What do U.S. presidential elections mean for Egypt, beyond 10 months of “disagreeable and exaggerated rhetoric”?

 

TL;DR

World Bank cuts its 2016 Egypt growth forecast to 3.8% from 4.2% (Speed Round)

Global markets are off to the worst start in at least two decades; Soros says we’re on the cusp of another global economic crisis. (What We’re Tracking)

Spate of security incidents on the weekend included an attack on a hotel in Hurghada. (Spotlight)

One of Egypt’s best friends in America warns we should be prepared for “ten months of disagreeable and exaggerated rhetoric.” (Contrarian View)

Al Habtoor looks to invest USD 8.5 bn in megaproject: “Egypt is ready for an investment of this scale,” founder says. (Speed Round)

EGX-listed companies are dodging taxes by issuing bonus shares, Reuters claims. (Speed Round)

Netflix launches in Egypt and 129 other countries. (Speed Round)

Saudi Arabia could list Aramco, Mohamed bin Salman tells the Economist in an exclusive interview (Speed Round)

By the Numbers

WHAT WE’RE TRACKING TODAY

The holiday long weekend was a tough one for security forces, who faced no fewer than five terror incidents of varying severity. Among the incidents was a rare attack on a hotel on the mainland Red Sea coast. Two members of the security forces were killed in a separate attack in the Greater Cairo Area, and at least one terrorist was killed and another arrested. The Hurghada attack, in particular, is making global headlines such as this one in the Financial Times: “Tourists attacked in Egyptian resort hotel.” We have a full wrap-up in a Spotlight after today’s Speed Round section.

Global markets are off to the worst start in at least two decades, and George Soros thinks we’re likely in the earliest days of another economic crisis. The FT has crunched the numbers and found “more than USD 2.3 tn was wiped off global stocks [last] week as China’s slowing economy and currency depreciations spooked investors around the world,” while the S&P 500’s 6% nosedive was its worst-ever start to a year. Meanwhile, hedgie George Soros, who predicted in 2011 that the Greek debt crisis would be “more serious than the crisis of 2008,” warned last week that “China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world… A return to positive interest rates is a challenge for the developing world.” Warned Soros: “The current environment has similarities to 2008.”

The first session of the House of Representatives will be aired live on national television today. Among the first orders of business: Electing a new speaker of the House.  

The Coordination Council, the body through which the central bank and cabinet coordinate monetary and economic policy, will meet today to discuss ways to curtail imports and potentially ease or eliminate caps on foreign currency deposits.

Also today, the Emirates NBD Egypt Purchasing Managers’ Index is expected out at 7:30am CLT. You’ll find the release here when it’s out. The PMIs for Saudi Arabia and the United Arab Emirates were both out on Thursday. The Saudi index (pdf) “suffered a loss of growth momentum at the end of 2015, with business conditions improving at the weakest pace in the survey’s history.” The UAE also reported muted growth (pdf) “with business conditions improving at the slowest rate in 40 months.”

WHAT WE’RE TRACKING THIS WEEK

Foreign Minister Sameh Shoukry is planning a three-day visit to Germany on Monday to strengthen relations and improve counterterrorism cooperation with Europe.

China’s TEDA will announce the launch of the USD 233 mn development on the North West Gulf of Suez Economic Zone at a press conference on Thursday, Al Borsa reports. This will be the first part of TEDA’s USD 500 mn contract to develop a 6 sqm area in the Suez Canal Development Area. In attendance: Investment Minister Ashraf Salman, Industry Minister Tarek Kabil, the Governor of Suez and the head of the Suez Canal Area Development Project Ahmed Darwish.

A CONTRARIAN VIEW

As the race for the U.S. presidency heats up, one of Egypt’s best friends in the States urges we be prepared for “ten months of disagreeable and exaggerated rhetoric.”

Caravel Management Chairman and CIO James A. Harmon is a Wall Street insider who has Washington’s ear. He’s also a proven friend of Egypt: The Egyptian-American Enterprise Fund, of which he is chairman, has recently invested in both payments platform Fawry and consumer finance and securitization leader Sarwa Capital. He’s convinced that the next U.S. President will “seek to maintain a strong relationship with Egypt” — and suggests that “a reauthorized Export-Import Bank of the U.S. together with the Overseas Private Investment Corp. can be helpful in providing additional capital for the private sector.”

Just don’t expect the next ten months to be rhetoric-free… Tap here to read Harmon’s full op-ed, written exclusively for Enterprise.

