Sunday, 24 July 2016

UK fund acquires USD 35 mn stake in electronics retailer B-Tech


What We’re Tracking Today

A shuffle of governors is expected “within hours,” a Local Development Ministry source told Al Shorouk. On the chopping block are the governors of Cairo, Alexandria, Fayoum, Beni Suef, Minya, Assiut, Sohag, Luxor, and Daqahliya, according to the source, who ruled out changes in Marsa Matruh, Red Sea, North Sinai and South Sinai. The shake-up is a function of how governors have performed on the implementation of national projects, improving services to residents and management to local provision of commodities, the newspaper says. There’s still no word this morning on an expected cabinet shuffle.

Finance minister Amr El Garhy is in Chengdu, China for a meeting of G20 finance ministers and central bank governors. The two-day gathering wraps today and will make recommendations for consideration by heads of state at the Hangzhou summit of the G20 due to take place 4-5 September. El-Garhy will also attend a high-level forum on international tax policies taking place on the sidelines of today’s meeting. The Financial Times (paywall) reports that talks yesterday were dominated by fallout from Brexit.

Foreign Minister Sameh Shoukry is in the Mauritanian capital of Nouakchott for the Arab League summit taking place tomorrow and Tuesday.

The UAE’s USD 100 mn solar-powered plane Solar Impulse 2 departed from Cairo International Airport in the early hours of the morning today for the final leg of its around-the-world journey back home to Abu Dhabi, USA Today reported. The livestream of the flight may be viewed here, and the takeoff from Cairo may be viewed here, (running time: 1:25)

Apparently, Apple and Egypt’s House of Representatives don’t talk. You’ll want to check the time with your spouse / coffee buddy / colleague / secretary this morning If your iPhone or iPad installed the iOS 9.3.3 update this weekend. Installing iOS 9.3.3 sets your clock back an hour if you have “Set Automatically” turned on under “Date & Time.” You can thank the House for taking an hour of sleep from you. Fix it by going to Settings > General > Date & Time and turning “Set Automatically” to the “off” position. Want to update to 9.3.3 manually? Settings > General > Software Update. It’s a hair over 50 MB and takes about 5 minutes to install. You’ll need to be connected to wifi to do it.

What We’re Tracking This Week

The House of Representatives is expected to finish voting on the Civil Service Act this week. Nineteen articles remain on the floor and are due to come up for debate today and tomorrow, Youm7 reports.

Members of the business community will attend a hearing on the value-added tax (VAT) legislation on Tuesday, 26 June, said Mohamed Shoukry, head of the Food Industries Division of the Federation of Egyptian Industries. He tells Al Mal, that the division had requested that the Finance Ministry provide a draft for review, but was met with silence.

The European Bank for Reconstruction and Development, European Investment Bank, and World Bank will launch tomorrow their joint report What’s holding back the private sector in MENA? Conrad Hotel, Cairo.

Interest rates are up for review this week: The Central Bank of Egypt’s Monetary Policy Committee will meet on Thursday, 28 July to review interest rates. That’s one day after the U.S. Federal Reserve’s Federal Open Market Committee wraps a two-day meeting for the same purpose. The current expectation is that a damp global outlook following Brexit will force the U.S. Fed to pull back on plans to raise interest rates, with one prominent commentator reminding us that the FOMC is split between advocates of two rate increases this year and those who would raise rates either once or not at all. The Wall Street Journal’s blog lists the Fed’s meeting as one of five things to watch on the US economic calendar this week.

** Did you miss part one of our five-part series on “Saving Cairo from Itself”? The piece by leading real estate player SODIC ran on Thursday and is headlined, “Why is your day in Cairo so hard — and what can we do about it?” Part two appears this coming Thursday.

