Egypt faces stricter lockdown measures for the week of Eid El Fitr, then a gradual loosening in June: Egypt will be under a 5pm-6am curfew and all shops will be closed next week as the Madbouly government enforces tighter restrictions designed to curb the spread of the virus that causes covid-19. Prime Minister Moustafa Madbouly announced the measures at a press conference yesterday, saying they would be in effect from Sunday, 24 May (the presumptive first day of Eid) until Friday, 29 May (watch, runtime: 14:53). The full list of decisions is here, and Reuters also has the story.

The nighttime curfew will run from 5pm until 6am next week, although Cabinet spokesman Nader Saad told late-night maven Lamees El Hadidi (watch, runtime: 23:56) that factory workers will be exempt in a bid to limit the impact on factory output. Food deliveries can also continue past curfew hours.

Stores, restaurants and public spaces will be closed. The measures — which are akin to those the government imposed during the Sham El Nessim holiday last month — include a complete shutdown of all malls, shops, restaurants, public parks, and beaches.

Supermarkets, grocery stores and pharmacies will be allowed to open as will beaches on hotel properties that have reopened and that comply with Health Ministry standards, Saad told Lamees.

Public transportation will also be suspended entirely, particularly as the government looks to curb movement between governorates during the holiday. Saad, however, told state TV host Wael El-Ibrachy that the suspension will not include microbuses (watch, runtime 19:17. There do not appear to be restrictions on the movement of personal vehicles between governorates.

Everyone will be expected to wear face masks in “any closed space” starting 30 May, the PM said, which we’re taking as including government buildings, private offices, malls and retail outlets. People will also need to wear masks when using buses, the metro, trains, taxis and ride-hailing services such as Uber and Careem, Madbouly said. Folks choosing not to wear masks could face legal penalties once masks are “available for everyone,” Saad added. The Health Ministry will coordinate the manufacture of cloth face masks at a cost of as little as EGP 5 each that are reusable for up to a month, Saad told El-Ibrachy.

So, when is Eid, exactly? Madbouly didn’t say other than to note that it likely begins on Sunday, but Saad told Lamees that government and other public-sector employees will have the full week off. Cabinet will make it official with a decree today, Saad said.

The Manpower Ministry is expected to announce today how long the holiday will run for the private sector — we expect it to be Sunday-Tuesday.

Eid prayers will be broadcast from inside El Sayeda Nafisa Mosque, as mosques around the country remain closed. Mosques will only be allowed to recite takbeer el Eid through speakers.

Once Eid week is over, we’re back to the same basic set of restrictions as were in place before Ramadan, with the measures being in place until mid-June. This phase, which officially begins on Saturday, 30 May will run for two weeks, Madbouly suggested, and includes allowing shops and malls to open for part of the day and restaurants to operate as they did during Ramadan, (around-the-clock delivery + allowing customers to place takeaway orders in-store). The nighttime curfew will again be shortened to run from 8pm until 6am (one hour longer than at present).

One note: The Health Ministry has pulled from its website a three-phase reopening plan it released last week. Al Dostor is reporting that it has done so because Cabinet is reviewing the document.

In mid-June, the government will allow houses of worship and some leisure activities to gradually reopen. Churches and mosques will be allowed to have limited prayers and ceremonies, Madbouly said. What’s on offer and when will be announced later, he added. The government will also begin gradually allowing sporting clubs and restaurants to reopen in full, provided they follow specific precautions that will also be outlined at a later date.

Thanaweya Amma exams will begin on 21 June, but students will have the option to postpone sitting the exams until next year, Education Minister Tarek Shawki said at the press conference yesterday. Students who do choose to sit for this year’s exams will be required to maintain safe physical distances within the testing rooms, which will also be rearranged to hold fewer students than normal.

Graduating university seniors will sit their final exams starting 1 July, Higher EducationMinister Khaled Abdel Ghafar said.

Madbouly didn’t say when Egypt plans to reopen its airspace to regularly scheduled international commercial flights. The flight ban, which has been extended multiple times and was due to expire on Saturday, has been extended for up to two more weeks along with other measures designed to curb the spread of the virus.

Look for an announcement “in the first half of June … on a timeline for the resumption of flights and the precautionary measures that will accompany it,” Saad told Lamees last night, noting that, “sooner or later, flights will resume, particularly as we see European and Asian countries planning to reopen their airspace.”

EgyptAir seems to be taking bookings for next month. The online booking feature on national flag carrier EgyptAir’s website shows round-trip flights to several cities available as of 1 June. The carrier has not said when flights will resume, but we understand that aircrew are being told to expect to be in the air once again in June.

We found flights available yesterday from Cairo to London, Washington, New York, Paris, Dubai, Jeddah, Montreal, Amsterdam, and Casablanca, among others. Flight aggregator Expedia also automatically sets 1 June as the first available flight leaving Egypt. Flights to Beijing, Moscow, Athens, and Vienna, among others, will be available as of 2 June, while a Toronto flight is scheduled for 6 June, with return flights available as of this morning on 11 and 13 June.

There are no flights yet available to Frankfurt, Dublin or Tokyo.

