PM — EDF Renewables + AMEA Power sign major agreements to produce green energy in SCZone

PSA #1- This is our last edition of this week. We’re taking a publication holiday tomorrow (we do this each year so we can gather as a team for iftar) in addition to the bank holiday on Sunday and Monday’s national day off (confirmed by the EGX this morning). Our AM and PM editions will be back in your inboxes at the appointed hour on Tuesday.

REMINDER- The private sector won’t be taking the entire week off for Eid, unlike the public sector. The private sector will officially get Labor Day (that’s 1 May) and the first two days of Eid as paid vacation days, the Manpower Ministry said yesterday. Now it’s up to you (or your bosses) to decide if your company will bridge the entire week.

PSA #2- You only have a few hours left to file your ESG report: EGX-listed companies and all non-bank financial services outfits regardless of listing status need to submit their first quarterly ESG questionnaire by the end of today. The regulator is making it mandatory for companies to publicly disclose their performance on key environmental, social and governance metrics each year when they submit their annual financial statements, starting 2023.

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:25pm CLT this evening in the capital city, and fajr prayers are at 3:51am.

THE BIG STORIES TODAY-

#1- Two agreements signed today may help turn the Suez Canal Economic Zone into a green energy hub:

• A consortium of EDF Renewables and ZeroWaste have signed a USD 3 bn agreement with the SCZone and the Sovereign Fund of Egypt (SFE) that will see them produce 350k tonnes of green fuel for ships in Ain Sokhna. (Cabinet statement)
• UAE energy company AMEA Power will produce 390k tonnes of green ammonia in Ain Sokhna after inking an agreement with the SCZone and the SFE. (Cabinet statement)

#2- Another fintech platform is setting up shop in Egypt: FlexxPay, a UAE-based company that offers flexible salary payment services to its users, is expanding to Egypt, it announced in a press release (pdf) yesterday. Already active in the UAE and Saudi Arabia, the company has made Egypt its third market and has opened an office at the Greek Campus.

^^ We’ll have more on these stories when we return to your inboxes on Tuesday morning.

THE BIG STORY ABROAD

The war in Ukraine is still front-page news as far as the eye can see: The deadline for Russia’s ultimatum to Ukraine to give up Mariupol expired a couple of hours before we hit dispatched, with no signs of surrender from Ukrainian fighters. This comes as Russia presses ahead with its eastern offensive in a final attempt to take full control of Donbas’ two administrative regions. Western governments are pledging to ship more arms and military support to Ukraine in what’s being billed as the country’s “last stand.” (Reuters | Washington Post | The Guardian | Wall Street Journal)

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

• IMF upgrades Egypt’s GDP growth in 2022 despite a “significant slowdown” globally: The IMF has cut its global GDP forecast for this year and the next as surging inflation and economic fallout from the war in Ukraine hit growth prospects, but the lender revised upwards Egypt’s growth for the current fiscal year despite soaring food and energy prices threatening to weigh on economic activity.
• CIB management gets vote of confidence from (new) largest shareholder: Alpha Oryx, a subsidiary of Abu Dhabi sovereign wealth fund and the new holder of a 17.5% stake in CIB, has no intention of doing anything that would “negatively impact the bank’s management or the interests of its shareholders.”
• CIRA to launch its new schools in 6 October, Qena this fall: EGX-listed private sector education outfit CIRA is looking to open the doors of three new schools at the beginning of the upcoming school year in September.

???? CIRCLE YOUR CALENDAR-

REMINDER- The corporate tax deadline is approaching. Companies with financial years ending 31 December have to submit their corporate tax returns by Saturday, 30 April.

Also on the final day of the month: The fixed customs exchange rate introduced last month following the EGP devaluation will be lifted. Greenbacks used for importing essential items such as basic commodities and materials used for manufacturing are currently changing hands at a fixed rate of EGP 16, a move introduced to minimize exchange rate volatility in the wake of the deval.

☀️ TOMORROW’S WEATHER- Expect a daytime high of 28°C tomorrow and a nighttime low of 13°C, our favorite weather app tells us.

The Russia-Ukraine war means fewer flights to Asia and higher ticket prices: Airlines have been forced to reroute their flights — particularly those operating between Europe and Asia — over the past couple of months in order to avoid the closed Russian airspace, resulting in fewer flights offered, the Wall Street Journal reports. Besides potentially operating some of the longest flights ever, airlines like Finnair have slashed their number of flights to destinations in Asia — like Japan — from up to 40 weekly flights to 10 destinations, down to seven flights to only one destination. “If this continues into the winter, flights will be longer and, on some occasions, might have to make a technical stop,” one industry analyst tells WSJ. Scheduling conflicts, rising fuel costs, and longer flights will also mean higher ticket prices, analysts predict.

How’s this for a flight map? A Russian plane had to make a 15k km detour this week to pick up diplomatic staff that were expelled from Spain and Greece, flying up to the Arctic Circle, across North Africa and over the Caucasus. This was almost as long as the world’s longest flight between New York and Singapore.

