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Tuesday, 2 Jul 2024

What We're Tracking Today
Energy
Automotive
Manufacturing
Automotive
Debt Watch
Capital Markets
Moves
Also On Our Radar
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Going Green
Calendar

Energy investments continue to stack up following Egypt-EU Investment Conference

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Today at a glance

1

Energy

Green hydrogen, solar, ethane and wind power investment announcements follow Egypt-EU Investment Conference.
2

Automotive

Vokswagen mulls partnering in shared auto production facility in East Port Said.
3

Automotive

Auto sales in Egypt rise for the second month in a row in May
4

DEBT WATCH

Valu raises EGP 1.2 bn in securitized bond issuance.
5

What We're Tracking Today

Act Financial kicks off IPO procedures.
6

What We're Tracking Today

Egypt welcomed a record 7.1 mn tourists in 1H 2024.
7

Moves

New fiscal year kicks off with management changes across public, private sectors.
8

PLANET FINANCE

GCC sovereign wealth funds post largest investment share in 15 years -GlobalSWF.
9

Going Green

Egypt’s first carbon pricing draft law is almost here.

Tuesday, 2 Jul 2024

What We're Tracking Today
Energy
Automotive
Manufacturing
Automotive
Debt Watch
Capital Markets
Moves
Also On Our Radar
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

Egypt-EU Investment Conference round #2

Good morning, friends. We were a little too busy with big-ticket announcements yesterday from the Egypt-EU Investment Conference to remember to wish you all a happy new fiscal year. The new fiscal year that kicked off yesterday may not be as exciting as the Gregorian or the Islamic new years, but for readers of Enterprise its a signal to pay close attention to local business and economic news as new state initiatives officially launch and much of the private sector begins to crank up a gear to start the year-long period on a strong footing.

In today’s issue, we’ve got energy project announcements galore and an unusually large amount of automotive news for you to get through this morning, plus so much more. We’ve got a busy issue today, so let’s jump right in.

WATCH THIS SPACE-

#1- Egypt-EU Investment Conference 2.0: Cairo is looking forward to the 2025 edition of the Egypt-EU Investment Conference, Prime Minister Moustafa Madbouly said during remarks closing out the conference on Sunday. The two-day conference, which wrapped up earlier this week, saw Egypt sign some EUR 67.7 bn worth of MoUs and agreements.

In the meantime: “Our primary focus in the coming period is to translate these signed agreements into actual projects on the ground,” Madbouly said. “Given the successful launch of the conference, it is crucial to follow up on the agreements and the ideas and initiatives proposed, as well as the signed MoUs.”

#2- EU could help us unlock EUR 11 bn in foreign investment: The EUR 1.8 bn worth of investment guarantees under the EUR 7.4 bn financing package from the bloc will be channeled through the European Fund for Sustainable Development and help attract EUR 11 bn in foreign investment across several sectors, according to a statement from the International Cooperation Ministry. The funding will target priority sectors including energy, food security, water, and climate action, and human capital.

Sound familiar? When this EUR 1.8 bn tranche was first announced in March after Egypt and the EU signed a joint strategic and comprehensive partnership, it wasn’t completely clear how the funds would be used. A release (pdf) circulated to media outlets at the time described the funds as “additional investments under the Southern and Neighborhood Economic and Investment Plan,” without providing further details.

#3- We got our first LNG shipment for the season: The government has received the first of a number of anticipated LNG shipments at the Ain Sokhna port yesterday, CNN Business Arabic reported, citing an unnamed government official. The 3.5 bn cubic feet of gas are now being prepared to be transported to the floating LNG regasification unit docked in Ain Sokhna, before commencing the gasification process and integrating it into the national gas network this week, the official added.

The first of many: Egypt secured 20 LNG shipments last week as it works to ensure it has sufficient supplies to keep the lights on during the current period of increased demand expected to last till September. BP and an East Mediterranean Gas Company subsidiary will each supply five of the shipments, Al Sharq Business reported, citing two anonymous officials from the Oil Ministry.

#4- Al Ahly Sabbour has an IPO in the pipeline: Local real estate developer Al Ahly Sabbour is in talks with undisclosed advisors regarding its plans to go public on the EGX, chairman Ahmed Sabbour told Al Arabiya, without providing further details. The company will officially announce its IPO once all preparations are in order and depending on market conditions, Sabbour said, adding that preparations are expected to wrap up within the next 6-9 months.

