Wednesday, 22 January 2020

More pledges of investment from UK companies.
Plus: Introducing Enterprise Hardhat

TL;DR

What We’re Tracking Today

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Introducing Hardhat — your weekly briefing of all things infrastructure in Egypt: We’re proud to launch our second Enterprise industry vertical — Hardhat, which will focus each Wednesday on infrastructure. The scope of the Hardhat is massive, covering everything from energy, water, transportation, urban development and even social infrastructure such as health and education. From the glossy and shiny to the smelly pipes.

To put it all into perspective, Egypt needs USD 230 bn in infrastructure investment: To get an idea of why we started with infrastructure, you need only look to the World Bank, which says Egypt faces a USD 230 bn investment gap in infrastructure over the coming 20 years — and the vast majority of that is in transportation. Some USD 180 bn of the projected gap is in transport, while water infrastructure needs USD 45 bn in investment above current baseline projections.

Look for Hardhat every Wednesday: With support of our friends at Orascom Construction, we’ll bring you a weekly hand-picked selection of stories, analysis pieces, explainers, interviews, and reports that will help you be informed on infrastructure developments every Wednesday.


Stuff you can go to this week and next:

  • Renaissance Capital’s annual North Africa Investors Conference (pdf) kicks off in Marrakech today and wraps on Thursday.
  • This year’s Cairo International Book Fair runs today through to Tuesday, 4 February at the New Cairo International Exhibition and Convention Center.
  • AmCham will host US Ambassador Jonathan Cohen for its monthly luncheon on Tuesday, 28 January. Cohen will discuss prospects for commercial ties between Egypt and the US. Members can register for the event here.
  • CI Capital’s annual three-day MENA Investors Conference gets underway on Tuesday, 28 January at the Four Seasons Nile Plaza.
  • The British Embassy and IFC’s StartEgypt Forum 2020 will pit 45 startups against each other in a pitch competition on Wednesday, 29 January at the Greek Campus.

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It’s day two of the World Economic Forum in Davos today, with the czars of global capitalism descending once again on the Swiss resort to talk, among other things, about the climate crisis and sustainable development. The irony of hundreds of pollutocrats flying private aviation to discuss ways to mitigate environmental destruction wasn’t lost on the forum this year: For the first time it will be providing special “green” jet fuel to participants, enabling them to reduce their Davos emission bill by 18%. Hey, it’s better than nothing.

Among those representing Egypt at this year’s summit: International Cooperation Minister Rania Al Mashat is attending as a co-chair of the WEF’s MENA arm and will participate in sessions on economic development, gender equality and technology. Oil Minister Tarek El Molla is also attending, announcing yesterday that the government had lowered its arrears bill to international oil companies to USD 200 mn.

Yesterday’s media coverage of Davos was dominated by what the press was building up to be a Trump vs Thunberg smackdown: President Trump denounced “prophets of doom” for their “predictions of apocalypse” in his summit address yesterday, a thinly-veiled attack on the 17 year-old Swedish climate activist who was sat in the audience. Thunberg then told the forum that its attendees had done “basically nothing” to limit carbon emissions, and that “our house is still on fire.”

There have been a deluge of climate-related reports released to coincide with the forum:

  • Thirty-three major banks have poured a total of USD 1.9 tn into the fossil fuel industry since the Paris Accords in 2015, 24 of which are represented at Davos currently, a Greenpeace report (pdf) points out.
  • Investment into climate finance stands at a comparatively-paltry USD 600 bn — less than a fifth of what is needed to decarbonize the world’s energy supply, according to a UBS report released on Monday, cited by the Financial Times. The investment bank says that quant funds will be among the casualties of climate change due to the inability of analysts to accurately predict climate smart investments.
  • The next financial crisis could be triggered by climate-related risks, according to Bank of International Settlements research, which warns that so-called “green swan” event could cause the global economy to face-plant.

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All that talk of recession and inverted yield curves seems like a long time ago: Global equities finished 2019 up 27%, with all major asset classes seeing gains and risk assets performing strongly, in spite of slowing global growth, geopolitical volatility and the US-China trade spat, according to Deloitte. Stocks were propelled by the Federal Reserve’s triple rate-cut, easing by the European Central Bank and stimulus in key EM countries, as well as the US-China ‘phase one’ trade agreement reached at the end of the year.

