PM — Sabotage of Nord Stream?

Happy hump day, friends. It’s by no means a slow news day here in Omm El Donia, with a handful of interesting stories happening on the home front.

THE BIG STORIES TODAY

The government wants to remove barriers to industrial development within a month or two, President Abdel Fattah El Sisi said today during the inauguration of several national projects linked to the General Authority for Investment and Freezones (watch, runtime 8:37). The state is looking to address and resolve issues that stand in the way of investors so that administrative procedures are fast and efficient for investors and industrialists who are looking to enter the Egyptian market, he added.

Wataniya + Safi hitting the EGX before the year is out? The Sovereign Fund of Egypt is looking to take military-owned filling station Wataniya and bottled water maker Safi public on the EGX by the end of the year, according to a cabinet statement. The two National Service Products Organization companies are currently being restructured ahead of their IPO.

THE BIG STORY ABROAD

A couple of stories are vying for attention in the international business press this afternoon:

#1- Three gas leaks from the Russian-owned Nord Stream 1 and 2 pipelines were discovered in Swedish and Danish waters, raising concerns about further Russian supply shortages. The company said in a statement it was “investigating” the reason behind the pressure drop that caused the leaks, while European countries are looking into potential sabotage. “The incident is not expected to have consequences for the security of Danish gas supply,” the Danish energy ministry said in a statement. The Nord Stream 2 pipeline is pumped full of gas despite its operations getting halted due to Russia’s invasion of Ukraine, while the Nord Stream 1 pipeline has been out of service for weeks for maintenance work. (Financial Times | CNBC | Bloomberg | Reuters)

European natural gas futures shot up 6.4% in trading early this morning on the news, after dropping to a two-month low earlier this week, Bloomberg reported.

#2- Japan held a state funeral for former Prime Minister Shinzo, provoking angry demonstrations in Tokyo over his legacy of close ties with the ultra conservative Unification Church. Abe was assassinated in July at a political campaign event. (Reuters | the Associated Press | The New York Times | the Guardian | The Wall Street Journal)

HAPPENING NOW-

Our friends at HSBC are hosting an energy transition webinar series today through Thursday (27-29 September). The series will look at the “latest climate analysis in relation to the global energy market and transition to net zero” in six different sessions covering energy security, what is required to ensure the success of COP27, financing and investment needs for the energy transition, and the scaling up of renewables in the region, among other topics. You can register for the series here.

A Spanish business delegation is in town today and tomorrow for the Egypt-Spain Multilateral Partnership Forum, organized by the Spanish Institute for Export and Investment, according to a press release (pdf). The two-day conference will include seminars and panel discussions on trade and investment in transport, energy, and water with Egyptian ministers and representatives from government bodies, alongside officials from international financing institutions and Spanish Secretary of State for Trade Xiana Méndez Bértolo. The agenda for the conference is available here (pdf).

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

• EFG Hermes and GB Capital have rebranded life ins. company Tokio Marine Egypt Family Takaful as Kaf following their acquisition of a majority stake in 2020.
• Elsewedy Electric has secured EGP 2 bn in Islamic financing from a banking consortium led by Abu Dhabi Islamic Bank.
• Pickalbatros Hotels will open three new hotels in Hurghada and Marsa Alam by next February.

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???? CIRCLE YOUR CALENDAR-

The Arab Pensions and Social Ins. Conference kicks off tomorrow in Sharm El Sheikh, bringing together pension and investment leaders to exchange expertise and experiences on reforming and developing pension systems in the Arab region, according to a cabinet statement. Finance Minister Mohamed Maait will be attending the two-day gathering.

The UN World Food Program and the International Cooperation Ministry are hosting a two-day conference on food security at the St. Regis Cairo Hotel on Wednesday and Thursday, according to a press release (pdf). The conference will mainly focus on the digitization of the agricultural sector, financial inclusion and social protection.

Women entrepreneurs: Are you looking for funding? The Facility Investing for Employment is looking to write co-financing tickets in the EUR 1-10 mn range for new projects at businesses that “contribute to sustainable job creation.” Its focus is on women entrepreneurs and women-led businesses, according to a press release (pdf). Entrants can apply starting 14 November.

☀️ TOMORROW’S WEATHER- Expect a daytime high of 38°C tomorrow and a nighttime low of 25°C, according to our favorite weather app.

Paternalistic leadership — done the right way — can offer great benefits to a business and its management: A paternalistic leadership approach associated mostly with leaders in Asia, Latin America and the Middle East, offers a number of benefits that Western leaders need to take note of, the Financial Times writes. Unlike “transactional” and “transformational” models of leadership heralded by Western leaders, the paternalistic approach uses a combination of authoritarianism, benevolence and morality to make emotional connections with employees that reflects in more loyalty, productivity and motivation across the company’s staff. It also helps company leaders through high-profile disputes and conflicts, where they are able to use these qualities and their loyal following to mobilize positive publicity and use it in their favor.

