EnterprisePM — Plans to overhaul railway could see a major role for private sector

Good afternoon, everyone, and thank goodness for a slow news day this Monday. Pep needed? It is technically mid-week already, with Thursday a day off for Sinai Liberation Day. A reminder that Enterprise is taking a publication holiday, in observance.

THE BIG STORY TODAY- Our railways, their upgrades, their failings and the private sector’s role in fixing it was the big topic of the day. The conversation dominated headlines as Transport Minister Kamel El Wazir addressed the House of Representatives to explain the recent spate of railway accidents, as well as his ministry’s plans to overhaul the railways. Meanwhile, an Al Mal piece out this morning explores possible plans for how the private sector can take part in those plans. We breakdown the debate and more in the Speed Round below.

The latest top state official to get a covid jab: Prime Minister Moustafa Madbouly, who was vaccinated today, one day after President Abdel Fattah El Sisi publicly received a dose, according to a cabinet statement. Madbouly encouraged citizens to register for their own vaccinations soon, as the country’s vaccine rollout picks up steam.

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

• The Finance Ministry released the draft FY2021-22 budget.
• We’re still a carry trade darling.
• New terms for Egypt’s second major tobacco company are back in drafting.

COVID UPDATE-

Six feet isn’t enough to stop the transmission of covid-19 while indoors: Social distancing guidelines may not be as effective as previously thought, with a new MIT study suggesting the risk of being exposed to covid-19 indoors is just as big at 60 feet as it is at six feet — even when wearing a mask. The researchers looked at factors including the amount of time spent inside, air circulation, immunization, variant strains, mask use, and even respiratory activity such as breathing, eating, speaking or singing to calculate the risk while in an enclosed space. The study puts question marks on the effectiveness of the six-foot rule, shining light on more constructive steps people can take to make it safer for people indoors including limiting the time people can spend inside and installing fans for better air circulation.

THE BIG STORY ABROAD- That capital gains tax increase in the US? It’s only going to impact the wealthiest 0.3% of Americans, the Financial Times reports, citing an unnamed senior Biden administration official. The White House’s plan to nearly double tax on capital gains and dividends, which will be announced this week, is meant to fund a new education and child care spending package that could top USD 1.5 tn. Wall Street and Silicon Valley are not on board, arguing that the proposal to raise the corporate tax rate from 21% to 28% and enact a global minimum tax could stymie the US stock rally, reports the FT.

**So, when do we eat? Listen for Maghreb prayers this evening at 6:29pm, and Fajr prayers at 3:43am.

FOR TOMORROW-

Finance Minister Mohamed Maait is addressing AmCham’s Pre-Annual General Meeting tomorrow to discuss Egypt’s economic reform beyond the pandemic. The event will be held virtually at 2pm CLT. Members and non-members alike are welcome to attend. Register here.

???? CIRCLE YOUR CALENDAR-

Next Sunday is Coptic Easter Sunday and Sham El Nessim will fall on Monday. It’s still unclear whether either will be a banking holiday, so watch this space for updates.

Eid is expected to fall on 13-15 May, but the dates are still to be confirmed.

The Gouna International Squash Open 2021, a PSA event, will run 20-28 May with 96 men and women competing. The event has the backing of our friends at CIB.

???? ON THE TUBE TONIGHT-

The “most diverse” Oscars ever have come to a close, with a handful of the final awards going to women and racial minorities at the 93rd Academy Awards, writes CNBC. You can check out the full list of prizewinners on the Oscars official website, but here are the highlights:

• Best picture went to Nomadland, which tells the story of an elderly woman's journey across America after being left rootless by the Great Recession.
• Chloe Zhao won best director for Nomadland, making her the first woman of colour to win the award and the second ever female to take home the trophy.
• Best actress also went to a contender from Nomadland, Frances McDormand.
• Anthony Hopkins was handed the award of best actor for his role in The Father, which was also named the best adapted screenplay.
• Promising Young Woman took home the award for best original screenplay.
• The award for best cinematography went to Erik Messerschmidt for his work on Mank and the film also snagged the award for best production design.
• The best supporting actress nod went to Youn Yuh-jung for her role in Minari. Youn is the first Korean actor to take home an Oscar.
• Daniel Kaluuya picked up the award for best supporting actor for his portrayal of Black Panther activist Fred Hampton in Judas and the Black Messiah
• Nature doc My Octopus Teacher was awarded best documentary feature.
• Colette, which follows a French woman who was part of the resistance during World War II, was named the best documentary short.
• Pixar’s Soul was given a nod for best animated feature film as well as best original score.
• Chrisopher Nolan’s sci-fi mindbender Tenet won for best visual effects.
• The timely Two Distant Strangers took home the award for best live action short film.
• Best animated short film went to Netflix’s If Anything Happens I Love You.
• The best international feature film award was given to Denmark’s Another Round.

⚽ There’s one last match to tie up Premier League’s gameweek 33 tonight: Leicester will play against Crystal Palace at 9pm.

Milan is playing against Lazio in Serie A tonight at 8:45. Another match on in the league today is Torino against Napoli at 6:30pm.

La Liga’s sole match tonight is Eibar versus Real Sociedad.

Zamalek is up against National Bank tonight in the Umm El Donia Premier League, playing at 9:30pm.

The Champions League is resuming tomorrow with a must-watch match between Real Madrid and Chelsea.

???? OUT AND ABOUT-

The six-day electronic and new media festival Cairotronica is kicking off today and will run until 1 May. The festival will see over 40 artists from 22 countries give talks, workshops, or set up exhibitions or installations at the Tahrir Culture Center or at the Factory. The festival aims to shed light on important global issues through creative art forms, looking at topics such as AI, data, climate change, and misinformation.

The French Institute in Cairo is organizing a talk titled “The Taste of Books” tonight at the AFCA Arts Center. The talk will bring together two writers who managed to write books while in a foreign country during the pandemic: French writer Anton Beraber, who was staying in Egypt, and Egyptian Mansoura Ez-Eldin, who was staying in Paris.

Oud player and composer Cardan will play at El Sakia Culturewheel today, performing a variety of songs from the 1980s and 1990s.

???? UNDER THE LAMPLIGHT-

Has the role of a manager become an outdated concept? In The Management Delusion, author Matt Casey expertly lays out the failures of conventional management and argues that employees often take on management duties to keep the wheel turning. He offers instead Minimum Effective Management, a bold alternative approach to traditional management style that puts employees in control of their own training, holidays, and even pay raises.

???? TOMORROW’S WEATHER- Expect daytime highs of 31°C and nighttime lows of 15°C tomorrow, our favorite weather app tells us.

Here’s what private sector involvement in Egypt’s railways might look like: The government is mulling establishing three JVs with foreign rail companies to manage Egypt’s railway network as part of plans to bring in the private sector to improve the country’s ailing railway system following a string of deadly accidents, Al Mal reports, citing unnamed sources in the know.

Scenario #1- Each company would manage a geographic section of the network: One would be assigned to the Upper Egypt lines, one to the Lower Egypt lines, and the third would manage the suburban short-distance railway tracks, sources said.

Scenario #2- One firm to run them all? The government could contract an international company that would be held responsible for managing a certain number of passenger cars, or all of them, depending on the company’s technical capabilities. This company would be mandated with improving passenger rail services and reducing losses.

Scenario #3- Divvying up and managing new rail cars: The Transport Ministry would assign the existing air-conditioned railcars and the new 1.3k railway cars from Russia's Transmashholding to a foreign player to manage. The Egyptian National Railways (ENR) would only be left responsible for non-air conditioned railcars until they are taken out of service, sources said. Transmashholding has so far delivered 260 railcars under a EGP 22 bn contract signed with ENR back in 2018.

Whichever way it goes, the private sector’s involvement isn’t going to take hold before 2022. Regardless of the time needed for the Transport Ministry to study the scenarios and make a choice, it is highly unlikely that any company would agree to assume responsibility for Egypt’s railway infrastructure as it currently stands. The wait time is necessary until the country’s railway signaling system is upgraded and ENR takes receipt of the remaining Transmashholding railcars next year, the sources said.

