PM — BoE enacts lower-than-expected rate hike

Happy THURSDAY, friends. We’ve made it through another rather busy week that’s ending on a relatively quiet note at home.

THE BIG STORY TODAY

Fawry grew its revenue streams in 1Q2022, but saw a dip in its bottom line from nonrecurring items: Fawry’s net income fell 63% y-o-y in 1Q2022 to EGP 28.2 mn, according to the company’s earnings release (pdf). The company’s bottom line was impacted by nonrecurring items, including a noncash EGP 19.1 mn expense for its newly-introduced ESOP program. Meanwhile, Fawry’s revenues rose 38.4% during the quarter to come in at EGP 483 mn. The quarter saw Fawry grow all of its revenue streams, with its banking services leading the pack with y-o-y growth of 115.5% due to expanded agent banking and acceptance businesses.

THE BIG STORY ABROAD

The Bank of England raised interest rates by 25 basis points today to 1.25%, according to a statement from its monetary policy committee. The decision shied away from a more aggressive rate hike, with only three of the nine MPC members voting to raise rates by 50 basis points to address rising inflation. Although the BoE signaled it could “act forcefully” in response to more persistent inflation down the line, today’s rate hike — which was lower than expected and lagged behind other central banks, including the US Federal Reserve — drove down the GBP and pushed up yields on UK government bonds. The story is getting front-page treatment in the Financial Times, Bloomberg, and CNBC.

HAPPENING NOW-

The African Export-Import Bank’s (Afreximbank) annual meetings are on their second day at the new administrative capital, with President Abdel Fattah El Sisi inaugurating the official opening earlier today, according to Ittihadiya. Central Bank of Egypt Governor Tarek Amer also spoke at today’s session, stressing Egypt’s commitment to growing African trade (watch, runtime: 11:16).

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

• Egypt, Israel and the EU sign gas export agreement: Egypt and Israel will increase gas exports to the EU under an MoU signed in Cairo yesterday that comes as the continent looks to phase out its reliance on Russian fossil fuels.
• Aldar eyeing MNHD? The UAE’s Aldar Properties is reportedly eyeing an acquisition of a majority stake in EGX-listed real estate developer Madinet Nasr Housing and Development (MNHD), but MNHD has yet to receive any formal offers.
• EFG Hermes’ microfinance arm Tanmeyah has acquired B2B e-commerce marketplace Fatura in a stock and cash transaction.

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NEXT WEEK-

MPs to vote on the budget next week: The draft 2022-2023 budget and the development plan will head to the House of Representatives next week, House Budget and Planning Committee Chairman Fakhri El Fiqi said yesterday. From Sunday, MPs will have three days to discuss the budget, with a final vote potentially being held on Tuesday.

REMEMBER- Under the constitution, MPs have to pass the budget for the next fiscal year before 30 June.

The first workshop in the government’s public consultations on its ambitious state ownership policy document begins next Sunday, according to the online platform for the consultations. Every Sunday and Tuesday will see workshops on specific industries, starting with an agriculture-focused workshop next Sunday and a food industries-focused workshop on Tuesday. Each Thursday is reserved for workshops with the House of Representatives or the Senate, along with think tanks.

Foreign Minister Sameh Shoukry will head to Luxembourg to discuss energy with his EU counterparts, according to Africa Intelligence.

???? CIRCLE YOUR CALENDAR-

We have a date for the Amcham AGM: 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.

The Ayady Misr Handicrafts Exhibition is on today and tomorrow in the Tell Basta area in Zagazig, featuring traditional and handmade products from around the country such as pottery, crochet, and home accessories, according to a cabinet statement. You can also shop the collections from the Ayady Misr website.

There’s a handful of conferences coming up next week:

• The Aswan Forum for Sustainable Peace and Development will take place in Cairo later this month on 21-22 June (Tuesday-Wednesday).
• The Big 5 Construct Egypt (pdf) construction industry exhibition runs from 25-27 June at the Egypt International Exhibition Center (EIEC) in Cairo.

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 fairly hot weather over the weekend, with daytime highs of 38°C on Friday and Saturday, our favorite weather app tells us. Temperatures will fall to 21-22°C at night.

