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Tuesday, 18 Apr 2023

What We're Tracking Today
Economy
Manufacturing
Legislation Watch
Startup Watch
Diplomacy
Taxation
Earnings Watch
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Going Green
Calendar

IMF reportedly wants progress on reforms, asset sales before loan review

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Today at a glance

1

Economy

 IMF wants to see progress on reforms, asset sales before first loan review –Bloomberg. PLUS: CBE’s Abdalla speaks on inflation.
2

Manufacturing

 French smartphone maker Ace is now assembling phones at Sico’s Assiut factory.
3

LEGISLATION WATCH

 Meet the new Supreme Investment Council.
4

Startup watch

 Trella is the latest to close shop in Pakistan amid the country’s economic woes.
5

Diplomacy

 It’s official: We’re making up with Turkey + Syria not yet welcome in the Arab League.
6

Taxation

 Some self-employed professionals won’t have to e-invoice.
7

EARNINGS WATCH

 CIRA Education revenues up 22% in 1H 2022-2023.
8

PLANET FINANCE

 IMF’s top Africa official calls for debt relief.
9

Going Green

 What needs to happen to get ecotourism booming?

Tuesday, 18 Apr 2023

What We're Tracking Today
Economy
Manufacturing
Legislation Watch
Startup Watch
Diplomacy
Taxation
Earnings Watch
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

THIS MORNING: Privatization program could pick up after Eid -reports. PLUS: EgyptAir reschedules flights thanks to daylight saving time

Good morning, wonderful people, and a very happy Tuesday. We hope your long weekend was as relaxing as ours.

One thing that didn’t take a break: the news cycle. We’re returning from the break with updates on everything from the progress of our IMF loan review and economic reforms (out of the IMF / World Bank spring meetings in DC last week) to the latest foreign phone manufacturer setting up shop here. But first…

PSA #1- It’s the next-to-last business day of Ramadan. We have a very long weekendcoming up, running Thursday, 20 April, through Tuesday, 25 April, in observance of Eid El Fitr and Sinai Liberation Day. EnterpriseAM will be landing in your inbox at our customary time tomorrow morning and then we’ll next see you again on Wednesday, 26 April.

PSA #2- The mercury is set to peak at 35°C today, according to the Egyptian MeteorologicalAuthority, while our favorite weather app says it could get as hot as 37°C by this afternoon. Temperatures could drop as low as 20°C at night. Be on the lookout for a chance of thunder showers and blowing dust tomorrow.

PSA #3- The reintroduction of daylight saving may impact your flight schedule: The clocks are jumping forward one hour on Friday, 29 April — and so all EgyptAir flights will also depart one hour later than the previously scheduled time, according to a company statement. The airline urges its customers to review their reservations through its 1717 hotline to confirm their departure times.

** SO, WHEN DO WE EAT? We’ll be breaking our fasts at 6:24pm CLT today. You have until 3:53am tomorrow morning to hydrate and grab a bite to eat.

WATCH THIS SPACE-

#1- Could the state’s privatization program pick up steam following the Eid break? “We are expecting announcements of state stake sales” after Eid El Fitr, Jefferies International MENA analyst Alia Moubayed told Asharq Business (watch, runtime: 7:56). Moubayed is also expecting greater exchange-rate flexibility, which she says could work alongside recent rate hikes to boost investor confidence in the local market.

Several stories in local media are suggesting the same: Cabinet intends to choose one of two shortlisted offers for a stake in state-owned United Bank “immediately after Eid,” Asharq Business reports, citing a source it says has knowledge of the matter. Meanwhile, the Public Enterprises Ministry will release the conditions of its planned tender for a private partner to refurbish Cairo’s historic Continental Hotel after the Eid break, Hapi Journal quotes Holding Company for Tourism and Hotels head Mervat Hataba as saying last week.

#2- Customs incentives in the works to boost transit trade? The transport and finance ministries are working together to introduce amendments to the Customs Law that would introduce incentives to draw transit trade to Egyptian ports, Al Mal reports, citing unnamed sources. The sources don’t reveal any details about the proposed incentives or when we can expect to hear more.

