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Tuesday, 7 Nov 2023

What We're Tracking Today
Tourism
Debt Watch
War Watch
Legislation Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Going Green
Calendar

We’re on track to hit tourism targets despite Gaza war, Issa says

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Today at a glance

1

Tourism

Egypt on track to meet tourism targets despite Gaza war, says tourism minister.
2

Transport

Chinese firms eye big rail infrastructure contracts.
3

DEBT WATCH

United Finance closes EGP 617.5 mn securitization transaction.
4

WAR WATCH

Eight countries have now downgraded ties with Israel as war on Gaza rages on.
5

LEGISLATION WATCH

VAT hike on cigarettes now the law of the land, expected to raise EGP 8 bn for state coffers.
6

What We're Tracking Today

The FX crunch has Egypt bartering for tea.
7

Also on our Radar

Pico and Kufpec want to invest USD 119.5 mn in Gulf of Suez exploration.
8

PLANET FINANCE

MENA bond issuances tripled in value y-o-y in the first nine months of 2023.
9

Going Green

How startup accelerators factor into our green startup-ecosystem.

Tuesday, 7 Nov 2023

What We're Tracking Today
Tourism
Debt Watch
War Watch
Legislation Watch
Moves
Last Night’s Talk Shows
Also On Our Radar
Planet Finance
Going Green
Calendar
1

What We're Tracking Today

Wall Street heavyweights warn of impacts of war on struggling global economy

Good morning, friends. For the second time in as many weeks, we bring you a case for cautious optimism about the impact of Israel’s war on our tourism industry. This morning’s issue is also heavy on transport news after day two of TransMEA.

Before we dive in:

You don’t need to be a finance bro to read The Fund, a takedown of Bridgewater’s Ray Dalio. Indeed, the New York Times suggests you’ll get plenty out of the book even if you’re just hate-reading it because you’ve had a bad boss or two in life.

The quick take: Dalio “presided over a professional hellscape.”

Why the book matters: An icon in the hedge fund world, Dalio was famous for his reliance on Bridgewater’s “‘investment engine,’ a collection of hundreds of ‘signals,’ or quantitative indicators that a market was due to rise or fall. Bridgewater rarely revealed any details of these signals, citing competitive pressure, but if they pointed to trouble ahead or even to uncertainty, Bridgewater said it would buy or sell assets accordingly — even if Mr. Dalio’s own gut might have told him otherwise.”

The claim: That Bridgewater was a actually a one-man show — and the only “investment engine” was Dalio’s brain, not the team he built. (Also: That he may not have been a super-nice guy in the office.)

Why this matters: Dalio, the author of the much-talked-about (but rarely truly read?) Principles, has been positioning himself as an oracle in recent years, opining on everything from how to deliver world peace to why capitalism really needs to change even amid a succession fight at Bridgewater, one of the best-known hedge funds in the industry.

Decide for yourself: You can read an excerpt of The Fund or pick up a copy on Kindle here.

PSA- Want to fly to London for less than you’d pay a car service to drive you to Gouna? EasyJet is now running flights three times per week from Sphinx International in Cairo West to Luton for (wait for it) GBP 37 to GBP 93. Return fares on the Luton-Cairo West route are running in the GBP 110 range when we checked this morning. Those figures don’t include the usual EasyJet extras, but they mean the baseline for a filght is a price none of us have paid in 20 years.

HAPPENING TODAY-

It’s day three of TransMEA 2023 at the Egypt International Exhibition Center: The four-day transport, logistics and infrastructure conference brings together thousands of industry leaders, experts and policymakers to discuss developments in the sector. We’ve got full coverage of yesterday’s events in this morning’s news well below.

HAPPENING THIS WEEK-

Maait in Istanbul for Turkish-Arab forum: Finance Minister Mohamed Maait will be in Turkey on Wednesday to attend the Turkish-Arab Economic Forum.

Inflation figures are out soon: Capmas and the Central Bank of Egypt will publish inflation data for October on Thursday, 9 November.

WATCH THIS SPACE-

EnviroMin has an ambitious investment target for next year: The Environment Ministry is aiming to attract USD 600 mn in investment into six projects during 2024, Asharq Business reported Environment Minister Yasmine Fouad as saying yesterday. No further details were provided.

Remember: The ministry is trying to drum up investment for green projects and in September hosted a climate investment forum in partnership with the UN Industrial Development Organization (UNIDO).

