US trade delegation arrives today

It’s an exceptionally quiet news morning at home and abroad, and we took advantage to roll out a little piece of technology (entirely behind the scenes) that will add new functionality to our website for the first 100 beta users of our forthcoming Enterprise One service. Starting when we roll out, only subscribers to Enterprise One, our paid service focusing on actionable business intelligence, will be able to view our full archive of stories by theme and subject. That’s sorted access to more than 14 mn words words about Egypt…

** #1 Nearly 50 US companies are arriving in town today for a three-day visit to kick the tires on new business opportunities in Egypt, according to a presser on the delegation (pdf). AmCham, the US Chamber of Commerce, the US-Egypt Business Council, and the Egypt-US Business Council will hold ministerial panel discussions on Wednesday, 24 October and Thursday, 25 October featuring Prime Minister Moustafa Madbouly and nine other members of cabinet. Set to speak:

• Trade and Industry Minister Amr Nassar
• Public Enterprises Minister Hisham Tawfik
• Planning Minister Hala El Said
• Finance Minister Mohamed Maait
• Supply Minister Ali El Moselhy
• Investment and International Cooperation Minister Sahar Nasr
• Military Production Minister Mohamed El Assar
• CIT Minister Amr Talaat
• Oil Minister Tarek El Molla

PepsiCo Egypt is also set to announce today its investment plans over the coming four years, including the installation of new production lines and the expansion of its facilities in Egypt, according to an emailed statement (pdf).

One of us will be hovering around the margins of the delegation and will report back in Speed Round starting tomorrow.

Health Minister Hala Zayed and Tourism Minister Rania Al Mashat are scheduled to appear before the House of Representatives today, according to Ahram Online. MPs are expected to question Zayed about the quality of health services offered at public hospitals and rural medical centers. Al Mashat, meanwhile, will brief MPs on the government’s new overseas promotional campaign, which was announced earlier this month.

House of Representatives begins discussing RIZ agreement today: The House will begin discussing the contracts to establish the USD 7 bn Russian Industrial Zone (RIZ) today, Al Mal reported. The agreement, which Egypt and Russia finally signed in May, is one of 10 Speaker Ali Abdel Aal referred to relevant parliament committees for review yesterday after they were approved by the Legislative Committee. The agreements also included one with FAO over a water development project, and a EUR 243 mn loan from the Economic Development Cooperation Fund to finance Egypt’s contract with South Korea to supply 32 metro cars.

Maybe Ali Abdel Aal and Jake Paul could do co-branded merch? The House of Representatives plans to launch a YouTube channel to broadcast its news and “other key public announcements,” Ahram Gate reports. Don’t hold your breath for the House to decide to air sessions direct to the streaming video service or to traditional broadcast TV.

Finance Minister Mohamed Maait is among the headliners at a conference on Sukukset to get underway this morning. Along with other government officials and attendees from the financial world, participants will discuss “the fundamentals of activating a sukuk market and the timeframe for creating an appropriate climate for issuing sukuk” as well as the potential for sukuk in Egypt based on experience in other markets including Dubai.

Turkey is trying to use the Khashoggi affair to “change the balance of power” in the Middle East. Turkish President Recep Tayyip Erdogan has promised to reveal during a speech today new details about the murder of dissident Saudi Journalist Jamal Khashoggi’s while inside the kingdom’s consulate in Istanbul, Reuters says. Turkey — which for weeks now has claimed to possess evidence that incriminates Saudi officials — is playing a calculated hand, using the incident as a “a catalyst for changing the balance of power in Saudi Arabia and regaining influence across the Middle East,” according to Bloomberg. Saudi authorities have yet to put out an official story, saying only that “rogue” agents were responsible and that an investigation ios ongoing.

MbS meets Mnuchin ahead of investment conference: While Germany decided to halt arms exports to Saudi to pressure it to come clean about the murder, US Treasury Secretary Steven Mnuchin met with Crown Prince Mohammed bin Salman yesterday in Riyadh, ahead of an investment conference that gets underway today. World leaders and top executives have largely distanced themselves from the conference, among them IMF Director Christine Lagarde, JP Morgan Chase’s Jamie Dimon, and Uber’s Dara Khosrowshahi.

