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Wednesday, 4 Sep 2024

What We’re Tracking Today
Economy
Debt Watch
Economy
Energy
M&a Watch
Automotive
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar

Non-oil private sector activity back in the green after three years of contraction

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Today at a glance

1

ECONOMY

Non-oil private sector activity grows after three years in contraction.
2

WHAT WE’RE TRACKING TODAY

El Sisi makes long-awaited first official trip to Turkey as president.
3

DEBT WATCH

Qalaa settles EGP 3.34 bn of debt in exchange for a stake in Taqa.
4

ECONOMY

Fresh details on the move to cash-based subsidies.
5

Energy

Mitsubishi and another undisclosed Japanese firm selected to set up Hurghada’s 20 MW solar power plant.
6

M&A WATCH

What’s next for EGX-listed Middle East Glass?
7

Automotive

Egypt to lag behind North African peers in vehicle production over next decade, but production growth in 2024 remains strong.
8

PLANET FINANCE

USD drops 2% in August as JPY, EUR, and GBP gain steam.
9

HARDHAT

Egypt gears up to unveil the Grand Egyptian Museum as construction nears completion.

Wednesday, 4 Sep 2024

What We’re Tracking Today
Economy
Debt Watch
Economy
Energy
M&a Watch
Automotive
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Hardhat
Calendar
1

WHAT WE’RE TRACKING TODAY

El Sisi makes long-awaited first official trip to Turkey as president

Good morning, friends. We’re kicking off the issue with some good news that after three long years of contraction, the country’s non-oil private sector has inched back up into growth territory. But that’s not all today, with El Sisi is set to touch down in Turkey today for his first visit to the country since being in the top job, Hurghada’s long-awaited solar projected back in the works, debt news galore, and much more. We’ve got a packed issue today, so let’s jump right into it.

HAPPENING TODAY-

#1- El Sisi touches down in Turkey: Today is the day that President Abdel Fattah El Sisi touches down in Turkey for his long-awaited visit to the country since assuming office as the two countries seek to mend fences and build diplomatic and economic ties, Turkey’s Directorate of Communications confirmed yesterday. El Sisi is set to meet with Turkish president Recep Tayyip Erdogan and together chair the first meeting of the long-stalled high-level Strategic Cooperation Council between the two countries in the works since 2010.

On the agenda: Although details from the Turkish side are skimpy and Egypt has yet to release a statement on the trip, in addition to Gaza — that will presumably top discussions — Ahmed Moussa told his viewers on Ala Mas'ouleety earlier this week that the visit will include “discussions on all bilateral and international issues, as well as the signing of numerous agreements and MoUs in various areas” (watch, runtime: 2:21). Al Arabiya’s Turkey correspondent also told Amr Adib that economic relations and cooperation in areas such as tourism, transportation, and the defense industry, alongside expanding the countries’ joint freetrade agreement would be on the agenda.

The two countries are “opening a new chapter,” El Sisi said in a presser when Erdogan made his first visit in over a decade in February (watch, runtime: 15:15). The two sides have been working to mend a decade of tense relations triggered by a host of issues, including Erogan’s support for the Muslim Brotherhood, competing interests in Libya, and tensions over gas resources in the Eastern Mediterranean. Under this new relationship, the two countries are planning to boost annual bilateral trade from USD 6.6 bn in 2023 to USD 15 bn in the next few years.

#2- Madbouly is in Beijing for the launch of the Forum on China-Africa Cooperation: Keep your eyes peeled for investment and debt news, because Prime Minister Moustafa Madbouly is attending the three-day Forum on China-Africa Cooperation and is also booked in with Chinese officials and business leaders to discuss agreements and proposed investments in the works. A cabinet statement earlier this week told us that Madbouly will ink a number of MoUs and contracts related to investments in the Suez Canal Economic Zone and the Egyptian telecommunications sector, without going into details.

We’ve already heard that we’re getting new funding from our BRICS buddy: China will be extending a CNY 100 mn in development grant — currently worth around EGP 681 mn or USD 14 mn — in order to implement a number of new joint projects, according to another cabinet statement out yesterday.

#3- The two-day US-Egypt Joint Economic Committee meeting kicks off in Washington today, with government and business representatives expected to discuss Egypt’s current economic straits, existing investment opportunities and hurdles, and the coordination of PPPs between the two countries, according to an Investment Ministry statement.

#4- It’s day two at the Egypt International Airshow, which kicked off yesterday in El Alamein. The event covers all things aviation through Thursday, bringing together participants from over 300 companies from more than 100 countries. It also features exhibitions from 200+ companies, discussions from industry leaders, and even aircraft flyovers and displays.

HAPPENING TOMORROW-

It’s decision time for the MPC: The Central Bank of Egypt’s Monetary Policy Committee is meeting tomorrow to review rates. The bank left interest rates unchanged during its last meeting in July citing its commitment to sustaining the current trajectory of inflation moderation.

