PM — Has Big Tobacco swayed the state on the tobacco license tender?

Today is a big news day for Egyptian companies investing abroad, ladies and gentlemen, with Elsewedy Electric and Edita both announcing key updates to their African investments this week. Further afield, the Evergrande saga continues. But before we dive deeper into these…

THE BIG STORIES TODAY-

Did Big Tobacco get its way on the government’s controversial tobacco license tender? The Industrial Development Authority has reportedly relaunched this week its tender that would end Eastern Company’s monopoly and see a second tobacco manufacturer obtain a license, several local news outlets report, citing sources in the industry. What isn’t clear yet is whether the tender, which received backlash from major manufacturers when it was first introduced back in March, who argued that the new company would be given an effective monopoly on e-cigarettes and heated tobacco. Tobacco giant Philip Morris was the only company to take part in the bidding round for the new license.

BACK TO AFRICA- Elsewedy Electric inaugurated today its USD 35 mn electric cable plant in Tanzania, the company announced in a bourse statement (pdf). The plant is part of a 120k sqm complex that will also manufacture transformers, electric meters and synthetic plastics. The company is also working on a 4.8k sqm logistics facility, the company added.

Edita Food Industries has started operations at its new production facility in Morocco, the company announced in a statement (pdf) on Sunday. The EGP 200 mn plant — the company’s first greenfield investment outside of Egypt — currently has one production line that produces 2.7k tons of HoHos cakes every year. This will increase in the future with the addition of another two production lines, the company said.

^^We’ll have more details on these stories and more in tomorrow’s EnterpriseAM.

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CLARIFICATION- Abu Dhabi’s Chimera Investments had acquired a stake in the Sawriris family-owned Gemini Global Development Egypt (which owns 100% of Ora Developers Egypt) and not Gemini Holdings as we noted this morning. The latter is a separate entity also owned by the Sawiris family. The investment was made to support the expansion of Ora Developers Egypt’s real estate operations, which include Zed El Sheikh Zayed, Zed East, Pyramid Hills and the newly launched SilverSands on the Egyptian North Coast, Ora said in a press release (pdf) out today.

HAPPENING NOW-

Foreign Minister Sameh Shoukry is in Senegal for a two-day visit to attend the Dakar International Forum on Peace and Security, which will focus on the African continent’s post-covid-19 future.

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

• November’s PMI results are in: Egypt’s non-oil business activity shrank “moderately” last month as supply chain bottlenecks and inflationary pressures continued to weigh on firms.
• The roadshow must go on: Fears of Omicron and rising market uncertainty will not force Abu Qir Fertilizers to abandon its plans to sell a secondary stake on the EGX this month.
• r/egxbets will probably never become a thing: Investors could face fines and jail time for sharing stock trading tips on social media under proposed amendments to the Capital Markets Act put forward by the Financial Regulatory Authority.

THE BIG STORIES ABROAD-

The Evergrande saga continues: The share price of the world’s most-imperiled real estate giant plunged 20% to a record low today as fears of an imminent debt default grew ahead of today’s repayment deadline. Evergrande — which has accumulated a staggering USD 300 bn in debts — failed to meet a USD 82.5 mn repayment last month, and must pay it before the 30-day grace period expires tonight. This comes on top of a USD 260 mn payment which creditors have demanded immediately. Over the weekend, the group announced (pdf) that “there is no guarantee” it will be able to pay its financial obligations and that it will start “actively engaging with offshore creditors” to start working on a restructuring plan.

Beijing tries to contain the crisis: The Chinese government is trying to reassure investors that the situation is under control, today injecting new liquidity into the banking system by lowering capital requirements in an effort to prevent an Evergrande default from evolving into a systemic crisis. (Reuters | FT | The Guardian | CNN | Bloomberg)

Your daily Omicron update: The rise of the Omicron variant in South Africa hasn’t yet translated into a wave of hospitalizations, which US medical chief Anthony Fauci said is “a bit encouraging regarding the severity” of the variant. South Africa is still expecting hospital admissions to climb in the coming days though, and is preparing the country’s hospitals in anticipation that the epidemic will intensify. (Bloomberg | CNBC | Reuters)

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FOR TOMORROW-

Aldar / ADQ MTO subscription window wraps up tomorrow: SODIC shareholders have until the end of trading tomorrow to respond to the mandatory tender offer submitted by the UAE’s Aldar Properties and Abu Dhabi sovereign wealth fund ADQ.

