EGX30 drops 5% as Ras El Hekma announcement softens devaluation forecasts

Monday, 26 Feb 2024

EGX30 drops 5% as Ras El Hekma announcement softens devaluation forecasts

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Today at a glance

Capital markets

EGX30 drops 5% after Ras El Hekma announcement softens devaluation forecasts.

Economy

Ras El Hekma transaction not linked to IMF loan discussions, says IMF official.

Economy

OECD lays out policy recommendations after forecasting growth dipping to 3.2% in FY 2023-24.

EARNINGS WATCH

Egypt Kuwait Holding reports a 25% increase in net attributable income in 4Q 2023, despite dip in revenues

LAST NIGHT’S TALK SHOWS

Food prices in the run-up to Ramadam dominated the airwaves.

A MESSAGE FROM HSBC

Global trade faces its biggest transformation in decades, and businesses must adapt.

Also on our Radar

MPs give nod to quadrupling the price tag of passports to EGP 1k

BLACKBOARD

EdVentures founder Dalia Ibrahim on what we can expect from the local edtech sector this year.

What We're Tracking Today

Cabinet directs plan to secure FX for strategic commodities

Good morning, folks. The news cycle has kept up the pace from yesterday’s landmark USD 35 bn agreement between Abu Dhabi wealth fund ADQ and the government. We’ve got plenty for you to read through this morning, so let’s jump right into it.

WATCH THIS SPACE-

#1- Cabinet directs plan to secure FX for strategic commodities: A plan is in the works to speed up the release of goods that have been stuck at customs — due to FX shortage — which amount to a total of USD 1.3 bn worth of goods, according to a cabinet statement. Priority will be given to medicine, livestock fodder, and strategic food commodities including oil, wheat, and infant formula.

ICYMI: The Madbouly government has made addressing the import backlog one of its priorities for the proceeds from its USD 35 bn agreement with the ADQ to develop Ras El Hekma, a top government official told Enterprise earlier this week.

#2- Regulations for the voluntary carbon market set to be announced in the coming days: The regulatory framework for the long-awaited voluntary carbon market has been fully completed, and the Financial Regulatory Authority will be issuing decisions in the next few days, authority chair Mohamed Farid said during a meeting with Prime Minister Mostafa Madbouly.

HAPPENING TODAY-

#1-The economy is on the agenda for the National Dialogue today as it kicks off round two: Economists, government ministers, and business leaders are set to get together to discuss the challenges facing the economy and the way forwards in the second round of the national dialogue. Discussions will run until Thursday as the dialogue works on building recommendations to tackle inflation, encourage investment, organize the budget, and promote more inclusive growth that will be presented to the government.

#2- Foreign Minister Sameh Shoukry is in Geneva until Wednesday to attend thehigh-level segment of the UN Human Rights Council with 110 other country representatives. Shoukry will “take part in some sideline events on some of the most important regional and international crises and their implications on global human rights conditions,” according to the SIS. The high-level segment kicks off today and wraps up on Wednesday, while the regular session is scheduled to wrap up on 5 April.

#3- The Capital Markets Summit is taking place at the InterContinental Semiramis Hotel. Theannual event will be held under the title Structural Reforms Sustaining Development and will bring together officials from the Financial Regulatory Authority, EGX, Suez Canal Economic Zone, and the General Authority for Investments.

IN THE HOUSE-

MPs will meet today to discuss and vote on an amendment to the 2018 Consumer Protection Law that was approved by The House’s Constitutional Affairs Committee last week, whereby hoarding key food commodities can lead to sentences of one year in prison and fines between EGP 150k-3 mn. Repeat offenders will be faced with two to five years in prison and a fine of EGP 6 mn.

The House will also discuss and vote on a number of agreements that include:

Adopting the Secured Overnight Financing Rate — known by its acronym SOFR — instead of the London Interbank Offered Rate — also more commonly known by its acronym LIBOR — as the interest rate used in financial agreements between Egypt and the Islamic Development Bank.
A European Union grant of EUR 50 mn to help fund the government’s Hayah Karima program in rural Egypt.

