Someone in government finally had the [redacted] to say the education system is broken — and to suggest a way of fixing it

There’s plenty of news this morning on the economic front, but at the risk of coming across as pro-state toadies, may we just come out and cheer Education Minister Tarek Shawki? The man has proposed a complete overhaul of the country’s education system. There are many reasons why, in a nation of >100 mn, the private sector struggles to fill both blue- and white-collar vacancies — and the majority of those reasons rest in the education system. We have coverage in Last Night’s Talk Shows and Speed Round, below.

Foreign Minister Sameh Shoukry arrives in Khartoum today for talks with his Sudanese counterpart on Khartoum’s ban on Egyptian agricultural imports, border issues and more, All Africa reports.

Supply Ministry to deduct overdue payments to bakers from deposits: Supply Minister Ali El Moselhy reached an agreement yesterday with bakery owners that will see the ministry deduct what it owes them in overdue ins. payments from deposits they are required to pay for flour under the newly-enacted subsidy system, according to a ministry statement. The ministry also extended the payment deadline and is giving bakers until the end of the week to pay the three-day ins. fee. Unhappy with the new system that forces them to purchase flour at market prices, bakeries across the country are still threatening to strike or shut down in reaction, according to Al Shorouk.

Open any business news website this morning and you’ll be forgiven for thinking there is only one story globally that matters: Apple shares hit a new record after the company posted its best non-holiday quarter in two years on strong iPhone, iPad and Mac sales. CEO Tim Cook also said that “We really like what we see for the beginning of the back-to-school season” as Apple “issued strong revenue guidance for its fourth fiscal quarter, suggesting strong sales growth year-over-year,” Business Insider reports. “The strong guidance also hinted at the launch of a redesigned iPhone in September, which is expected to sell briskly.” Bloomberg also takes a forward-looking view, and the story is getting extensive coverage in the Financial Times, the Wall Street Journal and Reuters, depending on where you prefer to read your news. For geeks, Apple Insider, 9to5Mac and Macrumors are going wall-to-wall.

The bond market is a bubble at the moment, former Fed Chief Alan Greenspan says in an interview with Bloomberg. Real long-term interest rates are too low and unsustainable, Greenspan says, adding that when they do bounce back, the move upwards will be a rapid and could come as quite a shock. The former chairman references a theory known as the Fed Model to explain that the fact that bonds are outpacing equities as evidence that inflationary pressure isn’t priced into bonds. While stock markets have proven robust against dips in the bond market, the moves have been limited because low inflation and slow growth have kept yields also low through rough patches. Greenspan thinks that the looming USD 4.5 tn that the US government needs to unwind and the era of stimulus ending threaten to burst the bond bubble. But hey, he’s been wrong before.

Meanwhile: The greenback has bounced back from 15-month lows globally, GoldmanSachs is on a charm offensiveto climb out of last place in trading, and we’re really, really tired of reading stories such as “Saudi Aramco IPO Pits London Against New York” — choose, already.

We expected more from the talking heads on the surge in Egypt’s foreign reserves, but at least it made the headlines. But talking heads were (understandably) more interested in dissecting the newly proposed restructuring of the nation’s education system. (We have full coverage of both stories in Speed Round, below.)

On Hona Al Asema, Lamees Al Hadidi said the reserves rose largely due to government sales of debt instruments and bonds, but are still expected to have a positive impact on Egypt’s credit rating and FX rates (watch, runtime 5:41).

Over on Kol Youm, Amr Adib also touched on the reserves — with far less grace than his better half, contenting himself with questioning why the USD exchange rate and prices of consumer goods haven’t magically dropped as a result of the record-high reserves (watch, runtime 1:20). Someone needs to be run through a remedial economics class in the new thanaweya amma system.

Speaking of which: The star of the night was Tarek Shawki. Masaa DMC’s Osama Kamal spoke to the education minister about the new system that will replace thanaweya amma. The traditional system (which is now exiting stage right) killed any chance students would ever innovate, Shawki said. Under the new system, he added, students will be evaluated based on both coursework and exams, rather than just the latter (watch, runtime 13:42).

Shawki also rang up Lamees, telling her (in part) that primary-level certificates awarded after sixth grade are being scrapped because they are of no value to a child’s education, but require significant budget outlays (watch, runtime 13:02).

Lamees dedicated a large chunk of last night’s episode — her last before she goes off vacation for the month — to covering hepatitis C treatment efforts. More than 680k patients were treated between September 2015 and December 2016, according to the deputy head of the National Committee for the Control of Viral Hepatitis, Yehia El Shazly (watch, runtime: 3:56). Most cases treated with Sovaldi were successful, committee member Emam Waked said (watch, runtime: 1:00).

