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Wednesday, 10 May 2023

What We're Tracking Today
Budget Watch
Privatization
Capital Markets
Debt Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar

Here’s the government’s fiscal plan for FY 2023-2024

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Today at a glance

1

BUDGET WATCH

 Here’s the government’s fiscal plan for FY 2023-2024.
2

Privatization

 Abu Dhabi wealth fund eyes up to 25% of Egypt’s Elab -report.
3

Capital markets

 Egyptian companies to be protected from MSCI index rebalancing due to FX crisis.
4

DEBT WATCH

 Alexbank secures USD 15 mn from EIB for green on-lending.
5

What We're Tracking Today

 We’re five days away from the Enterprise Exports & FDI Forum.
6

What We're Tracking Today

 Supply Ministry to limit food disbursement for ration card holders.
7

What We're Tracking Today

 Do you want to start a career in IR? Join the Enterprise Advisory Development Program.
8

HARDHAT

 Where the government’s universal healthcare coverage currently stands.

Wednesday, 10 May 2023

What We're Tracking Today
Budget Watch
Privatization
Capital Markets
Debt Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar
1

What We're Tracking Today

It’s inflation day in Egypt: Analysts expect prices to have slowed in April

Good morning, wonderful people, and welcome to a budget-heavy issue of your morning read,after Finance Minister Mohamed Mait unveiled 2023-2034 document in the House of Representatives yesterday.

We’ve done plenty of math to help you make sense of Maait’s spending plan for the upcoming fiscal year, which leads our news well this morning, below.

FROM THE DEPT. OF GOOD NEWS- The document Maait tabled yesterday includes a sharp increase in export subsidies, underscoring the importance that the prime minister’s office is putting on exports. We’ll look forward to more details on that front as the budget debate continues.

Late night talkshow mainstay Lamees El Hadidi hosted a he said / he said on the budget last night, including two distinct views on Maait’s plan for 2023-2024. We have coverage in Last Night’s Talk Shows.

Budget discussions continue today for a second day.

WATCH THIS SPACE- It’s also inflation day — and expectations are for price growth to have slowed in April: That’s according to a Reuters poll of analysts, whose median forecast is for headline inflation to fall to 31.0% from 32.7% in March.

What to thank: A “favorable base effect, a steady currency, and weaker commodity prices,” the newswire says.

It has been a while since we’ve known anything other than unrelenting inflation: Headline CPI has risen for nine consecutive months, rising from 13.2% to near-record highs on the back of a series of heavy currency devaluations.

Yes, but: Inflation could rise in the coming months especially if the country pushes through with further EGP devaluations which would hike prices even higher, Capital Economics said. And there’s the recent hike in diesel prices to consider, too.

NOW, speaking of exports:

We’re only five days away from meeting with some of you at the Enterprise Exports and FDI Forum, taking place at the Four Seasons at the Nile Plaza on Monday, 15 May.

We’re delighted to announce that our friend Yasmine Khamis, chair of the Orientals Group and one of the nation’s largest exporters, is joining us for the forum. Are you? Yasmine will be speaking on why exports and FDI are the way forward. She will be joined on stage for that discussion by Yassir Zouaoui, a partner at McKinsey who is coming in from the GCC to join us, as well as Cheick-Oumar Sylla, director for North Africa and the Horn of Africa at the International Finance Corporation to help us set the stage for the day

The panel will be co-moderated by our friend Helmy Ghazi, deputy CEO of HSBC Egypt and Patrick, our editor-in-chief.

Essential reading before the conference: Five steps to build a new Egyptian economy, our most-read story ever.

Among the CEOs, top execs, bankers, and development finance folks speaking at the conference are (in no particular order):Tarek Kamel, CEO of Nestle Egypt; Omar Elsahy, General Manager of Amazon Egypt, Khaled Morsy, CEO of DB Schenker Egypt; Mark Wylie, CEO of Beyti; Mohamed Talaat Khalifa, CEO of Concrete; Kareem Abou Ghaly, chairman and CEO of Pasta Regina; Tarek Hosny, head of investments and projects at Fertiglobe; Nadia El Tawil, investment officer at AfricInvest; Mostafa Bedair, CEO of Giza Seeds and Herbs; Hassan Massoud, associate director and head of private equity (Southern Mediterranean), at the EBRD; Hossam Abou Moussa, partner at Apis; Shady William, managing director of IDG; Nada El Ahwal, CSO of Transmar; Mohamed El Gebely, team leader at USAID Trade; Hossam Sallab, CEO and vice-chairman, Sallab Group and Royal Ceramica; and Abdallah Sallam, CEO of Madinet Masr.