INVESTMENT WATCH-

Hassan Allam Utilities + AP Moller Capital to launch integrated logistics platform: Our friends at Hassan Allam Utilities — the investment and development arm of Hassan Allam Holding — and AP Moller Capital have agreed to launch an integrated logistics platform for warehousing and handling services in Egypt under a strategic partnership. The partnership aims to attract c.USD 200 mn of direct investments in Egypt’s logistics, airfreight, and warehouses sectors.

Read the full story in this morning’s edition of Enterprise Logistics — our new daily roundup of news, analysis, and insight into the biggest stories from MENA logistics players, four days a week.

DATA POINT-

Egypt released USD 15 bn worth of goods from ports during 1Q 2023 despite the ongoing foreign currency crisis, Asharq Business reported Sunday. The currency shortage has hindered the import of raw materials and goods, but an official at an Egyptian port is quoted as telling the news outlet that there’s no congestion of goods, only a delay in obtaining foreign currency for some shipments.

EGYPT AT THE IMF / WORLD BANK SPRING MEETINGS-

Our BIG STORIES TODAY come courtesy of last week’s IMF / World Bank spring meetings, where the Fund, FinMin, and the Central Bank of Egypt all had things to say on the state of the Egyptian economy. Read all the details in the newswell, below.

Egypt also led a push for more climate finance to the region at the Washington, DC, get-together. Finance Minister Mohamed Maait called to make green borrowing more accessible in a meeting with the Coalition of Finance Ministers for Climate Action. International Cooperation Minister Rania Al Mashat met with:

  • Representatives from Google to discuss launching the second edition of ClimaTech Run competition in the run up to COP28, as well as potential Google involvement in the government’s Nexus on Water, Food and Energy (NWFE) climate program;
  • World Bank head David Malpass, where she asked the bank to help speed up the implementation of the loss and damage fund agreed at COP27, and increase climate finance in general;
  • EBRD President Odile Renaud-Basso and European Investment Bank President Werner Hoyerto discuss their contributions to NWFE.

There’s no one BIG STORY ABROAD driving the conversation in the international press this morning. Some of the key headlines from the business pages:

  • China’s economy grew 4.5% in 1Q 2023 as the lifting of covid restrictions boosted the economy beyond analysts’ expectations. (Financial Times | Wall Street Journal)
  • US savers pulled nearly USD 60 bn from three major financial institutions in 1Q 2023 as the banking crisis and high interest rates put pressure on bank deposits. (FT | WSJ | Reuters)
  • Another challenge to traditional banks: Apple and Goldman Sachs launched their new US savings account at a 4.15% annual yield — more than 10x the national average. (FT| WSJ)

ALSO- Some of Italy’s biggest state-controlled enterprises got new leadership last week as the country’s right-wing Prime Minister Giorgia Meloni revamps sectors ranging from energy to defense, reports Bloomberg. Of the three most significant company roles in the country, only Claudio Descalzi, CEO of oil giant Eni, is continuing for another three years in his role.

Why this matters in Egypt: Eni is a key partner for Egypt, producing 60% of our natural gas and owning a 50% stake in our Damietta LNG plant, one of the country’s two natgas export terminals.

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May at Four Seasons, Nile Plaza. The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help us build an export-led economy that makes us a magnet for foreign direct investment (FDI).

What’s the Enterprise Exports & FDI Forum? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what we as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories.You can learn more on our conference website here.

Some of the biggest names in business and finance are on board — are you? If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

CIRCLE YOUR CALENDAR-

The African Private Equity and Venture Capital Association (AVCA) is returning to Cairo:More than 600 private-equity leaders from across Africa will gather at the Four Seasons Nile Plaza on 1-5 May for AVCA’s annual summit (pdf).

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

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

In today’s issue: What needs to happen to boost Egypt’s burgeoning ecotourism sector?

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Colorful spring activities come alive this spring at Somabay: A memorable action-packed week from April 21-28 for everyone. From spirited beach parties, commercial nights, sunset brunches, fashion shows and a bazaar, kids’ camps, adrenaline-pumping classes, selective food trucks and much more awaits you. Every corner of the destination will radiate inescapable Spring vibes, inviting the community to live it up. For more information, please contact book@somabayholidays.com or 16390.