PSA-

Blackouts officially back to two hours: The Electricity Ministry confirmed that the government has reverted to planned two-hour power outages as of yesterday, instead of three hours, according to a statement from the ministry. The two-hour planned outages will take place between 3pm to 7pm.

Higher processing fees on gold: Gold processing fees have increased by 10% yesterday with the start of a new fiscal year for a year-long period, according to a document seen by Enterprise.

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

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

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

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

HAPPENING TODAY-

Act Financial is kicking off its IPO procedures today in an event held alongside IPO manager Zilla Capital.

Remember: The company is offering some 32% of the company’s shares following a capital increase, with the subscription period for retail investors set to take place between 9-23 July, while institutional investors will get a chance to subscribe between 9-18 July.

The company has set the final IPO price at EGP 2.90 per share, it said in a statement (pdf). Financial Advice Corporate Transactions (FACT) — the independent financial advisor to the transaction — set the fair value price at EGP 3.63 per share, down from the EGP 4.54 previously set as the fair value price.

Act Financial also announced its performance during the year so far: The company recorded revenues of EGP 138.4 mn during the first five months of the year and recorded net income of EGP 24.4 mn during the period, it said in its latest financial statement (pdf).

DATA POINTS-

#1- Egypt welcomed a record 7.1 mn tourists in 1H 2024, ever so slightly inching above the previous record in the first half of last year, according to a Tourism Ministry statement. Overnight stays also rose to 70.2 mn from 67.6 mn in the same period last year, leading to an estimated USD 6.6 bn in tourism revenues, up from USD 6.3 bn.

#2- The Sovereign Fund of Egypt has drawn in some EGP 52 bn in local investments and around USD 5.1 bn in foreign investments over the past four years, Planning Minister Hala El Said said during the Egypt-EU Investment Conference, Asharq Business reported.

#3- MENA-bound remittances projected to rebound 4.3% y-o-y to USD 58 bn in 2024 on the back of uptick of flows into Egypt, which the World Bank in its latest Migration and Development Brief (pdf) attributed to people returning to official channels to send money into the country after the unification of the exchange rate in March. Come 2025, the lender sees remittances to the region picking up a further 5.5% y-o-y to USD 61 bn.

#4- The General Authority for Freezones and Investment has issued 31 golden licenses to local and foreign investors in Egypt since December 2022, authority head Hossam Heiba said on the sidelines of the Egypt-EU Investment Conference, Asharq Business wrote.

WAR WATCH-

Egypt rejected rumors it agreed to move or replace the Rafah crossing with another near the Kerem Shalom crossing from Israel into Gaza, an unnamed high-level source told Al Qahera News. The source reiterated Egypt's position that Israeli troops should withdraw from the Palestinian side of the crossing and that the country won’t send any forces into Gaza, adding that the post-war management of the enclave is purely a Palestinian affair.

CIRCLE YOUR CALENDAR-

One for the aerospace aficionados: The Egypt International Airshow will take place from 3-5 September at El Alamein International Airport. The event will showcase the latest developments and innovations in the defense, space, and commercial aviation industries. It will feature flying and static aircraft displays, two conferences, and an exhibition of aerospace products and services, bringing together over 200 global exhibitors. You can register for the event here or inquire about exhibiting here.

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-

US, British and French politics continue to push markets off the front pages of the global business press.

Not much has changed since yesterday: Democrats are still losing it over contentions that Joe Biden is too old to run for president. Top party officials held a call with key donors late yesterday to try to shore up their financial base. The FT sums up the current state of the debate nicely: There’s a growing sense among “donors, consultants, and operatives that Biden is no longer fit to challenge Donald Trump for the presidency and should make way for a younger candidate.”

And it could get messy, the paper says, noting there’s “anger at the president’s family and close circle of advisers for concealing his condition and their unwillingness to countenance his exit from White House race.”

Across the pond: Keir Starmer’s Labour party still leads Rishi Sunak’s Conservatives by 20 points or so in polls. And the horse-trading continues in France, as other parties look to block the far-right Rassemblement National from running away with parliament in second-phase voting due next week.

