Sunday, 20 November 2022

PM — COP delegates reach an agreement after divisive debate

TL;DR

🔎 WHAT WE’RE TRACKING TONIGHT

Good afternoon, wonderful people. We are delighted to say this afternoon that COP27 is officially over, after delegates stayed up through the night and into the morning to finalize an agreement. The pact has good news for EMs on loss and damage but is getting mixed coverage in the international press over mitigation targets. Without further ado…

THE BIG STORY TODAY (AT HOME AND ABROAD)-

COP27 wraps with an agreement for EMs on loss and damage: Delegates from almost 200 countries walked out of COP27 this morning with what the summit’s presidency is calling a “landmark agreement” to create a loss and damage fund to help vulnerable countries cope with climate disasters triggered by richer countries’ emissions, it said in a statement (pdf). The agreement came after a long stretch of tense negotiations that saw the summit drag on for an additional day and night as negotiators debated the issues of loss and damage, emissions reduction, fossil-fuel burning, and the 1.5C target laid out in the Paris Agreement.

The agreement took a whole lot of compromise: “I consider the text to be adopted to be a reflection of both a delicate balance that responds to the interests of all of us represented in this conference, and also a manifestation of the highest ambition that can be reached at this point in time,” COP27 President Sameh Shoukry said during the closing session (watch, runtime: 5:10:10).

Not everyone walked away from the table feeling positive: The divisive result of the summit is making for a stream of polarized coverage. Emerging markets are celebrating the loss and damage fund as a historic shift towards climate justice. For many countries in the developed world, the achievement is marred by the absence of a fossil-fuel phaseout or stronger ambitions for emission reduction. (Reuters | CNBC | Bloomberg | WSJ | FT | CNN | AP)

We’ll bring you more on the agreement and other outcomes of COP in tomorrow’s editions of EnterpriseAM and Enterprise Climate.

FROM COP to CUP-

President Abdel Fattah El Sisi is in Qatar to attend the opening ceremony of the 2022 FIFA World Cup, according to an Ittihadiya statement. The ceremony kicks off at 4pm CLT, before Qatar and Ecuador play the opening game of the tournament at Al Bayt Stadium at 6pm CLT. We have more on World Cup events and fixtures in our Sports section, below.

ALSO HAPPENING NOW-

On the docket for the House: The House of Representatives is today holding votes on the contractor compensation bill, a law restructuring Al Azhar, and a foreign loan agreement with South Korea's Export-Import Bank (KEXIM) that will fund part of the project of upgrading the railway tracks linking Luxor and the High Dam train stations.

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

  • The climate funding agreements we secured at COP for the Nexus on Water, Food and Energy (NWFE) program add up to nearly USD 10 bn, International Cooperation Minister Rania Al Mashat told Reuters on the sidelines of COP27.
  • The EGX will launch Africa’s first voluntary carbon market in mid-2023, EGX boss Ramy El Dokany said during a presser last week.
  • Alstom signs Metro Line 6 framework agreement: French rolling stock manufacturer Alstom signed a framework agreement with the National Authority for Tunnels to design, build and maintain Cairo Metro Line 6.

enterprise

*** It’s Inside Industry day — your weekly briefing of all things industrial in Egypt. Inside Industry focuses each Sunday on what it takes to turn Egypt into a manufacturing and export powerhouse, ranging from initial investment and planning to product distribution, through to land allocation to industrial processes, supply chain management, labor, automation and technology, inputs and exports, regulation and policy.

In today’s issue: The next stop for our localization drive: Vegetable oil production. We look at how the government’s push to localize the vegetable oil industry could open the door to private sector investment.

CIRCLE YOUR CALENDAR-

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COP27 may be over — but climate will remain the world’s largest and most important industry for decades to come. Our Enterprise Climate X Forum will see members of the business community gather at the Grand Egyptian Museum on Tuesday, 6 December 2022.

What’s the Enterprise Climate X Forum? It’s our first industry-specific conference, where CEOs, top execs, investors, bankers and development finance folks have the chance to talk about how to build a climate-centered business — and how to make sure your business continues to have access to the funds it needs to grow. You can learn more on our conference website here.

Some of the biggest names in business and finance are on board — are you? If you’re a C-suite exec, business owner, climate professional, DFI staff, investor or banker, please email us at climatexrsvp@enterprisemea.com to signal your interest, letting us know your name, title and where you work.