ET, is that you? China’s giant telescope may have picked up signs of an alien civilization: The world’s largest radio telescope, China Sky Eye, has detected “suspicious” signs of what could originate from alien civilizations, according to a report by China’s state-backed Science and Technology Daily that has since been deleted from the original site, according to Vice. The suspicious signal could also have come from a (human) radio interference, which needs to be confirmed or ruled out, said Zhang Tongjie, chief scientist of China Extraterrestrial Civilization Research Group. The Chinese scientists will “repeat the observation of suspicious signals that have been discovered to further identify and detect new signals,” said Tongjie. “We look forward to China Sky Eye being the first to discover and confirm the existence of extraterrestrial civilizations.”

Apple regained its position as the world’s most valuable brand with a brand value of USD 947.1 bn, according to a survey by data and insights company Kantar Brandz. The company, which last topped the ranking in 2015, pushed Amazon out of the top spot for the first time in three years. “Apple stands out for its high degree of differentiation and continued diversification across its hardware, software and services portfolio,” Kantar Brandz said. Google moved up to second place after boosting its brand value by 79% to USD 819.6 bn. Fashion luxury brand Louis Vuitton became the first fashion label to reach the top 10 and the first European brand to break into the top 10 since 2019, seeing a 64% growth in brand value this year. A growth in electric vehicle sales globally Tesla up to 29th place from 47th.

Newcomers to the list: Saudi Arabia’s oil giant Aramco made its debut at 16th place, with newcomers also including India’s Infosys at 64th place and Latin America’s e-commerce platform MercadoLibre at 71st place.

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Could Netflix cancel binge-watching? The streaming giant is reportedly rethinking its all-at-once release strategy as it grapples with subscriber loss and a tumbling stock price, CNBC reports, citing analysts. Netflix had disrupted TV’s traditional release format by giving viewers access to all episodes and seasons at once. While this strategy initially set it apart, it came with its drawbacks. “With Netflix, it is super easy to join for three-to-six months and then leave for three-to-six months,” said Michael Pachter, analyst at Wedbush. “Once Stranger Things is over and Ozark is over, what now?”

The company has had to increase its output of content to fill the gaps between series. Instead of having 30 shows spread throughout the year, it now needs 300, Pachter said. Netflix’s stock plunged from just below USD 600 at the beginning of the year to USD 180 yesterday, and the company reported a loss of 200k global subscribers in 1Q 2022, for the first time in a decade. It also warned it could lose around 2 mn global paid subscribers during the second quarter, which has the company reconsidering several of its main characteristics, including possibly introducing ad-supported plans.

???? ON THE TUBE SOON-
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Netflix is launching its biggest reality TV show ever — a real-life Squid Game: The streamer is working to create Squid Game: The Challenge which will gather 456 recruits from around the world to compete for a USD 4.56 mn prize, according to a video announcement (watch, runtime: 00:46). There’s not much information out yet, with Netflix saying the reality TV show will have a series of games inspired by the original show as contestants “strategies, alliances, and character will be put to the test while competitors are eliminated around them.”

Importantly, losers won’t die: Unlike the hit Korean drama, the worst fate for losers in the game will be going home empty handed. If you feel adventurous and want to take part, Netflix is now opening casting for anyone, anywhere.

⚽ There’s no football today, but Egyptian Premier League games will be back on our TVs this weekend.

Tomorrow: Ismaily will play against Al Moqawloon Al Arab at 7pm, and Somouha will face Talaea Al Geish at 9:30pm.

Saturday: Al Masry faces El Gouna FC at 7pm, and Misr Lel Maqassa FC will play against El Ittihad El Sakandary at 9:30pm.

???? EAT THIS TONIGHT-

Indian food lovers should check out Red Elephant: The Mohandeseen restaurant offers the South Asian cuisine with authentic flavors and a ton of spices. Red Elephant’s menu is full of some of our favorite Indian dishes as well as plates we’d never heard of, but can’t wait to try. Start off with some appetizers such as their vegetable samosas, Red Elephant shrimp, or dumplings. For main dishes, we loved their chicken korma, tikka masala, and palak gosht (lamb meat with spinach). The restaurant also serves a number of Chinese plates that are more mainstream such as teriyaki, sichuan, and kung pao chicken and beef dishes. Don’t miss out on the garlic naan and biryani rice as sides and get a coconut ice cream to calm your taste buds after the infusion of flavor.

???? OUT AND ABOUT-
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Tahini Talk, Egyptian Project, MotherFunkers will all be taking the stage at Cairo Jazz Club tonight, bringing the audience a combination of contemporary folk music as well as retro and oldies hits. The performances will start at 9pm. Meanwhile on Friday, CJC will host German producer and DJ Lexer, with Fade Republic opening the night.