Foreign Minister Sameh Shoukry was also in Riyadh yesterday to deliver a message to King Salman from President Abdel Fattah El Sisi, Amr Adib said on El Hekaya (watch, runtime: 1: 36). Diplomatic sources also tell Al Shorouk that the two officials would discuss a number of “high-priority issues” of mutual interest between Egypt and Saudi Arabia.

A quick request this morning: Could we please stop saying we are having “conversations around” something? This new addition to our collective speech pattern is vague bull[redacted]. We may have a conversation “about something,” but if we’re talking “around” something it means we’re avoiding the subject — or (at best) discussing it indirectly / nibbling at its margins, but not fully engaging with it.

PSA- We could be in for blowing sand and rain across Egypt this weekend, the head of the Meteorological Authority’s analysis unit tells Masrawy. Spells of heavy rain and blowing sand could start on Thursday and Friday from the north coast and travel south to Cairo and Sinai. Expect peak temperatures in Cairo today and tomorrow to hit 34°C, while Thursday and Friday will see a milder 29°C and 27°C, respectively.

As has been the case of late, there’s no one thing on the mind of the nation’s talk show hosts.

** #4 Fruit and vegetable prices have spiked recently, Domestic Trade Authority Chairman Ibrahim El Ashmawy told Hona Al Asema. He blamed the increase on the nation’s poor logistics network, which he says plays a role in ensuring staple commodities are available at stable prices (watch, runtime: 7:26). The Supply Ministry has been looking to collaborate with the private sector to build logistics centers and was said to have issued a tender last August to build 27 new facilities across the country, starting in Upper Egypt. The Farmer Syndicate’s Hussein Abdel Rahman blamed a sharp rise in potato prices on some farmers’ monopolistic practices (watch, runtime: 3:06).

Televisions, though, should be getting cheaper. Custom duties on TV sets have been slashed by 20%, which should help reduce their prices in the coming period, Customs Authority boss El Sayed Negm told Amr Adib on El Hekaya (watch, runtime: 1:02). Negm and Adib also chatted about electric vehicles being exempt from import duties (watch, runtime: 2:59) and the zero-tariff policy on EU cars that is expected to come into effect in January 2019 (watch, runtime: 4:22).

On the whole electric vehicles being customs exempt: We spoke with a couple of guys who are both very smart and very big players in the field. They reminded us that the new “zero customs duties” on electric vehicles isn’t … new. “There are no duties now on electric vehicles because there were never duties on electric vehicles,” one said.

Tanzania’s USD 3 bn hydroelectric dam will take up to four years to construct, according to El Sewedy Electric CEO Ahmed Elsewedy. Construction on the project, for which Arab Contractors won the mandate, is expected to start in five months’ time. Some 1,000-2,000 Egyptian laborers will be going to Tanzania to work on the dam, he added (watch, runtime: 3:39).

State Information Service head Diaa Rashwan was still on the air last night defending Egypt against allegations of organ theft. Rashwan once again confirmed that organs belonging to a British tourist who died in Egypt were not “missing,” as UK news outlets alleged, but were removed as part of an autopsy and would be returned to his family (watch, runtime: 5:14).

Life is slowly returning to normal in North Sinai, with schools and universities opening their doors to students, Governor Mohamed Shousha told Masaa DMC’s Eman El Hosary. He explained that security is now under control in the area, to a large extent, and said that he expects the governorate to be safe and violence-free by the end of 2018 (watch, runtime: 10:57).

The Coptic Church has four months to legalize the status of some 120 buildings, as per new legislation, Rev. Mikhail Anton told Hona Al Asema (watch, runtime: 4:57).

** #2 Egypt to establish fund to cover risk by Egyptian companies investing in Africa: The Madbouly Cabinet’s economic group has voted to approve the establishment of a new insurance fund to cover part of the risks incurred by Egyptian companies investing in Africa, Investment Minister Sahar Nasr said in a statement yesterday. The fund is expected to encourage more Egyptian businessmen to do business around the continent, according to Nasr. No further details were provided.

Big Africa win for Arab Contractors: The announcement comes one day after state-owned Arab Contractors won a mandate for a USD 3 bn hydroelectric dam project in Tanzania.