MEANWHILE- The US Supreme Court ruled that Trump has broad immunity for official (but not necessarily personal) actions he took while in office — a finding that almost ensures he won’t face trial before November on charges that he tried to usurp the 2020 election.

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

In today’s issue: We take a look at the new carbon pricing draft law and consider how implementing carbon price mechanisms will help us achieve our green transition goals.

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2

Energy

Green hydrogen, solar, ethane and wind power investment announcements follow Egypt-EU Investment Conference

Energy investment news has been keeping up the pace since the close of the Egypt-EU Investment Conference, with new details and even projects to emerge from the conference and other completely unrelated announcements from what is undoubtedly the main focus of investment in the country at present.

#1- More on the recently announced BP-Infinity-Masdar-Hassan Allam green hydrogen venture: Under the USD 15 bn green hydrogen project announced at the Egypt-EU Investment Conference that wrapped on Sunday, our friends at renewables firm Infinity Power, Hassan Allam, and the UAE’s Masdar, signed a joint development agreement with BP to let it into its existing consortium to explore establishing a multi-phase green hydrogen project in Egypt, according to a joint statement (pdf).

What we know now: The four big names will combine their green hydrogen projects in the country, before exploring “the potential for a single large-scale, multi-phase project for the development of green hydrogen and its derivatives, with a focus on exports,” the statement reads. Consortium newcomer BP has been tapped to be the main developer and operator of the project.

What’s next: The consortium has a freshly inked framework agreement with the government giving them the greenlight to begin technical and commercial feasibility studies for the project.

#2- Sidpec-led consortium confirms project to import ethane: Sidi Kerir Petrochemicals (Sidpec), along with Egyptian Petrochemicals Holding, Egyptian Ethylene and Derivatives, Egyptian Natural Gas Company, and Gama Construction Company, confirmed that they will set up a company with a market cap of USD 663 mn to import liquified ethane gas this year after getting approval from the wider consortium of chemical, gas, and construction firms involved in the project, the company said in an EGX disclosure (pdf).

Remember: Plans to establish a company to facilitate ethane imports emerged in then-unconfirmed reports late last month after Sidpec was forced to shut down operations due to a “lack of feed gasses,” a result of high temperatures, increasing electricity consumption prices, and cuts to the regional gas supply.

Meanwhile, another fertilizer factory goes offline: Egypt Kuwait Holding’s AlexFert has once again suspended operations after it stopped receiving gas supplies due increased consumption triggered by higher temperatures, the company said yesterday in an EGX disclosure (pdf).

Reuters also picked up the story.

#3- ACWA Power gets the green light to operate its Kom Ombo solar plant: Saudi Arabia’s ACWA Power has received a commercial operation certificate for its 200-MW Kom Ombo solar plant — Egypt’s largest privately owned solar plant — it said in a Tadawul disclosure. Acwa has a 25-year power purchase agreement with the Egyptian Electricity Transmission Company and expects the financial impacts in the third quarter of this year.

Refresher: Once online, the solar farm, which will span 4.8 sq km and contain over 387k bifacial solar panels, will be connected to the country’s electricity grid and offset an estimated 280k tons of carbon emissions annually by powering 130k households.

#4- Taqa Arabia is looking to produce 150 MW of solar energy in Egypt: Qalaa Holdings’ Taqa Arabia is negotiating with clients in the tourism, industrial and agricultural sectors about proposed projects to produce 150 MW of solar energy in Egypt, Chairman Khaled Abu Bakr told Zawya.

#5- Infinity-Hassan Allam-Masdar consortium pushes back USD 10 bn Sohag wind farm construction date: Construction will begin on Infinity Power, Hassan Allam Utilities, and Masdar’s 10 GW wind project in March 2026, Infinity Power Mohamed chairman Mansour told Bloomberg. Construction was initially set for this year but fell behind due to land procurement issues in West Sohag. The project will begin electricity generation in 2032, he added.

AND- Infinity is also planning expansion in Cameroon: To help reach Infinity’s goal of upping its capacity from 1.3 GW to 10 GW by 2030, the company is planning to raise USD 2 bn in debt and equity to develop 4 GW of small scale projects in West Cameroon, Mansour said in the interview.

