Sunday, 10 July 2016

Craft beer in Arab markets?

TL;DR

Now, where were we?

If you’re anything like us, you’re recovering from the first long weekend of Sahel, a transatlantic flight and / or the reintroduction of ethanolic beverages in your diet — and could probably do with a reminder of where we left off last week. Among the issues of broad importance making headlines before the Eid:

  • Egypt repaid debt to both Qatar and the Paris Club totaling more than USD 1.7 bn and there was speculation we may have opened informal talks with the IMF on a facility of as much as USD 10 bn.
  • Industry was worried EGAS will cut natural gas supplies to manufacturers for the coming two month as we pass through high demand season for electricity.
  • Mobile network operators faced the specter of foreign competition if they don’t take the 4G licenses on offer (and, of course, if there’s a foreign player out there interested in our market). The industry continues to bemoan the lack of FX, to fret about repatriation of funds and jockey for position, particularly over the fate of Telecom Egypt’s stake in Vodafone Egypt.
  • Bank managing directors found they could still face term limits, Central Bank of Egypt Governor Tarek Amer suggested, setting up continued conflict between industry and private-sector institutions despite a court ruling against the earlier imposition of the nine-year limit.
  • We seemed to be on the verge of a mini-IPO boomlet, with CIB’s CI Capital being the most recent to be rumored to want to file. We’ll have an updated IPO tracker for you soon.
  • And Beltone Financial said it is suing the heads of the Egyptian Financial Supervisory Authority and the EGX, claiming it was being unfairly treated.

What We’re Tracking Today

Answers to these three questions will set the agenda for business this week:

Are we about to face another round of devaluation? Central Bank of Egypt chief Tarek Amer hinted last week that further devaluation could be in the works when he said it had been a “big mistake” to defend the EGP over the past five years: “I will never be happy when the FX rate is stable but factories are not working … people need to know we are going through a challenging period.” Speculation got a shot in the arm last nightafter President Abdel Fattah El Sisi sat down for a talk with Prime Minister Sherif Ismail, Finance Minister Amr El-Garhy and Amer, according to an overnight statement from Ittihadiya. All eyes now turn to Tuesday’s scheduled FX auction.

(The parallel market is looking forward to the move, it seems: The USD strengthened against the EGP on the parallel market on the first working day after Eid El-Fitr, Al Mal reported, giving the rate as 11.10 EGP to the USD on Saturday, compared to 11.00 EGP before Eid. Reuters had cited traders quoting 11.05-11.08 before Eid. This comes as the CBE’s net foreign reserves rose to USD 17.55 bn at the end of June from USD 17.52 bn at May’s end, according to Reuters. At the start of July, Egypt made payments of USD 1.72 bn, split between USD 1 bn to return Qatar’s deposit at the CBE and USD 720 mn to repay Paris Club debts.)

Do we have a state budget yet? The state budget was approved by the House of Representatives at the end of last month — and House Speaker Ali Abdel Aal created confusion by saying the budget should have first been sent to the Council of State (Maglis El Dowla) for review. Technically, this means we don’t have a budget yet and are operating under last year’s until the new one is passed, no? The key: Amid poor reporting by the local press and in the absence of an official statement, did Abdel Aal order the budget sent to Maglis El Dowla? Or does he just think it should have been sent there? This much is clear: The budget doesn’t appear to have been published in the Official Gazette as yet, and readers of a certain age will recall it was distressingly common pre-2011 for laws to be struck down by the courts on procedural grounds for having failed to obtain Maglis El Dowla approval when necessary.

Did the PMI fall again in June? And is the effect more than seasonal?The Emirates NBD / Markit PMIs for Egypt, Saudi Arabia and the United Arab Emirates are due out today at about 6:15am CLT (that’s substantially earlier than usual — we’ve no clue why). You can check out the releases here when they’re out.

What We’re Tracking This Week

Expect your electricity bill to climb after cabinet approves new prices for power this week. The Ismail cabinet is mulling whether to hike prices for higher consumption tiers only or to raise them across the board, Al Borsa reports. While the Sisi administration has been shy about cutting subsidies for petroleum products, it has been willing to push through new electricity prices for both industry and consumers.