But irrational exuberance may be in the air: Ned Davis Research’s metric measuring sentiment among traders shows that there is currently “excessive optimism” in the equity markets, suggesting that short-term risks may be rising, CNBC reports. The S&P 500 has already gained 3% since the start of the year despite weak earnings expectations and continued uncertainty in the US-China trading relationship. This is fuelling greater euphoria among traders, setting the markets up for a nasty fall should a disruptive event occur or the fundamentals weaken.

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Lebanon finally has a government: Caretaker prime minister Hassan Diab has nominated 20 ministers to form a new cabinet, the New York Times reports. This is the first time in almost three months that Lebanon will have a functioning government after former prime minister Saad Hariri resigned in November amid large anti-government protests.

The new cabinet has a few things it needs to sort out: The country is in the midst of a severe financial crisis, with a plunging currency, a teetering banking sector and a borderline insolvent state.

On the bright side, Lebanon will probably avoid defaulting for at least two more months, Oxford Economics said yesterday. Lebanon is likely to restructure its debt later this year after paying its USD 1.2 bn Eurobond when it matures on 9 March, it said.

Saudi Arabia will issue its first Eurobond of the year today: The USD 5 bn issuance is made up of three tranches: a 7-year tranche offering 0.85%, a 12-year yielding 1.1% and a 35-year for 3.84%. The government plans to issue some USD 32 bn in bonds denominated in local and international currencies this year in a bid to narrow its budget deficit. Bloomberg has more.

Turkey is seeking more EU funding as its EUR 6 bn agreement with Brussels to stem the “flow of illegal migrants to Europe in exchange for financial aid and the promise of visa-free travel” comes to an end this year, the Financial Times reports.


More proof the world is kind of a mean place this morning:

Enterprise+: Last Night’s Talk Shows

The UK-African Investment Summit retained the attention of the talking heads last night: Al Hayah Al Youm’s Lobna Assal noted President Abdel Fattah El Sisi’s meetings with Prince William and Prime Minister Boris Johnson in Downing Street (watch, runtime: 5:12). Masaa DMC (watch, runtime: 0:42) Yahduth Fi Misr (watch, runtime: 0:41) and Min Masr (watch, runtime: 0:59) also had coverage. We have more on the summit in this morning’s Speed Round below.

The UK is turning to Africa post-Brexit: Khaled Nosseir, head of Egyptian British Business Association, told Al Hayah Al Youm’s Hossam Hadad that Egypt is one of the largest exporters of food and crops to the UK and that this will only increase after the country leaves the European Union (watch, runtime: 7:04). Hadad also interviewed GAFI CEO’s adviser Amr Nour El Din, who said that the Africa summit was an indication of Britain's post-Brexit trade and investment strategy (watch, runtime: 7:35).

Some 23 car makers are offering discounts to customers: Masaa DMC’s Eman El Hosary phoned secretary-general of the Egyptian Automobile Manufacturers Association Khaled Saad, who said that car prices have fallen since customs on Turkish imports fell to zero at the beginning of the year, as well as the performance of the EGP which has gained 28 piasters against the USD since 8 January (watch, runtime: 6:31).

Why is the EGP appreciating? Yahduth Fi Misr's Sherif Amer phoned Banque Misr Deputy Chairman Akef El Maghraby, who attributed the change to the government’s reform program stabilizing the economy and driving growth in key sectors such as tourism (watch, runtime: 4:26).

Speed Round

Speed Round is presented in association with

INVESTMENT WATCH- Matalan, GSK agree to invest GBP 30 mn in Egypt at UK-Africa Investment Summit: UK fashion retailer Matalan will invest GBP 25 mn over the next five years building 20 outlets in Egypt, the British embassy in Cairo and a spokesperson for the UK government announced on social media yesterday. GlaxoSmithKline will also invest GBP 5 mn to develop two of its Egyptian production lines, the embassy said without providing further information. The two agreements came during the UK-Africa Investment Summit held in London on Monday, during which British companies signed GBP 6.5 bn in trade agreements with African countries.

