PM — Private sector activity has now been in contraction for a full year

Good morning, friends — and welcome to week #49 of 2021. We’ve got fresh PMI figures, a refreshingly Omicron-free news flow, and mixed news for all of us who want an acceleration of financial inclusion. On one hand, fintech startups in emerging economies are flourishing and are starting to overtake the old guardians of the global payments system. On the other, we have a new report that suggests that almost 40% of the world’s population have never used the internet, a figure that puts into perspective what it will take to integrate people of developing countries into the modern economy.

THE BIG STORY TODAY-

November’s PMI results are in — and they’re much the same as October: Non-oil business activity shrank “moderately” during November, remaining unchanged from the month prior as supply chain bottlenecks and inflationary pressures continued to weigh on private sector firms. The latest PMI reading (pdf) means that private sector activity has now been in contraction for a full year

** In case you missed it: We featured the brains behind Egypt’s PMI indicator — IHS Markit economist David Owen — in last week’s My Morning Routine column. Check it out here.

^^ We’ll have the full story in tomorrow’s EnterpriseAM.

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

• Max LNG: Egypt’s LNG terminals are running at full capacity as the country tries to capitalize on the surge in natural gas prices overseas, Oil Minister Tarek El Molla has said.
• More energy price hikes: The Oil Ministry has hiked the price of butane gas cylinders by 7.7% for households and businesses.
• Omicron and the global economy are not friends: The IMF is likely to downgrade its growth forecast for the global economy due to the spread of the Omicron variant, which is causing new travel restrictions and volatility in the financial markets.

---

THE BIG STORIES ABROAD-

It’s all about Biden and Putin’s upcoming talks on Ukraine: US President Joe Biden and his Russian counterpart Vladimir Putin are expected to talk on Tuesday to discuss the situation in Ukraine. Tension between the two sides has been rising as a buildup of Russian military forces on Ukraine’s border has fuelled speculation in Western capitals that Moscow is planning to invade the country. Last week Putin vowed a strong response should Nato deploy missile systems and troops in Ukraine after the US and Nato warned of “serious consequences” should Russia invade the ex-Soviet state. (The AP | Reuters | The Guardian | BBC News)

Meanwhile in South America, the “world’s coolest dictator” is fast becoming the world’s brokest dictator, after BTC fell off a cliff overnight falling about USD 10k. Fears of Omicron triggered the cryptocurrency selloff, which saw the coin fall to a three-month low of USD 42k. El Salvador, who under the tutelage of President Nayib Bukele became the first country in the world to make BTC legal tender, bought the dip. After a partial recovery, BTC currently sits at USD 49.4k as of dispatch time. (CNBC | Forbes | NBC | Wall Street Journal | CNN | Bloomberg)

THIS WEEK-

Cairo plays host to a spate of year-end conferences this week:

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

Subscribe to Enterprise

???? CIRCLE YOUR CALENDAR-

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- Hello, winter. Expect a daytime high of 22°C tomorrow and a nighttime low of 15°C, according to our favorite weather app.

Thinking of investing mns of USD in metaverse real estate? One of this year’s more preposterous investment trends — an impressive feat given 2021 was the year that gave us Dogecoin mania — was made all the more absurd last week by a UN report which told us that more than a third of the world’s population still have never even used the internet.

Highlighting the stark inequalities between the digital haves and the digital have-nots, the UN’s IT agency said that some 2.9 bn people (equivalent to 37% of the global population) living in developing countries have never once logged onto the web.

But covid is changing this: The pandemic caused the largest annual increase in internet users since 2010, with covid lockdowns, school closures and increasing access to online banking and government services growing the number of internet users by almost 20% between 2019 and 2021. The strongest growth was seen in the 46 lowest-income countries in the world, which saw a 20% increase in internet penetration.

Although the digital gender divide has narrowed in most of the world, Arab and African countries continue to have large gaps, with internet usage being more common among youth, men and urban dwellers. The report found that the digital divide is created largely by factors like poverty, illiteracy, lack of access to electricity and digital illiteracy.

