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Tuesday, 30 May 2023

What We’re Tracking Today
Taxation
Automotive
M&a Watch
Corporate Governance
Investment Watch
War Watch
Earnings Watch
Last Night’s Talk Shows
Egypt In The News
Also On Our Radar
Planet Finance
Going Green
Calendar

MPs approve raft of tax reforms aimed at curbing budget deficit, boosting investment

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Today at a glance

1

Taxation

 MPs approve raft of tax changes.
2

Automotive

 Auto sales drop 69% y-o-y in April.
3

M&A WATCH

 Edita acquires frozen bakery producer Fancy Foods.
4

CORPORATE GOVERNANCE

 Nearly a fifth of board members of Egyptian companies are women.
5

WHAT WE’RE TRACKING TODAY

 Egypt, Turkey to “immediately” normalize relations + Khamenei backs stronger Egypt ties.
6

INVESTMENT WATCH

 Australian consortium to invest USD 875 mn in phosphoric acid plant in Egypt.
7

WHAT WE’RE TRACKING TODAY

 It’s deadline day for listed companies to submit their 1Q financials.
8

WAR WATCH

 Sudan factions agree truce extension amid heavy clashes.
9

Going Green

 Spotlight: KarmSolar CEO and co-founder Ahmed Zahran.

Tuesday, 30 May 2023

What We’re Tracking Today
Taxation
Automotive
M&a Watch
Corporate Governance
Investment Watch
War Watch
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

Egypt, Turkey to “immediately” upgrade relations -Itthadiya

Good morning, dear readers: Two things are driving the news agenda this Monday morning.

#1- Tax, tax, tax: MPs gave the OK to a raft of tax changes aimed at raising revenues to curb the widening budget deficit, and boost equity investment as the government prepares to introduce the long-discussed capital gains tax on EGX transactions. We have all the details in the news well, below.

#2- A major shift in Egyptian foreign policy could be taking place: In the latest shock rapprochement taking place in the region, Itthihadiya said yesterday that Egypt and Turkey will move to “immediately” upgrade ties and begin the process of appointing ambassadors. This came on the same day that the supreme leader of Iran signaled intent to strengthen its relationship with Cairo in the latest indicator that the two countries could soon move to formally restore relations. Read on for more.

PSA- ACs at the ready: The capital is looking at warmer weather until Saturday, with the mercury expected to rise to 37°C on Thursday and Friday before dipping to lows of 22°C on Saturday, according to the Egyptian Meteorological Authority. The authority is expecting heavy dusty winds tomorrow and on Thursday.

HAPPENING TODAY-

It’s deadline day for listed companies to submit their 1Q financials: Listed companies have until Tuesday, 30 May, to report and publish their 1Q results.

House committees hold meetings: The House General Assembly is breaking for two weeks to reconvene on 11 June, but it’s business as usual for the House committees, which will spend their day discussing various aspects of the draft budget for the coming fiscal year:

  • The Economic Affairs Committee is reviewing the the 2023-2024 budgets for the Financial Regulatory Authority and the Financial Services Institute;
  • The Budget Committee will discuss the budgets for the Local Development Ministry and the governorates of Cairo, Menoufia, and Sharqiya;
  • Emigration Minister Soha Gendy will join the Foreign Affairs Committee to review Egyptian expat’s contribution to the economy;
  • The Industrial Committee will look into the future of the paper and ink industries and the Nasr Pharma Company.

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

THE BIG STORY ABROAD-

The US debt ceiling deal is still driving the conversation in the Western press this morning: Republican and Democratic leaders are trying to get the conservative and progressive wings of their parties on side as yesterday’s agreement between President Joe Biden and Republican House Speaker Kevin McCarthy enters the House. A number of Republicans have already pledged to vote against the agreement, suggesting that a smooth passage through Congress is far from a foregone conclusion. Lawmakers have until 5 June to pass legislation to raise the debt ceiling and avert a federal default. (Associated Press | Reuters | Bloomberg | Financial Times | New York Times | Wall Street Journal)

THE REALIGNMENT-

#1- This isn’t something we thought we’d ever see: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan have agreed to restore full diplomatic ties, Itthadiya said yesterday. The two leaders spoke over the phone yesterday following the Turkish president’s reelection and agreed to “immediately start elevating diplomatic relations … and exchanging ambassadors,” the statement said.