2

Economy

IMF wants to see progress on Egypt reforms before first loan review, Bloomberg says. PLUS: Central Bank Governor Hassan Abdalla on inflation

Reform before review, IMF tells Egypt: The IMF wants Egypt to make more progress on privatizing state-owned companies and moving to a flexible exchange rate before it goes ahead with the first review of the country’s USD 3 bnassistancepackage, Bloomberg reports, citing people it says have knowledge of the matter. The review had been expected by 15 March 2023 under the terms of the package.

Signs of progress: The Washington-based lender had “fruitful discussions” with the Egyptian authorities in preparation for the first review on the sidelines of the IMF and World Bank Spring Meetings last week, IMF mission chief for Egypt Ivanna Hollar said in a statement on Sunday. “Discussions addressed a number of issues related to program implementation and the outlook for the Egyptian economy, and will continue virtually towards starting the first review mission,” Hollar added, without disclosing a potential timeline.

Seconded by Georgieva: “The teams are working and I am confident that we will have a good outcome,” IMF boss Kristalina Georgieva told reporters on Thursday, adding, “I want to say that we have seen in Egypt a deeper understanding of how complex not only the domestic environment is but also the regional and global environment is.”

The government may have to curb the pace of large-scale infrastructure projects to get through the bottleneck, Georgieva added. “In the current tight environment, they could undermine macroeconomic stability with the speed that was originally designed under different circumstances,” she added. Prime Minister Moustafa Madbouly in January announced curbs on FX spending on infrastructure projects and instructed all but “essential” ministries to make budget cutbacks until the end of the current fiscal year.

“The flexibility of the exchange rate is the best way for Egypt to protect its economy from external shocks,” said the IMF’s director for the Middle East, North Africa and Central Asia, Jihad Azour, at a press conference on Thursday (transcript). The government needs to “redesign the role of the state to focus on priority sectors and allow through leveling the playing field, the capacity for the Egyptian private sector to create growth and create more foreign currencies,” he added.

The World Bank agrees: The lender's vice president for the Middle East and North Africa, Ferid Belhaj, shared the same view as the IMF about the government’s need to reduce its involvement in the economy in an interview on Wednesday, according to Bloomberg. Authorities in Egypt are “moving in the right direction but they never move fast enough when it comes to reforms,” the news service quotes him as saying. “What we see today in Egypt is a situation that is not as stable as we would like it to be,” he added, in reference to the EGP exchange rate. Structural reforms to level the playing field and increase transparency of state-owned companies are “very, very important to give more confidence to investors and people who would like to engage in the Egyptian economy,” he added.

What happens if the first review doesn’t wrap up before June? The IMF’s executive board should discuss the first review by June, but in the case of a longer delay the lender may combine it with the next one, which is scheduled for September, according to Bloomberg.

BACKGROUND- Egypt committed to reduce the state’s involvement in the economy and maintain a permanent currency float as part of the terms of the loan. The government is yet to sell down any assets since it in February announced plans to offload stakes in 32 companies, while the official USD-EGP rate has remained unchanged at 30.94 for almost six weeks. Egypt needs to pass the first review to unlock the second USD 354 mn tranche of the loan.

MAAIT RESPONDS-

The government is “steadily proceeding” with implementation of economic reforms in partnership with the IMF, Finance Minister Mohamed Maait told Fund representatives in Washington, according to a ministry statement released on Sunday. He pointed to the state ownership policy document and measures to drum up more FDI as evidence of progress, adding that the changes will see the private sector become the driver of economic growth.

ABDALLA SPEAKS-

It’s going to take more than rate hikes to bring down inflation:“A lot of our inflation is imported and a lot of it is due to supply problems,” Central Bank of Egypt Governor Hassan Abdalla said on Thursday in Washington (watch, runtime: 06:19). “Not only supply prices but supply issues including a backlog that has resulted from some previous regulations. And this in itself is not and will not be addressed by interest rates.”

Background: Inflation rose to a near-record high in March of 32.7%, up from 31.9% in the previous month on the back of factors including a series of currency devaluations, an FX crunch, higher fuel prices, and increased demand during Ramadan.

Moving with caution: The CBE has raised interest rates by 1k bps over the past year to curb soaring inflation, and Abdalla voiced caution about further hikes. “We’ll not hesitate to do more, but we need to be very careful,” he said, hinting at the use of other policy measures to address the rapid growth in prices. Improving the effectiveness of monetary policy — such as by winding down its subsidized loan program last year — is something the central bank is “working very hard on,” he said.