Topics and live interviews will include:

  • How to attract foreign partners and figure out what they are looking for;
  • What lessons can we draw from white goods, fertilizers, and garments exporters who have increased our exports;
  • What are the fundamentals to creating an export and / or FDI strategy;
  • What it takes to secure a place in a multinational’s supply chain.
  • How industrial clusters could expedite exports, FDI and possibly be an avenue for SME development;
  • How Egypt’s industries need to be open to evolution to become more competitive.

Tap or click here to explore the full agenda.


** Have you confirmed your attendance? Invitations have been sent out over the past few weeks. If you have yet to confirm your attendance and would still like to join us, please reply to the invitation with an RSVP.

HAPPENING NEXT WEEK-

Car import scheme wraps up: The expat car import initiative will draw to a close on 14 May.

Endeavor Egypt is celebrating its 15th birthday at the GEM next week: The startup network heads to the Grand Egyptian Museum (GEM) next Friday, 19 May, to mark its 15th anniversary. 

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

Supply Ministry tightens limits on food disbursement for ration card holders: Ration card holders will now face tighter limits on how much subsidized food they can buy per month under aSupply Ministry directive issued yesterday.

The limits: Beneficiaries will be limited to purchasing 1-4 bottles of cooking oil and 1-6 kgs of sugar, depending on the size of the family. They will also have to choose between purchasing 1-2 kgs of rice or pasta.

REMEMBER- This is the latest move by the government to lower its spend on food subsidies.

The ministry raised the prices of almost all subsidized commodities sold to ration card holders earlier this month and indicated it would make further incremental price hikes. The state supports some 64 mn ration card holders, providing them with over 30 subsidized commodities.

THE BIG STORIES ABROAD-

The Donald is everywhere on the global front pages this morning: A New York jury has found former US President Donald Trump guilty of abusing and defaming writer E. Jean Carroll and ordered him to USD 5 mn in damages. (Reuters | AP | Financial Times | NYT | Washington Post | Bloomberg |Wall Street Journal)

WATCH THIS SPACE- The impasse over the debt ceiling continues in Washington with senior lawmakers refusing to compromise and come to an agreement to avert a debt default in three weeks time. (Reuters | AP | Bloomberg | Financial Times | NYT | Washington Post | WSJ)

WANT TO START A CAREER IN INVESTOR RELATIONS ADVISORY?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.

NEVER WORKED IN INVESTOR RELATIONS OR ADVISORY BEFORE? We have the Enterprise Advisory Development Program. The four-month program will see full-time, paid participants take part in workshops and lectures from veteran investor relations and advisory professionals, while also applying their knowledge in a practical setting. Those who successfully complete the program will be offered full-time positions on staff for a chance to work in a flexible and supportive — but still fast-paced — work environment that eschews micromanagement and rewards good work. Enterprise Advisory offers the chance to build a network of high-ranking individuals across some of the largest and most influential companies in the region through direct exposure to clients.

During the program, you’ll learn:

  • Finance for non-finance people;
  • How to analyze businesses, their business models, their strategic advantages, and their strategies;
  • How to take that information and then tell an audience of investors, journalists, and analysts a compelling and well-developed story;
  • How to frame individual companies’ stories within the wider macroeconomic environment.

Career switchers are very welcome.

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

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

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The TriFactory's Somabay Endurance Festival returns for the fifth time from 25-27 May,bringing together Egypt's multi-sport community for an amazing weekend filled with swimming, cycling, and running throughout the beautiful scenery of Somabay. Select from six different races, Sign up now, and get ready to Experience Endurance.

2

BUDGET WATCH

Finance Minister Mohamed Maait presents Egypt’s FY 2023-2024 budget to the House of Representatives

Our first proper look at the new budget: Yesterday we got our first look at the Madbouly government’s spending plans and fiscal projections for FY 2023-2024 as Finance Minister Mohamed Maait delivered his budget statement to the House. The minister announced new support measures for households and businesses struggling through an economic crisis — and sought to reassure MPs that the economy remains on an even footing amid anxieties over inflation and the ongoing foreign exchange crunch.