This has been in the cards for a while: Relations between the two countries have thawed in recent months, with several rounds of high-level talks taking place between Foreign Minister Sameh Shoukry and his Turkish counterpart Mevlut Cavusoglu in Cairo and Ankara. Following their last meeting in April, Cavusoglu said that they would soon reappoint ambassadors and suggested that El Sisi and Erdogan could soon meet for their first-ever face-to-face talks.

But it’s hard to overstate the significance of a potential breakthrough with Turkey: The two countries have been at each other’s throats for a full decade over a host of issues including Erdogan’s support for the Muslim Brotherhood, competing interests in Libya, and tensions over gas resources in the Eastern Mediterranean.

#2- Friendship with Egypt has the ayatollah’s blessing: Supreme Leader Ayatollah Khamenei said he welcomes the restoration of diplomatic ties with Egypt during talks with Oman’s Sultan Haitham bin Tarek yesterday, Iranian state media reported. Bin Tarek flew to Tehran on Sunday just days after holding talks with President Abdel Fattah El Sisi in Cairo, raising speculation that a possible rapprochement was being discussed.

Khamenei isn’t the first Iranian official to speak fondly of Egypt in recent weeks:Thecountry’s foreign minister has also expressed optimism that the two countries could resume diplomatic ties.

Anonymous Egyptian officials have signposted a breakthrough: A recent article in the National reported that the two countries will reappoint ambassadors in the coming months under a mediation effort being led by Oman, citing Egyptian officials. President Abdel Fattah El Sisi and Iran’s Ebrahim Raisi are also likely to meet before the end of the year, according to the report.

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We have tons more in the pipeline — come help us build new publications. We offer the chance to work in a fast-paced newsroom on a broad range of topics and in a variety of formats. Our goal is simple: To create value for our growing community of >250k daily readers by telling stories that matter.

Journalists looking to explore business, finance and economic stories are welcome. So are recent journalism school graduates.

That said, we’re looking for gifted story-tellers from all walks of life and across all professions, as long as they show a keen interest in learning to write about the stories, topics, businesses, and figures moving markets. Egyptian and foreign nationals alike are welcome to apply. So are job-switchers: If you’re an equities analyst tired of the rat race, we’re a great place to come work.

NEVER WORKED IN A NEWSROOM BEFORE? We have the Enterprise Business Writing Development Program. Whether you are a recent graduate, an industry vet, or looking to switch careers, the Enterprise Business Writing Development Program will give you the tools you need to tell the most important stories to our audience of C-suite officials, government ministers, diplomats, financiers, investors and entrepreneurs.

During the program you will learn:

  • The key news stories and trends shaping business and the economy in Egypt and the region, across various sectors;
  • Business and finance for non-finance people: Whether it’s industry jargon or key concepts or simply how to read a balance sheet;
  • How to construct an Enterprise story: From idea formulation down to the structure, style and tone of writing;
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Not an internship program — a career: The three-month program will see full-time, paid participants take part in workshops and lectures from veteran business journalists, while also working on and filing stories that will run on any of our publications. Those who have successfully completed the program, will then be given long-term job offers.

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

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

In today’s issue: We sit down with KarmSolar CEO and co-founder Ahmed Zahran to find out what the company has in store and where he sees potential for growth in our renewables sector.

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Solasi brings you Sunrise Yoga, Sound Healing, Funky Classes, Morning Runs, Enlightening Workshops, Healing Treatments, Tai Chi, Meditation, Kids Activities, locally sourced food, and lots of dancing.

Don’t miss your chance to take #ThreeDaysOff and flow with us at Solasi at Somabay. Head to www.solasifestival.com to find out more and book your pass today.

2

Taxation

Egyptian lawmakers approve raft of tax reforms

House gives its final nod to tax hikes, income tax changes: MPs gave their final approval yesterday to a fresh batch of tax amendments — raising the threshold for income tax exemption and introducing a raft of tax, duty, and development fee hikes.

New taxes? Among the changes are a 5-20% ‘entertainment tax’, new fees on duty-free products, a stamp tax hike on ins., and a 10% development fee on a number of imported luxury goods. Check out our coverage last week for the full details.