The Fingerprint Summit is taking place this Tuesday and Wednesday (22-23 November) at the Nile Ritz Carlton Hotel. The conference connects private and public sector partners to discuss potential investments and challenges in the business community. Speakers include Finance Minister Mohamed Maait and Planning Minister Hala El Said.

☀️ TOMORROW’S WEATHER- Temperatures in Cairo will hit 27°C tomorrow during the day before falling to 17°C at night, our favorite weather app tells us.

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FOR YOUR COMMUTE

Taylor Swift fans + the US Congress vs. Ticketmaster: Online event ticketing giant TIcketmaster is facing calls that it be investigated by the US Justice Department for monopolistic behavior, after scores of Taylor Swift fans complained about not being able to get tickets to the star’s Eras tour, Reuters reports. Ticketmaster ws forced to shut down booking for the tour — Swift’s first in five years — after the site was overwhelmed by some 3.5 bn ticket requests from fans, bots, and scalpers alike. Disappointed Swifites inundated their representatives in Congress with complaints, reigniting a yearslong debate about whether the company’s 2010 merger with LiveNation should have been prevented on antitrust grounds.

“Daily reminder that Ticketmaster is a monopoly, its merger with LiveNation should never have been approved, and they need to be reigned in. Break them up,” US representative Alexandria Ocasio-Cortez said on Twitter and followed with another tweet linking an online petition calling for the DOJ to split up the company.


A tougher economy means employers are increasingly stepping in to help staff with their finances— but some are warning of an ethical gray area, the Financial Times reports. Big employers in the UK and US are offering financial advice and plans to help their staff manage their debt, negotiating better energy and phone bill plans on their behalf, or helping them directly with interest-free loans. In one example, British retailer Timpson has disbursed over GBP 450k in no-interest loans to its employees as it looks to help them weather the cost of living crisis amid a high-rate environment. “We don’t want [employees] to struggle and go to a loan shark or a payday lender,” said Timpson’s “happiness director,” who estimates she spends a third of her working week helping staff with financial worries.

All part of the cultural shift in the world of work? The move is indicative of a wider trend since the pandemic, the FT says, where ties between employee and employer have become increasingly personal. Workers expect executive boards to take more responsibility for their wellbeing and play a role in a wider range of issues from childcare to mental health. From management’s point of view, deepening these ties is good for loyalty and productivity.

The downsides: Some say employers looking to help alleviate the impact of the cost of living crisis on their employees should raise salaries instead of offering loans. Others are raising privacy concerns about handing over your financial data to your boss. Then there are the awkward questions of what happens when you want to leave a company to whom you owe money — or if you default on a loan owed to your employers.

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ENTERPRISE RECOMMENDS

📺 ON THE TUBE TONIGHT-
(all times CLT)

Limitless With Chris Hemsworth proves he's more than just Thor: In this fascinating National Geographic documentary, the Hollywood A-lister spends a year testing his physical limits to discover the extent of the human body's capabilities and try to stall the aging process. Over six episodes, Hemsworth puts himself through a battery of tests developed by experts meant to do everything from building up his immune system to improving his memory. Hemsworth fasts for four days before going hunting for food, swims 800 feet across a nearly frozen Arctic fjord, and climbs a dangling rope 100 feet above a canyon. The docuseries illustrates how even the strongest and fittest people can reach their physical and mental breaking points. The episodes are available to stream on Disney+ (watch trailer, runtime 2:20.)

The opening ceremony of the 2022 World Cup begins at 4pm CLT today and will be broadcast live on the open-to-all Bein Sports channel. The event will be held at Al Bayt Stadium in front of 60k live spectators, with mns of football fans expected to tune in around the world. Jungkook — a member of K-pop superband BTS — will be performing alongside Qatari singer Fahad Al-Kubaisi.

The opening match of the tournament pits host Qatar against Ecuador from Group A. It kicks off at 6pm CLT.

LAST CALL: JOIN US FOR OUR ENTERPRISE FANTASY WORLD CUP LEAGUE. Sign up with the code SZJ507VP to compete against other members of the Enterprise community. The top finisher will take home something special from us.

We have everything you need to know about the World Cup in our latest edition of Your Wealth, which was out this Friday.