Speed Round

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UK private equity group Development Partners International (DPI) is investing USD 35 mn to acquire 33.3% of B-Tech, Egypt’s largest electronics and home appliances retailer with nearly 70 stores, the Financial Times’ Heba Saleh reports (paywall). DPI, which specialises in investments in Africa, says B-Tech has been growing an annualised rate of 18%. DPI has a “strong belief that B-Tech will grow strongly over the next five years which will more than offset any depreciation of the currency,” DPI’s Sofiane Lahmar said, pointing to “the expansion in housing and the annual increase in the number of marriages” in Egypt. DPI’s investment will come in a capital increase to fund expansions in brick and mortar stores, online, and enhancing infrastructure, the FT said. DPI has more than USD 1 bn in private equity assets under management and says it invests “across the African continent in companies benefiting from the fast-growing emerging middle class.”

In a statement released by EFG Hermes, B-Tech Chairman and CEO Mahmoud Khattab notes that the retailer invested EGP 60 mn to “enhance its operations” last year and says the chain has “grown over the last ten years to become the leading household appliances and consumer electronics retailer in Egypt.” Moustafa El Chiati, Managing Director of EFG Hermes UAE, noted that the injection from DPI will allow B-Tech to implement a “forward-looking growth strategy that will see improvements to the supply chain and IT infrastructure, the opening of new stores and the launch of new products and services.”

EFG Hermes Investment Banking was sole advisor to B-Tech. Zulficar & Partners and White & Case LLP (the latter of which recently inaugurated its Cairo office) were legal advisors.

FX crunch disrupting the M&A market? It’s not all roses, though. Saleh’s piece for the FT quotes Ahmed Ozalp, executive director at Arqaam, which acquired M&A specialist Akanar Partners from Ozalp & Co. earlier this year, as noting that “there is still foreign investor interest but the FX problems have caused a lot of disruption. It has stopped some people from looking at deals in Egypt and it has disrupted certain late-stage deals because there is a differential between the official and the black market rate.” Consumer plays are in favour (including food and beverage and healthcare) alongside power and hydrocarbons.

Speaking of hydrocarbons: Five IOCs including BP, Kuwait Energy, and Rockhopper are vying to acquire Circle Oil’s investment in Egypt, Al Mal reported. Circle Oil is looking to sell its 40% stake of Petro Amir’s concession in the Gulf of Suez. A source told Al Mal Circle Oil is owed USD 10-12 mn from EGPC, which it recently called “unpredictable,” and is refusing to be paid in EGP. A government source explained that larger companies often agree to be paid partially in EGP or through crude oil, but smaller explorers refuse to accept EGP and do not have the sufficient production capacity from their fields to be paid in kind. IOCs are now worried about their overdue payments from the Egyptian government as the USD shortage continues to worsen, the source added.

In other M&A news, Naeem Holding has not completed due diligence on its potential acquisition of AT Financial and AT Brokerage, the company said in a statement to the EGX, denying that an MoU for the acquisition was signed, Al Mal reported. The statement comes in response to reports last week about the MoU signing and the due diligence completion.

The gap between the official and unofficial FX rates was at its widest ever on Saturday as the EGP hit a record low of EGP 12.30 to USD 1 after CBE governor Tarek Amer once more raised the specter of devaluation last Wednesday, Al Mal reports. Reuters reported on Thursday that the greenbacks were changing hands at EGP 12.05 per USD 1, more than 35% above the official CBE rate of EGP 8.78. “There has been an increase in [USD] demand over the past two days and people are afraid to sell for fear of the pound weakening further so supply is lower," one trader said.

Federation of Egyptian Chambers of Commerce chief Ahmed El-Wakeel blames Amer’s “frequent” and “ambiguous” public statements on the exchange rate over the past month for the state of confusion in the parallel market. He tells Al Mal that Amer’s hints and backtracking on the devaluation led many people to change their savings to USD instead of EGP, creating more demand on the USD from producers and importers.

Devaluation alone can’t solve Egypt’s economic woes -ECMA Chairman. Mohamed Taymour, chairman of both the Egyptian Capital Markets Association and Pharos Holding, penned an op-ed piece for Al Shorouk discussing why he believes devaluation alone cannot solve Egypt’s economic woes. Egypt has not implemented structural reforms to support devaluation, meaning domestic and foreign markets will continue to operate assuming the EGP will devalue against the USD unless faith is restored in the economy’s ability to grow.