Editor’s note: This section of Enterprise gives space to contrarian views on contemporary issues — or pieces that bring to light topics that aren’t on the community’s mind, but should be. As usual: Views expressed are those of the author, not necessarily of Enterprise. RT ≠ endorsement. Et cetera, etc., ad nauseam… If you have an idea for an op-ed, drop us a pitch (or a draft submission of no more than 700 words) at patrick@enterprisemea.com. Our editorial staff will work with you to refine any piece we choose to run with.

LAST NIGHT’S TALK SHOWS

After quickly glossing over the final three-year prison sentence handed to former President Hosni Mubarak and his sons, talk shows buzzed with praise for President Abdel Fattah El Sisi’s initiative to promote SMEs on the occasion of Egyptian Youth Day, pledging EGP 200 bn during the next four years to finance youth-owned SMEs (more in On Your Way Out).

Save for a quick round up of the president’s most recent decrees, the economy took a backseat last night to chatter about inaugural session of the House of Representatives. Talk show power couple Lamees El Hadidy and Amr Adib are apparently dreading the session, which will be aired live. On “Hona El Assema,” El Hadidy urged MPs to behave. Her three commandments: No running to catch seats in the front, no tardiness, and no prolonging oaths for more screen time. Also, scooch over to make room for the ladies.

After some sass on Qatar, Iran and several other countries and officials — as well as claiming that the Star Wars saga has made more money than Egypt has foreign currency reserves — Adib also urged MPs to be on their best behavior. “I do not want any monkey business; no kidding and no fooling about. The world will be watching us tomorrow. No fighting, either,” he said on “Al Kahera Wal Nas”. [And on a side note: The combined worldwide box office for the entire Star Wars series including The Force Awakens thus far is actually only c.USD 6 bn.]

Legal and Parliamentary Affairs Minister Magdy El Agaty phoned in, assuring El Hadidy that the new parliament will have 15 days to sign-off on legislation enacted when parliament was suspended. Aly Abdel Al, Kamal Ahmed, Ali Moselhi and Tawfiq Okasha are the four final candidates for the position of Speaker of the House. Moselhi gave El Hadidy a phone interview while Abdel Al called into Al Qahera wal Nas.

Adib, who expects Abdel Al to be elected speaker, also hosted writer Lamis Gaber, who seemed pleased with the percentage of women and Copts in parliament.

The Alliance in Support of Egypt’s Sameh Seif El Yazal and Mostafa Bakry were featured last night after Bakry made headlines yesterday. Bakry had stormed out of a session held by the alliance to elect a secretary and vowed to resign and sit independently. Bakry has since retracted his statements, and both he and El Yazal told El Hadidy and Ossama Kamal on  AKN’s “Cairo 360” that he will play nice and abide by the alliance’s choices. “This coalition was born to stay, and I will not be the reason behind breaking a brick in its wall,” Bakry told El Hadidy.

Kamal, meanwhile, hosted Education Minister Helali El Sherbini, who told Kamal that 42% of public schools have an average of 45 students per class and that we would need another 53,000 classes to end night sessions. The ministry is working to add 24,000 extra classes within the next 18 months, he said.

And from the “this canard will never die” department: Mubarak’s bns can now come home. Lawyer Essam El Eslamboly phoned-in to tell El Hadidy that after the verdict against Mubarak and his sons, Egypt can now claim the frozen assets of the former president.

SPEED ROUND

World Bank cuts Egypt’s growth projection for 2016: The World Bank has cut its growth forecast for Egypt from 4.2% in FY2015/16 to 3.8%. The decision came as the WBG cut its forecasts for global economic growth from 3.3% to 2.9%, according to its recently published Global Economic Prospects: Spillovers amid weak growth (pdf). Global “weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9 percent pace, from 2.4 percent growth in 2015,” the accompanying press release notes. Find the Middle East and North Africa section, in which Egypt is discussed, from pages 123-137 here (pdf). Before you go all George Soros and declare the world is coming to an end, there’s just about no consensus about how 2016 is shaping up. See, for example, the FT’s “Grim year forecast for developing nations” (“Developing economies last year recorded their slowest growth since the immediate aftermath of the 2008 financial crisis and are facing the prospect of an equally grim 2016, the World Bank has warned”) vs. the paper’s “EM growth rises despite doom and gloom” (which marshals data from the IMF and Bank of America Merrill Lynch to argue that things aren’t looking so horrible).

Egypt has received the first USD 500 mn tranche of the USD 1.5 bn African Development Bank loan, Central Bank of Egypt (CBE) Governor Tarek Amer tells Daily News Egypt. The CBE is still awaiting the first USD 1 bn installment of the World Bank loan, which Amer said “would take time to arrive.” The loans are contingent on Egypt prioritizing subsidy reform and improving the business environment, as noted last week.