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3

Automotive

Vokswagen mulls partnering in shared auto production facility in East Port Said Industrial Zone

Volkswagen seems keen on proposed shared auto production facility: German carmaker Volkswagen is interested in helping develop a shared production facility in the East Port Said Industrial Zone, Volkswagen Group Africa Chairperson and Managing Director Martina Biene told Asharq Business.

Remember: The Madbouly government and Volkswagen signed an agreement in November to conduct feasibility studies for the establishment of the planned East Port Said Automotive Zone (EPAZ), for which Volkswagen was set to provide the government with technical assistance as it works on the zone’s feasibility study. Volkswagen’s assistance to the project was driven by the firm’s interest in upping its presence in the country and jumping on board with efforts to localize the industry under the Automotive Industry Development Program.

An automotive industry first: “What Egypt and East Port Said is trying to build is something unique and something we have not heard of in the automotive industry before,” Biene added. The shared production facility will be used by different original equipment manufacturers (OEMs), Biene said, explaining that they are “interested in sharing in assembly so that individual manufacturers only would have to set up their individual bodyshops.” As an example, Beine pointed to the possibility of different car manufacturers sharing a vehicle painting complex, “which reduces the capex side of the investments a lot and moves it into opex.”

The more the merrier: “The project really becomes interesting if there are other OEM partners. So, we would welcome all other manufacturing partners that are interested in looking at this experiment.”

A final agreement could be announced in 2025: If the project proves feasible, Biene hopes to present a final agreement by next year, which would then be followed by the construction of the facilities, she said.

And another? The government is in “advanced talks” with a major non-Chinese vehicle manufacturer to assemble its cars locally, Trade Minister Ahmed Samir told Asharq Business.

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4

Manufacturing

TMG, AOI partner with Schindler to localize elevator manufacturing

Egyptian-made elevators? The Arab Organization for Industrialization and Talaat Moustafa Group will work to localize elevator manufacturing under a framework agreement inked with Swiss elevator and escalator manufacturer Schindler, according to a statement. Schindler will launch a program to localize certain elevator components, which will then be used in upcoming Housing Ministry and New Urban Communities Authority projects.

The details: Under the agreement, Talaat Moustafa Group and the Arab Organization for Industrialization will set up a facility for the assembly and testing of elevators, while Schindler will provide technical assistance and manage the facility. The facility is expected to produce 5k elevators a year over a ten-year period.

ICYMI: Last year, we discussed the challenges facing the elevator industry in Egypt amid demand increase in our weekly section Inside Industry.

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5

Automotive

Auto sales in Egypt rise for the second month in a row in May

Another month with auto sales on the rise: Auto sales in May saw a 10.8% m-o-m increase to 6.3k vehicles, according to figures from the Automotive Marketing Information Council (AMIC) seen by Enterprise. The uptick follows April’s 35.1% m-o-m increase, which saw sales rebound to 5.7k units from March’s 4.2k — the lowest number of auto sales we’ve seen since we started keeping track in January 2019.

Growth across the board: Bus sales rose 36.8% m-o-m to 450 units in May, while truck sales were up 29.4% m-o-m to just over 1k units. Passenger car sales — which accounted for 76.6% of all vehicle sales — recorded a modest increase of 5.7% m-o-m to 4.8k units.

Remember: Auto sales have been relatively volatile — but overall on the decline — for the last few years. In late 2023, auto sales fell on the back of FX shortages that limited supply in the market and gave distributors leverage to hike prices as they pleased. But over the past few months, demand has been fluctuating and in March sales fell in response to the float of the EGP, which some think led to customers adopting a wait-and-see approach in hopes of further price reductions down the line.

On a yearly basis: Auto sales were down 14.2% y-o-y in May, driven by a 35.2% y-o-y dip in bus sales and a 15.7% y-o-y in passenger car sales. Truck sales, on the other hand, increased by 10.5% compared to the same period last year.

More cars should be hitting the local market soon: The government will release all cars stuck at the country’s ports by the end of the week after the process to do so kicked off last week, an unnamed government official told Al Borsa. The official downplayed the number of the cars still stuck at the ports, saying that the reported numbers have been greatly exaggerated, and that the official figure will be announced once the vehicles are released.

