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Tuesday, 14 Nov 2023

What We're Tracking Today
Economy
Energy
Logistics
Debt Watch
Legislation Watch
War Watch
Earnings Watch-
Last Night’s Talk Shows
Planet Finance
Going Green
Calendar

Kuwait rolls over USD 4 bn deposit at CBE

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Today at a glance

1

Economy

Kuwait rolls over USD 4 bn CBE deposit -report.
2

Energy

Israeli gas exports to Egypt increase as Chevron restarts production at Tamar field.
3

Logistics

DP World to begin construction of Sokhna port logistics zone this month.
4

DEBT WATCH

Afreximbank extends USD 3 bn in credit facilities to Egyptian firms.
5

Banking

Fitch cuts bank ratings following sovereign downgrade.
6

What We're Tracking Today

Philip Morris hikes cigarette prices by up to 20%.
7

Also on our Radar

Infinity Power signs a 20-year battery energy storage contract with Senegal.
8

WAR WATCH

Israel continues siege of Gaza City hospitals; UN says it can no longer distribute aid as fuel runs out.
9

Going Green

How green accelerators address the challenges facing startups in Egypt.

Tuesday, 14 Nov 2023

What We're Tracking Today
Economy
Energy
Logistics
Debt Watch
Legislation Watch
War Watch
Earnings Watch-
Last Night’s Talk Shows
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

Philip Morris hikes cigarette prices by up to 20% following cigarette tax hike

Good morning, wonderful people, and happy hump day to you all. We have a packed issue for you this morning, with highlights including Kuwait rolling over its CBE deposit and another uptick in imports of natural gas from Israel after supplies were cut at the outset of the war.

Also good news: DP World is breaking ground on a new logistics zone this month and Afreximbank has extended some USD 3 bn worth of credit to local corporates doing business across Africa.

PSA- There’s never been a better time to quit smoking: Cigarette manufacturer Philip Morris has hiked the price of smokes by up to 20% in the wake of the cigarette tax hike signed into law last week, according to a price list (pdf) published by the company yesterday. The price of a pack of Merit has risen 15% to EGP 74 while the cheaper L&M brand will now go for EGP 50 a pack, up 19%. Marlboro prices have increased 17-20%, with a standard pack priced at EGP 69 and a pack of Crafted at EGP 59.

A stubborn parallel market: State-owned tobacco manufacturer Eastern Company also increased its prices last week, but this hasn’t done much to squeeze the black market, where cigarette prices have risen for local and foreign brands by EGP 5 and EGP 10 respectively, Eastern CEO Hany Aman told Al Borsa.

Remember: Legislative amendments passed last week introduced a EGP 0.50 VAT on all tobacco products — and permit manufacturers to raise their prices by 12% annually for the next five years without moving into a higher per-pack tax bracket. The idea is to help companies finance production costs to increase supply and undercut wholesalers who have been selling cigarettes far above the sticker price.

WATCH THIS SPACE-

Bartering to beat the FX crunch? The central bank and Trade Ministry are reportedly studying possible barter trade agreements with Russia, Turkey, and some African countries in a bid to reduce pressure on the country’s FX stocks, Asharq Business reported, citing two anonymous government sources. Egyptian Chamber of Chemical Industries head Sherif El Gabaly said that it is likely that we would swap fertilizer for Kenyan tea if the barter system gets the go-ahead.

HAPPENING TODAY-

It’s day one of the Egypt VC Summit: Venture capitalists have descended on the Hilton Hotel in central Cairo today for the Egypt VC Summit, which will run until tomorrow. Flat6Labs’ Dina El Shenoufy, GAFI’s Hossam Heiba, FRA’s Mohamed Farid, and other industry players are set to take to the stage.

It’s Algeria and diaspora day at theIntra-African Trade Fair that has been taking place all week at Cairo’s Hilton Hotel.

The Environment Ministry will hold its first Harm Reduction Summit in Cairo today. “The summit aims to illuminate the concept of harm reduction and mitigate the negative effects of harmful practices on the environment, health and society,” according to apress release (pdf).

THE BIG STORIES ABROAD-

It’s another morning of US politics dominating the international front pages, other than the war on Gaza (which we dive into in this morning’s War Watch, below).