And speaking of gendered leadership: Girl power is circumstantial when it comes to mentors: Women initially prefer women mentors — a preference that is likely to shift with more background information about the candidates, according to a UCLA and University of Chicago study cited by the Wall Street Journal. The research results show that female students are drawn to mentors who are also women when they don’t know much solid information, but if they know more about a mentor’s mannerisms, likelihood to give personalized advice, or awareness of future job opportunities, the preference no longer holds.

The findings show without sufficient data, women will opt for allies from their own gender: In the first phase of the study, women students were 20% more likely than their male counterparts to contact women mentors, regardless of preferred occupation. They were also 28% more likely to give up a mentor with their preferred occupation to pair up with a woman mentor. In the second phase, students received the same information about the 30 pairs of mentors with star ratings from past mentees including knowledge about job opportunities, affability and likelihood to give personalized advice. Given this additional information, neither female nor male students were willing to sacrifice a mentor with their preferred occupation regardless of gender.

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Copper prices are down by nearly 30% since March on higher inflation, recession fears, and market volatility, triggering a larger copper-deficit outlook which could short-circuit the global energy transition, Bloomberg reports. The drop in prices is dampening new investment and could stoke a shortage in global supply of the metal, which is used in all things green including EVs and power grids. The deficit is expected to reach 10 mn tons, or 20% of demand, by 2035.

???? ON THE TUBE TONIGHT-
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Dahmer is both difficult to watch and difficult to look away from: Netflix’s new limited series examines the life of notorious serial killer Jeffrey Dahmer through the eyes of his victims. Ryan Murphy and Ian Brennan's latest project stars Emmy winner Evan Peters as the cannibalistic murderer who killed and dismembered seventeen men between 1978 and 1991. In almost every way, the show puts the stories of Dahmer’s victims ahead of his own. It’s a reworking of the typical true crime-style, and a daring move that gives this story the gravitas it deserves, and makes the series incredibly tense to watch. Portrayed for a long time as a mad cannibal who miraculously evaded capture by the police, this interpretation of events seems closer to the truth: Dahmer was never a criminal mastermind. Instead, his victims were let down by a biased police force. The writing, acting, and directing are all excellent, and the fresh take on Dahmer’s story makes it worthwhile to watch (watch trailer, runtime 2:57).

⚽ Egypt faces Liberia tonight at 8pm, in our second friendly match with new Portuguese coach, Rui Vitoria. The Pharaohs played Niger a few days ago, and emerged victorious with a final score of 3-0, with two goals from Mohamed Salah and one from Mustafa Mohamed.

The group stage of the UEFA Nations League concludes today at 8:45 pm, with Portugal v Spain, and Switzerland v Czech Republic. The two matches will determine who sits at the top of the group and who will land to the bottom, so we’ll get to find out the last qualifiers to the semi-finals.

Who’s in and who’s out so far: Croatia, Italy and the Netherlands have reached the semi-finals, while Portugal (10 points) and Spain (8 points) are still stuck in limbo. Switzerland (6 points) and the Czech Republic (4 points) are trying to avoid joining Austria, England and Wales, whose relegation to league B has been confirmed

Friendly matches we recommend keeping an eye on today:

Saudi Arabia v USA at 8pm

Brazil v Tunisia at 8pm

Morocco v Paraguay at 9pm

Algeria v Nigeria 9pm

???? EAT THIS TONIGHT-

Fried chicken lovers, listen up: Maadi’s Howlin’ Birds is about to be one of your favorite spots: You can customize the spiciness of the cloud kitchen's fried chicken breast to your liking, with levels ranging from country (no heat) to mild, hot, x-hot, and howlin hot, for those who love an extra burn. If you’re craving a quiet bite, go for their chicken tenders, their signature sando sandwich, or the boojy-style sandwich, which is boneless chicken breast, cheese, coleslaw and pickles in between crunchy toast. Go for the whole bird if you want to share your meal, and you can thank us later.

???? OUT AND ABOUT-
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Verdi’s quintessential opera Aida is showing at the Cairo Opera House tonight through Friday: The larger-than-life story, along with some of the best music ever composed will be performed by the Cairo Opera Company and the Cairo Opera Orchestra at the Fountain Theater at 8pm.

Improv troupe Irtigalia celebrates their fourth birthday at CJC 610 tonight: The group, directed by actor Ramsi Lehner, combines elements of both Egyptian comedy and improvised theater to give audiences something new in the world of live comedy.