The UAE’s Al Habtoor Group may invest as much as USD 8.5 bn in a mega project in Egypt, including three five-star hotels, luxury housing projects, sporting clubs, a golf course, an international school and shopping malls, CEO Khalaf Al Habtoor told Al Arabiya TV on Wednesday. Dubbed Al Habtoor City Cairo, the proposal was submitted to President Abdel Fattah El Sisi and includes developments on an area of over 800k sqm, he added. The location for the project is expected to be chosen by the Egyptian authorities, Ahram Gate quoted Al Habtoor as saying. “We have been studying the idea for some time. Egypt is ready for an investment of this scale.” Watch the interview in Arabic here (running time 08:24).

EGX-listed companies are dodging taxes by issuing bonus shares, Reuters’ Ehab Farouk writes. The move, taken by an increasing number of listed companies, is to avoid a 10% tax on cash dividends, a government official told Farouk. Although cash dividend payments are down 28% and the value of bonus shares climbed 124.5%, no amendments to how bonus shares are treated under the tax code are in the pipeline right now, the official added. Al Masry Al Youm covered the report in Arabic.

Netflix is officially available in Egypt (and another 129 countries): The video streaming service has tripled its global reach by expanding into an additional 130 countries for a total footprint of 189. “The company also added service in Arabic, Korean and Chinese dialects to the 17 languages already supported,” The Wall Street Journal reported on Wednesday. The service remains unavailable in China, North Korea, Syria and Crimea. In the Middle East, Netflix appointed Cairo-based digital media agency Kijami as its digital media network, making it responsible for media planning and buying, digital strategy and execution across digital and social channels, A Digital Boom wrote on Wednesday.

Zohr to begin production before the end of 2017: The first developmental phase of Eni’s Zohr gas field will be finalized before the end of 2017, Daily News Egypt reported. Petrobel, a subsidiary of Eni, is nearing the formation of PetroSherouk, the company that will oversee the management of the field. Already, the drillship Saipem 10000 arrived at the planned site of the Zohr-2 well, where it will soon begin drilling. DNE adds that EGPC held a meeting with Eni to set the gas price and agreed for it to range between USD 4 and USD5.88 per mmBtu and to be revised two years after initial production. The Oil Ministry is also reported to have informed Eni that it will not be allowed to export any produced gas from the field, unless the amounts are in excess of local demand.

Importers believe Industry Minister’s decree violates WTO agreements: Head of the Importers Division at the Cairo Chamber of Commerce Ahmed Shiha says that the registry of foreign factories manufacturing in Egypt as proposed by Ministry and Foreign Trade Minister Tarek Kabil may violate the WTO’s regulations, as reported by Daily News Egypt. “Shiha said the new decree to control imports will in effect circumvent laws regulating trade and will increase the risk of monopoly,” also fearing it could provoke retaliatory action.

Someone from Egypt got chosen for Y Combinator, the “Hogwarts of the Startup World,” as Gimlet’s Startup Podcast refers to the place. That’s about all we know: Egypt is listed as one of the countries from which a company in YC’s latest batch is drawn, per a tweet from @justinkan. Anyone out there have any idea who was chosen? Drop us a note and we’ll carry the details the next morning. In other YC news: The creator of Gmail (and author of Google’s former “Don’t be evil” slogan) has just been named the partner in charge of YC’s main accelerator program as part of a wider shakeup, Bloomberg reports.

The Central Bank of Egypt is considering forming a committee to review and possibly amend the Central Bank and Banking Act, Al Borsa reports. The committee’s aim will be to “adapt existing banking legislation to current realities in the sector,” a CBE official told the newspaper, without specifying which articles would be looked at. The source also states that amendments to investment-related legislation aimed at untangling the interlocking jurisdictions of different regulators are on the horizon. Although not specifically mentioned, the statement implies that changes to the Investment Law and a reorganization of GAFI’s responsibilities are coming. Anyone out there happen to know the price of a kilo of salt, off hand?

Awqaf Minister Gomaa warns against protests on uprising anniversary -MENA: Minister of Religious Endowments (Awqaf) Mohamed Mokhtar Gomaa called any protests commemorating the 25 January demonstrations “a full crime and illegal according to Islamic Sharia law,” Reuters reported, citing state news agency MENA. Gomaa reportedly told officials in his ministry during a meeting that stability and security are priorities.