The Supreme Court gets an ethics update: This morning, the international press is giving a lot of ink to the US Supreme Court adopting its first formal code of conduct. The move comes following a series of revelations about justices accepting undisclosed trips, gifts, and a bunch of other favors they have been cashing in. (Associated Press | Reuters | Bloomberg | Financial Times | New York Times | Washington Post | WSJ | BBC)

ALSO- Former UK prime minister David Cameron has made a shock return to frontline British politics after Prime Minister Rishi Sunak went ahead with an emergency cabinet reshuffle. Cameron has been named foreign secretary, replacing James Cleverly who takes the place of Suella Braverman as home secretary. (BBC | Financial Times)

Al Qahera News cameraman killed in Gaza: Al Qahera News cameraman Ahmed Fatima has been killed in Gaza, the head of the news department at the channel’s parent company United Media Services said yesterday. The crew was at Al Shifa Hospital covering the Israeli military’s siege when the broadcaster lost contact with them, Ahmed El Tahry wrote on Facebook. The Journalists’ Syndicate condemned “in the strongest possible terms the continued Zionist aggression against journalists” and called for the prosecution of Israeli military officials for war crimes.

Israel has targeted and killed 50 journalists in Gaza since the conflict started less than six weeks ago, the Palestinian Red Crescent said yesterday. The war made last month the deadliest for journalists since records began in the early 1990s, according to the Committee to Protect Journalists.

When you need to defend a legally dubious war, who you gonna call?Tony Blair is reportedly being headhunted by the Israeli government to mount a defense of its war effort and quieten the global outcry about its devastating impact on Gaza’s civilians. Israeli PM Netanyahu hopes that Blair’s experience as a Middle East envoy will “temper international concerns over the civilian cost of Israel’s campaign in Gaza,” Israeli media wrote yesterday, citing several unnamed senior officials. Blair’s office said the former UK prime minister is open to getting involved but stressed nothing has been decided yet.

MARKET WATCH-

Wall Street banks are split on where they see the Federal Reserve’s interest rate policy heading over the coming year or two as the central bank starts easing in response to cooling inflation. UBS strategists see the Fed slashing rates to 2.5-2.75% by the end of 2024, with the first rate cut coming in March, Bloomberg wrote. Morgan Stanley also sees deep cuts starting June 2024, bringing rates down to 2.375% by the end of 2025. Goldman Sachs is less optimistic, expecting the first 25 bps cut in 4Q 2024, to be followed by quarterly cuts through mid-2026, leaving rates at 3.5-3.75%.

Where does the Fed stand? The Fed’s latest projections show two 25 bps rate cuts next year and rates going down to 3.9% by the end of 2025. Rates currently stand at a 22-year high of 5.25-5.5% following an aggressive monetary tightening cycle.

CIRCLE YOUR CALENDAR-

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: How green accelerators address the challenges facing startups in Egypt.

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2

Economy

Kuwait renews USD 4 bn deposit at Egypt’s central bank -report

Kuwait has renewed a USD 4 bn deposit with the Central Bank of Egypt (CBE) as officials in Cairo continue to battle an FX crunch, Asharq Business reported, citing what it said were government officials. The deposit includes two USD 2 bn tranches that mature in April and September of next year.

Remember: Kuwait has had USD 4 bn deposited at the CBE since mid-2015 and has continuously rolled it over.

Kuwait pulling the plug would have sent us back to 2017: FX reserves have slowly risen in recent months after we shed some used USD 8 bn following Russia’s invasion of Ukraine; the CBE’s reserves currently stand at USD 35.1 bn. Reserves would have declined to the lowest level since April 2017 had Kuwait taken back its money. Saudi Arabia, the UAE, Qatar, Libya, and Kuwait have some USD 30 bn on deposit at the central bank, accounting for 85.5% of our reserves.

And more might be coming: Chatter in the local press last month claimed in unconfirmed reports that Saudi Arabia and the UAE could deposit another USD 5 bn at the CBE, although this could also refer to a rollover of maturing portions of existing deposits. Abu Dhabi Commercial Bank chief economist Monica Malik recently said she had noted a “change in sentiment” of Gulf countries following the outbreak of the war on Gaza away from their recent reluctance to provide financial support to the country.

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3

Energy

Israeli gas exports to Egypt increase as Chevron restarts production at Tamar field

We’re getting more gas from Israel as the Tamar field resumes production: Israeli natural gas exports to Egypt have risen by 60% to 350-400 mn cubic feet a day, up from 250 mn earlier this month, Bloomberg reported, citing a person it says is familiar with the situation. The report came as Chevron announced it had resumed production from the Tamar gas field, which was shut last month due to safety concerns stemming from the conflict in Gaza.The company expects production at the field to reach full capacity in the coming days, Reuters reported yesterday, citing industry sources.

In perspective: This is still only half of pre-war import volumes, which totalled 800 mn cubic feet per day.