Can cash subsidies solve high-income countries’ demographic crunch? Developed countries are increasingly offering subsidies to citizens to encourage them to have more children — an effort that seems to be going to waste, with fertility rates continuing to dwindle in countries like Hungary, France, Italy and South Korea, the Financial Times writes. In France, the rate has dropped from above two children per woman in 2010 to 1.83 in 2021, according to data from the country’s statistics office cited by FT. Some blame cuts to family support, gender inequality and lack of affordable childcare as the main reasons discouraging people from having children — circumstances that cannot be addressed with a one-off USD 1.7k subsidy, one South Korean woman said.

What could put an end to dwindling fertility rates? More gender equality: Countries that score high on different aspects of gender equality — such as Norway, Sweden, Iceland and Belgium — tend to report higher fertility rates. “Higher equality allows especially better-educated women an easier combination of career and family life,” one researcher said. This can also be attributed to fair parental leave, he suggested, asking: “Why not allow some of the men to retreat from work for two or three years to take parental leave and then head back to work?”

More gender equality = more kids? Tell that to us, here in Egypt. Less gender equality = less kids? Please, policymakers. Let’s not go there.

We’re having to ask slightly different questions as the country’s exploding population causes increasing concern about how everything from jobs and housing to basic resources such as water will be allocated in the coming decades if this keeps up. At 103,235,889 people and counting, the government is setting up a new dedicated authority to tackle population growth in a sign that policymakers are starting to get serious on the issue. Still, we don’t expect cash prizes for celibacy to be put on the table anytime soon.

Coming soon on Netflix: Ads + cheaper subscriptions. After years of resisting commercials, Netflix is now exploring offering cheaper, ad-supported subscription plans over the next year or two, co-chief executive Reed Hastings said yesterday on an earnings call (watch, runtime 43:18). The introduction of ads would mark a massive shift for Netflix, who had long opposed adding commercials or other promotions to the platform. “Allowing consumers who would like to have a lower price and are advertising tolerant get what they want makes a lot of sense,” said Hastings, adding that ad-free plans will continue to be available to users who don’t want to see ads.

Chill? More like Netflix and Panic: Netflix’s earnings caused its market cap to tank by USD 40 bn in pre-market trading today as shareholders reacted to the news that it lost 200k subscribers in 1Q 2022 — its first subscriber loss in over a decade. With rising competition from newcomers to the streaming market, the company admitted that it had become “harder to grow membership,” causing its share price to dive more than 27%.

???? ON THE TUBE TONIGHT-

(all times CLT)

Severance takes the concept of work-life balance to a dystopian level: The Apple TV series looks at a dystopian future where a company has managed to separate work and life for their employees, removing their life memories at work and vice versa. This leads to a complete disconnect between the two worlds, to the extent that employees can’t remember their coworkers once they leave the office. The main character, Mark (played by Adam Scott), chose to work at the company after his wife died, seeing the eight-hour reprieve from grief as a solid work benefit. But it’s not all sunshine and daisies and the mechanics of how the separation of consciousness works can often lead to dire consequences (you can only imagine what happens when someone quits). There are a lot of adjectives we could use to describe the series: intense, fascinating, mysterious, and even, strangely, feel-good. You can check out this review by the New Yorker.

⚽ There are a handful of English Premier League matches to keep you entertained this evening: At 8:45pm, Everton will face Leicester City, Chelsea will face Arsenal, and Newcastle will compete with Crystal Palace. For the last match of the night, Man City and Brighton will hit the field at 9pm.

La Liga: Atletico Madrid will play Granada at 7pm and Celta Vigo and Getafe kick off at 8pm. At 9:30pm, catch the match between Real Madrid and Osasuna.

And then there are solo matches in our local league and Serie A: Udinese is playing against Salernitana at 6:45 in Serie A while El Gouna and Smouha play at 9:30pm.

???? OUT AND ABOUT-

(all times CLT)

Equilia Coworking Space is hosting a sohour and movie night tonight starting at 8:30pm, with a screening of Confessions of a Shopaholic.

Photopia and Documentaries Page are co-organizing Documentary Nights — a two-day event that features talks and slideshows by young influential documentary photographers to show their latest projects. The event will run from 22-23 April.

Luka Wel Batteekh are performing tomorrow at The Room Garden City at 9pm.

Tiatro Metro is hosting an open mic standup comedy night tomorrow at 8pm.

Syrian-Armenian singer Lena Chamamyan is performing at the Cairo Opera House on Friday at 9:30pm. Chamamyan is known for her soprano voice and distinctive style, which fuses jazz, Middle Eastern folk music and Western classical music.

A football cup for women — titled Red Bull Neymar Jr's Five — is taking place at Wadi Degla Sporting Club in Maadi on Friday at 8:30pm.

???? UNDER THE LAMPLIGHT-

Why We Fight is the #1 new release on Amazon: Christopher Blattman explores the true origins of war in his new book Why We Fight, employing his knowledge of economics, political science, and history. As the threat of warfare is often leveraged — as seen by the Russian invasion of Ukraine — it’s important to take a step back and understand why violence trumps negotiation. The book draws on real-world interventions to lay out the root causes and remedies for war, looking at everything from full blown wars to fighting street gangs. Blattman is a knowledgeable peacemaker with years of experience on the field and he attempts to lend new meaning to the adage “give peace a chance.”

