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Wednesday, 6 Dec 2023

What We're Tracking Today
Economy
Privatization
Energy
Financial Services
Debt Watch
War Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar

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Today at a glance

1

Economy

Private-sector optimism hits record low on inflation, currency woes.
2

Privatization

SFE hires consulting firm to advise on wind farm sales as Actis readies bid.
3

Energy

Masdar-led consortium to start work on 10-GW Sohag wind project in 2025.
4

Startup watch

Auto startup Mtor lands USD 2.8 mn in pre-seed round.
5

DEBT WATCH

GB Corp’s Drive closes EGP 1.4 bn securitized bond issuance.
6

Also on our Radar

Renewably-generated electricity, shipped from Egypt to Italy.
7

FINANCIAL SERVICES

Beltone signals new push into securitization.
8

PLANET FINANCE

Moody’s issues negative outlook for global banks.
9

LAST NIGHT’S TALK SHOWS

Was your internet out yesterday?
10

HARDHAT

What to expect from the Giza Zoo post-revamp.

Wednesday, 6 Dec 2023

What We're Tracking Today
Economy
Privatization
Energy
Financial Services
Debt Watch
War Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar
1

What We're Tracking Today

Nassef Sawiris to redomicile family office in Abu Dhabi

Good morning, ladies and gentlemen. We have plenty of news for you this morning, but before we dive in…

PSA #1- Your Wi-Fi may be getting better: A technical malfunction in one of Telecom Egypt’s main network devices disrupted internet service in a number of governorates, the company said in a statement yesterday. The company said it has addressed the issue and service should have returned to normal last night, but we were still having glitches in the wee hours of the morning.

PSA #2- Enjoy sunshine today — we’re heading into two days of largely cloudy weather, our favorite weather app suggests. Look for a high of 23°C today falling to 22°C with clouds all day Thursday and Friday. There’s no suggestion of rain in the forecast.

FROM CYPRUS TO ABU DHABI-

One of the nation’s richest men is relocating to Abu Dhabi: Nassef Sawiris is moving his family office NNS Group to Abu Dhabi, following in the footsteps of an increasing number of investors and bn’aires relocating to the emirate, Bloomberg reports. The OCI NV chief, who also owns stakes in Aston Villa and sports brand Adidas, said in a statement cited by the business information service that NNS Group’s move to the Abu Dhabi Global Market (ADGM) “will contribute to the further development and growth of its portfolio and core activities.”

What gives? NNS will look to “build significant stakes in a concentrated number of companies, primarily in Europe, the Middle East and North America,” Bloomberg writes. The group currently has offices in Cyprus, London, Luxembourg, and New York, according to its LinkedIn profile.

HAPPENING TODAY-

#1- Shoukry in DC: Foreign Minister Sameh Shoukry is in Washington, DC for several days of meetings with senior lawmakers, foreign policy hacks, and Secretary of State Antony Blinken to try to push for a ceasefire in Gaza, the ministry said in a statement yesterday.

#2- It’s day seven of COP28: Discussions today will focus on the shift to sustainable transport, building green infrastructure and cities, and looking at ways to minimize waste in the production-consumption cycle.

Want to go deeper on everything happening over there? Enterprise Climate has got yourback.

#3- It’s the third day of the Egypt Defence Expo (EDEX), where some 35k defense and security professionals are gathering at the Egypt International Exhibition Center in Cairo. The event runs through Thursday.

#4-Russian President Vladimir Putin touches down in the UAE and Saudi Arabia today for a rare trip abroad where he will meet with the UAE president and Saudi crown prince, according to the Kremlin. Discussions will focus on the war in Gaza and oil prices after several OPEC+ members agreed to reducetheiroutput last week.

HAPPENING THIS WEEK-

#1- FX reserves: The central bank should be out with November’s foreign reserves figures thisweek.

#2- The Engineering Export Council of Egypt will be heading to Saudi Arabia on a trademission on Saturday, 9 December. The visit, organized with the help of the USAID Trade Reform and Development in Egypt project, will run through Friday, 15 December.

HAPPENING NEXT WEEK-

#1- Election 2023: Voters here at home will head to the polls on 10-12 December to cast their ballots in the presidential election. Voting for expats wrapped earlier this week. First-round results are due on 18 December, and a runoff, if necessary, will take place in early January.

#2- Inflation: Be on the lookout for inflation figures for November on Sunday, 10 December.