The latest announcements come a day after UK-based PE outfit Actis signed an agreement with the Egyptian government that will see it invest alongside the Sovereign Fund of Egypt in energy and infrastructure projects. The pact could funnel some GBP 3 bn worth of investment in infrastructure, health and education over the next three years. The UK government’s development finance arm, CDC Group, also extended a USD 100 mn loan to CIB.

Other news from the summit: Planning Minister Hala El Said reiterated that a decision on whether to agree on a non-financial loan program with the IMF will be made “soon,” Bloomberg reports. “Now is the time for the private sector” she said on the sidelines of the summit. Finance Minister Mohamed Maait has suggested that the government could sign up to a new post-loan program with the fund in March.

El Sisi talks investment with Johnson: The UK prime minister told President Abdel Fattah El Sisi that he was counting on Egypt to be the “center of gravity” for stability in the region during talks at 10 Downing Street, according to an Ittihadiya statement. The two sides discussed Egypt’s infrastructure projects and the current investment climate, as well as tackling terrorism and illegal migration, and the crisis in Libya.

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Russia to resume flights to Red Sea resorts in April-May? Russian airlines could resume charter flights to Egypt’s Red Sea resorts in late April or early May if security checks currently taking place in Hurghada Airport go well, aviation experts tell Russia’s Association of Tour Operators. Russian security officials inspecting the airport yesterday praised the government’s work to improve security in Terminal 2, raising hopes that Moscow will follow in the UK’s footsteps and allow the resumption of flights.

Timeline? Should this happen, it will take 2.5-3 months of preparations before flights can begin, one of the experts said. Russian flights to Red Sea destinations have been on hiatus since 2015 when a bomb brought down Metrojet Flight 9268 after taking off from Sharm El Sheikh. The UK lifted its ban on flights to Sharm in October.

M&A WATCH- Three banks interested in Bank Audi Egypt: First Abu Dhabi Bank (FAB), the National Bank of Kuwait, and Emirates NBD have expressed interest in acquiring Bank Audi’s Egypt unit but have yet to make official bids, banking sources told Masrawy. Audi said last week that it was in talks with several potential buyers after press reports claimed that it was looking to exit the country due to the ongoing financial crisis in Lebanon. Bank CFO Tamer Ghazaleh confirmed that the bank was considering pulling out of the country due to financial pressures emanating from Lebanon. S&P Global downgraded the bank’s credit rating further into junk status in November amid a liquidity squeeze in the Lebanese banking sector.

Bank Audi had been looking to acquire the National Bank of Greece’s Egypt unit before the Lebanese crisis erupted. Last week’s news came just days after local press reported that the banks were making progress in the acquisition in spite of NBG’s employee pay dispute preventing them from obtaining CBE approval.

M&A WATCH- Pioneers Holding gets 30-day MTO extension from FRA: The Financial Regulatory Authority (FRA) has approved a request by Pioneers Holding to extend its mandatory tender offer (MTO) submission deadline by 30 days to give it time to hire a new financial advisor, the regulator said in a bourse disclosure (pdf). The advisor would conduct the fair value assessment on the company’s MTO for five of its subsidiaries, replacing Fincorp, which the FRA suspended last week for three months.

STARTUP WATCH- Glovo leaves Egypt — again: Spanish on-demand delivery startup Glovo has decided to exit the Egyptian market for the second time in less than a year as it looks to become profitable next year, according to TechCrunch. A company spokesperson told the tech publisher that the Egyptian market was too “complex” and that “there is not a clear path to profitability” for the company. Egypt is one of four markets — the others being Turkey, Uruguay and Puerto Rico — that the company has decided to exit. Co-founder and CEO Oscar Pierre said it was a “tough decision to take” but that it was necessary for the company to hit its 2021 profitability targets.

Talk about déjà vu: The Glovo first said they would exit the Egyptian market in May after securing a EUR 150 mn series D funding round led by Lakestar. This prompted the Egyptian Competition Authority to accuse the company of anti-competitive practice when it began directing users to Otlob, the food delivery app owned and operated by Delivery Hero, which owns 16% of Glovo. The ECA demanded that Glovo resume operations in Egypt, which it did less than a month later. The latest decision comes a month after the company secured USD 166 mn in series E funding from UAE’s Mubadala, apparently at a valuation north of USD 1 bn.