🥐EAT THIS TONIGHT-

Flavor and color abounds at Tokyo: This modern Japanese fusion restaurant in the Heliopolis neighborhood of Korba combines excellent food, eye-catching presentation, and a casual-chic atmosphere to create a delightful dining experience. First and foremost on your list should be the salads — we like the refreshing but still substantial salmon avocado salad, while the lobster salad is a well-balanced culinary delight. Another favorite is the black cod misoyaki, which melts in your mouth — and the miso glaze adds just the right amount of sweetness. The sushi selection is fresh, colorful, and among the best we've had in town. Remember to leave room for dessert: The matcha cheesecake is a delicious way to round out your meal.

🎤 OUT AND ABOUT-
(all times CLT)

One for Egyptian film aficionados: The Netherlands-Flemish Institute in Zamalek is screening a documentary about the iconic Studio Masr, which was offered for privatization in 2000. Mona Assaad’s 2018 film Fee Studio Masr (Into Studio Masr) sees a group of young film buffs tackle the studio's modernization. The film pays tribute to Egyptian cinema, taking us on a “journey in time and space, fiction and history, friendships, aspirations, and dreams.” The Arabic-language film will be shown with English subtitles. Doors open at 6:30pm and close at 7pm (or earlier if the room has reached full capacity).

For post-match laughs, head to Room Art Space New Cairo tonight for a comedy night “about men’s life” featuring comedians Alaa Yasseen, Ahmed Marzouk, Saleh Sayem, and others. The show starts at 9pm.

💡 UNDER THE LAMPLIGHT-

Nuclear Family is an original, funny, and magical literary debut: Set in the months before the false missile alert in Hawaii in 2018, Joseph Han's hilarious and beautiful first book is a family comedy that combines magical realism and political satire. The plot revolves around a college student, her brother teaching English in Seoul, grouchy deli-owner parents, and the ghost of their deceased Korean grandfather, who is on a cultural healing mission in the afterlife. Mr. and Mrs. Cho's dream of franchising their Korean plate lunch restaurants across the state is finally coming true when their reputation is suddenly hit by a viral video of their son Jacob attempting — and failing — to cross the demilitarized zone into North Korea. Nobody knows that Jacob is being controlled by the ghost of his long-dead grandfather, who wants to cross the border and get back to the family he left in the north. What follows is a beautiful story about a family that must confront their differences in order to learn more about themselves and each other.

GO WITH THE FLOW

Arabia Investment Holding’s (AIH) net income eased 17.5% y-o-y to post EGP 47 mn in 9M 2022, the company said in its earnings release (pdf). Revenues dropped 25.0% y-o-y in the same period to post EGP 900 mn, amid a slowdown in the car financing market.


The EGX30 rose 0.1% at today’s close on turnover of EGP 1.44 bn (18.3% above the 90-day average). Regional investors were net sellers. The index is up 4.8% YTD.

In the green: Mopco (+3.6%), Elsewedy Electric (+2.7%) and Credit Agricole Egypt (+2.5%).

In the red: Cleopatra Hospitals (-4.1%), e-Finance (-2.4%) and Telecom Egypt (-2.4%).

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The next stop for Egypt’s localization drive: Vegetable oil production. Import substitution has been on the Madbouly government’s priority list for some time now, but has recently gained fresh importance as the war in Ukraine roiled global markets and has had knock-on effects on domestic inflation. To that end, the government is looking to reach a point of self-reliance in producing several goods and commodities, and is now looking to localize the vegetable oil industry as part of that push. This localization drive also opens up potential private sector investments.

REMEMBER- Reducing imports is a cornerstone of narrowing the current account deficit, which narrowed to 3.7% in FY 2021-22, buoyed by oil and non-oil exports, rising tourism receipts, and a jump in FDI. This also comes as we look to build a more resilient local industry (and economy) that can weather external shocks like the fallout from covid-19 and the Russia-Ukraine war.

A lay of the land: Egypt currently imports some 1.7 mn tons of raw vegetable oil, with palm oil accounting for two-thirds of that figure, while sunflower and corn oil make up the rest. The majority of our palm oil consumption is supplied through imports, primarily from Indonesia, which supplies us with 50% of our imported palm oil. We also import oil from Malaysia, Singapore, Saudi Arabia, China, and Germany.

Sunflower oil imports are under pressure: Much like palm oil, Egypt covers its domestic consumption needs for sunflower oil primarily through imports. Ukraine typically accounts for 55% of Egypt’s sunflower imports, while Russia covered another 19%. Although many commodities that are primarily exported from Russia and Ukraine have seen their prices jump on the back of the war (see: wheat), sunflower oil prices have actually been on the decline for the past several months “due to uncertainty over the future of the export corridor in Ukraine amid rising geopolitical tensions,” according to the UN food price index.

