Tuesday, 30 August 2016

The VAT has passed the House, could be in place as soon as October


What We’re Tracking Today

We have a VAT law: The House of Representatives passed the Ismail government’s proposed VAT legislation yesterday in what stands as a model of legislative efficiency. The only changes to the draft proposed by the Finance Ministry were to reduce the rate to 13% in the first year of implementation, with the rate rising to 14% from year two onwards. The House also decided to increase penalties for tax evasion, Al Ahram reported. The law comes with a list of exemptions that includes 56 goods. We still await the specific details.

The VAT law now includes clauses setting the penalties for tax evasion at either a three to five year prison sentence, an EGP 5,000-50,000 fine, or both. The amendments also stipulate that tax evasion claims can only be filed at the request of the Finance Minister, while also giving the Minister the authority to resolve disputes outside of court if the due taxes are paid along with a penalty. Requests by MPs to have the tax evasion penalties set as a percentage of the taxes dues were rejected by Speaker Ali Abdel Aal, who said they would be unconstitutional since the constitution requires tax penalties to be set in nominal terms.

After voting to approve the law, Abdel Aal said “the cycle of reforms is moving fast … those trying to impede reforms should revise their positions … I am here to defend the interests of those least well-off,” according to Al Masry Al Youm.

We have a detailed look at the VAT in today’s Speed Round and a primer on what a VAT is and how it (should) work in Making the VAT Work: A Primer, below

What We’re Tracking This Week

El Sisi to visit India, China: President Abdel Fattah El Sisi is expected to make a stop in India on a state visit on Monday en route to the G20 summit in China, which will take place next week.

Feed-in tariff news coming this week? Electricity Minister Mohamed Shaker is reportedly due to hold a press conference this week to discuss the embattled program. Also this week: Oil Minister Tarek El Molla is due in Cyprus for talks.

Oh, and Apple is holding its fall launch event next week. On Wednesday, 7 September, to be precise. Apple’s event page is here (that’s where they’ll livestream the show, likely around 8pm CLT). The Verge has a rundown on what to expect, and Bloomberg says that while Apple is working on new MacBook Pros, iMacs and MacBook Airs as well as a new iPad Pro and a new monitor to replace its recently retired Cinema Display, they’re unlikely to make their debuts until later this year.

Making the VAT work: A primer

After much hemming and hawing, we are finally staring down the barrel of a value-added tax (VAT). Egypt has been wringing its hands on replacing the current general sales tax with VAT to broaden the tax base and boost revenue, but plans were put into high gear in recent weeks after the International Monetary Fund (IMF) made enacting a VAT as a condition for Egypt to receive a USD 12 bn, three-year extended fund facility.

As you’ll read in Speed Round, the VAT is now (almost) the law of the land after the House of Representatives approved it yesterday in what stands as a model of legislative efficiency. If you’ve wondered what a VAT is — how it works, where it has (and hasn’t) worked in the past, et cetera — then this primer is for you. We’ve dug deep into what VAT is, what policies tend to make it successful and those that make it … not so successful. Tap here to read the primer and make sure you feel up to speed.

Speed Round

Speed Round is presented in association with

House passes VAT with a long list of exemptions The House of Representatives approved yesterday the 74-article value-added tax (VAT) law, clearing the first obstacle on Finance Minister Amr El-Garhy’s quest for a USD 12 bn, three-year extended fund facility from the IMF.

The baseline VAT rate has been set at 13% for the first year and will increase to 14% beginning in year two. Some 56 goods and services are entirely VAT exempt, and the Finance Ministry also has a set of goods and services that will be subject to various fixed tax rates under the VAT regime but not subject to the baseline rate. If the law is implemented in October as Finance Ministry officials have suggested, state coffers should net EGP 20 bn from the tax in FY2016-17. The Finance Ministry anticipates future VAT receipts equivalent to about 1% of GDP. Finance Minister Amr El Garhy expects inflation will get a 1.3% bump as a result of the VAT, Al Ahram reports.