BEFORE YOU GET YOUR HOPES UP- This does not mean the railways will be privatized: Plans to involve the private sector in revamping Egypt’s rail sector do not mean the government is looking at railway privatization, Transport Minister Kamel El Wazir said as he addressed the House this morning to present the railway development plan, the local press reports. El Wazir had been speaking today in a special hearing of the House of Representatives on the recent spate of train derailment.

Bringing in the private sector to manage the country’s railways had originally been in the works back in 2018, when the Transport Ministry began procedures to establish private sector-run companies to manage each railway, but it appears these plans fell by the wayside. After the recent rash of rail accidents, culminating in last week’s derailment near Qalyubia’s Toukh, it appears these plans are now being revived.

Reducing congestion will be a major feature of the development plan, El Wazir said, adding that a second railway track connecting Cairo with the Delta and Upper Egypt is essential One line is not enough to absorb the increasing capacity of passengers and commuters, he told representatives.

Addressing the “human” elephan…sorry…element in the room: El Wazir made did not mince words when calling out unqualified workers operating the lines. He called on MPs to amend the Civil Service Act to enforce tougher penalties for railway employees linked to extremist networks or substance abuse, according to Al Mal. El Wazir also pointed to repeated instances of vandalism that the tracks are regularly subjected to, Youm7 reports.

READ OUR LAST ISSUE OF HARDHAT to learn why poorly-trained staff is a major contributing factor to the recent series of rail accidents in Egypt.

One of the Israeli natgas fields Egypt imports from could be getting a new shareholder: Israel’s Tamar offshore field, which supplies Egypt with natural gas under a 2018 agreement, could be getting a new shareholder after Delek Drilling, one of the field’s owners, signed a non-binding agreement to sell its 22% stake to the UAE’s Mubadala Petroleum for USD 1.1 bn, the company said in a regulatory filing (pdf). Delek aims to wrap up the sale by the end of May, at which point it should’ve obtained approval from the Israeli Energy Ministry. The sale would come as part of a plan by the Israeli government to boost competition and reduce concentration in the field. If completed, the agreement would be one of the most major developments since the UAE and Israel normalized ties between their two governments last year, says Reuters.

Delek retained a 22% stake in Tamar, one of Israel’s main natural gas sources, despite saying last year it would transfer ownership of other assets including a stake in the EMG pipeline between Arish and Ashkelon to a spinoff. Delek also holds a stake in the other primary natgas field, Leviathan.

Background: Egypt imports gas from the Tamar and Leviathan fields under a landmark agreement signed by Alaa Arafa’s Dolphinus with the field’s partners, which were led by Delek and Texas-based Noble Energy at the time. Israeli Energy Minister Yuval Steinitz recently told Reuters that we could be looking at doubling natgas imports from Israel thanks to a planned pipeline that will connect Leviathan to the Damietta and Idku liquefaction plants.

OTHER ENERGY NEWS- BP brings Raven field online: BP has started operating the Raven natural gas field at the North Alexandria concession as one of the later phases of a USD 9 bn project to develop fields in the western Nile Delta, the company said in a statement carried by Masrawy. The Raven field is currently producing 600 mmcf of gas daily, and has a capacity of 900 mmcf and some 30k barrels of natural-gas condensate when it reaches full capacity. Production at Raven comes after the Giza-Fayoum and Taurus-Libra fields, also part of the three-stage Nile Delta concession development project, went online in recent years.

The EGX30 fell 0.7% at today’s close on turnover of EGP 985 mn (23.5% below the 90-day average). Regional investors were net sellers. The index is down 3.0% YTD.

In the green: Qalaa Holdings (+2.0%), Eastern Co. (+1.6%) and ElSewedy Electric (+1.1%).

In the red: Oriental Weavers (-16.2%), Telecom Egypt (-6.1%) and MM Group (-3.4%).