Investment Minister Dalia Khorshid and Trade Minister Tarek Kabil headed to Beijing for meetings with their Chinese counterparts on Monday and Wednesday to prepare for the G20 Hangzhou summit in September, Al Masry Al Youm reported. The meetings will focus on transport, power, renewable energy and housing agreements signed in the past year. The Egyptian delegation will also meet the heads of more than 15 companies to discuss investment opportunities in Egypt.

On The Horizon

Odds are good we won’t have another long weekend until Eid El Adha in September. The problem: 23 July falls on a Saturday.

Speed Round

Speed Round is presented in association with

The Ministry of Foreign Affairs is considering retaliating against Italy after its senate voted to halt exporting military supplies to Egypt including spare parts for F-16 fighter jets, Reuters reported. “We regret the decision and are considering taking similar measures that affect areas of cooperation with Italy,” the Ministry reportedly said on Wednesday. The foreign ministry didn’t specify the measures under consideration, but said any action taken could “affect bilateral, regional and international cooperation between Italy and Egypt” and include “a review of ongoing cooperation in combating illegal immigration in the Mediterranean and dealing with the situation in Libya.”

Economic ties could be up for discussion as House looks to review relations with Italy: Tensions looked set to escalate on Saturday when House Speaker Ali Abdel Aal directed three House committees — human rights, foreign affairs and national security and defence — to “conduct a review” of relations with Italy, Ahram Online’s Gamal Essam El Din reported. Critically, Rep. Mohamed Anwar El-Sadat, chairman of the House Committee on Human Rights and a member of the liberal (in the Egyptian context) Reform and Democracy Party, suggested MPs may be open to a range of sanctions saying there are “many MPs who say that there should be a complete overhaul of all economic and oil agreements and all kinds of cooperation between the two countries.” The House also decided to lower its representation at the Parliamentary assembly of the Union for the Mediterranean to be held in Rome Sunday from speaker Abdel Aal to foreign affairs committee head Mohamed Al-Orabi, Al-Orabi confirmed to Al Shorouk in a phone call from Rome. The decision was directly related to Italy’s decision to halt weapon supplies, Rep. Emad Gad told the newspaper.

Italy’s decision not to sell F-16 parts to Egypt came one day before Eni CEO Claudio Descalzi told The Financial Times (paywall) that a number of potential bidders have expressed interest in acquiring a stake in supergiant gas field Zohr, noting that the interest was “informal” so far. Zohr is “a big development. And there is room also to accommodate some other partners,” Descalzi explained, without naming who was in the mix. One analyst said Eni is expected to sell 20% of Zohr for about USD 1.6 bn, and the FT says Zohr “could be appealing to potential buyers because production could start quickly with low development costs because it is close to existing Egyptian infrastructure.” Selling a stake in the field would allow Eni to share the costs of development and remove some of the political risk “associated with operating in Egypt, which has faced instability.” Italian newspaper La Repubblica reported in March that Russia’s Lukoil was in talks to buy 20% of Zohr.

… In related news, Italian oil services company Saipem — an Eni subsidiary — said it has been awarded an EUR 1.5 bn engineering, procurement, construction, and installation contract by Eni for Zohr, The National reported. “We are very pleased to have been selected for the important objective of delivering first gas from Zohr before the end of 2017 … We will mobilise a fleet of vessels with last-generation capabilities and leverage on our proven expertise and consolidated presence in the area in order to ensure our clients achieve their targets,” Saipem’s CEO Stefan

EGAS has refused to sell natural gas to factories at the USD 4.50 bn per MMBtu requested by the Federation of Egyptian Industries, saying it would be a “waste” of the nation’s natural resources. An EGAS source told Al Borsa the country already imports around 1.2 bcf of natural gas per day at an average cost of USD 7.5 per MMBtu, so selling it below cost would effectively be a subsidy to factories borne by the state. Similarly, the cost of producing natural gas domestically rings in at an average of about USD 6 per MMBtu. Fertilizer producers get gas at USD 4.50 per MMBtu because they channel their output to the local market and support the agriculture sector domestically, the source explained. The Trade and Industry Ministry had said it was hoping to set gas pricing to all factories at USD 4.50 per MMBtu by September.

Meanwhile, GAFI noted that investment in the petroleum sector saw a net outflow of USD 1.5 bn during 3Q2015-16 despite non-oil FDI rising 13.7% to USD 5.85 bn, in a statement lifted directly from the CBE’s BOP report which we noted last week.