Here’s how the government sees things playing out over FY 2023-2024, according to the draft budget (pdf):

THE MACRO PICTURE-

Growth will be flat: Economic growth will inch down to 4.1% in the coming fiscal year from a projected 4.2% in FY 2022-2023 and 6.6% last year.

Egypt to outperform the global economy, says El Said:Though the projected growth rate is below the initial 5% forecasts, it remains above the 2.8% forecasted for the global economy, Planning Minister Hala El Said told MPs while delivering her statement on the FY 2023-2024 socioeconomic development plan.

REMEMBER- The IMF last month penciled in a 2.8% global growth rate for 2023, down from the 3.4% in 2022, on the back of a slowdown in advanced economies.

Price growth will slow, but we’re still looking at significant inflation: Headline inflation will average 16.0% over the 12-month period, down from a projected 19.6% this year, according to the document. Inflation has hit its highest levels in more than five years this year thanks to the combination of currency devaluation and high commodity prices.

Oil + wheat prices to ease:

  • The government sees Brent crude prices averaging USD 80 per barrel from July 2023 through to June 2024. This is down from USD 94 / barrel this fiscal year.
  • Wheat prices are expected to remain significantly above pre-2021 levels, with US wheat averaging USD 240 per ton over the 12-month period. This is down from USD 424 / ton this year, which saw global prices surge on the back of the disruption caused by the war in Ukraine.

THE DEFICIT-

This year: The government now sees the budget deficit finishing the current fiscal year at 6.4%, up from 6.1% in FY 2021-2022. The government had initially targeted a 6.1% deficit in this year’s budget, which was revised to 6.8% in March. Meanwhile, the primary surplus will inch up to 1.5% from 1.3% last year.

And the next: The government expects the deficit to widen to 7.0% and the primary surplus to increase to 2.5% in FY 2023-2024.

Additional borrowing this year has given us two deficit figures: The budget forecasts an “adjusted budget deficit” of 8.0% this year. This accounts for the EGP 165 bn in fresh borrowingapproved in March to cover debt service and the latest round of wage and pension hikes in the final quarter of the year.

MONEY IN, MONEY OUT-

The taxman expects to have a very good 2023-2024: Revenues will rise 41% to EGP 2.14 tn in the upcoming fiscal year, up from an estimated EGP 1.52 tn this year. Most of this is thanks to higher tax receipts, which are projected to rise 31% EGP 1.53 tn, though non-tax revenues will also increase 75% to EGP 610 bn, almost double that of the past three years.

Privatization to bring in almost USD 2.3 bn next year: The government expects to bring in EGP 70 bn (USD 2.26 bn) through its privatization program next year, under which it hopes to sell stakes in many of the nearly three dozen companies in the privatization program by the end of 3Q FY 2023-2024.

Spending to near EGP 3 tn: Spending for the upcoming fiscal year will increase 34% to EGP 2.99 tn on higher wages, borrowing costs, and subsidy allocations, according to the document:

  • The state’s wage bill will climb 15% to EGP 470 bn;
  • Debt service costs will increase 44% to EGP 1.12 tn;
  • Commodity purchases will rise 11% to EGP 139.4 bn;
  • Public investment will rise 56% to EGP 586.7 bn;
  • Allocations to education will rise 19% to EGP 229.9 bn in FY 2023-24, while health spending will increase 15% to EGP 147.8 bn;
  • Social security spending will rise 31% to EGP 477.5 bn.

SOCIAL SAFETY NET-

Total spending on measures to support at-risk households, businesses and individuals will climb 24% to EGP 529.7 bn during the coming year as the government ramps up spending on subsidies to mitigate the impact of inflation and shore up the economy.

Fuel subsidies to increase: The government expects to more than double spending on fuel subsidies, and has allocated EGP 119.4 bn for the coming year.

But spending on food subsidies will fall: Allocations to food commodities will inch down to EGP 127.7 bn from EGP 130 bn this year, according to the document.

WATCH THIS SPACE- Export subsidies to almost quadruple:The export subsidy will see the highest upward percentage change in next year’s budget to reach EGP 28 bn.