DATA POINT- We reuse a third of our water supplies according to Water Minister Hani Sewilam, speaking during last week’s Cairo Water Week. Every year, we use 80 bn cubic meters of water, even though we only get 60 bn cubic meters. We bridge the gap by recycling and reusing roughly a third of our water supply.

SIGN OF THE TIMES- Egypt wants to barter for Kenyan tea: The Madbouly government is resorting to bartering with Kenya to continue importing black tea in a bid to protect FX reserves, Kenyan Treasury Secretary Njuguna Ndung’u said at a panel yesterday, according to Bloomberg. “We’ll get your tea and you also come and decide what you get from us,” Egypt’s ambassador to Kenya Wael Attiya is reported to have told the Kenyan government, according to the Kenyan official. This offer comes as the East African country is facing its own FX crunch, which pushed the KES to record lows against the USD.

FYI- Egypt is the second-biggest buyer of Kenyan tea in the world. Its imports were down 23% y-o-y during the first eight months of the year.

HELP GAZA-

Want to support relief efforts in Gaza, but don’t know how? We’ve got you. More than 1 mn people in Gaza have been thrown from their homes and every human being there lacks access to food, water, and fuel amid the most intense bombardment any population has endured this century.

The folks at Talabat are processing donations for a range of Gaza relief appeals by charities including the Egyptian Food Bank and Misr El Kheir. Pay in EGP using your credit card.

Or check out our list of charities to which you can make direct donations via bank deposit and / or Fawry.

THE BIG STORIES ABROAD-

The war in Gaza continues to dominate the front pages of the world’s business press. We have the latest on the conflict in today’s War Watch, below.

Running a close second: The 2024 US election cycle. Donald Trump, the presumptive Republican nominee, is polling ahead of Joe Biden in five of six battleground states, according to the New York Times. That’s setting up what the WSJ claims could be the “closest election in a generation” — and has the Financial Times suggestion on its front page that “Trump leads in 2024 polls as fears over war and economy hurt Biden.” Voters go to the polls in just under a year, casting their ballots on Tuesday, 5 November.

You can now create your very own chatbot: ChatGPT parent company OpenAI is allowing its Plus and Enterprise users to create customized AI bots dubbed GPTs to take on specific tasks, the company said in a statement yesterday. The company also unveiled a more knowledgeable and cheaper AI model for developers called GPT-4 Turbo. (Reuters | Bloomberg | Financial Times | New York Times | Washington Post)

The fight is on: The announcements come a day after X owner Elon Musk launched his AIchatbot Grok.

Google is on trial again: A jury in a San Francisco federal court yesterday kicked off a month-long trial against Google after Epic Games — the video game creator behind Fortnite — filed a lawsuit accusing the tech giant of violating federal antimonopoly law. Epic is accusing Google of monopolizing the Android app market by forcing developers to use its own payment system and charging excessive fees on Google Play. The lawsuit comes while Google is already engulfed in the biggest U.S. antitrust trial in a quarter-century over its alleged monopolization of the online search and advertising markets. (Associated Press | Washington Post | New York Times)

MARKET WATCH-

Geopolitical uncertainty stokes concern of a global recession among Wall Street players: “Rising fear” stemming from Israel’s war on Gaza and the war in Ukraine could push an already-struggling world economy “almost to a whole new future,” said Larry Fink, CEO of world’s biggest asset manager BlackRock, in an interview with the Sunday Times. The impact on energy markets, food prices, international trade, and diplomacy was “quite scary and unpredictable,” echoed Jamie Dimon, chair of the biggest US bank JP Morgan.

Safe-haven assets love volatility: Gold prices are close to reaching record highs as investors look to more stable investments in the current climate, said Tom Palmer, head of the world’s largest gold mining company Newmont Gold, in an interview with the Financial Times. Gold broke the USD 2k / oz threshold last week, according to Bloomberg, nearly reaching its all-time high of USD 2072 recorded during August 2020 on the back of economic shutdowns from covid.

CIRCLE YOUR CALENDAR-

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

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

In today’s issue: How startup accelerators are supporting our green startup ecosystem

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2

Tourism

Egypt on track to meet tourism targets despite Gaza war -tourism minister

Issa sounds positive note on tourism despite Gaza war uncertainty: Egypt is on track to meet its target of attracting 15 mn tourists this year despite the impact of the war in Gaza — and is introducing new incentives to support tourism in South Sinai, Tourism Minister Ahmed Issa said in an interview with Reuters.

