Watch out, Heliopolis: Mubarak ordered free

Good luck, Heliopolis: Like it or not, the biggest news out of Egypt this morning is that former President Hosni Mubarak has been ordered released by the Prosecutor General’s Office. Farid El Deeb, Mubarak’s lawyer since his ouster, tells Al Masry Al Youm that the former president should be going home “in a day or two.” Youm7 carries the warning for Heliopolites. Declan Walsh has the news for the New York Times, while most media outlets are relying on coverage from the Associated Press and Reuters.

The question of whether there are Russian troops in Egypt (22 of them, in grand total, it seems) will preoccupy the chattering class today — a day in which the real heavy-lifting will be on the legislative front at various committees of the House of Representatives. This after an exclusive from Reuters that reads as if penned for a D.C audience suggests “Russia appears to have deployed special forces to an airbase in western Egypt [about 100 km from] the border with Libya in recent days.” Reuters suggests the drone-packing Russkies are supporting troops of Gen. Khalifa Haftar, the military commander of the internationally-recognized Libyan government and an ally of Egypt. The spokesman for the Egyptian Armed Forces denied there are Russian troops on our soil.

Yes, folks: The heavy lifting is on the policy front. Just see our Speed Round section this morning, which reads like nothing so much as a legislative diary. As we’ve said before, the “gutsy” work on reforms is largely done: The float of the EGP, a commitment to cutting subsidies, etc. It’s now a game of inches in the form of bureaucratic and legislative reforms.

Elsewhere in the region: Saudi Arabia’s Olayan Financing is debating whether to tap publicmarkets, with Bloomberg reporting that the high-profile investor in Egypt could offer on the Tadawul shares of more than one operating company — or even flip multiple assets into a holdco it would then IPO. Also: Foreign investors are loving Kuwait this morning. The country has already attracted more than USD 20 bn in orders for its debut USD 8 bn international bond, the Financial Times tells us (see also coverage in the WSJ and Bloomberg) and

US interest rate hike looms tomorrow, EM shrug — for now: Global business news for the next 48 hours will be dominated by the US Federal Reserve, whose Federal Open Markets Committee kicks-off a two-day meeting today. Analysts expect we’ll hear tomorrow afternoon (EDT) from Fed boss Janet Yellen about the first of (possibly) multiple quarter-point rate hikes this year. That news would once have been enough to send emerging market investors into a tizzy, but the Financial Times (paywall) this morning suggests EM investors have become less wary given the risk-reward equation has shifted rather strongly in favour of EM, which it notes the International Institute of Finance (IIF) sees as having grown an annualized 6.8% in February (and 6.4% in January) against an expected 2% for developed markets. “If confirmed, the IIF forecast would appear to show that the emerging world has broken out of the downward trend that has been in place since the global financial crisis,” the paper notes.

The punditocracy is kicking into overdrive with hot-takes on the Fed. There are fears that Yellen won’t keep raising rates, the notion that three rate hikes may not be enough, and fears that a Trump presidency is “clouding” the issue.

Also: A looming blizzard has postponed Trump-Merkel day to Friday and oil has now posted its biggest week-on-week drop in four months. (And warning if you’re heading to NYC or other points on the U.S. East Coast: The “weather event” has seen thousands of flights cancelled or delayed.)

World Bank postpones visit, Egypt positioned to lead WBG’s African board in 2018:The World Bank Group has postponed until April its visit, previously expected this week, to assess progress on Egypt’s economic reform agenda, Al Borsa reports. Investment and International Cooperation Minister Sahar Nasr had met with a WB workgroup regarding the organization’s Doing Business report, as we noted last week. Egypt was selected as the new first vice-chairperson of the World Bank and IMF Board of Governors for African Countries, Zawya reports. Nasr said the new position “paves the way to Egypt’s leadership of the board” in 2018 a position currently held by Benin.

Meanwhile, Prime Minister Sherif Ismail met with World Bank Vice President for Global Practices Jan Walliser yesterday to discuss economic reform and his government’s bid to raise Egypt’s ranking in the Doing Business report, according to a cabinet statement. Shocking exactly no one, Walliser stressed the importance of pressing ahead with reforms and passing key pieces of legislation to improve the country’s business and investment climate.