WAR WATCH-

Egypt, Qatar to host two rounds of ceasefire talks: Cairo and Doha will host the latest round of talks for a truce in the Gaza Strip and the exchange of captives, Al Qahera News reports, citing an unnamed Egyptian official. The talks will be held by representatives from Egypt, Qatar, the US, and Israel, as well as a delegation from Hamas, and will build on previous discussions held in Paris last weekend, according to the outlet.

The “basic contours” of a hostage and ceasefire agreement have already been agreeduponduring recent negotiations and an agreement could be reached “in the coming days,” US National Security Advisor Jake Sullivan said yesterday.

Netanyahu says Palestinians in Rafah should move north: Israeli Prime Minister Benjamin Netanyahu said Sunday that he’ll have a “plan for action” to move civilians in Rafah to the north of the enclave ahead of Israel’s offensive in Rafah (watch, runtime: 14:16).

THE BIG STORY ABROAD-

It’s a (fairly typical) slow Monday in the global business press. A rebound in (developed market) housing prices leads the front page of the Financial Times, while the Wall Street Journal has split its focus, writing that Donald Trump is “on the brink of securing” the Republican nomination and that Nvidia is on the cusp of entering a new, much larger market — with significantly more competition. Reuters also has Trump on its mind, while Bloomberg can’t really decide what’s news, leading the homepage with a spot report on the price of oil.

For our fellow tech nerds: Lenovo earlier this morning showed off a prototype of a laptop with a see-through screen and a no-key keyboard (ugh), while Apple is said to be preparing for a March event. Look for the tech giant to unveil its first iPad Pro redesign in years, a new iPad Pro keyboard that looks more Mac-like, and MacBook Airs with M3 processors.

ICYMI- Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at how industry players are managing their financing needs amid a persistently high interest rate environment. You can check it out here.

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

In today’s issue:Enterprise sits down with Nahdet Misr CEO and founder of its VC armEdVentures Dalia Ibrahim to dive into edtech sector trends to look out for in 2024.

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food What We're Tracking Today

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Capital markets

EGX30 drops 5% after Ras El Hekma announcement softens devaluation forecasts

The EGX30 fell 5.0% at the close of trading yesterday, after news of Abu Dhabi wealth fund ADQ’s planned USD 35 bn investment in Egypt for development rights to Ras El Hekma on the North Coast over the weekend.

It wasn’t just the EGX30 that had a rough time: The USD on the local parallel market has fallen nearly 17% since ADQ’s agreement with the government was announced on Friday and is now trading at around EGP 51. Safe-haven asset gold in the local market has also taken a hit, with 24 karat gold now exchanging hands for 12.7% less than what it was before the announcement. The EGP also strengthened in the market for twelve-month non-deliverable forwards, with traders putting the USD-EGP rate at the high 50s, down from a January peak of over 70 for a brief period.

But some on the index had record days: Investors piled in on real estate and construction stocks following the news, with Talaat Moustafa Group — who announced it will “collaborate” with Abu Dhabi wealth fund ADQ and the Emirati real estate developer Modon Properties on the project in an EGX disclosure (pdf ) — seeing its share price jump 20% throughout the day. Even real estate developers and construction companies not yet connected to the colossal project saw their share price jump.

For many investors, today seemed like the day to collect on their investments: Even after the 5% drop, the country’s headline index is still up 11.8% YTD and up 67.4% for one-year returns as investors had been piling into equities as a hedge against devaluation — even pushing the index past the 30k mark last month for the first time ever, Mubasher Capital Vice Chairman Ehab Rashad told Enterprise. Now that the expectation is that the devaluation will be more modest than previously believed, they're collecting on their investments.