The two-day North Africa Trade Finance Summit starts tomorrow, bringing together business leaders, people from the financial industry, logistics experts and policymakers to discuss trade finance.

???? CIRCLE YOUR CALENDAR-

Global Forum for Higher Education and Scientific Research runs Wednesday through to Friday at the St. Regis Al Masa Convention Center.

The Cairo Woodshow kicks off on Thursday at the Cairo International Convention Center.

News triggers to keep your eye on:

• Foreign reserves: November’s foreign reserves figures will be released this week.
• Inflation: Inflation figures for November will be released this Thursday, 9 December. Data for inflation typically appears on the 10th of every month, but is moved up one day if that falls on a Friday.
• Interest rates: The Central Bank of Egypt’s Monetary Policy Committee will hold its final meeting for the year to review interest rates on Thursday, 16 December.

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

☀️ TOMORROW’S WEATHER- The mercury is going down to 20°C tomorrow during the day, falling to 11°C at night, our favorite weather app tells us.

Investor activism in Europe could be entering a new “golden age”: So says professional services firm Alvarez & Marsal (A&M) in a new report, which says that as many as 148 companies on the continent could face attacks from activist shareholders over the next 12 months, up 10% from its previous forecast in April.

For the uninitiated, activist investors might not be what you imagine: Rather than being the types to organize sit-ins at head office or join the local Greenpeace flotilla, shareholder activists are merely people who buy stakes in companies with the intention of influencing how the company is run. Pressuring a company to behave more ethically can be a motive, but activism tends to be used more by heavyweight investors such as hedge funds and private equity firms to improve the share price of weaker companies. Think Paul Singer’s Elliott Management, Daniel Loeb’s Third Point, and Bill Ackman’s Pershing Square.

ESG is becoming a bigger concern for investors, though: A&M finds that companies with low social and environmental scores are likely to be more susceptible to attacks in the coming year, noting that the percentage of targeted companies facing environmental or social campaigns has risen to 37% this year, up from just 8% three years ago.

“The potential for reputational damage and subsequent financial damage has never been higher,” said Malcolm McKenzie, managing director of A&M. “Boards are now facing the prospect of multi-activist attacks and are unable to unravel a Gordian knot of multiple demands. As COP26 in Glasgow moves to COP27 in Sharm El Sheikh, even brighter lights will shine on polluting and anti-social behaviours and those corporates considered complicit.”

Larger companies are more at-risk: Activists will be shifting their focus to fewer but larger companies over the coming 12-18 months, with targets having an average market capital of EUR 20.2 bn from this year’s EUR 16.9 bn and last year’s EUR 12.3 bn. The UK is likely to be the most targeted market, with 21 companies vulnerable to attacks due to lower valuations and heightened interest by private equity groups.

Shell is one company that has come under attack in recent months; Third Point is trying to pressure oil giant Shell to break itself up, splitting its “legacy” oil and gas business from its renewables and LNG operations. “Pursuing a bold strategy like this would likely lead to an acceleration of CO2 reduction as well as significantly increased returns for shareholders, a [victory] for all stakeholders,” the fund wrote in a letter to shareholders seen by the Financial Times.

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JUST FOR FUN- The global guardians of emojis have unveiled the top 10 of 2021: ???? ❤️ ???? ???? ???? ???? ???? ???? ???? ???? — in that order — were the most frequently used emojis worldwide this year, according to data published by the Unicode Consortium, the organization in charge of maintaining the standard for how text, symbols and emojis are digitally encoded on the web. There are a total of 3,663 emojis available for use and Unicode regularly adds new ones or reviews old ones, and data like this helps envision what people will use or won’t use.

