Tuesday, 19 September 2017

Why we think a tax holiday for small business is the best economic idea since sliced bread


What We’re Tracking Today

From bad reporting to good policy: Last week, Al Masry Al Youm inaccurately reported that central bank governor Tarek Amer had said he reached an agreement to give SMEs tax-exempt status. Turns out, what Amer was really suggesting a form of tax amnesty for SMEs owing back-taxes. Good idea. But looking back at it, we thought: Why not give a complete, time-limited income tax holiday to SMEs that opt to go legit and become part of the formal economy? We think the idea, if implemented fully, would be a stroke of brilliance from the government. As radical as it might sound, the idea would is not novel — it’s simply a use of tax incentives to improve the tax base.

It would create the most meaningful possible incentive for companies in the parallel economy to officially register — and would promote economic growth no matter how you cut it. Benefits for companies that join the formal economy would include access to finance (including the subsidized interest rate now available for SMEs), enforceable commercial contracts, access to future tax breaks and incentive packages, to raise their competitiveness, membership with trade union associations, access to government subsidies and incentives, and employer contributions to pensions for workers. The integration into the formal economy would also allow for assets that are held informally to be recognized, overcoming some of the challenges of dead capital.

And a time-limited tax holiday doesn’t need to apply only to informal businesses. Registered, tax-paying SMEs up to a certain size — and, by extension, the economy as a whole — would benefit from an income tax break. The government would get back its “abandoned” tax haul in large part through consumption taxes via the value-added tax and payroll taxes. Heck, they’d even get some it back through the tax on dividends, which we despise. Why? Because SMEs getting this windfall would, for the duration of the tax break, reinvest and spend the money, which would create more jobs and stimulate growth.

The result: More growth now and a larger tax base tomorrow. The exemption would also prepare the market for a gradual reintroduction of the income tax down the line, but this time, it would benefit from the larger number of companies that would have been integrated officially, as well as their larger sizes having benefitted from capital investment following periods of tax exemption. The overall quality of the tax base would improve down the line and the economy would get a bold, unequivocal investment incentive.

The idea isn’t that far-fetched — our freely admitted respect for the finance minister notwithstanding, we note that Amr El Garhy mentioned in passing at Euromoney yesterday that among the measures he’s mulling to promote financial inclusion is a strategy to ease the tax burden for SMEs. What say you, government readers?

President Abdel Fattah El Sisi has another busy day today in New York, where he’sattending meetings at the UN General Assembly. He’s scheduled to address the assembly today on regional politics and the war on terror. The President will also be joining a UN Security Council summit on peacekeeping and is making the crisis in Libya a signature issue, according to Asharq Al-Awsat. We have a full rundown on his meetings in New York yesterday in today’s Diplomacy + Foreign Trade section, below.

El Sisi will also be meeting with US President Donald Trump on Wednesday, while the delegation accompanying him will sit down with the president of the World Bank as well as a number of US investors.

A wave of US investments coming? A number of leading US corporations, including Mars and Uber have apparently pledged new investments and expansions in Egypt at a meeting with President El Sisi, Investment Minister Sahar Nasr told Kol Youm’s Amr Adib The interview also revealed that the executive regulations of the Investment Act will be issued in two weeks. You can catch the full details of the interview in Last Night’s Talk Shows.

The president also sat down for a working lunch with American Chamber ofCommerce and the US-Egypt Business Council, an official statement said. Discussion revolved around enhancing trade and attracting American investors to the Egypt. El Sisi discussed economic reforms and counterterrorism with the heads of various US lobbying groups and organizations yesterday at a roundtable discussion.

El Sisi also reportedly sat down for an interview with Fox News yesterday, according to the President’s schedule which ran in Ahram Online. The talk had yet to air as of dispatch time.

The Euromoney Egypt Conference 2017 wraps up today. Trade and Industry Minister Tarek Kabil is scheduled to attend early today, and yesterday saw Finance Minister Amr El Garhy and EGX boss Mohamed Farid address the audience. (We have more on El Garhy in Speed Round, below).

Reminder- We’re heading into a long Thursday-Saturday weekend in observance of the Islamic New Year.

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Enterprise+: Last Night’s Talk Shows

The talking heads were channeling their inner Frank Sinatras last night, whistling “New York, New York” as President Abdel Fattah El Sisi’s talks with US companies to spur investment dominated the airwaves.