Orascom Construction nets USD 650 mn in awards in 1Q2021: Our friends at Orascom Construction (OC) added USD 650 mn in new awards to its backlog during the first quarter of 2021, the company said in a press release (pdf) this morning. Some 85% of awards during the quarter were for projects in Egypt, while the remainder came from projects in the US. OC’s estimated consolidated backlog was valued at USD 5.3 bn by the end of the quarter.

Reforestation without biodiversity could create breeding ground for disease: A new study suggests the destruction of forests in favor of palm oil plantations and monoculture reforestation could be increasing risk of the emergence of zoonotic diseases such as covid-19, The Guardian reports. “Reforestation can increase biodiversity loss when forest expansion is made at the expense of grasslands, savannas, and open-canopy woodlands,” the study states. Reforestation correlated most strongly with disease outbreaks in areas with more grassland and less tropical climates, including the United States and Europe.

What do you mean planting trees could be bad? The issue is monoculture, or the cultivation of a single crop. A range of species and habitats are required to filter diseases in a biodiverse environment. When forests are replaced with monoculture plantations, specialist species die off in favor of generalists like rats and mosquitoes, resulting in a loss of natural disease regulation, the study suggests.

The study used data from the WHO, World Bank, FAO and Gideon epidemic database to examine the correlation between trends for forest cover, plantations, population and disease around the globe. It surveyed the period between 1990-2016, covering 3.8k outbreaks of 116 zoonotic diseases (transferred from animals) and 1.9k outbreaks of vector-borne (carried by mosquitoes, ticks and flies) diseases.

But correlation is not causation: The authors do not rule out the fact that other factors, such as climate change disruption, may be involved in the development of diseases, but point to the link between land use change and epidemics through several case studies. Deforestation in Brazil increases the risks of malaria, while loss of forests in West Africa has been identified as a factor in the development of Ebola.

Palm oil plantations are one of the major drivers of deforestation: The US Food and Agriculture Organization found that forests had decreased in size by 800k square kilometers since the 1990s, while the study found that nearly a quarter of global forest loss occured due to an increased demand for beef and palm oil, which require cutting down forests to build plantations or rear livestock.

So why don’t we just boycott palm oil? Despite its issues as a monoculture crop contributing to deforestation, palm oil is the most versatile and efficient of all vegetable oils, contributing 35% of global vegetable oil yield through only 10% of the land used for vegetable oil crops. Any alternative would require four to ten times more land, according to the WWF. Palm oil is used in almost 50% of all packaged consumer goods found in a supermarket — ranging from peanut butter to deodorant — and is critical to the GDP of emerging economies, with millions of small farmers relying on it for their livelihoods. Indonesia and Malaysia make up over 85% of global supply, but there are 42 other countries that produce it.

What can be done? Further studies are planned to unpack the correlation between deforestation and disease, and to potentially predict future outbreaks. As individual consumers, the WWF suggests that those who can should invest in smallholder programmes and sustainable landscape initiatives, and following the RSPO production standard and best practices for sourcing palm oil to shift consumption towards a sustainable palm oil industry.

Covid-19 has amplified the need for easy access to mental health resources, and some think artificial intelligence is the answer: With the proliferation of mental health apps and websites, individuals seeking mental health support are more likely to find themselves in conversation with a chatbot than a real human. These apps are both convenient and affordable, and are making therapy accessible to a larger subset of society. As a cheap and handy alternative, will therapy apps eventually make human therapists redundant? And can AI be trusted with our mental health? Experts interviewed by the Wall Street Journal broadly agreed that there are potential uses for AI in mental health services, but that bots are unlikely to replace humans any time soon.

AI-powered therapy tools can make mental health services more accessible and affordable: Financial troubles are a common source of stress and mental health issues, with studies pointing to a direct correlation between low household income and mental health problems, meaning that often people who need this kind of care are unable to afford it. Factor in the busyness of modern life, and sometimes even those who can afford it feel they do not have the time to go to a physical appointment. Interestingly, research has also shown that people are more willing to open up when they believe they are interacting with a bot rather than a real human, possibly due to less anxiety about being judged.

