PM — You’ve heard of smart cities, now get ready for smart industrial parks

Good afternoon, friends, and welcome to a busy start to the week. We have some big news for you to catch up on as you wrap up the workday, and plenty of tidbits to get you thinking, so let’s get right to it.

BUT FIRST, A CORRECTION- In this morning’s EnterpriseAM, we mistakenly reported that Amazon purchased a stake in EFG Hermes’ London-listed global depositary receipts (GDRs) that is equivalent to 10% of EFG’s market cap. Amazon’s purchase represents 1% of EFG Hermes’ GDRs. The story has been updated on our website.

THE BIG STORIES TODAY

#1- Gov’t announces some of its strategy to spur private sector activity in the economy: The government plans to more than double the private sector’s contribution to the country’s economy to 65%, from 30% currently, within the next three years, Prime Minister Moustafa Madbouly said at a highly-anticipated press conference today (watch, runtime: 47:57). This target rests on the government’s long-term strategy to reduce the state’s involvement in the economy, which will be announced “within days” and will provide a roadmap for reducing the state’s economic activities, charting which industries it will withdraw from and when, as well as ring fencing strategic sectors where it wants to retain a presence — all within three years. The government also expects to reach its targets with unspecified incentives geared towards improving the business climate, as well as opening lines of communication with the private sector to help cater to their needs.

ALSO IN THE STRATEGY: The government’s plan to attract a total of USD 40 bn of local and foreign private sector investment in state-owned assets, at a pace of USD 10 bn annually over the course of the next four years. The assets include new and renewable energy projects, real estate assets in new cities, desalination projects, as well as ICT and education projects. President Abdel Fattah El Sisi had announced this goal last month. The government has already selected USD 9.1 bn-worth of assets out of this year’s allotted USD 10 bn, and is currently working on appraising assets worth another USD 15 bn as part of a “fast-tracked” component of the strategy, which should be completed this year, Madbouly said.

#2- Unemployment fell in 1Q2022: Egypt’s unemployment rate eased to 7.2% during the first quarter of the year, from 7.4% in 4Q2021, according to the latest data by statistics agency CAPMAS (pdf). This is the second consecutive quarter during which the jobless rate eased, after remaining somewhat steady over the past year.

^^We’ll have more on these stories and others in tomorrow’s edition of EnterpriseAM.

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THE BIG STORY ABROAD-

It’s all about energy, with the European Commission considering setting a cap on natural gas prices if Russia cuts off supply to avoid “unbearably high” costs, Bloomberg reports. European energy markets are grappling with uncertainty over gas supplies after Moscow demanded “unfriendly countries” pay for Russian gas in RUB, which would breach EU sanctions.

Separately, but also related: Iran says it has the capacity to double its oil exports if there’s sufficient demand, said Mohsen Khojastehmehr, managing director of the National Iranian Oil Company yesterday, Bloomberg reported. His comments come as Iran is engaged in faltering negotiations to revive the 2015 nuclear pact — an agreement would restore Iranian oil exports and grant the country much-needed sanctions relief (in return for curbs on its nuclear program). Analysts estimate that Iran sells as much as 1 mn barrels per day, though the country does not publish official production figures.

UKRAINE UPDATE-

• Ukrainian military infrastructure in the Lviv region was destroyed this morning due to a Russian missile strike, the region's Governor Maxim Kozitsky announced, reports Reuters. No casualties have since been identified.
• The US Senate met with Ukrainian President Volodymyr Zelenskyy yesterday, with Senate Leader Mitch McConnell heading the delegation which discussed additional sanctions on Russia as well as a potential USD 40 bn aid package, reported CNBC.

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

• Amazon snaps up EFG GDRs, with option to swap for valU shares: Amazon has agreed to purchase USD 10 mn worth of EFG Hermes’ London-listed global depositary receipts (GDRs) with an option to convert the investment into an equity stake in EFG’s consumer finance arm valU.
• MSCI adds EFG Hermes to global standard index, e-Finance enters small-cap index: EFG Hermes has been added to MSCI’s standard equities index from its small cap index following its semi-annual review. E-payments giant Fawry has been moved from the standard index to the small-cap index, and is joined by state-owned fintech player E-finance, which makes its index debut. Meanwhile, real estate firms Palm Hills Developments (PHD) and Heliopolis Housing were removed from the small-cap index.
• Canal Sugar Company has secured loans worth EGP 12.5 bn from a consortium of 10 banks led by the National Bank of Egypt (NBE) to help finance its USD 1 bn sugar beet processing facility in West Minya.

*** 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: Industrial park developers in Egypt are, slowly but surely, beginning to move towards developing smart industrial parks — think the technology of smart cities but applied to factory complexes. Today, we look at the advantages that smart parks have over regular industrial parks, and whether or not they have the potential to change the manufacturing landscape in Egypt.