Prime Minister Sherif Ismail’s Cabinet held its weekly meeting on Wednesday, signing-off on decisions including:

• Amendments to clauses within the inheritance law and a revision of the punishments, which include a maximum fine of EGP 100k, detailed here.
• Amendments to the law on illegal profiteering, which includes increased fines for late financial disclosures and the possibility for financial settlement and reconciliation during the trial stage within a year of the court case.
• The economic and technical cooperation agreement signed with the Chinese Government in Cairo last November. The agreement entails a USD 31.5 mn non-refundable grant to finance a satellite assembly, integration and testing facility.
• A USD 30 mn loan agreement with the Kuwait Fund for Arab Economic Development to participate in the Egypt-Saudi Arabia Electricity Interconnection Project.
• A presidential pardon ahead of the 25 January celebrations.
• Proceeding with Egyptian Electricity Holding Co. and Mohamed Turki Mott MacDonald Engineering Consultancy negotiations and inking an MoU to build a 4,000 MW coal power plant on a BOO or BOOT basis over three phases.
• Two conditional contracts with Chinese firms, Dongfang Electric Corporation and Shanghai Electric, for coal-fired power plants (more in the Energy section).
• Forming a multi-ministry technical committee to study investable opportunities in Marsa Matrouh and prepare a report on their status.

Prime Minister Sherif Ismail chaired a meeting between the nation’s governors and the Cabinet Economic Group on Saturday to coordinate implementing development policies and improving services, according to an official press release. Among the top priorities: implementing the new Mineral Resources Act, opening more General Authority for Investment and Free Zones offices across the governorates, and expediting infrastructure and new urban community development projects. Ismail also instructed governors to facilitate licenses as part of the project to connect 1.2 mn homes to the national gas grid. Curbing inflation and raising supplies of essential goods through more cooperative outlets featured heavily on the agenda. The meeting also explored improving services, particularly in waste management with a new waste collection service to begin in Giza governorate. The meeting resulted in a decision to place 10% of social housing developments under the charge of regional governors, according to an emailed statement from the cabinet.

All churches torched following the dispersal of two pro-Morsi camps in August 2013 “will be fully restored this year,” President Abdel Fattah El Sisi said during the Coptic Christmas mass last Wednesday night. El Sisi attended the mass for the second year in a row and gave a speech in which he apologized for the delays in the church restoration efforts. You can watch the speech in full here (run time 9:57).

Volkswagen to announce EUR 170 mn car factory in Algeria: Volkswagen plans to build a EUR 170 mn car factory in Algeria with a production capacity of 100k cars per annum, according to Algerian daily Ennahar. The project is expected to be unveiled during Algerian Prime Minister Abdelmalek Sellal’s visit to Berlin on Tuesday. The facility is expected to produce the Polo, the Skoda Octavia and the Amarok pickup line.

We’re not alone: The Central Bank of Sudan has imposed import controls to curb FX shortages, Al Mal reports. An import ban now applies to furniture, dairy products and plastic goods. The Sudanese pound has been in a freefall since South Sudan seceded in 2011, taking a significant chunk of oil revenue with it — a primary source of FX liquidity.

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Tensions in the Gulf: Iran has accused a Saudi-led coalition of “deliberately” bombing Iran’s embassy in Yemen, according to the BBC. “State media quoted a foreign ministry spokesman as saying members of staff had been wounded in an airstrike.” The coalition denied the allegation in a statement carried by the Saudi Press Agency. Al Masry Al Youm reported that Iran escalated its response, banning the import of all Saudi products. It also threatened to take the issue to the UN, saying the strike “seriously wounded a guard,” according to the BBC.

The Economist landed the first on-the-record interview with Saudi Deputy Crown Prince Mohammed bin Salman, where in an almost offhand remark in the midst of the wide-ranging talk, says the country is considering floating shares of Saudi Aramco. The Economist has published the full transcript of the interview here.

The Economist provides some reactions to the snippet of a potential news story about a potential share float of Aramco. Noting “the talk is of at first floating only a small portion of the company in Riyadh, perhaps 5%,” the piece paraphrases analysts as saying Saudi “wants to protect its share of the global oil market by driving high-cost producers to the wall at a time when unconventional forms of oil, such as American shale, have had gushing success.”

The Wall Street Journal polls some analysts on the potential partial float of Saudi Aramco shares. “Some analysts said it would be strange for Saudi Aramco to list its shares when the oil market is in the midst of a deep price collapse, dropping more than two-thirds over the past 18 months to the lowest levels in more than a decade. But the sale would help bolster the kingdom’s coffers as it copes with a slump in income from oil sales… Raising a large sum of money would allow the energy giant to weather low crude prices for a few more years, said Chad Mabry, a senior energy analyst at brokerage FBR & Co.”