Monday was a humdrum night on the airwaves, with nothing to break the routine except an image that went viral showing an angry investor walking into a conference carrying a white shroud that symbolizes death to protest bureaucracy.

90 Minutes’ Moataz El Demerdash spoke to Luxor Governor Mohamed Badr about the businessman who walked into a press conference carrying the white shroud of his ‘kaffan’ (an action customarily associated with ending tribal feuds in Upper Egypt that usually involve a dead person) after being denied permission to build a petrol station inside a Luxor industrial zone, which Badr says is illegal (watch, runtime 5:42).

Yahduth fi Masr’s Sherif Amer zeroed in on the Supreme Judicial Council rejecting the House of Representatives’ proposed amendments to judicial codes, which would give the president the authority to appoint the heads of judicial, a power that presently rests with the judiciary. The Supreme Judicial Council’s vote had been unanimous, Ahram Online reports. The House took the amendments off their agenda pending further revisions, which they expect to finalize before the end of March, MP Ahmed Helmy told Amer.

On Kol Youm’s interim host, the actress Ragaa El Geddawy, covered FEP Capital’s Monday press conference in Cairo, where Managing Director Omar El Maghawry reaffirmed the company’s plans to invest EGP 250 mn in SMEs and distressed manufacturers over the next two years (watch, runtime 3:42).

Meanwhile on Al Hayah Al Youm, Lobna Assal hosted Dietrich Raue, the lead archaeologist on the Egyptian-German team handling the Matariya dig, who confirmed that the statue believed to belong to Ramses II was in fact broken before they began their work (likely during antiquity to be used as building material) and said that recovering the second half of the statue on Monday, which is bulkier, was a much more challenging feat (watch, runtime: 2:22).

Lamees El Hadidy and Amr Adib are still off the air while the latter convalesces.

Could the Investment Act be split into two laws? The House of Representatives’ Economic Committee is leaning toward splitting the proposed Investment Act into two bills: One that would focus on private-sector investors, and another that would government state investment agencies, Youm 7 reports committee chair Amr Ghallab as saying. The much-anticipated law has already been reworked in the last few months to reflect input from state entities and business associations. Ghallab didn’t indicate whether the process could further delay the planned late March / early April vote on the bill.

Also in the House yesterday: House Speaker Ali Abdel Aal referred yesterday the text of the agreement with the International Monetary Fund on a USD 12 bn extended funds facility to the House’s Economic and Legislative Committees for review, Al Mal reports.

No Contractor Compensation Act before mid-April: Contractors shouldn’t expect until sometime in April a bill designed to allow the government to compensate them for losses on state contracts that need to be repriced post the float of the EGP.Housing Committee member Khaled Abdel Aziz says. Media reports last week said the legislation was due to come up yesterday for a vote of the House general assembly. House Housing Committee chair Alaa Wali also said on Sunday that the final draft would come to a vote within days, after contractors went berserk over what they perceive as delays in issuing bill, threatening to derail projects and requesting extensions of contract terms until they are compensated, which Wali said was uncalled for.

As expected, House and civil servants want handouts during a time of austerity: The Ismail cabinet has refused a request from the House Manpower Committee to give civil servants an additional 10% social welfare bonus on top of the 7% annual bump granted under the Civil Service Act, unnamed MPs tell Al Borsa. Articles 37 and 38 of the Act’s executive regulations stipulate a 7% annual raise for all civil servants and allows an additional 5% performance-based bonus for high-flyers. The regulations do not include the bonus, but Manpower Committee head Mohamed Wahaballah says that public and private sector employees alike have been granted a social welfare bonus since 1987. The newspaper’s sources say Cabinet is offering a total raise of 10% including the bonus. MPs reportedly held closed-door meetings with the finance, manpower, and public sector affairs ministers two weeks ago to discuss the issue. They have threatened to put the issue to a vote in parliament if the ministers do not respond to their demands by Wednesday.

Egypt’s reforms are showing signs of success, Ahmed Feteha writes in Bloomberg, “foreigners are investing again in stocks and local-currency debt, and [USD] are becoming more available.” Feteha notes, however, that the benefits of the reforms are not yet apparent in all areas and lists a number of challenges. He says there are challenges to economic stability, as the “limited protests last week against lower bread subsidies illustrate the potential for instability,” even though the risk. Tourism is still struggling, especially with the continued flight ban from Russia. Also a concern is rising inflation and its impact on reducing the drive of consumption of GDP growth. Exports will also take time to adjust to relying less on imported inputs and overcome the “limited capacity to expand” and “significant red tape,” and the same applies to attracting foreign investment.