Refresher:

  • 2023 has been a boom year for Egyptian tourism: Tourism — which is our largest source of foreign currency and either directly or indirectly supports one in every seven jobs in the country — had been experiencing something of a boom prior to 7 October. Revenues from tourism hit record highs in 3Q 2023 and tourism arrivals reached 11 mn in 7M 2023.
  • The mood changed on 7 October. As we reported last week, the market for regional package tours dried up alongside the Israeli tourism market, setting up a month that officials thought would be c. 10% ahead of last year’s figure — but 15% short of the Tourism Ministry’s target.
  • Prime Minister Moustafa Madbouly warned yesterday of the war’s potential impact on tourism during a meeting with ministers and central bank officials yesterday.

Much of the fallout has been contained, says Issa: Less than 10% of bookings have been canceled since the war started more than four weeks ago, and tourist numbers were up 7% y-o-y in the year through to the end of October, thanks to higher arrivals from Germany and China, the minister said, speaking on the sidelines of a travel industry fair in London. Egypt welcomed 1.3 mn tourists this October, up 8% on the same month last year, Asharq Business quoted him as saying.

The government is stepping up incentives: Egypt will offer package holiday companies an additional USD 500 per chartered flight landing in Sharm El Sheikh, which has raised the most concern among holidaymakers owing to its proximity to Gaza, Issa told Reuters. Egypt currently offers companies a subsidy between USD 1.3k and USD 3.5k when charter flights meet a certain occupancy rate, as an incentive for companies to attract higher footfall to the country. This policy was extended in 2022 and again this year.

That’s not all: We were told last week that senior government officials have begun damage control with several new responses to the crisis, which include convening a forum for key industry players, regulators and industry associations to put heads together, alongside increased marketing spend and allocations for familiarization tours by global tour operators.

We’re more vulnerable than other MENA countries: S&P Global yesterday named Egypt, Lebanon, and Jordan as those whose tourism sectors are most likely to suffer as a result of regional conflict — but the loss of USD weighs harder on Egypt’s economy, given our dwindling FX reserves and upcoming debt payments. Tourism revenue losses of 10-30% “could cost the country 4-11% of foreign exchange reserves,” the report warns.

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Planes, (a lot of) trains, and automobiles: Two days into the ongoing TransMEA 2023 industry event in Cairo, the state-run National Authority For Tunnels (NAT) has already signed a heap of contracts, framework agreements, and MoUs with Chinese, European, and local companies, the Transport Ministry said in a statement yesterday. Chinese firms seem to be set to continue spearheading much of our light-rail transit (LRT) project, Orascom Construction was chosen to help build a section of Metro Line 4, and the Madbouly government’s bid to localize manufacturing seem to be chugging along.

#1- LIGHT RAIL- All aboard the LRT: AVIC International Holding Corporation (AVIC INTL) and China Railway Major Bridge Engineering Group Co. inked a framework agreement to design and construct in collaboration with local subcontractors the 16-km fourth phase of Cairo’s LRT project that will extend the route into Tenth of Ramadan City. The value of the contract for the fourth phase will be the same as for the third phase contract, the statement said, without providing further details. AVIC — the main contractor for the LRT project — also signed an MoU for the fifth phase of the project that will reach into the new capital as well as an MoU for an light electric train that will link Al Rehab to the new capital.

Remember: AVIC has spearheaded the construction of the LRT from the start and has been working alongside a number of local contractors including Hassan Allam Holding, Orascom Construction, Concord, Arab Contractors, General Nile Company for Roads and Bridges, Egyptian Company for Maintenance of Roads and Airports, and Petrojet.

#2- HIGH SPEED RAIL- We may be getting a new high-speed rail line between Port Said and Abu Qir: Egypt-focused contractor El Didi Group and the Chinese Railway Group Limited (CREC) inked an MoU for a planned 250-km long high-speed rail line between Port Said and Abu Qir. The project will be carried out under a built-operate-transfer agreement, and the financing will be arranged by the contractors rather than the state, the statement said. No further details were provided

Déjà vu? Almost exactly a year ago, El Didi Group signed a similar MoU, which fell through due to changes in the financing arrangement.

ALSO- A number of local and international companies signed contracts to design, supply, and install the electromechanical systems for the 1.8k km national high-speed railproject led by Siemens.

  • Orascom Construction, Elsewedy Electric and Arab Contractors secured the contract for the first line running between Ain Sokhna and Marsa Matrouh.
  • Siemens Mobility, Orascom Construction, and Arab Contractors will install the systems for the second Sixth of October-Aswan line and the third Hurghada-Luxor line.