The EGX30 fell 1.7% at today’s close on turnover of EGP 580 mn (36.6% below the 90-day average). Regional investors were net buyers. The index is down 12.6% YTD.

In the green: Egypt Kuwait Holding-EGP (+3.5%), Cleopatra Hospital (+1.9%) and Madinet Nasr Holding (+1.9%).

In the red: Telecom (-6.4%), CIB (-4.0%) and Ezz Steel (-3.8%).

The war in Ukraine is bad news for food security: It’s no secret that Russia’s ongoing war in Ukraine is bad for economies the world over. The main worry for most is a slowdown in growth, after the war sent energy and food prices skyrocketing. But while wealthier countries can for the most part absorb price hikes, some poorer nations are looking at a starker reality: more of their citizens going hungry, in what some are calling the start of a “global food crisis.”

Global food prices surged to a new all-time high in March, according to UN data. Food prices are now more than 15% higher than the previous all-time high, recorded in February 2011.

Why war in Ukraine exacerbates food supply issues: The two countries provide around a third of the world’s wheat, almost 80% of sunflower oil production, and about a fifth of corn exports — not to mention key supplies of fertilizers for farmers elsewhere. Grain exports out of Ukraine have stopped almost entirely as Russia blockades the country’s sea ports. For the trade that is continuing (largely on the Russian side), increased risk means higher ins. and shipping costs, and a tighter market as some traders steer clear. That all leads to knock-on effects (read: higher prices) in global commodities markets. Looking ahead, one key question is how much damage Ukraine’s farms have sustained as large swathes of land become battlefields — and how long it could take for Ukrainian farmers to get back on their feet.

REMEMBER-Food inflation is nothing new. The pandemic, persistent supply-chain issues, and climate change have all been driving up prices and destabilizing global food flows for some time. Some say wealthy nations have failed to address a food crisis that has been coming up in their rear-view mirrors for years.

Who stands to be hit the hardest? Countries already facing major food security challenges will unsurprisingly bear the brunt of rising prices. A quarter of Africans are facing a food security crisis, the Wall Street Journal quotes Dominik Stillhart, the International Committee of the Red Cross’ global operations director as saying.

International nonprofits are raising the alarm over West Africa in particular, where another 11 mn people could be pushed into hunger by this summer, humanitarian organizations have said. They’re calling on wealthy nations to help plug the USD 4 bn aid financing gap in the region.

And developed nations aren’t safe either: Price hikes disproportionately hit people on lower incomes no matter where they live, because they spend a greater share of their earnings on essentials. Poorer families could end up sacrificing electricity, healthcare, and heating in order to buy food, be forced to skip meals, or opt for less expensive and less nutritious meals, according to a FAO information note (pdf).

Some defensive moves to mitigate the crisis aren’t helping: The war has pushed some countries — including Egypt — to respond with export restrictions as they look to secure their domestic needs. The World Trade Organization is urging countries to drop these controls and offer their surplus stock of basic commodities such as vegetable oil and grains to the world market to ease supply shortages.

Hunger also has its own consequences, chief among them political instability, mass migration, and conflict, the World Food Programme notes (pdf).

Food is a concern in our neck of the woods: Some Middle Eastern nations are “struggling to access enough food because of a toxic combination of conflict, climate change and the economic aftermath of Covid-19,” the United Nations World Food Programme’s MENA director Corinne Fleischer previously said. “People’s resilience is at a breaking point. This crisis is creating shock waves in the food markets that touch every home in this region.”

For Egypt, wheat is key: We’re the world’s largest importer of wheat, and Russia and Ukraine together supply more than 80% of our imported wheat in peacetime. That wheat largely ends up as subsidized bread loaves, which are handed out to more than 60 mn Egyptians. With the war threatening our grain supply, the government has moved to tap new markets for imports, up its purchases in the local harvest, and introduce price caps on unsubsidized bread. Egypt currently had enough wheat to cover the next 2.6 months’ worth of consumption in early April, the government said, down from the four-month figure announced last month.

What can be done? Targeted emergency financing, for one. Multilateral lenders and food bodies are calling for a coordinated financing push from wealthy nations to help address the problem in developing countries, but little concrete action has so far been taken. Some are hoping that could change within days as world leaders discuss the issue in Washington this week amid the IMF and World Bank spring meetings. The EU has already said it will provide Egypt with EUR 100 mn in support to help us tackle rising food prices, part of a freshly announced EUR 225 mn Food and Resilience Facility for MENA countries.

Looking to the long term, there are systemic issues to be faced: “Every country going forward needs to continue to transform its food system and make it more resilient in the long term,” says World Bank Vice-President Juergen Voegele. That means mobilizing private funding and innovative agricultural methods “to do more with less: Produce more nutritious, more diverse and more high-value food for a growing population — and to do so with less water and less fertilizer, while limiting land use change and greenhouse gas emissions.”