….Taymour highlights measures critical to a durable economic recovery: To redress the budget deficit, the subsidy system needs to be revised to subsidize people and not commodities and services, a policy that has left public transportation, railways, education and healthcare in tatters. Second, he says, we need to reform the bureaucracy, weeding out under-performers and while also amending articles 115 and 116 of the Criminal Code to protect civil servants from politically motivated prosecution for otherwise good decisions made fairly. The third measure is establishing an Egyptian economic identity as a free market open to foreign investment with the government playing a supervisory role and not a competing investor. The government can address this by partially or completely selling state owned companies, Taymour says.

Import restrictions imposed in December 2015 by the Ismail government and implemented since March have created “an unnecessary barrier to trade,” EU ambassador to Egypt James Moran told Bloomberg. The measures requiring registration of factories exporting to Egypt creates uncertainty for foreign investors, which in turn makes it harder for Egyptian companies to sell to EU markets, he added. Egypt and the EU have been involved in talks since their implementation, he says, hoping the matter can be resolved before reaching the World Trade Organization’s dispute panel. CBE Governor Tarek Amer had said in January that the measures could curb “unnecessary imports” by USD 20 bn in 2016. “I think when the results of all this are better known, maybe towards the end of the year or before that, perhaps they will realize they were misguided,” said Moran. “This isn’t the way to solve shortage of foreign exchange.” This is the second time in a month that Moran has called out the export registry, having urged Trade and Industry Minister Tarek Kabil to scrap it late last month. His statements then followed reports that trading partners including the EU and Turkey might file a complaint with the WTO over the registry, which the ministry denied.

Kabil’s response came swiftly: “We will not turn back on the export registry,” The registry and other import restrictions imposed this year are acceptable under international trade agreements, Al Borsa reports Kabil as saying. Egypt has the same right to protect itself from foreign imports as the EU, the ministry said: “The registry is mostly populated by European factories anyway,” he added.

Miners could face value-added tax: Mined or quarried products could move off the list of VAT-exempt products and services, Tax Authority chief Abdel Moneim Mattar has said. His remarks came after suggestion that leaving miners out of the VAT system could open the industry to tax evasion, Al Mal reports. The draft VAT act classifies minerals as VAT-exempt on page 69. If you were wondering how is it still possible to discuss amending the draft after it is with parliament, well, the door remains open for the ministry to retract and amend the legislation, said Ramadan Sadik, advisor to the finance minister on taxation.

In other VAT news, the Egyptian Society of Auditors and Accountants has called for the EGP 500K mandatory minimum income level for registering for the VAT be scrapped, echoing similar reservations for the clause raised by the Federation of Egyptian Industries.

** Tap here to read the Youm7 leak of the draft value-added tax legislation.

Electricity Ministry spinning Enel’s exit by blaming it on fallout from Regeni. A diplomatic rift opened by the ongoing investigation into the murder in Cairo of Italian graduate student Giulio Regeni is behind Enel Green Power’s exit of Egypt, a source at the Electricity Ministry told Al Mal. Enel had taken steps to end its investments in Egypt after what was presumed to be a disagreement over domestic arbitration clauses. The company has the right to be compensated for the investments it has already injected. More Italian companies will follow suit, the source said, speculating that the exit was driven by orders from Italian authorities.

In any event, the ministry’s insistence on domestic arbitration is behind Électricité de France (EDF) considering pulling out of phase one of the feed-in-tariff (FiT) projects, company sources tell Al Borsa. EDF’s consideration comes after the European Bank for Reconstruction and Development pulled its funding of EDF’s solar power JV with El Sewedy Electric in Benban. While financing the project doesn’t seem feasible at this time, the company will await the second phase launch of FiT projects in October, with an eye towards investing in those once the picture is clarified, the source adds.