Subsidized loans for industry + agriculture: The government will spend EGP 19.5 bn on subdizing loans to industrial and agricultural companies. This is the first fiscal year the state has picked up the tab for the subsidized loan program after it agreed to take the responsibility from the central bank at the request of the IMF. The central bank previously managed the programs by directing commercial banks to provide loans to qualifying businesses at lower rates.

DEBT-

Debt as a proportion of GDP to rise this year, fall the next:The country’s debt-to-GDP ratio will rise to 96% by the end of the current fiscal year in June, from 87.6% last fiscal year on the back of a weaker EGP and rising interest rates. Meanwhile, the government is now forecasting debt-to-GDP to fall to 91.3% in FY 2023-2024, and is aiming to push the figure below 80% by 2026-2027.

A lot of fresh borrowing: The amount of new borrowing is set to increase by 22% in FY 2023-2024, with the government expecting to sell EGP 2.04 tn in new treasury bills and bonds, according to the document.

WHAT’S NEXT?

The budget debate begins at the committee level:The budget document will be discussed in committees and it should typically go up for a vote at the general assembly before the start of the new fiscal year on 1 July. If the budget doesn’t pass before 30 June, the current budget rolls forward to direct state spending until the new document is passed.

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3

Privatization

Abu Dhabi wealth fund ADQ reportedly eyeing up to 25% of Egypt’s Elab -report

Abu Dhabi wealth fund ADQ is reportedly close to acquiring a 20-25% stake in Egyptian Linear Alkyl Benzene (Elab), Asharq Business, reports citing three unnamed sources it says have knowledge of the matter. The transaction is expected to be completed before the end of this month, according to the sources.

We knew Elab could be up for a sale soon: Local media previously reported Sovereign Fund of head Ayman Soliman as saying Elab would be the first company to go to market via the SFE’s pre-IPO fund, though Soliman is yet to directly confirm the names of any of the eight companiesrumored to be included in the fund. The aim of the pre-IPO fund is to sell stakes in state-owned companies to strategic investors ahead of potential public offerings on the bourse. Elab is one of the 32 companies up for stake sales as part of the government’s wider privatization program, through which it hopes to raise USD 2 bn by the end of June.

What we don’t know: Information about the value of the potential stake sale and whether ADQ will buy shares from existing shareholders or through a capital increase wasn’t disclosed.

IPO to follow? Elab’s shareholders are expected to debut 10% of the company’s shares on the EGX following the close of the potential sale transaction to ADQ, Asharq quotes one of its sources as saying.

Shareholder structure: National Investment Bank (NIB) owns 34.6% of Elab, Egyptian Petrochemicals Holding Company (ECHEM) and Egyptian Natural Gas Holding Company (EGAS) each own a 21% stake, the Finance Ministry owns 13.1%, Egyptian General Petroleum Corporation (EGPC) owns 10.5%, and Royal Chemicals owns 0.22%, according to Elab’s website.

REMEMBER- We should soon see more movement on the state’s privatization program. Offers could start rolling in this month for military-owned bottled drinks firm Safi and fuel retailer Wataniya, the cabinet said earlier this week, promising details “soon” on other transactions in the works.

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4

Capital markets

Egyptian companies to be protected from MSCI index rebalancing despite FX crisis

MSCI will give Egyptian securities listed in its benchmarks “special treatment” in the wake of investor concerns over Egypt’s limited FX liquidity, Reutersreports, citing a note from the global index provider on Monday. MSCI said it would not “implement any changes as part of upcoming index reviews for any securities classified in Egypt.” The company will announce which stocks it is adding and removing from its indices in its quarterly review after US markets close tomorrow.

El Dokany weighs in: “We see this [decision] as part of the wider impact on the Egyptian economy … The Egyptian stock market is an inseparable part of the Egyptian economy,” EGX boss Ramy El Dokany told Asharq Business (watch, runtime: 1:44). “We are in contact with [MSCI] to see how much their decision will affect Egyptian stocks.”

Egypt in MSCI indices: Egyptian companies are part of MSCI Emerging Markets Index and MSCI's flagship global equity index MSCI ACWI Index. Over the past year Ezz Steel, Heliopolis Housing, and E-Finance have been added to MSCI’s various indices, which also include EFG Hermes and Fawry.