---

One very good reason for less internet penetration? Donald Trump’s Truth Social, which will have most of us either decamping for a permanent vacation in Zucker-verse or setting fire to our routers. The SPAC being used by The Donald to launch his new social media venture has raised USD 1 bn from institutional investors, it said yesterday (pdf). The social media messaging app “Truth Social,” TMTG’s flagship platform, was due to launch in November with an invitation-only beta version but has apparently failed to meet its own deadline. The share price of DWAC has dropped dramatically since the initial announcement.

---

This year’s Financial Times’ list of the year’s 25 most influential women asks what influence is and how it is changing, with an unranked list penned by influential women themselves including a diverse group of female activists, whistleblowers, truth-seekers and business heavyweights. The list features the likes of the director-general of the World Trade Organization Ngozi Okonjo-Iweala, Ark Investment Management founder Cathie Wood, Sudanese foreign minister Mariam Al Mahdi, and Facebook whistleblower Frances Haugen.

???? ON THE TUBE TONIGHT-

(all times CLT)

WHAT’S NEXT- Theranos is a great case study on how not to run your business: Elizabeth Holmes, founder and CEO of the now-infamous Theranos, was a master of selling her ideas to investors and motivating her employees. But what was meant to be a breakthrough in blood testing ended up being a smoke and mirrors sales act that eventually led to the company’s demise and an ongoing trial that could land her in jail for up to 20 years. The 2019 documentary, The Inventor, delves into the story, talking to a number of the important stakeholders in the case including whistleblowers Erika Cheung and Tyler Shultz who chose to remain true to the data and science and finally spoke up about the deception taking place. The truth was that Holmes failed to tie her dreams to a semblance of reality by never setting up successful engineering or research and development teams. She herself never truly fully understood the product she was selling, Schultz admits.

The lesson for business owners here: Chasing that next round of investment is fine but doing so at any cost is probably going to end in tears. The Theranos playbook of recruiting an army of investors without having a viable product to back it up is unlikely to work. Just ask Elizabeth. You can watch The Inventor on OSN Streaming.

---

⚽ Egypt smashed Sudan 5-0 yesterday in the Fifa Arab Cup: The victory almost guarantees the Pharaohs a place in the next round, taking us joint top of Group D after taking three points from both the opening games. We’re level on points and goal difference with Algeria, who we meet on Tuesday in a match that could decide who will top the group.

Premier League: There’s a flurry of matches at 4pm today: Man Utd kick off the Ralf Rangnick era at home to Crystal Palace, Leeds United will play Brentford, while Antonio Conte’s Spurs will be looking to make it three wins in three when they take on relegation fodder Norwich City. In the late kick-off, Aston Villa and Leicester City play at 6:30pm.

Serie A has one game tonight: Juventus play Genoa at 9:45pm.

???? EAT THIS TONIGHT-

Recently-opened Oke is all about Asian comfort food: New in Sheikh Zayed’s Arkan Plaza, Oke brings all your favorite pan-Asian foods under one roof to create high-quality, creative dishes that use fresh ingredients and seafood. You’ll know you’re in for something good once you order any of their appetizers such as their beef spring rolls, citrus miso honey shrimp, or salmon carpaccio. From there, there are so many different routes your meal can take. You could opt for their sushi rolls, featuring all your favorites from Philadelphia to California and some special nigiri that includes one of our favorite seafood: scallops. Oke also serves a number of Asian dishes such as fried rice and teriyaki beef. If you’re on the go, grab yourself a poke bowl. Finally, don’t leave without trying their giant fortune cookie filled with dark and white chocolate mousse.

???? OUT AND ABOUT-

(all times CLT)

The Kodak Passageway is hosting an exhibition by Aya Tarek titled Token which explores “our obsession with consumption and its effect on the Egyptian societal ideals that dominate our virtual and non-virtual realities.”

Zamalek Cinema has a special screening of Beyond The Raging Sea on Tuesday at 7pm. The film follows two Egyptian athletes, Omar Nour and Omar Samra, as they attempt to cross the Atlantic, taking the perilous path that 66 mn displaced individuals took in a desperate bid for safe refuge.

