EnterprisePM — Lots of infrastructure news + EGX30 is back in the green for 2021 YTD

…and that’s a wrap on what has felt like a particularly long Wednesday, ladies and gentlemen. We’ll be back in your inboxes tomorrow morning to wrap up the workweek. In the meantime, the big theme here at home today is infrastructure, infrastructure and infrastructure.

THE BIG STORIES TODAY-

#1- Egypt and Greece will take an important step towards linking their energy grids tomorrow when the two countries are set to sign an agreement to build a subsea cable as part of the EuroAfrica Interconnector project.

#2- The buildout of Egypt’s first 660 km high-speed rail line is “on the fast track,” Siemens Mobility CEO for the Middle East and Africa Leon Soulier says.

#3- The benchmark EGX30 is back in the green for 2021 YTD after gaining 0.9% today. The index is now up 0.3% since the start of the year, but lags regional competitors including Saudi’s Tadawul (+32.8%) and both the ADX (+53.3%) and DFM (+11.9%) in the United Arab Emirates. The EGX30 has now posted gains seven straight trading sessions in a row.

#4- Another day, another IMF report: Egypt’s budget deficit is still expected to narrow by the end of the current fiscal year, but will shrink at a slower pace over the next several years than previously expected, the IMF says in its latest Fiscal Monitor Report.

HAPPENING NOW-

A fire that broke out in a section of the Gouna Film Festival Plaza earlier this morning is now reportedly under control. There were no reports of deaths by dispatch time, but 14 people were treated for smoke inhalation, including eight who were hospitalized, according to a Health Ministry statement. The festival, which opens tomorrow, is set to proceed as planned, Orascom Development Holding Chairman Samih Sawiris said. The fire only affected the festival’s party venue, which is expected to be restored by tomorrow, according to Sawiris.

Across the pond, the G20 Meeting of Finance Ministers and Central Bank Governors was getting underway in Washington, DC as we hit “send” on this afternoon’s issue. On the agenda: Formally endorsing the landmark OECD international tax agreement ahead of the G20 leaders’ summit in Rome at the end of the month. Egypt signed on to the agreement — which would see the introduction of a minimum global corporate tax rate of 15% — back in July. The G20 sitdown comes as the IMF and World Bank annual meetings continue, also in DC.

European markets are in the green afternoon — and Wall Street is now set to follow suit in a reversal of what the fates futures suggested this morning. The Dow, Nasdaq and S&P are all looking to break a three-day losing streak. The DAX 30, CAC 40, Stoxx 600 and FTSE all broke into the green, clawing back losses as CNBC says a run of strong earnings report boosted sentiment.

The question now: How will markets react to news that US inflation accelerated in September to 5.4% as both supply and labour shortages continued to drive up prices. The WSJ suggests the inflation data, out just minutes ago, suggests that “it looks like some of these supply-chain and inventory challenges are going to stick with us for a bit longer—at least through the rest of this year.” And that’s before rising oil prices this month are thrown into the mix as the global energy crisis rings bells in the US.

Biden’s solution to the supply-chain crisis? Get (private sector) workers to clock more hours. The White House has secured promises from Walmart, UPS and FedEx to move to a 24-hour schedule in an attempt to ease the supply-chain squeeze in the run-up to Christmas, a senior US official told the FT. The move comes as the US government steps up pressure on the private sector to solve a growing mismatch between supply and demand that could exacerbate inflationary pressures, imperiling Biden’s Democratic Party ahead of next year’s midterm elections.

One reason it may not work: Labor shortages are a major contributor to the supply squeeze, with transport industry heads warning of a mass exodus on the back of a humanitarian crisis in conditions for workers in the sector.

For the iSheep among us: Apple thinks EarPods could become health devices and is studying whether its earbuds could serve as “hearing aids and include an in-ear thermometer and posture warnings,” the Wall Street Journal reports in an exclusive.

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** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

• Growth is cooling and the rich are getting richer, the IMF says in its latest World Economic Outlook.
• e-Finance prices its IPO at the top of the range amid reports of strong international institutional appetite.
• Ain Sokhna Port is getting additional investment from Emirati port giant DP World and CDC Group.

