PM — Warmth in the VC nuclear winter?

TL;DR

Gov’t plans to trim wheat imports by 500k tons in FY 2022-2023 by extracting more flour from the grain. (The Big Story Today)
FMCG players think the state’s privatization plans have merit — but want to see additional clarity + some changes. (Inside Industry)
US-based green hydrogen startup finds USD 198 mn-worth of warmth amid VC nuclear winter. (For Your Commute)
A shortage of engineers is complicating Japan’s plans to revive the chip industry. (For Your Commute)
Only Murders in the Building brings together comedy powerhouses Steve Martin and Martin Short. (On The Tube Tonight)
Grab a bite of Egyptian traditional food at its best from Tabali. (Eat This Tonight)
Find art in everyday moments at Bibliothek Egypt’s Life in Color. (Out And About)
With summer travel plans finally back in sight, there’s no better time to pick up a hardcopy of inspiring travelog The Catch Me If You Can. (Under The Lamplight)

???? WHAT WE’RE TRACKING TONIGHT

Happy Sunday, ladies and gentlemen. We have another relatively busy afternoon for you today, with some commodities news leading the pack so far.

THE BIG STORY TODAY

Ramping up flour extraction from wheat to trim imports: The Madbouly government plans to trim wheat imports by 500k tons in FY 2022-2023 by extracting more flour from the grain to use for subsidized bread production, Supply Minister Ali El Moselhy said at a presser today, according to Reuters. The government is now looking to import some 5-5.5 mn tons of wheat for the upcoming fiscal year.

THE BIG STORY ABROAD

The international press is awash with headlines related to Russia and the G7 this afternoon. The two biggest stories leading the conversation so far are Russia launching missile strikes in the Ukrainian capital, Kyiv, which reportedly targeted an apartment building and a kindergarten, while G7 leaders are working on a package of new measures targeting Russia’s economy. The Group of Seven is discussing a potential price cap on Russian oil, after agreeing to ban imports of Russian gold. The stories are getting ink in Reuters, the Financial Times, and Bloomberg.

HAPPENING NOW-

Etisalat Egypt has just unveiled its new brand identity, etisalat by e&, at an event Enterprise is currently attending. The launch of the new brand comes “in line with the e& Group’s recent positioning as the global technology and investment conglomerate that digitally empowers societies,” Etisalat Egypt said in a statement (pdf).

We’ll have more details on this in tomorrow’s edition of EnterpriseAM.

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

The Central Bank of Egypt (CBE) kept interest rates unchanged in its meeting last Thursday, breaking a run of rate hikes in its two previous meetings to tackle high inflation.
Thales, Orascom Construction and Colas Rail have landed a USD 659 mn contract for construction work on the first phase of Cairo’s fourth metro line.
GB Auto’s car finance arm Drive Finance has closed its first EGP 700 mn corporate bond issuance as part of a wider EGP 2 bn program.

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: As public consultations continue over the state’s privatization plans, we talked to FMCG business leaders about what they think of the discussions and what else needs to happen in the food sector for the privatization push to play out well. From pricing to strategy to changing policies and regulations in the sector, the executives we talked to see positive potential for the move but think there are many necessary steps ahead before the initiative can really take off.

FOR TOMORROW- Amcham AGM: Our friends over at Amcham will hold their annual general meeting tomorrow at the St. Regis Cairo Hotel. Finance Minister Mohamed Maait will address the gathering.

President Abdel Fattah El Sisi heads to Oman tomorrow: El Sisi will hold talks with Omani officials over a two-day visit to the country that kicks off Monday, according to the state-run Oman News Agency (ONA, which cites a statement from Oman’s Diwan of Royal Court.

???? CIRCLE YOUR CALENDAR-

Key stats from OPEC drop Tuesday: The oil cartel will release its annual statistical bulletin on Tuesday, 28 June, the organization announced in a press release. The flagship publication provides data on the global hydrocarbons industry, with a focus on the 13 OPEC member countries. Market watchers will be paying close attention to the figures this year, given rising energy prices brought on by a major supply-demand imbalance, the ongoing energy crisis in Europe, and ever-louder calls to transition away from polluting fossil fuels.

The deadline for companies to submit bids for the redevelopment of the National Democratic Party headquarters is this Thursday, 30 June.

The government’s fuel pricing committee will likely meet to review fuel prices as part of its quarterly review sometime next week.

The national dialogue to set Egypt’s political and economic roadmap will also kick off next week. President Abdel Fattah El Sisi had called for the dialogue in April. Check out our explainer on the dialogue, its agenda, participants, and targeted outcomes here.

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 temperatures to rise to 38°C during the day tomorrow before falling to 22°C at night, our favorite weather app tells us.