House of Representatives gives preliminary nod to proposed innovation fund: Parliament gave preliminary approval yesterday to a draft law that would establish an innovation fund to promote innovation and scientific research, Ahram Gate reports. The bill would require private and government universities to provide a one-time contribution equivalent to 5% of their budget to finance the fund and would see universities dish out another 5% each time they see a change of management (the latter being something of an odd provision, if you ask us). The fund would be placed under Higher Education Ministry oversight. Cabinet had approved the draft law last October.

You want to make basic or academic research attractive? Make corporate donations to licensed universities or other institutions tax-deductible. Note to policymakers: That doesn’t mean “tax companies more and give the money to universities.” It means let corporates fund research (at approved institutions) in return for a tax credit or otherwise claim a portion of their donation against their taxes.

** #3 REGULATION WATCH- Egyptian stock exchange goes to tiered system for annual listing fees, seeks SME listings: Prime Minister Moustafa Madbouly issued a decree amending listing fees for companies on the Egyptian Exchange. The decree is now law after having been published in the Official Gazette on Sunday. Listed companies will pay the new schedule of fees at the start of every calendar year in January. The fees — which have been capped at EGP 500k a year — will be calculated based on each company’s capital, with the new guidelines categorizing companies into five categories:

• Companies with up to EGP 12.5 mn in capital will pay an annual fee equivalent to 0.2% of their capital;
• Companies with capital ranging from over EGP 12.5 mn-100 mn will pay 0.15%;
• Companies with capital ranging from over EGP 100 mn-300 mn will pay 0.075%;
• Companies with capital ranging from over EGP 300 mn-500 mn will pay 0.05%;
• Companies with capital over EGP 500 mn will pay 0.025%.

Listed SMEs given 50% discount: Companies not listed on the main market — such as those listed on the Nilex — will be given a 50% discount on their listing fees. Issuers with up to EGP 12.5 mn in capital will pay an annual fee equivalent to 0.1% of their capital, while companies with capital ranging from over EGP 12.5 mn-100 mn will pay 0.075%.

The decision also sets fees for listed and traded debt instruments at 0.2% of the value of the security, with a cap of EGP 50,000 being set. Those are payable only at the time of the issuance.

Background: Prior to the decision, all listed companies had to pay annual listing fees of equivalent to 0.2% of their capital, with a cap of EGP 500k. The new regulations cut listing fees for all companies listed on the main bourse with capital of over EGP 100 mn with a sliding scale to make capital increases ultimately less costly.

** #6 Home appliance producer Whirlpool Corporation and local partner MTI Holding will assemble  and market in Egypt Whirlpool-branded top-loading washing machines starting 1H2019.

M&A WATCH- Three state-owned companies close USD 15 mn buyout of CCI: State-owned companies Egyptian Ethylene and Derivatives Company (Ethydco), Sidi Kerir Petrochemicals Company (SIDPEC) and the Egyptian Petrochemical Holding Company (ECHEM) have closed a USD 15 mn acquisition of Solvay Alexandria Sodium Carbonate (CCI), government sources told local media. Ethydco acquired 60% of CCI while SIDPEC and ECHEM acquired 20% each, the sources added. The three companies plan on bringing back to life a mothballed Solvay steel and glass manufacturer, the report claims. CCI suspended production in 2016 after rising energy prices made operations uneconomical.

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President Abdel Fattah El Sisi is due in Khartoum on Thursday, 25 October to meet with Sudanese President Omar Al Bashir.

The 2018 Narrative PR Summit will take place at the Four Seasons Nile Plaza on Sunday, 28 October.

The T-20 ‘Invest in Healthcare Conference 2018’ will take place on Thursday, 15 November at the Nile Ritz Carlton in Cairo. The event will feature four panel discussions and end with a showcase on promising startups in the tech sector. Panels will include:

• The impact on the universal health insurance scheme on healthcare quality
• Opportunities for investors and private-sector players in the universal health insurance scheme
• The impact of technology on healthcare in Egypt
• The healthcare supply chain

Egypt celebrated Navy Day by observing the 51st anniversary of the sinking the Israeli destroyer Eilat, according to Egypt Today. Eilat was sunk by three Egyptian missile boats off Port Said waters on 21 October 1967. The sinking, thought to be the first vessel sunk by a missile boat during wartime, prompted global interest in the development of missile boats.