ALSO- Jeff Bezos is going to shoot the original Captain Kirk to the edge of space later this afternoon. Actor William Shatner will be one of four people on a Blue Origin space tourism flight that is set to launch at 4pm CLT. Shatner is 90 years old — what could possibly go wrong? The New York Times has a live blog up if you’re curious and / or feeling a bit ghoulish.

Your company isn’t the only one that feels a little bit messed up right now: Everyone in business is dealing with 580-some days of messed-upednes between the stresses of covid-19, working from home, pressure to return to the office — and now supply chain disasters and a brewing global energy shortage. The latest reminder? America’s Southwest Airlines has had to cancel more than 2k flights in the past few days. Not because of bad weather, but because its staff are stretched thin and feeling the stress as management confronts crisis after crisis.

???? CIRCLE YOUR CALENDAR-

We’re within arm’s reach of our next long weekend: ​​​​The Prophet Muhammad’s birthday falls on Monday, 18 October. We expect a three-day weekend starting Thursday, 21 October. Look for confirmation from the cabinet toward the end of the week.

El Gouna Film Festival is kicking off tomorrow and will run until 22 October. This edition of the event promises to bring together a selection of international narrative, documentary, and avante garde films and you can check out the full program here.

Calling all entrepreneurs in Egypt: You have one month to apply for the acceleration exchange program Meet Silicon Valley, which will take a group of entrepreneurs to California for a 10-day program to meet with tech executives and investors. The program is being implemented by Injaz Egypt and TechWadi with the support of the US Embassy in Egypt. Startup founders must be between the ages of 23 and 35 to be eligible for the program — the full criteria and program details can be found here.

Conference season ratchets up this month, with a number of exhibitions and business events here and throughout the region taking place this week, including:

• The Turathna Exhibition at the Egypt International Exhibition Center, Cairo, which will run until Friday, 15 October.
• The GITEX Global is being held in the Dubai World Trade Center from 17-21 October. The event brings together players in Big Tech to discuss what’s next in areas such as AI, cloud, 5G, cybersecurity, blockchain, and more.
• Further down the road: The Middle East Angel Investment Network is hosting its Angel Oasis in El Gouna on 27-29 October, with separate pricing for in-person and virtual attendance.

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

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☀️ TOMORROW’S WEATHER- Expect a daytime high of 33°C and overnight low of 21°C tomorrow, our favorite weather app tells us.

Never trust an (investment) banker? Deutsche Bank is facing a EUR 500 mn lawsuit over claims it duped a Spanish hotelier into buying risky forex derivatives that were too complex for the company to understand. Palladium Hotel Group is the largest company caught up in an escalating scandal over the German bank’s alleged aggressive selling of unusual financial products to between 50 and 100 Spanish SMEs, according to the FT. The lawsuit argues that Deutsche Bank’s former forex head cultivated friendships at the company to arrange 259 complicated derivatives transactions on its behalf, involving up to EUR 5.6 bn at their peak in 2017 — dwarfing the firm’s EBITDA of EUR 150 mn and leading to major losses. Deutsche Bank says the claim is “without foundation,” but is conducting its own investigation into the wider debacle, and has already parted ways with two of its senior execs and paid more than USD 10 mn to settle related disputes.

The moral of the story: Pay close attention to downside risks, and never, ever buy a financial product you don’t fully understand.

From the Department of Terrible, Horrible, No Good Ideas: FIFA President Gianni Infantino wants Israel to piggyback on a bid from Arab countries to host the 2030 FIFA World Cup, according to i24 News. The regional bid is being led by the UAE, which normalized relations with Israel under the Abraham Accords last year.

The green energy transition is gaining pace — but not enough to avert catastrophic warming. That’s according to the International Energy Agency’s (IEA) World Energy Outlook 2021 report, which urges governments to get more ambitious on clean energy targets ahead of November’s COP26 UN climate summit. The IEA — which is financed by mostly Western nations to advise and intervene on energy supply — says that green policies already under implementation can cover almost all of the net growth in energy demand to 2050.