Amwal Al Ghad has published the full 74 approved articles, the highlights of which include:

If your annual sales were more than EGP 500k in the 12 months prior to the passing of the tax, you’ve got one month from enactment to register for the VAT. Importers of any goods subject to VAT must register with the “relevant authority” regardless of their top line. The executive regulations of the act will determine registration guidelines for all who do not meet the EGP 500K threshold. (See: Articles 16-21)

How will the VAT be applied? The VAT will be applied down the value chain and reflected in the final cost. The final cost of the good or service must also factor-in costs of components, transportation, customs duties and interest. The Finance Ministry will factor-in historical transactions between parties to ensure prices remain accurate and account, of course, for market forces. VAT will be applied on imports after customs duties are paid. (Articles 10-11)

Go clear-out that unoccupied family flat — you need more storage space. Businesses will need to keep receipts, records and other bookkeeping niceties for a five-year period. VAT tax returns are due in April, and you’ll need to remit your final VAT payment by 15 June at the latest. The executive regulations will determine the accounting standards for the law. (Articles 12-15)

Rebates and Incentives (ie: the lottery): If you’re exporting, you’re eligible for a VAT rebate on anything you sell abroad — provided the foreign exchange you generate is accounted for in the banking system as per CBE regulations. Rebates will also be offered on capital equipment and machinery for manufacturing. Incentives for consumers to collect their VAT receipts (read: the VAT lottery) will be outlined by the Finance Ministry in the executive regulations. The value of the lottery must not exceed 1% of VAT revenues. (Articles 30 & 74)

Goods traded within free zones will be exempt from the VAT, as will be anything bought using a grant or aid funding. Services by the Egyptian diplomatic corps are exempt, while goods and services purchased by the Armed Forces or for the purposes of national defense are also exempt. All contracts with the diplomatic corps and the Armed Forces will be exempt. (Articles 7, 23 & 28)

Fellow plutocrats, the House would dearly love to throw us all in jail: Criminal penalties for evading the VAT have been toughened — and MPs wanted to make them tougher still. Violators will face prison sentence of three to five years and an EGP 5,000-50,000 fine. (Article 67)

Timeline for implementation: The Finance Ministry has 30 days from the moment the law is enacted to hand down the executive regulations. Businesses have three months to become compliant under the grace period the law specifies; the Finance Ministry hopes to begin enforcing the law in October. (Articles 7 & 9)

Okay, so what’s exempt? 56 goods and services have been VAT-exempt, up from 52 in the draft that had been originally submitted to the House. A full draft of the approved exemptions list appears Youm7. Highlights include:

  • Food: All basic raw and processed food, including livestock, has been exempt with the exception of luxury items such as caviar, imported fruits and vegetables, juices and concentrates. Food sold at “non-tourist” restaurants will also be exempt under certain conditions which will be determined by the Finance ministry at a later date;
  • Financial services: Exempt are services that are the “sole purview of banks”; FX trading; non-bank financial services regulated by the Egyptian Financial Supervisory Authority; insurance and reinsurance; banking services offered by Egypt Post;
  • Infrastructure and utilities: Production and distribution of power and water, with the exception of bottled water. Food and paper waste in addition to recycled goods are VAT-exempt;
  • ADSL internet will be exempt for the first year of law only;
  • Energy and mineral resources: crude oil, natural gas, butane are VAT-exempt. Gold and silver ores and other mined or quarried goods are also exempt;
  • Healthcare: All non-cosmetic healthcare services are exempt, as are pharma products (both locally manufactured and imported). Equipment and items for blind and handicapped persons including vehicles, wheelchairs and prosthetics have also been exempted. The House had stated that it would not exempt private medical practices, but that appears to have been left out of the final draft of the list — or the final wording notes that services offered by private practitioners are basic medical services and so exempt;
  • Education: All schools and educational institutions including international schools have been exempt;
  • Transportation: Land (including taxis), air and water transportation of passengers outside the tourism industry is exempt. Exceptions include air-conditioned passenger land travel and car rental services. Certain types of ocean-going vessels, airplanes and their equipment have been exempt;
  • Real Estate: The sale and leasing of real estate is VAT-exempt;
  • Agriculture: Agriculture activities and services are exempt;
  • Publishing and Media: Printed goods (magazines, books, notebooks and newspapers) are all exempt; news agencies will be exempt, while all media content broadcast for free will also be exempt.