The company talked big but couldn’t deliver: Less than three months ago the company was talking about its plans to acquire a 50% share in Egypt’s online delivery market within 18 months, saying it had earmarked EUR 5.1 mn to fund its expansion in Egypt in 2020.

Schools apply for exemptions from 20% foreign ownership cap: Cairo Investment and Real Estate Development (CIRA), the International School of Choueifat, Nermien Ismail School and GEMS are among several private sector schools that have applied for an exemption from the 20% cap on foreign ownership imposed by the Education Ministry last October, Al Mal reports, citing company sources. Investor backlash prompted the ministry to walk back slightly on the plans, announcing in November that it would grant exemptions on a case-by-case basis.

Education Ministry begins to review exemption requests: We reported on Monday that the Education Ministry had issued a directive on 1 January to set up a committee to review exemption requests made by private-sector K-12 schools. In addition, the directive makes it mandatory for all schools with foreign shareholders to provide the Education Ministry with their detailed shareholder structure.

Plunging gas prices are forcing Egypt to change its gas-selling strategy: Egypt will reduce the amount of liquefied natural gas (LNG) it sells via short-term contracts and negotiate long-term agreements in response to plunging gas prices, Bloomberg quoted Oil Minister Tarek El Molla as saying. The government is currently in talks with international customers to sell gas at USD 5 per mn British thermal units under renewable 12-18-month contracts, El Molla said in an interview yesterday during the World Economic Forum in Davos.

Spot contracts to fall this year: Egypt offered 80 spot LNG tenders last year and this is set to fall further this year. “They’re not giving us the value that we want,” El Molla said. “We canceled several LNG tenders last year because the prices that we received don’t even match the cost of production … This year will be even more challenging if we continue seeing the drop in prices.”

Global gas prices hit 45-month low: Gas prices plunged 5.4% yesterday to hit lows not seen since March 2016.

Damietta LNG plant could restart within weeks: El Molla said that the Damietta LNG facility will reopen “in the coming few weeks” ending a six-year hiatus. This could enable Egypt to double its gas exports from 1 bcf/d currently by the end of the year. The plant will output 500 mncf/day then gradually increase to 700 mncf/day, he said. The Damietta plant has been the subject of a long-running legal dispute between the government and plant operator Union Fenosa Gas. The plant was thought to be on the cusp of opening several times last year but the failure to reach a settlement in the dispute resulted in delays.

EGAS cuts Zohr production by 600 mcf/d: The Egyptian Natural Gas Holding Company (EGAS) has cut gas production from the Zohr field by 600 mcf/d to 2.4 bcf/d, the local press quoted unnamed sources as saying. The sources claimed the decision was motivated by a decline in local consumption and high pipeline pressure.

Egypt to cut gas prices for factories in coming fiscal year -sources: The government is studying several proposals that could cut gas prices for factories by another USD 1.5-2 per mn British thermal units, with the new prices expected to come into force at the beginning of the new fiscal year in July, two sources from the Federation of Egyptian Chambers of Commerce told Al Shorouk. One source who attended meetings between industry representatives and the government said that they seek to bring gas prices down to the USD 3.5/mmBtu global average, while another said that Finance Minister Mohamed Maait pledged to cut prices by USD 1-2/mmBtu. Factories in Egypt currently pay on average USD 5.5/mmBtu.

Background: The cabinet last year lowered gas prices for cement, metallurgy, and ceramics manufacturers, heeding the call of lobbyists who have been pushing for changes for years. The cement industry is now paying USD 6/mmBtu, while metallurgy and ceramics firms pay USD 5.5/mmBtu. The government also set up a committee to review the prices every six months. The cabinet then said it is also looking to lower gas prices for petrochemical factories below USD 7/mmBtu.

PHD signs EGP 505 mn refinancing agreement with Ahli United Bank: Palm Hills Developments (PHD) has signed a EGP 505 mn loan agreement with Ahli United Bank Egypt to refinance some its debt, the real estate developer announced in a statement (pdf). The credit facility will replace a medium-term loan previously granted to PHD by the Arab African International Bank. It will refinance outstanding debts linked to its Palm Parks project, as well as funding the project’s updated investment cost and remaining construction work. The agreement marks PHD’s second debt refinancing agreement in little over a month after it signed a EGP 1.1 bn loan agreement with CIB in December.