EastMed pipeline could resume next: The East Mediterranean Gas pipeline, which runs from Israel’s Ashkelon to Egypt’s Arish, is also likely to restart operations this week, Bloomberg reported, citing three people it says are familiar with the matter. Chevron has been exporting gas via the Arab Gas Pipeline since EMG’s closure.

BACKGROUND- Gas flows to Egypt have been gradually picking up this month after falling following the closure of the Tamar field. The Madbouly cabinet said at the end of October that gas imports had fallen to zero. An industry insider we spoke to at the time said gas imports had never dropped below 100 mn cubic feet per day — a fraction of the pre-war volume.

We’ll be compensated:Chevron and Delek Drilling have offered to compensate Egypt for the reduced gas shipments “once the situation stabilizes,” Asharq Business quoted an unnamed Egyptian government official as saying yesterday.

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4

Logistics

DP World to start building Sokhna port logistics zone in November 2024

A new Ain Sokhna logistics zone will soon be in the works: Emirati state-owned port operator DP World will break ground on its USD 80 mn logistics zone at Ain Sokhna port this month, the company said in a statement(pdf). The company inked the construction agreement with the Suez Canal Economic Zone’s Main Development Company (MDC) back in August 2022 and the first phase is expected to be completed by the end of 2024 and is expected to create 6k jobs, according to the statement.

DP World is no stranger to Egypt: The company has so far deployed USD 1.3 bn in the country, said DP World CEO and Chairman Sultan Ahmed bin Sulayem. DP World is also the main operator of the Ain Sokhna port and has investments including a USD 520 mn expansion ; it is currently adding another 500K TEUs of capacity at the facility, according to the National.

DP World isn’t the only one interested in the Ain Sokhna Port: Fellow Emirati shipping and logistics giant Abu Dhabi Ports is eyeing up big investments in Ain Sokhna and and said in 2021 that it could invest USD 500 mn to develop a terminal at Ain Sokhna port and another at Safaga port. The port has also been undergoing a USD 20 bn redevelopment plan that began in 2021 that saw Hutchison Ports, Cosco and CMA CGM sign a contract to build a new container terminal at the port that would triple the port’s annual capacity.

DP World says it is committed to Egypt: The company will continue to invest in the Ain Sokhna port and other logistics services to bolster maritime trade and support the Egyptian economy, the statement reads.

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Fitch Ratings has downgraded the credit ratings of four major Egyptian banks a week after it cut the country’s sovereign credit rating deeper into junk territory. The agency cut the ratings of Banque Misr, National Bank of Egypt, CIB, and Banque du Caire to B- from B, reflecting the impact of the government’s credit profile on the lenders, it said yesterday.

The rationale: Each of the banks hold sizable amounts of government debt on their books and have lent significant sums to public-sector companies, exposing them to the elevated default risk of the government. Economic conditions, including the FX shortage, heightened inflation, and geopolitical uncertainties, also weighed on the banks’ ratings, Fitch said.

BACKGROUND- Fitch lowered our credit rating to B- from B earlier this month on concerns about the sustainability of government debt, becoming the third major rating agency to do so since October. Moody’s and S&P Global Ratings both lowered their ratings in October.

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5

DEBT WATCH

Afreximbank extends USD 3 bn in credit facilities to Egyptian firms

The African Export-Import Bank (Afreximbank) has agreed to extend USD 3 bn of credit facilities to Egyptian companies to help support their infrastructure projects across Africa, Al Masdar reported yesterday. The African multilateral lender signed the agreements at this week’s Intra-African Trade Fair in Cairo:

  • Hassan Allam Holding will take out a USD 200 mn credit facility to help funds in at least six African countries;
  • Elsewedy Electric signed an agreement for a USD 300 mn facility;
  • Arab Contractors will receive a USD 200 mn facility;

The recipients of the remaining USD 2.3 bn have not been publicly disclosed.

ALSO- An e-platform for engineering contracts: The bank partnered with the International Cooperation Ministry to launch a digital platform for engineering, procurement and construction contracts, as part of the government’s plan to boost infrastructure investments, the ministry said in a statement.

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6

LEGISLATION WATCH

Egyptian House of Representatives approves legislative amendments to SMEs, Child acts

It was another busy day at the House, with MPs approving amendments to the SMEs Act and Child Act, as well as a number of presidential decrees.

#1- Changes to the SMEs Act: MPs yesterday gave final approval to amendments to the 2020 SMEs law that grants financing handed out by the SMEs Development Agency the same exemptions and benefits afforded under the Banking Act. The amendments also bring the SMEs Act up to date so they align with the 2020 Banking Act rather than the now repealed 2003 Banking Act.