But not all cars will be getting the green light to clear customs: The government decided to halt all customs clearance and pre-registration of tax-exempt vehicles for differently abled individuals for six months to put in place a new system that will prevent non-differently abled people fraudulently purchasing vehicles through the system, according to a document seen by Asharq Business. Cars for individuals with special needs account for about 25% of Egypt’s annual vehicle imports, Egyptian Automotive Dealers Association head Osama Abo El Magd told the news outlet.

Always read the small print: AMIC figures reflect data contributed by member distributors, who include most, but not all, industry participants.

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6

DEBT WATCH

Egypt’s Valu raises EGP 1.2 bn in 10th securitized bond issuance

Valu has raised EGP 1.2 bn in securitized bonds as part of a larger EGP 9 bn securitization program, the company said in a statement (pdf). The issuance was backed by a receivables portfolio assigned to EFG for Securitization with a Prime 1-rated 6-month tenor tranche and another Prime 2-rated 12-month tenor tranche.

This is Valu’s 10th issuance and it follows an EGP 616.8 mn securitization issuance in May. The company plans to issue a total of EGP 4 bn worth of securitized bonds in 2024, Hassouna said in earlier this year.

Who bought in: EFG Hermes and the Arab African International Bank were underwriters and Bank ABC was listed as one of the subscribers to the issuance.

Remember: Valu is gearing up for an EGX listing with Valu CEO Walid Hassouna saying in March that Valu plans to offer between 20-25% of its shares on the EGX within a year.

Advisors: EFG Hermes was the sole financial advisor, transaction manager, bookrunner, and arranger on the issuance. Arab African International Bank also served as the custodian bank. Baker Tilly acted as auditor and Dreny & Partners provided legal counsel.

DATA POINT- Companies have raised a little over EGP 16 bn from securitization so far this year, according to data tracked by Enterprise. This is 37% less than the amount raised in the same period last year, when companies clocked up some EGP 25.3 bn.

NTA IN LINE FOR EGP 74 BN IN FINANCING?-

The National Tunnels Authority (NTA) has kicked off procedures to take out a loan of up to EGP 74 bn from a syndicate of ten local banks, led by the state-owned National Bank of Egypt and Banque Misr, Asharq Business reports, citing three anonymous government officials. The funds, which will be guaranteed by the Finance Ministry, will reportedly be used to pay local contractors currently working or slated to work on the authority’s projects.

The timeline: The authority could receive a tranche worth more than EGP 10 bn this month and the remainder of the funds before the end of 3Q 2024, one of the sources said.

FUNDS FOR RAYA IT-

Al Baraka Bank will provide Raya Holding subsidiary Raya Information Technology with a credit facility of up to EGP 550 mn or its equivalent in foreign currency under a cooperation agreement inked between the two sides, according to a statement (pdf). The financing will help the company fund its expansion plans and explore new avenues for growth.

ADCB LOANS EGP 1.5 BN FOR NEW CAIRO DEVELOPMENT-

The developer behind New Cairo’s Regent’s Park secured funding for another New Cairo project: Abu Dhabi Commercial Bank (ADCB) has signed a financing agreement with Cairo-based property developer Al Dawlia Boutique Developments to provide a credit facility worth EGP 1.5 bn over five years to fund one of the company’s new projects in New Cairo, Al Mal reports. The funds will support the development of a large-scale real estate project aimed at expanding the residential and commercial infrastructure in the area.

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7

Capital markets

EFG Hermes once again tops the EGX brokerage league table in June

EFG Hermes’ brokerage arms once again topped the EGX brokerage league table in June with a market share of 18.5%, according to figures released by the bourse (pdf). Rounding out the top five were CI Capital (9.0%), Thndr Securities (7.0%), Cairo Capital Securities (5.4%), and Mubasher Securities (5.0%). EFG Hermes has led the table for 13 months in a row now, and held the top spot in every month but one back in 2023.

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8

Moves

New fiscal year kicks off with management changes across public, private sectors

New fiscal year’s resolutions: Hoping to kick off the new fiscal year with a fresh start, the public and private sectors are busy appointing new and old faces to leadership positions.

#1- Prime Holding has terminated CEO Hassan Samir (LinkedIn), who also served as vice chairman and managing director of the company, according to an EGX disclosure (pdf). Samir took on the added roles of CEO, managing director, and vice chairman in January 2023 following a three-year stint as brokerage firm’s managing director for capital markets. He has been with the company for nearly two decades. Samir was fined EGP 1 mn by the company for “deliberately” missing the general assembly meeting during which the termination decision was issued, according to the disclosure.