The agreement between Egypt and the IMF “seems to lay the groundwork for success,” Mohamed El-Erian, former CEO and co-Chief Investment Officer of PIMCO and member of the CBE’s coordination council, writes for Project Syndicate. Past experience, El-Erian notes, shows that success of IMF programmes depend on six key factors:

  • A carefully designed economic program that is locally owned and accounts for a country’s economic realities.
  • A focus on addressing social challenges that may arise – in particular, protecting the most vulnerable segments of the population.
  • A strong and sustained political commitment to ensuring the program’s proper implementation.
  • Sufficient and timely external financing.
  • Transparent and timely communication, not only between the IMF and national officials, but also with other stakeholders, particularly citizens.
  • Trust, so that if (or, rather, when) things do not go according to plan, the relevant parties can work together effectively to make the needed adjustments.

He says “the primary objective of the three-year program will be to unleash Egypt’s considerable potential, enhance growth and job creation, and tackle foreign-exchange shortages.” El-Erian believes the agreement carries a lot of good news: ”Egyptian and IMF officials are said to have placed substantial emphasis on a set of pro-growth reforms aimed at improving sectors of Egypt’s economy with significant untapped potential… the agreement is understood to include fiscal, monetary, and exchange-rate measures aimed at containing financial imbalances and ensuring the program’s medium-term viability. And, importantly, it promotes the strengthening of social-welfare programs and safety nets – features that can do much to revive the IMF’s reputation in Egypt and bolster trust among stakeholders.” The challenge now, he says, is guaranteeing careful implementation of the programme, comprehensive communication, and consistent efforts to reinforce trust between Egypt and the Fund. “It seems that Egypt and the IMF have the potential to overcome their legacy of testy relations,” El-Erian hopes.

Ramifications of ergot flip-flop: “The market is bemused as to where Egypt expects to find [mns] of tonnes of ergot-free wheat … The market though has lots of wheat with traces of ergot that it might have sold to Egypt,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Reuters. US wheat prices dropped again yesterday for a sixth consecutive session, nearing three-week lows amid high global inventory levels and the notion that Egypt won’t be buying as much wheat. Private-sector importers seem to have foreseen the zero-tolerance policy, with Venus International Chairman Mohamed Abdel Fadil claiming he had signed a contract to import 30k tons of ergot-free wheat last Friday in anticipation of the new rule, Reuters reported. He expects importers who had already signed contracts before the new announcement to likely see their shipments rejected as inspectors only look at the date of shipment arrival. He advises importers to instead try and sell their shipments abroad.

It’s not just STC, representatives from Lebara KSA are also in Egypt this week to discuss the possibility of obtaining a 4G licence, a CIT Ministry source told Reuters. CIT Minister Yasser El Kady held talks yesterday with Lebara KSA’s chairman, but no further details were provided. Domestic mobile network operators were given until 22 September to accept the terms set for obtaining a 4G licence and the CIT Ministry said it will offer it to international players if domestic ones do not present bids.

House shines spotlight on Agriculture Ministry’s role in wheat corruption: House Speaker Ali Abdel Aal referred the House investigative committee’s report on the wheat scandal to Prosecutor General’s office yesterday. The news came as MPs turned their guns away from the Supply Ministry and toward a new target: The Agriculture Ministry. The wheat committee’s report, which was discussed on Monday in Parliament, had concluded that faulty methods in tallying agricultural land slated for domestic wheat harvest played a major role in the fraud, Al Borsa reports. Sources from the ministry tell the newspaper that the tally of potential wheat yields is frequently wrong. Hacking of the supply smart cards has cost the state EGP 1 bn, some MPs declared at the hearing, which expanded its scope to cover the entire bread subsidies system, Al Borsa reports.