With uncertainty in global markets, we want to position ourselves as a regional oil producer: GAFI wants to make Egypt a regional hub for producing and exporting Malaysian palm oil by signing freetrade agreements with Arab, African and European countries. Earlier this year, GAFI boss Mohamed Abdelwahab met with Malaysia’s plantation industries and commodities minister delegation to discuss investments in several industries, with an emphasis on palm oil. Malaysia is the world’s second-largest palm oil producer and exporter (after Indonesia), with 21 mn tons of palm oil produced annually, 16 mn of which are exported, according to data collected by World Atlas.

Where Egypt’s oil production industry currently stands: Egypt has four companies, all affiliated with the state-owned Holding Company for Food Industries, working in the production of edible oils: Alexandria for Oils and Soap, Tanta Oil, Soap, Water, Abo Elhol Company for Oils and Detergents (formerly known as Salt and Soda) and Nile Oils and Detergents. The four oil-producing companies have a refining capacity of about 1.3k tons a day, with a monthly capacity of about 40k tons.

We have the processing capabilities — but the cultivation side is lagging: Egypt has “strong” oil pressing and refining capabilities but these are not being put to use due to the lack of oil crops, head of the Federation of Egyptian Industries’ food division Ashraf El Gazayerli told Enterprise. He pointed to Egypt’s sunflower production, which can feed into the vegetable oil industry, and named canola as one of the available alternatives to sunflower. The government is looking into the cultivation of canola — a Canadian crop from which oils are extracted. Canola can grow in saline conditions, during any season and regarding the weather conditions.

Oil crops make up a big chunk of the production cost: The gap in oil production is driven by the unavailability of oil crops — soybeans, sunflowers and peanuts — which make up 70% of the cost, industry players tell us.

We need a clear localization strategy: The Agriculture Ministry needs to work with other government agencies to formulate a clear strategy to localize the oil industry in Egypt through increasing the cultivated areas and boosting incentives for farmers, El Gazayerli said, adding that the Madbouly government’s plan needs to focus on the cultivation of oil crops.

There’s more private sector participation coming: The political leadership is working on an integrated vision to localize the vegetable oil industry, in partnership with the private sector, Holding Company for Food Industries board member Ahmed Abu El Yazid told Enterprise. He added that the government is currently restructuring state-owned vegetable oil companies and allowing the private sector to step foot into the market, be it through local, regional or foreign investments.

Three oil industrial complexes in the making: In partnership with the private sector, the state is working on three major oil industrial complexes in Burj Al Arab, Sohag and Sadat City, specializing in the extraction, pressing and packaging of vegetable oils, Abu El Yazid said. This comes on top five new oil companies the Supply Ministry is working on, Internal Trade Authority head Ibrahim Al Ashmawi told us.

One step closer to self sufficiency: The government aims to increase its local production of vegetable oil over the coming four years to cover between 5-50% of domestic needs, Abu El Yazid told us. Current production covers 3% of our needs. Sources told Enterprise that the cabinet has been looking into a plan to push our local production to cover no less than half of our consumption, mainly driven by cultivating oil crops locally, namely sunflower and soybeans.


Your top industrial development stories for the week:

  • Another green hydrogen plant: Our friends at Infinity and Hassan Allam Utilities alongside UAE clean-energy giant Masdar have inked a framework agreement for a 2 GW green hydrogen plant they will build in the Suez Canal Economic Zone.
  • Al Mansour Automotive still wants to assemble electric vehicles in Egypt and intends to produce 15k EVs over the next three years. The company will also partner with GM to import electric Cadillacs to Egypt by the end of 2023.
  • The Supply Ministry labeled rice as a strategic commodity to crack down on hoarding and issued a one-week notice period from yesterday for producers, sellers and distributors to notify the Supply Ministry directorates of their stockpiled rice and storage areas.

CALENDAR

NOVEMBER

6-18 November (Sunday-Friday): Egypt will host COP27 in Sharm El Sheikh.

13-22 November (Sunday-Tuesday): Cairo International Film Festival (CIFF).

20 November (Sunday): House of Representatives is back in session.

20 November-18 December (Sunday-Sunday): 2022 Fifa World Cup, Qatar.

22 November- 23 November (Tuesday-Wednesday): The Fingerprint Summit will be held at the Nile Ritz Carlton Hotel.

27 November (Sunday): Senate in session.

27-28 November (Sunday-Monday): The first edition of the Egypt Media Forum.