#3- eGlobe Expo: Business leaders will gather at St. Regis Almasa Hotel in Cairo on 10-11 December to discuss digital transformation and its application in different sectors, like e-commerce, agriculture, healthcare, education, and logistics.

WATCH THIS SPACE-

Standard Chartered is still on track to launch Egypt operations: British multinational lender Standard Chartered Egypt will begin operations early 2024, Finance Minister Mohamed Maait said. A Planning Ministry statement out last month had us expecting the lender to start operating before the end of the year.

THE BIG STORIES ABROAD-

It’s a mixed picture on the global front pages this morning, with no single story driving the international conversation:

  • xAI: The plan by Elon Musk’s AI startup to raise USD 1 bn in equity is the big story in the business press — Reuters | Financial Times | CNBC | WSJ .
  • Gaza:Reuters on why the US is unlikely to stop supplying arms for Israel’s war effort, despite the devastating impact on civilians.
  • The Donald: The Associated Press and the Washington Post have the latest on the legal woes surrounding the ex-president and frontrunner for the Republican nomination.
  • Sanctions-dodging:Bloomberg explains how the West’s unprecedented sanctions on the Russian economy have done little to prevent Russia from reeling in bns of USD from oil exports.

MARKET WATCH-

US yields fall to three-month lows as investors rush into bonds on rate-cut bets: Yields on the 10-year Treasury fell to 4.18% yesterday — their lowest level since early September — as weak US jobs data fuelled expectations that the Federal Reserve could start cutting interest rates sooner than expected, according to Bloomberg. US job openings fell to their weakest level in more than two years in October, indicating that the Fed’s aggressive tightening cycle is starting to slow the economy.

Watch this space: The Federal Reserve is expected to leave rates unchanged when it holds its final policy meeting of 2023 next Tuesday and Wednesday.

WAR ECONOMICS-

Shipping industry warns of energy flow disruptions after Houthi attacks: International shipping association Bimco is calling for the deployment of “more military resources” to better protect ships in the Red Sea following attacks by Yemen’s Houthi movement, the Financial Times reports.

A threat to global trade:The odds of a “material interruption in regional energy flows” were pegged at up to 30% by Rapidan Energy Group’s head of research Bob McNally.

ICYMI- The Houthis have mounted a series of attacks on allegedly Israel-linked ships in the Red Sea, the most recent of which came this week when they launched missiles and drones at three commercial vessels and a US warship.

*** 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 sit down with Hadayieq’s Mohamed Kamel for an exclusive interview on his company’s plan to restore and upgrade the Cairo Zoo — a key piece of municipal infrastructure in the Greater Cairo Area — and regain international accreditation.

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2

Economy

Optimism in Egypt’s private sector hits record low on inflation, currency woes

Three years and counting: Economic headwinds buffeting Egypt’s non-oil private sector continued in November as inflationary pressures weighed on demand and sent business confidence to record lows, according to S&P Global’s purchasing managers’ index (pdf). The downturns in demand and output eased slightly during the month, resulting in a marginal improvement in the headline PMI figure, but continued to decline “solidly,” S&P Global said. The PMI came in at 48.4 in November, up slightly from 47.9 in October.

November 2020 seems like a long time ago: Egypt’s PMI has not climbed above 50.0 — the threshold that separates growth from contraction — since November 2020, making last month the third anniversary of the private-sector downturn.

Inflation + import backlog dragged output down: High inflation continued to “depress customer demand,” while unresolved import problems drove down production in a number of sectors, namely among wholesale and retail companies. Companies also hiked their prices at a faster rate in November to offset higher production costs triggered by currency weakness and supply shortages.

Businesses are not confident about what next year has in store: Business sentiment fell to its lowest levels since at least April 2012 when data collection began. The survey data showed that pessimism about output levels over the next 12 months also sank to an all-time low, with businesses expecting inflation to continue to depress demand and raise input costs.

Remember: Inflation has soared to record highs this year on the back of successive currency devaluations and a chronic shortage of FX. Authorities are widely expected to devalue the EGP again and raise interest rates to new multi-decade highs following this month’s presidential election, a move which would trigger a new bout of inflation and further weigh on economic activity.

Optimism is in short supply: “Optimism in the Egyptian non-oil economy is eroding as we approach the end of the year,” said David Owen, senior economist at S&P Global Market Intelligence. “While the resulting downturns in new business and output were not as severe compared to those seen at the start of the year, they are also showing no signs of letting up, stretching a sequence of decline that goes back to late-2021.”