The African Development Bank (AfDB) will likely back out of funding energy projects as part of the USD 500 mn second tranche of its development loan if the feed-in tariff projects fail to get an endorsement from international finance institutions, an AfDB source has reportedly told Al Borsa. This will add a new dimension to the issue of international arbitration for feed-in tariff contracts, where the Ismail government’s insistence on domestic arbitration has been scaring-off international funders. The AfDB board will vote on greenlighting the second tranche of the USD 1.5 bn development loan at its meeting in October. The board’s decision will be based in a comprehensive report on the government’s development plans and project pipeline compiled by the bank’s delegation which visited Egypt in June, in addition to the reform agenda agreed upon by the delegation and the Egyptian government. It is unclear whether international arbitration featured in these meetings.

Meanwhile, the electricity ministry pitch investors “within days” on the 1,000 MW second round of renewable energy projects under the feed-in tariff system, apparently undeterred by the holdup of current feed-in tariff contracts, government sources told Al Borsa. The second phase targets wind and solar energy projects in Upper Egypt. The government is committed to buying around 4,200 MW of the first phase as part of the feed-in tariff system, a source said, but remains insistent on domestic arbitration of disputes under FiT contracts. What’s the endgame? We’re looking for the government to give up on the arbitration issue as the cost of getting producers to accept lower prices under in this second phase.

New partners at Matouk Bassiouny: Ahmed Abdel Gawad and Muhammad Nassef have made partners at business law shop Matouk Bassiouny, where they practice in the firm’s high-profile corporate and M&A group, according to an emailed statement. Abdel Gawad has Recently advised Danone on its acquisition of Halayeb Food and Rocket Internet on its acquisition of food ordering site Otlob. Nassef recently represented CIB in its acquisition of Citibank’s Egyptian consumer business and “has also represented several private equity firms throughout their respective investments’ lifecycle.”

Law firm White & Case LLP is opening an office in Cairo and expects to be up and running by October. The Cairo office will help the firm meet the increasing demands of its Egyptian clients and better support the needs international clients investing there, Chairman Hugh Verrier said. White & Case has been advising clients in Egypt, mainly corporate and investment banking clients, for more than 15 years and the new office will enable it to “broaden its legal practice and better support clients on high end work including project finance, private equity, corporate / M&A and debt and equity capital markets.” The firm will operate in Egypt “in association with new Egyptian law firm MHR & Partners, the partners of which will be Tarek Mohanna, Said Hanafi, Walid El Daly and Sherief Rashed.”

The Trade and Industry Ministry finalized an amended automotive directive last week and has supposedly sent this to the cabinet for approval, according to Minister Tarek Kabil just before the Eid holiday, Al Borsa reports. In this latest draft of the strategy, the domestic component minimum for a vehicle to be considered manufactured in Egypt has been set at 60%, said Kabil. The strategy will also set a quota of Egyptian components slated for export by domestic assemblers. Last we heard the cabinet had approved the a previous draft of the directive which was sent to Ittihadiya for review, which would imply this latest draft included input from the presidency. The automotive directive would provide domestic assemblers with tax and other incentives to go further up the value chain into manufacturing, creating jobs and sustaining an industry that claims it is threatened by unfair competition from Turkish, Moroccan and European Union imports.

Facebook and Google may have to collect VAT in Egypt on sales of targeted advertisements, according to remarks by Deputy Finance Minister Amr Al Monayer last Monday. These ads target Egyptian users and advertise products and services sold in Egypt, said Al Monayer, according to Al Masry Al Youm. He denied that the ministry is looking for ways of taxing personal accounts on popular websites and social media outlets, noting that it’s rather difficult to tax a free service (thank you, Domestic Press, for raising that critical question).

Audio from the recovered flight deck voice recorder of EgyptAir flight MS804 indicates there was an attempt to put out a fire on board the plane before it crashed, sources said. “Earlier analysis of the plane’s flight data recorder showed there had been smoke in the lavatory and avionics bay while recovered wreckage from the jet’s front section showed signs of high temperature damage and soot… Investigators are to conduct further analysis on the voices contained in the recordings,” Reuters notes. The cause of the crash has not been pinpointed yet, and investigators have caution it could still be some time before a conclusion is reached.