CIB shares are partially the reason: Shares in CIB has for some time been a prime target for many investors as a means of acquiring USD through arbitrage — that is, buying CIB shares in EGP from the EGX and then converting their shares into certificates of deposit in its LSE-listed GDRs, which they can then sell in foreign currency. As the EGP’s value rose against the USD on the parallel market, CIB’s share price fell 9.8% at yesterday’s close. Because the bank is the largest component of the EGX30, taking up over 27% of the index, the decline in CIB shares was one of the determining factors for the EGX30’s decline.

Investors will be more choosy with their stocks for the coming period, as they look to avoid shares that would be affected by the rise in the value of the EGP against the greenback, and ones that rely primarily on exports, Rashad told us.

Tags:

capital markets EGX Ras El Hekma

Economy

Ras El Hekma transaction not linked to IMF loan discussions, says IMF official

Ras El Hekma agreement is “completely separate” from IMF discussions: “The[USD 35 bn] Emirati investment in Egypt is an important step, but it is not linked to the Fund’s discussions with Egypt. These two topics are completely separate,” the IMF’s Middle East and Central Asia head Jihad Azour told Al Arabiya Business (watch, runtime: 10:55). The first and second reviews of Egypt’s loan program are purely dependent on the Madbouly government’s reform program, which aims to achieve economic stability and boost social security, he added.

But It does make an agreement with the Fund all the more likely: Theannouncement of the Ras El Hekma agreement indicates that both the Fund and the UAE have “a greater confidence” in Egypt, IBIS Consultancy economist Ali Metwally told Enterprise. The Ras El Hekma agreement “may be one of the most important steps to complete the agreement, because our expectations as economists were that reaching an agreement with the Fund and disbursing tranches urgently would coincide with agreements with Egypt’s partners such as the UAE and Saudi Arabia,” Metwally said.

Exchange rate flexibility is a key component to help the Egyptian economy withstandshocks, but it should be paired with fiscal and economic reforms that will help keep inflation low and boost the private sector’s role in the economy, Azour said.

Remember: IMF staff and Egyptian officials are continuing to make “excellent progress” towards finalizing the long-stalled first and second reviews of Egypt’s loan program, with the main elements of the program already agreed on, the Fund’s director of communication Julie Kozack said on Saturday.

CLOSING THE FINANCING GAP-

Our financing gap should be covered for the next three to fours years, think analysts: The ADQ investment, in addition to an expanded IMF loan and further FDI inflows, will cover Egypt’s financing gap for the next three to four years and help Egypt “avoid financial pressures from external obligations,” Metwally told us. The funds will provide “sufficient” support for Egypt until the US Federal Reserve and the EU start cutting rates, Metwally added. Goldman Sachs’ Farouk Soussa also sees the investment covering the county’s financing gap for the next four years.

Mind the gap: Egypt’s external financing requirements for 2024 stand around USD 56 bn,consisting of debt repayments and our current account deficit, writes Al Ahly Pharos’ Esraa Ahmed in a research note seen by Enterprise. Fresh FX injections, Arab countries expected to roll over their Egypt deposits, and the waived UAE deposits will help pay the majority of it, leaving the remaining external financing requirements for the year at around USD 11 bn, which can be covered by FDI and borrowing, she continued.

Devaluation pressures to alleviate: The transaction will “provide a good cushion for thecurrent FX crunch and pave the way for implementing the IMF agreement and ensuing EGP exchange rate adjustment,” said Ahmed. “These developments will allow for a less harsh EGP devaluation, maybe to the EGP 40-45 range, far lower than the previous parallel FX market’s speculations,” she added, explaining that the injection of funds will help Egypt “unfreeze economic activity and withstand the front-loaded obligations.” Metwally forecasted an even more pared back devaluation of 20-25%, which would put the EGP somewhere between 37-39 against the greenback.