Great news? Not so much. Under that scenario, annual emissions wouldn’t budge from today’s levels, leading to global temperatures increasing past a disastrous 2.6°C by 2100.

Time to invest for the long term, despite the tough winter ahead: To avert a climate meltdown, the IEA wants governments to commit to a far more drastic energy plan that would see net emissions drop to zero by 2050, maintaining the mean temperature increase at 1.5°C. That’s in line with the EU’s recently announced green plan, the most ambitious in the world to date. Implementing it would mean resisting calls from corners of the industry (ahem, OPEC) who are seeking to use the current energy crisis as an excuse to revert to fossil fuel expansion. It will also require lending a helping hand to emerging-market economies, which need to be allocated around 70% of the additional spending required to meet the net-zero target, according to the IEA.

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Squid Game has become Netflix's biggest ever series launch, with 111 mn users tuning in its first 28 days after exceeding Bridgerton’s previous record of 82 mn views, reports BBC. We reviewed Squid Game last week and the show has been a fixture on our social media feeds since its release. The Korean thriller series is a creative depiction of humanity through a series of children’s games played by a group of financially-strained adults competing for a cashprize.

Taking aspirin to prevent a heart attack in older age may cause some people more harm than good, the US Preventive Services Task Force posited in a draft recommendation. A single daily low-dose aspirin (81-100 mg) has commonly been prescribed to people above 60 as a blood thinner to prevent heart attacks or strokes. Folks under 60 seen as “at risk” are also commonly told by their MDs to take a daily aspirin. Data suggests that side-effects including bleeding in the stomach, intestines and brain could outweigh the benefits and we should be using aspirin “a whole lot less,” Dr. Lloyd-Jones told the Wall Street Journal. The draft is open to comments for the next month before the task force releases a final recommendation.

???? ON THE TUBE TONIGHT-

(all times CLT)

How the Golden Arches became a fast food giant: In biopic The Founder, it all comes down to Ray Kroc, the salesman who was tasked with turning the eatery into a successful chain. McDonald’s started off as the passion project of two brothers, Dick and Mac McDonald, and by 1954, the two brothers had already introduced concepts such as the drive-thru and fast service to their business model. The two were struggling to franchise their business and hired Kroc (played by Micheal Keaton) as their head of franchising. After a ton of arguments, Kroc finally proves his worth to the company as he catapults the business to global fame. Even if you’re not into Big Tasty sandwiches, it’s a great watch for those trying to grow a business. You can check out the almost-two-hour-long film on OSN.

⚽ It’s another football-less day, but our only consolation is that the lull is almost over. Let's hope that the remaining days until Super Saturday pass quickly, but until then we’ve been re-watching the incredible goal scored by Liverpool star Mohamed Salah against Manchester City earlier this month from every possible angle (watch, runtime: 04:33). You might also want to take a look at the goals from the Egypt vs Libya World Cup qualifier on Monday (watch, runtime: 02:10).

???? OUT AND ABOUT-

(all times CLT)

Jordanian indie band Autostrad will be playing tonight at Cairo Jazz Club 610 in El Guezira Plaza at 9pm. The Cairo Jazz Club in Agouza will host a new edition of Welcome to the Jungle (aka glow in the dark night) with A-Squared behind the decks at 8pm.

???? UNDER THE LAMPLIGHT-

All the rockstars are writing books now: Set the Night on Fire is a tell-all about rock icon The Doors, written by none other than their guitarist, Robby Krieger. It’s been 50 years since frontman Jim Morrison died at age 27, but Krieger still recalls all the details of The Doors’ rise to success. Krieger takes readers back to the very beginning, from early teenage antics, to booking their first show, to meeting their first celebrity. It also explores the less fun parts of the band’s history including bouts of addiction and a fight with cancer. If you’re a fan of music from the 60s and 70s, this book is more than just a memoir — it’s a snapshot of the culture at the time and what it meant to be a musician.

The EGX30 rose 0.9% at today’s close on turnover of EGP 1.13 bn (25% below the 90-day average). Foreign investors were net sellers. The index is up 0.3% YTD.