Back on Kol Youm, Adib zeroed in on waste management, lambasting the government for its “failed” recycling projects and calling on the private sector to take over (watch, runtime 2:46). Adib spoke to MP and House Local Development Committee member Mohamed Attia, who gave him the low-down on a government proposal to establish a solid waste management holding company (watch, runtime: 5:28).

On Yahduth Fi Masr, Sherif Amer hosted record-breaking swimmer Farida Osman to talk about her snagging Egypt’s first-ever world medal. Osman said she’s looking ahead to the 2020 Tokyo Olympics.

Central bank reserves are at their highest level ever. Provisional central bank data showed that net international reserves rose to a record-high of USD 36.036 bn at the end of July, from USD 31.305 bn at the end of June. CBE Governor Tarek Amer tells Al Mal that July saw an influx of USD 7.7 bn. He attributed the USD 4.7 bn net gain to both foreign inflows, which came in at USD 3.7 bn, and the banking system drawing in USD 4 bn. Egypt received a USD 1.25 bn tranche from the IMF loan in July. The previous peak in central bank reserves was in December 2010, closing that month at USD 36.005 bn. Reserves had dropped to a low of USD 19 bn in October of 2016, right before the EGP float the following month.

“Egypt’s reserves now cover almost eight months of imports, which adds credibility to the new currency regime,” CI Capital economist Hany Farahat tells Bloomberg’s Ahmed Feteha. The data show that Egypt is able to attract strong inflows, “implying the country’s currency problems are almost over,” he said. Prime Minister Sherif Ismail said the reserve level “means that the Egyptian economy has recovered,” the Associated Press reports. Uhm…

More than USD 13 bn has flowed into Egyptian T-Bills as of July 25, with yields soaring over 22 percent, according to Bloomberg. Foreigners snapped up debt totalling USD 3.5 bn in July. Most of the inflows go into the CBE’s repatriation fund, which backs expedited transfers of funds for foreign investors.

Capital Economics, meanwhile, says in a research note (pdf) that the CBE “has also been intervening in the foreign exchange market to prevent the EGP from appreciating, in the process rebuilding its FX reserves. This upwards pressure on the currency appears to be related to a jump in capital inflows, which we think it is likely to be temporary. Indeed, foreigners’ net purchases of Egyptian equities, which jumped immediately after the devaluation of the EGP late last year, have now started to fall.” As a result, the firm expects the EGP “to weaken modestly against the USD over the next few years.”

…All of this comes as World Bank Egypt Country Director Asad Alam said Egypt’s economic reforms are improving the country’s competitiveness and attracting new investments, according to Al Borsa. Alam says the central bank and government have achieved tangible successes in improving the business climate domestically and that the private sector is starting to see benefits from the reforms to energy policy and new legislation.

USD 2-4 bn eurobond issuance planned for 1Q2018: Egypt is a planning a eurobond issuance to the tune of USD 2-4 bn by 1Q2018, Finance Minister Amr El Garhy told the press on Tuesday, according to Reuters. No other issuances of that size can be expected in 2017, El Garhy added, despite reports last month suggesting that Egypt would be floating c. EUR 1-1.5 bn in bonds in September.

Government to switch entirely to electronic transactions by year’s end: Speaking at a presser held yesterday, El Garhy said the government plans to complete the transition from cash to electronic payments for all state- and budget-related transactions, which includes civil servants and public workers’ monthly salaries, by the end of 2017. The plan is expected to help the government better monitor its spending — which is expected to decline by c. 10% as a result of the switch — and also gradually reduce the budget deficit to a range of 3-3.5% by 2022, according to the minister. In the same vein, the government has also started consolidating different government bodies’ central bank accounts and has already agreed with the CBE to shut down 1,500 government-affiliated sub-accounts, he added.

Bankers, CBE to meet in two weeks to continue talks on central bank and banking acts: The Federation of Egyptian Banks (FEB) will be meeting with central bank officials in two weeks’ time to continue discussions of industry concerns regarding proposed amendments to the CBE and banking acts, unnamed bankers tell Al Borsa. Banks will each prepare a separate memo with their specific objections to present during the meeting, they add, explaining that the CBE is being responsive to their demands, but could still be “a little more flexible.” On Sunday, news from a meeting between the CBE and FEB suggested that the parties were heading towards a compromise on some contentious clauses in both acts, such as the central bank’s power to appoint members of a bank’s board of directors. Among the remaining thorny issues: term limits for bank MDs, the notion that the appointment of the CBE governor should not be subject to confirmation by the House of Representatives, and a mandatory “contribution” of 5% of each bank’s net profits to an industry development fund.

