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Tuesday, 16 May 2023

What We’re Tracking Today
Enterprise Exports + Fdi Forum
Privatization
Development Finance
Earnings Watch
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Around The World
Going Green
Calendar

Exports and FDI are the way forward — other countries have done it right and so can we

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Today at a glance

1

ENTERPRISE EXPORTS + FDI FORUM

 How can we turn the tide on Egypt’s export sector?
2

Privatization

 NI Capital is working on two state asset sales that should close by June.
3

Privatization

 Just 9% of Telecom Egypt shares were bought by foreign investors, NI Capital chief.
4

Development finance

 Al Baraka Bank secures USD 30 mn in green funding from the Islamic Development Bank.
5

EARNINGS WATCH

 Lots of earnings: Rameda, EKH and Oriental Weavers all report their 1Q23 financials.
6

ALSO ON OUR RADAR

 SODIC to acquire 180 acres to expand North Coast Caesar project.
7

Going Green

 Breaking down the government’s spending plans for the green economy in FY 23-24.

Tuesday, 16 May 2023

What We’re Tracking Today
Enterprise Exports + Fdi Forum
Privatization
Development Finance
Earnings Watch
Moves
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Diplomacy
Around The World
Going Green
Calendar
1

WHAT WE’RE TRACKING TODAY

Thanks to all those who came to the Enterprise Exports and FDI Forum

Good morning, ladies and gentlemen-

Before jumping in, we want to start by thanking the 500 of you who joined us yesterday for the Enterprise Exports and FDI Forum. The day was stacked with insightful conversations with businesses and manufacturers who have successfully set themselves up as major exporters.

We’re exceptionally grateful to all of our friends whose generous support made yesterday possible:

Banking partners: Banque Misr | Al Baraka Bank | Emirates NBD | HSBC

Lead partners: DB Schenker | DP World | East Port Said Development | IDG | IFC | Madinat Masr

Event partners: Beyti | Concrete | GlobalCorp | Grant Thornton | Hassan Allam Utilities | Royal Ceramica

COVERAGE–Enterprise Logistics has the rundown this morning on how Egyptian companies can crack into multinational players’ supply chains, and we have a recap below on how to turn the tide on Egypt’s exports. We’ll have more coverage over the next several days across our publications.

WATCH THESE SPACES-

#1- Qatar is eyeing the BRT: An unnamed Qatari company is interested in managing and operating the Cairo Ring Road bus rapid transit (BRT) system. The news came during a meeting between Transport Minister Kamel El Wazir and his Qatari counterpart Jassim Al Sulaiti yesterday, where they also discussed other potential points of cooperation in the transport sector. The BRT system will provide an alternative means of transportation on the Ring Road and is aimed at reducing traffic on the congested freeway.

#2- More Palestine-Israel negotiations in Sharm? Egypt is reportedly planning another five-party meeting in Sharm El Sheikh focused on resuming peace talks between Israel and Palestine, Israeli media reported Monday. Representatives from the Palestinian and Israeli governments will attend, alongside Egyptian, Jordanian and US officials, according to the report.

The report comes on the heels of renewed violence between Islamic Jihad and Israelwhich engaged in five days of fighting last week after Israel assassinated a number of its commanders. Egypt brokered a ceasefire on Saturday.

Egypt hosted a similar meeting in Sharm in March only for progress to be immediatelyundermined by inflammatory comments made by Israel’s far-right finance minister and a decision by lawmakers to reinstate a number of settlements dismantled in 2005.

PSA- A one-stop shop for investors in Egypt’s new cities: The New Urban Communities Authority (NUCA) has launched an online portal to help investors find and apply for investment opportunities in new cities, Housing Minister Assem El Gazar said yesterday. Investors can apply for projects during the first half of every month.

HAPPENING TODAY-

It’s the second session of the National Dialogue: Four sessions are scheduled for today, two focusing on social protection programs and two concerned with the tourism sector and efforts to boost investment, according to Youm7. The opening day on Sunday saw discussions about the electoral system and discrimination. All sessions will be shared on the dialogue’s Facebook and Youtube accounts.

India’s army chief is in Egypt for a two-day visit: General Manoj Pande will hold talks with Defense Minister Mohamed Zaki, Armed Forces chief of staff, Osama Ahmed Askar, and the ministry’s Military Operations Authority Ahmed Fathy Khalifa, according to a statementfrom the Indian Defence Ministry. The visit aims to enhance “Indo-Egypt defense relations.”