EGP stability will help draw in foreign investors: “Foreign investors love the Egyptian market but the lack of stability in the exchange rate may be the reason for their delayed investments …The exchange rate stabilizing would be the main motivation for investment,” El Dokany said, voicing confidence in the country’s decision makers to help stabilize the EGP.

MEANWHILE- The EGX may be changing around its lineup of indexes- “We are looking into restructuring a number of the older indices part of the stock market and maybe at some point terminate one of them,” he told CNBC Arabia (watch, runtime: 11:32). He said in March that the bourse has conducted surveys to see which of its indices are among the least used.

Shariah-compliant index pushed back: A Shariah-compliant index is still in the works to hopefully launch before the end of the year, he said. The EGX boss previously suggested that the index could launch this summer.

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5

DEBT WATCH

EIB lends Alexbank USD 15 mn in green funding

The European Investment Bank (EIB) will provide USD 15 mn to Alexbank for on-lending to green projects, the two sides said in a joint release (pdf) yesterday. The money is being made available through the Green Economy Financing Facility (GEFF), and will target businesses working on renewable energy and efficiency projects, it said. The EIB signed off on the financing in December, according to the EIB’s website.

GEFF? Led by the EBRD in partnership with the EIB and the French Development Agency, the initiative aims to help small, private-sector businesses to help them invest in energy-efficiency projects and green technologies.

Egyptian banks have so far received more than EUR 465 mn from GEFF, which has worked with a number of local lenders — including the National Bank of Egypt, QNB Alahli, Alexbank and Arab African International Bank — to channel finance to green projects and SMEs.

The loan was signed on the sidelines of the Swedish embassy and EU’s electricity interconnectivity event yesterday, according to a jointpressrelease(pdf). Panels at the event discussed how Europe could help finance the green transition here, and how in turn the renewable energy generated in Egypt could make its way to Europe.

SOUND SMART- There are as many as five proposed interconnector projects that would link our electricity grid to mainland Europe. Read about them all here.

IN OTHER GREEN NEWS-

Gov’t, UN launch new sustainable development framework: The Madbouly government and the UN yesterday launched the UN Sustainable Development Cooperation Framework 2023-2027 (pdf) at an event in Cairo, cabinet said in a statement. The five targets of the four-year framework include strengthening welfare and public services, improving women’s rights, building climate resilience and reducing the informal economy.

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6

Moves

Abu Dhabi Tourism Investments appoints new CEO

Abu Dhabi Tourism Investments Company (ADTIC) has appointed Yehia Kotb as its CEO, Hapi Journal reports. Kotb previously served as the Middle East and West Asia regional director for the Meridian Hotels Group and was Movenpick Aswan’s general manager. ADTIC operates several hotels in Egypt located in Cairo, Luxor, Sharm El Sheikh, and Hurghada.

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7

LAST NIGHT’S TALK SHOWS

Egyptian talk shows dive into the budget for FY 2023-24

Budget day turned budget night on the airwaves as the nation’s talking heads unpacked the details of the government’s spending plans announced by Finance Minister Mohamed Maait yesterday. Of particular note was Kelma Akhira, where show host Lamees El Hadidi interviewed two MPs with different opinions about the government’s handling of the public purse.

For: “The Egyptian government has the ability to create budgets with extreme caution, taking into account any surprises that may occur,” Budget Committee Deputy Chairman Yasser Omar told El Hadidi (watch, runtime: 7:36). “We know that things got out of hand for FY 2022-2023 due to the devaluation that happened across several phases,” he said.

Against: “Unfortunately, we see no vision towards reform for the fiscal year 2023-2024,” said MP and Reform and Development Party Head Ayman Aboul Ela (watch, runtime: 3:11). “The budget has had the same issues since 2016 … and the government doesn't take them into account,” he said, adding that the budget conversation didn’t even touch upon solutions to pay back our debts or resolve the budget deficit. Meanwhile, Masa’a DMC’s Ramy Radwan broke down the budget for his viewers (watch, runtime: 6:14).

** For more on the FY 2023-2024 budget: We break everything down in this morning’s Budget Watch, above.

FOOD SUBSIDIES- More on the Supply Ministry’s move to curb spending on subsidized food: The Supply Ministry earlier this month decided to hike subsidized commodity prices between 25-75% and yesterday came out with a decision tightening limits on purchasing power per ration card holder (more on than in the news well, above). The state is limiting the quantities purchased to ensure there is enough to go around for all ration card holders, Supply Ministry undersecretary in Alexandria Mohamed Saadallah told Kelma Akhira (watch, runtime: 8:34). Even after the price hike, there is a significant price difference between subsidized and unsubsidized products that could reach up to 80%, he added.