Choueifat off the Education Ministry’s naughty list: The International Schools of Choueifat in Egypt are no longer under the administrative and financial control of the Education Ministry after complying with the ministry’s demand that it collect tuition in EGP, not USD, sources tell Al Mal. The schools were one of several private-sector international and language schools placed under ministry control last year for running afoul of the ministry’s tuition policies.

Cairo Metro under pressure to pay suppliers: Get beyond the alarmist (and wholly unrealistic) suggestion that the Metro could be closed down for any period of time and there’s clearly an issue at the Egyptian Company for Metro Management and Operations. Al Mal suggests that at least 11 companies are refusing to supply spare parts and maintenance services until the company makes good on its debts. An unnamed government official cited in the piece blames the impasse on both Cabinet’s refusal to raise ticket prices and at the feet of the Finance Ministry, which he alleges has yet to cough up EGP 150 mn owed to contractors. The newspaper says that Cairo Metro Ahmed Abdel Hady announced yesterday that Germany’s ThyssenKrupp is refusing to sign a new contract to maintain escalators and elevators in the system until it receives overdue payments for its previous maintenance work.

Things are getting ugly at Careem: The now former managing director of Careem Egypt might be suing the company after he was unexpectedly fired earlier this week and replaced with Ramy Kato, sources close to him tell Al Mal. “I did not step down,” Fakharany tweeted yesterday, “I was fired in an insulting, surprising way.” Fakharany and other company execs are said to have clashed in recent weeks, the sources add. Careem has not yet commented on the situation in an institutional capacity.

Shocker: Egypt is not a major automotive producer by global standards. Egypt was ranked as the 39th largest auto producer globally of the 40 nations surveyed covered in the International Organization of Motor Vehicle Manufacturers (OICA) global production statistics report for 2016. That’s one place better than in 2015 thanks to a 0.6% rise in the country’s overall motor vehicle production during the year. The increased owed mainly to a 5.4% y-o-y bump in heavy truck output to 25,300 units last year, despite a drop in passenger car production to 10,930 units from 12,000 units in 2015. You can view the full statistics here.

** EARNINGS WATCH- Oriental Weavers reported a consolidated net profit of EGP 528.9 mn in 2016, up from EGP 339.1 mn a year earlier, the company said in its earnings release. It sees “export performance in [USD] terms continuing to recover and our successful response to the floating of the EGP locally, further growth in 2017 looks assured. Orders are in hand from top customers, new clients are lined up and opportunities to expand online sales continue: the results should be reflected in our numbers in the second half of 2017.” Oriental Weavers is proposing a dividend of EGP 1.4 per share.

Telecom Egypt posted a consolidated net profit of EGP 2.7 bn in 2016, down from EGP 3.0 bn a year earlier. The company’s revenues rose in 2016 to EGP 14.1 bn from EGP 12.2 bn the previous year. A TE board official told Reuters the company is proposing a dividend of EGP 1 per share, up from EGP 0.75 per share a year earlier.

Prosecutor General refers CAF president, secretary general to criminal trial for Lagardère Sports agreement: Egypt’s top prosecutor will take Confederation of African Football (CAF) President Issa Hayatou and Secretary-General Hisham El Amrani to criminal trial to face allegations they violated fair competition laws, according to an emailed statement from the Egyptian Competition Authority (ECA). The authority had accused Hayatou in January of reaching an agreement with Lagardère Sports on a 12-year agreement to broadcast CAF matches without allowing other bidders. CAF issued a statement earlier this week saying the ECA’s allegations are “unsubstantiated.”

Hayatou is apparently also in hot water with FIFA, whose audit and compliance committee reportedly requested that the organization’s ethics committee dismiss him from his post after learning of the corruption charge, a CAF source tells Al Borsa. CAF is scheduled to hold elections for a new president on Thursday.

President Abdel Fattah El Sisi pardoned 203 people yesterday who were convicted and jailed for their participation in illegal protests, according to the Associated Press. The pardon “did not cover any of the iconic, secular activists jailed for violating the 2013 protests law.”