Meanwhile, one silo owner was released on bail in wheat corruption case: Rafaat Nossair, remains a criminal defendant in the state’s investigation of allegations the government was defrauded in this year’s wheat harvest, was released on Monday after posting bail of EGP 500k and after returning EGP 77 mn in what prosecutors allege were state funds, Ahram Online reported citing Al Ahram. The detention of another private silo owner has been extended by 15 days by the prosecutor.

Arabiyya Istithmaraat has reportedly rejected a bid by BPE Partners and Sigma Capital to buy its 80% stake in subsidiary UE Lease, claiming that offer price “is not suitable and does not reflect the stakes’ true value,” an unnamed source told Al Borsa. The firm would consider a better offer, a company official suggested, but BPE Managing Director Sherif Al Akhdar said the bidders are yet to make a new bid. We had noted last week that BPE and Sigma had submitted a preliminary offer of EGP 36 mn for the stake, pricing it at EGP 225 per share.

Free zones are coming back: The state could bring back free zones, it seems, after the incentive was one of 10 amendments to the Investment Law proposed by a committee headed by Investment Minister Dalia Khorshid, Al Ahram reports. The new amendments would also establish special investment zones and grant the boards of these zones the right to set rules and guidelines for operating in them. Other amendments noted by the newspaper include incentives for SMEs. It has yet to be announced if the amendments will resolve the issue of government tendering land, which restricts that function to the General Authority for Free Zones and Investments. The Ismail cabinet has been edging away from the clause, granting other government bodies such as the Industrial Development Authority the right to sell land to investors.

Multinationals and local importers are considering suing the Ismail government over import restrictions, Al Borsa reports. Foreign companies that export to Egypt are considering filing suit in the Administrative Court to end the exporters registry, which enforces quality control restrictions on their factories, company reps tell the newspaper. Representatives of 17 countries had indeed met with Egypt’s government at the World Trade Organization to protest the import restrictions, which we had noted back in June, and which the government denies happened. This comes as the Cairo Chamber of Commerce is gearing up to sue the government over the restrictions, said Ahmed Sheeha, head of the organization’s importers division.

The Metrojet plane crash investigation is still ongoing: Irish, French and American experts will join the inspection team, which includes experts from Russia, Germany, and Egypt, and will seek to pinpoint the area where the plane began to break up. “Parts of the wreckage had been previously gathered and moved to Cairo International Airport. The experts will attempt to reconstruct the plane,” Reuters says.

CORRECTION- In our story in yesterday’s issue on Egypt’s arrears owed to international oil companies, the unit on the amount still owed was mistakenly written as mn when it should have read USD 3.4 bn. We regret the error. H/t Youssef T.


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The Macro Picture

We may be seeing up to three US Federal Reserve rate hikes over the coming 12 months, EFG Hermes Research chief strategist Simon Kitchen told Bloomberg TV (runtime 06:29). Talk of rates being lowered because of Brexit or the global economy is now “off the table,” he added. “The direction is pretty clear, it’s time for the Fed to start raising rates,” he says. The US economic recovery continues, but the Fed needs to have firepower for when the economy slows down again as a means to get ahead of the growth curve, said Kitchen. When people feel the Fed is going to hold, a lot of flow goes to emerging market funds and benchmark markets including the UAE and Qatar, he added. “There may be an equalization in flow between the UAE and Qatar, and Saudi Arabia,” he said.

Egypt in the News

Driving the conversation this morning: Reuters’ coverage of the value-added tax looks set to be the most-picked-up international story about Egypt today. Other highlights of a mercifully slow news day for Egypt in the international press: The New York Times shines the spotlight on our delivery culture (see Worth Reading) and the WSJ pulls a Rip van Winkle.

The Wall Street Journal woke up from a years-long nap and is stunned to find there’s a parallel market for FX in Egypt. The WSJ is a teeny, tiny bit late to the party with its piece “As Egypt Struggles, a Black Market Emerges for USD.” “Emerges”? Really? Ezz Steel’s Kamel Galal and a suitcase seller named only “Kamal” make appearances in the piece.

The livestock market is in “recession” as Eid Al Adha approaches, Ahmed Shafiq writes for Xinhua. “Demand this year might be the worst in decades, and there are only two weeks away from the feast,” a camel trader says blaming the falling FX rate.