CDIS starts today: The Egypt Cybersecurity & Defense Intelligence Systems (CDIS) expo gets underway at the Egypt International Exhibition Center. The three-day event will bring together experts from across the world to discuss the present and future of cybersecurity in Egypt and the world. Check out the agenda here (pdf).

HAPPENING THIS WEEK-

It’s interest rate week: The Central Bank of Egypt (CBE) will hold its policy meeting on Thursday, 18 May. Seven of nine respondents in our regular poll of analysts and economists expect the central bank to hold off on further rate hikes.

Make that seven of 10: In a note out yesterday, HC Securities’ Heba Mounir forecast a 100-bps rate hike due to inflationary pressures, widening net foreign liabilities in the banking system and delays to the government’s privatization program.

Arab League summit: Syria will be at the table at this week’s Arab League summit in Saudi Arabia for the first time in 12 years after the group of Arab states earlier this month voted to restore the country’s membership. Syrian government officials were in Jeddah yesterday for an economic conference ahead of the summit, which takes place Friday. It’s not clear whether Syrian President Bashar Al Assad will personally attend the meeting.

Syria wants Arab investment: During the meeting, Syria’s economy and trade minister urged Arab nations to invest in the country and called for the removal of all tariffs by members of the

Greater Arab Freetrade Zone (GAFTA), according to the Syrian Arab News Agency (SANA). “We invite you to participate in investing in Syria, where there are important opportunities and promising prospects,” the agency quoted him as saying.

That’s going to be tricky: US sanctions currently prevent governments from doing business with the Assad government. These would be expanded under draft legislation designed to deter countries from normalizing ties with Damascus, as Saudi Arabia did earlier this month.

Al Assad at COP: UAE President Sheikh Mohammed bin Zayed Al Nahyan yesterday invited Syrian President Bashar Al Assad to attend COP28, which takes place in Dubai in December, SANA reported.

THE BIG STORIES ABROAD-

It’s a mixed picture on the front pages this morning, with no single story shaping the global news agenda:

  • The Turkish election continues to get ink: Turkey will hold a runoff vote on 28 May after neither president Recep Tayyip Erdogan or his main opponent, social democrat Kemal Kilicdaroglu, managed to secure more than 50% of the votes and claim victory. Turkish stocks and bonds tanked on the news as markets began pricing in another five years of Erdonomics. (Bloomberg | Reuters| Financial Times)
  • The debt ceiling: Democrats and Republicans are no closer to an agreement on lifting the debt ceiling and avoiding a catastrophic debt default next month. (Reuters | Financial Times | Wall Street Journal | CNBC)

CIRCLE YOUR CALENDAR-

EFG Hermes without the Hermes? EFG Hermes Holding has called an extraordinary general meeting on Wednesday, 24 May to discuss, among other things, proposals to change the company’s name (pdf) and increase its capital (pdf), according to a company statement (pdf). If approved, the bank will change its name from EFG Hermes Holding to EFG Holding, and raise its issued and paid-in capital by 25% to EGP 7.3 bn.

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

COME WORK FOR OUR ADVISORY ARM-Enterprise Advisory (formerly known as Inktank Communications) is looking for smart, talented people to help us tell the stories of exciting companies. Enterprise Advisory is the region’s leading investor relations advisory company and works on investor and strategic communications issues that take you deep inside the c-suite. Our clients are in Egypt, Saudi Arabia, the UAE and beyond. Egyptian and foreign nationals alike are welcome to apply.

We’re running a four-month training program for fresh grads and career switchers and will hire every successful grad of the program.

Apply directly to jobs@enterprisemea.com and mention “advisory development program” in your subject line.

*** 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.

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Miss Elite 2023 at Somabay Red Sea, 10-20 May: For the third time in Egypt and second year in a row at Somabay, Miss Elite will once again host its global-scale international beauty pageant that celebrates beauty and brains of women across the globe. Sponsored by Somabay Red Sea, The Cascades Golf Resort, Spa & Thalasso, Stayr by Somabay Holidays, the spectacular event will feature 33 contestants representing the beauty, culture and traditions of their countries.

2

ENTERPRISE EXPORTS + FDI FORUM

How can we turn the tide on Egypt’s export sector?

Exports and FDI are the way forward — other countries have done it right and so can we: Egypt must combine its natural value proposition with clarity and focus to build exporting economies of scale, said Yasmine Khamis, chair of Oriental Group and Yassir Zouaoui, partner at McKinsey, during the opening panel — which set the tone for the rest of the forum — of the Enterprise Exports and FDI Forum yesterday. The panel was co-moderated by Helmy Ghazi, deputy CEO of HSBC Egypt and the anchor of our most-read story ever (Five steps to build a new Egyptian economy).