An independent judiciary is necessary for Egypt’s democratic transition and to protect human rights, Bruce Rutherford writes for Foreign Affairs. Rutherford argues that strengthening legal institutions and restoring their reputation would help curb the power of the presidency and protect the rights of citizens. “Weak legal institutions allow for rampant corruption and police brutality,” he says, adding that promoting greater judiciary independence is more achievable under current conditions than some would expect.

The story is dominating the conversation on Egypt in the foreign press this morning.

Egypt needs to reconcile with civil society, Ziad Bahaa El Din writes in his latest column for Al Shorouk. An accumulation of misunderstandings over the years have given non-profit organizations and NGOs a bad reputation in Egypt and led them to underperform where they could excel, according to Bahaa El Din. He argues that effort should be spent on changing that perception, both on the legal and social levels, making a case for the importance of NGOs and the value they could bring to the development and transformation of societies.

** #8 Social justice demands that mns die or be dislocated: Only four things can force equality or “large-scale levelling”: epidemics and pandemics, complete collapse of whole states and economic systems, total revolutions, and wars of mass mobilisation. Or so Walter Scheidel argues in his book “The Great Leveller: Violence and the History of Inequality from the Stone Age to the Twenty-First Century.”

The Vienna-born historian concludes that (the Great Depression aside) financial crises and political reforms seldom have a major impact on bridging the gap between the poor and rich, according to a book review by The Economist. Scheidel notes that democracy and popular social movements have also largely proven ineffective. Large scale conflict and warfare, however, have proven effective at equalizing the economic scales.

Change could be driven by non-human intelligence, collapse of a civilization? The Austrian author doesn’t see the kind of catastrophes that have historically lead to a decline in inequality happening any time soon. Scheidel suggests however that the future might usher in more possibilities for change, perhaps one led by non-human intelligence or a civilisational collapse.

From guided missiles to guided Ubers, this is the history of GPS: GPS was first invented to help the US catch up with the Soviets in the Cold War space race after the latter launched Sputnik 1, the first man-made object put in space, in 1957. US military scientists discovered that Sputnik’s frequency varied as it changed position. This led to the realization that positions of signal receivers on Earth can be ascertained using satellites — the basic idea of the Global Positioning System, or GPS. The US military, which initially kept the technology under wraps, began deploying GPS on a large scale in later wars, including the 1990 Gulf War. Today, civilian usage of GPS, valued at USD 34.9 bn, dwarfs that of the military, a mere USD 2.1 bn. Watch on Bloomberg, runtime: 5:17.

** #5 President Abdel Fattah El Sisi received yesterday the diplomatic credentials of 21 new ambassadors to Egypt, according to an Ittihadiya statement. Among those presenting credentials:

• Afghanistan – Mohammed Mohheq
• Benin – Orou Sego
• Brunei – Pengiran Haji Mustapha
• Denmark – Tomas Christensen
• Dominican Republic – Aquiles Ledesma
• Ethiopia – Aznaw Abreha
• India – Rahul Kulshreshtha
• Japan – Masaki Noke
• Liberia – Edwin Sele
• Malaysia – Mohamed Haniff bin Abd Rahman
• Nicaragua – Mohamed Lachter
• Panama – Alejandro Gantes
• Peru – Paul Portella
• Poland – Michal Labenda
• Saudi Arabia – Osama Nugali
• Sierra Leone – Morie Fofana
• Slovenia – Mateja Prevolšek
• South Korea – Yoon Yeocheol
• South Sudan – Joseph Majak
• United Kingdom – Geoffrey Adams
• Uruguay – Enrique Oscar Crestino

Cabinet signs off on Kuwaiti funding for infrastructure projects on mainland and in Sinai: The cabinet economic group signed off on Monday on an additional KWD 25 mn (c.USD 82 mn) loan from the Kuwait Fund for Arab Economic Development (KFAED) to continue the construction of a sewage treatment facility in Sharqia, it said in a statement. The KFAED had already given Egypt USD 170 mn as part of the state’s development drive in Sinai. The economic group also agreed to begin procedures to sign a KWD 15 mn loan (c.USD 49 mn) from KFAED to set up four desalination plants in South Sinai to meet growing demand for drinking water.