On Deadline

Constructive criticism benefits the state: Former MP and Al Masry Al Youm columnist Amr El Shobaky says questioning the feasibility and efficiency of state projects — and of the administration itself — is often incorrectly viewed as an attempt to attack the state. The failure of an administration from within is far more destructive than terrorism or protests, he says, claiming constructive criticism benefits the state.

Worth Reading

The New York Times’ Nour Youssef highlights something we in Egypt take for granted — and of which the developed world remains deprived: Being able to get everything delivered to one’s home. This is probably the first and last feel-good article on Egypt to appear in the NYT, so enjoy while it lasts. The quotes Youssef is able to extract are outstanding. A phlebotomist who makes house calls laments: “It is often exasperating when you go and find that the person is absolutely fine and just chilling at home.” (Read “Coffee, bikini waxes, X-rays: Almost anything can be sent to homes in Cairo”)

Worth Watching

A horror movie themed introduction for what would likely be the most enjoyable episode of the classic television series The Love Boat. (Watch, running time: 1:35)

Diplomacy + Foreign Trade

The Saudi Fund for Development has transferred USD 300 mn to Egypt as part of the USD 1.5 bn Sinai development loan, International Cooperation Minister Sahar Nasr told Amwal Al Ghad. This brings the total amount received from Saudi Arabia to develop Sinai to USD 500 mn after the Kingdom transferred USD 200 mn earlier this year to support SME projects, she added. Projects being financed through the loan include the King Salman University, the King Salman Bridge, and upgrades to the Kasr El Aini hospital, among others.

GAFI, Japan’s JETRO buddy-up: The General Authority for Investment (GAFI) signed an MoU with the Japan External Trade Organization (JETRO) to exchange training and workshops in the field of investment, Al Shorouk reported. A GAFI team will be trained in Japan to act as a liaison with the JETRO office in Egypt, while JETRO will send a representative to GAFI in October.

Foreign Minister Sameh Shoukry flew to Paris on Monday for talks with his French counterpart Jean-Marc Ayrault on the Israel-Palestine peace process, Foreign Ministry spokesperson Ahmed Abu Zeid said, Al Mal reported. The wars in Syria and Libya are also on the agenda.


Union Fenosa wants more Israeli gas than previously indicated once imports begin

Spain’s Union Fenosa Gas (UFG) wants even more gas from Israel’s Tamar Field than previously stated, once imports begin, unnamed sources told Bloomberg. A final agreement will be signed within a couple of months, while the first gas will be piped to the Damietta liquefied natural gas plant in Egypt as soon as one year after the signing, the source added. “The partners will need to invest an estimated [USD 1.5 bn] to [USD 2 bn] to facilitate increased volumes of gas. That would finance three new wells in the Tamar field, upgrades to the offshore platform and a new pipeline that would connect to Damietta.” UFG owns 80% of the Damietta LNG facility, and is required to drop an outstanding arbitration case against Egypt as part of the agreement, the source said.

Chinese oil company rejects payment in EGP

Chinese oil company ZhenHua Oil refused to be paid in EGP, asking for its receivables from the Egyptian government to be paid in USD as contracted, sources told Al Mal. The sources said the company is reluctant to increase investments in Egypt currently given the inconsistent payments and the current low-oil price environment globally.

Electricity Ministry seeking an EGP 5 bn loan to repay EGPC

The Electricity Ministry is in negotiations with domestic banks for an EGP 5 bn loan that will be used to repay EGPC for fuel used in power plants, Al Borsa reported. EGPC is willing cover the EGP 1.25 bn interest on the loan as a means of receiving some of its dues from the ministry, a source at EGPC said. EGPC is owed around EGP 60 bn from government bodies, the source added, the lion’s share of which goes to the Electricity Ministry at EGP 46 bn for natural gas, fuel oil, and diesel.

China’s TBEA offers to arrange a USD 400 mn loan to build power plant for Egypt Aluminium Company

China-based electrical equipment manufacturer TBEA has reportedly offered to arrange a USD 400 mn loan from the Export-Import Bank of China to build a 350 MW power plant for Egypt Aluminium Company, Al Borsa reported. The offer would include credit facilities, a 15-year repayment plan and a grace period of 24 to 48 months with 2.5% interest, according to Hisham Qasem, the commercial director of electric power company Mirage, which is working with TBEA on several energy projects.