It also gives a sense of the times. Sort of. In 2021, the “Pleading Face” emoji (????) inexplicably jumped 83 spots to no. 14, meanwhile despite the continued spread of covid-19, pandemic-related emojis weren’t popular within social media escapism. The data also breaks down the emojis into categories to determine which is the most used within each one. ???? is the most common animal emoji while ???? tops the food category. As for the least popular category, we weren’t too surprised to learn that flags came last.

???? ON THE TUBE TONIGHT-

(all times CLT)

( The grande finale of Money Heist doesn’t disappoint: Money Heist Part Five Volume 2 was out this weekend, which we noticed when our Friday family gatherings consisted of everyone glued to their mobile phones. If that is anything to go by, the last few episodes of the hit series are full of the same wit, vigour, style, and substance as the rest of the show. Following the death of one of the group’s members, they continue on with a final heist that sees them all experience a self-reckoning, closing some fantastic character arcs in a satisfying bunch of final episodes.

One more Bella Ciao, before they’re off: The creative minds and actors behind Money Heist come together to discuss the process of creating and filming the series in Money Heist From Tokyo to Berlin.

⚽ The Arab Cup is back tonight: The final games of groups A and B will be played tonight, deciding which teams will go through to the quarter-finals.

Leaders of Group A and tournament Hosts Qatar are the only team to have already booked their place in the next round, and will play second-placed Iraq at 9pm. Also in the group: Oman play at Bahrain 9pm with both needing a victory to have any chance of making it through.

Group B leaders the UAE can be reasonably confident of going through to the next round but will need a point in their 5pm game against second-placed Tunisia to make sure. In the other fixture, Syria needs a victory to progress to the quarters when they play Mauritania, who are already out of the competition.

The Premier League has a single match tonight: Everton are at home to Arsenal at 10pm.

La Liga + Serie A: Getafe are playing against Athletic Club at 10pm in La Liga while in Serie A Empoli will face Udinese and Cagliari play Torino.

???? OUT AND ABOUT-

(all times CLT)

Check out A Quiet Time photography exhibition at Maadi’s Art Se7en. The exhibit by Karim Shokair displays calm photographic moments from Cairo which aim to “embrace change, allowing yourself to learn and grow in a more meaningful way.” A Quiet Time will run until 17 December.

It’s AfroLatin Night at Sheraton Hotel’s Rawi Restaurant & Bar where dancers are invited to dance kizomba, salsa, and bachata and enjoy a nice dinner, starting from 9pm.

Cairo Jazz Club 610 has one hell of a night planned for Wednesday, with the lineup including El Kontessa, YUNIS, El Waili, Molotof, and Abo Sahar.

???? UNDER THE LAMPLIGHT-

Social entrepreneurship and the “new bottom line”: In The Business of Good, real estate entrepreneur Jason Haber explores businesses that are motivated less by business and more by social change. These ventures operate on a give-back strategy regardless of what sector they’re in or what product or service they offer. In what he terms “Capitalism 2.0,” Haber explains why this shift in thought is important, and highlights the positive impact social entrepreneurship can have on the environment, society, and even within the companies themselves.

EARNINGS WATCH- Juhayna’s net income rose 14% y-o-y to EGP 174 mn in 3Q2021, according to the company’s latest earnings release (pdf). The company’s revenues rose 23% during the period to EGP 2.4 bn. The company’s bottomline during 9M2021 recorded EGP 490 mn, up 28% from the same period last year, while revenues jumped 16% to record EGP 6.5 bn during the period.

MARKET ROUNDUP-

The EGX30 rose 1.0% at today’s close on turnover of EGP 1.86 bn (23.8% above the 90-day average). Regional investors were net sellers. The index is up 6.2% YTD.

In the green: Heliopolis Housing (+18.7%), GB Auto (+9.3%) and Madinet Nasr Housing (+7.4%).

In the red: Fawry (-3.4%), Rameda (-1.9%) and Speed Medical (-1.9%).

Is upskilling the missing link for Egypt’s white collar job market? A new study (pdf) out of Nexford University — a fully online institution that works to encourage skill development and create a global learning community through technology — found that the vast majority (78%) of employers in Egypt report difficulties in finding skilled white collar employees. The study’s findings, which are based on a survey of employers from multinationals and large local companies employing upwards of 1k people, indicate that employers and employees need to continuously invest in building a culture of ongoing learning to stay competitive.