FRA to bring NBFS firms on board with CBE corporate debt forgiveness initiative: The Financial Regulatory Authority (FRA) is forming a committee to assess how non-banking financial services companies can be brought into the Central Bank of Egypt’s initiative to support financially-distressed companies, the regulator said in a statement. The committee will include representatives from the CBE, FRA, and financial leasing and factoring companies. The initiative, which was launched by the CBE (pdf) last month, requires banks to write-off bad corporate loans worth up to EGP 10 mn and will be in place until the end of the current fiscal year.

Egypt’s ‘Willy Wonka’ is our latest guest on Making It: Hani Berzi, the CEO of Edita, tells us all about the inner workings behind our favorite snack foods. And while there are no oompa loompas running around his factory, his story is one for the books.

You can listen to the episode (runtime: 36:11) on: Our website | Apple Podcast | Google Podcast

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Egypt in the News

Foreign press coverage of the meeting between President Abdel Fattah El Sisi and UK Prime Minister Boris Johson was a mixed bag. The National focused on the partnership agreed at the UK-Africa Investment Summit to support Egypt’s economic growth, social development and drive for financial inclusion. The Guardian went with the human rights angle, reporting that Johnson was being urged by a rights group to confront the Egyptian president over his domestic record.

Other stories worth a moment of your time:

  • Egypt’s soft power becomes a daily staple in New York: The Egyptian food ambassador in New York, Zooba, is no longer a weekend special, as many Americans can’t just stay away from all the calories, Grub Street says. New York head chef Omar Hegazi threw away that gluten-free corn pasta and is now using the conventional spaghetti and tubetti.
  • King Tut continues his grand tour: A traveling exhibition with over 150 artifacts from Tutankhamun’s tomb ― billed as the largest such display ever to travel outside of Egypt ― is on its way to Boston, where it will remain from 13 June until January 2021, AP reports.
  • Mit Al-Huran’s craft of turning old tires into baskets, landscaping materials, and alternative fuels is featured in AFP, which focuses on how the village’s residents turn the skill into profit.
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Counting the costs of the govt’s >USD 50 bn water-saving plan: Irrigation Minister Mohamed Abdel Atti announced a plan last year that could see the government spend more than USD 50 bn to combat water scarcity through 2037. The plan comes at a critical time: Climate change is a growing threat to our water security just as Ethiopia is looking to fill the Grand Ethiopian Renaissance Dam. The government’s program aims to overcome water scarcity by encouraging the use of modern irrigation methods and establishing desalination plants, among other things. The strategy is supported by legislative amendments to the Agriculture Act, and aims to clamp down on water-intensive crops to reduce water shortages.

Investment in water is now at least on par with transportation and energy as a top infrastructure priority for the government. Water is increasingly becoming a national security issue as much as it is an economic one. As it stands, the costliest water infrastructure projects being developed are desalination plants and wastewater treatment facilities. For this story, we’re focusing on both desalination and treatment plants, while noting that there are multiple different possible water projects.

We don’t discuss efficiency in this story, for example, starting instead with capacity. And there’s clearly work to be done on efficiency: Consider, for example, that some experts believe we use nearly twice as much water per capita as some European countries at the household level — not necessarily because of the constant washing of cars or because we take particularly luxuriant showers, but in part due to inefficiencies including losses throughout the domestic water network.

How is the government planning to tackle the projects? Are they sufficient? Are there viable alternatives? And how will we secure funding for them?

For starters, 70-75 bn cubic meters (cbm) per year of total usable water are needed, says Ahmed Fawzy Deiab, professor of water resources, water policy, watershed and hydrogeology at the Desert Research Center, and a senior international consultant. He told Hardhat the figure is based on future projections that take into account population growth.

The World Bank’s Egypt infrastructure report, meanwhile, says Egypt needs to invest some USD 45 bn in water projects above current baseline projections. More than 75% of rural communities have no wastewater treatment facilities, and the WB says USD 14 bn will need to be invested in wastewater treatment facilities alone.