Basic Materials + Commodities

Gov’t hammers business to keep prices low ahead of Eid, post-VAT announcement

Fully aware of the potential for price gouging since announcing the VAT, the government has launched a full court press to keep prices in check. This includes apparently meeting with business interest groups and investors association to ensure they keep prices of low in the run up to the Eid break. Sources tell Al Shorouk that an agreement has been reached. Meanwhile, Industry and Trade Minister Tarek Kabil, as acting Supply Minister, announced that the government plans to flood the market with 37,000 tonnes of sugar and is working with business associations to ensure supply of 450-550k tonnes by February, AMAY reports.

Eastern Company looking to double paid-in capital

The Eastern Company for Tobacco is considering a capital increase, according to a bourse statement. The company is looking to double its issued and paid-in capital to EGP 1.5 bn from EGP 750 mn. It is also looking to double the authorised capital to EGP 3 bn.

Health + Education

SABIS, UAE investment fund to jointly launch EGP 500 mn educational services company

SABIS educational group, which runs the Choueifat Schools regionally, and a UAE-based investment fund are jointly launching an educational services arm called Global Educational Services, Al Mal reports. The new venture targets the middle-income segment and has an initial capital of EGP 500 mn. Global Educational Services will construct five schools in the next three years under the brand name Cadmus International Schools.

CBE only provides 20% of [healthcare compounds] firms’ needs

The CBE reportedly only provides 20% of the yearly FX needs of the [healthcare compounds] division of the Federation of Egyptian Industries, said Ahmed El Ezaby, head of the division, Al Borsa reported on Monday. While El Ezaby claims the industry’s annual FX needs amount to USD 1.2 bn, Penta Pharma Chairman Ossama El Saady puts the figure at closer to USD 3 bn, as firms import around 90% of their inputs. El Saady says there is a shortage of over 1.6k types of medication, including contraceptives and kidney-related meds. Reliance on the parallel currency market has increased the cost of production by 50%, as some firms haven’t received any FX in the last three months, said Global Pharma Chairman Gamal Ezzeldin.

Real Estate + Housing

Redcon building EGP 400 mn medical park in Alburouj

Redcon Medical Park, a subsidiary of Redcon Construction, is building an EGP 400 mn medical park within the Capital Group Properties integrated community Alburouj in 2Q2017, Redcon Medical Chairman Hazem El Ashry told Amwal Al Ghad. The medical park will be built over an area of 22k sqm within the 1,212 feddan Alburouj project, he added. We had reported earlier that Capital Group Properties had signed MoUs worth EGP 40 bn with Smart Village, SABIS, Africa Crest Education, El Sawy Culture Wheel, and food company Al Bustan, to develop projects at Alburouj.

Telecoms + ICT

Telecom Egypt offers MNOs a payment plan on USD-denominated receivables

Telecom Egypt has approved collecting its USD-denominated receivables from domestic mobile network operators (MNOs) in EGP, but at an additional 3.5% interest rate, Al Borsa reported. Sources believe the move comes due to MNOs rejecting the requirement to pay for half the 4G license in USD, as the USD component in the EGP 3 bn total turnover between the MNOs and Telecom Egypt is minimal. The MNOs only generate USD revenues from international call services, the source added.

Automotive + Transportation

Latvians want to sell Egypt 300 train wagons, Transportation Ministry says

Latvia wants to sell Egypt up to 300 train wagon to Egyptian National Railways through Latvia’s RVR (not Rift Valley Railways), Al Borsa reported. The proposal would see half of the rolling stock manufactured in Latvia and half in Egypt. Also in industry news, the National Investment Bank (NIB) is reportedly studying providing an EGP 1.4 bn loan to ENR to back its investment plans for the year, an NIB board member told Amwal Al Ghad.

