Ford was interested in assembling in Egypt — until it was spooked by GM’s FX-induced temporary shutdown, insider says

TL;DR

Is Ford backing off Egypt investment plan? (Speed Round)

CIB signs share purchase agreement with OTMT on CI Capital sale, Hisham Ramez is returning to CIB. (Speed Round)

Due diligence puts Abraaj’s Misr Cafe acquisition at EGP 700-800 mn. (Speed Round)

90% of TE’s board to be changed by mid-March. (Speed Round)

Nabil Elaraby not seeking second term as Arab League Secretary General; Aboul Gheit favoured as successor (Speed Round)

Consumers charged based on feed in tariff for part of electricity consumption. (Energy)

Apache to slash spending, prioritise Egypt, North Sea operations. (Energy)

Grim outlook for FDI in auto industry, insiders claim; prices up 5% on supply constraints. (Automotive + Transport)

Suez Canal Zone approves new registration, licensing procedures for foreign companies. (Egypt Politics + Economics)

El Sisi expected to sign financing agreements, MoUs during Asia tour. (Diplomacy + Foreign Trade)

By the Numbers

WHAT WE’RE TRACKING TODAY

** OUR GCC EDITION GOES LIVE TOMORROW — that’s Tuesday, 1 March 2015, one day later than planned because we can’t count. Our apologies for the inconvenience. You can sign up here to receive your own copy. And if you’re interested in having coffee while we’re in Dubai next week, do drop us a note: patrick@enterprisemea.com.

Export-Import Bank of United States Chairman Fred P. Hochberg is in Cairo today to meet with government officials and private sector leaders to explore opportunities for trade and investment in Egypt.

It’s leap day today, so everyone born on 29 February can celebrate on their actual birthday this year. Wired explains why leap years exist. The National Geographic explains that the ancient Egyptians made up for deficiencies in their calendar by partying: “When the Egyptians adopted this calendar they were aware that there was a problem, but they didn’t add any more days to the calendar. … They just added an extra five days of festivals, of partying, at the end of the year.” And The Guardian asks (tongue in cheek) whether 29 February is a capitalist conspiracy.

The Oscars are on right now, having kicked off at about 3:30am CLT. Our liveblog of choice for the results is over at the New York Times.

WHAT WE’RE TRACKING THIS WEEK

The second Egyptian Tourism Investment Briefing, sponsored by Sahl Hasheesh, gets underway tomorrow at 9:30am at the Ritz-Carlton. More than 100 industry players including global brands, domestic and regional investors, and bankers will gather for the event, which will include an opening note from Tourism Minister Hisham Zaazou. We’ve seen the list of confirmed attendees, and it looks great. Contact the organizers via their website (they organize the Arab world version of the same gathering) or check out the current version of the agenda here (pdf download).

President Abdel Fattah El Sisi is expected to be in South Korea on 3 March to meet with President Park Geun-hye, the prime minister and the speaker of parliament. The president is also expected to sign a declaration on the promotion of relations to the level of Comprehensive Partnership and Cooperation between the two countries, according to an Ittihadiya statement. We’re told that El Sisi will be met in Korea by an Egyptian business delegation headed by GB Auto’s Raouf Ghabbour. Qalaa’s Ahmed Heikal is also expected to attend, among others.

CBE governor Tarek Amer and a number of banking leaders will take part in the Builders of Egypt Forum on Tuesday to talk about the role of the banking sector in financing major national projects, DNE reports.

ON THE HORIZON

The government plans to present its program to parliament next week after bylaws are issued on Wednesday and permanent committees are formed early next week, MPs tell DNE.

The 12th Annual EFG Hermes One on One 2016 runs next week from 7-9 March (Monday-Wednesday) atAtlantis, The Palm in Dubai.