The polls are in: The central bank is once again expected to leave interest rates unchanged as persisting inflationary pressures keep potential rates at bay, eight analysts and economists told Enterprise in a poll earlier this week. Those polled by Reuters agree, with 14 of the 15 that the newswire spoke to predicting that rates will be held steady and one penciling in a 100 bps rate cut

DATA POINT-

The Electricity Ministry expects to collect EGP 500 mn in fines from overdue electricity bills during the current fiscal year, ministry sources told Al Arabiya. Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) introduced a 7% fine on overdue electricity bills which will come into effect with September’s bill. Those who fail to pay for three consecutive months will receive a warning before having their meters removed.

KUDOS-

Local firm MUSEEUM is up for the Arab World Design Award: Local retail management company and the operator behind the Grand Egyptian Museum’s (GEM) gift shop MUSEEUM has been nominated for this year’s Arab World Design Award for its curation of the GEM gift shop. Hosted by the Institut du Monde Arabe (IMA), the award “aims to highlight emerging and established designers from the Arab world,” according to the institute’s website. The winning candidates will be named today and an exhibition of the winning projects will be held at the IMA in Paris from 5-15 September.

What MUSEEUM does: The company works as a curator for heritage destinations and museums, using “research and analysis to craft a collection that captures the historical essence of its surroundings,” MUSEEUM co-founder Jaeyung Kwon told Enterprise. “Our goal is to cater to a diverse audience, encompassing tourists, bucket list enthusiasts, proud locals, Egyptophiles, as well as academics and teachers and students,” she said.

The firm’s strategy involves collaborating with both artisanal and manufactured products fully crafted by Egyptians, and making sure that artists get their fair share of the value chain while still delivering favorable and varied prices, Kwon tells us. “In Egypt, the artisanal talent is there, but through design and curation we point artisans towards global interest. Good design can show both the customers and the craftsmen what they've been missing,” she said.

** Want more? We spoke to Kwon at length for our My Morning Routine column — look out for the full interview in tomorrow’s issue of EnterpriseAM Egypt.

PSA-

WEATHER- It’s much the same in Cairo today, with a high of 34°C and a low of 26°C, according to our favorite weather app.

It’s a notch cooler in Alexandria and along the North Coast, with a high of 32°C and a low of 24°C.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

CIRCLE YOUR CALENDAR-

German President Frank-Walter Steinmeier and an accompanying business delegation will touch down in Egypt next week, a German embassy official recently announced, according to a statement from the General Authority for Investment and Free Zones. Steinmeier’s visit will mark the first time in 24 years that a sitting German president has visited Egypt.

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-

All eyes are on Wall Street in the international business press this morning, with the S&P 500 having dropped 2.1% by yesterday’s close. A 9.5% slide in Nvidia’s stock price prompted a selloff of other big tech names. Nvidia was breaking all of the wrong types of records yesterday, claiming the unenviable title of having the steepest-ever single-day loss of market cap by a US company — wiping off a whopping USD 279 bn during trading.

Traders were prepared for a rocky September, but probably not this rocky. On top of the “traditional” September slump, an upcoming US jobs report on Friday, interest rate cut speculation ahead of the Fed’s mid-month meeting, and 10 September televised debate between Kamala Harris and Donald Trump have been weighing on the market.

Analysts are increasingly wondering if this may signal the end to chip mania, which had until recently been the main driver pushing US stock markets to historic records. After all the money that has been pumped into chipmakers over the last year and a half, a period of reflection and readjustment may be a matter of course, thinks Jackson Square Capital’s Andrew Graham, telling Reuters that “all tech revolutions go through periods of disillusionment.”

But high expectations aren’t Nvidia’s only problem, with it being reported on the same day that the US Department of Justice has subpoenaed Nvidia in an antitrust probe.

It wasn’t much calmer in the oil markets, with Brent crude falling 4.9% to settle under USD74 and wiping out gains the black stuff had made throughout the year. Driving the fall was news that Libya is ready to turn back the tap back on. A dispute between competing political factions over oil revenue and control of the central bank had effectively stopped exports on the formal market.

AND IN OUR CORNER of the world, Riad Salameh faces the music … again. Former Banque du Liban head Riad Salameh was arrested yesterday in Beirut for alleged financial crimes related to USD 110 mn he amassed through the Lebanese central bank’s dealings with brokerage firm Optimum Invest.

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

In today’s issue: We look into what the government has done — and has yet to do — in the lead up to the Grand Egyptian Museum's official opening.

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Beauty unveiled amidst ancient wonders: Celebrate the beauty, nature, and cultural legacy of 30 nations as Miss Elite 2024 returns to the enchanting shores of Somabay from 2-14 September. For the fourth consecutive year, Somabay is hosting this prestigious international beauty pageant, celebrating women’s beauty and intelligence on a global scale. Experience the fusion of antiquity and modern elegance by attending the Grand Finale on 13 September at Mazeej Soma Beach Platform.