How will we address this shortage? The government last August outlined the details of a plan that involves setting up some 39 desalination plants with a capacity of 1.4 mn cbm / day and 52 wastewater treatment facilities. The plan also outline strategies for controlling water waste and using treated wastewater to grow “economically useful” plants.

Track #1: desalination. The 39 plants in the plan will be built at an estimated cost of EGP 29.3 bn. Projects are already underway in Matrouh, the Red Sea, North and South Sinai, Port Said, Dakahlia and Suez, according to a press report out this month. The desalination plants underway could add 550k cbm/d once they’re up and running, raising Egypt’s capacity to over 1 mn cbm/d.

By the end of 2022, up to 670k cbm/d will be added and — in the longer term — another 900 cbm/d. This will bring the country's overall desalination capacity to some 2.5 mn by 2037, said Hossam Shebl, water desalination advisor at the Holding Company for Water & Wastewater.

Track #2: wastewater. The government has completed 26 of a total of 52 sewage treatment plants being developed in Upper Egypt, and the remaining 26 are due for completion by the end of the year. Once completed, the plants will have a combined capacity of 418 mn cbm/year and serve 8 mn people. They are estimated to cost EGP 8.1 bn, Housing Minister Assem El Gazar said last March.

Should waste water treatment be given priority over desalination? Water policies should be restructured to prioritize agricultural and industrial wastewater to maintain the resources we have as a direct need, Deiab said. The water could be used in irrigation and if properly treated can be used for drinking as well.

More costly, more energy intensive and harder to maintain water desalination plans could be more long-term solutions for the future. “Desalination is getting cheaper by the day, much like solar energy,” Schneider Electric regional president Walid Sheta told Enterprise in an exclusive interview last year, supporting Diab’s view that desalination should be looked at as a long-term solution.

The Water Holding Company’s Shebl, meanwhile, says that the biggest challenge for desalination projects is that all the components are imported, something which his company is working to resolve by looking to local manufacturing to reduce cost.

and should we look at alternatives? Deiab suggests treatment of ground water in coastal areas as a faster and cheaper alternative to desalination. He says it can help irrigate five mn feddans and at 20% of the cost of desalination plants and 30% of energy costs.

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How is the country financing all of this? This very expensive strategy appears to hinge on a combination of private sector investment and partnerships, loans from major international lenders, support from aid and development grants.

The private-sector is leading: Private companies have been investing heavily in water infrastructure projects, acting primarily as engineering, procurement and construction (EPC) contractors to build and then manage the facilities under operations and maintenance (O&M) agreements. Funding for these have come through a combination of local and international bank facilities (with syndicated loans playing a big role) and partnerships, either with the government (PPP) or through joint ventures with other companies.

Notable PPP projects: The first-ever PPP (public-private partnership) project in Egypt was actually in wastewater — the New Cairo Wastewater Treatment Plant awarded to an Orascom Construction-Aqualia joint venture. Meanwhile, four new desalination plants are set to be constructed in Hammam on the North Coast and along the the Red Sea coastline between Safaga and Quseir under a public-private partnership (PPP) tender planned to launch in 2Q2020. The government also signed an MoU with Switzerland’s Aqua Swiss to build desalination plants across Egypt under a PPP framework.

Notable JVs: Orascom Construction has formed a number of JVs in the wastewater sector, including a partnership with with Arab Contractors in May of last year that inked a USD 739 mn contract to operate and maintain the largest water treatment plant in the country at a capacity of 5 mn cbm/d. OC also has a partnership with the UAE’s Metito, including for a EGP 1.6 bn water desalination plant under construction in Arish. The pair recently completed a EGP 2 bn desalination plant in Galala with a capacity of 150k cbm/d, and are partners on a third plant in East Port Said. Meanwhile, Hassan Allam Holding and Abdul Latif Jameel established a joint venture last April to develop and invest in water and wastewater infrastructure projects. Hassan Allam had also formed a JV with Fluence Corporation on a USD 74 mn contract to design and build a water desalination plan in New Mansoura.

The private sector has significant appetite not just for one-off EPC revenues, but for recurring income from operations and maintenance contracts at utilities. OC notes in its most recent investor presentation (pdf) that it is actively “building an investments and O&M portfolio” to “create both construction opportunities and recurring income and cash flow.” The company has O&M agreements “most” of its water projects for 1-5 year terms, it said separately.