ELSEWHERE IN THE REGION- Saudi growth eases: Non-oil private sector activity in Saudi Arabia eased to 57.5 in November from October’s four-month high of 58.4, according to the PMI (pdf). The report attributed the drop to “moderations in the rate of staff and inventory growth, as well as a sharp reduction in delivery times.”

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3

Privatization

SFE hires consulting firm to advise on wind farm sales

As Actis reportedly readies wind farm bid, the SFE has brought in an advisor: The Sovereign Fund of Egypt (SFE) has appointed Belgium-headquartered engineering and consultancy firm Tractebel to act as a consultant for the sale of stakes in the state-owned 580-MW Gabal El Zeit and 545-MW Zafarana wind farms, reports Asharq Business, citing unnamed government sources. The engineering consultant will work “in coordination” with a committee formed by the Madbouly government to negotiate with potential investors and review offers and timelines for the two wind farms.

ICYMI- Zafarana and Gabal El Zeit were included on the government’s list of 32 companies and assets earmarked for privatization in February. Local and foreign investors have shown interest in the acquisitions, including Saudi Arabia’s ACWA Power, the UAE’s Alcazar Energy, and our friends at Egyptian renewables firm Infinity. Planning Minister Hala El Said said this week that she expects the sales of the plants to be finalized in 1Q 2024.

Actis still looks to be the Gabal El Zeit frontrunner: We reported back in July that UK-based private equity outfit Actis had presented a well-received technical and financial bid to the Sovereign Fund of Egypt for the Gabal El Zeit wind farm in July. The PE firm is “finishing very simple matters before submitting its final offer within days,” Asharq’s sources now say. Actis is expected to offer at least USD 380 mn for the project, they added.

Maersk seems close to securing Zafarana: Danish shipping giant Maersk signed a framework agreement with the government for a 51% stake in the Zafarana farm, according to unconfirmed press reports in October. The company has reportedly entered the final stages of negotiations over the stake’s value, with the transaction potentially closing by the end of this year. Maersk is reportedly looking to use the power to produce green methanol for use in ships.

SOUND SMART- The sale of the two facilities will bring hundreds of mns of USD into the state’s coffers as we look to build up a war chest ahead of the anticipated float of the EGP, which pundits hope will happen after the presidential election.

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4

Energy

Masdar-led consortium to start work on 10-GW Sohag wind project in 2025

We have a timeline for one of the region's largest wind projects:Infinity Power, Hassan Allam Utilities, and the UAE’s Masdar are set to start construction on their 10-GW wind farm in 1Q 2025, Infinity Power Chairman Mohamed Mansour told Al Arabiya. The consortium is planning to reach financial closure by 1Q 2025 with operations scheduled to begin in 2027 — approximately two years after construction commences, Mansour added. The plant will be one of the country’s biggest wind energy projects and one of the largest in the world.

Where the money’s coming from: The project will require USD 11 bn of investment, USD 1 bn more than June estimates, Mansour told the Saudi broadcaster. “The funding for this project will be sourced from investors outside of Egypt, meaning that there will be no delays tied to Egypt’s current FX shortage,” he said. Between 70-80% of the funding will come from international institutions.

About the project: Located in Sohag, the wind farm will offset as much as 10% of our total carbon footprint, saving the country some USD 5 bn per year by minimizing the need for natgas consumption.

IN COP28 NEWS-

Egyptian officials made the rounds during day six of COP28: Planning Minister Hala El Said met with CEOs of US conglomerate Honeywell and Australian green energy company Fortescue Future Industries, while Oil Minister Tarek El Molla met with the head of LSE-listed oil and gas company Energean and the chairman of AfreximBank.

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Mtor fills the tank with multi-mn USD pre-seed round: Homegrown automotive tech startup Mtor has raised USD 2.8 mn in pre-seed funding in a round led by our friends at venture capital outfit Algebra Ventures, which announced the investment in a statement(pdf) yesterday. The Dutch Founders Fund (DFF), Aditum Ventures, LoftyInc Capital Management and a number of other angel investors also contributed to the round.

Mtor is more than just another startup with an aversion to vowels: The Cairo-based startup runs an online and in-application automotive aftermarket platform that connects car mechanics with car part distributors. Mtor says it has fulfilled over 70k orders and partnered with over 2.5k auto workshops since getting started in 2022.

The market is potentially huge: Mtor says our aftersales service market is one of the largest in Africa and MENA, worth more than USD 5 bn with some 8 mn registered vehicles. The average car in Egypt is significantly older than the global average, meaning they tend to have a higher need for service and repair. The company thinks car owners spend the equivalent of USD 600 per vehicle each year to more than 35k workshops and service providers — the vast majority of them not part of a vehicle brand’s authorized network.