Worth remembering: Unless the requirement is amended after Cabinet review, the Health Ministry foresees incoming tourists being required to produce the results of a PCR test completed 48 hours before they embarked on their flights. There has been no official word on whether travelers arriving in June would still face a 14-day quarantine as is presently the case.

The national flag carrier said yesterday it’s cutting by 10% the salaries of its highest paid employees from May’s paychecks due to the covid-19’s heavy toll on its business, Reuters’ Arabic service reported. This came a day after the government said it could extend a EGP 2 bn lifeline to see the airline through until the flight ban is lifted.

What are other airlines doing? Emirates is operating one-way outbound flights to nine cities — including London, Paris, Milan, Chicago, and Sydney — between this Thursday, 21 May and 30 June. British Airways’ travel information allows travelers who have flights booked up until 31 July to reschedule their tickets or claim a refund, but does not indicate whether this is the date it intends to resume air traffic. Turkish Airlines will resume flights on 28 May.

M&A WATCH- First Bank of Abu Dhabi (FAB) has put on ice its plan to acquire Bank Audi’s Egypt assets due to market conditions, Reuters reports, citing unnamed sources. One source, who said the pact was worth USD 700 mn, told the newswire that it is prioritizing supporting the UAE economy due to the covid-19 pandemic.

We’ll find out more in the coming hours: FAB and Bank Audi will issue a joint statement today or tomorrow confirming the status of negotiations, Masrawy reports, citing sources close to the matter.

Background: FAB said last week that it had completed due diligence on Bank Audi’s Egypt arm and was finalizing its offer. A senior executive said in February that the bank will make a final decision on whether to proceed with the acquisition after completing due diligence. FAB has pursued the acquisition despite the covid-19 outbreak after receiving the greenlight from the Central Bank of Egypt in January.

INVESTMENT WATCH- Innoventures in talks with potential LPs to raise USD 100 mn fund for food startups: Local startup investor Innoventures is raising a USD 100 mn fund targeting food startups and is in talks with potential limited partners including UK’s CDC Group and global giant Blackstone, co-founder Rafik Dalala tells Al Mal. Other potential LPs include EBRD, the International Finance Corporation and an unnamed Canadian investment fund. State-owned National Bank of Egypt and Banque Misr have also been pitched. The story doesn’t say when Innoventures hopes to close the fund or to begin deploying capital.

Background: Innoventures is an Egypt-based VC firm that has invested in early stage startups across a range of industries. CDC has invested in a range of Egyptian blue chips via funds managed by emerging markets PE giant Actis and has also made direct investments and extended tier-2 finance to local banks. Meanwhile, Blackstone has long held an interest in Egypt; its subsidiary Zarou was reportedly a frontrunner to acquire a stake in the Siemens-built combined cycle power plants.

The World Bank approved yesterday a USD 50 mn fast-track facility to bolster Egypt’s covid-19 emergency response capabilities, according to a statement. The facility will focus on improving Egypt’s medical infrastructure through the distribution of essential medical supplies, supporting quarantine and treatment facilities, and ramping up contact tracing capabilities through improving first responder preparedness. A portion of the funds will also be earmarked for public awareness campaigns addressing personal hygiene and social distancing. The bank granted Egypt last month a separate USD 400 mn loan for universal healthcare.

IBRD, IDA are responsible for providing the global support mechanism: The rapid financing facility comes as part of the USD 6 bn International Bank for Reconstruction and Development (IBRD) and the International Development Association’s (IDA) Global Fast Track Facility which aims to assist vulnerable populations through economic and medical support. Funds allocated by the international lenders are based on population size. Egypt qualified for the maximum receivable amount under the facility for a population of 100 mn.

LEGISLATION WATCH- House approves draft Banking Act with new provisions: The House of Representatives has approved the long-awaited Banking and Central Bank Act with several new provisions and shipped it off to the State Council for final legal review, the local press reported yesterday, citing MENA. The legislation, which received a preliminary nod from the House earlier this month, would give the Central Bank of Egypt (CBE) increased discretionary powers to regulate the banking sector. The bill won’t become a law until returned to the House for a final vote by the general assembly. It would also require President Abdel Fattah El Sisi’s signature.

CBE to issue licenses for credit risk guarantee companies: The law’s latest provision, added yesterday after a proposal from the CBE, will put the central bank in charge of licensing companies that want to offer credit risk guarantees. Credit risk guarantee arms must be established for the sole purpose of providing services to protect receivables against defaults and must have a minimum of EGP 50 mn in paid-in and issued capital. Companies interested in setting up credit guarantee arms will be subject to a EGP 100k “inspection fee” and EGP 50k for every other new branch.

Authorization for bank bailouts: The law will allow the CBE to provide short-term bailout funding to struggling banks. This would come in the form of a three-month to one-year loan carrying an interest higher than the market average.

The law will also not affect the current CBE board and the boards of commercial banks, which will only be shuffled to comply with the new stipulations after their terms expire. Under the legislation, future boards and chairmen of state-owned banks will be appointed by the Prime Minister and will be subject to some form of competency approval from the CBE.

