REGULATION WATCH- FRA issues new regs on licensing of microfinance providers, sets minimum capital at EGP 15 mn: The Financial Regulatory Authority (FRA) issued amendments yesterday to the regulations that govern the establishment and licensing of microfinance firms, Youm7 reports. Under new rules, microfinance outfits must have a minimum issued capital of EGP 15 mn and initial paid-in capital that is equal to at least 50% of that amount and which increases gradually over a three-year period. The rules also stipulate that no one person, entity, or group can own more than 49% of a microfinance firm without receiving a non-objection from the FRA.

What about licensing fees? The annual licensing fees that microlenders will have to pay — which have been capped at EGP 100k — will be equivalent to 1% of their paid-in capital and increase gradually as capital rises. The FRA will also be claiming a quarterly tithe of 0.05% of the total funding extended by a firm during the three-month period. The FRA had issued new regulations in May for the licensing of non-banking financial institutions, which set out stipulations on ownership structure and regulatory framework.

CABINET WATCH- The Madbouly Cabinet signed off yesterday on a draft Data Protection Act, which is meant to set the ground rules for the handling and processing of personal information online and otherwise, according to an official statement. The bill, which will be presented to the House of Representatives at the start of the fall legislative term, makes it mandatory for companies to obtain users’ prior approval for data sharing, setting prison terms of at least one year and fines of EGP 100k-1 mn for violations and data breaches. It also includes provision to guarantees users’ right to access their private data at any time. We had previously heard that the new act would also give users the right to take legal action against parties responsible for data breaches and misuses of private information,

Data protection officers with powers of arrest? The law will also establish a data protection unit inside the Information Technology Industry Development Agency (ITIDA), whose members will be appointed by the Justice Minister and given powers of arrest, the statement said. The center will be responsible for implementing the law, as well as setting strategies, policies, and systems for data protection.

Also approved at yesterday’s weekly cabinet meeting:

• A decision allowing the National Telecommunications Regulatory Authority to invest EGP 600 mn in state-owned Silicon Waha;
• A decision to award the military-owned El Nasr Co. For Services & Maintenance (Queen Service) a one-year contract to clean and service the historical sites around the Giza Pyramids.
• The allocation of state-owned land in downtown Alexandria to the Electricity Holding Company to build a transformer station.

Railway Authority to purchase equipment from Austria’s Plasser & Theurer under EUR 6.8 mn contract; will use the gear to to measure health of railway track: Egypt’s Railway Authority signed a EUR 6.8 mn agreement with Austria’s Plasser & Theurer yesterday to purchase the latter’s railway track surveying vehicle, the EM100U. The vehicle uses ultrasonic waves to measure the health of railway tracks and detect flaws, according to a cabinet statement. Transport Minister Hisham Arafat said the equipment is expected to help the government accurately determine weak points in the country’s railway track network, which require immediate attention, adding that he expects the vehicle to complete a full sweep of tracks across the country within a month.

Why is such a small contract getting such big play? Dozens of people were injured when two trains derailed last month, one each in Upper Egypt and Giza. Preliminary findings had suggested that a lack of maintenance on the track was responsible. The government had begun to take steps to overhaul the railway sector earlier this year, after a train collision in Beheira left 12 people dead and 39 others injured. Among the steps was the passage of amendments to the Railway Act that allow the private sector to participate in developing, managing, and operating railway projects.

This comes as we hear that France’s Systra won a EGP 50.2 mn contract to carry out the design work and plans for the extension of the Cairo Metro Line 2. The National Authority for Tunnels rejected the offer submitted by Lebanese consultants Khatib & Alami, which did not meet tender requirements, sources close to the matter tell Al Mal. The list of bidders had also included Egis Rail, Setec, Artelia, and Dar Al-Handasah. The extension of Line 2 to Qalyub is expected to cost EGP 10 bn and comes as part of the government’s plans to upgrade railway services.

Is the government looking to hire the private sector to run retail outlets for state-subsidized goods? The Supply Ministry is just a week away from finalizing the template of a contract that will outline its future partnerships with the private sector on the development and management of state-controlled food retail outlets, ministry spokesman Ahmed Kamal tells Al Mal. 10 privately-owned hypermarket retail chains, including Carrefour, Spinney’s and Metro have already approached the Ministry about the possibility of being contracted to upgrade and operate outlets where subsidized commodities are sold, he adds, refusing to disclose any more detail. Minister Ali El Moselhy had met with executives from various retail chains last week to discuss the framework for their potential partnership, Kamal added. We noted last month that the House of Representatives was looking to amend existing laws on state cooperatives, with the aim of creating one unifying legislation to govern the different types of outlets that sell subsidized commodities.

MOVES- Finance Minister Mohamed Maait appointed Kamal Negm to lead the Customs Authority, Youm7 reports. Negm replaces Amr El Kholy who was appointed as an interim headafter ex-boss Gamal Abdel Azim was arrested last month on charges of accepting bribesworth EGP 1 mn in exchange for facilitating the clearance of goods from customs. Negm was the head of the Central Administration of Customs in Damietta.