Where are big international loans coming from? Primarily from development finance institutions as the equipment and capital goods needed will have to be imported and require high levels of FX.

Regional financing: The Kuwait Fund for Arab Economic Development (KFAED) said last year it will provide USD 1 bn in loans to Egyptian infrastructure projects over the next three years. KFAED has already extended a KWD 25 mn (EGP 1.3 bn) facility in 2018 for the construction of a sewage treatment facility in Sharqia, and another KWD 15 mn (EGP 780 mn) facility in contribution to building four desalination plants in South Sinai. Meanwhile, the African Development Bank signed off on a EUR 109 mn facility to Egypt for sewage disposal and wastewater treatment plants in rural areas in Luxor last December. Last November, saw Hassan Allam Holding receive a USD 20 mn loan from the European Bank for Reconstruction and Development (EBRD) to expand its investments in the water and wastewater treatment.

International financing: The government signed in 2018 a EUR 172 mn loan agreement with the European Investment Bank, and inked a separate agreement for a USD 300 mn facility from the World Bank in the same year. Proceeds from the latter agreements will be used for a mixture of sewage and wastewater projects.

Gov’t-to-gov’t aid: The USAID, meanwhile, pledged USD 65 mn in grants for infrastructure and water reforms in 2018, and the Korea-Africa Economic Cooperation another USD 600k grant for a wastewater treatment plant in Abu Rawash in the same year. More recent examples include EUR 120 mn in grants from the Netherlands over the next four years, some of which will be earmarked for “the water sector.” Before that, a EGP 70.5 mn agreement with the Italian government to finance the third phase of a wastewater project in Minya was signed.

It appears that the gov’t is going with conventional wisdom in its water plan: From what we’ve seen, the government appears to be abiding by recommendations from infrastructure experts and development agencies. Over the past decade and in the short term, Egypt had been steadily building up its wastewater capacity. And while desalination may be a turning point, these projects will likely come online in the medium to long term, which is logical considering that costs of desalination continue to remain high at the moment. We’ll probably see an increased reliance moving forward as these costs continue to fall.

Conservation still needs to feature more prominently: But despite the heavy investment that has and will continue to be made in wastewater and desalination, many we have spoken with tell us it may not be enough if Egypt doesn’t invest in conservation. These include upgrading distribution networks to prevent runoffs, cutting out wasteful agricultural goods such as rice and cotton, and adopting less wasteful methods of manufacturing and construction (which consume a lot of water).

Your top infrastructure stories for the week:

The Market Yesterday

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EGP / USD CBE market average: Buy 15.72 | Sell 15.85
EGP / USD at CIB: Buy 15.73 | Sell 15.83
EGP / USD at NBE: Buy 15.76 | Sell 15.86

EGX30 (Tuesday): 13,460 (-1.0%)
Turnover: EGP 415 mn (36% below the 90-day average)
EGX 30 year-to-date: -2.3%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session down 1.0%. CIB, the index’s heaviest constituent, ended down 0.9%. The EGX30’s top performing constituent was Juhayna up 0.7%. Yesterday’s worst performing stocks were Egyptian Resorts down 4.7%, Abu Dhabi Islamic Bank down 3.1% and Qalaa Holdings down 3.1%. The market turnover was EGP 415 mn, and regional investors were the sole net buyers.

Foreigners: Net short | EGP -18.6 mn
Regional: Net long | EGP +32.3 mn
Domestic: Net short | EGP -13.7 mn

Retail: 55.9% of total trades | 57.1% of buyers | 54.7% of sellers
Institutions: 44.1% of total trades | 42.9% of buyers | 45.3% of sellers

WTI: USD 58.34 (-0.3%)
Brent: USD 64.54 (-1.0%)

Natural Gas (Nymex, futures prices) USD 1.90 MMBtu, (-5.4%, February 2020 contract)
Gold: USD 1,557.90 / troy ounce (-0.2%)

TASI: 8,445 (-0.3%) (YTD: +0.7%)
ADX: 5,184 (-0.6%) (YTD: +2.1%)
DFM: 2,854 (+0.1%) (YTD: +3.3%)
KSE Premier Market: 7,106 (-0.2%)
QE: 10,694 (+0.0%) (YTD: +2.6%)
MSM: 4,059 (-0.4%) (YTD: +2.0%)
BB: 1,643 (+0.1%) (YTD: +2.1%)

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Calendar

January: 1,000 artifacts to be displayed when Hurghada Museum opens.