Tags:

devaluation economy IMF Ras El Hekma

Economy

OECD lays out policy recommendations after forecasting growth dipping to 3.2% in FY 2023-24

OECD gives us a bill of health and chimes in with its two cents on the way forward: Egypt needs to ramp up private sector activity, rationalize spending cuts, and maintain restrictive monetary policy to help boost economic growth, the Organisation for Economic Co-operation and Development (OECD) said in its first economic survey of Egypt on Friday.

Our OECD bill of health:

Growth to fall this fiscal year before recovering in the coming years: The OECD sees economic growth falling to 3.2% in the current fiscal year — from 3.8% in the last fiscal year — as inflation continues to drive down consumption. Growth is set to pick up to hit 4.4% in FY 2024-25 and 5.1% in FY 2025-26 provided that inflation subsides.
Public debt is expected to fall to 92% of GDP in FY 2023-24 and decline further to 86.9% and 80.7% in the next two fiscal years.
The current account deficit is expected to narrow to 0.8% of GDP in FY 2023-24 and FY 2024-25 and further to 0.7% in FY 2025-26.
Budget deficit is expected to increase to 7.8% of GDP in FY 2023-24, before narrowing to 7% and 6.5% in the subsequent fiscal years.
Annual headline inflation is expected to average 32% in the current fiscal year, before plummeting to 15.9% in FY 2024-25 and 7.5% in FY 2025-26.

The doctor’s orders: The OECD put forward a number of recommendations for shoring up the economy. Below is a rundown of some of their key suggestions:

#1 - Continued monetary tightening: “Bringing inflation under control is now a key near-termpriority to spur consumption and strengthen growth. Monetary policy needs to remain restrictive until inflation comes back to target,” OECD Secretary-General Mathias Cormann said at a presser while presenting the survey.

#2 - Doubling down on fiscal consolidation: Spending cuts recently introduced by thegovernment should be coupled with a thorough review of public investment projects, the report reads. The state should further work to rationalize infrastructure projects and postpone the implementation of some large-scale public investment projects in a bid to lower public debt and redirect funds to priority areas, such as healthcare and education. It should also phase out untargeted energy subsidies, the report suggests.

Remember: The Madbouly government’s decision to slash public investment and scrap taxexemptions previously granted to state entities and public-sector companies and projects went into effect earlier this month.

#3 - Boosting private sector activity: Reducing regulatory barriers and scaling back the footprint of state-owned enterprises would level the playing field, according to the report. Additionally, the state privatization program should allow for more transparency in the choice of assets to be sold and the timelines.

#4 - Creating more flexible labor markets: This entails streamlining employment regulations,reducing labor taxes to incentivize the creation of higher quality jobs and lowering social security contribution rates — a significant driver of informal employment and the subsequent lack of social protection for workers. The government should also expand childcare facilities to encourage greater female participation in the workforce, which currently stands at 12.7%.

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budget deficit economy GDP inflation OECD state privatization program

A MESSAGE FROM HSBC

Global trade faces its biggest transformation in decades, and businesses must adapt

The impact of geopolitics on supply chains, and the pace at which trade and investmentflows have shifted over the past two years are topics that will be keenly discussed at the World Trade Organization’s (WTO) ministerial meeting in Abu Dhabi this week.

Whilst shipping challenges caused by tensions in the Red Sea and the drought in the Panama Canal are making trade conditions more difficult in the near-term, businesses must also prepare for more fundamental transformations afoot.

These transformations are being driven by digitisation of key processes, a strategic pivot towards more resilient and sustainable supply chains, and the emergence of new business models. This poses both challenges and opportunities for businesses.

The nature of what is being bought and sold and how it is being traded is changing too.In the future, container ships will continue to sail, filled with goods acquired from e-commerce platforms in one continent, by customers in another. But there will also be a big proportional shift towards trade in services. The value of global trade is estimated to be in the region of USD 32 tn, of which a fifth is comprised of services. Over the next decade, services are expected to account for a substantial share of all new international trade, with the bulk of this being in digitally delivered services.