LAST NIGHT’S TALK SHOWS

Lamis El Hadidy on CBC Egypt had a call-in from MP Alaa Abdel Moneim, who today recommended that MP Kamal Ahmed be questioned after repeatedly assaulting fellow Rep. Tawfiq Okasha with a shoe in the chamber today. Ahmed allegedly assaulted Okasha after the latter hosted Israeli Ambassador Haim Koren at his home for dinner. Near the end of the call, Abdel Moneim said the entire matter didn’t deserve mention, and El Hadidy agreed, saying that she hadn’t wanted to cover the issue. We’ll take our cue from El Hadidy and declare the rest of her episode needs no further coverage.

On Al Kahera Wal Nas, Ibrahim Eissa hosted in his studio former finance minister Ahmed Galal to discuss Egypt’s economic policy from 30 June to the present. Galal said he was offered a position in the Cabinet a number of times over the past few years, but declined. With all due respect to Dr. Ahmed Galal, who is an esteemed economist, there was little in the interview with which a casual observer of Egypt wouldn’t already be familiar. (Watch in Arabic, running time: 48:43)

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SPEED ROUND

Is Ford backing out of expanding in Egypt? Ford abruptly and indefinitely postponed a visit scheduled to take place on 14 February to explore opening an assembly facility in Egypt, giving no explanation for the move, according to Adel Badeer, head of the Transportation Division of the Federation of Egyptian Industries. The decision was taken during the week-long shutdown of General Motors’ assembly plant on the back of the FX crunch; GM’s shutdown ended on 14 February, Badeer tells Al Masry Al Youm, blaming the situation for Ford’s decision to back out.

CIB has signed a share purchase agreement with Orascom Telecom Media and Technology Holding (OTMT) for the acquisition of CI Capital, Reuters reports. The two parties will “move forward to complete said transaction, with the aim of finalizing it before the end of the first quarter of 2016, after obtaining all necessary approvals,” according to a CIB statement. Earlier yesterday, the EGX had suspended trading on OTMT and Beltone Financial shares with the bourse seeking more details on the financing of the acquisition. Al Mal writes Beltone is yet to clarify its source of funding and anonymous sources told it that the expected statement from the company will not include any new developments. Al Borsa reports that it has the scoop: a source is saying that Bank Audi and Bank of Alexandria leading on a EGP 1 bn loan to finance the transaction. The facility will reportedly be ready for release as early as tomorrow (1 March).

In other CIB-related news this morning, former Central Bank of Egypt Governor Hisham Ramez is returning to CIB, where he has been appointed managing director and vice chairman at CIB, the bank announced. “Mr. Ramez will be overseeing the overall business of the bank and managing day-to-day operations, where he will be responsible for both key business lines i.e. consumer and institutional banking as well as the COO area … [he] will be focusing on the bank’s strategic issues in addition to overseeing the regulatory functions of the bank,” a CIB statement said. Chairman Hisham Ezz Al-Arab will be responsible for strategy and regulatory matters. Ramez was deputy governor of the central bank from 2007 until being named vice-chair and MD of CIB in 2011, then returned to the central bank in 2013 as governor. Sources say Ramez awaits CBE approval to officially assume his new role, Al Masry Al Youm writes.

MOVES- Juhayna Food Industries has appointed Seifeldin Thabet as CEO and deputy chairman of the company, reporting directly to Juhayna’s Executive Chairman of the Board Safwan Thabet, according to an emailed statement.

Domty is expected to raise EGP 300 mn from its IPO, which will take place in the second half of March, says EFG Hermes’ Mostafa El Chiaty. The Egyptian Financial Supervisory Authority has no objection to the fair value report by Pharos Holding. This will be the first IPO of the year, Al Borsa reports

Abraaj could pay as much as EGP 700-800 mn to acquire Misr Cafe, according to Al Borsa. Abraaj, which has been in talks for the acquisition of Misr Cafe for the past six months and reportedly completed due diligence a few weeks back. Sources tell Al Borsa that the transaction is expected to be completed in 2Q2016.