2

ECONOMY

Egypt’s non-oil private sector activity grows after three years in contraction

Finally in the green: Non-oil private sector activity expanded in August for the first time in over three years, S&P Global’s Egypt Purchasing Managers’ Index (PMI) (pdf) report showed. The report pointed to more stable demand conditions thanks to “market recovery amid improved macro-economic factors and rising export business” as an important reason behind activity finally increasing.

It’s been a long time coming: The index rose to 50.4 in August, up from 49.7 in July. The country’s non-oil private sector has been in contraction since November 2020, but has been flirting with the 50.0 mark that separates growth from contraction since May thanks to cooling inflation and growing confidence.

Growth across the board — almost: Demand stability reports encouraged companies to increase their output, expand their inventories, and hire more staff for the second consecutive month. However, weakening client demand resulted in a marginal decline in new orders.

But don’t celebrate yet, inflationary pressures persist: The EGP weakening against the greenback last month pushed input price inflation up for the third consecutive month. The report also pointed to an increase in transport cost — thanks to the latest fuel price hike — and a rise in salaries, explaining that “efforts to pass through higher costs to customers also resulted in an increase in average prices charged.”

“Rising price pressures are another risk — August data signaled the fastest uplifts in costs and charges for five months — which has the potential to limit spending and weaken the market recovery," S&P Global Market Intelligence Senior Economist David Owen noted.

Business sentiment rises to its highest level in years: Businesses had high expectations — their highest since mid-2022 — for future business activity last month.

The news is bolstering growth projections for the country: “Economic growth bottomed out at 2.2% in 3Q FY 2023-2024,” Fitch Solutions' director of MENA country risk Ramona Moubarak wrote, reaffirming the Madbouly government’s growth forecast of 4.2% for the current fiscal year. She pointed to “higher investment, a recovery in the manufacturing sector and a normalization of traffic through the Suez Canal (assuming the war in Gaza ends in H2 2024),” behind her forecast and explained that the high cost of living and issues with the oil and gas sector will prevent the economy from growing even further.

The international press also took note: Reuters | Bloomberg

ELSEWHERE IN THE REGION-

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3

DEBT WATCH

Qalaa settles EGP 3.34 bn of debt in exchange for a stake in Taqa

Qalaa officially offloads 18% stake in Taqa in debt settlement agreement: Qalaa Holdings has settled some EGP 3.35 bn worth of debt to four local banks in exchange for a 17.7% stake — 239 mn shares — in Taqa Arabia, according to an EGX disclosure (pdf).

The banks: Banque Misr and Banque du Caire each got a 4.9% stake in the company, while the Arab African International Bank got a 6.0% stake and Al Ahli Bank of Kuwait got a 1.9% stake. Silverstone Capital Investments — an entity controlled by Qalaa Holdings — transferred the shares in a block trade yesterday.

That’s not all: The agreement saw Qalaa settling its entire EGP 4.5 bn debt in exchange for the 17.7% stake in Taqa as well as a land plot overlooking the Nile. There was no mention of the land plot in the disclosure.

Remember: Under the agreement, Qalaa — Taqa Arabia’s parent company — will retain the right to repurchase its shares in the energy distribution company from the banks within the next five years, but if that doesn’t happen the banks can resell the shares back to Qalaa in the sixth year.

Advisors: The Arab International Law Firm represented the banks in the transaction, while Zulficar and Partners represented Qalaa Holdings and its subsidiaries.

Market reax: Qalaa’s shares rose 1.0% during yesterday’s trading to close at EGP 2.11, while Taqa saw its shares rise 2.3% during yesterday’s trading to close at EGP 14.62.

Qalaa has been working overtime to settle its dues: The holding company’s plan to retire some USD 430 mn in foreign-currency debt also included a debt buyback program that saw it raise over EGP 2.6 bn from shareholders.

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4

ECONOMY

Fresh details on the move to cash-based subsidies

What will cash-based subsidies look like? As we inch closer to the government scrapping in-kind subsidies and replacing them with cash subsidies, several questions linger regarding the new subsidy program — how it will work and how much will cash-based subsidies pay out?

Cash-based subsidies will range between EGP 500-1,250, a government source told Enterprise. A two-person household will receive a monthly EGP 500, three-person households will receive EGP 750, while four-person households will be getting a monthly EGP 1,250. Households with more than four members will not be eligible for any subsidies, our source told us.

Annual increases: The sums suggested will be raised annually in line with inflation levels, the source said.

It will be a gradual transition: The first year of implementation will see both in-kind and cash-based subsidies granted to households — in-kind subsidies will exclude oil and sugar.

How will the funds be distributed? Families will receive their cash subsidies through a card that can be used just like a prepaid card in retail stores.