WTO meeting delegates will have a challenge knowing where to begin, and while we will no doubt see useful developments, it will as ever be incumbent on businesses themselves to navigate this complex terrain with agility and foresight.

First, businesses need to understand how their market, and markets relevant to them, are evolving. To improve resiliency, many are already seeking new suppliers closer to home — so-called near-shoring. Others are forging entirely new supplier networks within nascent industry segments as they seek the tools necessary to transition to net zero. Airlines for example, are facing steep learning curves identifying and working with the most promising producers of sustainable aviation fuels.

Second, putting in place the right financial infrastructure can create agile, borderless businesses able to react quickly to change. Exploiting simple cross-border payment and trade tracking apps, and making investments in partnerships and platforms to facilitate global collaboration across real and virtual platforms, will be key.

HSBC is well-positioned as we often sit on both sides of a transaction, providing us with unique insights into the needs of buyers and sellers, together with that of the wider industry. Through the bank’s extensive investment into experienced people and processes, we are also driving forward automation and digitisation in trade finance.

For those willing to adapt, innovate, and collaborate, the potential rewards are significant. The key lies in a strategic and forward-looking approach. This will include embracing complexity, leveraging technology, and building on the strengths of global interconnectedness and good governance.

Vivek Ramachandran is head of global trade and receivables finance at HSBC.

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A MESSAGE FROM HSBC HSBC trade

EARNINGS WATCH

Egypt Kuwait Holding reports a 25% increase in net attributable income in 4Q 2023, despite dip in revenues

Profits up, revenues down: Our friends at Egypt Kuwait Holding (EKH) saw its attributable net income (ANI) rise over 25% y-o-y to USD 43 mn in 4Q 2023, while revenues dropped nearly dropped nearly 17% during the same period,according to the company’s latest earnings release (pdf). For the whole year,EKH’s attributable net income dropped nearly 26% y-o-y in 2023 to USD 179 mn, while revenues fell 27% to USD 801 mn throughout the year.

The why: A rise in urea prices — a key factor in EKH’s fertilizer and petrochemical operations — shortly following Russia’s invasion of Ukraine and subsequent decline in prices, in addition to the devaluation of the EGP being reflected in the companies financials calculated in USD, impacted the company’s y-o-y comparisons. Despite a decline in revenues and bottom line throughout the year, revenues still remained above pre-Ukraine war historical averages and profitability remained strong with a gross profit margin hitting 45%.

Dividend: The company’s board of directors approved a proposal to pay a dividend of USD 0.06 per share, which will be recommended to EKH’s annual general meeting next month.

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earnings watch Egypt Kuwait Holding foreign exchange

LAST NIGHT’S TALK SHOWS

Food prices in the run-up to Ramadam dominated the airwaves

It was all about the economy once again last night, as the nation’s talking heads focused on a meeting held by Prime Minister Mostafa Madbouly to speed up the release of goods that have been stuck at customs due to FX shortages and the second round of the National Dialogue set to kick off today that are focussed on the economy.

There could be a decline in the prices of essential commodities before Ramadan, as the release of goods that had been stuck at customs brings down prices, Federation of Chambers of Commerce Secretary-General Alaa Ezz told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 3:50). “With the release of more goods stuck in ports, prices will decrease. This will start at the wholesale price level and eventually reflect on retail prices, which usually takes between five days to a week,” Ezz said.

“Prices of cooking oil could go down by 30-40% in the coming period, as local banks continue to provide the necessary USD liquidity to importers and the USD price stabilizes,” Federation of Egyptian Industries member El Sayed Bassiouny called in to tell Lamees Al Hadidi (watch, runtime: 2:35).