US companies have appetite for Egypt: A number of US companies pledged new investment or expansion of operations during meetings with El Sisi, Investment Minister Sahar Nasr told Kol Youm’s Amr Adib in an interview. These included confectioner Mars, which will establish a new production line in its Egypt factory. Uber’s newly appointed CEO, Dara Khosrowshahi, told El Sisi that the ride-hailing app will expand its services to cover all governorates in Egypt over the next three months, Nasr said. Apache, Boeing, and GE also said they are looking to do more in Egypt, according to the minister. Founder and CEO of data center developer NxtVN Khaled Sedrak told Adib that his company, which is currently based in Finland, will enter the Egyptian market soon (watch, runtime 18:26).

Nasr also revealed that the executive regulations for the Investment Act will be issued in two weeks’ time (watch, runtime 29:18).

Over on Masaa DMC, AmCham President Tarek Tawfik told host Eman El Hosary that El Sisi’s talks with investors focused on a potential FTA between Egypt and the US — something Trade Minister Tarek Kabil yesterday denied was in the cards (more on that in the Speed Round). Company reps also discussed potential investments in education, energy, infrastructure, logistics, and the automotive sector. Business leaders had apparently requested an encore of the 2015 EEDC, according to Tawfik (watch, runtime 5:53).

Hona Al Asema’s Lamees Al Hadidi delved into the issue of fraudulent real estate developers with Coldwell Banker’s Managing Director, Khaled Bahig, who advised buyers to choose where to purchase their homes based on the credibility of the developer. He noted that customers have the right to ask for all projects’ licenses and master plans to guard against scams (watch, runtime 3:53).

Lamees also zeroed in on the latest developments in Doha, where Qatari investors were shut out of Bahrain’s bond sale, leading the Qatari stock market to a five-year low during yesterday’s session (watch, runtime 5:04). Kuwaiti newspaper Al-Seyassah’s Editor-in-Chief Ahmed Al-Jarallah told Lamees that the Qatari regime is “under siege” and will soon be likened to the Qaddafi regime for its links to terrorism (watch, runtime 10:12).

Meanwhile on Yahduth fi Masr, Supreme Media Council President Makram Mohamed Ahmed told Sherif Amer that two Al Azhar University professors were barred from making television appearances due to their controversial fatwas (too disgusting to even bring up here), and are now under investigation.

Speed Round

Speed Round is presented in association with

Central Bank Governor Tarek Amer does not appear too worried about the US Federal Reserve’s impending rate increase, saying in a strong, wide-ranging interview that the expectations has already been built in. “We don’t see this as affecting us so much right now,” he tells Bloomberg TV’s Yousef Gamal El-Din (runtime: 16:05). The economy can respond to the rate increase with “good policy” and Amer notes that Egypt already has sufficient reserves to act as buffers and respond to any potential changes in the sentiment or appetite of investors. “Our exposure to the external world is not that substantial or significant so that we are concerned about the changes in investor sentiment on emerging markets.”

Monthly inflation has “peaked,” Amer believes. The comments could be construed as a hint that the central bank is looking at a timeline on which to lower interest rates, as the Monetary Policy Committee said in July that it sees a “measured easing of the monetary policy stance to allow for a reduction in interest rates” as soon as “underlying inflation” starts to moderate. “I am getting more comfortable, much more comfortable,” Amer said. Amer has clear targets for the inflation path, saying the target for 2H2018 is 13% and he expects the rates to stabilise at around 7% in the medium term. (Our gut still tells us rates won’t come down before the final meeting of the year, scheduled for 28 December.)

The economy is responding comfortably to reforms, Amer said. “We are in the right direction and we are moving very fast … We’ve been aggressive in our monetary policy, and this has been resisted a bit … But we thought it’s important so we can get our shop fixed very quickly.”

Amer expects workers’ remittances to exceed USD 25 bn and says the central bank will continue working on integrating the parallel economy and to promote financial inclusion. After addressing monetary policy and working on the fiscal discipline, the Egyptian economy is now telling a different story — “We bit the bullet, put it on the right track” — and it is now diversified and not just locked-in in just short-dated treasuries.

“The investors are ahead of Moody’s and rating agencies,” Amer told Bloomberg, commenting on the former’s decision not to upgrade Egypt’s credit rating or shift its outlook to positive. “If the investors are here, that’s all what matters,” he says pointing to around USD 30 bn in investments through FDI and portfolio inflows. “If the ratings agencies are lagging behind, I think this is up to them.”

The “tough” economic reform measures and decisions are “done,” Amer said. The next IMF review is just a “regular review … the program is working very fine.” He reiterated that the reform program is homegrown and the IMF was only brought in to enforce “discipline” and ensure the “fiscal” side is under control.

Movements in the exchange rate against the USD have not been substantial because “it is a very thin market,” Amer told Gamal El-Din. “It is not a reference market, it is a very thin market … it doesn’t represent,” he explains. “I cannot comment on [the current FX rate], but I can tell you … local industry is emerging very quickly, exports are emerging very quickly, and we expect this to continue … we are happy that the fundamentals are working.”