The timeline: Prime Minister Moustafa Madbouly last week said that he hopes to see the initial phases of the implementation of cash-based subsidies at some point during the next fiscal year. The matter has already been discussed by the National Dialogue, which is now in talks with the government over how it could be implemented, he said.

Remember: Slashing subsidies and moving towards direct cash-based assistance is one of the steps the International Monetary Fund is eager for us to carry out.

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5

Energy

Mitsubishi and another undisclosed Japanese firm selected to set up 20 MW solar power plant in Egypt’s Hurghada

Is Hurghada finally getting its 20 MW solar power plant? A Japanese consortium was selected to set up a EUR 90 mn, 20 MW solar power plant in Hurghada, Al Mal reports, citing Electricity Ministry sources. The consortium may decide on a local partner to take on the design and construct of the project as well as operate and maintain it for two years.

The players: The consortium consists of two companies — Mitsubishi and another undisclosed firm — and it was the only participant in the tender, the sources said.

Years and years in the making: The project first came to light in 2016 before being put on hold for two years, until JICA agreed to provide the New and Renewable Energy Authority (NREA) with a USD 106 mn loan for the project. At the time, the power plant was set to kick off operations in mid-2019.

When can we expect the final agreement? The Madbouly government and the Japanese side are currently in negotiations regarding the financials and are expected to ink the final contract in 4Q 2024 for the plant to be up and running in 2026. NREA has obtained the necessary licenses for the project and an electrical connection was set up to link the station with electricity transformers.

A first for us: The Hurghada solar station will be Egypt’s first to be equipped with a battery to store energy.

Another step towards our ambitious renewables target: The project is the latest in a long list of renewable projects in the pipeline as the state works towards its goal to add 28 GW of renewable energy to the country’s energy mix over the next five to seven years.

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6

M&A WATCH

What’s next for EGX-listed Middle East Glass?

What’s next for Middle East Glass? Late last month, MENA Glass Holding upped its stake in EGX-listed bottle maker Middle East Glass (MEG) to 93.7% in an EGP 2.8 bn transaction. Now that the dust has settled on the acquisition, we spoke with Middle East Glass CEO Tawfik Laham to learn what’s next for the company.

Remember: MENA Glass Holding acquired an additional 40.2% in MEG after stakeholders agreed to offload 25.1 mn shares. MENA Glass had submitted a mandatory tender offer to acquire an additional 40.8% — 25.5 mn shares — in MEG in a USD 57.8 mn transaction.

MENA Glass bought up Gulf Capital’s stake: Private equity firm Gulf Capital exited the company, selling its entire 36.9% stake. “It is normal for any private equity firm to exit its investment after a certain period of time,” Laham told Enterprise, adding that Gulf Capital was a very good partner that added value to MEG — operationally and financially.

The added value: “Gulf Capital’s growth investment enabled MEG to become the largest glass packaging manufacturer in the Middle East and the second largest in Africa,” the private equity firm said in a statement (pdf). The firm also helped the glass maker double its production capacity, set up new production lines, and increase its exports.

Now that Gulf Capital is out of the picture, what can we expect from MEG? The main objective for the company at the moment is growth — “we are working on setting up our fourth factory and enhancing and improving efficiency in existing plants,” Laham said, adding that the company plans to “significantly” increase its capacity over the coming 3-5 years and expand its exports.

As things stand: The company has three glass factories with 17 production lines and six furnaces. It exports over 50% of its production to over 25 markets, making it one of Egypt’s top five exporters. “The company was the first glass exporter in Africa,” Laham said.

MEG has no plans to exit the EGX, Laham tells us. “We definitely will stay listed … being an EGX-listed company will help us to grow regionally in the future,” he said.

Advisors: EFG Hermes was tapped to broker the acquisition, while Bahaa Eldin Law Office and MENA Associates acted as the buy-side legal advisor. MEG tapped Tanami Financial Advisory as its independent financial advisor to conduct the fair value study, while Arqaam Capital was the sell-side financial advisor and White & Case was the sell-side legal advisor.

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7

Automotive

Egypt to lag behind North African peers in vehicle production over next decade, despite strong production forecast for 2024

Egypt’s auto production to grow, but at a slower pace than its neighbors: The country’s vehicle production is expected to witness steady increases over the coming years, but will likely fall behind regional competitors, according to a recent BMI report.

The numbers for the year ahead: The report expects Egypt to produce 37k vehicles in 2024, putting the country second place in the region above Algeria with an expected 17.4k vehicles and way behind Morocco in first place with 614k vehicles — marking it as the largest auto producer in the whole of the continent.

Long-term outlook shows modest growth: BMI sees Egypt's vehicle production growing at an average annual rate of 11.4% between 2024 and 2033, reaching just under 83.5k vehicles by the end of the forecasted period.