???? FOR YOUR COMMUTE

“What VC nuclear winter?” asks this green hydro startup: A US-based startup aiming to make green hydrogen more cost effective just raised USD 198 mn through a series B round. Electric Hydrogen raised the funds via a mixture of equity and venture debt, attracting the attention of US VCs Fifth Wall Climate Tech and S2G Ventures, lenders Silicon Valley Bank and Trinity Capital, and industrial giants Honeywell, Mitsubishi, and Rio Tinto, it said in a statement.

About Electric Hydrogen: The startup aims to help eliminate more than 30% of global GHG emissions from hard-to-electrify industries through pioneering new technology for low-cost, high-efficiency, zero-fossil hydrogen systems.

Why do we care? There has been a wave of “down rounds” — when a company sells shares at a lower price than its previous funding round — happening globally, and that trend appears to have landed in Egypt as well. Electric Hydrogen’s series B round runs contrary to the VC slowdown narrative with a significant ticket size. Plus, the company’s entire business is very relevant to Egypt’s current energy policy, which has seen us attract plenty of investments into green hydrogen projects, including from Saudi Arabia’s FAS Energy and H2 Industries.

A shortage of engineers is complicating Japan’s plans to revive the chip industry: Japanese chipmakers such as Toshiba and Sony are flagging a lack of engineering talent needed to bolster the chip industry, threatening one of Japan’s main areas to ensure economic security, the Financial Times reports, citing company sources and industry figures. The Japan Electronics and Information Technology Industries Association has warned the country’s trade ministry that these next five years are the last chance for Japan’s semiconductor industry to regain its footing. The domestic industry will need to hire 35k engineers over the next 10 years to keep up with the pace of investment, the association estimates. However, new engineering grads are now opting to join financial institutions or startups as the chip sector has long lost its charm. Major companies are now partnering up with universities to pour additional funding into chip research and recruitment at science departments in efforts to build up the talent pool.

El Salvador’s nationwide crypto experiment is not going so great: It’s been nine months since El Salvador’s government officially adopted BTC as legal tender, which means that the cryptocurrency can be used to buy anything, from tacos to real estate, alongside El Salvador's other currency, the USD. But the crypto crash has prompted questions on whether the Central American country’s gamble was the right decision. El Salvador’s BTC investments are already worth half their value, after using USD 100 mn of public funds to buy BTC — which has fallen more than 70% from its November 2021 peak, and more than 55% from the time President Nayib Bukele announced his plan. Since then, El Salvador’s economic growth has stalled, and the country’s deficit remains high, with debt-to-GDP ratio set to hit nearly 87% this year, stoking fears that the country will not be able to settle its loan obligations, CNBC reports.

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???? ENTERPRISE RECOMMENDS

???? ON THE TUBE TONIGHT-
(all times CLT)

Only Murders in the Building combines mismatched stars with unexpectedly smooth chemistry: The murder-mystery-comedy series brings together two comedy powerhouses in their 70s — Steve Martin and Martin Short — alongside one of the world’s biggest millennial pop stars, Selena Gomez — and the result is captivating. The three play neighbors Mabel, Charles, and Oliver who all live in an apartment complex in Manhattan, and share an obsession for the same true crime podcast. When a neighbor is found dead in the building, the cross-generational trio decide to start their own podcast with the aim of finding out who killed him. The show is fun, the writing is immaculate, and the characters stir up a range of emotions through their individual backstories. Like all mysteries, there is a plethora of suspects, and you’ll find yourself building your own theories as you watch along. What gives the show an extra notch is that ultimately, it is as compelling a mystery as it is a hilarious comedy. You can catch Season 1 in its entirety on Disney + (watch, runtime, 2:28).

⚽ Nostalgic for the past? Egyptian football has you covered. Al Ahly and Pyramids will play their postponed game from the quarter-finals of last season’s Egyptian Cup at 9.30pm. Yes, the 2020-2021 season is still alive and kicking, and is being played in parallel with the current Cup, which has already reached the Round of 16. Tonight’s victor will move on to face Petrojet in the semi-finals, then continue the journey against Zamalek in the cup final on July 21.

And in the Egyptian League: Misr Lel Makassa will play against Al-Masry at 7pm.

???? EAT THIS TONIGHT-

Grab a bite of Egyptian traditional food at its best from Tabali: We can never say no to fuul and ta’meyah, so Tabali is always a reliable, irresistible option — whether we’re looking for a snack, a proper meal, or an above-average Breakfast of Champions. The restaurant offers Egyptian cuisine that is consistently good, and the menu has an abundance of options for every occasion. Our absolute favorite is their Tableyet El Mini: You get a little bit of everything (foul with different flavors, falafel, eggs, fries, and cheese) served in tiny baladi bread loaves. We recently discovered their feteer and it instantly won us over. Pro tip: Always finish off your meal with rice pudding for dessert — you can get it plain, or topped with Lotus or Nutella and marshmallow, and all three options are scrumptious. Tabali has branches all over the city in Zamalek, Heliopolis, Sheikh Zayed, and 5th Settlement.