The time is now: “Delays are an excuse for nothing, they are only lost opportunities”, said Khamis. The immediate need to push for exports will drive companies to innovate and build resilience in order to enter global markets, she added.

There’s a lot going in our favor: Egypt is a cost competitive market with a large, young labor force and multiple international trade agreements, Khamis and Zouaoui agreed. Geographically we act as a near shore country to large and dynamic economies including the GCC and EU as well as an access point to Africa and the MENA region. “Egypt’s value proposition is set”, said Zouaoui, “we just need to fine tune it to the investors”.

That requires focus: We must choose a few of the top sectors in which to invest and commit to them, said Zouaoui. It’s a lesson we can learn from Morocco, which made the conscious decision to focus on four sectors under a continuous national policy spearheaded by separate Industry Ministers over a period of 15-18 years, he said.

We must pick sectors with a clear competitive edge: A successful export program is tailor made to the needs of the global market by leveraging the capabilities of the local market, said Khamis. She pointed to Egypt’s textiles and tourism sectors, while Zouaoui added our renewables sector — solar and wind — as well as batteries, electric vehicles and tech-driven manufacturing, all of which already have established sustainable value chains.

Think creatively with what’s on offer: Leaning on government support in the form of export subsidies can provide a “jumpstart for a business” looking to export regardless of whether the subsidies are paid on time, said Khamis. Oriental Weavers, she said, uses subsidies to give back to the customer in the form of discounts or a rebate, increasing the company’s global competitive edge.

Other incentives Khamis called for include credit facilities with banks and tax exemptions in addition to a lobby for exporters to voice their needs.

Snowball effect: Drawing in top tier flagship investors will inevitably lead to the entrance of local investors and SMEs that enrich the value chain, said Zouaoui.

Investors are secured through predictability, he added, meaning that we must draw up a clear roadmap to be implemented by “transaction focused” people, signaling to the global market that Egypt is open and committed to business.

Zouaoui also noted the importance of having an investor promotions authority to highlight the value proposition that Egypt has, noting examples abroad including India and Vietnam.

We could not have made the Enterprise Exports and FDI Forum without the support of…

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3

Privatization

NI Capital is working on two state asset sales that should close by June

National Investment Bank subsidiary NI Capital is preparing to sell stakes in seven state-owned companies as part of the government’s privatization program, two of which are expected to be complete by the end of the fiscal year in June, NI Capital CEO Mohamed Metwally told CNBC Arabia yesterday (watch, runtime: 8:07). Stakes in the remaining companies will be sold before the end of the year, he said. Companies include those in the oil, petrochemicals, and transport sector, he added, refusing to disclose names.

The potential contenders: We already know some of the oil and petrochemical players that the state has flagged for privatization: ‎The Egyptian Ethylene and Derivatives Company (Ethydco), Egyptian Linear Alkyl Benzene (Elab), Helwan Fertilizers Company, the Egyptian Polypropylene and Polypropylene Company (EPP), the Egyptian Drilling Company (EDC) were all named by the government in February when it announced its rebooted privatization plans.

More companies enter the roster: Metwally said that some of the seven companies have been named in the 32-company program and some have not. “Some companies are being promoted to strategic investors,” he said, naming military-owned bottled drinks firm Safi and fuel retailer Wataniya.

NI Capital has helped to close one sale: The firm acted alongside CI Capital and Al Ahly Pharos as a financial advisor and bookrunner on last week’s sale of Telecom Egypt shares.

THE TELECOM EGYPT LOCAL / FOREIGN SPLIT-

We now know how many investors who bought into the TE sale were foreign: Just 9% of the investors who acquired shares in Telecom Egypt were foreign, Metwally said, leaving upwards of 90% of the shares going to local buyers. The government raised almost EGP 3.75 bn (USD 121.3 mn) when it sold a 9.5% stake in the state-owned telco last week in what was the first major asset sale since it announced its privatization plans earlier this year. The government is yet to reveal the identities of the new shareholders.

This means the FX proceeds were minimal: Because the transaction was done in EGP, the small number of shares sold to foreign investors means that the sale generated less than USD 11 mn in hard-currency proceeds, according to our math.

Metwally says the sale was never about the hard currency: “The purpose was not to bring in USDs but rather to have the state offload its stake in the company,” he said.

Remember: The Madbouly government is aiming to raise USD 2 bn via asset sales by the end of June. Together with the sale of Pachin to Dubai-based National Paints Holding, it has now reached some 7% (USD 147 mn) of that target.