Listed food companies have seen their profits take a hit in 2Q2017 on the back of high inflation, interest rate hikes, and the declining purchasing power of consumers, says Reuters. Both top snackmaker Edita and dairy outfit Juhayna saw profits falls, and revenue increases at the two have come on price rises despite falling volumes.

Egyptian Financial and Industrial Company (EFIC) may call off the spinoff of subsidiary Suez Fertilizers, EFIC Chairman Ali El Sayad tells Al Borsa. Instead, the company will use increased export revenues in 2Q17 to fund its expansion. A fair value assessment by Pharos Holding and Misr Financial Investments Company have not been completed yet, says El Sayad. Suez Fertilisers was expected to list 40% of its shares on the EGX in 1Q17.

M&A WATCH- The Arab Company for Drugs Industries & Medical Appliances (ACDIMA) has reportedly acquired 100% of United Pharma IV for EGP 320 mn, Al Mal reports.

Housing Ministry gets a pass on the “single window” for sale of state land: The new Investment Act appears to have granted the New Urban Communities Authority (NUCA) an exemption from the “single window” for land sales, according to Al Borsa. The policy, which obliges different authorities to tender land in coordination with the General Authority for Investment and Free Zones, had been maintained in the new act, despite objections from other branches of government. NUCA had been one of the bodies that objected, saying it would delay tenders. As we noted back in May, the law would also allow the trade and CIT ministries to tender state land to the private sector. The new law would also restore sealed-envelope tenders, which were scrapped in the 2015 act now in force.

Thanaweya amma to be replaced by new system starting 2018-19: The traditional thanaweya amma high school system will be replaced by a new secondary education regime as of the 2018-19 academic year, Education Minister Tarek Shawki announced on Tuesday, Ahram Online reports. The new education system will part from traditional exams and scoring systems with a new GPA-based framework based on coursework and electronically-graded multiple choice exams. The curriculum is also getting a facelift and will reduce the importance of rote memorization, AMAY says. The ministry is also reforming primary education and will no longer be awarding primary-level education certificates to students after the sixth grade.

Resort tourism in KSA? Uh, sure — mocktails for all. Saudi Arabia’s Crown Prince Mohammed bin Salman announced the launch of an “international tourism project…to develop exceptional resorts on more than 50 natural islands between the cities of Amlaj and Al-Jawh.” The Saudi Press Agency says the project “will be a leading coastal destination, located on a number of virgin islands in the Red Sea,” and “will contribute to a qualitative shift in the concept of tourism and hospitality” in Saudi Arabia. The first phase includes “the development of the airport, the port, the development of hotels and luxury residences, the completion of facilities and infrastructure, and transport services.” The project’s fact sheet can be accessed here.

IMF data says electric cars aren’t just a fad. In a working paper, the Fund tracked the growth in electric car use against that of combustion engine motor vehicles and found that the connection runs almost parallel to the disruptive impact motor vehicles have had on the horse and carriage nearly a century ago. Using the horse-car parallel, the paper forecasts that by 2040 motor vehicles would mostly disappear in advanced economies and could comprise about a third of the fleet of all cars in emerging market and developing economies.

Want a glimpse of what you might be driving? We had the chance to check Tesla’s offerings recently and were impressed. And that was just a couple of weeks before the launch of the Model 3, of which Bloomberg has written: “Driving Tesla’s Model 3 Changes Everything:
We took one out for a spin, and have little doubt the age of electric cars has arrived.”

Egypt’s new record FX reserves are the top story on Egypt in the international press thismorning along with Prime Minister Sherif Ismail’s accompanying reassurance that this is “good news” that means “the Egyptian economy has recovered.”
Al Azhar’s Cairo Metro fatwa kiosks are taking on new life in the international news cycle this morning. The Guardian’s Ruth Michaelson writes: “The idea is proving popular with travellers …Yet few seemed convinced that the project would attract those with pre-existing extremist tendencies to seek guidance.” The Associated Press’ coverage of the ‘news’ also sees the piece getting wide pickup in member news outlets.