The rationale: BMI attributed its “strong” vehicle production output in 2024 to “anticipated FX stabilization period and the easing of import restrictions.” Also, “the reduction in currency fluctuation will provide much-needed certainty for manufacturers, which will support a more stable business landscape in which to scale up production.”

Remember: The Madbouly government has been working to localize the auto industry, introducing the Egyptian Automotive Industry Development Program (AIDP) in 2022, which will offer incentives to auto players with the aim of localizing the industry and its feeder industries, with the aim of enhancing the country’s existing assembly and manufacturing capabilities — and of encouraging new investment to the sector.

But Algeria and others look set to outpace us: While Egypt’s forecast represents significant growth, it lags behind the more optimistic growth forecasts for other North African markets. Algeria is expected to see production grow an annual 36.5% over the period between 2025-2033 and have an annual output of 236.7k units by end of the period — over 180% more than what Egypt is expected to produce. According to this trajectory, Algeria is expected to nudge Egypt out of its place as North Africa’s second largest auto producer by 2026. Morocco is expected to expand output 6.8% every year until 2033 and remain at the top of the leader board with an eventual annual output of 1.1 mn vehicles.

SPEAKING OF- Chinese auto players eying Egypt: Representatives from 20 Chinese automotive companies are set to land in Egypt in the coming days to look into how they can sell their models in Egypt in the coming period, business development head at the Egyptian Auto Feeders Association Ehab Mohamed told Al Mal. The representatives will be meeting with a number of local car agents and importers to look into how they could enter the local market.

Read more: We dove into the government’s efforts to localize the auto industry in an InsideIndustry published earlier this week.

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8

Moves

Mashreq Egypt taps Amr Hassan as CRO

Mashreq Egypt has a new CRO: Our friends at Mashreq Egypt tapped Amr Hassan (LinkedIn) as the lender’s new chief risk officer (CRO), according to a statement (pdf). Hassan served as the bank’s head of corporate credit risk for over four years before assuming his new post. He brings over 20 years of risk management and credit risk analysis expertise to the role — he has held positions in several financial institutions, including Credit Agricole Egypt, Emirates NBD Egypt, and BNP Paribas Egypt.

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9

LAST NIGHT’S TALK SHOWS

Egypt rejects Netenyahu’s statements on the Philadelphi Corridor

Talk show hosts kept the spotlight on diplomacy last night after Egypt expressed its “complete rejection” of statements made by Israeli prime minister Benjamin Netanyahu in which the Israeli PM affirmed his commitment to keeping Israeli forces in the Philadelphi Corridor on the border between Egypt and Gaza.

Egypt responds to Netanyahu: In a statement issued by the Foreign Ministry yesterday, the government said that Netanyahu had “attempted to drag Egypt’s name into the matter to distract Israeli public opinion, hinder reaching a ceasefire agreement and hostage exchange, and obstruct mediation efforts being made by Egypt, Qatar, and the US.” Egypt emphasized its “total rejection of all allegations being made by Israeli officials in this matter,” adding that it holds the Israeli government responsible for the consequences of these statements “which exacerbate the situation, aim to justify aggressive and provocative policies, and lead to further escalation in the region.”

“Israeli officials have repeatedly described Netanyahu’s claims that the Philadelphi Corridor poses a threat to Israel as false, asserting that they are merely a pretext for thwarting any ceasefire agreement in Gaza,” military strategist and commentator Samir Ragheb told Sherif Amer on his program Yahduth Fi Masr (watch, runtime: 5:34). The topic received extensive coverage on other programs as well, including Ala Mas'ouleety (watch, runtime: 2:14) and El Sa’a El Sadesa (watch, runtime: 6:53).

President Abdel Fattah El Sisi’s inauguration of the Egypt International Airshow in El Alamein yesterday was also caught the attention of the talk show circuit, with advisor to the Military Academy for Postgraduate and Strategic Studies Hisham Al Halabi telling Ahmed Moussa on his program Ala Mas'ouleety that the exhibition “is expected to attract significant investments and place Egypt on the map of international exhibition tourism” (watch, runtime: 18:45). The topic was also covered by Azza Mostafa in El Sa’a El Sadesa (watch, runtime: 5:40).

And in rosier diplomatic news, the programs continued their coverage of President Abdel Fattah El Sisi’s visit to Turkey, set to begin today. Speaking to Sherif Amer on his program Yahduth Fi Masr, Turkey’s ambassador to Egypt Salih Mutlu Sen said that El Sisi’s first visit to Ankara as president is “historic and of special significance” (watch, runtime: 12:35). He added that his country is “seeking to reconcile with Egypt after a period of stagnation” in relations, noting that the Israeli assault on Gaza will be among the main topics that El Sisi and Erdogan will discuss.