Background: The draft Banking Act, which has been in the works since 2017, will replace the 2003 Banking Act, as well as cancel overlapping provisions in related laws. Besides increasing the CBE’s oversight over the sector, the law would introduce measures governing e-payment, fintech businesses, and cryptocurrencies, as well as strengthen data protection and consumer privacy. The legislation would also put in place a 1% levy on bank profits to endow an industry development fund. Banks will have 1-3 years to comply with the new provisions once it’s signed into law. You can find out more here and here.

LEGISLATION WATCH- House Speaker submits Income Tax Act, Public Enterprises Act, others, for committee discussion: House Speaker Ali Abdel Aal submitted six draft laws and two protocols to their relevant committees during parliament’s plenary session on Sunday, the local press reports.

Income tax amendments sent to the Planning and Budgeting Committee: Fresh off raising the income tax exemption threshold in amendments passed last month, the planning committee will discuss a fresh set of changes to the legislation — possibly involving the proposal to cut capital gains tax for state-owned companies we caught wind of last week.

Stamp tax amendments head back to the planning committee: The committee last week decided to temper the government’s proposed cuts to stamp tax on EGX transactions, reducing the tax from 0.15% to 0.075% instead of 0.05%.

The Public Enterprises Act amendments were submitted to the Economics Committee. The legislation would reclassify listed companies in which the government holds up to a 75% stake and a cap on board compensation. Members of the Constitutional and Legislative Affairs Committee, and well as the planning and labor committees will participate in the discussions.

Other bills submitted to relevant committees:

• The suspension of tax on agricultural land for two years will be discussed by the agriculture and planning committees.
• A draft law to set up a fund to support tourism and archeological sites was submitted to the tourism, culture, civil aviation, and constitutional committees.
• The civil disputes resolution bill, the protocol to eliminate illicit trade in tobacco products and a presidential decision regarding IMF funding were submitted to the Constitutional Affairs Committee.
• Legislation on waste management was submitted to the Energy and Environment Committee, with participation of members of the constitutional affairs, planning and industry committees.

Cairo Airport seeking EGP 1.2 bn loan to refurbish Terminal 1: The Cairo Airport Company has approached the National Bank of Egypt and Banque Misr for a EGP 1.2 bn loan to part-finance its plan to refurbish Cairo International Airport’s Terminal 1. Sources familiar with the agreement told Al Mal that the company is waiting to receive approval from the banks, and learn which one would be interested in managing the loan, which comes with a 5-7 year repayment term.

What’s happening at the airport? The company’s former chairman, Ahmed Fawzy, said in November that refurbishing the terminal would cost in the region of USD 200 mn. The plan would see the airport’s first and second terminals merged into a single building containing separate local and international departure halls. Terminal 3 would be revamped as an arrival hall and merged with the airport’s mall. An unnamed French company has been selected by the government to develop the Terminal 1 building, while the Cairo Airport Company issued in March a EGP 1 bn tender for local companies to renovate Terminal 2.

DISPUTE WATCH- Gov’t signs settlement with TMG for 2016 dispute over Four Season San Stefano: Talaat Moustafa Group (TMG) and the governorate of Alexandria signed yesterday a settlement agreement over the group's Four Seasons-branded hotel in Alexandria’s San Stefano, according to a cabinet statement. Under the agreement, TMG will pay EGP 7 mn in unspecified fees to the governorate each year, with that amount increasing 12% per annum. The real estate group will also be required to invest EGP 5 mn in “development projects” under its corporate social responsibility umbrella each year.

What was the issue to begin with? Although the statement does not clarify which dispute the agreement is meant to settle, we believe it pertains to a dispute the governorate had with TMG over the lack of an occupants’ union for the hotel and residence complex, claiming that it qualified as a residential building and not a hotel. Under Egypt’s 2008 Building Code, “a building, a development or a gated compound … which consist of 5 units or more are mandatorily required to establish a union for the occupants.” However, the 1973 Hotel and Touristic Facilities Act exempts hotels from the occupant union requirement. In 2018, the Council of State (Maglis El Dawla) ruled that the Four Seasons is a hotel, meaning it is not required to form an occupant union.

EARNINGS WATCH- Rameda profits soar in 1Q: Rameda Pharma almost trebled its profits in 1Q2020, recording net income of EGP 23.9 mn compared to EGP 8.1 mn a year earlier, according to the company’s earnings statement (pdf). Revenues climbed 22% to reach EGP 232.4 mn over the three-month period, up from EGP 189.9 mn last year.

Supply chain issues courtesy of covid-19 failed to dent the company’s recovery from last year’s production disruptions: “Despite the stresses placed on the Egyptian market in specific and global markets in general during the period by the coronavirus pandemic and its associated economic impacts, recovering volumes after last year’s production disruptions combined with improvements in our average price points delivered solid top-line growth for Rameda during 1Q20,” CFO Mahmoud Fayek said, noting that revenue growth was broad based with the exception of export sales, which, “fell on account of disruptions in global trade and logistical restrictions.” .

“Moving forward we will continue to seek opportunistic acquisitions that can drive growth, improve our profitability, and expand our market share,” CEO Amr Morsy said, adding that the company will continue to keep an eye out for potential acquisitions.