Fixing supply issues is key, Abdalla says: “Relaxing the supply issues and increased competition will result also in a healthier and faster inflation reduction,” he said.

Regaining the narrative: “The market needs to see a true story and needs to see a way forward for some time, a plan for two or three years,” he said. “You cannot get back the confidence and the trust and managing expectations unless you have the whole full plan. And this is something I’m glad to tell you that we are working very closely with the government on.”

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3

Manufacturing

French manufacturer assembling smartphone at Sico’s plant in Egypt

French smartphone maker Acehas started producing phones at Sico Egypt’s factory in Assiut, Al Mal reported on Thursday. The company is making an initial EGP 150-200 mn investment in its operations, Commercial Director Amr El Hefnawy reportedly told the newspaper.

The company, together with its local distributor KG Tech (LinkedIn), launched three smartphones and four feature phones — and plans to produce tablets in the second half of this year, El Hefnawy reportedly told the newspaper. Ace plans to export some of its phones to countries in West Africa in addition to selling it here in Egypt, he said.

Lawmakers are trying to boost the local industry: MPs voted in February to slash customs duties and eliminate the 5% development fees on imported mobile phone components in a bid to boost manufacturing and localize the industry.

The local phone assembly industry is picking up steam in Egypt: Samsung and Nokia manufacturer HMD Global are among the firms assembling models here, and they should soon be joined by Chinese manufacturers Xiaomi,Oppo, and Vivo.

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4

LEGISLATION WATCH

El Sisi greenlights Supreme Investment Council

The Supreme Investment Council has been established: President Abdel Fattah El Sisi has issued a presidential decree to set up the Supreme Investment Council, according to the Official Gazette. Set up to replace the investment council that was established in 2016, the new body is part of the state’s efforts to boost investment and stimulate economic growth. Its formation was greenlit by cabinet in November.

Who is on board? Chaired by the president, the council is composed of 22 ministers and state officials, including the prime minister, the governor of the Central Bank of Egypt, the chairman of the EGX, and head of the Sovereign Fund of Egypt, along with the planning, international cooperation, defense, and military production ministers, among others. The council may also invite non-member state officials, private-sector representatives, and experts to its meetings, though non-members are not given voting rights. The council is set to convene at least once every three months.

What it does: The new council seeks to eliminate obstacles to new investment and accelerate licensing for new projects, Al Masry Al Youm quotes a member of parliament as saying. The role of the council — whose decisions are binding on all state institutions — includes creating an environment that is more conducive to investment, monitoring the progress of state institutions in implementing investment plans, following up on public-private partnerships, and setting mechanisms for settling investment disputes.

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5

Startup watch

Egyptian logistics startup Trella exits Pakistan

Logistics startup Trella closes operations in Pakistan: Egypt-headquartered logistics startup Trella is putting its operations in Pakistan on hiatus three years after entering the country, Bloomberg reports, citing two sources it says have knowledge of the matter. The company stopped taking on new business in March, the people said, making Trella the latest firm to exit the crisis-hit country.

The rationale? Economic woes: Import restrictions, FX shortages, and a rise in fuel prices have tipped Pakistan’s economy into crisis. The economic problems are compounded by disastrous floods that displaced tens of mns of people last year.

Some staff to remain: Trella will keep some of its staff on the payroll to support operations in Egypt, Saudi Arabia and the UAE, the news outlet reports.

Trella isn’t the only one pulling back: Trella is following in the footsteps of several companies looking to wind down their Pakistani operations. EFG Hermes is heading for the exit, Careem last year shuttered its food delivery business, and Swvl closed its operations in November. Consumer healthcare operator IDH said in February it had terminated its planned acquisition of labs operator IDC.

REFRESHER- Trella closed one of Egypt’s largest-ever series A rounds in 2021, raising USD 42 mn in a round co-led by Maersk’s VC arm. The company received USD 6 mn in debt financing last year to help it expand in Pakistan and Egypt.