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10

ALSO ON OUR RADAR

BP to invest USD 400 mn in two new wells. PLUS: Agiba, Pickalbatros, Juba, Alexandria Port Authority, El Araby Group, carbon credits

ENERGY-

#1- BP to ramp up production: Global energy giant BP plans to invest USD 400 mn during the current fiscal year to drill two new wells at the Raven natural gas field in its North Alexandria concession, Asharq Business reports, citing an anonymous government official. The two wells will add a combined daily 400 mn cubic feet of gas to its output. The first well will go live next month — adding some 200 mn cubic feet of gas and 8k barrels to the company’s overall output — and the second will go live in February.

More and earlier than expected: Last July, the Oil Ministry said that BP plans to invest some USD 200 mn to drill two new wells at its Raven field, with the new wells adding 200 mn cubic feet of gas to its overall output by the third quarter of the fiscal 2024-2025.

Oil players have been ramping up their activity in Egypt after the government started clearing its arrears to foreign oil and gas companies operating in the country and the recently-introduced incentive package for oil and gas players helped sweeten the pot even further.

#2- Agiba to bring three more rigs online this week: Agiba — a JV between energy giant Eni subsidiary IEOC and the Egyptian General Petroleum Corporation (EGPC) — will start operating three of its rigs next week, Eni announced yesterday. This came during Oil Minister Karim Badawi’s visit to Italy to meet with Eni officials and look into enhancing cooperation between Egypt and the Italian oil giant.

ICYMI: Prime Minister Moustafa Madbouly said last month that the oil minister will be meeting with foreign energy players with the aim of boosting local production starting early 2025. After months of blackouts and then setting aside USD 1.2 bn for energy imports, the government has been noticeably more proactive in its efforts to try to get local energy production rates back up.

HOSPITALITY

Red Sea hotels have raised their prices some 10-15% during 2024 so far, Red Sea Tourism Investment Association Chairman and Pickalbatros Hotels & Resorts CEO Kamel Abou Aly told Al Arabiya. In tandem with this, average occupancy rates in Red Sea hotels rose to 75% over the past two months, he added.

MANUFACTURING-

Another fertilizer factory incoming: Local agricultural development firm Juba plans to set up its first fertilizers and agricultural nutrients factory — in partnership with local investors — with plans to kick off operations for the EGP 50 mn facility in early 2027, chairman Eslam Madina told Al Mal. The factory will be set up on a 3k sqm plot in Sadat City and will have a production capacity of 350-400 tons a month during its first year, which will then increase to up to 500 tons by early 2028. The company will initially produce 20 products with plans to expand its portfolio to 100 products by 2029.

Exports on the agenda: The is looking to tap two new export markets — Saudi Arabia and Lebanon — with plans to earmark 30% of its production to exports.

LOGISTICS-

Loading and unloading companies at ports told to upgrade equipment: The Alexandria Port Authority has instructed companies involved in loading and unloading cargo from ships — known in the industry as stevedoring — to develop a five-year plan for upgrading their equipment, AlMal reports, citing a circular by the authority. The initiative, which will prohibit companies from using outdated equipment after the five-year deadline, aims to align shipping and unloading rates with global standards.

DEBT-

El Araby Group secures EGP 1.9 bn loan: Electronics and home appliances manufacturer ElAraby Group has secured EGP 1.9 bn in financing from the Suez Canal Bank, AlMal reports, citing sources it says are in the know. The funds include a five-year EGP 1.1 bn loan for expanding logistical capabilities and upgrading equipment in addition to a short-term EGP 800 mn loan for boosting working capital and facilitating local purchases.

CAPITAL MARKETS-

All aboard the carbon market: The Financial Regulatory Authority (FRA) has registered 12 new carbon reduction projects to its newly-launched carbon market, according to a statement from the authority. All 12 projects are certified under Egyptian Biodynamic Association’s Economy of Love standard, which aims to support small-scale farmers as they switch to organic and biodynamic farming methods. They will offer over 13.2k carbon credits that will help reduce 13.3k tons of carbon emissions.

Remember: Egypt launched Africa’s first carbon market last month, allowing companies to issue and trade voluntary carbon certificates in Egypt and Africa, which can be bought by other companies wanting to offset their emissions.

FINTECH-

A new fintech accelerator in town: EG Bank launched the MINT fintech accelerator, in partnership with USAID’s Business Egypt program and DAI Egypt, according to a statement (pdf). The accelerator aims to support fintech startups by providing funding, training, and mentorship as well as connecting entrepreneurs with potential partners.

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11

PLANET FINANCE

The USD lost 2% against other major currencies in August 2024

The USD took its steepest dive of the year in August, losing over 2% against other major currencies as markets anticipated the US Federal Reserve might cut interest rates amid signs of a slowing economy, Reuters reports. The greenback nevertheless rose to a two-week high yesterday, as markets braced for a series of key economic reports, including Friday's U.S. Jobs report, which pundits think will help set the tone for the US Federal Reserve’s next three interest rate meetings.