Furthermore, domestic arbitration appears to be holding up signing the final agreements for the 250 MW Gulf of Suez wind farm between the consortium including Engie (previously GDF Suez), Toyota, and Orascom and the ministry. The consortium is looking for foreign lenders and Japanese banks in particular, and will require resolution for the domestic arbitration issue, a source from the consortium tells Al Borsa. This appears to contradict DNE reports, which we noted back in May, that the final contracts had been signed.

Cairo Solar’s Hisham Tawfik is much less optimistic about the prospects of phase two of FiT. While domestic arbitration prompted 21 FiT investors to tell the ministry that their projects were at risk, the ministry’s haggling over the FiT helped push 33 potential investors from the project, Tawfik tells Al Shorouk. Without addressing the problems of the first phase projects, the second phase and the entire FiT system is doomed to fail, he added.

*** Inktank is hiring. Our parent company is growing — and looking for an investor relations analyst (English), an Arabic writer-translator, a talented graphic designer and a front-end developer. Please apply with a CV and cover letter to

Blumberg Grain Middle East and Africa CEO David Blumberg will testify today before the House of Representatives today on why the shouna system his company has built isn’t yet fully operational. Blumberg will speak before the House committee probing allegations of fraud in this year’s domestic wheat harvest, Blumberg told Al Mal. As we noted last week, Blumberg Grain placed primary responsibility for the delay in the operation of its shounas on the Supply Ministry’s General Company for Silos and Storage (GCSS) and the latter’s failure to supply adequate power for them by harvest season.

How are Blumberg’s shounas related to the wheat fraud case? It isn’t — not directly, at least. The Blumberg system was specifically designed to track grain storage and detect manipulation or theft. Had GCSS provided the project with the electricity it was contracted to provide, the Blumberg system might have been operational for this year’s harvest and provided data of use to investigators — or made the alleged fraud impossible to start with.

State-run silos company head goes on offensive: Mahmoud Abdel Aziz, head of the General Company for Silos and Storage, says his company has supplied the Blumberg system with electricity, but admitted to an unspecified “misunderstanding” about a “minor technical aspect” of the contract. Abdel Aziz then casually drops a bomb, claiming GCSS rejected Blumberg Grain’s proposal for phase two of the grain storage project over the project’s “high costs.” We had noted back in April, that the second phase of the project, would see the development of 300 shounas at a cost of USD 120 mn — three times the scope of phase one.

Meanwhile, the scandal around this season’s harvest continues to grow, with committee member Yasser Omar saying more than EGP 700 mn in wheat is effectively missing or was never produced in the first place, according to Al Shorouk. The committee’s report, which is due to come out at the end of the month, will note the entire system is hobbled by inaccurate data and gaps that leave it open to corruption, a source from the committee tells Al Borsa.

DBK Pharma has submitted a request to re-list on the EGX, Al Mal reported. The [healthcare compounds] manufacturer had opted to delist in December after failing to float 35% of its shares on the EGX. In May, it was reported that DBK was looking to sell EGP 300-500 mn worth of shares to strategic investors and had appointed Pharos Holding as advisor.

MOVES- Mohamed Abdel Aziz has been appointed head of the corporate finance and treasury group at Qalaa Holdings’ Rift Valley Railways in Nairobi, Kenya.

MOVES- Civil Aviation Authority vice president Hany Eladawy has been appointed acting president after President Mahmoud Taha El-Zanaty reached retirement age, Al Borsa reported. Eladawy is the President of the African Civil Aviation Commission (AFCAC).

Vodafone Egypt revenues up in EGP, down on EUR for 2Q2016: Vodafone Group issued a trading update (pdf) for 2Q16 on Friday, with its Egypt unit reporting EUR 362 mn in service revenue, a 7.9% decrease y-o-y. As of 1 April 2016, Vodafone introduced “alternative performance measures” to highlight the effect of M&A activity and foreign exchange rates on revenue. Taking FX rates into consideration, Vodafone reports its Egypt unit should have recorded a positive 9.1% rate of “organic growth” during the quarter. This would represent the second-biggest hit to Vodafone’s revenues due to FX this past quarter after its South African unit. Vodafone Egypt added 519k prepaid mobile subscribers, 19k contract mobile subscribers and 18k fixed broadband subscribers during the quarter. The update made no mention of operating expenses or net profit. Vodafone Egypt had 39.04 mn subscribers as of 30 June 2016.