The final approval came despite opposition: A number of leftist and liberal MPs rejected thebills on Sunday, saying that they will add further financial burdens on the public and contradict the investment-friendly climate the government is trying to set up.

REMEMBER- The tax hikes have been in limbo since December 2021 when the Madbouly government pulled it from the House following its rejection by the House General Assembly.

The impact on the public purse: The tax amendments will bring in EGP 25 bn in revenues a year, a Tax Authority source told Enterprise.

INCOME TAX-

A tax break for lower earners: Changes to the income tax law will raise the personal tax exemption threshold to EGP 36k from EGP 24k, lowering the tax burden for as many as 22 mn low- and middle-income earners. You can find the breakdown of the new tax bands here.

The new higher rate band won’t affect as many as previously thought: The changes will introduce a new 27.5% higher rate of tax for people earning more than EGP 1.2 mn a year. The higher tax rate was initially expected to impact those making over EGP 1 mn a year but Finance Minister Mohamed Maait agreed to raise the threshold upon a request from independent MP Diaa Eldin Dawoud. “As the EGP lost much of its value against the USD last year, it would be reasonable to introduce the new tax rate for people who earn a monthly EGP 100k,” Dawoud said.

The cost to the state budget: EGP 6 bn. “These new legislative amendments will reduce tax receipts by EGP 6 bn, but we are ready to bear this cost because it aims to serve the interests of low and average-income citizens,” said Finance Minister Mohamed Maait. Raising the income tax threshold will cost around EGP 10 bn, EGP 4 bn of which will be offset by the new higher rate of tax, said Deputy Finance Minister Rami Youssef.

Boost for small businesses: The amendments will allow small businesses with annual revenues of less than EGP 10 mn to be granted a flat-rate tax treatment and grant individuals who file under the new e-invoicing system an incentive worth 5% of their annual tax bill. We have more details in our coverage earlier this week.

CAPITAL GAINS TAX-

Tax cut on shares of newly-listed companies: In a bid to incentivize subscription to IPOs, investors will be charged the 10% capital gains tax on only 50% of the realized gains made from selling shares in newly-listed companies. This will fall to 25% two years after the passage of the legislation.

Expanding the umbrella of CGT: Income made from investments in venture capitals, real estate investment funds, holding companies and or equity funds are now subject to a 5-15% CGT.

REMEMBER- A 10% capital gains tax on EGX transactions was supposed to be introduced in January 2022 for resident investors but was later delayed by the Finance Ministry pending the passage of the Income Tax Act amendments. Investors will pay the tax on net portfolio earnings calculated at the end of the tax year, minus brokerage fees.

WHAT’S NEXT- The bill will be passed to President Abdel Fattah El Sisi to sign into law.

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3

Automotive

Egyptian auto sales drop 69% in April

Auto sales dip to new lows in April: Auto sales fell 69% in April from a year ago as the shortage of foreign currency continued to impact the automotive industry. Distributors sold 5.1k vehicles during the month, compared to 16.6k in April 2022, according to figures released yesterday by the Automotive Marketing Information Council (AMIC). This is the lowest since at least the start of 2018, per our internal trackers.

The breakdown: Passenger car sales fell 70% y-o-y to 3.8k units, bus sales were down 59% y-o-y and truck sales were down 69%. AMIC figures reflect data contributed by member distributors, who include most (but not all) industry participants.

The downward trend continued on the month: April sales were down 23% from March’s figures, with passenger cars recording a 17% decrease, buses a 31% drop and trucks down 39%.

It’s been a tough year for the auto market: Total auto sales volumes fell more than a third in 2022 after capital controls in place for most of the year made it almost impossible for distributors to import cars and components, and forced a number of global car manufacturers to suspend sales to Egypt.

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4

M&A WATCH

Egyptian food company Edita to acquire frozen bakery producer Fancy Foods

Edita Food Industries has signed an agreement to acquire 100% of frozen bakery producer Fancy Foods, it said in a statement (pdf) yesterday. The transaction will see the company enter the frozen bakery segment for the first time, giving it access to a largely untapped market, it said.

Fancy Foods:The company produces a range of frozen pastries, bread and desserts from its Sixth of October factory, which has two production lines. The transaction gave the company an enterprise value of EGP 380 mn.

