7 bn fuel transport line that will connect the Middle East Oil Refining Company to Al Hamra terminal.
Health Ministry to work with private sector to set up ten hospitals over two years: The Health Ministry is in talks with local and foreign private players to to build ten hospitals across ten of the country’s governorates within the next 24 months.

Tags:

construction FDI Hardhat infrastructure real estate

CALENDAR

2024

MAY

27-30 May (Monday – Thursday): Avior-HC Egypt virtual conference.

29-30 May (Wednesday-Thursday): Solar & Storage Live MENA, Cairo, Egypt.

29-31 May (Wednesday-Friday): The second edition of GITEX AFRICA Morocco 2024.

JUNE

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

29-30 June (Saturday-Sunday): EU-Egypt Investment Conference.

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

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

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.

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

NOVEMBER

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

DECEMBER

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

EVENTS WITH NO SET DATE

April 2024: President Abdel Fattah El Sisi will visit Turkey.

1Q 2024: Egyptian-Qatari Joint Supreme Committee.

1Q 2024: Opening of the newly developed Pyramids Plateau in Giza.

1Q 2024: The government is set to finalize the sale of the Gabal El Zeit wind farm.

February-May: The Grand Egyptian Museum could officially open to visitors.

March 2024: The USD 2.7 bn MIDOR Refinery is set to begin full operations.

May 2024: Egypt to receive USD 20 bn of Ras El Hekma funds.

May 2024: Arab Finance Ministers’ meeting at Egypt’s administrative capital.

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

Mid-year: The fifth Japan-Arab Economic Forum.

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 bid 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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