SUDAN- Shoukry continues diplomatic efforts: Foreign Minister Sameh Shoukry joined Ala Mas’ouleety for the second interview in as many days (watch, runtime: 5:29) following his meeting with South Sudanese President Salva Kiir in Juba yesterday. President Abdel Fattah El Sisi has reached out to neighboring countries — including South Sudan and Chad — to work to restore peace and stability in Sudan, Shoukry said, adding that the priority at this stage remains establishing a ceasefire and protecting civilians.

The hardest part is yet to come: “The next post-truce phase is the hardest … it requires serious work and trials to reestablish political dialogue to move the nation from fighting to dialogue and from dialogue to stability,” former foreign minister Mohamed El Orabi told Al Hayah Al Youm (watch, runtime: 5:30). Orabi also joined Masa’a DMC (watch, runtime: 6:23).

The trip from Sudan to Egypt: El Hadidi interviewed (watch, runtime: 20:40) Egyptian students who were studying in Sudan to get the details of their trips back to Egypt after the war broke out.

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8

Also on our Radar

Emaar to open three new hotels in Egypt by 2024. PLUS: New GASC tender and a Fresh acquisition

HOSPITALITY-

New Emaar hotels this year: Emaar Hospitality will open two new hotels on the North Coast in 2023, the Address Marassi Beach Resort and the Vida Marina Resort & Yacht Club Marassi, according to Trade Arabia. Emaar is also building the new Vida Residences Cairo Gate, which will open its doors in 2024.

M&A-

Fresh acquires majority stake in Misr Compressor:Fresh has acquired an 80% stake in air compressor manufacturer Misr Compressor for an undisclosed sum, Al Mal reports, citing anonymous sources. The home appliances manufacturer acquired a 40% stake in the firm through the exit of Saudi investment group Dallah Albaraka, 9% through the exit of Saudi-Egyptian Industrial Investment, and another 9% through the exit of MidBank, with the remaining shares coming from undisclosed investors. National Bank of Egypt, Suez Canal Bank, and Misr Ins. hold the remaining 20% in the company.

What’s next: Fresh plans to invest some USD 40 mn in the company within two years to boost its performance and up its annual production capacity from 350k refrigerator and freezer compressors to 5 mn by 2026, according to the newspaper.

COMMODITIES-

GASC on the hunt for local, int’l vegetable oil: State grains buyer GASC has launched an international vegetable oil tender for delivery between 25 June and 10 July, Reuters reported yesterday. GASC also launched a tender for local vegetable oil, seeking 1k tons of soybean oil and 500 tons of sunflower oil for delivery between 1-20 July, the Supply Ministry said. Traders have until Thursday to submit offers in the tenders.

VENTURE CAPITAL-

The African Private Equity and Venture Capital Association’s annual summit last week brought together more than 400 investors and entrepreneurs to discuss how to maintain investment flows to African startups amid heightened global uncertainty, according to a press release(pdf).

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9

PLANET FINANCE

Fertiglobe + Aramco post lower earnings in 1Q as OCI reconsiders listing venue

Fertiglobe posts lower earnings as hot fertilizer market cools: MENA fertilizers firm Fertiglobe — a JV between Adnoc and the Sawiris-owned OCI — saw its net income dip 62% y-o-y to USD 135 mn in 1Q 2023, according to its earnings release (pdf). Revenues were down 41% y-o-y to post USD 694 mn. The drop came as global fertilizer and energy markets cooled from peaks seen in the wake of the outbreak of war in Ukraine, as well as on the back of “muted industrial demand.” Fertiglobe plans to pay out a USD 250 mn dividend at the end of 1H 2023.

Egypt’s first green hydrogen plant is officially producing: Fertiglobe said “on-spec green ammonia” was produced during 1Q from its new 100-MW green hydrogen plant in Ain Sokhna in partnership with Scatec and Orascom Construction, which began commissioning in November. “We expect volumes to ramp up over the year,” it said, adding that a final investment decision on the plant should be made during 2023.