Edita plans to invest EGP 400 mn to expand the business over the coming year, the company’s IR head Mena Shams El Din told Enterprise yesterday. “The segment remains young in Egypt but we plan to upscale Fancy Foods’ manufacturing capacity to capture untapped demand,” she said.

What they said:“[The acquisition] made perfect sense for us,” said Shams El Din. “Fancy Foods has huge potential for growth and it has a lot of synergies between Editas existing business lines.”

Advisors: Zilla Capital provided financial advice to Edita while Matouk Bassiouny & Hennawy served as legal counsel.

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5

CORPORATE GOVERNANCE

Female representation on Egyptian companies’ boards doubles in four years but remains below 20%

Nearly a fifth of Egyptian board members are women: The proportion of women on Egyptian company boards rose three percentage points on the year before to 19.7% in 2022, according to the Egypt Women on Boards (WoB) Observatory’s annual monitoring report (pdf). More than 1.3k women sat on Egyptian boards last year — 26.6% more than in 2021.

Methodology: The report collects data on the boards of nearly 1k companies, including 676 non-banking financial service (NBFS) firms, 236 EGX-listed companies, 82 public sector enterprises, and 34 banks.

There’s still a long way to go — but improvement has been marked in recent years. The proportion of women on boards has almost doubled since 2019, when only 10% of board members were female. That marks an average annual growth rate of 32.1% over the last four years. If that growth is sustained, the country could reach the WoB Observatory’s target of having 30% of board seats filled by women by 2026 — ahead of its 2030 goal.

Leading the pack are NBFS firms, where women hold some 22% of overall board seats. More than a quarter of NBFS firms have already reached the 30% target. In second place are EGX-listed firms, where women account for more than 17% of board members and just over 10% of firms have met the target. The banking sector came in third: 16.5% of board members are women and nearly 12% of banks have met the 30% goal.

The public sector is a distant fourth place: Just over 9% of board seats at public-sector companies are held by women and less than 4% have met the target.

Regulations to boost female representation seem to be working: Under rules brought in by the Financial Regulatory Authority in 2021, women must account for at least 25% or two seats on the boards of EGX-listed firms and NBFS companies, while the central bank in the same year said banks must have at least two women on their boards. The increase in women on boards between 2021 and 2022 could be a result of “effective compliance with regulators’ decrees and decisions,” says the report, though it notes that “some companies and banks believe in diversity” and had already brought on at least two women to their boards before the decisions came into effect.

But all-male boards are still a thing: The number of companies who continue to have zero female representation on their boards is shrinking across all four categories, but all-male boards haven’t yet been consigned to history. Nearly 48% of public-sector enterprises have no female representation, though that figure is down from 72.5% in 2019. The figure stands at 15.1% among NBFS firms (down from 58.8%), 10.2% among EGX-listed firms (down from 53.3%), and 8.8% among banks (down from 26.5%).

There’s been little improvement in the number of women heading up big firms — and even a decline in some sectors. Only 16 of the 236 EGX-listed firms were chaired by women in 2022 — an increase of just one on the year before. Three of the 34 banks surveyed were chaired by women, down from five a year before. The public sector showed some improvement, with the number of chairwomen doubling to six out of 82 in 2022. Of the 676 NBFS firms, those with women at the helm dropped by almost half from 28 to 16 — even as the number of companies in the sector grew more than 5%.

Qualified women are out there — and the Observatory has already done the legwork to find them. The WoB Observatory “remains committed to supporting companies and banks in finding qualified women to serve on their boards through the AUC Egyptian Board Ready Women database,” Ghada Howeidy, associate dean at the AUC School of Business and the observatory’s founder, told Enterprise. Supported by UN Women Egypt, the database includes over 1k qualified women across 26 economic sectors, she said. The Observatory matches women in its database to organizations looking for board members at no cost. Women interested in joining the database can apply here.

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6

INVESTMENT WATCH

Australian consortium to invest USD 875 mn in phosphoric acid plant in Egypt

An Australian consortium plans to invest USD 875 mn to build a phosphoric acid plant in the Red Sea port town of Safaga, Asharq Business reported yesterday, citing a government official. The consortium — which includes Wesson Group’s financial consultancy firm Lionsbridge and electrical contractor Westech Group — is currently working to launch their Egyptian JV, dubbed Osiris, to carry out the project, which will have an annual production capacity of around 700k tons.

