PM — It’s a big day for investments

As we predicted this morning, it’s a busy news day on the home front, ladies and gentlemen, with investment front and center.

THE BIG STORY TODAY

We just signed 14 investment agreements with Saudi Arabia worth USD 7.7 bn covering key sectors including renewable energy, logistics, agriculture, and others, Saudi Commerce Minister Majid al-Qasabi said, according to a statement from Saudi’s Investment Ministry. Egypt and Saudi signed the agreements to coincide with Saudi Crown Prince Mohammed bin Salman’s visit to Cairo as part of a three-day tour that will next take him to Jordan and Turkey.

The agreements include a USD 3.26 bn agreement to build the Egypt Center for Petroleum and Petroleum Products Storage, between Saudi’s Ajlan & Bros Holding Company and the Egyptian Arab Supply Chain Group Company, according to Arab News. Meanwhile, Acwa Power signed an agreement with the Electricity Ministry that will see the Saudi company invest USD 1.5 bn to set up the MENA region’s biggest wind power facility, according to a cabinet statement. Benya Capital also signed an agreement with Saudi’s Al Fanar to set up a USD 200 mn tech-focused joint venture in Saudi Arabia that will focus on data centers, smart cities, and cybersecurity, Benya Chairman Ahmed Mekky told Bloomberg Asharq.

THE BIG STORY ABROAD

We have another thoroughly mixed bag this afternoon, but news that Kellogg is planning to split into three companies by sectioning off its snackfoods, cereal, and plant-based food businesses is getting front-page treatment (at varying levels of importance) in the international business press: Reuters | the Financial Times | the Wall Street Journal | CNBC.

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

• The Madbouly cabinet imposed a slate of new regulations for real estate players yesterday designed to protect consumers and reduce market risk.
• EGAS signed an MoU with Chevron to explore ways to transport, import, liquefy, and re-export gas from the Eastern Mediterranean, with the two companies set to work on developing infrastructure to transport gas from offshore fields to Egypt, where it can be liquefied and re-exported.
• Madbouly gets his ministers together for a status update on privatization plans: Prime Minister Moustafa Madbouly yesterday brought key cabinet ministers around a table to follow up on President Abdel Fattah El Sisi’s new economic agenda, including plans to sell stakes in state-owned firms to local and international investors.

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???? CIRCLE YOUR CALENDAR-

It’s interest rate week: The Central Bank of Egypt will meet on Thursday to discuss interest rates. A majority of analysts and economists we surveyed expect policymakers to leave rates unchanged, according to our customary poll. A separate poll from Reuters suggests the CBE could enact a 50 bps rate hike in the face of persistent inflationary pressures.

The Big 5 Construct Egypt (pdf) construction industry exhibition runs from 25-27 June at the Egypt International Exhibition Center (EIEC) in Cairo.

Amcham AGM later this month: Our friends over at Amcham will hold their annual general meeting on Monday 27 June at the St. Regis Cairo Hotel. Finance Minister Mohamed Maait will address the gathering.

A call for women entrepreneurs: Visa, in collaboration with CIB and USAID, launched the She’s Next initiative (pdf) in Egypt, giving women-led businesses the chance to snag one of five USD 10k grants, as well as one year of coaching from IFundWomen with access to networking and mentoring. Applications close on 20 July.

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

☀️ TOMORROW’S WEATHER- Expect a daytime high of 38°C tomorrow before the mercury falls to a more manageable 21°C at night, our favorite weather app tells us.

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The balance sheets have spoken: Four-day workweeks do reflect well on bottom lines and productivity. As the shorter workweek model begins to take hold around the world, with multiple countries trialing the concept and others, like the UAE, implementing it for good — the results have been surprisingly good for corporate activity. Companies are reporting up to 30% growth in their bottom lines, and 350% growth in sales, as productivity levels rise some 24% with fewer working hours, according to a handful of companies’ individual reports to CNBC. All the firms CNBC spoke with have made the four-day workweek a permanent fixture in their employees’ contracts — without cutting pay — after the more output-focused model proved more efficient.

Things are finally looking up for the airline industry, as the global economic recovery from the pandemic puts the industry on track to see a positive bottomline next year, the International Air Transport Association (IATA) said yesterday. The association also upgraded its 2022 forecast, now predicting losses of USD 9.7 bn for the year, narrowing from its previous prediction of USD 11.6 bn in losses, as passenger numbers are expected to reach 83% of pre-pandemic levels. This compares to USD 42 bn in 2021 losses and USD 137.7 bn in 2020. The IATA attributed the optimistic outlook for strong demand, countries lifting their travel restrictions, low employment rates and a rise in personal savings. “Airlines are resilient. People are flying in ever greater numbers. And cargo is performing well against a backdrop of growing economic uncertainty … It is a time for optimism, even if there are still challenges on costs, particularly fuel, and some lingering restrictions in a few key markets,” Willie Walsh, IATA’s Director General said.