Banking + Finance

United Bank considering EGP 1 bn capital increase

The United Bank of Egypt is looking to increase its capital by about EGP 1 bn through converting a loan it obtained from the CBE in 2013 to equity, Al Mal reported. Sources said the move would support the bank’s capital base and help it expand activities. United Bank is still in talks with the CBE, its owner, over the move.

HC Securities, Misr Asset Management to set up two funds in October as part of partnership agreement

HC Securities and Investment and Misr Insurance subsidiary Misr Asset Management (MAM) are set to establish two funds, Dakhl Thabet and Hemaya for Capital Insurance, in October, MAM Chairman Atef El Mahmoudy told Al Borsa on Monday. Separately, MAM has signed an agreement to manage Misr Iran Development Bank’s EGP 100 mn Wafi Fund, according to MAM Chairman Atef Al Mahmoudy, Al Borsa reported on Sunday.

Other Business News of Note

250k feddans of 1.5 mn feddan project to be tendered to investors as a first phase

The government is set to tender 250k feddan as a first phase of the 1.5 mn feddan desert reclamation project in the regions of Al Farafra, Al Maghara and Toshka, according to a statement from Ittihadiya spokesperson Alaa Youssef, Al Mal reported on Monday. He added that the rest of the project will be tendered in phases up until mid-2017.

Egypt Politics + Economics

Prosecution holds police NCO on murder charges for killing driver

Microbus drivers held a strike on Monday after a non-commissioned police officer shot a microbus driver dead on the Ring Road near Maadi after intervening in a dispute between two drivers, Ahram Online reported. An eyewitness who was with the driver claimed he was hit in the head by the policeman’s gun before the driver was shot dead in the neck, conflicting with other eyewitness reports claiming that the slain driver had refused to take the policeman on a “work errand.” While the Interior Ministry’s initial statement said the shooting was the result of a “warning shot,” the prosecutor’s office later stated that the policeman in question was being held on murder charges.

Swiss court orders Mubarak case to resume

The Swiss Supreme Court ordered their Attorney General to resume the inquiry into former president Hosni Mubarak, Swiss state media reported last Wednesday. The decision overturns that of the state prosecutor’s decision in 2015 to close the case, with the court arguing that the prosecutor did not hear the arguments of the Egyptian government. Approximately USD 61 mn in assets belonging to the Mubarak family in Switzerland will remain frozen as a result of the decision.


Presentation Sports bids for exclusive rights to continental football competitions until 2029

Presentation Sports, majority owned by steel magnate Ahmed Abou Hashima, has presented a USD 600 mn bid to acquire the exclusive rights to air all African club and national team competitions until 2029, Al Borsa reports. The offer covers exclusive coverage of the African Cup of Nations competition for the seniors’ and youth levels as well as club competitions. The rights are currently held by Qatar’s BeIN Sports and the winner of the new agreement will be announced in June 2017.

Qatar’s beIN Sports to open first office in Cairo

Qatari network BeIN Sports is set to open its first office in Cairo, a company official told Al Mal. In April, the Consumer Protection Agency had accused the network of anti-competitive behavior, claiming that it increases prices and changed its TV channel packages in ways that “do not fit the Egyptian market.”

On Your Way Out

Disrupt Africa’s Tom Jackson profiled Giraffics; an Egyptian information design and data visualisation startup. Giraffics has a platform that “converts any type or form of data into an infographic video” and is currently serving 30 clients domestically and internationally.

Heading to Abu Dhabi? Don’t bank on using Uber or Abraaj-backed Careem to get around. The two ride-hailing services have suspended operations in the UAE capital after what appears to have been the mass arrest of drivers over the weekend, The National reports. Bloomberg said the two companies issued a statement saying they had temporarily pulled drivers off the streets due to “unforeseen circumstances.”