???? UNDER THE LAMPLIGHT-

In The Price of Time, a leading financial writer explains the current state of the world's economy and how we got here: Finance historian and journalist Edward Chancellor provides a comprehensive and profoundly relevant history of interest rates. Although interest is frequently referred to as the “price of money,” Chancellor thinks it is actually better referred to as the “price of time” because time is valuable, scarce, and expensive. He makes a compelling case that when central banks set interest rates too low, the economy suffers in a number of ways, even if the central bankers succeed in capping consumer price inflation, as the US Federal Reserve did from 1995 to 2019. Chancellor ends his insightful book with a gloomy warning: The manipulation of interest rates by central bankers may seem relatively benign in comparison to more intrusive forms of government action, but it actually poses the greatest threat to the effectiveness and reliability of the freemarket system. The priceless right to freedom is hidden behind the cost of time, he writes.

The EGX30 fell 0.1% at today’s close on turnover of EGP 1.07 bn (11.6% above the 90-day average). Foreign investors were net sellers. The index is down 18.8% YTD.

In the green: Qalaa Holding (+4.6%), Madinet Nasr Housing and Development (+3.8%) and CIRA (+3.4%).

In the red: CIB (-1.6%), Cleopatra Hospitals (-1.0%) and Egypt Kuwait Holding-EGP (-1.0%).

OUR FOUNDER OF THE WEEK- Every Tuesday, Founder of the Week looks at how a successful member of Egypt’s startup community got their big break, asks about their experiences running a business, and gets their advice for budding entrepreneurs. Speaking to us this week is Amir Aboul Fotouh, founder and head of operations at Mazaya (LinkedIn).

My name is Amir Aboul Fotouh and I am the founder and head of operations at Mazaya. I began my career working as an accountant. I worked at Raya and then at Cargill, a US company that distributes grain and other agricultural commodities. I then joined the commercial team at Raya as a product manager, managing the telecom product line business before becoming the senior commercial planning manager at Raya Trade.

During my time at Raya, we began to notice that our margins were being squeezed every year, and it became imperative that we build a technology-based operation. We met with a lot of merchants and retailers and realized that there was a big gap in the market. Small retailers had to work with a lot of suppliers to get the stock they need. They also had very few financing options available to them.

We built Mazaya on the convenience and accessibility value propositions. It’s a one-stop-shop, selling mobile phones and accessories, tablets, TVs and small domestic appliances, such as blenders and microwaves.

The local electronics market comprises around 12k-13k retailers, and the distributors and suppliers deal directly with only about 20% of them. The rest have to bear the cost of buying from intermediaries like wholesalers or semi-wholesalers that each add their own margins, which boosts up the price of the products at small retailers, increasing the gap between the price suppliers pay to buy a product firsthand from the source and the end price at which they are sold to consumers.

Our role falls somewhere between distributors and wholesalers. We aim to serve small retailers. They’re an underserved market and to provide their stocks within a proper price range and time frame and to make sure they are aware of any promotions or discounts from suppliers. We currently serve 6k retailers and we are looking to bring that number up to 10-12k by next year.

We had the first version of the application ready by September and we launched in Cairo and Giza first in December 2021. We expanded to Alexandria, then the Delta region and Upper Egypt. By July 2022, we had a presence nationwide, covering 6,000 retailers.

We recently closed a USD 5 mn pre-seed round, led by Raya Trade and Distribution, a subsidiary of Raya Holding for Financial Investments. We have a special partnership with Raya, wherein we turn to them first to obtain our stocks. They are not just investors, they offer us a lot of support, as well.

Corporate companies have their limits, especially big companies. It is very difficult to change the traditions and practices within them. There is very little appetite for change. On the other hand, at a startup, you are able to react very quickly to market changes. Corporates however are more solid and equipped to deal with difficult circumstances

By founding your own company, you give up the support that larger companies afford you. You are solely responsible for your company’s successes or failures. You need to constantly think about the company and its employees because no one else will do this on your behalf.

Heading a startup you get very fast feedback on decisions you make so you are able to adjust accordingly. You are always thinking about the next step so you never really get to take in the successes. You’re always looking to the next milestone.

Some KPIs I constantly look at are the frequency of orders and average order value. We aim to receive four orders from each retailer every month as their average cycle is around one week. The order value is very important because you could have an order that just consists of one EGP 15 cable.

The current economic climate definitely affects our business. When the EGP was devalued in 2016, the market declined by 25%, but it recovered a year later. This time around we expect the decline to be harsher. Consumers have also shifted their spending habits, opting to fix old phones as opposed to buying new ones and buying less expensive models than they would have previously.

When I’m not working, I spend as much time as I can with my family. I usually end the day watching two episodes of Friends. I also try to travel wherever I get the chance. When I encounter topics I am unfamiliar with, I tend to look for a podcast on the topic and to listen to that.

I think MaxAB has done a great job of mixing the traditional way of doing business and the startup model. They respect traditional wholesalers and traders and are keen on maintaining good relationships with them. I have a lot of respect for startups that are respectful of the traditional players in their industry, that were there long before them conducting business in a certain way. Startups emerge with new tech and strategies that disrupt that market, so it's important that that is done in a gradual and respectful manner. You cannot show up on the scene expecting to change the market overnight.