On a related note: Tupperware is blaming FX constraints in Egypt and Egyptian “product certification issues” (read: the import registry) as being behind a slump in its emerging markets revenues during 2Q2016. The company said in its second-quarter earnings statement that “Egypt and Turkey drag segment sales [were] down 13% in USD and 9% in local currency” terms, contributing to a 25% slump in EM revenue in USD terms.

Decree further curtails rights in Turkey: Turkish President Recep Tayyip Erdogan’s first decree since the 15 July failed coup attempt and newly imposed state of emergency included the closing of “1,043 private schools, 1,229 charities and foundations, 19 trade unions, 15 universities and 35 medical institutions over suspected links to the Gulen movement,” German media outlet DW reported on Saturday, citing Turkish state news agency Anadolu. Turkey also issued arrest warrants for 300 members of the presidential guard on Friday, AFP reported, with at least 283 already detained.

Erdogan — Turkey submitted evidence to the US for Gulen’s extradition: Erdogan claims his government has now submitted evidence to the United States to support Turkey’s demand for the extradition of Pennsylvania-based cleric Fethullah Gulen, whom Erdogan and the pro-government Turkish media accuse of masterminding the failed coup attempt, AKP mouthpiece Sabah reported on Friday. Turkey is now awaiting a response from the United States, where US state news agency Voice of America suggests it doesn’t seem Turkey has handed over a provisional arrest or detention warrant as required by the US-Turkey extradition treaty (pdf). “Even if the US agrees there is enough evidence to extradite Gulen, the extradition process could take months, if not years,” the VOA added.

The United States is already widely perceived within Turkey as having been complicit in the failed coup, with pro-government Sabah running a poll on Twitter — not even asking on whether the United States played any role in the coup, but rather,Which institution of the US provided largest support to Gulenist terror group? The poll closed yesterday, and with a total of 3,123 votes, the CIA won the poll with 69%, trailed by The White House in second place at 20%.

Turkish state media is also incensed by what it says is the hostile treatment of Erdogan’s government during the coup attempt in the Western, and especially US, media. Anadolu singled out a broadcast from Fox News (4:55) in particular for criticism. On 15 July when the attempt was still unfolding, frequent Fox News commentator Lt. Col. Ralph Peters said “This coup is Turkey’s last chance to avoid becoming an authoritarian Islamic regime if not outright an Islamic dictatorship. We should make no mistake: The people staging this coup are the good guys. It sounds paradoxical, but they are the ones that are on the side of constitutional democracy.”

**For further reading: ‘They’re taking everyone,’ by Politico’s Zia Weise. “‘I was representing a judge yesterday. A judge in handcuffs,’ she whispers, moving me away from the policemen guarding the corridor. ‘And everything is secret. We’re not even allowed to see most of the files.’”

Other stories making headlines this morning and worth noting in brief:

  • Gen. Gamal Saeed, a senior Cairo-area security official, was killed in a car crash on El-Alamein Road on his way back from vacation, Ahram Online says.
  • Egypt’s under-20 national football squad won a place in the 2017 African Cup of Nations in Zambia after defeating Angola 1-0 at home on Saturday.
  • A German-Iranian dual national believed to have killed nine people in Germany this weekend had no terror ties, the New York Times reports.


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Egypt in the News

Egypt’s economy is “ad hoc” and “grand projects, though moving quickly, are doing nothing to address the underlying structural problems,” Mohamed El Meshad writes for the Carnegie Endowment for International Peace. “In their efforts to address these underlying structural issues, Egyptian authorities are demonstrating that they have just as little vision as they do for the mega-projects,” El Meshad says, citing how the CBE raised interest rates to combat inflation, without regard to the impact on weakening investments. He closes with the grim notion that “the last time Egypt faced this kind of economic crunch and insolvency was in the late 1980s. The state was fast approaching bankruptcy… Short of another miracle, this regime will need to embark on significant and comprehensive structural change to remove impediments to development in the country in order to have any hope of achieving sustainable and equitable growth.”