The responses mesh with what you, dear Enterprise reader, have told us: Finding and retaining talented employees was the most pressing challenge facing businesses, our 2020 Enterprise Reader Survey found. The challenge appeared to be growing y-o-y, after being cited as the fourth-biggest issue for businesses in the previous year’s edition of our survey.

These findings are also consistent with global trends: The WEF’s Jobs Reset Summit reported last year that 50% of employees would need reskilling by 2025, with critical thinking and problem solving topping the list of required skills.

The need for upskilling existing employees: Nexford’s survey found that 51% of employers think at least 20% of their employees need upskilling — and 53% said they would consider sponsoring them.

A lack of skilled entry-level workers means hiring overqualified employees — and high employee turnover: 70% of employers would hire entry-level candidates if they were more job-ready, which is consistent with trends seen across Africa, Nexford University founder and CEO Fadl Al Tarzi (LinkedIn) explained to Enterprise. Because finding talents with the right skills is so difficult, employers often hire overqualified candidates for the job who quickly find themselves unfulfilled in their roles, creating a vicious cycle of employee turnover. Critically, the study found that the effects of hiring the wrong person last for at least 18 months.

What makes a potential employee attractive? 80% of employers consider MBA graduates more job-ready compared to those without an MBA, with 60% reporting that they would hire more MBA graduates if they could. “This challenges the idea that college credentials are no longer required,” says Al Tarzi, noting that the dearth of qualified talent is creating a market where employers are “so desperate” that they are willing to hire candidates without a college degree if they have the right skills.

One skill that was found to be largely missing from the hiring pool was business analytics, with more than half of employers reporting that they found it “hard” or “very hard” to recruit people with that skill. Other skills that were lacking included digital transformation (45%) and digital marketing (37%).

Existing teams are lacking soft skills: Some 40% of employers reported shortages in creative thinking, 37% in time management and 28% in problem solving. Critical thinking and teamwork / collaboration were also found to be lacking. Although these are global challenges, with Al Tarzi noting that increasing reliance on tech is making people more formulaic in their approaches and diminishing creative thinking, they are especially acute in Egypt. He notes that even in the startup sector, traditionally seen as the forefront of innovation and creativity, many companies are just adopting formulas rather than innovating.

It’s not just trouble with hiring: Skill gaps undermining the efficacy of technology investments is also a common complaint among employers, with 62% of survey respondents pointing to this issue. Many companies report that digital literacy continues to be a challenge as they try to stay competitive in an increasingly digitized market. Even companies that are looking to upskill in these areas are reluctant to invest in technology because they feel they don’t have the skills to deploy it.

Banks, telcos and hospitality need the most upskilling: Banks and telecoms are one of the largest consumers of education, with both sectors having very specific needs in digital marketing and customer service. The hospitality sector is witnessing a new wave of demand for skills in areas like communication and digital marketing.

Organizations that need technical talent struggle to scale without investing in education, with pharma being one of the top sectors to invest in education, largely because of the need for white collar pharma employees to have technical knowledge and bridge the large gaps in their sales and business skills.

The key is to build a culture of education and encourage employees to identify their own gaps, making ongoing learning a shared responsibility between employers and employees with employees facilitating the process. Al Tarzi notes that meaningful education should be part of the portfolio of employee benefits if they want to stay competitive. Most employers rely on ad hoc development plans rather than ongoing upskilling programs and lack tax incentives to invest in their employees. He notes that incentives can include having career path KPIs that enable employees to better fulfill their roles or giving people paid time off to invest in their learning and development.

There will be missed windows if we fail to upskill: From an economic mobility perspective, there is plenty for Egyptian companies to capitalize on if they invest in upskilling, increasing the USD inflows into Egypt each year. “If we look at global economic potential, we can deliver a very significant social and economic impact if we upskill,” says Al Tarzi, noting that disruptions in some industries mean that we will get left behind if we don’t upskill. But our current education system and learning climate does not encourage that, nor are employers talking about it. Al Tarzi notes that a lifelong learning mindset is the most valuable asset that an employee can bring to any organization.