Where the money’s going: The startup is planning to grow its team, increase the amount of products it offers, and expand by getting more car workshops on board with the digital platform.

What they said: “Mtor’s unique visual and voice interface coupled with a sophisticated fitment and parts matching engine eliminates the hours spent daily by mechanics hunting for the right part at the right price. We look forward to supporting Mtor on expansion in Egypt and beyond,” said Algebra Managing Partner Karim Hussein.

LYCHEE CLOSES SERIES A ROUND-

Lychee secures series A investment:Food and beverage brand Lychee has received an undisclosed amount of funding in a series A round led by Beltone Venture Capital, a subsidiary of Beltone Holding, the company said in a press release (pdf). Twenty-Eight Capital and Index Sports Fund — a private equity fund focused on the sports sector in MENA — also participated in the round. Beltone declined to disclose the value of its investment in the company when we reached out.

Where the money’s going:The new round of funding will facilitate Lychee’s expansion plan, which entails expansion to the Saudi Arabian market, followed by the rest of the GCC, the company said.

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5

FINANCIAL SERVICES

Beltone signals new push into securitization, closes first factoring transaction

Beltone is signaling it wants to go much deeper into Egypt’s red-hot securitization market: Beltone Financial Holding has signed a letter of intent to acquire real estate developer SODIC’s licensed securitization subsidiary, it said in a regulatory filing (pdf) yesterday, a move which would make it easier for it to securitize the portfolios of its growing fleet of non-banking financial services firms. It would also open new business opportunities for Beltone to lead transactions for third parties.

What’s next? Beltone will conduct due diligence on the subsidiary — an SPV named SODIC for Securitization — should it receive approval from the Financial Regulatory Authority (FRA), it said.

The rationale: Acquiring an already-licensed securitization company would be a quicker route to the market for Beltone, rather than setting up a new firm and applying for a license from the FRA. SODIC has completed only one securitization since creating the SPV a few years ago, closing a EGP 343 mn transaction in 2021.

FIRST FACTORING AGREEMENT-

Beltone wraps first factoring agreement: Beltone’s leasing and factoring arm has inked a EGP 200 mn factoring agreement with local medical equipment and services provider EGMED, it said in a press release (pdf) yesterday. This marks Beltone Leasing and Factoring’s first factoring agreement since it received its license earlier this year.

EGMED: The company offers a number of medical products and services to hospitals and healthcare facilities in Egypt, the Middle East, and Africa, with a focus on turnkey projects.

ICYMI- Beltone received a license from the Financial Regulatory Authority (FRA) in September to add factoring to its lines of business.

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6

DEBT WATCH

GB Corp’s auto financing arm closes EGP 1.4 bn securitized bond issuance

GB Corp’s auto financing arm Drive has raised EGP 1.4 bn via a securitized bond issuance,GB Corp said in a statement(pdf) yesterday. The issuance, which was 1.7x oversubscribed, is the first in Drive’s three-year EGP 5 bn securitization program. The bond’s three tranches were rated AA+, AA, and A by the Middle East Ratings and Investors Service (MERIS).

Where the money’s going: The funds will help Drive deleverage its balance sheet to increase its borrowing limits, improve liquidity, and expand its financing portfolio, the statement read.

Advisors: CIB acted as the financial advisor, and Arab African International Bank (AAIB) acted as the sole bookrunner and joint underwriter alongside Ahli United Bank (AUB). Dreny & Partners was counsel, and KPMG served as the auditor.

DATA POINT- Companies have raised EGP 78.9 bn from securitization so far this year, up 78% from the same period last year, according to data tracked by Enterprise.

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7

WAR WATCH

Gaza sees most intense day of fighting

It was “the most intense day” of violence in Gaza: Israeli forces continued their ground operations against Hamas, reaching the heart of the southern city of Khan Younis and marking the “most intense day since the beginning of the operation,” according to an IDF statement.

On the ground: Israel launched strikes on central Gaza’s Deir Al Balah, pushing central Gaza’s only operational hospital — Al Aqsa Martyrs Hospital — to its limit. The IDF claims it has reached the heart of south Gaza’s Khan Younis, the northern city of Jabaliya, and central Gaza’s Shejaiya. “We intend to continue to attack and deepen the achievement,” the IDF said. Meanwhile, Hamas said it killed eight Israeli fighters in clashes.