But leaving a vulnerable person in the care of a bot may not be entirely responsible, and risks are that AI powered bots could dispense inappropriate information that could end up amplifying bad advice to people in a suggestible state of mind. At the moment, both the UK’s NHS and the US’ American Psychiatric Association only recommend using apps as an “adjunct” to therapy, and not as a main treatment, which should be overseen by a human. But that could soon change. “If chatbots prove safe and effective, we could see a world where patients access treatment and decide if and when they want another person involved,” said the Stanford School of Medicine’s Adam Miner.

And then there are the privacy concerns: Research has shown that some smartphone apps used for depression and smoking cessation have shared data with commercial third parties without accurately disclosing that this would happen in the past, which is a major “red flag” for the mental health app industry according to John Torous, director of the digital-psychiatry division at Beth Israel Deaconess Medical Center. Though most countries have developed robust laws guarding patient confidentiality in a conventional therapy setting, how that can be extended to apps and websites has yet to be determined.

Passive smartphone sensing apps can, however, be used to gather data that can help doctors predict why some people develop mental health issues in the first place, and to determine and alter humans to critical moments that may require intervention. “Using new data combined with AI will likely help us unlock the potential of creating new personalized and even preventive treatments,” said Torous.

Instead of replacing therapists, AI can help “guide” the therapy process by providing tools for self reflection in between therapy sessions, or monitoring and tracking patterns in users’ mood changes, which could in turn lead to more accurate diagnoses. Apps that use Cognitive Behavioral Therapy to guide users out of negative thought patterns, often through a conversation with an AI chatbot, are especially popular.

And easier access to mental health apps can increase the demand for in person care, with the accessibility and anonymity of apps potentially easing people who may have been uncomfortable seeking mental health support into the idea of regular therapy. AI-powered mental health resources may actually boost, rather than chip away at, the demand for human therapists, as the practice becomes more normalized and mental health apps seek to bolster their services by adding human psychologists and psychiatrists to their teams.

26-28 April (Monday-Wednesday): Non Edadiya / Thanaweya Amma students sit end-of-year exams.

27 April (Tuesday): Finance Minister Mohamed Maait will address AmCham’s Pre-Annual General Meeting to discuss Egypt’s economic reform beyond the pandemic.

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

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

29 April (Thursday): Start of school summer holiday for students not sitting Adadiya / Thanaweya Amma exams.

1 May (Saturday): Labor Day (national holiday).

2 May (Sunday): Coptic Easter Sunday (holiday for Coptic Christians, still unclear whether it will be a banking holiday).

3 May (Monday): Sham El Nessim (date of the national holiday still TBC).

13-15 May (Thursday-Saturday): Eid El Fitr (TBC).

16-19 May (Sunday-Wednesday): The Arabian Travel Market (ATM) takes place in Dubai.

25-28 May (Tuesday-Friday): The World Economic Forum annual meeting, Singapore.

1 June (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

7-9 June (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

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

17-20 June (Thursday-Sunday) : The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

24 June (Thursday): End of the 2020-2021 academic year (public schools).

26-29 June (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center, Cairo, Egypt.

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: National Book Fair.

July + August: Thanaweya Amma exams take place.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

1 July (Thursday): Large taxpayers that have not yet signed on on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday)

23 July (Friday): Revolution Day (national holiday).

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

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

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

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

30 September-8 October (Thursday-Friday): The 54th session of the Cairo International Fair, Cairo International Conference Center, Cairo, Egypt.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

7 October (Thursday): National holiday in observance of Armed Forces Day.

12-14 October (Tuesday-Thursday) Mediterranean Offshore Conference, Alexandria, Egypt

18 October (Monday): Prophet’s Birthday.

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

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

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

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

29 November-2 December (Monday-Thursday): Egypt Defense Expo

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

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

May 2022: Investment in Logistics Conference, Cairo, Egypt.

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

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.