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4

Development finance

Al Baraka Bank Egypt secures USD 30 mn from IsDB in green funding. PLUS: Italy debt swap agreement extension?

Green SME-led projects to receive funding from IsDB: Al Baraka Bank Egypt will receive USD 30 mn in sharia-compliant funding from the Islamic Development Bank (IsDB) for on-lending to green projects, the bank said yesterday. The five-year financing agreement was signed with the IsDB’s private-sector development arm during its annual meetings last week, Al Baraka said in a statement. The funding will specifically target private-sector SMEs that are embarking on green and sustainable projects, Al Baraka Egypt CEO Hazem Hegazi told us.

More could be coming: The agreement with the lender could allow the funding to be increased in the future, the bank said.

The IsDB has a long history in Egypt: The lender has provided around USD 18.6 bn of financing to projects in Egypt since its founding in the early 1970s, according to its website. Almost 380 projects have received funding over the period, 46 of which are ongoing.

More than half a bn USD of new funding: During the meetings, the IsDB approved more than USD 558 mn in new funding for six projects that promote sustainability, inclusive growth, and infrastructure development in the bank’s member countries.

ITALY DEBT-SWAP EXTENSION-

The USD 100 mn third phase of Egypt’s debt swap arrangement with Italy could be extended to December 2024, after International Cooperation Minister Rania Al Mashat and Italian Ambassador to Egypt Michele Quaroni signed letters of intent yesterday, according to a ministry statement. The extension seeks to ensure the completion of all projects under the program’s third phase, whose 11-year term was initially scheduled to end this month.

Debt swap? The agreement allows Egypt to channel debts owed to the Italian government into development projects instead of paying them back. The third phase supports initiatives in a number of priority sectors, including food security, waste management, the environment, and education.

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5

EARNINGS WATCH

Rameda revenues up 14% while profits slip in 1Q 2023. PLUS: EKH, Oriental Weavers report 1Q23 earnings

Rameda reports higher revenues, lower bottom line in 1Q 2023: Tenth of Ramadan for Pharma Industries and Diagnostic Reagents (Rameda) net income dipped in 1Q 2023 as a solid rise in revenues failed to offset the impact of inflation and the depreciation of the EGP, it said in its earnings release (pdf) yesterday. Revenues increased 14% y-o-y to EGP 392 mn on the back of higher private sales, though net profit fell c.4% to EGP 68.7 mn due to rising costs and higher interest rates.

Price hikes, high-value sales support revenues: Rameda’s private sales grew 19% y-o-y to EGP 264.3 mn — accounting for more than half of the firm’s revenues during the quarter — as it hiked prices and focused sales efforts on higher-priced products. Export sales also recorded strong growth, climbing 35% y-o-y to EGP 35.7 mn on the back of higher sales to Libya. Toll manufacturing generated EGP 40.0 mn in revenues, up 59% y-o-y due to a rise in toll manufacturing prices and enhanced utilization of some of the company’s production lines.

More hikes on the way: Prices of products representing 77% of the company’s revenues were increased by an average 31% during the quarter, while those accounting for the remaining 23% were hiked by an average 55%, CEO Amr Morsy said, adding that the company is “looking forward to receiving increased approvals for price hikes over the course of the year.”

Revenues were offset by rising costs: Rameda’s cost base increased almost 26% y-o-y to EGP 213.2 mn due to higher raw material prices and wages, while its financing costs rose 40% on higher interest rates.

Looking ahead: “Over the course of the year, we will continue pivoting strategically and identifying avenues for growth as we navigate what’s expected to be a challenging year ahead in our home market of Egypt,” said Morsy. “The group is regularly exploring lucrative product launches and acquisition opportunities, particularly those under free pricing frameworks, as well as other business ventures beyond our local borders to further diversify our revenue streams and strengthen the resilience of our business model.”

EKH EARNINGS, REVENUES DOWN-

EKH income falls on lower commodity prices, weak EGP: Egypt Kuwait Holding’s (EKH) net income attributable to shareholders fell 16% y-o-y to USD 60 mn in 1Q 2023, according to itsearnings release (pdf). The downturn came on the back of a drop in urea export prices and the depreciation of the EGP, which saw the investment company’s revenues fall 23% y-o-y to USD 224.9 mn during the quarter.

Top-line growth was hampered by weaker urea prices: Revenues from the company’s fertilizer and petrochemical segment fell 11% to USD 135.2 mn during the quarter due to the normalization of urea prices, which fell 32% y-o-y to an average of USD 467 per ton. AlexFert — in which EKH recently increased its indirect ownership — saw revenues retreat 38% y-o-y to USD 77.2 mn.