A Lion King play will be performed today and tomorrow at 6pm at the Grand Tiba Theater in Heliopolis, promising a good time for children and adults alike.

The play Waiting for Gadallah (a local take on Waiting for Godot) will be performed at Elnahda Jesuit Cairo today, Saturday, and Monday at 8pm.

The EGX30 fell 1.0% at today’s close on turnover of EGP 1.23 bn (32% above the 90-day average). Foreign investors were net sellers. The index is down 17.4% YTD.

In the green: Orascom Development Egypt (+2.2%), GB Auto (+2.0%) and Rameda (+1.9%).

In the red: Egypt Kuwait Holding-EGP (-3.0%), Cleopatra Hospitals (-2.8%) and Madinet Nasr Housing (-2.4%).

Egypt’s economic growth is expected to account for 17% of Africa’s output growth in 2022, according to a report (pdf) prepared by the African Import-Export Bank (Afreximbank), which is upbeat about growth prospects on the continent in the near term, despite significant challenges to the global economy presented by the fallout from Russia’s war in Ukraine.

Egypt takes the spotlight in Afrexim’s most recent report which attributes strengthening growth in North Africa to “impressive performance” in Egypt over the past couple of years. The country ties with Nigeria in the bank’s forecast of the two most significant drivers of growth on the continent in 2022. Our GDP grew at a strong 9% clip in 1H 2021-2022, with the second quarter of the fiscal year alone seeing 8.3% growth, beating expectations. The economy grew at a 5.4% clip in 3Q 2021-2022 (the three months ending 31 March 2022) accelerating from 2.9% in the same period last year, despite the quarter including inflation and commodity price shocks from the war in Ukraine. After accounting for the war’s fallout, the government revised upwards its 2021-2022 growth outlook to 6.2% on the back of the figures.

There are a lot of reasons for this: Structural reforms enacted in Egypt before the pandemic hit “eliminated currency overvaluation and strengthened the business climate to boost competitiveness,” the report said. “A buoyant gas extraction sector; stronger private consumption; and growing remittances and capital inflows,” were also responsible for our strong performance, the report notes.

But it's not just Afreximbank, other international lenders seem to think we’re doing okay too: Earlier this year the IMF raised Egypt’s forecast GDP growth for FY 2021-2022 to 5.9%, up 0.3 percentage points from its previous forecast in January despite soaring food and energy prices. This came as the lender revised downwards its global growth projections for calendar years 2022 and 2023 to 3.6% — 0.8 percentage points lower for this year than in its previous forecast.

The report is chipper about economic growth in Africa overall, partly based on last year’s performance: In 2021, output grew by some 6.9% across the continent, up from a contraction of 1.7% in the previous year. By comparison, growth in advanced economies was only some 5% in 2021.

Loans from international financing institutions helped keep many African economies afloat: The IMF’s disbursal of some USD 33 bn in Special Drawing Rights (SDRs) during 2H2021 “had an important impact on macroeconomic buffers and will have positive spillovers for macroeconomic stability and growth in the short and medium term,” the report said. In effect, these funds allowed countries to improve their current and fiscal accounts and protect their reserves of foreign exchange, the report explains.

Remittances were also an important component to this story: Remittance inflows into Africa grew by over 11% in 2021 and are expected to continue strengthening well into 2022 largely because of a stronger labor market in Europe and the US.

This is significant in Egypt, which is the single largest recipient of remittances on the continent and where inflows hit a record high of USD 31.5 bn in 2021, growing 6.4% y-o-y. Egypt’s remittances are so significant that combined with Nigeria, they make up some 55% of Africa’s total inflows over the past three years.

Another important factor is trade: Africa’s trading partners will be crucial in supporting the continent’s performance over the coming year, the report says, and many of them look prepared to do so. China, the continent’s largest trading partner, is still angling towards continued monetary stimulus and an expansionary fiscal policy which means demand for African commodities will continue to rise. Global trade volumes are expected to grow by some 5% in 2022, the report notes.

But there are still challenges that lie ahead: Among the hurdles that could derail economic growth in Africa is inflation, supply chain disruptions (a threat to food security) and tightening financial conditions around the world — which could lead to stagflation and an outflow of capital from the continent, according to the report.

Still, the general sentiment seems optimistic: “Africa’s growth forecast for 2022 points to continued fortitude even in the face of heightening inflationary pressures and geopolitical risks,” the report says.