???? OUT AND ABOUT-
(all times CLT)

Find art in everyday moments at Bibliothek Egypt’s Life in Color: Featuring paintings by local artists Ali ElMerakhy, Ghada AlNajjar, Khalid Abdelaty, and Yasser Eid, the collective exhibition is an attempt to see the beauty in the everyday. The artworks on display are the culmination of decades of practice, reflection, and observation by four artists who have the talent to capture and portray often overlooked details of a rich and colorful life.The exhibition runs through 25 July at Arkan Plaza Extension.

???? UNDER THE LAMPLIGHT-

With summer travel plans finally back in sight, there’s no better time to pick up a hardcopy of inspiring travelog The Catch Me If You Can, written by traveler and photographer Jessica Nabongo ― the first Black woman on record to visit all 195 countries in the world. Nabongo recounts her fascinating journey around the globe with a wonderful stream of adventures, culture musings, travel musts, and beautiful human connections. From playing dominoes with men on the streets of Havana, to dog sledding in Norway and swimming with humpback whales in Tonga, Nabongo’s thrilling experiences are a joy to flip through. And no travel-book is complete without our very own Omm El Donia: “The entire country of Egypt is bucket-list worthy,” says the pro-traveler.

???? GO WITH THE FLOW

What do food industry players think of the state’s privatization plans?: The government last week held the second of a series of public consultations over its state ownership policy document laying out privatization plans, according to a cabinet statement. The focus of the session was on food industries, with industry reps laying out their recommendations on how best to bring the private sector on board, and giving their feedback on what the sector needs.

What sessions, you may ask? Every Sunday and Tuesday will see workshops on how privatization plans will affect specific industries. These come as the government wants to double the private sector’s role in the economy over the next three years, and aims to raise USD 40 bn over the next four years by selling stakes in state-owned assets to local and international investors. Look for detailed coverage on the talks in EnterpriseAM or across our various industry features. You can catch our coverage of last Sunday’s workshop on agriculture here. You can find more details on the schedule of the meetings here.

So what did private sector food companies say they want to see? Well first, the state needs to set clearer guidelines for the private sector’s involvement. The state needs to be clearer on how big of a stake it wants to offer the private sector, alongside conducting studies to assess how these transactions could impact the market, said Atayb Elbader head Saeed Badr during the session. The private sector will also need clarity on how the state will evaluate bids from investors to ensure that evaluations are as transparent and fair as possible, Edita CEO Hani Berzi told Enterprise separately.

State-owned companies might need to reprice their assets: The state may not be able to exit some sectors easily because some sectors just aren’t that attractive economically at the moment, vice chairman of Domty Mohamed El Damaty told the gathering. But the government can make assets in this sector more attractive by getting the pricing right, which could need the help of foreign advisors or the Sovereign Fund of Egypt, Ayman Korra, chairman of Cairo Oils and Soaps, said.

The onus is also on state-owned companies to set long-term strategies to help investors make informed decisions. Companies need to work to set a long-term strategy that includes KPIs, new products, and plans on how to fill in gaps locally and internationally, Macro Group Managing Director Hisham Wasfy told Enterprise.

Expanding the state’s exits across the value chain is also important: Private sector participants at the workshop urged the Madbouly cabinet to expand the state’s ownership policy to include supplements, production inputs and other parts of the food value chain, like fisheries.

The Madbouly cabinet is on top of it: The importance of sourcing local production inputs as opposed to importing featured heavily in the discussions. As the war in Ukraine continues to roil global supply chains and markets, the government has been working to encourage the use of local components by industry, most recently by introducing additional customs reductions for manufacturers based on their percentage of local components.

Competitive pricing and better products: Prices for products, such as hand soap, need to be more competitive and comparable to products we get from abroad, Wasfy told us. Companies also need to rethink their branding to make them more visually appealing to consumers when on display, Wasfy said.

Let the private sector manage and operate food state food factories, such as with the hospitality industry, Eslam Salem, managing director at Canal Sugar, told Enterprise. PPPs that allow companies to independently run an asset are much more appealing to investors, though we do not see many of them in the sector, he added.

Regulatory and legislative stability is a must: Private investors will need a stable legislative environment to allow them to properly plan ahead before making any investment decisions, Mohamed Anwar, chairman of supplements maker Organix, told Enterprise. “Laws should be fixed and stable for a period of at least ten years,” Berzi also tells us. “As an investor, I cannot conduct feasibility studies and make decisions based on a specific legislative and regulatory framework, only to have them upended due to sudden export bans or changes in taxation laws, for example,” he added.