Could carbon credits be the solution to stopping deforestation? Since 1990, the world has lost 180 mn hectares of forest — comparable to the size of Libya — with over 47 mn hectares being lost in 2010-2020, according to the Financial Times (watch, runtime: 02:59). While COP26 saw over 100 countries and 30 financial institutions pledge to stop or limit their exposure to deforestation, similar agreements have failed to deliver on their promises in the past. Carbon credits are now being boasted as a possible solution as they rely on positive reinforcement (providing incentives for preserving trees) instead of negative reinforcement (punishing them for cutting them down). In Brazil, for example, deforestation is rampant and even increasing under the Bolsonaro regime. The communities cutting these forests down are often farmers who are trying to grow more crops as a source of revenue. Carbon credits could provide this alternative source of income to these farmers and push them to grow more.

And the market for carbon credits is set to grow — including in Egypt: As of now, forestry and land use account for almost half of all carbon credit projects in the world. It is expected that 2022 could see carbon offset sales rise above USD 1 bn for the first time. We’ve heard that the Environment Ministry and EGX are also working on setting up a local carbon trading scheme here in Egypt to build on and regulate carbon credits, which both the public and private sector have previously dabbled in.

But of course, the biggest concern is greenwashing: Carbon credits have received as much concern as they’ve received celebration over accusations that they don’t deliver what they promise. The world has yet to find a framework that avoids greenwashing within carbon markets, but efforts are being made in the EU to tighten regulations to ensure carbon credits are an effective tool to offset emissions.

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True crime takes center stage in the harrowing docuseries Keep Sweet: Pray and Obey. The women who escaped polygamist cult leader Warren Jeffs share their shocking, inspiring stories of survival in Netflix’s new limited series (watch, runtime, 2:02). The show takes a deep dive into the investigation of abuse, underage marriage, and trafficking of young women by Jeffs and his family. A self-proclaimed prophet monster, Jeffs married a total of more than 60 wives — including a 12-year-old child — and rewarded his older male followers’ loyalty with girls. To say the man was a monster is an understatement, and the documentary takes on a horror-movie effect by making us stare at his portrait while listening to audio of him speak. Despite the horrifying nature of the events, there is a little poetic justice in the fact that it was the cult’s brave women who brought Jeffs down. He is currently serving a life sentence plus 20 years in prison.

⚽ No football to watch today, folks.

???? EAT THIS TONIGHT-

Get some grilled chicken for the soul at West Cairo’s Chiqita: A perfectly-grilled chicken is one of the top no-guilt comfort foods, and Chiqita’s peri peri wood-fire rotisserie chicken is our new favorite. With just the right amount of spice and juiciness, you can get either half a chicken, a whole one, or charcoal grilled boneless options. You also get to choose from a variety of dips, and each one we’ve tried was an invaluable addition to our meal — you can’t go wrong with the Chiqita special sauce, the garlic dip, the honey mustard, or the peri peri. Another surprisingly delicious item off their menu was their stuffed pigeon, with your choice of rice or fereek stuffing. We went for fereek and it was one of the best we’ve had outside of grandma’s kitchen. Chiqita has a diner in Sheikh Zayed’s Qubix Hub or you can sit back and order their fresh dishes from the comfort of your couch in Sheikh Zayed, 6th of October and Sahrawy.

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Take a deep-dive into the creative industries in Egypt at the Junction Summer Sessions kick-off event at The Greek Campus Downtown. The event gathers an inspiring group of industry leaders, academics and entrepreneurs from the Cairo creative ecosystem for expert insight, worthy discussions, presentations, and networking sessions. This includes filmmaker Amr Salama, university lecturer Jesse Cumming. The event, which is in anticipation of Canada’s Ryerson University’s launch in September, is without charge and open to the public, and it takes place this evening from 6pm–9pm.

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The world of work is being remade and The Nowhere Office tells us what to expect in the not-so-distant future: Business consultant Julia Hobsbawm pens a timely, short primer on the future of work, in the wake of current post-pandemic debates. Can we simply go back to the office after two years of working from home, like nothing had happened? Nope, says Hobsbawm. Offices will no longer be a place where we have to constantly be present, she predicts; instead, they will become spaces we stop by for collaboration, community-building, and networking. The bulk of the work will be done at home or on the move, she forecasts. Another prediction? Work will eventually be divided up across a seven-day week, during which we carve out “air pockets of freetime” rather than wind down over a two-day weekend (which, in our humble opinion, is a slippery slope to being on call all the time). While it’s still too early to know for sure which predictions will come true, Hobsbawm lays out a strong case for taking this as a chance to reshape the traditional ways of work.