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6

Diplomacy

Egypt, Turkey prepare to reappoint ambassadors. PLUS: Arab League yet to reach consensus on Syria’s readmission

Egypt and Turkey will soon reappoint ambassadors and formally reestablish diplomatic ties following a decade of hostilities, Turkish Foreign Minister Mevlut Cavusoglu said at a presser in Ankara Thursday with his Egyptian counterpart Sameh Shoukry (watch, runtime: 6:40). Following their third round of talks in as many months, the two diplomats agreed to collaborate on developing and strengthening a unified military force in Libya, as well as developing a timeline for holding elections in the country, easing a key source of tensions between them.

El Sisi-Erdogan summit? Shoukry and Cavusoglu reiterated plans to work towards arranging a face-to-face meeting between President Abdel Fattah El Sisi and his Turkish counterpart, Recep Tayyip Erdogan. In a sign of warming ties between the two countries, the two leaders were pictured shaking hands in Doha in November.

Times are changing fast: The Egypt-Turkey relationship has (almost) done a 180 since the devastating earthquake that hit Turkey and Syria in February. Soon after the disaster, Shoukry became the first Egyptian foreign minister to visit Turkey in a decade, a trip that was followed three weeks later by talks in Cairo where Cavusoglu received a warm welcome.

The talks received global attention:Reuters | AP | Bloomberg.

FROM THE REGION-

Syria isn’t yet welcome in the Arab League: A meeting of regional foreign ministers in Jeddah last week ended without reaching a consensus on welcoming Syria back into the Arab League. The top diplomats from Iraq, Jordan, Egypt, and the GCC countries agreed to “intensify consultations” to find a political solution to the Syrian crisis, the Saudi foreign ministry said, but stopped short of announcing they would look to readmit Syria into the forum. The topic will likely be tabled at the next Arab League meeting in the KSA in May, according to AP.

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7

Taxation

Egyptian Tax Authority exempts some self-employed professionals from e-invoicing

If you’re self-employed and dealing with end consumers, you don’t have to worry about e-invoicing: Self-employed professionals including lawyers, pharmacists, and doctors who directly serve end-customers are no longer obligated to register with the Egyptian Tax Authority's e-invoicing system, the head of the authority, Mokhtar Tawfik, said Thursday. Self-employed people will only need to register if they work with entities that are required to file e-invoices, such as companies and other organizations.

E-invoicing has been widely opposed by the self-employed: Doctors, lawyers and pharmacists came out in opposition to the reforms last year, arguing that the costs were prohibitively expensive.

More on this: The Tax Authority has formed joint committees with professional syndicates to address obstacles preventing the self-employed from registering with the system, Mokhtar said.

SAVE THE DATE: Self-employed individuals have until 30 April to register with the tax authority’s e-invoicing system after the Finance Ministry extended the deadline from 15 December.

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8

EARNINGS WATCH

Egypt’s CIRA Education reports a 22% rise in revenues in 1H 2022-2023

CIRA Education reports higher revenues, lower bottom line in 1H 2022-2023:EGX-listed education services provider CIRA Education reported EGP 223.4 mn in adjusted net income in the first half of its 2022-2023 fiscal year, down 25% y-o-y, according to the company’s earnings release (pdf). Revenues, meanwhile, climbed 22% to EGP 1.2 bn as the company expanded its reach, while EBITDA for the period was up 13%. While CIRA’s gross profit grew comfortably despite the high-inflation environment, its bottom line came under pressure on the back of a more than 2x rise in interest expenses.

Topline growth was driven by a rise in tuition revenues: Tuition revenues climbed 22% y-o-y to EGP 1.1 bn in 1H 2022-2023, accounting for 93% of total revenues. Tuition growth was primarily driven by the inauguration of Badr University in Assiut and Futures Language School in Qena, which ramped up enrollment rates. CIRA’s higher education segment generated EGP 677.4 mn in revenues, up 27% y-o-y, while its K12 segment brought in EGP 477.1 mn (+16% y-o-y). The company’s financial year runs September to August, in line with the academic year.

CIRA stable amid challenging conditions: “Despite the headwinds created by increasing interest rates, I am pleased to report that CIRA has maintained its ability to absorb higher interest expenses without the need for further action, with the group financially stable and well-positioned to withstand the changing economic environment,” said CEO Mohamed El Kalla.