#2- Allianz Egypt welcomes a new CEO: Allianz Egypt has appointed Charles Tawdros (LinkedIn) as the company’s new group CEO, the company said in a statement(pdf). Tawdros has more than 20 years of experience in the ins. and financial sectors and has served as the company’s managing director since 2019.

#3- The state-owned Industrial Development Bank has tapped a new CEO: The Industrial Development Bank yesterday welcomed Hussein Refaie (LinkedIn) as the lender’s new CEO and managing director, Al Borsa reports. Refaie brings in 40 years of banking and financial expertise, having worked for many banks, including CitiBank, Barclays, and the National Bank of Egypt. Refaie assumes his new post at IDB after leaving his managing director position at the Suez Canal Bank earlier this year.

#4- The legal system is also getting a shake up: President Abdel Fattah El Sisi has appointed Abdel Rady Seddiq as the new head of the Administrative Prosecution Authority and Ahmed Aboud as the new head of the State Council (Maglis El Dowla), Shorouk News reports (here, here).

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9

Also on our Radar

ITIDA, Telecom Egypt, and Nokia to establish internet protocol center of excellence in Cairo. PLUS: Emirates NBD Egypt, Arab Contractors, Antipollution Egypt, Schindler, EgyptAir + Air Cairo + Nesma

TELECOMS-

ITIDA, Telecom Egypt, and Nokia to establish internet protocol center of excellence in Cairo: ITIDA, Telecom Egypt, and Nokia signed an MoU to create a center of excellence to develop expertise in automating IP networks and enhancing Egypt's ICT export capabilities, according to a cabinet statement. The center will initially export digital services to over 60 countries in the MEA region, focusing on advancing AI, software development, and network technologies.

PRIVATIZATION-

Offers roll in for former gov’t HQs: Some seven local and international investors have submitted offers for eight former ministerial headquarters in Downtown Cairo, Planning Minister Hala El Said told Asharq Business. The Sovereign Fund of Egypt will start offering the HQs after wrapping up their valuation studies before the end of the year and will then start looking into the offers received, she added.

Remember: The government transferred its ownership of a set of ministerial headquarters to the SFE earlier this year in its efforts to sell off or repurpose the properties.

SUSTAINABILITY-

Emirates NBD Egypt unveils its first annual sustainability report: Emirates NBD Egypt has released its first sustainability report (pdf) outlining the environmental, social, and corporate governance standards implemented by the bank between 2021-2023, it said in a press release (pdf). “The integration of sustainability into [Emirates NBD Egypt’s] strategic vision has not only enhanced our resilience but also set us on a path toward innovative and responsible banking,” CEO Amr El Shafei said.

The highlights: Emirates NBD Egypt has reduced electricity consumption by 40% and decreased paper usage by 20% via a comprehensive waste management and recycling program and the adoption of a variable refrigerant flow system, in addition to establishing a program financing solar panel projects.

LOGISTICS-

#1- Arab Contractors wants funding for Suez Canal logistics services area: Arab Contractors is in talks with Afreximbank over a USD 50 mn loan to fund its logistics services area near the Suez Canal, managing director Mohamed Mandour told Asharq Business. The area will serve the mostly agricultural area of El Salheya and house warehouses along with foreign and locally owned factories.

#2- Waste management services at the Suez Canal: Antipollution Egypt and the Egyptian Company for Supplies and Maritime Works will provide waste management services at the northern entrance of the Suez Canal under an agreement inked with the Suez Canal Economic Zone, according to a statement. The next phase of the project will see the two companies expand their waste management services to the southern entrance of the canal, the statement adds.

AVIATION-

Local airlines will soon launch flights between Cairo and Marseille in response to the demands of Egyptian expats in France, according to a Emigration Ministry statement. Nesma Airlines will operate two weekly flights between the two cities starting August, Air Cairo will launch two weekly flights mid-2025, and EgyptAir will operate five weekly flights starting 2026 or 2027, with the possibility of launching sooner if aircraft become available.