Other international reports worth a skim:

• Cairo-based personal concierge app Elves is already generating revenues of USD 80,000 per month,Elizabeth MacBride writes for Forbes’ contributor network. The company is now raising a seed round of USD 1.25 mn.
• The Financial Times is taking note of how Egypt has been helping China deport Uighur students studying in Egypt.
• The New Yorker reviews Omar Robert Hamilton’s The City Always Wins in a piece titled “What A Novel Can Say About the Egyptian Revolution.”
• Economic reforms are starting to drive major multinationals to expand production in Egypt, according to a report in Oxford Business Group recapping projects announced previously.
• Ibrahim Halawa’s defense team presented his case yesterday, and of course, only the Irish are taking note.
• The acquittal of former President Hosni Mubarak shows that “political trials that take place throughout a transition phase generate rhetoric that plays a crucial role in the denouement of political struggles,” Yoram Meital writes in the Oxford University Press’ blog.

Columnists in the local press have put their brains in neutral for Sahel season — we have nothing of interest to discuss this morning, folks.

Chinese money laundering out of Spain was facilitated by the world’s biggest bank, claims part one of a Reuters report. Spanish authorities have been making arrests in the money laundering case allegedly involving the Chinese state-owned Industrial and Commercial Bank of China (ICBC), in a case they suspect involves up to EUR 1.2 bn in missing funds. Wiretaps and the investigation ultimately led to Spanish police going into the Madrid branch of ICBC and arresting executives. The operation is based on transferring illegal funds from Chinese organized crime and tax [redacted], causing considerable stress to the Spanish government at a time of austerity and economic stagnation. The case revolves around bank employees not reporting transfers up to the standard of Spanish law, using unauthorized accounts to split up large transfers into many small parts and using a network of Chinese citizens living in Spain to perform transfers. ICBC is now facing a clampdown in other European countries as more investigations take place in places like Luxembourg and Italy, creating complications on the diplomatic level between the EU and China, two of the largest economic powerhouses globally.

An Emirati delegation that includes Emaar is set to tour the Alamein area next week to look at potential investment sites, Al Mal Reports. The visit comes after Investment Minister Sahar Nasr said that Mohamed Alabbar may be interested in investing in New Alamein and the new capital city.

President Abdel Fattah El Sisi’s sign-off has triggered the migration of a flock of 45 new Egyptian ambassadors, representatives and consuls to new posts. The president had held two rounds of meetings with the newly appointed diplomats, according to Al Shorouk and Ahram Gate.

Kazakhstan filed a note to Egypt’s Foreign Ministry to protest the detention of Kazakh citizens in Egypt, Kazinform reports. Six Kazakh students were detained by Egyptian authorities in Cairo without being charged.

Assistance for migrants: Manpower Minister Mohamed Saafan spoke with the International Organisation for Migration (IOM) about extending new assistance to migrants in Egypt, according to an IOM statement. On offer could be enhanced access to accredited vocational training migration governance initiatives.

Roads, eh? Transport Minister Hisham Arafat announced the signing of a protocol of cooperation with the Canadian Chamber of Commerce, according to Al Shorouk.

Eni boss Claudio Descalzi was in town yesterday and checked in with Prime Minister Sherif Ismail, promising that the company’s Zohr supergiant field would ramp production by year’s end on schedule, Ahram Online reports.

Egypt bought 560K cubic feet of LNG from Jordan in the past four months as part of an agreement which would see Egypt import 140K cubic feet of gas per month for 10 months, according to Ahram Gate. Jordan exported about 670 mcf of LNG last year to Egypt, says the Oil Ministry.

Eastern Tobacco has signed five agreements for new production lines at its plant worth around EUR 15 mn, Chairman Mohamed Haroun told Al Mal. The new lines are set to result in doubling the company’s output and will be received within seven months. Eastern Tobacco has also managed to increase its reserves of manufacturing inputs to last for 16 months, as more banks were willing to provide the company with trade finance since the EGP float, Haroun adds. The company sent the EGX a statement confirming the EUR 15 mn investment mentioned in the Al Mal piece, but denied any plans for a stock split.

Sugar production companies and the Sugar Crops Research Institute want the government to pay farmers EGP 500 per tonne for sugar beets, up from EGP 400 per tonne, Al Borsa reports. Industry representatives will present the new pricing scheme to the Agriculture Ministry, which it hopes will champion the issue at cabinet before the upcoming harvest season. The Agriculture Ministry aims to increase the cultivated area for sugar beets to 600k feddans, up from 500k last season.

The Supply Ministry has decided to add milk, honey, frozen vegetables, tea, butter, and corn oil to the list of subsidized goods that citizens can purchase with their ration cards from government outlets, according to a ministry statement. The decision came in response to feedback from a ministry census among smartcard holders to determine which goods they needed subsidized the most, the statement adds.