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???? CIRCLE YOUR CALENDAR-

Budget season is in full swing at the House: The House of Representatives will begin holding committee-level discussions of the draft FY 2022-23 budget and economic and social development plan this week, Ahram Online reports. If approved, the budget will be signed into law by the president. Head here for a refresher on the draft budget’s key figures, and here for a look into how our state budget process works.

Need to get your head around the new e-receipt system? Lynx Strategic Business Advisors are following up their recent webinar on e-invoicing with a session introducing the Finance Ministry’s new e-receipt system, which is set to officially roll out on 1 July. The webinar will feature FinMin tax development advisor Yasser Taymour, as well as reps from Talabat, Jumia, Yoco, and the World Bank. It takes place on 18 May at 12:00-1:30pm CLT. Register 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 a daytime high of 30°C tomorrow and a nighttime low of 17°C, our favorite weather app tells us.

The hottest new green business venture: Investing in biodiversity. As the market for environmentally-friendly investing grows at an exponential pace, fund managers have recently discovered the potential benefits of jumping into biodiversity funds, a long-overlooked corner of green finance, Bloomberg reports. UK’s Aviva Plc has set up a natural-capital equity fund to invest in companies such as plant-based protein company Beyond Meat Inc, while Jupiter Asset Management has added new multi-asset ecology funds to its series. The market for biodiversity investments could grow by more than 2,000%, according to the Paulson Institute, which estimates that the field could reach as much as USD 93 bn by 2030, up from about USD 4 bn in 2019. With around 50% of the world’s economy derived from biological resources, according to estimates by the World Economic Forum, investors are realizing the importance of actively seeking funds that protect our ecosystems —.the destruction of our natural resources would not just result in a climate disaster, it would lead to massive financial losses.

Which countries should adopt central bank-backed digital currencies? Nine out of ten central banks surveyed (pdf) by the Bank for International Settlements are exploring central bank-backed digital currencies (CBDCs). As the demand for physical cash continues to dwindle, with banknote shares in POS transactions shrinking to 11% in North America, 19% in the Asia-Pacific and 27% in Europe, developed countries are steadily investing in CBDCs.

The question remains: which countries should adopt CBDCs and which can go without? The survey notes that countries with sturdy payment structures, a variety of noncash options, and whose currencies garner the local population’s trust, such as Poland, will probably have no need of CBDCs. Nations like Peru, who have underlying problems with their retail financial system, may be fertile grounds for CBDCs, something that the Peruvian central bank noted in the survey that payment flows could be enhanced by the introduction of a CBDC. Bloomberg also has the story.

???? ON THE TUBE TONIGHT-

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Operation Mincemeat tells the story of the elaborate deception behind the invasion of Sicily in WW2: Set in 1943, the Allies are planning an all-out assault on Sicily to weaken Hitler’s grip on occupied Europe. However, the German army was well-fortified and prepared for all their invasions, which led two British intelligence officers, Ewen Montagu (played by Colin Firth) and Charles Cholmondeley (Matthew Macfadyen), to devise an ingenious plan. Based on this true story, the film follows the two officers as they plant a false coded message on a corpse, hoping the enemy will scoop it up and take the bait. This obscure part of the war makes for a great watch for history buffs or those who enjoy drama-filled war movies. Operation Mincemeat is a Netflix film, so expect to see it on the streaming site soon or head to several cinemas nationwide where the film is currently being shown.

Fun fact: Operation mincemeat saw the involvement of one Lt. Col. Ian Fleming, who used his wartime experience to create James Bond and other spy characters.

⚽ The race for top 4 in the English Premier League continues: Tottenham and Burnley wrapped up their match just as we were hitting send, with Spurs taking home the 1-0 victory. Spurs beat Arsenal in a humiliating 3-0 thrashing leaving them one point behind the Gunners, who hold on to their top 4 position with their teeth and fingernails. Meanwhile, West Ham v Manchester City kicked off at 3pm, with the game potentially bringing City closer to retaining the league title or reviving Liverpool's hopes before the last round. Several other teams also hit the field at 3pm — Aston Villa v Crystal Palace, Leeds v Brighton, Watford v Leicester City, as well as Wolverhampton v Norwich — and are ongoing as we dispatch. The last matches in England will bring together Everton and Brentford at 5:30pm.

Nine La Liga matches are starting at 7:30pm: Cadiz v Real Madrid; Getafe v Barcelona; Atletico Madrid v Seville; Celta Vigo v Elche; Atletico Bilbao v Osasuna; Levante v Deportivo Alaves; Real Mallorca v Rayo Vallecano; Real Betis v Granada; Villarreal v Real Sociedad.

The Italian League is entering its final and decisive rounds with the attention on two matches: Milan will play against Atlanta at 6pm and Cagliari against Inter at 8:45pm. Milan is currently at the top of the league, above Inter with two points, while each team has two matches left until the end of the competition.

And here in Egypt: Ismaili and Ceramica Cleopatra will compete at 4pm, while El Mokawloon plays against Enppi at 6:30 pm, and Pyramids with Farco at 9pm.