Construction should start soon: The consortium will start working on the USD 312 mn first phase of the project as soon as it receives the necessary approvals. The first phase will produce some 346k tons of acid a year.

Phosphoric acid? The chemical compound is used in the production of fertilizers, detergents, and a large number of household clearing products.

We already have another phosphoric acid project brewing: Emirati company CFC Group recently received the cabinet’s approval to establish a USD 400 mn fertilizer complex that will produce 700k tons of phosphoric acid each year.

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7

WAR WATCH

Sudan factions agree truce extension amid heavy clashes

Sudan ceasefire extended through to Saturday:The Sudanese army and the Rapid Support Forces have agreed to extend the temporary ceasefire, Saudi Arabia and the US — who are mediating peace talks between the warring sides — announced in a joint statement yesterday. The week-long truce was due to expire on Monday evening but will now extend another five days, giving more time for humanitarian organizations to provide aid to civilians trapped amid the fighting, the countries said.

The ceasefire hasn’t put a stop to the fighting: There was an intensification of clashes between the two sides and airstrikes in Khartoum yesterday, witnesses told Reuters. Low-level fighting has persisted in the capital for much of the ceasefire period, while other provisions of the agreement — including aid distribution, the removal of soldiers from hospitals and the restoration of essential services — have not been “fully achieved,” Saudi Arabia and the US said.

Around 164k Sudanese people have fled to Egypt since the conflict began more than six weeks ago,Foreign Ministry Spokesperson Ahmed Abu Zeid said yesterday. The war has seen more than 280k people cross into neighboring countries to escape the fighting.

The number could rise significantly: The war could push around 1 mn people to leave the country by October, UN High Commissioner for Refugees Filippo Grandi said during an interview yesterday. The UN is expecting around 800k Sudanese people and 200k foreigners to flee Sudan over the coming five months. “This projection, that in the next few months we’ll reach these high figures, may even be conservative … At the beginning I didn’t believe it would be, but now I’m beginning to be worried,” he said.

Grandi holds talks with El Sisi: During a meeting with President Abdel Fattah El Sisi yesterday, Grandi expressed the UN’s appreciation for Egypt’s efforts hosting a large number of refugees, according to an Ittihadiya statement. Grandi stressed the need for the international community and donors to help refugee-hosting nations.

We’re getting USD 114 mn from the UN, Grandi said during a presser yesterday. The funding is part of a larger USD 470 mn raised to Sudan’s neighboring currenting hosting large numbers of refugees.

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8

EARNINGS WATCH

Contact Financial’s net income up 3% in 1Q 2023

Contact Financial Holding’s normalized net income rose 3% y-o-y to EGP 178 mn in 1Q 2023, as a jump in income at the company’s ins. division offset falling financing revenues, according to the company’s earningsrelease(pdf).

In detail: Net income at the NBFS player’s ins. division rose 35% y-o-y to EGP 25 mn thanks to robust results at Sarwa Life and Sarwa Ins., whose total gross written premiums grew 73% y-o-y to a combined EGP 437 mn. Meanwhile, net income at the financing division fell 14% as a strong expansion of new financing failed to offset a rise in credit loss provisions to “hedge against potential increases in credit risk during the ongoing economic turbulence.” New financing surged 66% y-o-y to a record EGP 4.1 bn, driven primarily by the company’s consumer finance and auto loan products, which posted new growth of 179% and 81%, respectively.

What they said: “Our results in the first quarter of 2023 came in the midst of difficult domestic and global macroeconomic environments, further showcasing our company’s resilience and the effectiveness of our mitigation and investment strategies,” management said. “Expanding and enhancing our digital capabilities continues to be at the top of our list. In parallel, we remain on the lookout for attractive investment opportunities to provide new services to our customers and new growth avenues for the company.”

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9

LAST NIGHT’S TALK SHOWS

Talk shows continue their coverage of new tax amendments

Tax continued to dominate discussions on the airwaves last night, with the nation’s talking heads focusing on the new batch of tax amendments that were voted through the House yesterday. We have the full story in the news well, above.

The new income tax will come into effect in July, Deputy Finance Minister Ramy Youssef told Masa’a DMC (watch, runtime: 6:13), referring to the personal income tax exemption threshold rising to EGP 36k from EGP 24k.