#2- Stronger child protection rules: The House approved government-drafted amendments to the Child Act to offer more social protection to children and mothers as well as extend maternity leave rights to adoptive mothers of babies less than six months old. The amendments will also introduce tougher penalties for people who fail to properly register the birth of their children or register the same child more than once. The amendments will be up for a final vote in an upcoming session.

#3- A vote in favor of three presidential decrees: The House greenlit bills banning doubletaxation on earnings generated from air transport between Egypt and Brazil, a CAD 10 mngrant from the Canadian government to enhance food security and fight climate change, and Egypt joining the Basel Convention, which aims to regulate the trade and disposal of hazardous waste.

House committee approves Abu Qir metro funding: The House Transport Committee approved an agreement that will see the Asian Infrastructure Investment Bank provide EUR 250 mn in financing for the redevelopment of the Abu Qir railway in Alexandria. The project seeks to convert the railway into an electric, low-carbon, underground metro.

What’s next: The House will reconvene on Sunday, 19 November.

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7

WAR WATCH

Israel continues siege of Gaza City hospitals; UN says it can no longer distribute aid as fuel runs out

Things go from bad to worse inside Gaza’s hospitals: Thousands of Palestinians have fled hospitals in the north as Israel presses ahead with its ground invasion targeting Gaza’s healthcare facilities. All hospitals in northern Gaza are now out of service, including the territory’s largest medical complex Al Shifa, where hundreds of patients remain inside without access to electricity and water. Medical supplies are dwindling as the Israeli bombardment prevents aid trucks from reaching the facility. At least 32 patients, including six premature babies, have died at Al Shifa in the past three days since fuel ran out.

The UN can no longer distribute aid in Gaza: The humanitarian relief effort in Gaza will “grind to a halt” within 48 hours unless fuel is allowed in, an official at the UN agency for Palestinian refugees said yesterday. Signs of collapse were already apparent yesterday as the UN’s aid trucks and two main water distributors ran out of fuel, depriving 200k people of drinking water and preventing any further intake of aid from the Rafah border.

The human shield narrative is wearing thin: Israel’s official line that Hamas lie in hiding within Gaza’s hospitals has been strongly rejected by Al Shifa’s management and the Palestinian Red Crescent. Human Rights Watch could not corroborate Israel’s claims.

ON THE GROUND- At least 11,240 Gazans including 4,630 children have been killed since 7 October | 102 UN staff have lost their lives | Communications are expected to start failing on 16 November as telcos run out of fuel.

HOSTAGES- Hamas has offered to release 70 women and children in return for a five-day truce to allow in aid, spokesperson Abu Obaida told Qatari mediators. An Israeli official said separately that the two sides could reach an agreement to release all women and children in return for a temporary ceasefire. This comes a day after it said it was suspending negotiations due to Israel’s treatment of Al Shifa.

AID- Egypt has earmarked 37 hospitals across eight governorates to receive injured Palestinians | A Turkish vessel carrying equipment to set up eight field hospitals has arrived at Al Arish.

DIPLOMACY- Indonesia: US needs “to do more to stop the atrocities in Gaza” | EU foreign policy chief Josep Borrell will travel to Palestine, Israel, Bahrain, Saudi Arabia, Qatar, and Jordan this week.

EVACUATIONS- Hundreds of European and Arab foreign nationals and dual citizens crossed the Rafah border crossing into Egypt yesterday.

REGIONAL ESCALATION- Two Lebanese people were killed and five Israeli soldiers were injured during an exchange of fire between Hezbollah and the IDF | Jordan’s King Abdullah warned that Israeli settler attacks on Palestinians in the West Bank could broaden the conflict.

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8

EARNINGS WATCH-

Orascom Development Egypt and Egypt Kuwait Holding release 3Q 2023 results

ODE had a strong quarter, backed by record sales: EGX-listed Orascom Development Egypt (ODE) saw its net income rise 53% from the year before in 3Q 2023, reporting a top line of more than EGP 1 bn, according to an earnings release (pdf) out yesterday. The property developer logged its highest-ever quarterly net real estate sales, which more than doubled to EGP 5.6 bn. Revenue rose 45% y-o-y to EGP 4.2 bn.

The hotel side of the business had a good quarter: Revenues for the company’s hotels jumped over 100% in 3Q 2023 on the year before to EGP 895 mn.

For the year to date: ODE’s bottom line is up 33% in the first nine months of 2023 from the same period last year to over EGP 2 bn.