Nabil Elaraby is not seeking second term as Arab League Secretary General, saying he has no intention to run for a second term after his current term expires on 1 July 2016, the Foreign Ministry reports. The former foreign minister has held the post since July 2011. President Abdel Fattah El Sisi is pushing for another Egyptian diplomat with a wealth of experience, according to Foreign Ministry spokesperson Ahmed Abu Zeid. President Abdel Fattah El Sisi issued a statement on the issue, saying “Elaraby has dedicated his time and effort as well his legal and diplomatic expertise to serve Arab causes and defend the interests of Arab countries and their people at a critical time and against grave challenges.”

Is Ahmed Aboul Gheit in the running? The former Egyptian foreign minister is said to have been nominated yesterday by Egypt to fill the post, Aswat Masriya reports.

The European Union fears migrant smugglers are reviving a route from Egypt, according to Reuters. The issue is increasing after “a quiet year,” an EU official says, and concerns are being raised “about Islamist militants from Sinai using the route to reach Greece or Italy.” Reuters reports that although the EU continues to be concerned that Egyptian authorities are not stopping smugglers, it “is reluctant to use aid and trade ties to pressure Cairo to do more when Egypt remains an ally in an increasingly troubled region.” An EU official acknowledges that “controls in Egypt are strict,” but the EU suspects that sometimes Egypt turns “a blind eye to let migrants go somewhere else.”

90% of TE’s board to be changed by mid-March: 10 of Telecom Egypt’s (TE) board members will be replaced by mid-march, CIT Ministry source told Amwal Al Ghad. The new appointees will be tasked with reformulating the growth strategy for the company and with improving the work environment. Chairman Mohamed Salem had submitted his resignation when Yasser Al Kady was appointed CIT Minister.

THE MACRO PICTURE

Global stocks, and MENA ones in particular, rallied today on comments from China’s central bank governor about combating currency speculation. China has also halted two outbound investment schemes in its latest bid to stem capital outflows and shore up the CNY, according to unnamed sources speaking to the FT (paywall).

Saudi Arabia is drawing up a strategy to convince US companies to invest in the kingdom to plug the gap caused by the drop in oil prices, according to the FT (paywall). “The point is to attract inflows of cash and create jobs, which is why there is a focus on retail and healthcare, which are both labour intensive sectors,” said one Saudi banker with knowledge of the plans. Bloomberg writes that GCC countries may struggle to refinance USD 94 bn in debt over the next two years due to the oil slump, according to HSBC Holdings. Gulf petrostates have to refinance USD 52 bn in bonds and USD 42 bn in syndicated loans, mostly in the UAE and Qatar, HSBC. They also face a fiscal and current account deficit of USD 395 bn over the same period. HSBC’s Simon Williams is also name-checked by Business Insider, which runs the story with a twist under the headline “These charts show the huge debt mountain that Gulf states have to climb.”

And Saudi Arabia, it seems, is behind the slowdown crimping Italy’s economic recovery, writes the FT (paywall). Saudi Arabia — along with Russia, another struggling oil-producing nation — has cut purchases in some industries in Italy due to the oil price drop, leaving some worried about the trajectory of the economy.

EGYPT IN THE NEWS

Controversial MP and accidental comedian Tawfik Okasha was attacked in the House of Representatives on Sunday for inviting Israeli ambassador Haim Koren to dinner, Reuters reports. Kamal Ahmed, the senior-most MP, hurled a shoe at him (watch here, run time 1:40), while over 100 parliament members signed a statement rejecting the normalization of ties with Israel and demanding an investigation into Okasha’s actions. Parliament has reportedly agreed to refer Okasha to a special investigation committee, Reuters Arabic writes. The Israeli press is all over the story, naturally, as is the AP.