In other Saudi news: Pressure may be rising on KSA to abandon its peg to the USD, the FT reports, noting that “bets against the riyal are building. … The divergence between the USD / SAR spot rate and the 12 month forward rate hasn’t been so wide in at least four years.” FastFT (no paywall) has more, while the paper’s Katie Martin dives deeper in “Hedgies need to ride a Saudi white swan.”

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Mexico agrees to El Chapo extradition: Joaquin Guzman was recaptured by Mexican authorities on Friday, the Guardian reported, following his second escape from prison last July. Guzman heads the Sinaloa Cartel, described as the most powerful organization in the trafficking of illicit substances in the Western Hemisphere and possibly the world. Mexican Attorney General Arely Gomez’s office said on Saturday that Mexico will begin with El Chapo’s extradition, the BBC reports. El Chapo’s recapture was made possible by “Guzman’s intention to make a biographical film, for which he established contact with actresses and producers,” according to Gomez, AFP reported. The New York Times reports this morning that “Sean Penn sat for secret interview with El Chapo.”

Other international headlines this morning that either carry implications for Egypt or that are simply worth noting in brief:

• Goldman Sachs takes us on infographic journey of what lies ahead for the global automotive industry, from self-driving cars and the technology behind them to how emerging markets are set to dominate the industry’s growth.
• In the wake of the mass execution in Saudi Arabia, FT’s Simeon Kerr asks if Crown Prince and Interior Minister Mohammed bin Nayef is losing grip in a tug of war for power with Deputy Crown prince Mohamed Bin Salman. (Mohammed bin Nayef, Saudi strong man in a power struggle, paywall)

SPOTLIGHT on a series of terror attacks this weekend

It was a rough weekend on the national security front, with at least five terror-related incidents taking place, boding ill for an already-ailing tourism industry. Moreover, Egyptians have been reported kidnapped or arrested in Libya.

Armed assailants linked to Ansar Beit Al Maqdis shot and killed on Saturday a police colonel and a soldier in a police vehicle, Ahram Online reports. “Immediately after the incident several moving and fixed checkpoints were deployed in the Muneeb area in order to crack down on the attackers and catch them,” Reuters quotes a security source as saying. “Some elements belonging to our organization targeted a security checkpoint in Giza’s Abu El-Nomors town using light weapons, leaving all security personnel dead,” the militant group said in a statement released hours after the attack.

The Giza incident followed an attack on tourists in Hurghada on Friday that saw three tourists stabbed in the Bella Vista hotel, BBC reported. One of the assailants was killed and the other injured by police in the Red Sea resort after they stabbed two Austrian guests and a Swede, according to the Interior Ministry. While witnesses claim they saw one of the assailants with an ISIS flag, no group has so far claimed the attack. The Interior Ministry is calling the incident a criminal offence as the men carried only knives and a “pellet gun.” On its Facebook page, the hotel attributed the attacks to “two drugged young men.” Tourism Minister Hisham Zaazou has promised to beef up security measures after the attack, Reuters reports. “The welfare of the tourists visiting Egypt is of the greatest importance to us and will continue to be so. No stone will be left unturned to ensure their security,” Zaazou said. So far flights to the resort town are continuing as normal, according to the Independent.

Gunfights near two hotels in Giza in Thursday: Police were involved in gunfights in two separate incidents at two hotels in Giza on Thursday, according to a set of statements from the Interior Ministry. One incident took place near the Three Pyramids Hotel, where a group of approximately 15 reportedly gathered before setting off fireworks targeting nearby police, according to the MOI. Gunfire was exchanged following the fire of a homemade pellet gun from the crowd, which rained down on a nearby tour bus, with no reported injuries. (Read in Arabic)

The bus was carrying a group of Israeli Arab tourists, and ISIS on Friday claimed responsibility for the Three Pyramids incident, Reuters reported. According to the ISIS statement (Arabic), assailants carried out the attack on Thursday in response to a call by the group’s leader Abu Bakr al-Baghdadi to target Jews “everywhere.” Reuters notes: “One gunman was arrested at the scene and security forces surrounded the other attacker in another part of Cairo,” citing unnamed security sources.

The New York Times’ new bureau chief Declan Walsh, however, described the attackers as “supporters of the Muslim Brotherhood,” without any further clarification on who stated the outlawed group was involved, as it was not mentioned in the MOI’s statement. Walsh further noted: “One Israeli tourist suggested that the events had been more serious than Egyptian officials were portraying, telling The Associated Press that the attackers had also tried to throw firebombs at the bus.”