Opportunity from crisis: “In light of a depreciating currency which has increased the cost of international education, the current economic climate has created a new market for those seeking local education solutions at international standards,” El Kalla said. “In response, we are in the process of meeting the needs of this growing demographic with the planned launch of micro-campuses in Egypt.”

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9

LAST NIGHT’S TALK SHOWS

Egyptian talk shows cover El Sisi’s calls for peace in Sudan

It was all about Sudan on last night’s talk shows as our talking heads focused on both the violence that broke out in the country on Saturday and Egypt’s response.

What’s happening in Sudan? Fighting between the army and the Rapid Support Forces, a paramilitary group, has claimed over 180 lives and injured 1.8k people since Saturday. The rival forces had been in a delicate power sharing agreement amid Sudan’s planned transition to civilian rule following mass protests that in 2019 ousted the country’s former leader.

The Egyptian stance: President Abdel Fattah El Sisi highlighted Egypt’s continuous efforts to ensure peace in Sudan and introduce a ceasefire during a meeting of the Supreme Council of the Armed Forces (watch, runtime: 5:35 | 4:14.) He also reiterated Egypt’s principle of “non-interference” in the affairs of other countries, calling what is happening in Sudan an “internal conflict.”

The Armed Forces are in contact to ensure the safety of Egyptian troops stationed in Sudan, El Sisi said. “We hope we can retrieve these forces as soon as possible,” he added.

FM Shoukry made the rounds: Foreign Minister Sameh Shoukry has spoken with Sudanese FM Ali Al Sadiq — where he called for unity and peace — as well as with his French, Saudi, Djiboutian, and South Sudanese counterparts, and African Union Chairman Moussa Faki. An emergency meeting on Sunday of the Arab League, requested by Egypt and Saudi Arabia, called for a ceasefire, and the Egyptian Foreign Ministry on the same day called for an immediate cessation of hostilities.

There are some 5k Egyptian students currently studying in Sudan, the majority of whom are currently in Egypt to spend the Eid break with their families, Emigration Minister Soha Gendy told Ala Mas’ouleety (watch, runtime: 14:12). The ministry is in constant contact to check on the safety of those still in Sudan, she added.

EgyptAir suspends flights: Flag carrier EgyptAir said Saturday that it was suspending flights to Khartoum for 72 hours due to the fighting.

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10

EGYPT IN THE NEWS

Foreign press discusses chances of further EGP devaluation

The foreign press is still speculating about the likelihood that we will see another devaluation of the EGP. Twelve-month non-deliverable forwards hit EGP 42.80 to the USD on Thursday, according to Bloomberg. The official rate has remained at 30.94 for more than a month. The recent drop in non-deliverable forwards for the EGP indicates growing market speculation that the CBE will have to devalue the currency for a fourth time in the coming weeks, the business news outlet says, citing Societe Generale EM strategist Gergely Urmossy. “There is consensus among market players — including myself — that the EGP will be devalued,” said Urmossy, adding that “the longer authorities wait with devaluation, the greater the magnitude could be.”

Investors in our USD bonds are looking for higher yields: The spread between Egyptian USD bonds and treasuries stood at 1.2k bps on Thursday — only 54 bps lower than the July record high, Bloomberg says, citing data from JPMorgan.

AND- Bloomberg’s Bobby Ghosh has opinions on the political challenges posed by high inflation.

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11

Also on our Radar

GASC has begun selling yellow corn on the EMX to tackle feed crisis

Yellow corn makes its EMX debut: State grains buyer GASC began offering yellow corn to medium-sized poultry feed factories on the Egyptian Mercantile Exchange (EMX) on Thursday, according to statements by the Supply Ministry (pdf) and the EMX. The offering, announced earlier this month, is part of the government’s efforts to boost the supply of feed amid an ongoing shortage. Reuters also took note.

Extra trading session today: GASC is set to hold a trading session to sell yellow corn on the EMX today and will otherwise sell corn every Monday and Thursday.

Who bought in? The corn was sold in five transactions to an unspecified number of factories with production capacities of 20-100 tons per day — GASC’s target market for the corn sales. Thirty-six feed factories have registered on EMX and others have begun registration procedures, the statements add.

REFRESHER- Poultry feed factories will use the corn to make fodder and sell it to small poultry breeders that have a maximum production capacity of 20k birds per year. Factories must disclose the buyers and the quantities of feed sold.