If you couldn’t already tell by our top story in this section, it was a bit of a slows night last night, with the other lading story on Egypt in the international press being that it plans to extradite a French citizen to the Dominican Republic where he is wanted for his “alleged role in helping two French pilots convicted of cocaine trafficking escape by flying across the Atlantic,” according to the AP. Christophe Naudin was arrested while travelling in Cairo earlier this month. The Dominican Republic issued arrest warrants for him and two other French men suspected to have helped  the pilots.

WORTH READING

Forcing Apple to Hack that iPhone Sets a Dangerous Precedent, Wired Magazine. “At first glance, the issue seems simple: Why shouldn’t law enforcement have access to information that could help us hunt down other terrorists or even to help prevent other terrorist attacks in the future? But this simplification overlooks the reason why companies have built their systems so securely to begin with: namely, to prevent criminals, terrorists and hackers from gaining access to our private and sensitive information.” And to any of our readers who don’t reside in the United States and who don’t believe that this battle between Apple and the FBI affects them: Understand that a backdoor may ultimately be exploitable not only by the government of the United States. This story is shaping up to be one of the greater struggles over privacy of our time and many are still woefully unclear on the issues — or completely unaware that it’s taking place. (Read)

WORTH WATCHING

Chris Rock had to walk a lot of fine lines during his opening monologue at the 88th Academy Awards, (which started around 3:30 am Cairo local time) given the controversy and boycott of this year’s awards by several prominent black actors, including Will Smith, over the lack of any nominations to black actors. Chris Rock did well, for the most part. (Watch, running time: 10:02)

DIPLOMACY + FOREIGN TRADE

President Abdel Fattah El Sisi is expected to sign a number of financing agreements during his visit to Japan, netting as much as USD 500 mn, Al Masry Al Youm reports. The agreements include facilities for the development of Borg El Arab airport, increasing electricity transmission efficiency, and building a solar power station in Hurghada. The loans include a 0.1-0.3% interest rate and a repayment schedule of 40 years. The president’s agenda will also focus on education cooperation, Al Ahram reports. In an interview with Japanese news outlet Asahi Shimbun, El Sisi stated that he wants to send 100k Egyptian students to study in Japan. The interview also focused on regional security issues, with the president declaring his support of the US-led coalition against Daesh, but criticized its lack of efficacy to stop the group, Ahram Online reports. “If Libya collapses it could act as a springboard for terrorism to expand to neighbouring countries such as Tunisia, Algeria, Egypt and even outside to Europe,” said the president, who ruled out a military intervention.

The Egyptian Electricity Holding Company is expected to sign 11 MoUs for power and energy projects during President Abdel Fattah El Sisi’s trip to Japan and Korea, a government source tells Al Borsa. These MoUs include: one with a Mitsubishi-Hitachi consortium for two 2 GW plants in Marsa Matrouh; a 2 GW coal-fired plant with Marubeni-El Sewedy consortium also in Matrouh; and a 2GW plant to power a desalination station in Sidi Shebeeb with Toyota Tsusho. The president and International Cooperation Minister Sahar Nasr are expected to sign a USD 115 mn loan from the Export-Import Bank of Korea. The 40-year term loan will have an interest rate of 0.15% and will be used to fund the development of railway traffic systems for the Naga Hamadi-Luxor lines.

ENERGY

Consumers to be charged based on feed in tariff for part of electricity consumption
The government will start charging consumers for part of their electricity consumption based on the feed-in-tariff within weeks, Al Borsa says. This will transfer part of the cost of generating electricity from renewables to the consumers based on a three-tier system based on their consumption levels. The Electricity Ministry is working on finalising this new system in March to guarantee it is ready before the FY2016-17 budget is passed. (Read in Arabic)

Apache to slash spending, prioritise Egypt, North Sea operations
Apache Corporation is cutting its capital expenditure by more than half this year, saying it is allocating USD 1.4-1.6 bn for it in 2016 after the drop in oil prices. The capital expenditure will be split roughly equally between maintenance, development, and exploration. Operations in the North Sea and Egypt will be prioritised. (Read)