The impact was partially cushioned by petchem subsidiary Sprea Misr, whose revenues grew 10% y-o-y to USD 58.1 mn after the company hiked selling prices, increased sales volumes across most product lines, and upped the capacity of newly-commissioned production lines. EKH’s fertilizers and petrochemicals segment — composed solely of Sprea and Alex Fert — contributed 60% of revenues during the quarter.

What they said: “We are working diligently on enhancing our future growth prospects and are proud to see that the positive results from our recently commissioned investments have already started to materialize,” said CEO Sherif El Zayat. “We are looking forward to unlocking a significant stream of USD denominated revenue and cash flow following our acquisition of an additional 15% in Bawabet Al Kuwait (“BKH”), effectively increasing our direct and indirect stake in AlexFert.”

ORIENTAL WEAVERS PROFITS RISE-

Oriental Weavers profits up 74% on higher revenues, China exit: Oriental Weavers’ net income attributable surged 74% y-o-y to EGP 411 mn in 1Q 2023 on the back of higher revenues and the EGP 277 mn sales proceeds from its exit from China, according to its earningsrelease(pdf). The carpet maker’s revenues jumped 27% y-o-y to EGP 4.1 bn during the quarter.

In detail: Local revenues, which accounted for 37% of the firm’s total revenues during the quarter, rose 39% y-o-y to EGP 1.5 bn, supported by the company’s decision to raise prices. Woven products saw the sharpest increase in sales, which rose 44% y-o-y due to rising sales and a 30% increase in prices. Export revenues, meanwhile, climbed 21% y-o-y to EGP 2.6 bn, driven by the devaluation of the EGP. Sales in the GCC region recorded the strongest growth, rising 60% y-o-y.

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6

Moves

Visa appoints new senior VP and chief marketing officer for CEMEA

Visa has appointed Tarek Abdalla (LinkedIn) as its senior vice president and chief marketing officer for Central and Eastern Europe, Middle East, and Africa (CEMEA), effective 2 May, it said in a press release (pdf) yesterday. Abdalla joins the company after serving as TikTok’s general manager for the Middle East, Africa, Turkey and South Asia for a year. Prior to that he spent a decade at Google, working his way up to becoming the regional marketing director.

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7

LAST NIGHT’S TALK SHOWS

Former Blom Bank Egypt deputy doesn’t think Egypt’s central bank will raise rates this week

A calmer than usual night on the airwaves brought us coverage of the upcoming Central Bank of Egypt (CBE) monetary policy meeting, chicken feed prices, and the Turkish elections.

Another vote for the CBE leaving rates unchanged: “All the signs point towards the central bank leaving rates unchanged,” former Blom Bank Egypt deputy managing director Tarek Metwally told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 7:01). Metwally joins seven other analysts from our interest rate poll who expect the CBE to hold rates when it meets on Thursday.

There is more to inflation than interest rates: With a lot of the inflation being driven by exchange-rate weakness and a shortage of USDs, Metwally advocated that the central bank raise rates after the country sees new FX inflows. “Interest rates are no longer the only tool to help soaring inflation seeing Egypt’s current circumstances,” he added, echoing recent statements by CBE Governor Hassan Abdalla.

The CBE needs to wait and see: The bank needs to “wait and see” the impact of the slowing inflation, he said, noting that gold prices and the price of USDs in the black market have slipped in recent days.

The talking heads checked in on the poultry market after the government announced plans to release some 380k tons of feed over the coming week. Government efforts to release feed have already caused corn prices to drop to EGP 14k per ton from EGP 18k last month, Tharwat El Zeiny, deputy chairman of the Egyptian Poultry Association, told Ala Mas’ouleety (watch, runtime: 6:42). Falling feed prices drop will help to calm chicken and meat prices, which have soared to record highs in recent weeks. El Zeiny also joined Kelma Akhira to discuss the matter (watch, runtime: 4:38).

The Turkish election got some airtime: Turkey will hold a runoff vote later this month after president Recep Tayyip Erdogan and his main opponent, social democrat Kemal Kilicdaroglu, both failed to secure 50% of the votes. El Heyaka’s Amr Adib (watch, runtime: 9:01) and Masa’a DMC (watch, runtime: 1:07) both had the news.