The return of the National Dialogue got some air time as well, with El Hekaya’s Amr Adib conducting an interview with the dialogue’s general coordinator Diaa Rashwan (watch, runtime: 11:24). Rashwan reiterated that the dialogue’s sessions will be centered around the country’s economic challenges and said that the dialogue would work to provide realistic and applicable solutions to these problems. The National Dialogue also received coverage from Al Hayah Al Youm (watch, runtime: 9:22) and Masaa DMC (watch, runtime: 38:50).

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commodities food LAST NIGHT’S TALK SHOWS

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Also on our Radar

MPs give nod to quadrupling the price tag of passports. PLUS: Saudi Egyptian Industrial Investment to invest USD 5 mn in new pharma production line

LEGISLATION-

MPs give nod to quadrupling the price tag of passports: The House ofRepresentatives gave the final approvalyesterday to amendments that will raise the issuance fee of passports to EGP 1k from EGP 250, in addition to other fees. The increase aims to catch up with the rise in prices of imported materials that go into the production of passports in addition to improving security features.

Also approved by the House:

A EUR 500 mn grant from the European Investment Bank to support the environment ministry’s Sustainable Green Industry project.
A EUR 80 mn grant from Germany to fund the environment ministry's solid waste management program, help create 25 technological schools and centers, and support the Central Bank of Egypt’s financial risk management program.
An agreement to eliminate double taxation and tackle tax evasion between Egypt and Croatia.

INVESTMENT-

Saudi Egyptian Industrial Investment (SEII) plans to invest USD 5 mn into a newpharma production line, which should kick off operations early next year, CEO Ahmed Ata told Al Shorouk. The investment will bring SEII’s total investment in the Egyptian pharma sector to USD 50 mn, he added. The SEII is also keen to invest in EGX-listed companies, “especially those in the ready-made garments, glass, and fertilizer sectors,” having pumped around EGP 150 mn into the stock exchange last year, Ata said.

SEII’s plans to acquire a majority stake in state-owned El Nasr Glass and Crystal are stillhappening, with discussions and negotiations currently underway, he said, but “we are waiting for the EGP-USD exchange rate to stabilize.” In case you missed it, SEII inked an MoU with the state-owned Metallurgical Industries Holding Company in 2023 to acquire 70% of its subsidiary El Nasr Glass and Crystal Company.

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ALSO ON OUR RADAR development finance legislation Saudi Egyptian Industrial Investment

PLANET FINANCE

Buffett says Berkshire Hathaway has no possible “eye-popping” gains left

The Oracle of Omaha tempers stock expectations: Warren Buffett’s USD 900 bn conglomerate now has “no possibility of eye-popping performance” because its colossal size means “there remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett said in his annual letter (pdf) to Berkshire shareholders.

A hard act to follow: Since Buffet took over Berkshire Hathaway in 1965, the share price has risen 4.4 mn percent. By comparison, the S&P 500 has risen 31k percent during the same period.

Berkshire Hathaway still reported its highest ever earnings in 2023: The company reported earnings of USD 97 bn in 2023, according to Berkshire’s latest earnings release (pdf).

EGX30	27,841	-5.0% (YTD: +11.8%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	21.25% deposit	22.25% lending
Tadawul	12,605	-0.2% (YTD: +5.3%)
ADX	9,280	-0.4% (YTD: -3.1%)
DFM	4,226	-0.1% (YTD: +4.1%)
S&P 500	5,089	0.0% (YTD: +6.7%)
FTSE 100	7,706	+0.3% (YTD: -0.4%)
Euro Stoxx 50	4,873	+0.4% (YTD: +7.8%)
Brent crude	USD 81.62	-2.5%
Natural gas (Nymex)	USD 1.60	-7.5%
Gold	USD 2,049.40	+0.9%
BTC	USD 51,760	+0.4% (YTD: +22.4%)

THE CLOSING BELL-

The EGX30 fell by 5.0% at yesterday’s close on turnover of EGP 9.2 bn (127.1% above the 90-day average). Local investors were net buyers. The index is up 11.8% YTD.