It’s “getting worse by the hour,” WHO’s Gaza representative Richard Peeperkorn told reporters yesterday. “We are looking at an increasing humanitarian disaster,” he added. He also criticized the little amount of aid that is reaching the city.

Hopes for another truce reignited? Israel would consider “a temporary pause” to release more of its hostages being held by Hamas, Israeli government spokesman Eylon Levy told the Jerusalem Press Club (watch, runtime: 22:42). Hamas doesn’t appear to be onboard with the idea, demanding an end to the violence before hostage negotiations begin again.

DIPLO- Jordan could suspend its peace treaty with Israel if it forcibly displaces Palestinians | Jordan’s King Abdulllah said the world must take a stance against Israeli attempts to create conditions that would forcibly displace Palestinians | Turkey warned Israel against killing Hamas members on its soil | It is unlikely for the US to withhold weapon supplies to Israel, despite repeated pleas for Israel to minimize civilian deaths | The US has started imposing a visa ban on “individuals believed to have been involved in undermining peace, security, or stability in the West Bank.”

IN NUMBERS- Over 15.8k Palestenians have been killed in Gaza since 7 October | Over 400k people in northern Gaza no longer have access to medical services | Over 1.8 mn have been displaced.

AID- The US has pledged USD 21 mn in humanitarian aid for the people in Gaza and the West Bank | 50 aid trucks entered Gaza yesterday.

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8

Moves

Mamdouh Ghoneim appointed EgyptAir Cargo chairman

EgyptAir Cargo has a new chairman: EgyptAir Holding has appointed Mamdouh Ghoneim as chairman of EgyptAir Cargo, succeeding Gasser Hussein, according to a company statement. Ghoneim was previously the vice chairman of the company.

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9

LAST NIGHT’S TALK SHOWS

Egypt’s talk shows cover yesterday’s internet outages, government corruption, and misinformation

No one story dominated the airwaves last night, as the nation’s talking heads discussed the nationwide internet outage, the corruption at the Supply Ministry’s headquarters, and the fast-approaching elections.

Was your internet out yesterday? Telecom services provider Telecom Egypt suffered from a technical malfunction yesterday that disrupted internet service in a number of areas throughout the country, but the service should be restored in no time, the company’s Vice President Chief Commercial Officer Mohamed Abu Taleb told Ala Maso’uleety’s Ahmed Moussa (watch, runtime: 5:03). The company is assessing the situation and will be compensating its users for the service outage once the situation is resolved, he said. Abu Taleb also joined Kelma Akhira’s Lamees El Hadidi (watch, runtime: 8:08) to reassure her that the outage impacted less than 10% of users.

Why this matters? “Telecom Egypt owns the country’s internet infrastructure — meaning that [this outage] has impacted users regardless of their chosen internet service provider,” El Hadidi told her viewers.

ALSO ON THE AIRWAVES-

  • #1- Sugar insider trading: A group of Supply Ministry officials, including the minister’s regulation and distribution advisor, have been arrested and are now facing corruption charges related to the current sugar shortage, as well as cooking oil and rice, Moussa said (watch, runtime: 7:17).
  • #2- Adib under fire: El Hekaya’s Amr Adib is facing criticism for comments made by a guest on his show, former MP Samir Ghattas, who claimed that Egypt had to get approval from Israeli authorities before allowing Egyptians stuck in Gaza to cross the border into Egypt. The claims were denied by the Foreign Ministry and criticized by local media. “We’re at war,” DMC’s Osama Kamal said, stressing that it’s not the time for “misinformation” that could be divisive (watch, runtime: 8:04).
  • #3- Election 2023: El Hadidi interviewed the head of President Abdel Fattah El Sisi’s re-election campaign Mahmoud Fawzy (watch: runtime, 5:03).
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10

Also on our Radar

UAE firm signs MoU to explore Egypt-Italy electricity link. PLUS: News from Engazaat, Supreme Council of Ports and Logistics, and Wizz Air

ENERGY-

Italy-Egypt subsea link is in the works: UAE-based energy company K&K Group has signed an MoU on the sidelines of COP28 with Italian energy and engineering consultancy firm CESI for the development of a subsea electricity link connecting Egypt to Italy, the companies said in a joint statement picked up by Zawya on Tuesday. The proposed 3 GW link would ship power generated by renewable energy in Egypt to across the Med, accounting for 5% of Italy’s peak electricity demand.