The USD’s fall eased pressures on most global markets, particularly in Japan, offering breathing space for (emerging) markets to cut rates and become more sensitive to domestic growth issues, Reuters suggests.

Currencies in Latin America gained no ground on the greenback in August thanks to economic troubles and shaky commodity prices.

The weaker USD positioned the EUR and GBP as the top-performing major currencies this year, with the GBP above USD 1.30, up over 25% since its record lows, and the EUR above USD 1.10. Sweden’s SEK was the best-performing major currency, rallying 4% in August.

THE MARKETS THIS MORNING-

Asian markets fell sharply in early trading this morning, mirroring yesterday’s tech-led selloff on Wall Street. Japan’s Nikkei and Taiwan’s Taiex were each down more than 3%, while Australia’s ASX 200 was off 1.7%. Benchmark indexes in China have so-far been least impacted: The Shanghai Composite is down 0.6% and the Hang Seng is off 1.5%.

Futures suggest we can expect more of the same in Europe as well as on Wall Street and Bay Street when trading opens there later today.

EGX30

31,018

+0.9% (YTD: +24.6%)

USD (CBE)

Buy 48.43

Sell 48.57

USD (CIB)

Buy 48.45

Sell 48.55

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,180

+0.1% (YTD: +1.8%)

ADX

9,379

+0.2% (YTD: -2.1%)

DFM

4,370

+0.3% (YTD: +7.6%)

S&P 500

5,529

-2.1% (YTD: +15.9%)

FTSE 100

8,198

-0.8% (YTD: +7.3%)

Euro Stoxx 50

4,913

-1.2% (YTD: +8.7%)

Brent crude

USD 73.75

-4.9%

Natural gas (Nymex)

USD 2.20

0.0%

Gold

USD 2,524.20

+0.1%

BTC

USD 58,149.10

-1.5% (YTD: +37.4%)

THE CLOSING BELL-

The EGX30 rose 0.9% at yesterday’s close on turnover of EGP 5.0 bn (27.5% above the 90-day average). International investors were the sole net sellers. The index is up 24.6% YTD.

In the green: Abu Qir Fertilizers (+4.9%), Juhayna (+3.3%), and Cleopatra Hospitals (+2.4%).

In the red: Palm Hills Development (-1.7%), Eastern Company (-1.6%), and Orascom Construction (-1.1%).

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Our weekly deep-dive into infrastructure in Egypt.

Published every Wednesday in EnterpriseAM.

Read Hardhat
12

HARDHAT

Egypt gears up to unveil the Grand Egyptian Museum as construction nears completion

The Grand Egyptian Museum (GEM) is nearing its grand opening, with the government adding the final touches ahead of the highly-anticipated full opening after significant delays thanks to the Covid-19 pandemic and the Russian-Ukrainian war. In today’s HardHat, we look at what has been done, what is left to get down, and what we can expect when the government officially raises the curtains on GEM.

Construction completed, infrastructure work underway: Construction work on the GEM has been fully completed, with work now focused on finalizing key infrastructure projects in the surrounding areas to ready the site to make its official debut, Maj.Gen. Atef Moftah, who is supervising the project, told Enterprise. The electrical grid is being upgraded and new rainwater drainage systems are being installed in the surrounding areas, he said, adding that work is underway to complete the construction of walkways connecting the museum to the area near the Mena House Hotel.

Refresher: The government announced earlier this year that all works on the museum would conclude in February, with the official opening to follow shortly after. The museum has been partially open for some time now, hosting a number of events and exhibitions, but the galleries displaying its permanent collection have not been open to visitors.

A landmark state-of-the-art project: Spanning 300k sqm, the GEM is a huge project. The museum's exhibition space alone covers 45k sqm, while an additional 55k sqm have been allocated for commercial and retail development in partnership with private sector players — about half of which are already operational, according to Moftah. The project utilized the latest tech and was meticulously planned — it received the International Finance Corporation’s (IFC) EDGE Advanced Green Building Certification, becoming the region’s first museum to receive the certificate.

In numbers: “GEM's resource efficient and climate-smart design and construction is helping the museum save more than 60% in energy costs and reduce water use by 34% compared to a conventional building of its type and size,” according to the IFC.

GEM could also stand for the Green Egyptian Museum: A dedicated 1 GW solar power plant has been set up to supply the museum with energy, with plans to eventually expand the plant's capacity to 10 GW as energy demands grow, according to Moftah. The museum also features a massive 300 cubic meter rainwater harvesting tank, allowing captured precipitation to be filtered and reused, reducing reliance on municipal water sources.

A net-zero museum? Moftah told us that the museum was built with carbon emission reduction mechanisms installed to achieve near-zero emissions. This includes using eco-friendly materials, relying on solar energy for lighting, and utilizing electric golf carts to lower emissions. GEM aims to become the world’s first museum to achieve zero carbon certification, with plans to secure the certification shortly after the museum becomes operational, according to Moftah.