EK HOLDING-

EK Holding reported net income of USD 36.1 mn in 3Q 2023, down from USD 63.4 mn in the same quarter last year. Revenues for the quarter came in at USD 201.4 mn, down from USD 273.0 mn in the comparable quarter of 2022. What pundits call a “tough comp” are at play: The company turned in extraordinarily strong numbers when global commodity prices spiked immediately after Russia’s invasion of Ukraine last year.

On a year-to-date basis, the company’s earnings are down, but still above pre-Ukraine war levels: Egypt Kuwait Holding (EKH)’s revenues fell 31% y-o-y to USD 588 mn, after reaching record highs in 9M 2022 as global urea prices reverted to historical averages, the company said yesterday (earnings release | press release, both pdf). Net income for the same period came in at USD 137 mn, down around 50% on the same period last year.

EKH has upped its Egypt investments to USD 200 mn this year: EKH has invested some USD 200 mn in 2023, up from the USD 170 mn it announced earlier in February, according to EKH chairman Loay Jassim Al Kharafi. The funds were allocated to capital expenditure and increasing its holdings in subsidiaries by buying out minority shareholders. The increased investments reflect the firm’s “confidence in the growth potential of EKH’s portfolio companies,” Al Kharafi added.

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9

LAST NIGHT’S TALK SHOWS

Egyptian news host Amr Adib takes aim at the EGP and sugar price hikes

Amr Adib broke ranks last night from most of his fellow hosts last night who were fixated on the war on Gaza, by shifting his attention to the EGP exchange rate on the parallel market and rising sugar and cigarette prices.

The EGP’s fall in the parallel market has left Adib perplexed: The currency has been stuck at near EGP 50 in the parallel market for the past two weeks, El Heyaka’s Amr Adib said (watch, runtime: 2:43) before bringing on economist Samir Sabri to weigh in on the issue (watch, runtime: 11:13). “This is not the real or fair value of the EGP … No country can have a sustainable economy with such a huge gap between the official and parallel market exchange rate [for the USD]. The gap is so big that it makes it difficult to estimate the cost of projects or investments or attract foreign investors,” said Sabri, who is also a member of the National Dialogue’s investment committee.

Blame consumer worries, they said: “Over the past two weeks, the panic over the collapse of the EGP against the USD increased … The war near our borders, the major drop in remittances from Egyptians abroad, and the dip in tourism has increased the amount of currency speculation,” Sabri told Adib. Most analysts had suggested a fair value for the EGP was something on the order of 36 to the greenback at the end of 2023 and 38-39 by the end of 2024, Sabri added.

What’s the parallel market price? One greenback is going for EGP 48.68, to hear Adib tell it, though pricing and availability vary widely in the parallel market, where liquidity and pricing are opaque by definition.

Also stressing out Adib: Sugar prices, which jumped from their usual EGP 27-30 per kilo to EGP 34-40. The entire world is battling heightened inflation, but commodity prices never see such dramatic jumps, Adib said (watch, runtime: 5:21). “Traders are taking advantage of the war on Gaza and [sugar being sent to Gaza as] Egyptian aid to hike up prices,” he added, calling on traders to take it easy on already cash-strapped consumers.

What’s behind the rise? “We are nearing the end of the sugar beet and sugar cane agricultural cycle. We are also nearing Ramadan, which pushes food producers and traders to up their sugar reserves, increasing the demand on sugar,” Assistant Supply Minister Ibrahim Ashmawy told Ala Maso’uleety’s Ahmed Moussa (watch, runtime: 6:33). “We are a free market and obliging traders to respect a certain price is against the constitution.”

Cigarette prices were also driving Adib nuts: State-owned tobacco giant Eastern Company last week hiked prices between 12-33%, which in turn increased the prices cigarettes are going for in the black market even further, with some brands going for as high as EGP 125 per pack, Adib said (watch, runtime: 1:56). “You can’t ask people to quit smoking,” Adib told his viewers and argued that the price hikes will not prevent people from smoking.

Live from Rafah: Kelma Akhira’s Lamees El Hadidi (watch, runtime: 6:59 | 2:47) left her studio last night and visited the Rafah border to bring us the latest developments on wounded Gazans receiving treatment at the Arish hospital and the latest on aid convoys going into the besieged territory.

Wall-to-wall Gaza coverage dominated most of yesterday’s talk shows:Masa’a DMC interviewed former Egyptian diplomat Gamal Bayoumi (watch, runtime: 6:01) to discuss all that Egypt has done for the Palestinian cause, while Al Hayah Al Youm spoke to the head of central administration of the North Sinai Governorate on all things Gaza aid (watch, runtime: 7:52). While Ala Maso’uleety spoke to Arab League spokesperson Gamal Roshdy to reiterate the Arab stance on the issue (watch, runtime: 18:39).