We might have already heard about this project: A 3-GW link between the two counties was proposed by Norwegian renewable energy developer Scatec in February and got cabinet approval in May, which gave the go-ahead for the signing of an MoU with Scatec to study the project. We also heard of another 3-GW Egypt-Italy interconnector that was proposed by Italy in January. Italy has reportedly proposed signing an MoU to begin conducting a feasibility study for the USD 3.5 bn project.

AVIATION-

Sphinx International adds another route: Wizz Air yesterday launched its first flight from Abu Dhabi International Airport to Sphinx International Airport, according to a press release picked up by Mubasher. Flights will operate weekly on Sundays, Mondays, Wednesdays, and Fridays.

TRADE-

New unified customs procedures for ports incoming: The Supreme Council of Ports and Logistics — FKA the Supreme Council of Ports until yesterday — approved the proposed unification of customs procedures and implementation mechanisms for transit trade for all ports to “maximize and support exports,” according to a cabinet statement released yesterday. The meeting also agreed on permanent coordination between the transport and finance ministries to overcome obstacles facing direct and indirect trade.

INVESTMENT-

#1- Engazaat x CHINT Global: Homegrown solar and water firm Engazaat inked a strategic cooperation agreement on the sidelines of COP28 with the Suez Canal Economic Zone (SCZone) and Chinese energy firm CHINT Global to build and run a new industrial park focussing on green energy technology in the SCZone, according to a statement from the SCZone yesterday. Details of the cost of the project are yet to emerge, but the statement added that framework agreement for the 2 mn square meter park should be inked at some point next year.

#2- Engazaat x Jushi: Chinese fiberglass manufacturer Jushi also signed a project agreement at the climate conference with Engazaat to set up solar panels for one of its factories with a capacity of 7 MW, according to a statement from the SCZone yesterday. The cost and timeline of the project were not announced.

ICYMI- Jushi announced on Monday that it’s investing USD 8 mn to expand its factory in China’s special economic zone TEDA.

#3- Engazaat x e-Aswaaq x NBE: Engazaat joined forces with e-Finance’s e-commerce subsidiary e-Aswaaq and the National Bank of Egypt (NBE) to sign an agreement to offer small farmers financing for solar energy and smart irrigation systems, according to a statement from e-Aswaaq yesterday. Under the agreement, farmers will apply for the loan through e-Aswaaq’s digital agriculture platform AgriMisr, which is backed up by the NBE, while Engazaat will supply the solar and irrigation equipment.

COMMODITIES-

Another step to tackle soaring sugar prices: The government is reportedly looking to stop selling sugar to companies set up across the country’s freezones in a bid to stabilize the sugar market and tame soaring prices, Al Borsa wrote, citing an unnamed source.

Remember: The Supply Ministry has been providing the local market with 1.5 tons of sugar a day — 30% more than the normal amount — to be sold at EGP 27 per kilo. The ministry has so far flooded the local market with some 50k tons of sugar as part of the measures it has taken to help fill the supply gap that has pushed prices to EGP 50 per kilo last week and had the Supply Ministry consider introducing price controls. Sugar was selling for EGP 41.5 per kilo yesterday.

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11

PLANET FINANCE

Moody’s issues negative outlook for global banks

GLOBAL BANK GLOOM-Banks across the world are in for a bumpy 2024 -Moody’s: Rating agency Moody’s has issued a negative outlook for the global banking sector in 2024, citing slower growth, rising default risk, and weaker financial performance.

#1- Slower growth: Growth will slow down as interest rates stay high “even as major central banks begin to cut rates.” This will limit business prospects and therefore limit loan growth across banks’ portfolios, which will prevent them from reaping the benefits of higher rates. “Elevated rates for the most part will lead to higher funding costs and greater asset risks among existing borrowers.”

#2- Bad loans: Financial conditions will reduce borrowers’ liquidity and income, making them unable to meet loan payments. That paired with higher debt-servicing costs will deteriorate loan performance among banks.

#3- Weaker profits: Moody’s believes that banks’ “profitability gains from the last two years will likely start to subside but remain sound,” citing higher funding costs and weaker loan demand due to heightened rates.

The news got attention from: Reuters and the Financial Times.

CHINA SLOWDOWN-Mounting debt and a property crisis tip China’s credit outlook into the red: Moody’s has downgraded its outlook on China’s sovereign credit rating to negative from stable on the back of the country’s pileup of state debt and persistent property crisis, Moody’s said in its latest report (pdf). China’s credit rating was last downgraded by Moody’s and S&P in 2017.