Key features of the Universal Healthcare Act were announced over the weekend at a workshop attended by Deputy Finance Minister Mohamed Maait, Health Minister Ahmed Rady and representatives of the World Bank and the French Development Agency. The ministries are finalizing the latest draft and are also working on the executive regulations. It is unclear when the draft will be ready, but Rady had suggested earlier this month that it will not be ready for the House of Representatives before June. While it appears that more needs to be done to iron out the bill, the broad strokes have been sketched:

The Universal Healthcare Act will see three authorities set up to manage the new state healthcare plan, said Maait. The Social Health Insurance Authority will be charged with funding the new healthcare system, while the Healthcare Authority will be in charge of managing healthcare services provided by the system. A third authority will be formed to ensure quality control at hospitals providing services under the act.

Who will benefit? Maait said that all Egyptians citizens will eligible for coverage and emphasized that the poor will be exempted from paying premiums. An earlier draft released last year suggested that individuals earning under EGP 250 per month and families with incomes of under EGP 300 per month would be exempt from paying into the state health insurance fund. The Medical Syndicate argued at the time that those earning below the minimum wage of EGP 1,200 per month must be exempt.

How will the state fund the new system? Employers and workers are expected to pay into the healthcare system, though there has been no update as of yet on the rates which have been set up for that. It had been previously reported that premiums for employers are expected to be the equivalent of 3% of each employee’s salary, while employees would be responsible for a 1% tithe. The three authorities will apparently be allowed to invest some of their funds and use the proceeds to fund the system. A portion of the sin tax on cigarettes will also be used to fund the program, Al Mal quotes Maait as saying.

Rolling out the act: The new system will be rolled out in phases nationwide by 2030, Rady told the House Health Committee. The readiness and quality of state hospitals will be the criteria in determining which governorates adopt the system and when, he added. The system will be introduced first to Port Said, as state hospitals are nearly six months away from meeting the quality criteria mandated by the act. Cairo will be the last governorate to follow suit, he said.

What we haven’t yet heard: The government hasn’t spoken for some time now on the private sector’s role in the new healthcare system. Previous reports had suggested that the private sector would be welcome to provide services and that the sector would remain open to FDI. It is unclear as of yet whether private sector hospitals and insurers would be part of the system or run parallel to it. We haven’t heard any update on whether a uniform pricing mechanism for state and private hospitals is still on the table or whether that has been scrapped. Finally, we don’t know what the proposed system will cost: Prime Minister Sherif Ismail had said early in 2016 that government will spend EGP 90-100 bn on the new universal healthcare system. This will undoubtedly rise significantly following the float, and is one of the reasons why expenditures on the FY2017-18 budget have surpassed EGP 1.1 tn. The Finance Ministry plans to complete its actuarial study on the act this month.

International coverage of Egypt is still slightly biased toward the extraction of the possibly 3,000 year-old torso of a statue presumed to be that of Pharaoh Ramses II, but that will shift during the day as reports on of a court order setting free former President Hosni Mubarak makes the rounds.

Increasing human activity and the ballooning population in Egypt have “seriously altered” the Nile’s flow conditions, which, coupled with the looming Grand Ethiopian Renaissance Dam, will likely result in a freshwater crisis for Egypt by 2025, ScienceDaily reports. Wait, it gets worse: Citing a study from the Geological Society of America, ScienceDaily says that “the coast 20 to 40 km of [Nile] delta surface will be underwater by the end of this century” due to rising sea levels.

US officials should remain firm on the necessity of human rights to the maintenance of security and stability in their meetings with Egyptian representatives, Amr Kotb and Allison McManus write for The Hill. “Particularly, they must insist on the protection of civil society as important to a country’s social and economic health, especially during a time of economic crisis when non-governmental organizations are needed to hold the state accountable and provide essential services to citizens.” Kotb and McManus also believe the US should “reconsider the assistance package as an important point of leverage, catering defense equipment to the threat at hand, insisting on opportunities for monitoring and evaluation, and preserving conditionality on democracy and human rights issues.”