GEM carbon certificates? The Madbouly government plans to issue carbon certificates for the museum once it begins operations, Moftah told us. Last month, Egypt launched its voluntary carbon trading market — the first in Africa. The market allows companies to issue and trade voluntary carbon certificates in Egypt and Africa, which can be bought by other companies wanting to offset their emissions.

Connecting Cairo’s past and present: The Transport Ministry is working on a corridor that will link GEM to the Giza Plateau, creating a seamless connection between two of Egypt’s most iconic sites. The museum will house over 100k artifacts, with around 20k on display and the rest securely stored in state-of-the-art scientific storage facilities to be studied and preserved. Specialized storage units for organic materials such as wood and leather, as well as for metals and stones, are also part of the museum's extensive infrastructure.

What remains to be done: Only minor tasks remain, such as the finishing touches on the surrounding areas, according to Moftah, who added that the museum itself, its outdoor spaces, landscaping, and the installation of electromechanical systems and smart communication and security systems has all been completed.

No impact from the March float: Moftah told us that the major construction and infrastructure work were completed before the float of the EGP in March hit construction costs — the project's value has significantly increased due to the ongoing rise in costs.

Ushering a new era for tourism in the capital: GEM is set to revolutionize Cairo's appeal as a tourist destination once operational, Moftah told Enterprise. Currently, most tourists spend only “one or two nights in Cairo before embarking on their tours to other tourism destinations like the Red Sea or other leisure tourism spots. However, the goal is to extend the average Cairo visit to three to five nights with the museum's opening and the development of surrounding areas, with a focus on cultural and eco-tourism,” Moftah told us.

Your top infrastructure stories for the week:

  • Vodafone Egypt has launched a new network frequency software system in cooperation with Huawei that the company expects to improve network performance, connection speed, and quality of service, according to Hapi Journal. The company has invested USD 540 mn in the new infrastructure, the outlet reports.
  • An African investor-focussed freezone is in the cards: The gov’t is mulling the creation of a freezone for African investors as part of the government’s long-term goal of increasing trade with the continent.
  • East Qantara Dry Port to kick off operations mid 2025: New Suez Canal for Dry Ports and Logistics Services plans to start operating the East Qantara Dry Port by mid 2025, with 70% of the port’s superstructure having already been completed.
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CALENDAR

2024

SEPTEMBER

2-3 September (Monday-Tuesday): The Seamless North Africa conference, Cairo.

3-5 September (Tuesday-Thursday): Egypt International Airshow, El Alamein International Airport.

4-5 September (Wednesday-Thursday): The US-Egypt Joint Economic Committee meeting, Washington.

5 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

9-12 September (Monday-Thursday): The annual EFG Hermes London Conference.

9 September (Monday): Egyptian delegation to visit Iraq.

10 September (Tuesday): The fifth edition of technology conference Tech Invest will take place.

10 September (Tuesday): Finance Minister Ahmed Kouchouk to speak at AmCham luncheon, Nile Ritz Carlton, Cairo.

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

16 September (Monday): Egypt-UK Investment and Opportunities Forum, London.

24 September (Tuesday): Enterprise Finance Forum, Cairo, Egypt

25-26 September (Wednesday-Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

25-28 September (Wednesday-Saturday): Cityscape Egypt, Egypt International Exhibition Center, Cairo.

30 September (Monday): Ban on sugar exports expiration.

30 September (Monday): Portfolio Egypt 2024, Nile Ritz-Carlton, Cairo.

OCTOBER

1-3 October (Tuesday-Thursday): Cairo Sustainable Energy Week, Cairo, Egypt.

6 October (Sunday): Armed Forces Day.

10-12 October (Thursday-Saturday): Egy Health Expo, Egypt International Exhibition Center, Cairo.

10-12 October (Thursday-Saturday): The FinExpo Conference and Exhibition, Cairo.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-17 October (Sunday-Thursday): Cairo Water Week, Water and Climate: Building Resilient Communities, Cairo, Egypt.

20-22 October (Sunday-Tuesday): Mediterranean Offshore Conference (MOC), Alexandria, Egypt.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

NOVEMBER

4-8 November (Monday-Friday): World Urban Forum, Cairo, Egypt.

12-15 November (Tuesday-Friday): Arab African Investment and International Cooperation Summit, Aswan, Egypt.

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

26-28 November (Tuesday-Thursday): Egypt Energy Show, Cairo, Egypt.

30 November (Saturday): Deadline to apply for renewable energy projects under the peer-to-peer (P2P) system.

DECEMBER

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

EVENTS WITH NO SET DATE

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

3Q 2024: Egyptian-Armenian Joint Committee.

September 2024: Turkish-Egyptian Business Council meeting in Turkey.

November 2024: Egypt to host the World Urban Forum (WUF12).

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

2025

July 2025: The first operational trail of Egypt-KSA electricity interconnection line.

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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