In a separate incident, police exchanged gunfire with a suspect near the Amarante Hotel in Giza, who escaped before his reported capture on Saturday, according to the Interior Ministry. (Read in Arabic)

Finally: Egypt is looking into the authenticity of reports that 21 nationals from Minya were abducted or arrested in Libya, the Foreign Ministry said on Friday. Egypt’s ambassador to Libya Mohamed Abu Bakr is attempting to verify the reports, which appeared on Thursday on El Fagr, through diplomatic channels. In February 2015, Daesh released a video showing the beheading of 20 Egyptian Copts on a beach the group claimed was in Tripoli.

EGYPT IN THE NEWS

Of mosque and state: Declan Walsh writes for The New York Times about Egyptian President Abdel Fattah El Sisi’s increasingly troubling use of religion to bolster legitimacy. Tensions between the president and state-funded Al Azhar came to a head when the president called publically for “religious revolution” to curtail extremism. “Some clerics appeared to take Mr. Sisi’s speech last year as an attack on the integrity of Al Azhar itself,” said Nathan J. Brown, a professor of political science and international affairs at George Washington University who specializes in the Middle East.

Also worth checking out this morning is Walsh’s “Egypt’s Parliament Prepares for Session With Some Familiar Names,” which looks at prospects for the incoming House of Representatives. The piece opens with a beautiful description of constituency relations, Egypt style: “As his jeep careened along a narrow country road, swerving to avoid slower traffic, newly elected parliamentarian Talaat el-Sewedy juggled two cellphones as he fielded a barrage of demands from supporters. One woman sought money to refurbish the bathroom of her new apartment. Several constituents asked for government jobs. An elderly man, who said he was on his deathbed, wanted to get his police officer son transferred to a better district. A military general needed to find a suitable bride for his son.”

WORTH READING

CSI Myths: The Shaky Science Behind Forensics: A landmark 4-year study in 2009 found some of the foundations of forensic science, including fingerprinting and ballistics, may prove unreliable. Breeze through the 328-page report (pdf) on your lunch break or read the summary in Popular Mechanics.

IMAGE OF THE DAY

Color-coded map of the United States illustrating areas of influence of major Mexican transnational criminal organizations, with regions under the influence of El Chapo’s Sinaloa Cartel shaded in orange. (View image by U.S. DEA, via Business Insider)

WORTH WATCHING

The true-life murder story everyone is watching and talking about: Making a Murderer. Netflix has smartly timed its worldwide expansion (see Speed Round, above) just weeks following the release of the 10-episode documentary Making a Murderer, which was filmed over the course of ten years and follows a set of crimes taking place years apart in a small town in Wisconsin. The series has an approval rating of 97% on Rotten Tomatoes. (Watch the trailer, running time: 2:55. Not a subscriber? Netflix has uploaded the first episode in its entirety on YouTube, running time: 1 hour, 5 minutes)

DIPLOMACY + FOREIGN TRADE

Egypt asks Israel to keep Turkey away from Gaza: Egypt has expressed reservations over reconciliation talks between Turkey and Israel, unnamed Israeli officials told Haaretz. Barak Ravid notes: “Turkish Hürriyet Daily News reported that Turkey demanded that Israel grants it “unlimited access” in providing aid to the Gaza Strip,” as part of the proposed terms of the resumption of ties.

Supply Minister Khaled Hanafy discussed exporting products of the Food Industries Holding Company to Cyprus during a meeting with Cypriot Agriculture Minister Nicos Kouyialis on Friday, according to Daily News Egypt. The agreement would open up new export markets in the EU, according to the State Information Service. Bilateral trade between Egypt and Cyprus was valued EUR 67.5 mn 2013 — the last available figure. The volume of bilateral trade between Egypt and the EU from January to October 2015 was USD 16.2 bn, with Egypt exporting the value of USD3.8 bn, according to DNE.

ENERGY

Gov’t approves two Chinese power plant proposals
Egypt’s Cabinet approved two conditional contracts with Chinese firms for coal-fired power plants, Reuters reported. “China’s Dongfang Electric Corporation plans to build a plant with a capacity of 1,980 MW while Shanghai Electric submitted an offer to construct four plants with a combined capacity of 2,400 MW,” the newswire quotes Electricity Minister Mohamed Shaker as saying. The investment value of both contracts remains unclear. Al Mal is reporting that the Electricity Ministry’s coal power plant contracts with Chinese companies will generate 4 GW and are part of a strategy to have coal constitute 5% of total power production by 2018. (Read)

EGPC postpones tender on oil price concerns
EGPC has postponed offering new oil and gas E&P tenders in 10 areas until the price of oil stabilizes, EGPC Chairman Mohamed El Masry said. Security approvals for the sites have already been obtained, but El Masry says the low oil price currently is not conducive to new investment. However, he believes there is significant production potential from sites in the Western Desert, West Delta and the Mediterranean, where there are still large amounts of undiscovered gas. (Read)