The property downturn: China’s real estate sector, which accounts for as much as 30% of the country’s GDP, has significantly contracted since the collapse of its largest property developer Evergrande in 2021. Moody’s is expecting the sector’s role in the economy to remain smaller than its pre-2021 levels.

ICYMI- Country Garden, one of China’s biggest property developers, is expected to undergo the largest corporate debt restructuring in the country’s history after defaulting on a bond payment in October.

EURO RATE PEAK? ECB official signals further interest rate are off the table:Hawkish ECB board member Isabel Schnabel said that further rate hikes are “rather unlikely” due to the “remarkable” drop in inflation, according to Reuters. Schnabel’s stance prompted markets to bet on rate cuts being implemented as soon as March.

EGX30

25,128

-0.5% (YTD: +72.1%)

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

11,144

-0.4% (YTD: +6.4%)

ADX

9,520

-0.2% (YTD: -6.8%)

DFM

3,978

-0.2% (YTD: +19.3%)

S&P 500

4,567

-0.1% (YTD: +19.0%)

FTSE 100

7,490

-0.3% (YTD: +0.5%)

Euro Stoxx 50

4,453

+0.9% (YTD: +17.4%)

Brent crude

USD 72.13

-1.3%

Natural gas (Nymex)

USD 2.69

0.0%

Gold

USD 2,037.50

-0.2%

BTC

USD 44,019

+4.6% (YTD: +165.4%)

THE CLOSING BELL-

The EGX30 fell 0.5% at yesterday’s close on turnover of EGP 5.2 bn (71.4% above the 90-day average). Local investors were net sellers. The index is up 72.1% YTD.

In the green: Elsewedy Electric (+3.6%), Oriental Weavers (+3.3%) and Heliopolis Housing (+3.1%).

In the red: GB Corp (-3.8%), Orascom Development Egypt (-3.8%) and B Investments Holding (-2.8%).

Asian markets are bouncing back this morning after yesterday’s broad-based selloff. European and North American markets are set to follow later today, futures suggest.

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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
12

HARDHAT

What to expect from the Giza Zoo post-revamp

PROJECT PROFILE- The Giza Zoo revamp: The Giza Zoo has been shuttered to the public since this summer for a EGP 1.4 bn overhaul that will see it joined by the nearby Orman botanical garden and transformed into an open-range, no-cage touristic attraction. We’ve heard that the overhaul will pave the way for it to regain membership in the World Association of Zoos and Aquariums, which the zoo lost in 2004, ministry official Mohamed Ragaey told talk show host Lamees El Hadidi earlier this year, but how much will its infrastructure change, and what will it look like when it’s complete?

We spoke with Mohamed Kamel, chairman of Hadayieq, which is leading on the zoo project, to learn more about the overhaul and the timeline for its completion.

Refresher: The zoo has had outdated infrastructure for decades. “The zoo was established in 1891 and its entire infrastructure has become inadequate and in need of revamping … Zoo standards have changed since then and cage designs need to change to better accommodate the animals,” Ehab Saber, head of the Agriculture Ministry’s veterinary services department, told Masa’a DMC earlier this year.

Who’s involved: Mohamed Kamel’s Hadayieq was awarded a 25-year contract last year to renovate and manage the historic sites. The company is being advised — on the transaction and beyond — by a team from Beltone Investment Banking. Wildlife and ecotourism design company Bernard Harrison & Friends will serve as a technical consultant on the project, and the UAE-based Worldwide Zoo will carry out the operational work for the park.

Where’s the financing coming from? Hadayieq and Beltone are looking into offers from a number of international financial institutions to bring fresh capital into the project. It was earlier estimated to cost some EGP 1 bn, but Kamel tells us the final cost will likely be in the EGP 1.4 bn range. Hadayieq will provide EGP 200 mn in funding to the project after the company completes an EGP 100 mn capital increase, Kamel tells us. The consortium also received a EGP 832 mn long-term loan from the Chinese Development Bank and the National Bank of Egypt last week. The loan, on which Beltone was financial advisor, will go towards the development of the zoo’s infrastructure, its operations, as well as finding new species to add to the zoo and healthcare provisions for the animals, according to Kamel.

Expect a much larger, more diverse zoo: The zoo will be divided into 14 areas, up from the three areas it had previously, divided by species and the regions where they originate, including Asia, Africa, the Americas, a birds area, safari, and an elephant area, Kamel explained. It will take visitors three to four days to be able to visit all the sites and participate in the activities on offer, he added. There will also be dedicated areas for recreational activities, including an educational center for children, a recreational area, and areas dedicated to interactive experiences with the animals, he said. The construction will not impact any of the historic landmarks and archeological sites located at the zoo, Kamel also noted.