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12

PLANET FINANCE

IMF’s Africa head calls for urgent debt reform

IMF’s Africa head calls for urgent overhaul of continent’s debt: IMF Africa chief Abebe Selassie is urging the continent’s creditors to reform their handling of its debt as more countries inch towards default. “We need a much more efficient sovereign debt framework … We need to be sure that resources are going to support countries rather than being used to service unsustainable debts,” Selassie told the Financial Times. He called for a “Gleneagles-like moment” to help pull African nations out of the debt cycle — referring to the 2005 G8 summit where a sweeping debt relief package was agreed for indebted African countries.

EGX30

17,671

+5.6% (YTD: +21.1%)

USD (CBE)

Buy 30.84

Sell 30.94

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,164

+1.2% (YTD: +6.5%)

ADX

9,646

+0.2% (YTD: -5.5%)

DFM

3,514

+0.6% (YTD: +5.3%)

S&P 500

4,151

+0.3% (YTD: +8.1%)

FTSE 100

7,880

+0.1% (YTD: +5.7%)

Euro Stoxx 50

4,368

-0.5% (YTD: +15.1%)

Brent crude

USD 84.76

-1.8%

Natural gas (Nymex)

USD 2.29

+0.4%

Gold

USD 2,006.80

-0.0%

BTC

USD 29,512

-2.8% (YTD: +78.3%)

THE CLOSING BELL-

The EGX30 rose 5.6% at Thursday’s close on turnover of EGP 1.7 bn (on par with the trailing 90-day average). Local investors were net sellers. The index is up 21.1% YTD.

In the green: CIB (+14.5%), Oriental Weavers (+6.9%) and Telecom Egypt (+4.0%). CIB shares popped thanks to a single, last-minute trade at the closing bell that looks to us like someone botched the execution of a buy order.

In the red: Orascom Construction (-1.8%), Rameda Pharma (-1.4%) and CIRA Education (-1.3%).

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

Published every Tuesday in EnterpriseAM.

Read going Green
13

Going Green

How can Egypt tap the growing ecotourism market?

What needs to happen to get ecotourism booming? Despite Egypt’s rich natural diversity and world-famous protected areas, the local ecotourism industry is yet to take off. Enterprise spoke to a handful of key players in the industry, and while they may disagree on the reasons why Egyptian ecotourism’s potential hasn’t yet been realized, it looks like they all agree on one thing: The need for clear guidelines and safety measures that allow visitors to explore the country as freely as possible.

Eco and adventure tourism are growing global industries: The global adventure tourism market is forecast to reach USD 1.3 tn this year from USD 444 bn seven years ago while eco-tourism is expected to more than double to USD 374.2 bn between 2022 and 2028.

And it has the potential to be a lucrative source of income for Egypt: While there are no official statistics for local eco-tourism due the widespread informality in the sector, Environment Ministry statistics obtained by Enterprise show that the number of people visiting the country’s protected areas increased almost 75% to 21.6 mn between FY 2018-2019 and FY 2021-2022.

Egypt doesn’t have a unified set of rules for eco-tourism: Although many laws and ministerial decrees have been issued for the protection of the environment and the promotion of environmentally-friendly touristic activities, there is a lack of an overarching legislation that links tourism and environmental activities, industry figures tell us. Neither are there clear rules that identify the roles and responsibilities of different government agencies as well as other stakeholders, they say.

Much of the industry remains informal: Companies that provide adventure and camping experiences are yet to be considered legal entities due to opposition from industry figures keen to protect revenues from the lucrative haj and umrah pilgrimages, Ahmed Yehia, founder and CEO of Eco Group, tells Enterprise. “There is huge resistance from the Egyptian Tourism Federation because traditional travel companies receive a quota from Saudi Arabia for tickets to the haj and umrah … if the door opens for new companies the number of visas will be split among a bigger number of companies and they will lose money,” he says.

There are strict rules on camping: While camping is permitted in certain areas of some of the country’s 30 protected areas, the rules are tight for locals and even tighter for foreigners — a situation that industry figures say is preventing the sector from reaching its potential. Camping requires identity documents, security permits, a tour operator and a trip itinerary. “This is just against the concept of ecotourism,” says Hala Barakat, environmental and heritage consultant. “I wake up in the morning, I go explore a place, I may want to spend the night so I take out my sleeping bag and sleep for the night. This spontaneity won’t work if you have to follow a guide and a program.”