In the green: Fawry (+6.4%), AMOC (+5.1%) and Mopco (+2.8%).

In the red: Aspire Capital (-9.5%), Pioneers Properties (-6.3%) and Gadwa Industrial Development (-6.3%).

Restaurant delivery apps … heros or villains? Restaurant delivery apps were the perfect solution for all of us who despise talking to customer service professionals on the phone and giving them your order six times until they get it right. These apps do more than just help you avoid awkward interactions — they act as a directory of restaurants, giving you options to discover and scroll through their menu. They ensure orders arrive, especially if it's through their own delivery drivers, and they offer different payment methods. These middleman-type apps remove an inconvenient step in the process for both sides and take a cut for their services. Sounds fair enough, right? These apps offer convenience at a cost, but some say they have begun to take advantage of their role in the food industry. The events that led to the quick rise of food delivery apps are the subject of a four-part podcast series in Land of the Giants created by Vox media food site Eater.

How the apps have become what the podcast calls a “modern day mafia”: In the US, DoorDash, Grubhub, and Uber Eats are the three biggest delivery apps, together worth around USD 130 bn. When the firms were still itsy bitsy startups, they all boasted that they were game changers for restaurants and would provide them with services to advertise and sell their products. At the time, these apps were reliant on restaurants buying into the idea and agreeing to list their names on the platforms. But things quickly changed and restaurants who weren’t on the apps became the ones at a disadvantage, especially after the pandemic made their use essential for many struggling restaurants. The delivery apps took advantage of this reversal and began charging excess commissions to restaurants while also taking a cut from hungry users.

Who bears the cost of convenience? For our last breakfast order of EGP 184 at the Enterprise office, we were charged an EGP 22 delivery fee on Talabat — approximately 12% of the total bill. This percentage changes based on location, or which party is providing the delivery driver, but it usually doesn’t exceed EGP 25. But the business model of food delivery apps doesn’t stop there, with the platforms also taking a commission from restaurants for every order that goes through — and sometimes those that don’t. Talabat charges a 15-25% commission on the restaurant’s order bill, paid from the restaurant’s profits on the sale, according to Oye Labs. In the US, food delivery apps have upped that range and charge a commission between 20-25% on every bill.

Restaurants don’t have the margins to pay the high commissions: Restaurant owners who were featured in the podcast agreed that the industry already has razor thin margins and paying these commissions has taken a bite out of their profitability.

The complaints abroad are echoed locally as well, with Creative Pan Founder and CEO Ibrahim Nagi detailing in a Linkedin post the problems that the food delivery industry causes in Egypt. We’ve also seen one too many posts while scrolling on social media complaining about the domination food delivery apps have had on local restaurants, especially about bad delivery and customer service.

So why do restaurants stick by these apps? Essentially, restaurateurs feel like they have no choice — just like with a real mafia. Gone are the days when you could distribute small menus to cars and passerbys — everything has moved online, and the platforms have the edge of a large customer base that regularly scrolls through their apps. Possibly more important than that, they have the digital infrastructure necessary to implement the process from start to finish, while also providing follow up and feedback. Not all restaurants can afford to create such a setup.

Here or abroad, the sentiment is the same: Restaurants can’t live with them — or without them.

Is there no alternative? In Egypt, fast food joints such as McDonald’s and KFC have created their own delivery platforms to control their value chain. Nonetheless, even Colonel Sanders couldn’t give up his presence on food delivery apps. Instead, the fast food chains offer extra markdowns and promotions for users on their solo app to drive people away from padding other companies’ pockets.

A better model for food delivery apps? In his post, Nagi suggests that a better business model is to introduce tiered commissions to restaurants based on the order’s total price, as opposed to having a set percentage regardless of the bill. When the order amount is small, food delivery apps don’t make much as it ends up barely covering the driver’s pay, but if the order amount is large, restaurants suffer as they cough up a big chunk of their margins. A tiered commission would result in a middle ground where all parties benefit.