???? UNDER THE LAMPLIGHT-

How Kissinger won the Middle East: In Master of the Game, long-time US Middle East diplomat Martin Indyk explores the art of machiavellian diplomacy as practiced by Henry Kissinger during his attempts to convince the Arab world to accept Israel’s existence while outflanking the Soviets in the region. Based on fresh documents, interviews with Kissinger, and the author’s own experiences with the key figures involved, the book is both “a painstaking history” of the Cold War in the 1970s Middle East and a “deeper reflection on Kissinger’s diplomatic philosophy,” the FT says.

The EGX30 rose 0.7% at today’s close on turnover of EGP 1.38 bn (3.1% below the 90-day average). Local investors were net buyers. The index is up 5.1% YTD.

In the green: Heliopolis Housing (+10.4%), Rameda (+5.3%) and CIRA (+4.6%).

In the red: Eastern Company (-1.7%), Speed Medical (-1.1%) and Aspire Capital (-0.7%).

The global digital payments race is heating up: Up-and-coming fintech firms in emerging markets are beginning to outpace Western financial companies who for years have controlled payment markets around the world, the Financial Times reported. Payment technologies such as mobile wallets, scannable QR codes, and smartphone software for contactless transactions are proliferating across emerging economies, guided by a new generation of young, tech-savvy entrepreneurs responding to friendlier market dynamics shaped by both the pandemic and state-led pushes for financial inclusion.

Covid has forced a change in the payments landscape around the world, causing the use of cash to fall and an increase in digital payments. This shift, coupled with governments in developing economies taking steps to increase financial inclusion, has stimulated innovation in the fintech space and enabled rapid growth in emerging economies. People who have made the shift to cards and mobile wallets have discovered the convenience of paying through digital methods, said Philip Benton, financial services senior analyst at Omdia, and they have now formed new habits.

Mobile payments exceeded ATM withdrawals for the first time ever in India last year, according to a report by S&P Global Market Intelligence, while Latin America expects a compound annual growth rate of 17.3% in digital payment transactions from 2020 through 2024, according to projections from Statista. Debit and credit cardholders are forecast to rise by 5.8% in the Philippines between 2020 and 2024, according to Omdia, compared with forecast growth of 0.6% in the UK over the same period.

Digital payments in Egypt are booming: Transaction volumes via e-payments platforms climbed more than 40% between 2020 and 2021 to hit USD 11 mn, according to data from Statista. This will continue expanding at an annual compound growth rate of 14% over the next four years, reaching USD 19.4 bn by 2025.

Follow the money: Egypt's fintech space has become one of the most vibrant parts of Egypt’s burgeoning startup scene in recent years, with firms in the sector closing some huge investment rounds this year. MNT-Halan raised USD 120 mn in what could be the region’s largest-ever startup investment by a fintech firm, while Dopay closed a USD 18 mn series A round. With its large unbanked population, the attractiveness of the Egyptian market also has foreign companies like JumiaPay and UK-based Jumo looking to set up shop.

Even before covid, the digital payments market has been growing faster in Africa than in Europe. In Nigeria, the number of digital payment transactions grew from 66 mn in 2008 to 2 bn 2018, while France’s transactions only grew from 33 mn to 61.5 mn during the same period, according to data from Statista.

Payment markets in emerging economies still face many challenges: Many continue to have low rates of financial inclusion, and according to the World Bank around 1.7bn adults in emerging markets remain unbanked and do not use a mobile money provider. However, that figure is falling, with fintech helping make financial services more accessible to more people. Over the last decade, the unbanked population fell by 35%, mainly due to an increase in mobile money accounts, the World Bank reported.

Policymakers in Egypt are trying to make fintech more accessible to all: The central bank has issued a number of rules to facilitate the use of mobile wallets and contactless payments, as well as make it easier to make payments and transfers between different service providers. A greater legislative focus on financial inclusion is also attempting to create a friendlier environment for fintech businesses to establish themselves in Egypt, with new rules for licensing and governance currently being discussed by lawmakers in the House.