21-24 January (Tuesday-Friday): World Economic Forum (WEF) Annual Meeting, Davos-Klosters, Switzerland.

22-23 January (Wednesday-Thursday): Renaissance Capital’s North Africa Investors Conference, Marrakech, Morocco.

23 January- 4 February: Cairo International Book Fair 2020, New Cairo International Exhibition and Convention Center, Egypt

25 January (Saturday): 25 January revolution anniversary / Police Day, national holiday.

25 January (Saturday): Midterm break for public schools and universities. Also known as: Two weeks of good commute.

27 January (Monday): Cairo Economic Court will look into minority shareholder’s lawsuit against Fincorp Investment Holding as Adeptio AD Investments’ financial advisor for its mandatory tender offer (MTO) for Americana Egypt.

27-29 January (Monday-Wednesday): African Private Equity and Venture Capital Association’s North African Fund Manager Masterclass, Sheraton Cairo Hotel, Galaa Square, Cairo.

28 January (Tuesday): AmCham to host US Ambassador Jonathan Cohen for monthly luncheon.

28-30 January (Tuesday-Thursday): CI Capital’s annual MENA Investors Conference, Four Seasons Nile Plaza, Cairo.

28-29 January (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

28-29 January (Tuesday-Wednesday): Egypt and Ethiopia to meet again in Washington, DC, for mediation on GERD.

29 January (Wednesday): StartEgypt Forum 2020, the Greek Campus, Downtown, Cairo

February: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

February: A delegation of Swiss businesses will visit Egypt to discuss investment.

February: Higher Education Minister Khaled Abdel-Ghaffar will visit Minsk, Belarus.

1 February (Saturday): The administrative court will look into an appeal by Adeptio AD Investments against a Financial Regulatory Authority to submit a mandatory tender offer (MTO) for Americana Egypt.

3-5 February: The Arab-African International Forum, Jeddah, Saudi Arabia.

4 February (Tuesday): Court hearing for PTT Energy Resources’ USD 1 bn lawsuit against Egyptian government.

8 February (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

9-10 February (Sunday-Monday): The the 33rd ordinary African Union (AU) Summit where Egypt will hand over the African Union presidency to South Africa

11-13 February (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

23 February (Sunday): Court session for Arabia Investments Holdings’ lawsuit against Peugeot. It was previously postponed to 24 November 2019 and then to 5 January 2020, and now 23 February.

23 February (Sunday): Court session for Amer Group, Porto Group compensation claim against Antaradous

20 February (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

March: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

1 March: A conference on “logistics and its impact on the movement of goods and industry,” venue TBD, Alexandria.

3 March (Tuesday): Business Today’s bt100 awards ceremony, Cairo.

4-5 March (Wednesday-Thursday): Women Economic Forum, Cairo.

7 March (Saturday): International Conference for Investment organized by Suez Canal Economic Authority, Al Galala City, Egypt

17-18 March (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

25-26 March (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

7 April (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 April (Sunday): Easter Sunday.

20 April (Monday): Sham El Nessim, national holiday.

23 April (Thursday): First day of Ramadan (TBC).

23-26 May (Saturday-Tuesday): Eid El Fitr (TBC).

25 April (Saturday): Sinai Liberation Day, national holiday.

28-29 April (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

5-7 May (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

14 May (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

9-10 June (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

17-20 June (Wednesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

30 June (Sunday): June 2013 protests anniversary, national holiday.

25 June (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

28-29 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

30 July-3 August (Thursday-Monday): Eid El Adha (TBC), national holiday.

13 August (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

20 August (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

15-16 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

24 September (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

6 October (Tuesday): Armed Forces Day, national holiday.

29 October (Thursday): Prophet Mohamed’s birthday (TBC), national holiday.

November: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

4-5 November (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

5 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

15-16 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

17 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

24 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

25 December (Friday): Western Christmas.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, national holiday.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2018 Enterprise Ventures LLC.