Yet, another tax exemption threshold raise? MP Mohamed Abou El Enein had proposed once again raising the tax exemption threshold to EGP 42k, according to Ala Mas’ouleety (watch, runtime: 9:28).

Tax breaks will help investors accept the CGT: The new income tax introduces incentives and facilities to soften the blow of the capital gains tax (CGT) that is expected to come into effect after the income tax changes are signed into law, Egyptian Capital Market Association (ECMA) chairman Mohamed Maher Kelma Akhira (watch, runtime: 4:38), pointing to the tax cuts on shares of newly-listed companies.

Also on the airwaves last night:

  • Lamees El Hadidi sat down for a one-on-one with the UN High Commissioner for Refugees Filippo Grandi to learn the latest on the situation in Sudan and Egypt’s efforts hosting thousands of refugees. Grandi is currently on a three-day visit to Egypt, where he held talks with President Abdel Fattah El Sisi and visited the Egypt-Sudan border. (Kelma Akhira | watch, runtime: 22:41)
  • The state has bought more than 3 mn tons of local wheat since the start of the harvest season at the beginning of April. (Al Hayah Al Youm | Watch, runtime: 2:35)
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10

EGYPT IN THE NEWS

Libya hands death sentences to suspected IS militants who killed Egyptian Copts in 2015

Leading the conversation on Egypt in the foreign press this morning: A Libyan court sentenced 23 people suspected of having ties to Islamic State to death and 14 to life in prison for their involvement in the 2015 attacks that killed dozens, including a number of Egyptians Coptic Christians, the Libyan Attorney General Office said. Reutersand the Associated Press had the story.

MEANWHILE- CNN covered our latest archeological discovery of human and animal mummification workshops in Saqqara, while the National followed the story of Egyptian Youssef Mikhaeil, who struggles with the rare Fabry disease and is being held by UK authorities ahead of his deportation.

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11

ALSO ON OUR RADAR

valU, Telda partner up. PLUS: Tatweer Misr signs partnership deal to enter Saudi, FRS approves EGX futures clearing company

NBFS-

valU, Telda offer new redemption, installment services: EFG Holding’s BNPL platform valU and digital payment app Telda have partnered to enable the users of valU cashback service Sha2labaz to redeem the value of their purchases through the Telda app, according to a joint statement(pdf). Redeemed amounts can then be used to make online purchases, payments at brick-and-mortar stores, or ATM cash withdrawals, according to the statement.

It works both ways: “Telda purchases can be redeemed through Sha2labaz and be refinanced through valU’s installment plans of up to 60 months,” the statement reads. These installments can be paid directly through the valU app.

valU has a couple of financing plans in the pipeline: The company intends to securitize more of its portfolio within a month or two, head of Product Development Ahmed Seoudi reportedly told Hapi Journal, adding that the firm has not yet set an amount for the offering. The firm is also reportedly in talks with two banks to secure two new loans soon, Seoudi said at a press conference yesterday.

REMEMBER- ValU closed its fourth securitized bond issuance in March and hopes to launch a second securitization program worth EGP 5 bn later this year, CEO Walid Hassouna told us in January.

REAL ESTATE-

Tatweer Misr takes first step towards Saudi expansion: Tatweer Misr will establish a joint venture with the Saudi investment firm Naif Alrajhi Investment under a strategic partnership signed between the two sides yesterday. The JV will focus on construction and real estate investment in Saudi Arabia and will mark Tatweer’s first project outside Egypt.

CAPITAL MARKETS-

EGX futures clearing company receives FRA approval: The Financial Regulatory Authority (FRA) has granted the EGX the greenlight to launch the clearing company for its new futures exchange, Al Borsa reported yesterday, citing EGX boss Ramy El Dokany. The EGX has tapped Evolve Investment Holding CEO Sameh El Torgoman (LinkedIn) as company chairman.

REMEMBER- The FRA, EGX, and Misr for Central Clearing and Depository (MCDR) are aiming to launch the long-anticipated futures exchange by 4Q 2023. The FRA in March issued amendments to rules on the establishment of the company that will manage the new futures exchange and the new clearing company.