MOVES- Cisco has appointed Ayman El Gohary as the new general manager for Cisco North, West & Central Africa (NWCA), according to Youm7. El Gohary was named for the new position back in February, according to CISCO’s official website. El Gohary was most recently the general manager for Cisco Egypt, Libya and Sudan.

White taxi drivers turned down a proposal from ride-hailing app Careem to begin discussions about including them in the company’s fleet, Country Planning Director Haitham Nassar said yesterday, Al Mal reports. Cab drivers apparently believe that joining Careem’s fleet would put them at an unfair advantage and force them to bear administrative fees they would not have to pay otherwise, said the head of the White Taxi Association Mahmoud Abdel Hamid. The white cab ride-hailing service through Careem would be priced 25% lower than the company’s main service, Nassar said, however, adding that studies are ongoing to determine which Nile Delta cities to pilot the service in first. The Ride-hailing Apps Act — which was approved by the House of Representatives in May — requires ride-hailing companies to incorporate white taxis into their fleets.

They don’t want to integrate, they want to compete: It is also worth noting that this is the very same White Taxi Association that has not only attempted to snuff out the Ride-hailing Apps Act, but is also readying to launch its own competing ride-hailing app. This is more about competition than anything else.

Foreign Minister Sameh Shoukry had a very busy day yesterday in Washington, meeting with US business leaders, state department officials and US National Security Adviser John Bolton. He sat down with business leaders representing US corporations including, Apache, ExxonMobil, Cargill, Lockheed Martin, and Honeywell. The meeting, which was organized by the US Chamber of Commerce, saw Shoukry invite US industrialists to establish a US Industrial Zone in the Suez Canal Economic Zone, according to a statement from the Foreign Ministry. Shoukry also highlighted that Egypt was interested in non-oil investment from US companies, ministry spokesperson Ahmed Abu Zaid said.

US aid to Egypt was the highlight of Shoukry’s meeting with Bolton, Abu Zaid said. Shoukry stressed to Bolton how crucial US aid, whether military or otherwise, was in Egypt’s fight against terrorism. The aid must be “nurtured and protected,” Shoukry added. The US restored USD 195 mn in military aid last month that it had suspended a year ago on human rights concerns.

Shoukry also gave Bolton the rundown on where Egypt stands in its anti-terrorism fight, with updates on the Armed Forces’ Operation Sinai 2018. Shoukry also discussed setting up 2+2 meetings between Cairo and Washington’s foreign and defense ministers. The latest on Syria, Libya, and Gaza was also on the agenda.

Gaza and Middle East peace process featured in Shoukry’s talks with Assistant to the President and Special Representative for International Negotiations Jason Greenblatt, who briefed Shoukry on talks he has had with regional players ahead of announcing the Trump administration's peace plan. The pair also discussed restoring aid to Palestinian refugees through the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), according to a Ministry statement.

Also on the diplomacy front, Egypt and Sudan reached a military cooperation agreement which would see them work together on border security and anti-terrorism operations, Xinhua reports. The agreement is the latest in a series of moves to de-escalate tensions between both countries over the Grand Ethiopian Renaissance Dam and trade.

Egypt stands with Saudi in Canada row: Egypt gave its support to Saudi Arabia against “any interference in its internal affairs,” according to a statement from the Foreign Ministry on Tuesday. The ministry said it was concerned at the level of escalation, with ministry spokesperson Ahmed Abu Zaid saying that the events were a result of a number of international actors interfering in the internal affairs of regional nations. He added that Egypt adheres to a strict policy of respecting the sovereignty of other nations.

The story so far: Egypt’s statement mirrored remarks out of the GCC on Monday and came after Saudi Arabia ordered Canada’s ambassador to leave the kingdom and suspended future trade. The row erupted after Canada’s foreign minister urged Riyadh to release women’s rights activists. The move, still front page in the global business press (“Saudi Arabia’s furious attack on Canada shocks western allies,” blares the headline in the Financial Times) potentially risks a USD 13 bn defense contract to sell Canadian-made General Dynamics Corp armored vehicles to KSA.

The UAE again underscored its support for KSA during UAE Defense Minister and Abu Dhabi Crown Prince Mohammed Bin Zayed’s visit to Cairo yesterday. In a joint statement with Ittihadiya, both Bin Zayed and President Abdel Fattah El Sisi declared their rejection of efforts by foreign countries to interfere in the internal affairs of others. Bin Zayed was in town to discuss regional issues.

Canada is looking to its allies, including the UAE and the UK, to help de-escalate tensions with Saudi Arabia, a source with knowledge of the matter tells Reuters. “The key is to work with allies and friends in the region to cool things down, which can happen quickly,” said the source.

One frenemy down south is not moving a finger: The US will not help Canada with its tiff with Saudi. “Both sides need to diplomatically resolve this together. We can’t do it for them; they need to resolve it together,” U.S. State Department spokeswoman Heather Nauert told a briefing. America could, in fact, be making things worse for Canada, CNBC argues.

Other US allies are holding their breath on another front after US President Donald Trump warned that any company doing business will be barred from the United States, Reuters reports. The statements came as the US re-imposed sanctions it had lifted after the signing of the 2015 Iran Nuclear Pact.