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8

EGYPT IN THE NEWS

‘Why isn’t Egypt involved in the int’l push for peace in Sudan?’ asks the National

Egypt isn’t getting a lot of attention internationally in what is a quiet morning in the foreign press:The National’s Hamza Hendawi is out with a piece asking why Egypt has been largely absent from the international drive to achieve a ceasefire in Sudan. Meanwhile, the Times breaks down 10 ways tourists can see the “real Egypt,” including a 12-day cruise, a stay at the Chedi hotel in Gouna, and a visit to clear waters and clean beaches of Marsa Alam.

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9

ALSO ON OUR RADAR

SODIC to acquire 180 acres to expand North Coast Caesar project. PLUS: Scatec meets Sisi, Apache wants more blocks, IHG to open 2 hotels in Sheikh Zayed

REAL ESTATE-

SODIC plans to expand North Coast Caesar project: Leading real estate developer SODIC has made a downpayment on 180 acres of land south of its North Coast project Caesar and is finalizing negotiations with the New Urban Communities Authority (NUCA), it said in an EGX disclosure (pdf) yesterday. The company plans to invest over EGP 10 bn in the Caesar extension, which it expects to start work on later this year.

ENERGY-

#1- Scatec meets Sisi: President Abdel Fattah El Sisi yesterday met with a delegation from Scatec to discuss progress on renewables projects, according to a statement from Ittihadiya. The company is working with Fertiglobe and Orascom Construction on Egypt’s first green hydrogen facility and is planning to construct a 1 mn ton-per-year green ammonia plant. It also recently signing an MoU to study an Egypt-Europe electricity interconnection project and this week inked an agreement to set up a green methanol plant in Damietta alongside several local firms.

#2- Apache wants to expand: Egypt’s largest oil producer, Apache, wants to obtain new concessions in the Western Desert to drill more wells, the company’s CEO John Christman told Oil Minister Tarek El Molla in a meeting yesterday, according to a ministry statement.

FYI- Apache’s production fell in 1Q 2023: Apache produced 149.9k barrels of oil equivalent per day in the January-March quarter, down 3% from the same period last year, the company said in its recent earnings release (pdf). Oil production dipped 1% to 85k barrels per day while natural gas output was down 5% to 386.6 mn cubic feet per day.

HOSPITALITY-

IHG plans new Egypt hotels: Intercontinental Hotels Group (IHG) will open two new hotels in Sheikh Zayed between 2026 and 2028, adding 390 rooms to its portfolio, it said in apress release yesterday. Situated at Arkan Palm for Real Estate Investment’s 205 project, Voco West Cairo 205 will feature 140 rooms and open by June 2026 and the InterContinental West Cairo 205 will have 250 keys and is scheduled to open in January 2028.

IHG currently operates seven hotels in Egypt under four brands: InterContinental, Crowne Plaza, Holiday Inn, and Staybridge Suites.

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10

PLANET FINANCE

Don’t breathe a sigh of relief about US inflation just yet, say economists

Economists think the Fed’s 2% inflation target is a way off: Economists are voicing skepticism that US inflation will soon fall to the Fed’s 2% target despite signs that the peak of the shock has passed, the Financial Times writes. Headline CPI slowed to itslowest level in two years last month on the back of the Federal Reserve’s aggressive rate hikes and weaker energy prices, but the core measure of inflation has remained sticky, raising concerns about how long it will take for price pressures to ease.

“It is not only going to be a bumpy road, but what we worry about are the sticking pointsbecause [those] make it all the much harder to derail what could be more entrenched inflation,” said Diane Swonk, chief economist at KPMG. Meanwhile, Omair Sharif, head of forecasting group Inflation Insights, doesn’t expect core inflation to return to target before 2024.

Inflation uncertainty = rate uncertainty: Slowing inflation rates in recent months have enabled the Fed to start signposting an end to its tightening cycle, which has pushed borrowing costs to their highest levels in 15 years. Markets are now pricing in a pause when the Fed meets next month, though pressure to continue raising rates will return should underlying price pressures reflected by the core figure refuse to come down in the coming months.

Another Saudi company kicks off IPO: Saudi pharma player Jamjoom is expecting to raise up to SAR 1.26 bn (USD 336 mn) in its IPO on the Saudi stock exchange in what will be the country’s largest listing so far this year. The company has priced the 21 mn shares on offer at SAR 56-60 apiece, it said in a statement (pdf) yesterday. The book building process kicked off yesterday and the company is already seeing high demand, with its entire order books covered, Bloombergreports citing private documents. The company is yet to disclose when it will make its Tadawul debut.