EDUCATION-

CIRA partners with Think Big and CEA to launch visual arts education program:CIRA Education is teaming up with Egypt-based Think Big Media Production, led by film director and founder, Rami Imam, and Canada-based the Center for Entertainment Arts (CEA), to offer accredited visual arts programs to students across a number of its campuses in both East and West Cairo, according to a press release (pdf) yesterday. The courses will cater to a wide range of students, from 12 years-old up to those pursuing university degrees.The program is expected to launch this summer with an estimated 150 students, CIRA Education CEO Mohamed El Kalla told Enterprise.

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12

PLANET FINANCE

TRY falls to near-record low following Erdogan’s reelection

The TRY didn’t take Erdogan’s re-election well: The TRY fell to near-record lows on the first day of trading following Turkish President Recep Tayyip Erdogan’s re-election on Sunday. The TRY slipped 0.6% against the greenback to 20.10, according to Bloomberg, which picks up a Morgan Stanley note warning that the currency could plunge 29% to 28 against the USD by the end of the year should Erdogan not change his economic policies.

EGX30

17,212

+0.5% (YTD: +17.9%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,136

0.0% (YTD: +6.3%)

ADX

9,412

-0.4% (YTD: -7.8%)

DFM

3,544

+0.1% (YTD: +6.2%)

S&P 500

4,205

+1.3% (YTD: +9.5%)

FTSE 100

7,627

+0.7% (YTD: +2.4%)

Euro Stoxx 50

4,320

-0.4% (YTD: +13.9%)

Brent crude

USD 77.07

+0.2%

Natural gas (Nymex)

USD 2.36

-2.3%

Gold

USD 1,961.20

-0.1%

BTC

USD 27,685

+0.4% (YTD: +66.4%)

THE CLOSING BELL-

The EGX30 rose 0.5% at yesterday’s close on turnover of EGP 2.42 bn. Foreign investors were net sellers. The index is up 17.9% YTD.

In the green: Heliopolis Housing (+11.8%), Orascom Construction (+7.5%) and TMG (+5.1%).

In the red: Ibnsina Pharma (-1.8%), Egypt-Kuwait Holding (-1.7%) and Oriental Weavers (-1.5%).

Asian markets are mainly in the green this morning amid optimism that US lawmakers will pass legislation to raise the debt ceiling and avert a default. US and European stock futures are also rising in early trading this morning.

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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

Spotlight: KarmSolar CEO and co-founder Ahmed Zahran

SPOTLIGHT- Ahmed Zahran, CEO and co-founder of KarmSolar: The water division of solar-powered utilities firm KarmSolar this week launched Marsa Alam’s first solar-powered desalination plant, covering 100% of water consumption at Red Sea Diving Safari’s Marsa Shagra resort. There’s more where that came from: The company is expanding its solar and water projects in Marsa Alam and launching its second solar grid next month in Farafra. We sat down with CEO and co-founder Ahmed Zahran (LinkedIn) to learn more about what KarmSolar has in store and where the company sees potential for growth in our renewables sector.

KarmSolar is expanding the Marsa Alam Solar Grid: Launched last year, the Marsa Alam Solar Grid allows projects in the area — including the Marsa Shagra desalination plant — to draw energy from both the national grid and from the company’s solar stations. KarmSolar has a license to distribute some 10.9 megavolt-amperes (MVAs) through the grid and is currently using around a third of that capacity, Zahran says, adding that it’s in the process of expanding the project. “The main challenge is that energy consumption [in Marsa Alam] is increasing, which is changing the size of the solar stations that we would need to build,” he says. “That happens when you have a developing area — we’ve not yet seen a steady state [of consumption].”

A second grid project is on the way: The Farafra Solar Grid — for which KarmSolar secured EGP 83 mn in financing from our friends at HSBC — is “almost fully constructed” and set to go live in early June, Zahran told us. The company has so far signed up Juhayna and Nawa for Agricultural Investment as offtakers.

KarmSolar is focusing on distributing power across large areas: “Our strategy at the moment is securing power distribution zones,” Zahran says, noting that the company has secured exclusive power distribution rights for a 67k-acre stretch of land for the Farafra grid project. “This gets you a lot of clients all at once from different sectors because you take the responsibility for power distribution across geographical areas,” he explains. “We’ve been doing very well on that front [and] our expansion is going to be dependent on that, because it’s one of the best ways to target private offtakers.”