Security can often be tight: “Visitors who come to our ecovillage are escorted by tourist police who remain with them all the time, preventing them from even walking to the antiquity site which is less than 2km,” says Mervat Abdel Nasser, founder of New Hermopolis Eco Village in Minya. “They also face lots of restrictions in terms of where to go and for how long. They can’t even visit a facility like ours if they happened to hear about it after arriving in the area without prior planning. This issue is preventing lots of visitors from visiting middle Egypt, let alone camping in the desert,” she tells us.

This could be pushing tourists to look to other countries in the region: “Because of the camping and adventure travel restrictions, Saudi Arabia is becoming more attractive than Egypt, even though our nature and desert is much more diversified,” Aamen Abuellil, founder and CEO of adventure travel operator Ghamer, tells us.

Some argue that security is necessary to protect travelers and the environment: “Renowned photographers used to camp in Egypt for days to see the wildlife but because of overhunting for over a century, some of our great wild animals are now extinct,” says Mohammed Mabrouk, founder of Sahara Safaris and an expert on desert safaris and ecotourism. "Although the majority of travelers are responsible, there are some cases who went off grid and they disappeared or died. There has to be clear safety guidelines to protect travelers and the environment," he adds.

The good news: Eco-lodges are now legit. Last month, a decree by the Tourism Ministry formalized eco-lodges for the first time, allowing them to exist as official legal entities. This came after years of work from industry leaders like Yehia. “This is our success story after years of work,” he says, noting that there is work still to be done before eco-lodges are seen as legitimate eco-tourism destinations. “A lot of lodges open and they call themselves eco-lodges, but when tourists go they find ACs and minibars — basically a hotel room. This causes them to lose trust in the term and the place,” he tells us.

The law is one of several steps taken by the Environment Ministry to promote the industry: The ministry is working with international NGOs on initiatives such as Eco Egypt and Green Fins to make eco-tourism destinations more accessible to tourists, and has begun inviting investors to provide finance to develop the country’s protected areas.

The ministry is also working on unified regulations: “As the current legal framework was designed for mass tourism, we are working across with all different stakeholders to formalize the eco-tourism legal framework,” Hoda Elshawadfy, assistant to the minister of environment for ecotourism affairs, tells us. “We are aware that we need to do a lot of work to coordinate between tourism and environment ministries and relevant stakeholders, and train the different stakeholders on ecotourism,” she adds, calling it “the future of travel.”

Planning for Egyptian eco-tourism’s future: “Security needs to work with environment rangers of the ministry and ecotourism industry leaders to make a plan to enlarge Egypt’s protectorates,” Mabrouk says. “When there is a clear plan and a clear budget, a call needs to be made for investors to come from both inside and outside Egypt. That should take Egypt to the next level and we can compete with the market worldwide.”

** Next week: In the second part of this series, we look at the practices of locals and travelers, and how traditional travel companies and tour operators are responding to the eco-tourism trend.

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CALENDAR

APRIL

April: SCZone roadshow in China.

April: SCZone to begin providing ship bunkering services in the Suez Canal’s ports.

20-25 April (Thursday-Tuesday): Holiday for the public and private sectors as well as banks in observance of Eid El Fitr and Sinai Liberation Day.

21 April (Friday): Eid El Fitr (TBC).

28 April (Friday): First day of daylight saving time.

30 April (Sunday) House of Representatives back in session.

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): Deadline for corporate tax returns.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

1 May (Monday): Deadline to apply to VC funds program by GIZ Egypt, AfricaGrow and Dutch development bank FMO.

1-5 May (Monday-Friday): African Private Equity and Venture Capital Association annual summit, Four Seasons Nile Plaza, Cairo.

2 May (Tuesday): National Paints Holding’s and Eagle Chemicals’ MTOs for Pachin ends.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 May (Wednesday): National Dialogue begins.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

7 May (Sunday): Senate back in session.

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

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

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

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

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

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

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.

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

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.

19-21 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.

18 July (Tuesday): Islamic New Year.

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.

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

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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