Egypt is coordinating with Israel to receive what is believed to be wreckage from flight MS804 that washed ashore on an Israeli beach north of Tel Aviv on Tuesday, according to a statement by Egypt’s investigative authorities on Friday as reported by Ahram Online. The debris was discovered by the Israeli coast guard at the Israeli resort Netanya, Israeli Prime Minister Benjamin Netanyahu’s office announced on Thursday, with Netanyahu ordering the remains handed over to Egyptian authorities for analysis, NBC reported.

Ikhwan Supreme Guide Mohamed Badie was reportedly hospitalized this weekend, according to a report from Turkey’s Anadolu. The newswire, which has in the past had good contacts in the Brotherhood, quotes an unnamed source as saying, “Badie is suffering a circulatory collapse” and was transferred to Manial Hospital in Cairo early on Saturday. Badie’s family claims not to have been informed of his hospitalization.

Meanwhile, the Muslim Brotherhood and the National Anti-Coup Coalition have declared this week’s theme (every week they have a theme) to be: ‘Never Let Egypt Down,’ according to a statement published by Ikhwanweb on Friday. The statement is so breathless and exciting that we think it plays much better as the opening text crawl of Star Wars. Watch the statement animated, Star Wars style, here, running time: 1 minute (click on “Begin” once it loads under the Crawl Creator logo). Eventually, however, the music fades out and the text is truncated because the app cannot handle the amount of text.

Egypt moved up 13 places to rank 49th on the World Bank’s Logistics Performance Index, Daily News Egypt reported. The “Connecting to Compete 2016: Trade Logistics in the Global Economy” (pdf)  ranks 160 countries based on their trade logistics performance, including infrastructure, quality of service, shipment reliability, and border clearance efficiency. Egypt has improved in four out of the six sub-indices compared to 2014. Germany ranked first with a Logistics Performance Index (LPI) of 4.23, while Syria had the lowest LPI with a score of 1.6.

MOVES- General Authority for Investment and Free Zones (GAFI) executive director Mohamed Hani Khodeir was appointed GAFI representative on the board of the National Authority for the Development of the Sinai Peninsula, replacing Alaa El-Din Omar, who Khodeir replaced as GAFI head last month, according to the Official Gazette.

Prime Minister Sherif Ismail’s cabinet had their weekly meeting on Monday before the Eid break. Among the decisions taken during the meeting:

  • Reallocating 107.5 feddans of state-owned lands to fisheries.
  • Allowing the unit managing the Nile International Schools set marketing plans, curricula, and standards for the proposed school system as well as negotiate the technical requirements with international examination boards.
  • Dispensing EGP 40 mn to import machinery and equipment for the Robeky leather city.
  • Agreeing to merge the 2016 emergency electricity production plan projects in one company and splitting Siemens’ projects into three separate companies.
  • Approving changes to the Egyptian National Railways’ mandate, including service pricing.
  • Approving an agreement to eliminate double taxation between Egypt and Bahrain.

Other stories worth noting this morning, whether for mention of Egypt, significance to international markets, or because it’s simply something we think you might want to know as we get back to the grindstone post-Eid:

  • Former Minister of Family and Population Moushira Khattab is said to be in the running to become the next director-general of UNESCO, according to Youm7.
  • Pepsi is doing alright in Egypt: The maker of sugary drinks posted double-digit growth in Egypt, China, Mexico and Turkey in the second quarter, the WSJ reports in a piece that focuses primarily on the company’s earnings outlook. The transcript of Pepsi’s earnings call is here (pdf; Egypt is mentioned on page 3).
  • Erdogan’s drive to mend fences with Russia and Israel is getting ink the WSJ. However, the piece notes: “Mr. Erdogan has shown no sign of willingness to reconcile with Egypt… unlike Israel and Russia, [Egypt] isn’t seen in Ankara as capable of threatening Turkey’s security.” Only hours after Erdogan once again ruled out reconciliation with Egypt on Tuesday, Egypt’s foreign ministry responding by calling Erdogan’s policies “blundering.”

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Egypt in the News

A female dentist who has worked her way from Fil Goal to Al Masry Al Youm and now CBC as a football commentator is the dominant story on Egypt this morning thanks to a widely picked-up Agence France Presse story. Manar Sarhan (Twitter, Instagram) has reportedly won the support of her colleagues and has taught herself Spanish — and plans to pick up Italian and Portuguese — to advance her new professional career while she continues to drill teeth during the day. The story has been picked up everywhere from the U.K.’s Daily Mail to Ecuador, and AFP has a nice video report on Dr. Manal (run time: 1:48) to accompany the print report and Getty Images photography.