Electricity Ministry in final stages of procedures with Al Nowais to build coal-powered plant
The Electricity Ministry is completing legal and contractual procedures ahead of the final agreement with Abu Dhabi-based Al Nowais Investments to build a coal-powered plant in Eyoun Moussa, sources within the ministry tell Al Borsa. The Egyptian Electricity Holding Company had signed an MoU with the company in September 2015 to build a 2,640 MW coal-powered plant which on a build, own, operate basis. (Read in Arabic)

INFRASTRUCTURE

General Authority for Roads and Bridges to complete Ring Road renovations by April
Maintenance and renovations on the Ring Road will be completed by April at a total cost of EGP 105 mn, according to head of the General Authority for Roads and Bridges Adel Tork. The maintenance project involves increasing road efficiency and capacity, he adds. The authority is also building a two-way support road between the Autostrad and the Cairo-Ismailia Desert Road at a total cost of EGP 400 mn to alleviate traffic congestion, says Tork. (Read in Arabic)

MANUFACTURING

Federation of Industries welcomes move on ‘industrial register,’ automotive manufacturing standards
Al-Ahram runs with a bait-and-switch headline, quoting FEI Engineering Industries Division chief Hamdy Abdel Aziz as noting that the government plans to introduce legislation simplifying the steps through which industrial companies need to go to obtain an operating license. The story, however, focuses on what it claims are new measures to impose domestic standards for the automobile assembly industry starting in summer 2017. Al-Shorouk has additional commentary from Abdel Aziz welcoming the move to cut red tape and saying that while industry doesn’t need protection from imports, it does need to be able to compete on an even footing. Amwal Al Ghad has a deeper dive into the Egypt Organization for Standardization and Quality’s new car manufacturing standards, quoting authority chairman Hassan Abdel Meguid. The 42 standards will be phased in over three years beginning in July 2016, he said.

GB Auto negotiates with gov’t for land plot for factories
GB Auto is negotiating with the government for land on which to build a two- and three-wheeler factory and a car tire factory, according to Chief Investments Officer Mena Sadek. Construction could begin as early as the end of the first quarter, Al Mal quotes Sadek as saying. (Read in Arabic)

REAL ESTATE + HOUSING

Mokhtar Ibrahim Company awarded EGP 79 mn infrastructure tender in Beni Suef
The Mokhtar Ibrahim Company was awarded a tender worth EGP 79 mn to extend infrastructure to 400 feddans as part of the the New Beni Suef expansions, Al Borsa reports. Ten companies had submitted proposals, with Mokhtar Ibrahim’s technical bid chosen in favour of the Arab Contractors, says head of the New Beni Suef City Authority Nour Ismail. The duration of the project is two years. (Read in Arabic)

TELECOMS + ICT

Mobile network operators build telecom towers in South Sinai
Vodafone Egypt, Mobinil, and Etisalat Misr are building 11 telecom towers in South Sinai that will be shared by all three companies as a means to strengthen network coverage, sources tell Al Mal. The towers are expected to be operational within two months at a total cost of EGP 30 mn to be financed through the ICT Ministry’s Universal Services Fund. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

Auto industry experts see grim outlook for foreign investment this year
It would appear that foreign car companies may be unwilling to open up shop in Egypt as a result of the gradual move to eliminate tariffs on EU car imports by 2019 and a lack of word coming out of the government on the automotive directive. At least that is the consensus among automobile sector insiders speaking to Al Mal, including AMIC’s Ra’fat Masrooga. He is skeptical of CBE Governor Tarek Amer’s statement from last week of 18-year protections offered to the auto industry to encourage exports to neighboring markets, saying that this will be unlikely in light of a lack of framework governing manufacturing and exports in Egypt and a lack of proper incentives to encourage foreign investments. This last point was stressed by head of the Auto Distributors Division of the Cairo Chamber of Commerce Affat Abdel Atty and head of Egyptian Automobile Manufacturers Association Hussein Mustafa. (Read in Arabic)