Until then, the government has intervened in some cases: After a year of US restaurant owners depending on food delivery apps to keep their businesses afloat during the pandemic, the massive number of complaints led to cities and states imposing permanent caps on commissions charged to restaurants, according to Protocol. New York and San Francisco, for example, both imposed commission caps of 15%. The move did not go over well with food delivery companies who complained the government was overstepping in imposing price controls. In retaliation, the apps cut off some delivery zones and added extra charges to cover the gap, playing on a legislative loophole to ensure their bottom lines weren’t affected.

Meanwhile, their own workers were on strike: The food mafia, in this case DoorDash, was already struggling with workers going on strike over low wages back in July, NPR reported. Delivery drivers for the app, aka Dashers, were demanding that their base pay be raised. Though no action was taken, just weeks ago, the city of New York stepped in to introduce a bill that set a minimum pay for food delivery workers, and introduced other changes that would improve working conditions, according to CNBC.

How to help local restaurants? Grind your teeth and go back to awkward interactions: In the Land of the Giants podcast, restaurant owners urged people to go back to ordering from stores directly, whether from their websites or by calling their number. Using these apps, especially in places where restaurants are getting battered by the ongoing pandemic, can make you part of the problem.

October: Romanian President Klaus Iohannis could visit Egypt mid this month to discuss ways to boost tourism cooperation between the two countries.

14-22 October (Thursday- Friday): El Gouna Film Festival.

9-15 October (Saturday-Friday): Turathna Exhibition, Egypt International Exhibition Center, Cairo, Egypt.

11-17 October (Monday-Sunday): IMF + World Bank Annual Meetings.

13 October (Wednesday): Meeting of G20 Finance Ministers and Central Bank Governors, Washington DC.

14-15 October (Thursday-Friday): The Ordinary Session of the Executive Council of the African Union, African Union Headquarters, Addis Ababa, Ethiopia.

Mid-October: The Egyptian Banking Institute, the Financial Services Institute, and I-Score will begin airing in mid-October the Digital Credit Scoring Webinar Series, a line-up of webinars on the banking sector and banking regulations.

18 October (Monday): E-Finance begins trading on EGX.

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

24-28 October (Sunday-Thursday) Cairo Water Week, Cairo, Egypt.

27-28 October (Wednesday-Thursday) Intelligent Cities Exhibition & Conference, Royal Maxim Palace Kempinski, Cairo, Egypt.

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

28 October (Thursday): Second tranche of overdue subsidy payouts will be handed to eligible exporters.

30 October – 4 November (Saturday-Thursday): The first edition of Race The Legends, Egypt.

30-31 October (Saturday-Sunday): G20 Leaders’ Summit, Rome, Italy.

31 October (Saturday): World Cities Day, Luxor, Egypt.

November: The French-Egyptian Business Forum is set to take place in the Suez Canal Economic Zone.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

2-3 November (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

15-21 November (Monday-Sunday): Intra-African Trade Fair 2021, Durban, KwaZulu-Natal, South Africa.

16-17 November (Tuesday-Wednesday): Africa fintech summit, Cairo.

26 November-5 December (Friday-Sunday): The 43rd Cairo International Film Festival.

29 November-2 December (Monday-Thursday): Egypt Defense Expo, Egypt International Exhibition Centre.

7-8 December (Tuesday-Wednesday): North Africa Trade Finance Summit.

8-10 December (Wednesday-Thursday): Global Forum for Higher Education and Scientific Research (GFHS), Cairo, Egypt.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

14-19 December (Tuesday-Sunday): The Cairo International Festival for Experimental Theater.

14-15 December (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

15 December (Wednesday): Deadline for joint stock companies and investment companies in Cairo to join e-invoicing platform.

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

1Q2022: Launch of the Egyptian Commodities Exchange.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

19 February 2022 (Saturday): Public universities begin the second term of the 2021-2022 academic year.

1H2022: The World Economic Forum annual meeting, location TBD.

22-24 April 2022: World Bank-IMF spring meeting, Washington D.C.

May 2022: Investment in Logistics Conference, Cairo, Egypt

16 June 2022 (Thursday): End of 2021-2022 academic year for public schools

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

18-20 October 2022 (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.