COMING SOON TO A TV NEAR YOU- Get ready to tune in for another one-on-one with Satterfield: Yahduth Fi Masr’s Sherif Amer sat down (watch, runtime: 0:50) with the Biden administration’s Middle East humanitarian envoy David Satterfield for an interview that will be aired tonight on MBC Masr. In case you missed it, El Hadidi hosted Satterfield earlier this week for an interview where he came off as a tad unsympathetic for a humanitarian envoy.

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ENERGY-

#1- Infinity Power to set up battery storage system in Senegal:Infinity Power — a joint venture between our friends at Infinity and UAE renewables player Masdar — has signed a 20-year agreement with Senegalese national utility Senelec to supply 40 MW of clean energy to the country’s grid through a battery energy storage system, it said in a statement (pdf) yesterday. The system will be supplied with energy generated by Infinity’s 158.7 MW Taiba N’Diaye wind farm and will help Senelec stabilize the country’s electrical grid. The value of the agreement was not disclosed.

^^ We have the full details in this morning’s Enterprise Climate.

#2- We’re getting more oil from Kuwait: The Madbouly government wants to increase its imports of Kuwaiti crude oil by 33% to 3 mn barrels per month starting the new year, Asharq Business citing an unnamed government official. Under the current contract, Egypt imports some 2.25 mn barrels of Kuwaiti crude a month, it also gives Egypt a 9-month grace period on payments. The move to boost Kuwaiti oil imports comes on the back of the Egyptian General Petroleum Corporation’s plan to increase the country’s crude imports by 40% starting in FY 2024-2025. By bringing monthly crude imports to 7 mn barrels from 5 mn currently, the government hopes to start refining more petroleum products locally to reduce our import bill from refined oil products.

DEBT-

CBE auctions fresh t-bills to refinance FX debt: The Central Bank of Egypt raised USD 1.61 bn in a t-bill auction yesterday to refinance existing debt, according to data on its website. The bills were sold at an interest rate of 5.149%, 55 bps higher than the maturing bills sold in November 2022.

FINTECH-

#1- More e-payment platforms hitting the market: Banque du Caire’s digital paymentssubsidiary Taly plans to launch two e-payment platforms next month — one targeting individuals and another targeting businesses — Taly CEO Magdy Hassan told Al Borsa. The platforms will offer businesses digital payment acceptance, collections, and finance, meanwhile individuals will have access to Taly-issued prepaid cards and invoicing. Last month, Tally started offering merchants payment services, between points of sale and e-commerce payment systems. It’s aiming to have 1 mn clients on board by the end of 1Q 2024 and to record transactions worth some EGP 1 bn during the same period.

A capital increase down the line: The company wants to double its capital to EGP 1 bn, Hassan said, without providing a timeline. The additional capital will help the company move forward with any potential investment plans. The company kicked off operations in March 2023 with a capital of EGP 500 mn.

#2- QNB wants to set up a digital bank: QNB Al Ahli has submitted an application for a digital banking license to the Central Bank of Egypt (CBE), CEO Mohamed Bedeir told Al Borsa. The bank is working to fulfill the recently-amended digital banking regulations, requiring digital banks to possess a minimum of EGP 2 bn in capital.

AVIATION-

EgyptAir is adding more aircraft to its fleet: National flag carrier EgyptAir has placed an order for 18 new aircraft from Boeing to be delivered between early 2025 and 2026, according to a press release. American outfit Air Lease Corp is providing the aircraft on a long-term lease.

Other regional carriers are doing the same: Mideast airlines made purchases of over 100 aircraft on day one of the Dubai Air Show, reflecting confidence in a tourism bounce-back even as regional tensions flare, the Financial Times reports. State-owned Emirates and sister airline FlyDubai are among those making the sales team at Boeing very, very happy.

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10

PLANET FINANCE

Dubai is taking its taxi business to the DFM next month

Dubai Taxi is going public next month:Dubai’s Road and Transport Authority (RTA) is taking its taxi business to the Dubai Financial Market next month, offering 624.8 mn shares — representing a 25% stake — at a nominal value of AED 0.04 per share, the company said in its intention tofloat(pdf). The offering is expected to raise some USD 300 mn, Bloomberg previously reported. In preparation for the listing, the government has changed the company’s legal status into a public joint stock company and rebranded it from Dubai Taxi Corporation to Dubai Taxi Company.