#3- METRO- Orascom Construction on board for Metro Line 4: Orascom Construction inked a contract to build the civil works for the stretch of Metro Line 4 between Giza and Fustat, it said in a statement (pdf). Details of the cost and terms of the contract were not disclosed, but the company said that a large part of the project will receive funding from the Japan International Cooperation Agency, which committed USD 733 mn to the project in April. The 40+ km line will connect Sixth of October to New Cairo and is expected to take six years to build.

#4- Local manufacturing also got another boost: The Egyptian Railways Authority inked a terms and conditions agreement with the Egyptian National Railway Industries Company (NERIC) to assemble 500 rolling stock, along with their maintenance and spare parts, over the span of 15 years, a second statement from the Transport Ministry said. NERIC also linked up with Spain’s CBS group through its subsidiary GTS to set up a local manufacturing plant for signaling devices.

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3

DEBT WATCH

United Bank’s United Finance closes EGP 617.5 mn securitization

United Finance jumps on the securitization bandwagon: United Bank’s financing arm United Finance raised EGP 617.5 mn in a securitized bond issuance, the transaction’s financial advisor Al Ahly Pharos said in a statement (pdf) yesterday. Al Ahly Pharos Investment Banking, the investment banking arm of the National Bank of Egypt’s Al Ahly Capital Holding, said that the bond was backed by a EGP 993 mn portfolio of leasing contracts.

DATA POINT- Egyptian companies have issued more than EGP 61.2 bn of securitized bonds so far this year, according to data tracked by Enterprise. That’s almost 35% more than what was taken to market across the whole of 2022 and more than three times the volumes in 2021.

The details: The United Finance bond was split into three tranches rated AA+, AA, and A by the Middle East Rating Services (MERIS).

The buyers: Al Ahly Pharos, the National Bank of Egypt, Banque du Caire (BdC), and Arab African International Bank (AAIB) acted as underwriters on the transaction.

Advisors: Al Ahly Pharos was the lead manager and arranger on the transaction, while AAIB acted as the custodian and BdC as placement agent. Dreny & Partners as legal advisor, and Baker Tilly Egypt as the transaction’s auditor.

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4

WAR WATCH

Eight countries have now downgraded ties with Israel as war on Gaza rages on

Blinken leaves the region empty-handed: US Secretary of State Antony Blinken ended three days of shuttle diplomacy in the region no closer to a consensus about the best way forward in Israel’s brutal war on Gaza, which has now killed at least 10k Palestinians, nearly half of them children. The Arab world continues to demand an immediate, unconditional ceasefire, Israel is refusing to dial back its bombing campaign or postpone its ground offensive, Hamas still has its hostages, and its allies in Lebanon, Tehran and Sanaa are still threatening to take the conflict regional. A final stop-over in Ankara yesterday for talks with the Turkish foreign minister doesn’t appear to have achieved much, either. It’s now over to CIA Director William Burns, who will this week visit Israel, Qatar and Egypt to push for the release of the hostages.

“Humanitarian pauses” have become “tactical pauses”: Biden yesterday discussed with Israeli Prime Minister Benjamin Netanyahu implementing “tactical pauses” to allow civilians to flee the fighting and aid to be delivered, the White House said last night. Washington will “continue to advocate for temporary localized pauses” and is “actively discussing” the idea with Israeli officials, White House spokesperson John Kirby told reporters. Israel did not publish a readout of the conversation.

The response wasn’t encouraging:Israel may stop the bombing “for an hour here, an hour there” depending on the circumstances, Netanyahu said in a televised interview with ABC News following his conversation with Biden (watch, runtime: 9:09).

Should Israel defeat Hamas, the occupation forces could be back on the ground in Gaza full-time:“Israel will for an indefinite period” have overall security responsibility for Gaza following the war “because we’ve seen what happens when we don’t have it,” Netanyahu said in the interview (watch, runtime: 0:30).

WHAT THE WORLD IS SAYING-

  • Eight countries have now curbed diplomatic ties with Israel: The South African government has recalled its ambassador to Israel due to what the country’s minister in the presidency said were breaches of international law and “genocidal” airstrikes. Eight countries have now either cut or downgraded ties with Israel, including Jordan which recalled its ambassador last week.
  • “Enough is enough. This must stop now”: The heads of 18 UN agencies and NGOs have signed a letter calling for an immediate humanitarian ceasefire and the release of hostages.
  • UN reiterates genocide warning: “What’s happening in Gaza now must be analyzed critically as genocide,” the UN special rapporteur on the Occupied Palestinian Territories, Francesca Albanese, said yesterday. ‘Racial or ethnic or religious groups are causing mass harm … and creating living conditions that might lead to the destruction of the group in total.”