INFRASTRUCTURE

Orascom Construction fully utilizes capital increase proceeds
Orascom Construction (OC) sent a disclosure to the EGX detailing that it used the proceeds of its capital increase fully. The amounts raised were used to pay off outstanding debt to affiliates and to fund OC’s working capital. OC also said it was on track with its power plant, infrastructure and road projects. (Read in Arabic)

EGP 1 bn development plan for Hadayek October
The Sixth of October City Authority announced an infrastructure development plan for Hadayek October with an estimated value of EGP 1 bn. The plan includes water and sewage networks as well as pumping stations, road work on the main arteries to the city and public service buildings, said head of the authority Essam El Badawy. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

Egypt’s new restrictions on wheat could delay supplies
Egypt imposed new restrictive measures on its wheat imports that alarmed traders and drove them to threaten to boycott future tenders, Reuters reported. “The new requirement — for a complete absence of ergot, a common fungus found in grains — could disrupt the country’s supply chain for bread,” traders told the newswire. Egypt’s GASC used to allow for a 0.05% ergot level, “but the agricultural quarantine authority said all incoming shipments above zero would be barred.” One trader said GASC was acting “unwisely in the ergot issue as they already have enough problems with delays in opening [letters of credit] without introducing other issues into their supply chain which could cause disruption.” Another trader noted it would be impossible to ensure zero ergot. (Read)

Centamin forecasts higher production at Sukari mine this year
Centamin expects to produce 470k ounces of gold at its Sukari mine in Egypt this year, up 7%, Reuters reports. The company also expects cash operating costs for the year to fall to USD 680 per ounce from USD 700 last year and all-in-sustaining costs to USD 900 per ounce from USD 950 last year. (Read)

MANUFACTURING

EGAS launches plan to receive dues from industrial sector
EGAS has launched a new plan to receive its dues from the industrial sector, an unnamed source told Al Shorouk. EGAS asked the domestic gas distribution companies to forward the study of the structural plan of the debts to the industrial sector to compare them with their estimated gas usage debts, the source added. Once agreed upon, the factories will sign off on multiple cheques ahead of cashing them in. The industrial sector’s debts to EGAS rose EGP 3 bn to EGP 15 bn in FY2014/15 from EGP 12 bn. (Read in Arabic)

Suggested gas pricing scheme can save EGP 1.8 bn, say fertilizer manufacturers
A new unified gas pricing scheme for nitrogen fertilizer manufacturers, presented in a study to the Chamber of Chemical Industries, can save EGP 1.8 bn, Al Shorouk reported. The new scheme suggests tying the price of the gas to the selling price of the fertilizer, by selling gas to companies at USD 4 per mmBtu when the average price of urea fertilizers is USD 230 per ton, and increasing the gas price by USD 0.01 for every USD 1 increase to the average fertilizer price. The study was conducted jointly by the Abu Qir Fertilizer Company, Delta Company for Fertilizers, AlexFert and the Helwan Fertilizers Company. (Read in Arabic)

REAL ESTATE + HOUSING

Maxim Holding begins development of EGP 4 bn tourist resort
Tourism Investment Company Maxim Holding began the first phase development of a EGP 4 bn tourist resort in Sidi Abdel Rahman in the North Coast, Al Borsa reports. The first phase will see the development of 1,550 hotel rooms on a 1,600 feddan plot of land. The deal with Maxim was inked at the Marsa Matrouh development conference last October. The resort is part of a larger project to build a EGP 14 bn city with seven hotels, 25,000 homes, a hospital, schools and a university. (Read in Arabic)

TOURISM

Travel agency is responsible for tourists’ death in Egypt, says Mexico’s Foreign Minister
A probe into the airstrike that killed eight Mexican tourists last September found that the travel agency hired was to blame for their deaths, Mexico’s Foreign Minister Claudia Ruiz announced. Ruiz said Egypt’s Tourism Ministry “found that the administrative authorities and the travel agency should have had more clarity on the permit and in that sense would eventually be responsible.” Egypt had promised a full inquiry into the incident. (Read)

BANKING + FINANCE

NBE to settle EGP 450 mn worth of NPLs
The National Bank of Egypt (NBE) is close to inking settlements for EGP 450 mn worth of non-performing loans, sources within the bank told Al Mal. The majority of the clients come from the tourism sector, the source added without giving any details. NBE is following through with the CBE’s directive to support the tourism sector by restructuring loans and postponing installments for six months free of interest payments and fines. In December, NBE delayed the collection of EGP 1.2 bn in tourism sector loans, board member Yehia Abou El Fotouh announced. (Read in Arabic)