“In general our growth strategy always depends on private offtakers because we believe it is more sustainable than government offtakers,” Zahran adds. “It is slower, but it is more sustainable and I think more profitable as well.”

The aim is to capture the whole value chain — from generation through consumption: The company’s three branches — KarmSolar, KarmWater, and the Karm Architecture Lab (KAL) — work in tandem to provide private projects with sustainable utilities and ensure they are used efficiently. “The overall vision is that you have a vertically integrated value chain that is fueled predominantly by solar with the minimum waste and the minimum environmental footprint —- whether it comes to energy, architecture, or water desalination,” Zahran says.

That could include finding new uses for the waste products of desalination. Conventional desalination plants have two key environmental impacts: They run on large amounts of energy, and they create large amounts of saline wastewater — also known as brine — as a byproduct. KarmWater currently injects that brine back into the ground in compliance with environmental regulations. But its technical team is exploring “economic uses for the brine,” Zahran tells us — foremost among them extracting the salt to be used elsewhere. The difficulty, he says, is in making that process cost-competitive: “It’s a big challenge for all desalination plants because there are a lot of impurities and chemicals that are produced with that brine that raise the cost of salt extraction.”

Could we one day be drinking KarmWater? The utility water produced by the Marsa Shagra desalination plant is drinking quality, Zahran says — but the company is prevented from bottling it by regulations that prohibit the use of desalinated water for drinking. Zahran would like to see that change. “It’s one of the worst things that exists today in the water regulations,” he says. All drinking water “is designed in terms of taste, mineral content, everything,” he argues. “Any type of water can be used for drinking if a proper process is implemented… So there is nothing scientific or technical that prevents us from doing that.”

Finding more uses for desalinated water could also cut down on plastic and carbon emissions, Zahran points out. “The carbon footprint of the plastic bottles that we’re all buying — especially when you buy them in areas that are very far away from where they’re produced — is tremendous,” he says. “That’s predominantly because of the transportation,” he adds. “It’s one of the main issues that we have today in terms of carbon footprint and in terms of plastic consumption.”

KarmSolar is well-positioned to ride out current economic challenges, Zahran says, noting that “because we have an international investor, we never had a problem accessing USD.” (France’s EDF Renewables became the company’s largest shareholder when it bought an undisclosed stake through a capital increase back in 2019.) “Obviously the investment criteria in Egypt are much tougher than before,” he says. “Imports are taking a bit longer, even if you have the USD… [but] those tough conditions are proving how resilient our company is.” He points to KarmSolar’s inclusion for the second year running in the Financial Times’ list of the fastest growing companies in Africa: “Achieving that during these tough times means that our growth is actually bigger than the devaluation of the EGP. That’s something we’re quite proud of.”

And green energy is a resilient sector: The country’s power demand doubles almost every nine years, while growth in water consumption will be “even more drastic,” according to Zahran. “There will be no shortage of projects. You just need to make sure that you build the company that is capable of handling the economics right, understanding how to deal with private offtakers [and] how to scale up those types of projects.”

Your top green economy stories for the week:

  • Egypt’s long-term renewable energy targets just got more ambitious: The Egyptian government is now targeting increasing its renewable energy generation capacity to cover 60% of the country’s electricity needs by 2040.
  • One Chinese green hydrogen plant: Energy China will sign a framework agreement to build a green hydrogen plant in SCZone within two months.
  • And more Chinese investment on the way? Chinese VC Estar Capital expressedinterest in investing in our green hydrogen industries and energy sector.
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CALENDAR

MAY

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

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

JUNE

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

June: Egyptian-Saudi business forum.

1-3 June (Thursday-Saturday): Fintech Industry retreat, Hurghada.

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

4 June (Sunday): Senate back in session.

4 June (Sunday): National Dialogue.

6 June (Tuesday): National Dialogue.

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

8 June (Thursday): National Dialogue.

10 June (Saturday): Thanaweya Amma examinations begin.

11 June (Sunday): House reconvenes.

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

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

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, Egypt International Exhibition Center.

19-21 June (Monday-Wednesday): Big 5 Construct, 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.

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

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.

15 September (Friday): Deadline for FX bureaus to comply with new capital requirements.

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

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

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.

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

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

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

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

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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