Alaa Al Aswany’s book The Yacoubian Building deserves a Nobel Prize, retired Israeli secret emissary to Arab countries and the head of the Defense Ministry’s Political-Military Affairs Bureau Amos Gilad, told Ynet. “If I were a member of the Nobel Prize committee, I would give him the award. I learned a lot about Egypt from this book. It’s a must-read.” Gilad gave Ynet an interview recounting stories from his experience across the years. He spoke about multiple incidents in Egypt, including how security officials had to restrain Palestinian officials from attacking him after warning about holding elections in 2006. Gilad also says he received warm messages from “the Egyptians, the Jordanians and the Turks” following the announcement of his retirement.

Other coverage of Egypt in the international press worth noting in brief:

• Farid Farid asks if Gamal Mubarak is eying Egypt’s presidency in an article for the Sydney Morning Herald. “Mubarak has shown up at a wedding, a funeral and a soccer match, happily snapping selfies with onlookers still enamoured of the flamboyant figure groomed to succeed his father.”
• Egyptian women are “pushing gender boundaries” and “entering into traditionally male-dominated jobs,” according to a report in Africa News.
• Ahmed Mustafa says the Ikhwan are the “root ideology for all militant and terrorist groups” in a piece for Gulf News.
• “Egyptian economists and businessmen are finally giving off an air of optimism these days after witnessing a state of instability and skepticism,” according to Middle East Observer.
• Egypt is not the same place it used to be three years ago, and its freedoms and economy alike are being “abused,” Bassem Youssef tells a Huffington Post contributor who decided to describe the comedian’s eyes as “hauntingly intense.”
• Tunisia, Morocco and Egypt are growing into global hubs for social impact start-ups, helped in part by an influx of foreign funding which plugging the “gap” left by the banking system, writes Zouhour Ben Hamdi for Econo Times.

Ziad Bahaa El Din asks whether we really have a parliament, in a column for Al Shorouk. On legislation, he makes points to the House of Representatives having passed 340 laws issued by presidential decree without serious discussions in addition to not holding any meaningful assessment on the Ismail cabinet’s reform agenda when it was pitched to the House in March 2015. The house did not amend the protest law despite the Constitutional Court’s ruling that it includes unconstitutional articles. On the economic front, he wonders how the House has not yet discussed the IMF loan. The Tiran and Sanafir islands and the Renaissance Dam issues have not been on the House’s political agenda, either.

A video of Adele kissing the hand of a Muslim fan went explosively viral, garnering much love from the UK singer among the Muslims of the twittersphere. The video (watch, runtime: 0:12) shows a fan wearing the hijab kissing the hand of Adele during a performance (as we are wont to do), and the singer responded in kind.

There is “no confirmation” Egypt was invited to observe this week’s Syria reconciliation talks in Kazakhstan, Foreign Affairs Ministry spokesman Ahmed Abu Zeid told Sputnik. The talks are set to be held in Astana today and tomorrow and UN Special Envoy for Syria Staffan de Mistura and US officials have been invited as observers. Separately, Minister Sameh Shoukry urged “rival Libyan factions to keep talking,” according to Ahram Online. “All parties should express an amount of flexibility in order to make this dialogue [Libyan-Libyan] a success,” Shoukry says.

Egypt and Iran are unlikely to re-establish full diplomatic relations any time soon despite recent backstage talks, Omid Khazani writes in Al Jazeera after speaking with Iranian analysts “Cairo’s concerns and difficulties for resumption of diplomatic ties with Tehran is much more serious," said Mosayyeb Naimi, editor-in-chief of Iran’s Arabic language Al Wifaq. He says that “the two countries’ efforts to reach a thaw in the relations have been constantly thwarted by some regional countries.”

The Egyptian-Lebanese Africa Trading and Investment Company is looking to increase Egyptian exports to the continent to USD 55 mn by the end of the year, and has signed agreements worth USD 25 mn during the first half of 2017, Al Borsa reports. The company, which was established last May, will open an office in the Ivory Coast and begin talks with the country’s importers, the company’s Vice President Magdy Tolba says.

Meanwhile, Sudan is looking to escalate its trade war with Egypt, with the Sudanese Industry Ministry sending an official request to the Trade Ministry calling for it to ban tomato sauce, ketchup and jam, Sputnik reports.