IN OTHER FOOTBALL NEWS-

CAF agrees to move African Nations qualifiers so that Egyptian team is present: The Confederation of African Football has agreed to amend the dates of Egypt's matches against Guinea and Ethiopia in the African Nations qualifiers to 5 and 9 June, respectively, instead of 2 and 6 June, according to a statement on Thursday. The rescheduling comes at the request of the Egyptian Football Association due to the proximity to the date of the African Champions League final match (scheduled for 30 May). Al Ahly qualified for the May league match yesterday after defeating Algeria’s ES Setif. Al Ahly will face Morocco’s Wydad in the final with the hope of getting the top title for the third time in a row.

???? EAT THIS TONIGHT-

Hummus and Go serves Palestinian street food: New Cairo folks can head to The Yard in Rehab city, where the new Palestinian food truck is parked. Hummus and Go first appeared during Ramadan serving sohour dishes such as falafel, foul, and salads. If you’re a hummus fan, then you’ll be delighted to hear that the food truck’s namesake is deliciously prepared, with many different variations to choose from. There are hummus salads, dips, and even hummus-stuffed foul, but we recommend the creamy roasted red pepper hummus or their hummus and beef. Hummus and Go is a great place to get your Friday breakfast fix or head there to stock up on a few salads to keep on hand.

???? OUT AND ABOUT-

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Head to a swing dancing night at Minglings tonight: The Heliopolis venue is hosting a swing dancing night tonight at 8pm, with an introductory class to the dance, dancing games, and competitions. Minglings urges people to get dressed in their “20s or 50s outfits” to really get into the spirit.

The Cairo Opera House is showing an exhibition with works from father and son artists: Art ran in the family for the late Salah Tahir and his son Ayman Tahir. Salah was appointed as head of the Museum of Modern Arts and then as head of the Opera in the 1960s. He also joined Al Ahram in 1966 as artistic consultant, holding the position until his death in 2007. Over his lifetime he painted over 15k paintings that were shown across the world. Today his son continues his artistic legacy, putting his paintings side by side with his father’s in an exhibition called Through the Eyes of Safeya which is on display until 18 May at the Cairo Opera House.

Also at the Opera House, Austrian Duo Aliada is performing today at 8pm as part of the Austrian Cultural Forum’s celebration of the Europe Month of May. Duo Aliada consists of saxophonist Michał Knot and accordionist Bogdan Laketic who set out to explore the musical landscapes of Eastern Europe and the Western hemisphere.

???? UNDER THE LAMPLIGHT-

How biotechnology emerged as one of the world’s top sectors in a matter of decades: From Breakthrough to Blockbuster by Donald L. Drakeman, Lisa N. Drakeman, and Nektarios Oraiopoulos follows the sector from the 1970s when several scientific breakthroughs promised to pioneer the creation of new meds. As the discoveries began to earn Nobel Prizes, investors wanted in on the sector and poured into biotech startups around the world who were attempting to compete with major pharma companies who had been in operation for a century. The success of the sector was soon realized as these small biotech companies now create nearly 40% more of the most important treatments for previously unmet medical conditions — all with less capital and costs. The book shows how a supportive environment, from VCs to the government, helped the entrepreneurial biotech industry to expand with unprecedented efficiency.

EARNINGS WATCH-

Alexandria Minerals Oil Company’s (AMOC) bottom line rose roughly 638% in 9M 2021-2022 to EGP 762 mn, according to the company’s financials (pdf). The company’s revenues rose 72% y-o-y during the nine-month period to EGP 12.26 bn.

Credit Agricole Egypt’s bottom line rose 30% y-o-y in 1Q 2022 to EGP 491.5 mn, according to an income statement (pdf) released today. The bank generated EGP 1.37 bn in net interest income during the January-March period, up 9% from last year.

The Export Development Bank of Egypt saw its bottom line rise 139% y-o-y in 1Q 2022 to EGP 301.9 mn, the bank reported in its financials (pdf). Net interest income reached EGP 1.66 bn during the first quarter of the year, rising 20.8% y-o-y.

Abu Dhabi Islamic Bank’s (ADIB) net income rose 33.7% y-o-y in 1Q 2022 to EGP 444.30 mn, the bank’s financials (pdf) revealed. Revenues during the period also rose 23% y-o-y to EGP 2.31 bn.

MARKET ROUNDUP-

The EGX30 fell 1.4% at today’s close on turnover of EGP 733 mn (15.5% below the 90-day average). Foreign investors were net buyers. The index is down 11.8% YTD.

In the green: CIRA (+2.0%), Cleopatra Hospitals (+1.7%) and Eastern Company (+1.3%).

In the red: Ibnsina Pharma (-4.6%), EFG Hermes (-4.4%) and Credit Agricole Egypt (-3.5%).

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Correction: This story was amended on 15 May 2022 to correct Credit Agricole Egypt’s net profit figure for 1Q 2022.