Violence against Egypt’s Coptic Orthodox Christian minority, one of the largest and oldest groups of Christians in the Middle East, has escalated at an alarming rate in the last several weeks, with little official response,” France24 says in a feature-length story getting pickup by other media outlets.

Worth Reading

Talking Points Memo outlines links between Putin’s Russia and Donald Trump: Though we’ve previously noted pieces reporting the links between Russia and members of Donald Trump’s campaign, Talking Points Memo’s Josh Marshall has collated all of the questionable links that Donald Trump, his organization and his campaign has to Russian President Vladimir Putin. “Trump has been blackballed by all major US banks… He has steadied and rebuilt his financial empire with a heavy reliance on capital from Russia… Trump’s foreign policy advisor on Russia and Europe is Carter Page, a man… who has deep and continuing financial and employment ties to Gazprom… The Trump Camp was totally indifferent to the [writing of the Republican party’s] platform… With one big exception… changing the party platform on assistance to Ukraine against Russian military operations in eastern Ukraine… This does not mean Trump is controlled by or in the pay of Russia or Putin… But it is certainly no coincidence.” (Read Trump & Putin. Yes, it’s really a thing)

Image of the Day

Dr. Erdogan’s surgical purge of Turkey: Kevin Kallaugher, the genius cartoonist behind KAL’s Cartoon at the Economist, succinctly captures the world’s concerns over the ongoing purge in Turkey. (View image via The Economist)

Worth Watching

The final three and a half minutes of carpool karaoke with US First Lady Michelle Obama, Missy Elliott and James Corden. (Watch)

Diplomacy + Foreign Trade

International Cooperation Minister Sahar Nasr signed a EUR 300 mn financing agreement with Spain for development projects in Egypt, Al Borsa reported. The funding covers 2016 until 2018 and will be directed towards projects in the agriculture sector as well as for sanitation and irrigation projects. The agreement is renewable in two years depending on Egypt’s requirements, Nasr said.

Nasr also met with the African Export Import Bank (Afreximbank) Chairman Benedict Okey Oramah on the sidelines of Afreximbank’s annual general meeting to discuss promoting intra-African trade and growing export industries, Al Mal reported. Afreximbank is hosting an extended meeting of all African countries in 2017 to present funding and support for intra-African trading.


EGAS will spare non-energy intensive users the cuts in gas supplies

Natural gas supplies to medium and low-intensity manufacturers will not be affected by the planned reduction in gas supplies, an Oil Ministry official told Al Mal. Reductions will affect energy intensive factories only, the source said, as the government channel more gas towards electricity generation to cope with peaking demand. The head of the metallurgical industries chamber at the Federation of Egyptian Industries said EGAS is notifying energy intensive manufacturers unofficially that it is going to cut gas supplies to up to 100% in August.

Eni and BP to drill 6 wells in South Baltim in FY16-17

Eni and BP target drilling six wells as part of Baltim South development lease in the East Nile Delta during FY16-17 and linking them to production on the National Gas Grid in 2H2017, a source told Al Borsa. The drilling of one exploration well takes two months and a half on a depth of 3900-4000 meters under sea level, the source said. One exploration well has already been drilled and its results are reportedly promising, we noted last week.


SUMED borrows EGP 100 mn from NBE to build pier in Ain Sokhna

The Arab Petroleum Pipelines Company (SUMED) has signed an EGP 100 mn loan agreement with NBE to finance a pier and petroleum product center for storage and trading in Ain Sokhna, Amwal Al Ghad reported. The project aims to receive LNG and pump it through the national grid, in addition to receiving, storing and transporting Mazut to the domestic or export. The pier will include storage depots for butane gas and fuel oil and the project also includes connecting gas line to the national natural gas grid. The project is expected to be completed by the end of March 2017.