The timeline: The Dubai Taxi Company (DTC) will hold an eight-day book building process from 21-28 November for retail investors and from 21-29 November for institutional investors. The final offer price will be announced a day later, with the company expected to make its DFM debut on 7 December.

ADVISORS- Citi, Emirates NBD and Merrill Lynch are joint global coordinators for the transaction. Joining them on joint bookrunner duties are our friends at EFG Hermes UAE as well as FAB. Emirates NBD is lead receiving bank, while our friends at Mashreq Bank are also serving as receiving bank alongside FAB and others. Rothschild is serving as independent financial advisor.

More to come? The transport authority is looking to list its parking subsidiary next year, also as part of the government’s plan to list 10 state-owned companies, Bloomberg wrote.

EGX30

23,955

+0.2% (YTD: +64.1%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

19.25% deposit

20.25% lending

Tadawul

10,790

-0.4% (YTD: +3.0%)

ADX

9,537

-0.2% (YTD: -6.6%)

DFM

3,983

+0.3% (YTD: +19.4%)

S&P 500

4,412

-0.1% (YTD: +14.9%)

FTSE 100

7,426

+0.9% (YTD: -0.4%)

Euro Stoxx 50

4,232

+0.8% (YTD: +11.6%)

Brent crude

USD 82.52

+1.3%

Natural gas (Nymex)

USD 3.20

+5.4%

Gold

USD 1,950.20

+0.7%

BTC

USD 36,511.39

-1.8% (YTD: +122.6%)

THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 3.4 bn (32.4% above the 90-day average). Foreign investors were net buyers. The index is up 64.1% YTD.

In the green: Telecom Egypt (+12.4%), Eastern Company (+7.3%) and Alexandria Containers and Cargo Handling (+2.4%).

In the red: Mopco (-3.9%), Abu Qir Fertilizers (-3.2%) and Heliopolis Housing (-2.9%).

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

Published every Tuesday in EnterpriseAM.

Read going Green
11

Going Green

How green accelerators address the challenges facing startups in Egypt

How green accelerators are addressing the challenges for climate startups: Last week, we explored how climate-focused accelerators are helping green startups in Egypt gain access to capital and funding. In the second installment of our two-part series, we take a look at the technical, regulatory and economic barriers that startups face, and how accelerators are helping startups navigate and mitigate such challenges.

There’s a gap in finding the correct technical support: Access to tech support is a significant barrier startups face when scaling, especially in innovative fields like biotech or AI built to support green initiatives. Most state-owned commercial banks such as NBE and Banque Misr offer technical assistance to SMEs, but these are often not tailored enough to the needs of climate startups — nor are many accelerator programs, which offer general business development support, but fall short of sector-specific climate tech support.

We need more climate-focused accelerators: Given that climate tech is a nascent industry, focused tracks for each sector would be beneficial, project lead of ClimAccelerator Egypt Ola El Houfy told Enterprise. “If you put biotech next to fintech, they’re not quite the same, so the benefits won’t be tailored. We were able to offer an advanced program based on the needs of the startups – we ran a co-creation phase prior to the programme asking green startups to tell us exactly what they needed,” she added.

Still, it’s not always easy to source expertise: ClimAccelerator partnered Schneider Electric to offer startups workshops led by experts. “For one of our startups Egymag, which produces protein from insects, we ended up having to outsource tech support from abroad,” El Houfy said. Flat6Labs Chief Programs Officer Yehia Houry — an accelerator which offers tech support on its Ebtekar agritech program — agreed that it has been difficult to find the correct experts tailored to each startup’s niche, and has resorted to running multiple cycles of the accelerator programme in order to allow enough time to source the appropriate support.

Egypt’s legal environment is an obstacle to startups: Egyptian startups face rigid regulations surrounding business administration, licensing, and compliance processes. Founders often lack the awareness of hiring, contracting, insurance and labor rights, according to a 2021 AUC report (pdf) on startups and human capital management in Egypt. Moreover, outdated employment laws are not suited to a dynamic labor market. “Hiring people is tedious work — we often end up turning to consultants to help with the legal side of things,” Changelabs CEO Karim Samra told us.

Many startups are, for regulatory and financial reasons, headquartered abroad: “Running a business in Egypt is still rather complex — being able to manage bank accounts and wire money around in a foreign currency, for example. A lot of companies instead register as an entity abroad in order to expand and raise money,” Samra explained.

And recent developments have not made it easier: Our current FX crunch and FX spending limits on credit and debit cards are a significant challenge to early-stage startups based in Egypt. Coupled with record high inflation and an impending devaluation, these factors stand in the way of startups looking to purchase equipment, scale up, and gain credibility from foreign investors.