More significant and almost as widely picked up this past weekend was Hamza Hendawi’s “Demanding Order, El-Sissi Turns to Military to Rebuild Egypt” for the Associated Press. The story breaks no new ground in its review of the military’s involvement in large-scale infrastructure projects, but will be influential in Western circles (in the U.S. and Canada in particular) for having simply been an AP story. Representative quote from every journalist’s favourite US-flavoured Egypt analyst: “‘[El Sisi] wants to run the country like the military,’ said Michael W. Hanna, an Egypt expert with the New York-based Century foundation. ‘In that world, it is a question of order and execution, it is not a place for discussion, transparency or politics. They don’t want politics.’”

Our favorite international story of the weekend: There is room for craft beer to grow in the Arab world, The Economist writes. There a number of challenges, “most Arabs are Muslim and most Muslims agree that the Koran bans alcohol. But not all of them shun it … Brewers say there is room to grow. Beer is still underappreciated in a region where wine, arak and whisky hold sway… craft brews could replace bad beer. Egypt’s Stella and Sakara could use some competition, as could Morocco’s four tasteless local brands.” To say that “not all of them shun it” is to give short shrift to the very real trend toward secularism in the under-30 set across multiple income demographics (and, to an extent, among under-50s when you include the ‘upper class’). We wouldn’t bet against the appearance of real, indie craft brewers in Egypt in the coming five years. The trick, as always, will be in the regulatory approvals.

Centamin CEO Andrew Pardey sat down for a wide-ranging interview published by the Telegraph on Friday in which he talked about everything from Centamin’s history to living and working normally through two uprisings. As for the future, Centamin “is now lobbying the [Egyptian] government to introduce a mining code, which would go beyond the profit-sharing [agreement] at Sukari and impose a standardised framework of taxes, rents and royalty arrangements on new mines. ‘If Egypt can develop something like that, I’m sure you’ll see the opportunities for further expansion there grow incrementally,’” says Pardey. Centamin, the first private-sector gold player to begin production in Egypt since the 1952 Revolution (so far as we’re aware), has lately been overshadowed in the international press by Alexandria Nubia, which recently rebranded itself Aton Resources.

Worth Reading

The secret list of names that Reuters spent USD 530 mn to acquire: Thomson Reuters’ World Check service — a database of 2.7 mn names used primarily by banks to assess risk, built solely on publicly available information and bought by Reuters in 2011 for what is believed to be USD 530 mn — has come under criticism in the press in recent months for being relatively unregulated and for wielding an outsized impact on banks accepting the labels assigned to people on the list. Among the individuals slapped with a ‘terrorism’ warning label: “Former World Bank and Bank of England advisor Mohamed Iqbal Asaria, who was given a Commander of the Order of the British Empire (CBE) award in the 2005 Queen’s Honours List for services to international development,” who later told VICE News with regard to World Check: “It makes me more than worried. If this is what the banks have at best, they’re not looking at something serious here.” (Read VICE News reveals the terrorism blacklist secretly wielding power over the lives of mns, February 2016)

Image of the Day

The Independent compiled the results of a non-scientific survey of Reddit users asking which countries they have visited that they never want to return to and why. The most common reason for why those who have visited Egypt and who plan on never visiting again is not terrorism, ‘stability,’ traffic, or bureaucracy — it is the obvious reason, one which too many Egyptian women encounter on a regular basis. One only hopes that the connection between the way all women in Egypt are treated and it’s very real impact on tourism is understood and acted upon by officials. (View image via the Independent and Reddit, color-key at the bottom of the map)

Worth Watching

Does your social life mainly consist of organizing going away parties? Here’s how most friendships in Egypt come to an end. (Watch, running time: 25 seconds; single-word parental discretion advisory is in effect.)

Diplomacy + Foreign Trade

An Irish member of parliament has called for Dublin to cut diplomatic ties with Cairo over the pre-trial detention of Ibrahim Halawa, an Egyptian-born Irish national who was 17 when he was arrested in 2013 during an Ikhwan protest against the 30 June Revolution. Catherine Martin, one of two Green Party MPs sitting in Ireland’s Dáil, made the call during a debate on Thursday that saw the passage of an all-party resolution calling on Egypt to free Halawa. Ireland’s foreign minister noted that Irish Prime Minister Enda Kenny had spoken with “the Egyptian president for the third time on Monday about the case,” state broadcaster RTE reported, adding, “The Egyptian Ambassador will be called to appear before the Oireachtas Foreign Affairs Committee to address the repeated delays in the trial of the Dublin man.” Halawa’s trial has been postponed more than a dozen times now; he is next due in court on 2 October alongside nearly 500 other defendants.