Polish agriculture machinery manufacturer Ursus is considering opening USD 50-100 mn tractor factory in Egypt, said Trade and Industry Ministry Tarek Kabil. The company would be working with a local partner on the project, he said, following a meeting with Ursus’ Director for Domestic Trade Marek Włodarczyk. The move comes as part of the company’s expansion into Africa, including in Ethiopia, Tanzania and Zambia, said Włodarczyk, according to Al Masry Al Youm.

Kato investments has sold its 11.5% stake in Egyptian Resorts Company (ERC) to Red Sea Hotels Holding Company for Tourism Investments in a EGP 121.8 mn transaction, according Al Mal reports, citing an EGX filing. The transaction took place on the market during live trading and now makes Red Sea Hotels one of the largest shareholders in the name.

State-owned investment bank NI Capital has launched a EGP 50 mn micro-financing arm called Tamweely, the bank said in an emailed statement. The National Investment Bank subsidiary, whose financial services will be backed by its own technology platform, will primarily focus its operations in Upper Egypt and the Delta. “Tamweely for Microfinance is an important milestone in our non-banking financial services platform. We are committed to providing and developing finance and capital channels with an aim to support the growth and development of the Egyptian economy,” says NI Capital CEO and Managing Director Ashraf Ghazaly. Tamweely was founded in partnership with Ayady for Investment and Development and Post for Investment Co.

Fawry, backed by a consortium of investors that includes the Egyptian American Enterprise Fund and Helios Partners, is launching a new company named ‘Fawry Plus’ that will cater to institutions, according to Al Borsa. Fawry also signed an agreement with Uber on Tuesday to facilitate a cashback rebate system for their clients and intends to offer more services and perks to Uber clients further down the line.

The government has set a timeframe of six weeks to establish its new solid waste management holding company that the cabinet approved last week, Al Borsa reports. Officials from the concerned ministries will be holding periodic meetings to formulate the company structure and determine which government body to affiliate it with.

The Court of Cassation acquitted on Tuesday Qaeda leader Ayman Al-Zawahiri’s brother Mohammed from terror charges, AMAY reports. Al-Zawahiri, who was arrested in 2014, had been charged with establishing a terrorist group and attacking government institutions and his ruling had flip-flopped before landing at the Court of Cassation.

The Media Syndicate suspended talk show host Riham Saeed’s program for three months after she pulled a Jerry Springer and hosted a married woman and the man with whom she had an affair, Al Masry Al Youm reports. The syndicate will inform Al Nahar, which broadcasts Saeed’s show, of its decision, according syndicate head Hamdy Konaissi.

Egypt and Greece have begun a multi-day joint naval and air force exercise in the Mediterranean, the Defense Ministry said in a statement. The joint-exercise, called Medusa 2017, will include Egypt’s Mediterranean-based Mistral-class carrier Anwar Sadat along with F-16 fighter jets, among other vessels. Egyptian air and naval forces participated in the Medusa 2016 exercises in Greece in December 2016.

Who knew there was an ancient Egyptian goddess of math, accounting and knowledge? Her name was apparently Safkhet, and she’s the namesake for a new hedge fund out of the US of A. Don’t hope for investment: Founder Fahmi Quadir says her edge is identifying shorts with accounting or other irregularities “that could cause a stock to lose more than 60 percent of its market value,” Reuters reports.

Three Egyptians won seats in elections for the International Council of Small Business (ICSB)’s board of directors held in Argentina, reports Daily News Egypt. Ahmed Othman was elected as the first vice president, Tanmeyah co-founder Amr Abu Al Azm is now vice-president for microfinance, and Ahmed Shalabi is VP for private projects. ICSB is a nonprofit based in Washington “devoted to the advancement of management development practices for potential entrepreneurs and existing small business.”

An Alexandria misdemeanors court sentenced former Bibliotheca Alexandrina director Ismail Serageldin to three and a half years in prison for allegedly squandering EGP 20 mn in government money, AMAY reports. Serageldin is being accused by Bibliotheca staff members of awarding contracts for library projects to friends by direct order and using library funds to finance luxury cars and private trips. The former director announced on his Facebook page that he would be appealing the verdict, denying the charges against him.

You know we have a serious obesity problem when we start winning medals in Sumo wrestling. Egypt apparently won two silver medals at the World Games 2017 in Poland for Sumo, Egyptian Streets reports. We can console ourselves that all that greasy feteer has come to good use.

Iranian director Shirin Neshat’s flickLooking For Umm Kulthum is an entry at the Venice Film Festival, Ahram Online reports.