“We don’t invest in companies today that are focused on Egypt alone,” Samra told us.“There’s no startup that’ll be able to raise VC funding in the next 12-18 months without having a clear, actionable strategy around expansion and generating foreign currency, to avoid reliance on the EGP. We’ve introduced our startups to partners in Africa and the Gulf.”

Climate tech is still struggling against fintech: Most accelerator programs in Egypt rely on the financial backing of commercial partners and development finance institutions such as Hivos, GIZ, and USAID. Commercially-driven accelerators have a fiduciary responsibility to investors, where they must justify investing in a climate tech startup as opposed to the attractive fintech startup, which typically generates revenues faster. The aim is to help green startups reach the same level of profitability as traditional startups in order to make them enticing enough to further investors down the line.

What can be done to encourage more investment? “What has worked best for us, was partnering up with [international development organization] Hivos – for every USD we invest into a startup, Hivos matches it with a grant. This makes investment more attractive to us, as it’s less risky,” Houry told us. Many others we spoke to agreed that financial matching from development organizations and the government is needed to develop Egypt’s green startup ecosystem.

How can state-led initiatives help? “Given that the loss and damage fund that was announced at COP27 has still not been clearly defined, I believe there needs to be more ground-level initiatives and cooperation between sectors. We’ve been supporting the state-led National Initiative for Smart Green Projects by offering our network,” Houry said.

And where do development finance institutions (DFIs) step in? “The state should provide more debt facilities to the most promising companies, identified by working closely with the private sector,” Samra added. “That’s what we’re trying to do with Hydrofarms, whose water-saving hydroponics systems are desirable to both farmers and the economy, but which have a high upfront cost to build. Imagine if The European Bank for Reconstruction and Development and Agricultural Bank of Egypt stepped in to finance the purchase of these products.”

Your top green economy stories for the week:

  • Checking in on our green hydrogen strategy: Prime Minister Moustafa Madbouly called for the swift adoption of our green hydrogen strategy and for updating the country’s energy strategy. (Statement)
  • Plans to boost electricity production: The Electricity Ministry is working to convert the country’s power generators to combined cycle plants, which would increase their capacity by 50%. (Statement)
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CALENDAR

NOVEMBER

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

14-15 November (Tuesday-Wednesday): Egypt VC Summit, Conrad Hotel.

15 November (Wednesday): Deadline for MTO to buyback Dice Sports and Casual Wear’s 46.9% Stake.

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

19 November (Sunday): House reconvenes.

22 November (Wednesday): Deadline to apply to FRA for credit rating license.

22 November (Wednesday): The EGY-GCC Business Forum opening session.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

Signposted to happen some time in November:

  • Bidding deadline for 5 gold mine concessions in the Eastern Desert (TBC).

DECEMBER

1-3 December (Friday-Sunday): Egyptian expats vote in the presidential election.

4-7 December (Monday-Thursday): Egypt Defence Expo, Egypt International Exhibition Center.

9-15 December (Saturday-Friday) :The Engineering Export Council of Egypt’strade mission to Saudi Arabia.

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

10-12 December (Sunday-Tuesday): Voting in presidential election takes place in Egypt.

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

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

20 December (Wednesday): End of sugar export ban.

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

Signposted to happen sometime in December:

  • Gov’t expects to finalize sale of a stake in military-owned bottled drinks company Safi
  • Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya.
  • Gov’t expects to finalize sale of Zafarana wind farm
  • Kenyan trade conference in Egypt.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

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.

3Q 2023: E-Finance to launch in Saudi Arabia.

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

4Q 2023: EGX to launch a shariah-compliant index.

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

2024: Standard Chartered Bank to open a branch in Egypt.

25 February 2024 (Sunday): Deadline for bidders for oil and gas expansion in the 23 new regions.

Q1 2024: Opening of the new developed Pyramids Plateau in Giza.

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

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

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

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

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

2Q 2025: Safaga Terminal 2 to start operations.

2024

JANUARY

7 January (Sunday): Coptic Christmas.

17 January (Wednesday): A delegation of Egyptian companies to visit Istanbul.

25 January (Thursday): Revolution day.

FEBRUARY

11 February (Sunday): The deadline to apply for the Chicago Booth Executive Program

APRIL

9 April (Tuesday): Eid El Fitr (TBC).

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC).

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (TBC).

29 May (Wednesday): Chicago Booth Executive Program

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC).

30 June (Sunday): June 30 Revolution Day.

JULY

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

23 July (Tuesday): Revolution Day.

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

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

OCTOBER

6 October (Sunday): Armed Forces Day.

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