27-30 November (Sunday-Wednesday): Cairo ICT and Pafix, Egypt International Exhibition Center, New Cairo.

29 November – 6 December (Tuesday -Tuesday): US and Russia to hold talks on resuming mutual nuclear inspections in Cairo.

DECEMBER

1 December (Thursday): Sphinx International Airport will begin operating international flights.

1 December (Thursday): Contractors to break ground on Egypt-Saudi interconnection project.

3 December (Saturday): Dior Men’s pre-fall collection show in Giza.

5-8 December (Monday-Thursday): QS Reimagine Education Awards and Conference, multiple locations.

6 December (Tuesday): Enterprise Climate X Forum, Grand Egyptian Museum.

7 December (Wednesday): Euromoney Egypt 2022 conference

10 December (Saturday): The TriFactory’s Pyramids Half Marathon.

10-12 December (Saturday-Monday): The 2nd edition of the Nebu Expo for Gold and Jewelry kicks off.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

13-15 December (Tuesday-Thursday): US-Africa Leaders Summit.

15 December (Thursday): European Central Bank monetary policy meeting.

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

December: The Sixth of October dry port will begin operations.

December: Egyptian Automotive Summit.

December: Egypt to expand Sudan electricity link capacity to 300 MW.

December: Chinese President Xi Jinping visit to Saudi Arabia

JANUARY 2023

January: EGX-listed companies and non-bank lenders will submit ESG reports for the first time.

January: Fuel pricing committee meets to decide quarterly fuel prices.

1 January (Sunday): Use of Nafeza becomes compulsory for air freight.

1 January (Sunday): Residential electricity bills are set to rise as per the government’s six-year roadmap (pdf) to restructure electricity prices by 2025.

7 January (Saturday): Coptic Christmas.

24 January-6 February: The 54th Cairo International Book Fair, Egypt International Exhibition Center

25 January (Wednesday): 25 January revolution anniversary / Police Day.

26 January (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

30 January-1 February (Monday-Wednesday): CI Capital’s Annual MENA Investor Conference 2023, Cairo, Egypt.

FEBRUARY 2023

11 February (Saturday): Second semester of 2022-2023 academic year begins for public universities.

13-15 February (Monday-Wednesday): The Egypt Petroleum Show (Egyps), Egypt International Exhibition Center, Cairo.

23-27 February (Thursday-Monday): Annual Business Women of Egypt’s Women for Success conference.

MARCH 2023

March: 4Q2022 earnings season.

23 March (Wednesday): First day of Ramadan (TBC). Maghreb will be at 6:08pm CLT.

APRIL 2023

1 April (Saturday): Deadline for banks to establish sustainability unit.

17 April (Monday): Sham El Nessim.

22 April (Saturday): Eid El Fitr (TBC).

25 April (Tuesday): Sinai Liberation Day.

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

Late April – 15 May: 1Q2023 earnings season.

MAY 2023

1 May (Monday): Labor Day.

4 May (Thursday) National holiday in observance of Labor Day (TBC).

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

JUNE 2023

19-21 June (Monday-Wednesday) Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

JULY 2023

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

SEPTEMBER 2023

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER 2023

6 October (Friday): Armed Forces Day.

Late October-14 November: 3Q2023 earnings season.

EVENTS WITH NO SET DATE

2H 2022: The inauguration of the Grand Egyptian Museum.

2H 2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H 2022: The government will have vaccinated 70% of the population.

3Q 2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

3Q 2022: Swvl to close acquisition of Urbvan Mobility.

4Q 2022: Infinity + Africa Finance Corporation to close acquisition of Lekela Power.

End of November: SFE’s pre-IPO fund to kick off roadshow.

4Q 2022: Electricity Ministry to tender six solar projects in Aswan Governorate.

4Q2022: Raya Holding subsidiary Aman and Qalaa Holdings’ Taqa Arabia to launch their fintech company.

4Q 2022: Saudi Arabia’s Jamjoom Pharma to inaugurate its EGP 1 bn pharma factory in El Obour.

End of 2022: Decent Life first phase scheduled for completion.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

1Q 2023: Adnoc Distribution’s acquisition of 50% of TotalEnergies Egypt to close.

1Q2023: Internal trade database to launch.

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