In the green: Orascom Construction (+20.0%), Talaat Moustafa Group (+20.0%) and Edita (+20.0%).

In the red: Alexandria Containers and Cargo Handling (-20.0%), Abu Qir Fertilizers (-19.9%) and Sidi Kerir Petrochemicals (-19.5%).

It’s a mixed picture for Asian markets this morning. Shares in China are mixed, with both Shanghai and Hong Kong basically flat, the Kospi in the red, and the Nikkei extending its rally to hit a new high. Futures suggest a soft open for shares in both Europe and North America later today.

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capital markets earnings Planet Finance Warren Buffett

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

Published every Monday in EnterpriseAM.

Read Blackboard

BLACKBOARD

EdVentures founder Dalia Ibrahim on what we can expect from Egypt’s edtech sector this year

Enterprise sat down with the Nahdet Misr CEOand founder of its VC arm EdVentures Dalia Ibrahim (LinkedIn) to learn more about the Egyptian edtech sector and what trends and news to look out for in 2024. Below are edited excerpts from our conversation.

ENTERPRISE: What can you tell us about EdVentures’ plans to invest USD 5 mn inlocal and regional startups?

DALIA IBRAHIM: EdVentures plans to invest up to USD 500k each into 10-12 Egyptian and international startups,in some cases exceeding this amount depending on the company. We have not identified all of the companies, but we have a pool of nine, including a company in Africa, another one in Canada, and seven companies in Egypt. We will deploy funds in four or five of them according to the negotiations and the final agreements. This will continue all year, we are just in February, so we still have ten months to go. EdVentures also operates incubation acceleration programs, from which we select and invest in some companies.

E: EdVentures places a lot of focus not just on funding startups, but providingmentorship. Why do you give this the same importance as providing funding?

DI: It’s not all about money, it’s much more important to have mentors and coaches and to help startups with what they are doing. Startups join EdVentures because we’re a corporate venture related to the biggest publishing and education content company in Egypt — Nahdet Misr. We are a huge group of 11 companies based in Egypt and abroad, working in curriculum development, vocational education content, digitalization, and school management.

Alongside offering funds and knowhow, EdVentures provides connections to the top managers in education, coding and programming, AI business development, as well as connections to ministries, universities, and schools and different countries.

E: Why does EdVentures think that Egyptian edtech startups make good investments?

DI: Egypt’s startup market is still growing and has not yet matured, which means that thecompetition is very high. There is a real potential for businesses that disrupt the market and the traditional education system. People still need digital content, so there are a lot of gaps that should be filled by startups, especially as the concept of education goes beyond just K-12 or university. Every one of us needs development and learning.

EdVentures’ investments are not only limited to potential unicorns, we support and invest in startups that will never scale up to that level, but have a real social impact and will continue to grow and be sustainable.

E: What trends do you think we will see within the local edtech sector this year?

DI: Artificial intelligence is booming in all sectors and it can be integrated across all types ofedtech programs and startups to cover any type of content, data analysis, school management and behaviors, social intelligence, and soft skills. Using AI gives you a lot of analytics and understanding regarding the behavior of students and it also helps teachers become more efficient. One study has indicated that some 40% of a teacher's time is lost preparing material beyond the direct interaction between them and the students.

AR and VR are also booming and they should be integrated according to the real need for them, rather than just making use of them because they are there. For example, if you want to teach vocational education in relation to safety, VR can act as a great tool.

Micro-learning and interactive material are another potential focus, startups can use short,TikTok style videos or reels that quickly disseminate information. Instead of watching a half hour lesson, students can access material that breaks down the lesson into smaller units, which ensures that they have understood the lesson through an assessment.

E: Where do you think optimism levels regarding the Egyptian edtech sector stand from a venture capital perspective?