House Speaker Ali Abdel Aal will in Moscow for high-level talks on 12-15 July, according to Egyptian ambassador to Moscow Mohamed Elbadri in remarks quoted by Russia’s Sputnik. Abdel Aal was invited for talks by Sergey Naryshkin, chairman of the Russian Duma. Abdel Aal is due to meet with Naryshkin as well as unspecified Russian cabinet ministers, Sputnik says.

The contracts for studies of the hydroelectric, economic and environmental impacts of the Ethiopia’s Renaissance Dam with consultancy firms BRL and Artelia will be signed “within a few days” in Addis Ababa, Irrigation Minister Mohamed Abdel-Aty told Al Masry Al Youm. The studies are supposed to be completed within 11 months, according to the agreed upon roadmap. Studies or not, the dam will reportedly be completed by July 2017.

Energy

IOC receivables fall to USD 3.4 bn in FY2015-16

Receivables due to IOCs have dropped to USD 3.4 bn by the end of FY2015-16 from USD 3.5 bn a year earlier, Oil Minister Tarek El Molla told Al Masry Al Youm. The government bought USD 5.4 bn worth of crude and natural gas from IOCs and paid them USD 5.5 bn, bringing their receivables down by around USD 100 mn. El Molla did not indicate when all of the receivables will be paid off.

EGPC issues tender to buy gasoil

EGPC has issued a tender to buy up to 165,000 tonnes of 0.1% sulphur gasoil in five cargoes in August, Reuters reported. EGPC requested 30k-33k tonnes cargoes for delivery to the ports of Alexandria or El Dekheila, with the delivery window for the first cargo set for 10-12 August.

26 companies bid for Assiut power plant tenders

Twenty six companies have submitted bids for the Assiut power plant’s four tenders, including transformers, electrical works, civil works, and reservoirs, Daily News Egypt reported. Six applied to the transformers tender, according to Upper Egypt Electricity Production Company Chairman Ibrahim Al Shahat, which includes the three unilateral transformers each with a capacity of 305 MVA. The total cost of the project is around EGP 5 bn, and will be financed through the Arab Fund for Economic and Social Development, the Kuwaiti Fund for Arab Economic Development, the Islamic Development Bank, and the OPEC Fund for Development.

Infrastructure

Government will complete New Assiut aqueduct project in September 2017

The Ismail government is set to complete the New Assiut aqueduct project in September 2017, Irrigation Ministry Spokesperson Walid Hakiki told Al Shorouk. The EGP 4 bn project is currently 87% complete, he added, and will boost irrigation performance in five governorates including Assiut, Minya, Beni Suef, Fayyoum, and Giza. Additionally, a 32 MW hydro-power station will also be completed, he added.

Basic Materials + Commodities

Galina investing EGP 75 mn in two projects in Alexandria

Galina–Agrofreeze is assessing investing EGP 75 mn in two agrifood projects in Alexandria, Chairman Abdel Wahed Soliman told Al Borsa. Galina is setting up a line to freeze and store fruit and another to produce pulp. The company is self-financing EGP 47 mn of the project costs, has lined up debt of EGP 5 mn, and generated another EGP 5 mn “through leasing” (presumably through a sale-and-lease-back arrangement) and is now looking to borrow the remaining EGP 18 mn from the National Bank of Egypt.

Health + Education

GSK investing EGP 340 mn in Egypt through end-2017

GlaxoSmithKline (GSK) said it will inaugurate a new EGP 60 mn production line in September as part of a larger, EGP 400 mn expansion plan, Al Mal reported. The company said it is committed to spending EGP 340 mn until the end of 2017. The new production line will produce affordable medications serving all market segments. GSK says it exports at least 15% of its output from Egyptian production facilities.