ON THE GROUND- Israeli forces have begun to advance into Gaza City, having completely surrounded the urban center a few days ago. There remains little on-the-ground reporting about the course of the fighting, and neither the IDF or Hamas have released updated casualty figures.

  • The death toll: The death toll from Israeli strikes in Gaza has risen to at least 10,022, including 4,104 children, Gaza’s Health Ministry said yesterday.
  • Aid continues to trickle into Gaza:Fifty trucks of aid crossed Rafah into Gaza yesterday, Al Qahera News reported yesterday (watch, runtime: 0:40). This is just 10% of the 500 trucks that entered the strip every day prior to the war.
  • The “deadliest” war in history for UN aid workers: That’s according to the Guardian, which reported yesterday that at least 88 workers at the UN’s agency for Palestinian refugees (UNRWA) have died in Israeli airstrikes during the month-long war. The UN said yesterday that another fivehad been killed over the previous 24 hours.
  • Evacuation of foreigners resumes: Tens of foreign nationals left Gaza yesterday after border authorities reopened the Rafah crossing following a two-day suspension, Reuters reported, citing three Egyptian security sources. Hamas had prevented foreign nationals from leaving the territory after Israel began blocking wounded Gazans from receiving treatment in Egypt. Canadians are among those being allowed to leave today, Canada’s CBC reports.
  • A few more Palestinians were allowed through:Another 17 injured Palestinians were allowed to cross the border into Egypt for medical treatment yesterday, the Egyptian Health Ministry said last night.
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5

LEGISLATION WATCH

New VAT on cigarettes gets final sign off

Cigarette tax hike gets signoff from up top: The new VAT law on cigarettes, which adds EGP 0.50 to all tobacco products including heated tobacco products and liquid tobacco, was passed into law yesterday, according to a decision published in the Official Gazette. The tax is expected to raise some EGP 8 bn, according to House Planning and Budget Committee head Fakhri El Fiqi. MPs passed the draft amendment last week.

The official line is that the tax will somehow help stabilize the market.Retailers have been selling smokes far above the sticker price as supply has contracted. (Blame rising production costs and the FX crunch for poor supply.) The extra tax receipts will (somehow) help manufacturers shoulder the costs and increase production, the head of the Federation of Egyptian Industries’ tobacco division, Ibrahim Imbaby, said on Alaa Maso’uleety last night (watch, runtime: 10:40). We’re not entirely sure how that works — we’re looking into it and would love to hear from anyone with an explanation of how a new tax will help funnel cash into the coffers of manufacturers.

FX from Eastern Company’s new Emirati investor is also helping: State-owned tobacco manufacturer Eastern Company — which produces most of the country’s cigarettes, and which has felt pressure from the FX crunch and soaring inflation — received an injection of USD after selling a significant minority stake to an Emirati investor in September, which has also supported production costs, Imbaby said.

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6

Moves

Standard Chartered names Mohammed Gad as first Egypt CEO

Standard Chartered now has an Egypt CEO: British multinational lender Standard Chartered named Mohammed Gad as the CEO of Standard Chartered Egypt, according to a press release (pdf). Gad has more than 22 years of experience in the industry, and previously headed the bank’s branch in Qatar. Before joining Standard Chartered in 2012, Gad also held senior positions at Mashreq Bank and Arab Bank.

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7

LAST NIGHT’S TALK SHOWS

How will Israel’s war on Gaza impact the local tourism industry?

How will Israel’s war on Gaza impact the local tourism industry? That was the key question posed on the talk shows last night — and “don’t worry” was the key message:

  • The Tourism Promotion Board: “Ever since the war broke out, we have been in contact with tourism partners to ensure that our tourism markets know that the situation in Egypt is stable … we saw more tourists come in during October than we did during the same period last year,” Tourism Promotion Board chief Amr El Kady told El Hekaya’s Amr Adib (watch, runtime: 4:52). Last week alone we saw five flight operators announce new routes to Egypt, he added.
  • The House Tourism Committee: Although the conflict has “definitely affected” tourism numbers, the outlook for next year is stable with reservations in January and February remaining unchanged, committee chair Nora Ali told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 4:58).