OCI is reconsidering its listing venue: Netherlands-listed chemical company OCI could look to list in the US or the Middle East as it looks to calm shareholder nerves about its share performance. The board has “approved a strategic review of all business lines, including an evaluation of OCI’s list in the Netherlands,” it said in its earnings release yesterday. The company has seen its share price decline more than 30% so far this year, prompting one investor to call for the company to sell off assets.

EMs face further challenges after latest Fed rate hike: Emerging markets are inching closer to the “danger zone” after the Fed hiked rates by another 25 bps last week pushing the policy rate to its highest level since 2007.

Default on the horizon? Some USD 210 bn of emerging-market hard-currency bonds are trading with yields significantly higher than that of other similar treasuries, according to Bloomberg. That means that around 15% of the USD 1.4 tn of outstanding sovereign external bonds are trading in distressed territory, indicating a rising risk of default.

AT HOME- The cost to insure Egypt’s debt hit a record 1.7k bps on Monday and has almost doubled this year as the country continues to struggle with exchange rate fluctuations and soaring inflation that has caused it to significantly increase its social spending.

Saudi Aramco’s net income dipped 19% y-o-y to USD 31.9 bn in 1Q 2023 on the back of lower crude oil prices, according to its interim financials (pdf). The Saudi oil giant’s net income still beat analysts’ forecasts of USD 30.8 bn. Revenues were down 11% to USD 111.3 bn.

Aramco to pay out an even bigger dividend: The company will issue a “performance-linked dividend” on top of its base dividend, it said shortly before releasing its 1Q financials. The additional payout to investors could add up to more than USD 20 bn this year, per Bloomberg Intelligence calculations cited by the business news outlet. Aramco’s USD 75.8 bn dividend last year was already the biggest of any listed firm, Bloomberg notes. Aramco shares closed up 3.2% on the news after rising as much as 7.2% during trading.

Context: The increased dividend comes as Saudi Arabia — which owns 90% of Aramco — posted a fiscal deficit in 1Q of USD 770 mn as spending rose and oil revenues fell.

EGX30

17,326

-1.8% (YTD: +18.7%)

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

11,305

+0.4% (YTD: +7.9%)

ADX

9,689

0.0% (YTD: -5.1%)

DFM

3,571

-0.3% (YTD: +7.0%)

S&P 500

4,119

-0.5% (YTD: +7.3%)

FTSE 100

7,764

-0.2% (YTD: +4.2%)

Euro Stoxx 50

4,323

-0.6% (YTD: +14.0%)

Brent crude

USD 77.26

+0.5%

Natural gas (Nymex)

USD 2.27

+1.2%

Gold

USD 2,041.90

+0.4%

BTC

USD 27,658

+0.5% (YTD: +67.3%)

THE CLOSING BELL-

The EGX30 fell 1.8% at yesterday’s close on turnover of EGP 2.9 bn (59% above the trailing 90-day average). Foreign investors were net sellers. The index is up 18.7% YTD.

In the green: Taaleem (+6.2%), Ibn Sina Pharma (+3.2%) and Mopco (+1.6%).

In the red: Abu Qir Fertilizers (-4.7%), Credit Agricole (-3.8%) and Qalaa Holding (-3.6%).

Yesterday’s sell-off in Western markets is continuing in Asia this morning, where exchanges across the region are nursing losses. The picture elsewhere is a little less clear, with US markets poised to open in the green but European bourses on course for a mixed open.

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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

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HARDHAT

Where the government’s universal healthcare coverage currently stands

How far along is the government’s universal healthcare coverage scheme? We previouslybroke down the Madbouly government’s vision for how the universal healthcare ins. scheme will pan out once it’s fully rolled out across the country by 2032. The scheme — which is designed to provide healthcare coverage for all citizens, regardless of their income bracket — is being rolled out across several phases, after the process kickedoff in2019. Today, we look at where the system currently stands, and the kinks that still need to be ironed out.

Where things stand geographically: The scheme is currently operational in Port Said and Luxor, and is being trialed in South Sinai and Ismailia. The trial phase will also extend to Aswan and Suez within weeks, according to the scheme’s Facebook page. In each governorate, individuals registered to the scheme have access to several primary healthcare units, primary care centers, specialized hospitals, fully integrated hospitals, diagnostics labs, pharmacies, and/or optometry centers.