DI: There is huge potential in Egypt as the cost of doing business here is comparativelyreasonable when you look at it from the perspective of Arab and international investors. Startups can receive great valuations, operation costs are low, and you have a great pool of capable talent. Egypt-based startups can develop new ideas at a very reasonable price and reach regional and international levels.

The market is also growing, there's a study that says that Egypt’s edtech sector will be worthUSD 5.5 bn by 2028, up from USD 2.5 bn in 2022.

E: What do you think the impact of the anticipated devaluation of the EGP could have on venture capital investments in the edtech sector?

DI: It's a double-edged sword edge. For investors they can invest or acquire a startup at a very reasonable price and still guarantee an operation on the ground. On the other hand, if a company operates only in Egypt and it only makes EGP revenues, of course it lowers the value of the startup itself. Most edtech startups want to work outside of Egypt as the income and returns are considered very high as they are received in foreign currency.

E: Why do you think so many local edtech startups are looking to expand outside ofEgypt?

DI: It’s for several reasons. The first is that startups have to grow, even under abnormaleconomic conditions, growth has to be part of their strategy.

Secondly, when you operate mainly from Egypt and you sell [your services] in different countries you are guaranteed a much higher profit margin. So stepping into new markets is important. But of course, local startups need a success story in Egypt first.

E: What’s next for EdVentures?

DI: We are planning to invest in almost ten startups or even more this year and support around 12 startups in an acceleration program and at least eight startups through our incubation program. Our return on investment is amazing and exceeds 5.4x, so a lot of investors feel very safe investing with us.

Tags:

Blackboard edtech Education EdVentures venture capital

CALENDAR

2024

FEBRUARY

24 February-1 March (Saturday-Friday): Egypt hosts the 71st African Airports Council International (ACI) Conference and Exhibition at the Alamera Hall Air Forces House Center and Le Méridien, Cairo Airport.

26 February (Monday): Eighth edition of the Capital Markets Summit at the InterContinental Semiramis Hotel, Cairo.

MARCH

1 March (Friday): New public-sector minimum wage goes into effect.

2-3 March (Saturday-Sunday): The Emigration Ministry’s International Health Tourism Conference at the St Regis Almasa Hotel, New Administrative Capital.

7 March (Thursday): Deadline to apply to Shalateen Mining Company’s international gold exploration tender.

10 March (Sunday): First day of Ramadan (TBC).

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

28 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 March (Thursday): Industrial Development Authority to close applications for 1 mn sqm of land in 10 different governorates.

29 March (Friday): Egypt removed from JPMorgan Chase’s Emerging Local Markets Index Plus.

APRIL

1 April (Monday): Deadline to bid for 23 blocks in an international oil and gas tender.

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

15-21 April (Monday-Sunday): The IMF / World Bank Spring Meetings.

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

28 April (Sunday): Grace period to ins. brokerage firms to comply with Law 215 for 2023 expires.

28-29 April (Sunday-Monday): Saudi Arabia hosts a World Economic Forum (WEF) meeting on ‘global collaboration, growth, and energy.’

29 April (Monday): The government’s car export scheme expires.

MAY

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

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (national holiday).

20 May (Monday): Malaysian Palm Oil Forum in Cairo, with attendance from Malaysian Plantation and Commodities Minister Johari Abdul Ghani.

23 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

29 May (Wednesday): Virtual launch of Chicago Booth Executive Program.

JUNE

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

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).

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

January 2024: The Red Sea Ports Authority is set to finalize an agreement with the Abu Dhabi Ports Group for the operation and maintenance of the tourist passenger terminal in the Sharm El Sheikh Sea Port.

February 2024: Egypt will sign a USD 1.5 bn financing agreement with the International Islamic Trade Finance Corporation (ITFC).

February 2024: Funds from the Islamic Development Bank for the high speed electric railway will get the sign off.

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

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.

1H 2024: The European Union is set to hold an investment conference in Egypt during spring.

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

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.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

EVENTS WITH NO SET DATE

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

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