** Tourism Minister Ahmed Issa spoke to Reuters on the issue. We have coverage in the news well, above.

Egypt wants to take in more wounded Palestinians, Health Ministry says: Kelma Akhira picked up the Health Ministry’s announcement that another 17 injured Palestinians crossed the border into Egypt for medical treatment yesterday (watch, runtime: 2:06). “We are prepared to take in and treat all kinds of illnesses and injuries … we are trying and we’re taking in all the cases that cross the border,” Health Ministry spokesperson Hossam Abdel Ghaffar told El Hadidi (watch, runtime: 4:32). “Our hospitals are prepared to take in much more than the 17 Palestenians who arrived today.”

WHO calls for humanitarian ceasefire:“We need the international community and international leaders to pressure the Israeli government to ensure the safe passage of aid to Gaza,” World Health Organization spokesperson Christian Lindmeier told El Hadidi (watch, runtime: 3:40). “We have been somewhat successful in delivering aid but we don’t have the necessary capabilities to deliver enough to sustain the people in Gaza.” We have the latest on Gaza in this morning’s War Watch, above.

El Sisi’s meeting with the president of South Sudan got some airtime: President Abdel Fattah El Sisi yesterday discussed the status of the Grand Ethiopian Renaissance Dam (GERD) negotiations during a meeting with South Sudanese President Salva Kiir, Ittihadiya said yesterday. The two highlighted the need to reach a binding agreement regarding the filling and operation of the dam. A third round of negotiations between Egypt, Ethiopia and Sudan wrapped up at the end of the October without signs of a breakthrough. Ala Maso’uleety (watch, runtime: 7:43) and Masa’a DMC (watch, runtime: 1:53) had the story.

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8

Also on our Radar

Pico and Kufpec want to invest USD 119.5 mn in Gulf of Suez exploration. PLUS: Equinox ups stake in Rameda, UAE embassy move, power generator plant

ENERGY-

Pico and Kufpec want to boost investment in oil exploration: Cheiron’s Pico Petroleum and the Kuwait Foreign Petroleum Exploration Company (Kufpec) will invest USD 119.5 mn over the coming five years to increase production at the Geisum and Tawila West concession in the Gulf of Suez, Al Borsa wrote citing an Oil Ministry document. The companies also requested that they be given 20-year licenses for the concession, so they continue operating and investing in the area after their current licenses expire in 2027.

Pico and Kufpec are ready to go: MPs last month authorized the Oil Ministry to contract the two companies to explore for oil at the concession, whose development lease is 60% owned by Pico and 40% owned by Kufpec.

M&A WATCH-

Equinox ups stake in Rameda: Rameda Pharma’s largest shareholder, Equinox Pharma, has purchased another 1.71% of the company in the past three months, raising its stake to 18.03%, Rameda said in a statement(pdf) yesterday. Equinox is owned by Compass Investment, which acquired 100% of Rameda in 2011 before listing it on the EGX in 2019.

INFRASTRUCTURE-

The Emirati embassy will move to the new capital: The UAE has purchased a plot of land in the new capital’s Diplomatic Quarter with the aim of relocating its embassy there, according to a statement (pdf).

MANUFACTURING-

Egyptian-owned manufacturer to inaugurate power generator plant before year end: Customized PowerTechnology Group (CPT) is building an EGP 500 mn power generator factory in the Tenth of Ramadan under the National Initiative of Developing Egyptian Industry (Ebda), Chairman and CEO Adham Abo El Nasr told Al Mal. The plant is expected to go online before the end of 2023, producing 10k generators a year, with plans to increase its annual production capacity to 12k generators by the end of 2024. The company plans to export around 7k power generators a year starting next year, mainly to African and Arab markets.

Two new factories in the pipeline: The company is also working to set up two new dieselengine factories under Ebda. The first will be inaugurated early 2024 and the second at a later undisclosed date.

What’s CPT? The Saudi-grown company kicked off operations in 2015 but it was recently acquired by Egyptian investors. The company specializes in power generators and hybrid power solutions manufacturing. Its USD 15-mn Badr City factory produces 2k generators annually.

COMMODITIES-

The Supply Ministry will auction off 66 gold bars and 41 silver bars on the Egyptian Mercantile Exchange next Tuesday, Al Borsa reported yesterday, citing a ministry official. All the gold put up for auction is government-owned, including that seized by the Customs Authority, Soliman said.