Health ministry to announce tougher sanctions for FGM

Health minister Ahmed Emad El-Din Rady will announce today plans to impose more severe sanctions against doctors and for nurses who engage in FGM, Al Masry Al Youm reported. Suggested measures reportedly include indefinite withdrawal of the license to practice the profession, withdrawing it for 1-3 years and significant fines, ministry sources told the newspaper. Perhaps the statement will mark an encouraging break from past “attempts” at enforcement. As NPR’s Leila Fadel discovered last December, the first Egyptian doctor ever to be convicted and sentenced for performing FGM, which had resulted in the death of 13-year old Soheir al Batea, was later found by Fadel to be not only outside of prison, but working in a government hospital.

Banking + Finance

EFG Hermes sells 4.1% stake in Credit Libanais

EFG Hermes sold a 4.1% stake of Credit Libanais for USD 33 per share, Al Mal reported citing a bourse statement. This followed the sale of a 40% stake in June and after EFG Hermes’ board tasked Credit Libanais with marketing the remainder of its holdings in the bank. Al Mal estimates that EFG still retains a 19.5% after the sale.

NBE signs cooperation protocol with Principal Bank for Development and Agricultural Credit

The National Bank of Egypt (NBE) signed a cooperation protocol with the Principal Bank for Development and Agricultural Credit (PBDAC) allowing each bank to serve the other’s clients, Daily News Egypt reported on Tuesday. The protocol relies on the widespread network of both banks, and enables NBE to install ATM machines at PBDAC’s 1,210 branches, said NBE Chairman Hisham Okasha. PBDAC will offer prepaid remittances card service, he added. Additionally, PBDAC will be able to receive personal loan instalments and credit card payments from NBE customers, said Okasha.

SFD signs EGP 100 mn micro financing agreement with NBE

The Social Fund for Development has signed an EGP 100 mn agreement with NBE to provide micro financing services through NGOs and micro financing companies, with funding from the Arab Fund for Economic and Social Development, Al Masry Al Youm reported.

National Security

Egypt to get four vessels from Swiftships

US shipbuilder Swiftships was awarded a contract to build the Egyptian navy four 28 metre long coastal patrol vessel kits, according to a statement from the company last month. “The 28 metre Coastal Patrol Craft (CPC) will include 4.7-metre rigid inflatable boats and forward looking infrared systems.” In May, Swiftships was awarded a Direct Commercial Contract (DCC) for the construction of six additional 28 metre CPCs, co-produced in Egypt under Swiftships’ BOT agreement. In total, Swiftships has built around 30 boats for the Egyptian Navy.

On Your Way Out

We’re not on daylight saving time: Cabinet decided on Monday to “permanently” scrap daylight saving time just four days before it was due to come back into effect for the Nth time since the 2011 uprising. The move came in the face of mounting opposition in the House of Representatives to the restoration of DST, which the Ismail government had first announced back in May. The Washington Post helpfully notes that Russia has had similar changes of heart on time change and time zones in recent years, “and then pulled back after a backlash.” EgyptAir notified its customers that all flights departing from and arriving to Egypt have had their time shifted by one hour. The national flag carrier is now asking travellers to be at the airport four hours before international flights and two hours before domestic ones. Telling time: Apparently, more than a skill one learns in first grade.

Hello, Al Shorouk. Do human beings still work at your newspaper, or has the entire operation been completely automated by Nazi AI chatbots? We ask, as the front page headline of yesterday’s first edition reads: “America’s n—— take up arms against the police,” in reference to the shooting of 12 people during a protest rally in Dallas on Thursday; five police officers were killed in the attack, which came as protesters were assembled to demonstrate against police killing black civilians. Al Shorouk isn’t alone in being challenged when it comes to reporting on race relations: Consider this headline, run by forever-trashy Youm7 a few years back, which reads: “Black terror gangs in Cairo,” followed by “N——” in English, lest there was any confusion.

Growth industry: We’re getting another prison: The Interior Ministry is opening an new prison in Beni Suef, according to the Official Gazette. The opening of South Beni Suef Central Prison comes as Egypt’s total number of prisons rose to 52 from 42 in the past five years, according to Gamal Eid, executive director of the Arab Network for Human Rights Information, writing for Al-Monitor in February.

Facebook may soon be joining its subsidiary WhatsApp in offering end-to-end encryption for Facebook Messenger, according to a statement from Facebook on Friday, saying the company has begun testing the feature. The encryption should prevent any other party, including Facebook, from reading messages exchanged by two users who have the feature enabled for their particular conversation, according to the statement. The company plans to roll out the option more widely sometime “this summer.” The downsides: Facebook Messenger’s so-called “secret conversations” may only be read on one device, cannot be used to play videos, and cannot be used to make payments. Well, at least they own WhatsApp.