President Abdel Fattah El Sisi met yesterday with Lebanese Foreign and Emigrants Minister Gebran Bassil to discuss energy and trade cooperation, as well as political developments in Lebanon, according to an Ittihadiya statement.

A high-profile Egyptian delegation arrived in Gaza yesterday for another round of talks with Hamas political leader Ismail Haneya on a truce with rival Palestinian faction Fatah that could pave the way to lift the blockade of Gaza, according to Xinhua. Egyptian Intelligence Chief Abbas Kamel is expected to pay a visit to the Gaza strip soon as part of the reconciliation drive.

The Egyptian Electricity Transmission Company (EETC) signed a EGP 362.4 mn equipment purchase and installation agreement with Elsewedy Electric for 52 units of 40 MVA power transformers, EETC chairman Gamal Abdel Raheem said. The transformers will be used for transmission stations in Cairo, Alexandria, the Delta region, the Canal governorates, Upper Egypt, and other governorates in central Egypt.

State energy companies Enppi and Petrojet have completed 60% of a project to expand the natural gas network in Jordan, Oil Minister Tarek El Molla said, according to Ahram Online. The two companies are expected to inaugurate the project in October 2019. We had previously noted that Enppi and EGAS are building a 17 km steel pipeline for the Jordanian-Egyptian Fajr for Natural Gas Transport and Supply Company that should be complete by 2020, but it remains unclear whether this is the project Molla was referring to.

The Housing Ministry signed a contract with the US-based Fluence Corporation to build three seawater desalination plants at a total cost of USD 7.6 mn, Afrik21 reports. The plants — which are expected to service new urban development projects in the north of Egypt — will be equipped with Fluence’s Nirobox SW – XL water treatment systems, allowing them to process up to 12,000 cbm of water a day. The equipment will be ready to ship by the end of 2018 with construction set to start in 2Q2019. Fluence will also operate the plants through a local partner. Details on construction timeline and funding were not disclosed.

The Industrial Development Authority (IDA) decided yesterday to give factories in industrial zones a penalty-free extension until 31 December to get their permits and industrial registration paperwork in order. The extension applies to both idle and working factories and grants the latter an exemption from having to submit proof of intent when applying for permits.

The British International College of Cairo is planning to open a branch in the new administrative capital, CEO Ahmed Samir tells Al Mal. BICC will break ground on the new campus soon and is expecting to complete it in three years’ time at a cost of EGP 350 mn.

Three local companies — Redcon Construction, El Nasr General Contracting, and Dorra Real Estate Development Group — are close to inking contracts with China State Construction Engineering Company (CSCEC) to develop parts of the new administrative capital’s business district, a source from one of the companies said, according to Amwal Al Ghad. Other local companies are also reportedly eyeing cooperating with CSCEC on the development. CSCEC, which is investing USD 3 bn in the business district, began talks in June to subcontract its projects in the district.

The Airport Holding Company could announce the winning bid for the Ras Sudr airport project by month’s end, or may relaunch the tender for the project, Tourism Development Authority (TDA) boss Serag El Din Saad said, according to Al Shorouk. The company is currently vetting between two offers for the EGP 2 bn airport and an adjacent touristic resort, one each from an Egyptian-Saudi consortium and another Egyptian-Emirati consortium. We had heard back in May that Toyota Tsusho Corporation, Samcrete, Arab Contractors and RW Armstrong & Associates were among the potential bidders. The government had re-issued its tender for the project back in March with amended stipulations, after failing to drum up investor interest last year.

2,000 visitors gathered yesterday to celebrate the bi-annual Sun Festival, during which rays of sunlight hit the seated statues of King Ramses II, Queen Nefertari, and god Amun Re at Luxor’s Abu Simbel temple, Ahram Online reports. Xinhua compiled a photo gallery of the event, which also made the radar of the Wall Street Journal (advance to slide 3).

Project Nitrous has helped 23 people in under a year with designing and developing their own prosthetic limbs using 3D printing, according to Egyptian Streets. The non-profit organization — which encourages people to participate in the making of their prosthetic limbs to suit their day-to-day needs — launched this year with funding from the Drosos Foundation and operates out of the Giza Systems Company. They are currently working on 18 new cases.