Armed Forces Engineering Department completes EGP 700 mn Safaga Port upgrades

The Armed Forces Engineering Department has completed an EGP 700 mn comprehensive renovation and upgrade of the Safaga Port, Red Sea Ports Authority Chairman Hesham Abu Senna told Al Borsa. Both phases of civil work were completed, in addition to trial runs of the terminals and yards over a total area of 12k sqm and a capacity of 1.3 mn passengers.

Basic Materials + Commodities

GASC issues soybean and sunflower oil tender

The General Authority for Supply Commodities issued a tender to buy soybean and sunflower oil to be delivered between 1 and 15 September, the Authority said, according to Reuters. The targeted quantity was not determined. Egypt requested offers including pricing and transport cost to be presented by 27 July, GASC Vice President Ahmed Youssef said.

Health + Education

Ethiopia halts imports from 11 Egyptian medicine manufacturers to inspect factories

The Ethiopian health ministry has halted imports from 11 Egyptian pharma manufacturers on the grounds of an inspection of factories exporting to Ethiopia, chairman of the Export Council for Medical Industries Maged George told Al Masry Al Youm. Thirteen of the 11 inspected factories did not meet Ethiopian regulations, he said, despite the factories exporting to 15 other countries. Maged El-Menshawy, deputy head of Federation of Egyptians Industries’ Pharma Division tells Ahram Gate the ban was politically motivated (in reference to the Grand Ethiopian Renaissance Dam), as Egypt’s factories export to 20 countries with stricter health codes than those of Ethiopia.


British inspection committee has ‘no reservations’ on Cairo airport security procedures

A British committee of aviation experts concluded their week-long inspection of security procedures at Cairo International Airport on Friday, Ahram Online reported, with the committee’s preliminary comments stating they had “no reservations” on the present level of security, according to reports. “The committee did not give any reservations on the security performance at Cairo airport, which will be included in its final report which will be submitted to high-level UK officials,” according to press statements reported on by Aswat Masriya. The release date of the final draft of the report is yet to be announced.

Telecoms + ICT

TE in talks to borrow EGP 5 bn to finance 4G licence, Orange not seeking financing

Telecom Egypt (TE) is in talks with banks to borrow EGP 5 bn to finance its acquisition of a 4G licence, sources told Reuters. The sources also added that Etisalat Misr is also negotiating to borrow a similar amount to fund its acquisition of the 4G licence. Orange Egypt, however, is not seeking loans from Egyptian banks, a company official told the newswire. “We are in talks with our parent company to finance the 4G licence, we will not acquire loans or credit facilities domestically so that we don’t sustain interest burdens on the company’s earnings,” the official said.

Automotive + Transportation

EgyptAir Flight 804 broke up in midair after a fire, evidence suggests

Evidence gathered in the investigation of the crash of EgyptAir Flight 804 suggests the plane broke up in midair after a fire “near or inside the cockpit that quickly overwhelmed the crew,” according to Egyptian authorities, the New York Times reported on Friday. However, officials are still uncertain as to whether the fire broke out due to mechanical failure or a terrorist act. “Crew members were playing music and chatting amiably when the pilot, Capt. Muhammed Shoukair, 36, suddenly said there was a fire on board and asked the co-pilot, Muhammad Mamdouh Assem, 24, to get an extinguisher. That was the last human sound the recorder captured,” the NYT reports.

Egyptian Holding Company for Airports receives security approval to establish airport maintenance firm with America’s Hi-Lite

The Egyptian Holding Company for Airports (EHCAAN) received security clearance to establish an airport maintenance firm with American airfield services provider Hi-Lite, EHCAAN Chairman Ismael Abu El Ezz told Al Borsa. EHCAAN will hold an equity of 51% of the USD 10 mn company, which will maintenance all Egyptian airports including buildings, facilities, and runways, as well as infrastructure and periodical renovations, he added. The company is set to begin operations within two months.