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9

PLANET FINANCE

MENA bond issuances tripled in value y-o-y in the first nine months of 2023

MENA debt issuances hit USD 61.1 bn in the first nine months of 2023: Debt issuances in the MENA region have nearly tripled in value y-o-y during the first nine months of 2023 to USD 61.1 bn, according to data from the London Stock Exchange Group’s (LSEG) Deals Intelligencereported on by Zawya.

It’s also been a good nine months for sukuk bonds: The sukuk bonds market registered its highest-ever nine-month period in terms of total value in 2023. The USD 26.1 bn raised accounted for 43% of total bond issuances across the region, up from 38% from the same period last year.

Saudi Arabia is leading the bond issuances boom: Saudi Arabia raised 50% of total bond proceeds during the first nine months of the year, followed by the UAE with 32% and Bahrain with 7%.

Government bodies and private sector issuers played an equal part: Issuances from state-related institutions accounted for 44% of the total value recorded, while private financial issuers drummed up 43% of the total amount.

But, figures are still down from 2017 to 2021: Despite the significant uptick in total value from the same period in 2022, figures for the first nine months of this year are still significantly lower than that recorded in the same period from 2017 to 2021.

Heavy outflows push China to its first-ever foreign investment deficit: China’s direct investment liabilities — a measure of foreign direct investments that includes foreign companies’ retained earnings — stood at negative USD 11.8 bn in 3Q 2023, according to the country’s quarterly balance of payments, marking the country’s first quarterly deficit since it began compiling the data in 1998. The deficit can be attributed to China seeing about USD 75 bn in net outflows in September, its biggest monthly outflows since 2016, on the back of an escalating crisis in its property sector.

Also driving the outflows: China’s 'lower for longer' interest rates, compared to the 'higher for longer' interest rates everywhere else, which “has led firms to remit their retained earnings out of the country,” Capital Economics’ Julian Evans-Pritchard told Reuters.

It’s not looking good: Capital continued to flow out of the country in October, with global funds pulling USD 3.1 bn from China and Hong Kong, Reuters wrote citing a Morgan Stanley report. “Increasing geopolitical tensions will hamper China's ability to attract FDI and instead [foreign companies will] favor emerging markets that are more friendly to the west,” Evans-Pritchard added.

ALSO WORTH NOTING- One vote for the Fed raising rates in Jan: Barclays now expects the US Federal Reserve to raise interest rates by 25 bps in January from its initial expectation for a December hike. The Fed left rates unchanged for a second consecutive meeting last week. (Reuters)

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THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 4.9 bn (101.7% above the 90-day average). Local investors were net sellers. The index is up 58.0% YTD.

In the green: Orascom Construction (+5.2%), Fawry (+4.7%) and Edita (+3.5%).

In the red: AMOC (-8.3%), Qalaa Holdings (-3.2%) and Oriental Weavers (-3.0%).

Asian markets are in the red this morning as the bounce in global equities that accompanied last week’s Federal Reserve meeting fades. Expect more of the same in Europe and the US later today, according to stock futures.

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

Published every Tuesday in EnterpriseAM.

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10

Going Green

How startup accelerators are supporting Egypt’s green startup ecosystem

The role startup accelerators play in Egypt’s green startup ecosystem: The role of climate-focused accelerator programmes is becoming increasingly important as growth-stage VC funding to climate tech startups is drying up in MENA and globally. Owing to the challenges green startups in Egypt face — including access to finance, sourcing technical assistance and talent, and a host of legal hurdles — climate-focused accelerators play an essential role in developing Egypt’s green economy ecosystem.

2023 wasn’t a good year for climate tech to land VC funding: While startups working in e-commerce, fintech, and logistics managed to attract investment, global VC and private-equity funding to climate tech dipped by 40% in 2023 due to economic uncertainty and a dip in investor confidence due to geopolitical tensions, according to a report by PwC. The report — which analyzed 8k climate tech startups and over 32k agreements worth more than USD 490 bn — also found more funding was occurring at the mid-stage than at the early stage for the first time ever for reasons including challenges around scaling or implementing capital intensive climate tech, as well as a challenging macroeconomic environment.

Enter accelerators: Accelerator programmes help catalyze the growth of young startups by providing access to mentorship, networking opportunities, and drumming up funds from external investors. Some programmes offer grants and others extend equity-based investments.

The award for most accelerated goes to … : Egyptian startups are the most accelerated in Africa, with almost 40% having taken part in some kind of acceleration or incubation programme, according to a 2021 report (pdf) by Disrupt Africa.