That makes two: The news comes at the same time as Morabaha Marina Financing Company is doing bookbuilding on its smaller IPO. The Saudi non-bank lender wants to raise up to USD 83.4 mn in its share sale, which is running through to the end of the month.

Two major listings in Riyadh were recently postponed: ADES International and Aramco’s energy trading arm were both reported last week to have shelved their listing plans due to current market conditions.

Saudi sukuk sale sees huge demand: A fresh sovereign sukuk issuance from Saudi Arabia has drawn more than USD 17 bn worth of bids, according to a bank document seen up by Reuters. The government is selling USD-denominated six-year and 10-year securities in what is its first debt sale since raising USD 10 bn in a sale of conventional bonds in January. The yield on the six-year sukuk was around 110 bps above US treasuries and the 10-year note was around 135 bps above, according to initial pricing guidance.

ALSO WORTH NOTING- EU says yes to Microsoft’s Activision takeover: The EU has approved Microsoft’s USD 69 bn acquisition of games developer Activision Blizzard, a few weeks after the UK’s competition regulator blocked the merger due to concerns that it could hurt competition. (Statement | Reuters)

EGX30

17,136

-1.3% (YTD: +17.4%)

USD (CBE)

Buy 30.84

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,230

-1.0% (YTD: +7.2%)

ADX

9,471

-1.7% (YTD: -7.3%)

DFM

3,525

-1.0% (YTD: +5.7%)

S&P 500

4,136

+0.3% (YTD: +7.7%)

FTSE 100

7,778

+0.3% (YTD: +4.4%)

Euro Stoxx 50

4,316

0.0% (YTD: +13.8%)

Brent crude

USD 75.46

+1.7%

Natural gas (Nymex)

USD 2.37

+4.7%

Gold

USD 2,020.80

+0.1%

BTC

USD 27,352

+1.6% (YTD: +65.6%)

THE CLOSING BELL-

The EGX30 fell 1.3% at yesterday’s close on turnover of EGP 2.24 bn. Local investors were net sellers. The index is up 17.4% YTD.

In the green: Credit Agricole (+8.30%).

In the red: Oriental Weavers (-4.3%), Rameda Pharma (-4.2%) and Ibnsina Pharma (-4.0%).

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11

Diplomacy

Egypt’s El Sisi, South African president hold phone call

President Abdel Fattah El Sisi received a call from his South African counterpart Cyril Ramaphosa yesterday, which centered around political, economic, and trade cooperation, according to Ittahidiya. The two leaders discussed the food and energy security crisis caused by the war in Ukraine as well as undisclosed African and regional issues, the statement said, without elaborating,

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12

AROUND THE WORLD

Police chief, central bank governor dismissed by Sudan’s army chief

Sudanese army chief General Abdel Fattah Al Burhan fired a number of senior officialsyesterday, including the governor of the central bank, the head of the police and several ambassadors in the foreign ministry, the Sudanese News Agency (SUNA) reported. The unexpected dismissals came a day after Al Burhan froze the bank accounts of the Rapid Support Forces, the paramilitary force his army has been at war with for more than a month.

No news from Jeddah: There were no updates on the status of the Saudi- and US-mediated peace talks that have been ongoing for 11 days. Hopes were raised last week when the two sides signed an agreement to protect civilians but little progress has been reported in the days since.

WFP extends helping hand to Sudanese refugees in Egypt: The UN’s World Food Program (WFP) has launched a cash assistance program targeting Sudanese refugees who crossed the border to Egypt to escape the civil war in their hometown, it said yesterday. The assistance will target the most vulnerable groups — those who have come into Egypt without the sufficient funds to secure basic food needs. Egypt has so far taken in almost 89k people from Sudan, almost 83.8k of whom are Sudanese, according to the latest UN data.

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

Published every Tuesday in EnterpriseAM.

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Going Green

Breaking down Egypt’s spending plans for the green economy in FY 2023-24

What the government has in store for the green economy in the upcoming fiscal year: Last week, Planning Minister Hala El Said laid out the government’s sustainable development plan for FY 2023-24 in an address to the House of Representatives, while Finance Minister Mohamed Maait presented the draft state budget for the upcoming fiscal year. The sustainable development plan — which the ministry issues every year to work towards Egypt Vision 2030 — covers planned government spending on several key sectors, including education, infrastructure, the green economy, and manufacturing.

ICYMI- We’ve already recapped the spending and development plans for transformativeindustries and education.

The government is planning to earmark 30-40% of its total investments in FY 2023-24 for environmental sustainability projects that contribute to slashing emissions, according to a Planning Ministry statement. That figure is set to rise to 50% by the following fiscal year, the statement said.