Car prices rise 5% due to supply shortage
Car prices have risen 5% as a result of a reduction in the supply of imported and locally assembled cars, says head of the Transportation Division of the Cairo Chamber of Commerce Adel Badeer. He goes on to cite an AMIC report that projects a 20% drop in the number of cars in Egypt due to the FX crunch, which has led assembling facilities to operate at 70% of their capacity. (Read in Arabic)

Transportation Ministry trial launches Nile Taxi from Helwan to Al Qanatir
The Ministry of Transportation is launching the trial run of the Nile taxi from Helwan to Al Qanatir passing through Maadi, said Ministry spokesperson Ahmed Ibrahim. The project will be expanded to include the rest of the governorates if it is successful, he adds. The project comes as part of the ministry’s initiative to increase Nile’s share of total transportation domestically to 10% instead of the current 1.1%, adds Ibrahim. (Read in Arabic)

BANKING + FINANCE

Banks begin selling Belady bills online today
The CBE’s new USD-backed bills for expatriates, dubbed “Belady” bills, will be sold to expats online through the websites of the big three state-owned banks (NBE, Banque Misr, and Banque du Caire). The banks will begin accepting orders this morning and will require a copy of the buyer’s passport, residency, and address in addition to filling out an order form online. (Read in Arabic)

Al Watany Bank of Egypt negotiates USD 10 mn loan from international lender
The Al Watany Bank of Egypt is negotiating a USD 10 mn loan from an international finance company, sources tell Al Shorouk. The loan will be used to finance small and medium sized businesses, the sources added. The bank recently received a USD 75 mn loan from the International Finance Corporation (IFC) to strengthen SME financing, promote investment in renewable energy products, and strengthen the bank’s commercial activities. (Read in Arabic)

Agricultural credit bank studies loans to 10 companies
The Principal Bank for Development and Agricultural Credit is studying 10 loan requests to agricultural companies ranging between EGP 100 mn and EGP 250 mn, says bank Chairman Attia Salem. Some of the financing agreements are in their final stages, he adds, noting that his bank is looking to receive EGP 1 bn from the CBE as part of the EGP 5 bn allocated toward supporting medium-sized industrial and agricultural companies. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Finance Ministry seeks WBG opinion on efficacy of public spending
The Finance Ministry is tapping the World Bank Group (WBG) to assess the efficacy of its  health, education, and social spending. Government sources tell Al Borsa the move seeks to identify any shortfalls in spending and directions through which public spending could be made more efficient. The source adds that the assessment should be completed within two months. (Read in Arabic)

Suez Canal Zone approves new registration, licensing procedures for foreign companies
The General Authority for the Suez Canal Economic Zone’s board of directors approved procedures allowing companies to register in the zone using their commercial registry. The board also approved amendments governing the licensing of foreign companies in the zone, Al Mal reports. The board reviewed a number of MoUs for projects in the Suez Canal Development Project including: establishing a Russian industrial zone in the canal, establishing a Spanish industrial zone in East Port Said signed with a Spanish consortium, two MoUs with China, and MoUs with Mitsubishi, Hitachi, and Toyota. (Read in Arabic)

ON YOUR WAY OUT

Telecom operators don’t have the right to change your call tone (or ringback tone as it is known in other countries) to a Tamer Hosny song without your consent, the Consumer Protection Agency (CPA) says, as it violates users’ privacy. Al Masry Al Youm says the CPA has already sent the three telecom operators official warnings over this.

The French Ministry of Foreign Affairs has launched an Arabic Facebook page that includes information on foreign policy, as well as information for students, tourists, and investors, according to ministry spokesperson Roman Nadal.

Man makes quick call to parents so next week’s call to ask for money doesn’t seem that bad, by The Onion.