The rise of the green accelerator: Accelerators have come as a key policy recommendation to bolster climate entrepreneurship. MENA began building its first generation of accelerators some years ago, according to the US-based Center for Strategic and International Studies, reflecting that there is talent, interest and potential for the green startup ecosystem.

And there’s been moves at home: “Our efforts began three years ago in Tunisia with the Green4Youth program, after a growing awareness of environmentalism around the world,” Chief Programs Officer at Flat6Labs Yehia Houry told us. Flat6Labs’ Ebtekar Agritech Program has invested over USD 1 mn into Egyptian startups working in biotech, smart farming, internet of things (IoT), big data and AI, logistics and more.

Green means good business: “Our thesis has always been that making green investments is good business,” Changelabs founder Karim Samra told us. Samra’s Scale Up to Green accelerator helped to raise USD 2 mn of investment across its top six startups in the 2022 cohort. “The investors we put our startups in contact with are not “climate-focused” investors. VCs are realizing that there’s a huge opportunity in Egypt for agritech and waste management,” he added. “We were able to bring on nine corporate partners in the programme’s fourth cohort, as opposed to just one in the first cohort.”

And there’s more than one success story: Hydrofarms, a hydroponics company that saves 75% of water used in agriculture, is now expanding into Saudi Arabia. “We’re in the process of helping [company founder] Adel El Shentenawy raise USD 500k and introduced him to 80-90% of investors in that round,” Samra told us. Another company in the Changelabs portfolio, Tekaya, is soon expanding into Saudi Arabia and recently licensed in Japan.

Funding and support is more scarce in Upper Egypt: Athar is an accelerator based in Upper Egypt, which has graduated three cohorts of startups on its Green Accelerator, and launched an agribusiness incubator for women-led startups in Minya Governorate this year. “There are virtually no VC funds or angel investors in Upper Egypt,” said Athar founder Shoaib AlQady, whose first cohort had raised a total EGP 1.53 mn by the end of 2022. “As for accelerators, some exist, such as the TIEC accelerator programme under the Communications Ministry. Most university graduates move to Cairo to receive professional training, from which they enter Cairo-based accelerators. It is extremely difficult to reduce this gap.”

There’s still a long way to go: “Startups across all of our programmes have received close to USD 250 mn in external investments, but less than 2% of that went into green startups,” Houry said. “We have started expanding our network of investors to environmentally-minded impact funds. For example, Catalyst Fund recently invested in Bekia, one of the startups in our portfolio, and Katapult Fund is another well-known impact investor in MENA.”

In part two, we’ll explore the economic, educational and regulatory barriers facing green startups and how accelerators are addressing them.

Your top green economy stories for the week:

  • We’re going to reduce fossil fuel dependence to 55% by 2035: The Egyptian Electricity Holding Company aims to reduce our fossil fuel dependence for electricity production to 55% by 2035. (Enterprise Climate)
  • Tuk-tuk EVs? State-owned El Nasr Automotive is reportedly close to inking a partnership agreement with an unnamed Chinese investor to manufacture four-wheeled electric light vehicles as an alternative to three-wheeled tuk-tuks. (Enterprise Climate)
  • Egypt partners with IEA on green transition: Egypt's Ministry of Petroleum and Mineral Resources signed an agreement with the International Energy Agency (IEA) to establish a joint action program. (Enterprise Climate)
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CALENDAR

NOVEMBER

8 November (Wednesday): Turkish-Arab Economic Forum 2023, Istanbul.

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

12 November (Sunday): House of Representatives to reconvene.

12 November (Sunday): Deadline for technical and financial offers for Misr Aluminium Company rehabilitation project (extended from 12 October)

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

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

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

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

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

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

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

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

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

Signposted to happen some time in November:

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

DECEMBER

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

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

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

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

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

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

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

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

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

Signposted to happen sometime in December:

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

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

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

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

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

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

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

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

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

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

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

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

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

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

2Q 2025: Safaga Terminal 2 to start operations.

2024

JANUARY

7 January (Sunday): Coptic Christmas.

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

25 January (Thursday): Revolution day.

FEBRUARY

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

APRIL

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

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

MAY

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

5 May (Sunday): Coptic Easter.

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

29 May (Wednesday): Chicago Booth Executive Program

JUNE

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

30 June (Sunday): June 30 Revolution Day.

JULY

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

23 July (Tuesday): Revolution Day.

SEPTEMBER

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

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

OCTOBER

6 October (Sunday): Armed Forces Day.

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