The government targeting GDP growth of 5-5.25% in FY2017-18, Finance Minister Amr El Garhy said, Reuters reports. Speaking yesterday on the first day of Euromoney Egypt (pdf), the minister pointed to the fiscal and economic policy changes since November 2016, including the EGP float and subsidy phase-out program, which he said were necessary to achieve current growth levels. Looking ahead, “we need to focus on improving manufacturing, exporting, closing the budget gap, then allocating the new funds to the healthcare and education sectors,” he said.

Egypt plans to narrow its USD 10-12 bn financing gap for FY2017-18 using foreigndebt issuances, said El Garhy. He told Al Borsa in an interview that the next two weeks will see the Finance Ministry begin to set the schedule forupcoming eurobond sales. The first of these — a EUR 1-2 bn issuance — is expected to take place before the end of November, The second USD 4-8 bn issuance is likely to happen in February 2018, he adds. The Ismail cabinet should be signing off on the sales within the coming weeks. The bond program comes as interest in Egypt’s debt has continued to increase, with foreign holdings of Egyptian bonds since the EGP float reaching USD 17.6 bn as of mid-September,Vice Minister of Finance Ahmed Kouchouk tells Reuters.

Other policies the government is looking to adopt include a strategy to ease SME taxation in a bid to improve financial inclusion, El Garhy added.

Remember those Panda bonds? It doesn’t look like they’re happening: It would appear that the government has nixed plans to issue yuan-denominated bonds (known as Panda bonds) this fiscal year, a government official tells Al Borsa. El Garhy had said in January that he wouldn’t rule out issuing panda bonds.

The Trade Ministry has no plan to further restrict imports, Minister Tarek Kabil told Al Mal in an interview. Measures such as the Importers Registry Act had sought to curb imports as a means of restricting the outflow of FX. The government will instead focus on encouraging exports, which grew by 8% y-o-y in 8M2017 at the same time as imports fell 29.5%. Kabil expects exports revenues to reach USD 22-23 bn by year’s end, up from USD 20 bn last year, driven by a USD 2-3 bn increase in non-oil exports. He added that the ministry is in negotiations with the African Export-Import Bank and the Saudi Development Bank for export credit guarantees.

On legislation, an amended Export Development Act is now before the House of Representatives, Kabil said. The bill is expected to allow accredited export councils to establish marketing companies, hold exhibitions, and set up logistics zones, Kabil said.

Kabil hinted that negotiations over the establishment of a Russian industrial zonewere “bumpy,” as Moscow is insisting on preferential terms that just don’t work for Egypt. Russia had abruptly postponed talks over the industrial zone to next year. The minister meanwhile denied Egypt was in talks with the US for a freetrade agreement.

One more thing that caught our eye: Talks on restarting operations at White Walker Auto (a.k.a. The zombieco that is Al-Nasr Automotive) are apparently back on track, and the company is in talks with potential foreign partners, the minister said.

IPO WATCH- Ibnsina Pharma announced its intention to proceed with an initial public offering (pdf) on the EGX. The company, Egypt’s fastest-growing pharma distributor, is offering around 25% of its shares through both primary and secondary offerings. (You can check out its corporate website here.)The transaction will take place in 4Q2017 or 1Q2018 and Ibnsina will use the proceeds of the transaction to grow its “core distribution business and support its expansion into new, higher-margin revenue streams.” Chairman Mohsen Mahgoub says, “Today, we are Egypt’s fastest-growing and second largest pharmaceutical distributor serving around 34,000 clients including retail pharmacies, hospitals and public health units across Egypt with products from over 300 local and multinational pharmaceutical companies.” The European Bank for Reconstruction and Development (EBRD) owns a 21% stake in company and Mahgoub says “the presence of institutional shareholders such as EBRD and Faisal Islamic Bank has allowed us to significantly enhance our corporate governance practices and systems ahead of our intended listing on the Egyptian Exchange.” Ibnsina Pharma shareholders include the Mahgoub family (24%), the Abdel Gawad family (23%), EBRD (21%), and Faisal Islamic Bank (16%). Other shareholders, including members of the senior management team, collectively hold the remaining 16%.

Beltone Investment Banking is acting as sole global coordinator and bookrunner on the transaction, while Matouk Bassiouny is acting as legal counsel to the issuer.