REMEMBER- We’ve recently set more ambitious targets for ourselves when it comes to the green transition: Last year, in the lead-up to COP27, the government submitted its updated nationally determined contributions (NDCs) committing to new emissions targets by 2030. These targets include fresh commitments to reduce emissions in the energy and transport sectors — two of the most polluting industries in Egypt — and will also look to scale back emissions from transport, Environment Minister Yasmine Fouad said at the time. The goals also include slashing emissions from the energy sector by ramping up its 2030 renewable energy targets. Egypt is looking to have renewable energy account for 40% of our energy mix by 2030 and 42% by 2035.

The Finance Ministry is also putting in place a “comprehensive set of measures” to push the green transition forward, including developing its tax system to encourage a transition to green projects, expanding its use of green financing tools such as green and sustainability bonds, and proposing several incentives and initiatives to support the green economy and spur financing for green and renewable energy projects, according to the proposed state budget (pdf).

REFRESHER- Maait had said last September that the government is looking at the possibility of issuing a green eurobond soon, depending on market conditions. Earlier that year, the ministry signaled that it is looking to take to the green bond market for a second time with another USD 750 mn issuance, matching the 2020 issuance that saw Egypt debut sovereign green bonds in the MENA region. Private sector players could also be preparing to sell up to USD 200 mn in green bonds, the Planning Ministry said earlier this month. CIB had launched the country’s debut corporate green bond issuance in 2020.

Also coming up next fiscal year as part of the sustainable development strategy: The government plans to complete the second phase of Egypt’s interactive climate change map, which maps the ecological footprint of climate change on the country. The map also details the government’s efforts to address environmental issues through national green projects, such as EV charging stations and hotels that fall under the “Green Star” program. The sustainable development strategy also includes several projects geared towards a greener economy, including producing electric vehicles and green hydrogen, and manufacturing solar panels, the Planning Ministry statement says, without providing specifics on what will be done on these fronts.

There are awareness programs coming our way: The strategy also entails launching a handful of awareness programs aiming to improve environmental literacy, in addition to pushing forward with a project to plant 100 mn trees.

Your top green economy stories for the week:

  • Wind farms attract investor interest: Saudi Arabia’s ACWA Power, the UAE’s Alcazar Energy and Infinity are reportedly among seven companies interested in acquiring Egypt’s two largest wind farms.
  • Scatec on board for green methanol plant: Norwegian renewables producer Scatec and Alexandria National Refining & Petrochemicals Company have signed an agreement to work on a USD 450 mn green methanol plant in Damietta.
  • EU funding for sustainable consumption:The Environment Ministry launched thesecond phaseof the EU-funded SwitchMed initiative, which aims to promote sustainable consumption and the circular economy.
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CALENDAR

MAY

12-15 May (Friday-Monday): Egypt Fashion Week.

16 May (Tuesday): National Dialogue session.

16-18 May (Tuesday-Thursday): Egypt Cybersecurity & Defense Intelligence Systems expo, Egypt International Exhibition Center.

17-31 May (Wednesday – Wednesday): Second round of applications for sixth phase of export subsidy program.

18 May (Thursday): National Dialogue session.

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

19 May (Friday): Arab League summit, Riyadh.

19-21 May (Friday-Sunday): G7 summit, Hiroshima, Japan.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

21 May (Sunday): Senate to reconvene.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

24 May (Wednesday): EFG Hermeswill hostits extraordinary general meeting.

28 May (Sunday): House to reconvene.

29 May (Monday): IEF-IGU Ministerial Gas Forum, Cairo.

30 May (Tuesday): Listed companies have until this date to report and publish their 1Q results.

JUNE

June: Indian representatives to discuss prospect investments in the Suez Canal.

June: Egyptian-Saudi business forum.

3-4 June (Saturday-Sunday): OPEC+ meeting, Vienna.

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June – 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-20 June (Monday-Tuesday): The forum for insolvency reforms and corporate restructuring in the Middle East and North Africa.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

5 – 6 July (Monday – Tuesday): Gov’t to pay out subsidies to first wave of applicants under its sixth export subsidy program.

18 July (Tuesday): Islamic New Year.

19 – 20 July (Wednesday – Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

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

2 – 3 August (Wednesday – Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

September: Sustainable Debt Coalition Initiative agreed at COP27 to launch.

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

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

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

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

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

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

OCTOBER

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

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

26 October (Thursday): Daylight saving time ends.

31 October – 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

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

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

DECEMBER

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

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

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

4Q 2023: EGX to launch its new futures exchange.

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

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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