Macro concerns also weigh heavily on private operators: “For there to be significant, long-term investments in the industry from the private sector, there needs to be a more encouraging investment climate, and the current local and global financial climate is difficult,” Barzi added. Former general manager of Savola Egypt, tells Enterprise that fears of a potential FX liquidity crunch are also hurting our appeal to foreign investors.

We’re getting a sense that the local private sector could be interested: Macro Group could look at investing in local companies if it is in line with their strategic direction for growth, Wasfy told us. “If they reach a target market or segment that we don’t, it could be a chance for us to expand our market share and bottom line,” he added.

Your top industrial development stories for the week:

Abu Qir Fertilizers is looking to build a USD 1.2 bn industrial complex that will include facilities producing ammonia, nitric acid, and granular ammonium nitrate.
Egypt signed 14 investment agreements with Saudi Arabia worth USD 7.7 bn: The agreements cover key sectors including energy, tech, food, and pharma and were signed during a meeting of Egyptian and Saudi companies and key officials.

???? CALENDAR

OUR CALENDAR APPEARS in two sections:

Events with specific dates or months are right here up top
Events happening in a quarter or other range of time with no specific date / month appear at the bottom of the calendar.

JUNE

25-27 June (Saturday-Monday): Big 5 Construct, Egypt International Exhibition Center.

27 June (Monday): AmCham annual general meeting, St. Regis Cairo Hotel.

27 June-3 July (Monday-Sunday): World University Squash Championships, New Giza.

30 June (Thursday): June 30 Revolution Day, national holiday.

30 June (Thursday): Deadline for bids for National Democratic Party HQ redevelopment contract.

June: Egypt will launch a unified ticketing system for all means of transport at the Adly Mansour Interchange Station.

June: Eastern Company meets to decide on prices of its tobacco products amid rising production costs and scarcity of raw materials.

JULY

July: A law governing ins. for seasonal contractors will come into effect.

July: Actis’ expected sale of its majority stake in Lekela to Infinity and Masdar’s Infinity Power.

First week of July: Fuel pricing committee meets to decide quarterly fuel prices.

First week of July: The national dialogue called for by President Abdel Fattah El Sisi kicks off.

1 July (Friday): FY 2022-2023 begins.

1 July (Friday): Official rollout of e-receipt system begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

21 July (Thursday): European Central Bank monetary policy meeting.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July-14 August: 2Q2022 earnings season.

AUGUST

August: Work to extend the capacity of the Egypt-Sudan electricity interconnection to 600 MW to be completed.

August: Sharm El Sheikh will host the African Sumo Championship.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

SEPTEMBER

September: Egypt will display its first naval exhibition, Naval Power.

September: Estate Waves Egypt real estate exhibition through metaverse technology.

September: Central Bank of Egypt’s Innovation and Financial Technology Center to launch incubator for 25 fintech startups.

September: The sixth session of the Egyptian-German Joint Economic Committee.

September: A delegation from Germany’s Aldi will visit Egypt to look at potential investments.

6-9 September (Tuesday-Friday): Gate Travel Expo 2022, El Kobba Palace, Cairo.

8 September (Thursday): European Central Bank monetary policy meeting.

18 September (Sunday): Deadline for brokerage firms, asset managers and financial advisors to register with the Egyptian Securities Federation.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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

26–27 September (Monday-Tuesday): The Africa Women Innovation and Entrepreneurship Forum (AWIEF) at the Cairo Marriott Hotel.

OCTOBER

October: Air Sphinx, EgyptAir’s low-cost subsidiary to commence operations.

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

1 October (Saturday): Use of Nafeza becomes compulsory for air freight.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

10-16 October (Monday-Sunday): World Bank and IMF annual meetings chaired by CBE Governor Tarek Amer, Washington, DC.

18-20 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

27 October (Thursday): European Central Bank monetary policy meeting.

Late October-14 November: 3Q2022 earnings season.

NOVEMBER

November: Cairo Water Week 2022.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

3-5 November (Thursday-Saturday): Egypt Fashion Week.

4-6 November (Friday-Sunday): The Autotech auto exhibition kicks off at the Cairo International Exhibition and Convention Center.

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

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

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

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

DECEMBER

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

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

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.

MAY 2023

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

EVENTS WITH NO SET DATE

2Q2022: The Sovereign Fund of Egypt will invest in two companies in the financial inclusion and non-banking financial services sectors.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 2Q2022: Door for bidding for the contract to redevelop the site of the former National Democratic Party HQ to close.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

1H2022: The government will respond to private companies’ bids to build desalination plants.

1H2022: Egypt’s second corporate green bond issuance expected to be announced.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

2H2022: The inauguration of the Grand Egyptian Museum.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H2022: The government will have vaccinated 70% of the population.

3Q2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

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.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish above between the actual holiday and its observance.