The EGX30 rose 0.2% at today’s close on turnover of EGP 642 mn (23.3% below the 90-day average). Foreign investors were net sellers. The index is down 18.9% YTD.

In the green: Heliopolis Housing (+4.7%), e-Finance (+2.2%) and Housing and Development Bank (+2.2%).

In the red: Abu Dhabi Islamic Bank Egypt (-4.0%), Telecom Egypt (-3.0%) and Eastern Company (-1.7%).

OUR FOUNDER OF THE WEEK- Ayman Essawy, co-founder and managing director of Lucky (LinkedIn).

My name is Ayman Essawy, and I’m the co-founder and managing director of Lucky. I’m a second-time founder. Before founding Lucky, my co-founders and I founded Dsquares in 2012. Dsquares is the leading loyalty services provider in the MENA region, and operates in nine countries, across several continents, including Africa, Asia, and Europe. We remain the main shareholders of the company, but my focus has been geared towards Lucky since 2021.

Dsquares enabled us to have a direct touchpoint with the population. We manage loyalty solutions on behalf of our clients, and so witnessed lots of transaction patterns and became aware of local consumers’ behaviors and needs. My co-founders and I decided to launch Lucky as a consumer product to tackle the financial problems people face when they make purchases. Lucky started off as a product of Dsquares and operated under its umbrella for two years, before we launched it as an independent entity in 2019.

We kicked off Lucky in 2017, after the EGP devaluation at the end of 2016. We observed that Egyptian consumers’ began prioritizing savings. Consumer credit products were originally designed to cater to lower income segments of the population, but after the devaluation, we noticed that savings products became more prevalent and in demand across different segments.

Lucky functions as a marketing agency for the merchants we partner with. For consumers, we function as their go to savings platform. Lucky provides two types of savings when customers use our app to buy products from our merchant network of more than 40k stores: Direct reductions and cashback.

We recently obtained central bank approval to launch our new Lucky One card. The card is designed to offer market-leading cashback rewards, as well as features including mobile bill payments, withdrawals, and deposits. Lucky One links users’ wallets in our app with a prepaid card, enabling them to use the card at any one of Egypt’s 700k PoS systems and earn up to 5% cashback on every transaction.

The best part of the job for me is solving real problems and helping make users' lives better. Starting a business from scratch and witnessing its progress and impact is exhilarating. It’s the dream of every entrepreneur to create an impactful business, and it’s great to see high levels of investor and consumer confidence and get positive feedback.

I’ve been down both the bootstrapping and the investor route. We started Dsquares as a self-funded business in 2012, and we still remember how difficult it was to get enough funding in the early stages of the business. Our first round of investment for Dsquares took place in 2018. As Lucky was still a product of Dsquares back then, we allocated a portion of the capital we raised to its development.

Lucky raised USD 25 mn in our Series A round in 2022. That financing round (pdf) was led by Global Ventures’ Nclude fintech fund, with participation from PayU, Endeavor Catalyst, Venture Souq, OTF, Arzan Capital, and Disruptech, along with existing investors Lorax Capital Partners. Lucky has been through three financing rounds and raised a total of USD 44 mn. We’re not in fundraising mode at the moment, but we’re planning for our Series B round, which will likely take place in 1Q 2024.

Lucky currently operates in Egypt and Morocco and we hope the next funding round will help fuel our expansion plans. We want to become more active in the Moroccan market before our Series B round, and we plan to expand into the Saudi market by the end of 2023.

The KPIs we focus on have changed as Lucky evolved. At the start, we were focused on building our commerce network to partner with the best merchants in town, and to acquire the largest consumer base. In 2020, our target was to educate our consumer base on how to utilize our services and transact through our platform. We are currently going through our third stage of growth, and are now focused on our financial services, especially increasing the market penetration of our Lucky One Card. We want to ensure that the onboarding process is seamless and that the customer experience is top-tier.

Startups I think are killing it include Trella, Mozare3, and Paymob. They’re solving real problems.

My advice for any would-be founder is to build a scalable business that's solving a real problem. Founders need to have a solid, expandable business model. The availability of more capital is enabling Egyptian founders to expand globally. Businesses that are built with a local business model in mind will not have a competitive advantage.