Illegal migration to Europe topped the agenda at a meeting between a German parliamentary delegation and the head of the House Social Solidarity Committee Abdel Hady El Qasaby Al Mal reports

Orascom Construction (OC) is in talks to form a consortium to bid on establishing the 6 GW USD 8 bn Hamrawein “clean coal” power plant, CEO Osama Bishai tells Al Mal. Bishai named Shanghai Electric, Dongfang Electric, Mitsubishi–Hitachi, and Sumitomo Electric, as potential partners the company is negotiating with. This appears to contradict reports on Al Borsa we had noted earlier this month that OC had already formed a consortium and has presented a bid on the project.

Infinity Solar is in negotiations for over USD 45 mn in loans to fund its 30 MW solar power plant as part of phase two of the feed-in tariff (FiT) program, human resources director Hisham El Gamal tells Al Mal. The company is in talks with four lenders including the International Finance Corporation and the European Bank for Reconstruction and Development, he said. The Egyptian Electricity Transmission Company sent power purchase agreements and contracts to FiT phase two investors two weeks ago to review them and send them to financial institutions, a source at the company tells the newspaper.

The government has set a base FiT rate for waste-to-energy projects at EGP 1.21 per kWh to account for cost increases after the EGP flotation, and stipulated that 50% of the rate be calculated according to the exchange rate on payday, sources from the ministry tell Al Borsa. According to the sources, the rate will increase to EGP 1.45 per kWh if the USD rate continues to rise. Businesses had suggested a rate of EGP 1.10 per kWh.

Airline Petroleum Air Services (PAS) will spend USD 80 mn in 2017 on modernizing its fleet used to service petroleum companies and projects, vice president Hany Abdoun said, according to Daily News Egypt. The company is expected to receive newly purchased airplanes in July and October, according to preliminary agreements, Abdoun said.

Ezz Steel is planning to export 1.5 mn tonnes of steel, anticipating sales of USD 800 mn in 2017 on exported steel, corporate sales officer Samir Naaman tells Al Mal. The company targets producing 5 mn tonnes in 2017, up from almost 3.5 mn tonnes in 2016.

Police has “thwarted 24 separate cases of attempted antiquities theft within the last week alone,” a local security source tells Anadolu Agency’s Omar Thabet. “In the period from March 7 to 12, Egyptian tourism and antiquities police carried out raids targeting suspected antiquities thieves in ten different provinces,” the source said.

Egypt and Jordan can boost tourism to both countries by forming a joint tourism promotion strategy and facilitating the flow of tourists between the two countries, Jordan’s Tourism Minister Lina Annab said on Sunday, The Jordan Times reported. Annab called on Egypt to facilitate the process of traveling between Jordan’s Aqaba and Egypt’s Nuweiba in order to cater to tourists’ needs. The two countries are currently looking into offering direct flights between Cairo and Aqaba, according to a member of Jordan’s Inbound Tour Operators Association.

The Egyptian Gulf Bank (EG Bank) and Qatar National Bank (QNB) will fund 21% of a EGP 20 bn facility for the Egyptian Electricity Holding Company (EEHC), Al Mal reports. EG Bank will provide EGP 2.5 bn, QNB will contribute with EGP 1.7 bn. The National Bank of Egypt (NBE) and Banque Misr were tapped in January by the EEHC to arrange for the syndicated loan, with Banque Misr lending EGP 3.6 bn. NBE is working is looking to get other banks to finance a EGP 1-1.5 bn tranche of the facility. EEHC had also requested that NBE and Banque arrange a separate EGP 37 bn loan earlier this year to fund the company’s expansions in power distribution and transmission projects. Other banks have reportedly been asked to come in on the 15-year loan.

National Bank of Abu Dhabi (NBAD) Egypt launched a new internet banking platform powered by CR2’s BankWorld Internet platform, according to Finextra. NBAD Egypt will also be launching a new mobile app soon, the report adds.

Trade and Industry Ministry Tarek Kabil issued a decision to begin restructuring the Ministry to merge the functions of trade and industry into a central unit, according to Al Masry Al Youm. The restructuring aims to create a structure that facilitates processes and improves transparency and performance measurement, Kabil says.

The House of Representatives’ committee on education is demanding more funding for education be included in the next state budget, Al Masry Al Youm reports. The Education Ministry should present the committee with a new education budget on Wednesday, according to MP Hany Abaza.

The Social Solidarity Ministry has eliminated 72,000 moochers from its cash benefits programs Takaful and Karama, according to Assistant Minister Nevine El Kabbag, Al Shorouk reports.