The availability of each type of service varies across governorates. For example, Menoufia and Dakahlia currently only have one full-fledged hospital available under the program in each governorate, while Suez and Beheira only have diagnostics labs. Other governorates — including Port Said, Cairo, Luxor, Aswan, and Giza — have a wider range of services available.

Who’s doing what: The broad majority of the service providers currently available in these governorates are operated by the Universal Healthcare Ins. Authority (UHIS), but a small handful are also operated by the Suez Canal Authority and the private sector. Among the private sector providers: Almokhtabar Labs, Alborg Labs, Cure Lab, Egypt Biolabs, and Alfa Labs, in addition to private sector-run hospitals, such as Shefaa Al Orman Oncology Hospital, Elaraby Hospital, and Misr International Hospital’s ophthalmology unit in Dokki, among others.

So far, it’s unclear how private health ins. providers will be looped into the healthcare system: There is still a lack of clarity on “the process of setting and revising the provider payment methods,” a policy research paper (pdf) notes. Private providers such as Axa Egypt have signed cooperation agreements with the General Authority for Healthcare (GAH) to extend the providers’ coverage to a broader network of service providers. But as it currently stands, there are no private ins. providers looped into the universal coverage system, according to a World Health Organization representative who spoke to Enterprise on the condition of anonymity.

How could the system handle payments to private ins. providers? The private sector is in talks with the government and is hoping to enact legislative changes to the Universal Healthcare Act that would clearly outline their role in the coverage system, and how payments will be handled, Al Mal previously reported. One suggestion on the table is for the law to allow for dual coverage, whereby citizens can have both private ins. coverage and register with the government’s universal healthcare system, according to Ins. Federation of Egypt Chairman Alaa El Zoheiry. This proposal would, if implemented, see private ins. services offered at lower price points since the GAH would incur parts of the cost, El Zoheiry said.

By the numbers: Some 4.5 mn people have registered on the system to date, a UHIA official who requested to remain unnamed told Enterprise. The number of government medical facilities authorized to join the system has reached 156, while there are currently 108 private sector facilities under the system, the source added. Some 17 mn medical services have been provided since the program was rolled out, including 256k surgeries, 8 mn family-medicine services, and 2 mn checkups, the source told us.

UHIA has reeled in a total of EGP 72.8 bn in revenues from the launch of the system until December 2022, with a total surplus of c. EGP 67 bn, Finance Minister Mohamed Maait said earlier this year. The authority paid EGP 3.4 bn in return for the medical ins. services offered by service providers who are part of the coverage network, Maait added.

Your top infrastructure stories for the week:

  • Scatec interconnector studies to go ahead: Ministers approved the signing of an MoU with Norwegian renewables developer Scatec to study a new 3-GW Egypt-Europe electricity interconnection project.
  • Renewables-powered desalination: The Sovereign Fund of Egypt prequalified 17consortiums to bid in upcoming tenders for renewables-powered desalination plants, according to a statement.
  • Khazna Data Centers + Benya partner on hyperscale data center: UAE-based Khazna Data Centers will establish Egypt’s first hyperscale data center in partnership with local IT infrastructure firm Benya Group.
  • Al Kharafi + Samcrete to build new water infrastructure in Fayoum: Al Kharafi & Sons and Samcrete have beenawardedseveral contracts under the European Bank for Reconstruction and Development-backed (EBRD) Fayoum wastewater treatment project.
  • Siemens + Giza Systems are keeping the lights on at remote development projects: Siemens Energy and Giza Systems have delivered four mobile substations for the Egyptian Electricity Transmission Company over the past 10 months.
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CALENDAR

APRIL

Late April – 15 May: 1Q2023 earnings season.

MAY

7-11 May (Sunday-Thursday): First round of applications for sixth phase of export subsidy program.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

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

13 May (Saturday): Transport Ministry’s Maritime Transport Sector is hosting its Excellence and Creativity conference in Alexandria.

14 May (Sunday): First National Dialogue session.

14 May (Sunday): Expat car import scheme ends.

14 May (Sunday): EgyptAir to launch a new route to Dhaka, Bangladesh.

14 May (Sunday) Egytrans’ shareholders to vote on NOSCO acquisition.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16 May (Tuesday): National Dialogue session.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

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.

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.

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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