And more shelter + better conditions for animals: The development work includes improvements to the animal shelter areas at the zoo, as well as 18% more water bodies and 12% more green areas, Kamel said. Besides there being no cages planned for the zoo, there will also be relatively few buildings, so that the zoo can comply with international criteria that requires buildings to make up only 0.1% of the space in a zoo, he added.

The current state of things: Construction work on the pedestrian bridge that will connect the Orman gardens with the zoo is currently underway, alongside the restoration of the archaeological sites, Kamel said. Animals that were being medically treated are also being transported this month to the new areas at the zoo, he added. Other design projects, like recycling the old cages at the zoo to make decorative statues, are also underway.

The company is also working on regaining its international accreditation, in a bid to get it back within six months from opening the zoo in 2Q 2025, Kamel said. The company is in talks with the World Association of Zoos and Aquariums and the Pan-African Association of Zoos and Aquariums to put things in place, he added.

Looking ahead: The company also wants to set up the recreational areas and platforms at the zoo over the next year in coordination with Discovery and National Geographic, with plans to attract investments to help equip and operate them in time for launch in 2Q 2025, Kamel said.

Your top infrastructure stories for the week:

  • Catalyst Capital Egypt invests in SCZone industrial and logistics hub: Impact investing fund Catalyst Capital Egypt has acquired a significant minority stake in a new Alex Steel subsidiary looking to develop an industrial and logistics hub in the Suez Canal Economic Zone.
  • Alstom to sign Metro Line 6 contract early next year: The Transport Ministry is finalizing the terms and conditions of its agreement with France’s Alstom to take the lead on the planned Metro Line 6, and will ink the contract in 1Q 2024.
  • TCI inks Arish cement export terminal project: Abu Dhabi Ports’ terminal operator subsidiary Transcargo International (TCI) signed an agreement with Cementir Holding subsidiary Sinai White Portland Cement to build and operate Egypt’s first silo terminal for the bulk export of white cement from Al Arish Port.
  • Taqa Arabia eyes Wataniya stations: Qalaa Holdings’ energy distribution arm Taqa Arabia will submit a binding offer to purchase an unspecified number of fuel stations from military-owned fuel retailer Wataniya.
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CALENDAR

DECEMBER

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

4-7 December (Monday-Thursday): Egypt Defence Expo, Egypt International Exhibition Center.

9-15 December (Saturday-Friday) :The Engineering Export Council of Egypt’strade mission to Saudi Arabia.

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

10-12 December (Sunday-Tuesday): Voting in presidential election takes place in Egypt.

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

14 December (Thursday): Bidding deadline for five gold mine concessions in the Eastern Desert.

14-21 December (Thursday-Thursday): El Gouna Film Festival.

16-18 December (Saturday-Monday): Egypt, Ethiopia, and Sudan to resume talks over the filling of the Grand Ethiopian Renaissance Dam (GERD).

20 December (Wednesday): End of sugar export ban.

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

Signposted to happen sometime in December:

  • Gov’t expects to finalize sale of a stake in military-owned bottled drinks company Safi
  • Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya.
  • Gov’t expects to finalize sale of Zafarana wind farm
  • FRA to announce chosen consortium for credit rating license
  • Kenyan trade conference in Egypt.

EVENTS WITH NO SET DATE

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.

4Q 2023: EGX to launch a shariah-compliant index.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

2024: Standard Chartered Bank to open a branch in Egypt.

25 February 2024 (Sunday): Deadline for bidders for oil and gas expansion in the 23 new regions.

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

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.

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 start operations.

2024

EVENTS WITH NO SET DATE

The Grand Egyptian Museum could be officially open to visitors some time between February and May 2024 .

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

JANUARY

1 January (Monday): Egypt to join the Brics.

7 January (Sunday): Coptic Christmas.

17 January (Wednesday): A delegation of Egyptian companies to visit Istanbul.

25 January (Thursday): Revolution day.

FEBRUARY

11 February (Sunday): The deadline to apply for the Chicago Booth Executive Program

APRIL

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

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

MAY

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

5 May (Sunday): Coptic Easter.

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

29 May (Wednesday): Chicago Booth Executive Program

JUNE

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

30 June (Sunday): June 30 Revolution Day.

JULY

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

23 July (Tuesday): Revolution Day.

SEPTEMBER

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

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

OCTOBER

6 October (Sunday): Armed Forces Day.

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