The markets yesterday

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USD CBE auction (Tuesday, 28 June): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 10 July): 11.04-11.10 (compared to 11.05-11.08 on Tuesday, 28 June, Al Mal)

EGX30 (Monday): 7,183 (+2.9%)
Turnover: EGP 607.1 mn (39% above the 90-day average)
EGX 30 year-to-date: +2.5%

THE MARKET ON MONDAY (4 July 2016): Speculation that further devaluation of the official exchange rate may be in the works sent the benchmark EGX30 up 2.9% last Monday (the final trading session last week before the start of the Eid holiday). As noted in the Monday edition of Enterprise, Amer told the domestic press that defending the EGP over the past five years had been a mistake. Blue-chip CIB, a proxy for Egypt and fast approaching its GDR cap, accounted for nearly 27% of all turnover on Monday. Significant gainers included SODIC (up 9.9%), South Valley Cement (+9.2%) and Talaat Moustafa Group (+0.1%); Juhayna and Edita were the only EGX30 constituents to close in the red, losing less than 1% each. With total market turnover at EGP 607.1 mn, foreign investors were the sole net sellers of the day.

Foreigners: Net short | EGP +118.0 mn
Regional: Net long | EGP +3.0 mn
Domestic: Net long | EGP +115.0 mn

Retail: 52.5% of total trades | 49.2% of buyers | 55.8% of sellers
Institutions: 47.5% of total trades | 50.8% of buyers | 44.2% of sellers

Foreign: 25.9% of total | 16.2% of buyers | 35.6% of sellers
Regional: 6.4% of total | 6.7% of buyers | 6.2% of sellers
Domestic: 67.7% of total | 77.1% of buyers | 58.1% of sellers

WTI: USD 45.41 (+0.60%)
Brent: USD 46.76 (+0.78%)
Natural Gas (Nymex, futures prices) USD 2.82 MMBtu, (+0.57%, August 2016 contract)
Gold: USD 1,358.40 / troy ounce (-0.27%)

TASI: closed
ADX: 4,575.8 (+0.6%) (YTD: 6.24%)
DFM: 3,371.2 (+1.0%) (YTD: 6.99%)
KSE Weighted Index: 351.1 (+0.1%) (YTD: -8.01%)
QE: 9,980.1 (+0.6%) (YTD: -4.46%)
MSM: 5,811.8 (unchanged) (YTD: +7.50%)
BB: 1,142.6 (0.85%) (YTD:-5.21%)

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Calendar

Due to the length of this morning’ edition, our Calendar section appears only on our website today.

12-15 July (Tuesday-Friday): House Speaker Ali Abdel Aal will in Moscow for high-level talks on 12-15 July

23 July (Saturday): Revolution Day, marking the 1952 Revolution. We’re betting that Sunday will not be a national holiday despite the statutory day falling on the private-sector weekend.

28 July (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

28 July (Thursday): Ruling expected on charges of disseminating false news against former Central Auditing Organization head Hisham Genena.

05-08 September (Monday-Thursday): The 6th EFG Hermes London MENA and Frontier Conference, Emirates Arsenal Stadium, London, UK.

11-13 September (Sunday-Tuesday): Eid El Adha (national holiday, tentative date).

19-20 September (Monday-Tuesday): Euromoney Egypt, venue TBD.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

02 October (Sunday): Islamic New Year (national holiday, tentative date) .

06 October (Thursday): Armed Forces Day (national holiday).

November (TBD): Delegation of German companies in the renewable energy sector due to visit to discuss investment opportunities.

11-12 October (Tuesday-Wednesday): Global Islamic Economy Summit, Madinat Jumeirah, Dubai.

17 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

27 November (Sunday): 2016 Cairo ICT, Cairo International Convention Centre.

04-06 December (Sunday-Tuesday): Solar-Tec exhibition, Cairo International Convention Centre.

04-06 December (Sunday-Tuesday): Electricx exhibition, Cairo International Convention Centre.

11 December (Sunday): Prophet Muhammad’s Birthday (national holiday; date to be confirmed).

11-13 December (Sunday-Tuesday): The Middle East Fire, Security & Safety Exhibition and Conference (MEFSEC), Cairo International Convention Centre, Cairo.

29 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meets to review rates.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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