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10

PLANET FINANCE

GCC sovereign wealth funds post largest investment share in 15 years -GlobalSWF

GCC sovereign wealth funds accounted for more than half of the value of all state-backed investments made so far this year, according to GlobalSWF. In 1H 2024, GCC funds including the Abu Dhabi Investment Authority (Adia), Saudi Arabia’s Public Investment Fund (PIF), and Qatar Investment Authority (QIA), backed some USD 52 bn worth of transactions — their largest share since 2009.

Oil revenues bolstered Abu Dhabi funds’ spending: Despite market volatility, Abu Dhabi’s funds, including Mubadala and ADIA, are “more active than ever,” buoyed by windfall from oil revenues, GlobalSWF Managing Director Diego Lopez said.

Leading the pack: Saudi Arabia’s PIF led investment activity globally, expanding its footprint through asset transfers aimed at diversifying the state’s funding sources beyond oil revenues.

In contrast to Middle Eastern funds’ robust momentum, global state-backed funds trimmed their spending. Asian funds such as Singapore’s GIC and Temasek scaled back their investments, a trend that has resulted in an overall decline in state-backed investment compared to 1H 2023.

Remember, 2023 was a big year for Gulf wealth funds: GlobalSWF named the GCC the “ region of the year ” on the back of USD 82.3 bn in investment activity in 2023, with assets under management of all GCC funds reaching USD 4.1 tn.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning, with the Hang Seng leading the gainers (+1.5% at dispatch time) after taking yesterday off for a national holiday. The Kospi (-0.5%) leads the decliners. US equities futures were uniformly (but gently) in the red in overnight trading, while futures for major European benchmarks were largely flat.

EGX30

27,970

+0.7% (YTD: +12.4%)

USD (CBE)

Buy 48.21

Sell 48.34

USD (CIB)

Buy 48.20

Sell 48.30

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,659

-0.2% (YTD: -2.6%)

ADX

9,060

0.0% (YTD: -5.4%)

DFM

4,057

+0.7% (YTD: -0.1%)

S&P 500

5,475

+0.3% (YTD: +14.8%)

FTSE 100

8,167

0.0% (YTD: +5.6%)

Euro Stoxx 50

4,930

+0.7% (YTD: +9.0%)

Brent crude

USD 86.68

+2.0%

Natural gas (Nymex)

USD 2.48

-4.7%

Gold

USD 2,342.10

+0.1%

BTC

USD 63,250.60

+2.1% (YTD: +49.7%)

THE CLOSING BELL-

The EGX30 rose 0.7% at yesterday’s close on turnover of EGP 3.4 bn (22.7% below the 90-day average). International investors were the sole net sellers. The index is up 12.4% YTD.

In the green: GB Corp (+9.9%), Palm Hills Development (+5.2%), and Juhayna (+4.7%).

In the red: AMOC (-2.1%), EFG Holding (-1.6%), and Delta Sugar (-0.9%).

CORPORATE ACTIONS-

Banque Misr now owns the majority of IDB: State-run lender Banque Misr has increased its stake in the Industrial Development Banque (IDB) to 85.04%, up from just 2%, by increasing the lender’s capital to EGP 5 bn, up from EGP 500 mn, Hapi Journal reports, citing courses it describes as informed.

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

Published every Tuesday in EnterpriseAM.

Read going Green
11

Going Green

Egypt’s first carbon pricing draft law is almost here

Egypt’s first carbon pricing draft law nears completion: As Egypt looks to keep up with global developments addressing climate change and carbon emissions, the Madbouly cabinet has been working on Egypt’s first ever carbon pricing draft law — and is now in the final stages of drafting the new legislation, a source in the renewable energy sector told Enterprise.

When to expect the law: The law is set to be finalized before the end of the year, and will be discussed with several key players in the highest carbon-emitting industries before a comprehensive bill is submitted to the House of Representatives, the source said.

The government currently imposes a tax on carbon emissions from petroleum products based on quantity, with a fee of EGP 0.25 per liter on fuel, but there is no explicit tax on carbon emissions.

Global carbon pricing revenues hit a new record in 2023: Revenues from carbon taxes worldwide reached a record USD 104 bn in 2023, half of which has been used to fund climate-related programs, according to a recent World Bank report. The report also emphasized the need for integrating more sectors under carbon pricing mechanisms, including international aviation and shipping. There are currently 75 carbon pricing instruments in operation worldwide, according to the report.