Other Business News of Note

NHPS holds EGM to approve accelerated sale of Le Meridien Heliopolis

The National Company for Housing for Professional Syndicates (NHPS) board is holding an EGM to approve the accelerated sale of Le Meridien Heliopolis, Al Mal reported. A financial consultant will be contracted to evaluate the hotel and present the findings to the board in time for the EGM. NHPS built the hotel with a capacity of 318 rooms and an investment value of EGP 120 mn and is free of any financial obligations. The company estimates the hotel’s market value at USD 75 mn, or around EGP 500 mn.

Marsa Matruh governorate prepares to sign 17 projects from investment conference this week

The Marsa Matruh governorate is hosting a conference on 29 July to sign 17 agreements for investment projects announced at the investment conference in October of last year with Emirati, Canadian, Saudi Arabian, and Egyptian companies, Governor Alaa Abu Zeid told Al Borsa. The total value of the investments is estimated at around EGP 90 bn, he added. The projects include three wastewater treatment plants, three agricultural projects, four tourism projects, an entertainment city in Marsa Matruh, two water packaging plants, and a language school, he said.

Legislation + Policy

Finance ministry completes amendments to tender law

The finance ministry completed key amendments to the tender law to bring it in line with “Egypt’s current economic situation” and allow for better control of government spending, Finance Minister Amr El Garhy told Al Masry Al Youm. The amendments include articles specifying the training required for employees tasked with purchasing and contracting in the government’s administrative units, applying the tender law to funds and private accounts of administrative units, as well as loans or grants obtained from international agreements. Additionally, the amendments allow for renting movables in cases where buying is financially unnecessary, as well as two-part tenders, and direct tasking of investment projects proposed by national or international normal or exceptional figures complete with funding.

On Your Way Out

Comic-Con wraps up today in San Diego, where fans have been treated to a number of trailers for television programs and upcoming movies, including this rough, ultraviolent animation of a Rick and Morty season 3 episode (1:31), as well as trailers for the Wonder Woman movie (2:51) and Justice League (2:45).

The markets yesterday

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USD CBE auction (Tuesday, 19 July): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 23 July): 12.30 (up from 11.80-11.75 on Wednesday, 20 July, Al Mal)

EGX30 (Thursday): 7,436 (-0.9%)
Turnover: EGP 423.9 mn (3% below the 90-day average)
EGX 30 year-to-date: +6.1%

Foreigners: Net Short | EGP -53.7 mn
Regional: Net Long | EGP +4.9 mn
Domestic: Net Long | EGP +48.8 mn

Retail: 57.4% of total trades | 57.6% of buyers | 57.2% of sellers
Institutions: 42.6% of total trades | 42.4% of buyers | 42.8% of sellers

Foreign: 20.3% of total | 14.0% of buyers | 26.6% of sellers
Regional: 5.9% of total | 6.5% of buyers | 5.4% of sellers
Domestic: 73.8% of total | 79.5% of buyers | 68.0% of sellers

WTI: USD 44.2 (-1.3%)
Brent: USD 45.7 (-1.1%)
Natural Gas (Nymex, futures prices) USD 2.78 MMBtu, (+3.1%, Aug 2016 contract)
Gold: USD 1,322.1 / troy ounce (-0.1%)

TASI: 6,601.0 (-0.4%) (YTD: -4.5%)
ADX: 4,589.8 (-0.5%) (YTD: +6.6%)
DFM: 3,544.2 (-0.1%) (YTD: +0.6%)
KSE Weighted Index: 351.6 (-0.1%) (YTD: -7.9%)
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25 July (Monday): The European Bank for Reconstruction and Development, European Investment Bank, and World Bank launch their joint report: What’s holding back the private sector in MENA? Conrad Hotel, Cairo.

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.

07 August (Sunday): Deadline for mobile operators to submit applications for 4G licences

29-30 August (Monday-Tuesday): Wastewater Egypt conference.

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 conference, 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.

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