EGX agrees to extend Kuwait’s Al Salam Group listing period to May
The EGX has extended the listing and offering period for Kuwait’s Al Salam Group until May, Daily News Egypt quotes CEO Mohamed Maher of Prime Holding, the financial advisor on the listing, as saying. The delay is caused by the Kuwait Capital Market Authority setting more requirements for the company, says Maher. The group plans to have 30% of its shares converted to Egyptian depositary receipts (EDRs) and traded on the EGX by July of this year. (Read)

LEGISLATION + POLICY

Sukuk law ready, will not include selling state assets
The drafting of a sukuk law has been completed, a Finance Ministry source told Al Masry Al Youm. The law will not allow for the sale or mortgage of state assets, the source added. Concerns were raised in 2012 after a draft law, issued by the Morsi administration, allowed the government to rent or mortgage state assets. A Sharia committee will be formed to approve any issuance. The draft law will be presented to Al Azhar and the Finance Ministry for approval before it goes to the House of Representatives. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

El Sisi to deliver state of the nation to parliament, pardon 100 convicts for 25 January anniversary
President Abdel Fattah El Sisi is expected to give a state of the nation address to the parliament sometime around the fifth anniversary of the 25 January Revolution, Al Shorouk quotes unnamed sources as saying. Although the date of the speech was not specified, the sources say it will take place after parliament has been in place for 15 days and deliberates and votes on the government’s programs and legislations passed since 2013. The president is also expected to issue pardons for 100 convicts for the anniversary. Government sources speaking to Al Masry Al Youm state that the list will not include Ahmed Maher, the founder of 6 April Movement, and other members of the organization that played a leading role in the events of 25 January.

No mistakes in Finance Ministry’s data, spokesperson says
There are no mistakes in the Finance Ministry’s FY2014/15 closing data, the ministry’s spokesperson said, denying reports to the contrary. All technical and accounting rules were followed in the preparation of the accounts. He also noted that settlements were made to facilitate the financial disentanglement between state institutions, as decided by the cabinet. The spokesperson also explained the classification of some of the closing account items. (Read in Arabic)

ON YOUR WAY OUT

President announces youth initiative: Banks will provide EGP 200 bn in SME financing over the next four years, says President Abdel Fattah El Sisi. The move will see SMEs constitute 20% of the sector’s loan portfolio, El Sisi adds. Furthermore, the central bank will launch an initiative to support SMEs by setting up loans with a 5% return rate, Al Borsa reports. The move is part of a series of decisions announced by the president meant to improve the economic prospects of Egyptian youth. These include reserving land in the 1.5 mn feddan project for young people, updating the school curriculum and completing 145k housing units for young people this year, according to Al Ahram.

Court annuls EGP 100 mn ruling against Bassem Youssef: An appellate court annulled a 2014 ruling by the Cairo Regional Centre for International Commercial Arbitration (CRCICA) on Thursday, Ahram Online reported. The court annulled an earlier ruling that had previously ordered Bassem Youssef and his production company QSoft to pay EGP 100 mn in compensation to CBC Egypt for breach of contract. CBC had sued in response to QSoft terminating its contract with the satellite television network, which in turn had been in response to CBC cancelling Youssef’s comedy sketch show El Bernameg.

Egyptians abroad will be able to repatriate the full value of their investments in Egypt, CBE Governor Tarek Amer confirmed, as quoted by Al Shorouk. Immigration Minister Nabila Makram Ebeid also said there are no concerns over expatriates’ ability to repatriate their investments should they seek to liquidate them for any reason. We note, however, that both Amer and Ebeid’s statements made no mention of whether or not repatriating profits was possible.

And one day, cloven-footed animals will fly: Preparations to relocate the Mugamma’ should be complete by mid-2017 and not mid-2016, announced Cairo Governor Galal Mostafa. The Mugamma’ houses 30k employees and is frequented by 100k people daily, he notes. (Some of us have been reporting on this story for 15 years now, so forgive us for not holding our breath for mid-2017.)

Science 101 with the Governor of Suez: Egypt is endowed with “the best location in world,” Suez Governor Ahmed El Hayatmy said on video. The ice caps melting will drown parts of the European continent, but will leave Egypt unharmed because it is not in close proximity to any ocean, he added. He topped it off by saying Egypt is shielded from missile attacks by northwesterly winds. (Run time 01:19)

Ethiopia is being hit with the worst drought in 50 years. It is “eroding harvests of everything from corn to sorghum,” Bloomberg reports. “It’s a really scary situation … In part of the country, there were two bad seasons in a row,” a UN FAO economist says.