Where Egypt stands: Attempts to implement carbon pricing mechanisms in Egypt have been uneven so far. Carbon credits from the Benban solar power plant have been sold below global prices due to the lack of clear pricing mechanisms. However, Egypt has been working on setting standardized pricing as it looks to adapt carbon pricing instruments currently in use worldwide.

The voluntary carbon market is also set to be launched soon: The trading rules for the soon-to-be-established voluntary carbon market are set to be released within “the next few weeks,” Financial Regulatory Authority head Mohamed Farid said in May. The new market will effectively prohibit any entity other than designated bodies from verifying carbon emission reduction projects for registration and trading on Egypt’s carbon credit exchanges. Once launched, the market will be the first voluntary carbon market in Africa, and will allow companies in Egypt and Africa working on emissions-reducing projects to sell certified carbon credits, which can then be bought by other companies wanting to offset their emissions.

Egypt stands to benefit from global developments in carbon pricing mechanisms, especially as the EU’s Carbon Border Adjustment Mechanism (CBAM) goes into full effect in 2026, a source from the Finance Ministry told Enterprise. The carbon border tax will make up the difference between the local carbon price — if there is one — and the EU’s carbon price, meaning that if Egypt doesn’t tax the carbon on EU-bound imports, the EU will.

EU requirements are already pushing the private sector toward reducing carbon emissions: The Chamber of Building Materials Industries (CBMI) has been backing the shift toward greater sustainability in the construction materials sector to reduce the industry’s carbon footprint, CBMI head Ahmed Abdel Hamid told Enterprise. The chamber’s efforts include a plan to form joint committees to inspect construction materials factories and implement environmental compliance and recycling measures.

It’s about reducing emissions, not about increasing income: The goal, our source said, is not to achieve higher incomes — it’s to reduce emissions. Income is expected to decrease as companies successfully reduce harmful emissions or purchase equivalent carbon credits, the source added, saying that a financial impact study projects the collection of roughly EGP 10 bn in the first year of implementing the tax.

We’re still far from reaching global climate goals — as well as our own: The Finance Ministry thinks our current approach to climate-related taxation is far off what is needed to reach both global climate goals and Egypt’s goals for 2030, with the current fee insufficient to effect a significant change in our level of emissions, the source said. As a result, restructuring environmental taxes is one of the key elements of the government’s new tax policy and income tax law.

Local brick manufacturers have come a long way: Around 400 of the 500 brick factories currently in operation in Egypt have switched to gas power, with some able to sell carbon credits, Ali Singer, head of the refractories division at the CBMI, previously told Enterprise. The transition to greener production facilities was initiated in 2005 with an EGP 700 mn program — half of which was funded via a Canadian grant — to convert 50 factories to gas power, and helped cut emissions by 90%, Singer explained.

Industries with high consumption are moving toward implementing solar solutions: A key driver behind manufacturers shifting to solar energy are efforts to comply with ESG standards and the ability to market their products as green, with CBAM providing particular motivation for manufacturers, said Romany Hakeem, the chairman of Beneshty Solar and vice chairman of Sustainable Energy Development Association. In the near future, cutting emissions will also help local manufacturers make money through carbon credits and tradable certificates representing verified greenhouse gas reductions, he added.

Your top green economy stories for the week:

  • A fresh renewables target: The Electricity Ministry wants renewables to make up 58% of Egypt’s total energy mix by 2040, up from its current target of 42% by 2030.
  • Egypt-EU Investment Conference sees a flurry of green agreements: We inked a number of green hydrogen agreements during the two-day Egypt-EU Investment Conference earlier this week, including a US 15 bn green hydrogen project in the Suez Canal Economic Zone and a EUR 24 bn green hydrogen facility in Gargoub.
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CALENDAR

2024

JULY

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

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

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

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

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

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

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

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

AUGUST

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

SEPTEMBER

3-5 September (Tuesday-Thursday): Egypt International Airshow, El Alamein International Airport.

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

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

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

OCTOBER

6 October (Sunday): Armed Forces Day.

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

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

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

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

NOVEMBER

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

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

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

DECEMBER

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

EVENTS WITH NO SET DATE

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

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

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

3Q 2024: Egyptian-Armenian Joint Committee.

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

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

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

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

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

EVENTS WITH NO SET DATE

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

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