The markets yesterday

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USD CBE auction (Tuesday, 23 Aug): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Monday, 29 Aug): 12.75 sell, 12.65 buy (up from 12.70 sell, 12.50 buy from Sunday, 28 Aug, Al Mesryoon)

EGX30 (Monday): 8,032.4 (-0.3%)
Turnover: EGP 399.9 mn (8% below the 90-day average)
EGX 30 year-to-date: +14.7%

THE MARKET ON MONDAY: Egypt’s benchmark index, EGX30, closed 0.3% down despite a positive start to today’s trading session. CIB’s 1.6% de­cline dragged the market into negative territory, with Arabian Cement, Ezz Steel, and Talaat Moustafa being the worst performers. The top gainers were Orascom Con­struction, Edita and Pioneers. Market turnover was EGP 400 mn with foreign investors being sole net sellers.

Foreigners: Net short | EGP – 75.0 mn
Regional: Net long | EGP + 13.6 mn
Domestic: Net long | EGP + 61.4 mn

Retail: 60.7% of total trades | 65.9% of buyers | 55.5% of sellers
Institutions: 39.3% of total trades | 34.1% of buyers | 44.5% of sellers

Foreign: 25.5% of total | 16.2% of buyers | 34.0% of sellers
Regional: 5.2% of total | 6.9% of buyers | 3.5% of sellers
Domestic: 69.3% of total | 76.9% of buyers | 61.5% of sellers

WTI: USD 47.06 (+0.17%)
Brent: USD 49.37 (+0.22%)
Natural Gas (Nymex, futures prices) USD 2.88 MMBtu, (+0.28%, Oct 2016 contract)
Gold: USD 1,327.60 / troy ounce (+0.04%)<br
TASI: 6,071.2 (0.0%) (YTD: -12.2%)
ADX: 4,495.1 (-0.1%) (YTD: +4.4%)
DFM: 3,494.3 (+0.1%) (YTD: +10.9%)
KSE Weighted Index: 345.8 (-0.2%) (YTD: -9.4%)
QE: 11,261.5 (+0.6%) (YTD: +8.0%)
MSM: 5,779.6 (-0.5%) (YTD: +6.9%)
BB: 1,135.8 (-0.3%) (YTD: -6.6%)

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29-31 August (Monday-Wednesday): Egyptian-Jordanian Commission meeting

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

01 September (Thursday): President Abdel Fattah El Sisi is expected to be in India on a state visit en route to the G20 summit in China.

04 September (Sunday): Arab Trade & Supply Chain Finance Conference.

04-05 September (Sunday-Monday): President Abdel Fattah El Sisi is expected to be in China for a state visit coinciding with the G20 summit.

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

05 September (Monday): Markit Emirates NBD PMIs out for Egypt, Saudi Arabia, UAE at 6:15am CLT.

06-08 September (Tuesday-Thursday): Citi’s 2016 Global Technologies Conference, New York.

08-09 September (Thursday-Friday): Regeni case prosecutors from Egypt and Italy set to meet in Rome.

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

14-16 September (Wednesday-Friday): Bank of America Merrill Lynch Global Healthcare Conference 2016, London, UK.

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

19-20 September (Monday-Tuesday): Arqaam Capital MENA Investors Conference 2016, Park Hyatt Dubai, UAE.

19-21 September (Monday-Wednesday): Bank of America Merrill Lynch Global Consumer and Retail Conference 2016, London, UK.

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

22 September (Thursday): Deadline for mobile network operators to accept the final terms for 4G mobile broadband network licenses.

27-29 September (Tuesday-Thursday): Citi’s Frontier Markets Symposium – London 2016, UK.

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

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

11 October (Tuesday): 2nd Annual Leasing Conference entitled “New insights to stimulate financing instruments”, Four Seasons Nile Plaza Hotel, Plaza Ballroom, Cairo.

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

26-27 October (Wednesday-Thursday): The Marketing Kingdom Cairo 2 event, Cairo.

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

14-16 November (Monday-Wednesday): Bank of America Merrill Lynch MENA 2016 Conference, The Ritz Carlton, Dubai International Financial Centre, 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.

29-30 November (Tuesday-Wednesday): Citi’s Global Consumer Conference, London, UK.

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

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

07-08 December: Citi’s 2016 Global Healthcare Conference, London, UK.

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.

13 December (Tuesday): Amwal Al Ghad’s top 50 most influential women in Egypt women forum, Four Seasons Nile Plaza Hotel, Cairo.

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

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