EFG Hermes announced yesterday the launch of operations in the US with an office in New York. EFG Hermes USA Inc. has been officially licensed and approved as a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation to operate in the United States since 1 September. The new office will allow the firm to expand its pool of brokerage clients and function as a starting point for the North American base for its entire product offering. “As regional appetites shift towards non-conventional investment destinations outside MENA, our presence in New York will facilitate the provision of better services to our US client base, especially with the recent growth in our product offering and market reach,” CEO Karim Awad says.

Cleopatra Hospital Group has earmarked EGP 1 bn for acquisitions that will bring its capacity up to 1,000 beds: The Cleopatra Hospital Group is planning to invest up to EGP 1 bn to bring its total capacity up to 1,000 beds in the coming period, CEO Ahmed Ezz El Din tells Al Mal. The Group is currently in talks to add 365 new beds through the acquisition of hospitals in different locations, including one in West Cairo and another in Beni Suef, he added, declining to get into further specifics. Cleo had filed last month for a EGP 700 mn capital increase to support its acquisition of a 150-bed hospital for EGP 580 mn, for which due diligence is currently ongoing, according to Ezz El Din.

Beware of callers whose numbers start with 0155: Telecom Egypt’s mobile network is called “We” (we kid you not) and it will go live on 28 September. Telecom Egypt CEO Ahmed El Behery officially launched yesterday its mobile network, branded “We,” and inaugurated the new MNO’s first customer service center in Mohandiseen, Al Shorouk reports. The network, whose numbers begin with 0155, has launched data and call services, and began selling phone lines with 4G services, which it will roll out on 28 September, alongside the three other MNOs, Youm7 quoted El Behery as saying. We’s pricing is set to be the lowest in the market, Al Mal notes alongside a price list for We’s internet bundle. The state-owned network seems to have rolled out its services without completing interconnection rate talks with the nation’s three pre-existing mobile operators. Orange Egypt had accused TE last week of demanding below-average interconnection rates.

Separately, El Behery says TE will invest EGP 7 bn over the next year to develop its cable infrastructure and phone centrals, as well as launch a marketing campaign for the company, according to Al Mal.

HIGHLIGHTS from the Euromoney conference: Speakers on the opening day of the conference yesterday included SODIC Managing Director Magued Sherif, who discussed the continued rally of the real estate market in a panel discussion on the sector (pdf). Sherif pointed to Egypt’s demographics as spurring further property development despite a 40% increase in costs following the float of the EGP. In a separate interview with Daily News Egypt, Sherif pointed to high land prices as one of the main problems the sector is facing and urged the government to act on that front. “The government must also bring more land to the market in each auction,” he said, adding that there was a new real estate policy which is expected to regulate bidding by classifying developers according to track record and development capacity. He expects to see more partnerships to mitigate against inflation.

EGX chairman Mohamed Farid spoke (pdf)about new capital market and financial instruments the bourse is planning on introducing, including a commodities exchange and allowing short-selling on the EGX.

Also speaking was Egyptian-American Enterprise Fund Executive Director Amal Enan, who discussed (pdf) how the fund’s strategy after the EGP float now focusses on investing in exporters after having been primarily concentrated on microfinance and financial inclusion. Other speakers and panelists included:

Links above are to pdfs readouts on the sessions from Euromoney’s PR agencies; we haven’t vetted them. You can read the day’s opening remarks here in Arabic.

Salah Diab acquitted of unlicensed firearms possession charges: Salah Diab, founder of PICO Group and Al Masry Al Youm newspaper, and his son Tawfik were acquitted of charges of possession of unlicensed firearms by a Cairo criminal court on Monday, according to Ahram Online. The business community was stunned back in November 2015 when Salah and Tawfik were arrested after a number of high profile cases being filed against a number of leading business figures. The arrest prompted President Abdel Fattah El Sisi to remark that “the law governs all relations between the state and businessmen and that he will not tolerate abuses to anyone.”

International stories worth noting in brief this morning include:

  • Saudi Arabia looks set to raise petrol prices by as much as 80% by November at the latest, Bloomberg reports. Goodbye, gravy train.
  • KSA is also reportedly seeking bids for a 1,600 km rail line linking its Red Sea coast to its Eastern shores.
  • It’s not a good day to be Qatar, as Bahrain rejected yesterday Qatari investors’ offers on its largest-ever bond sale, unnamed sources tell Bloomberg. This comes as Bahrain accuses Qatar of seizing some of its vessels off its coat.
  • Adding insult to injury Snapchat’s decision yesterday to remove Al Jazeera’s channel from its app in Saudi Arabia, The Financial Times reports.
  • Good luck getting ahold of lawyers and nominated directors in the Caribbean in the next couple of days: Yet another hurricane is moving into the area, this one now rated as category five.
  • John Chambers will be stepping down from his role as chairman of US tech giant Cisco once his term runs out in December, the Financial Times says.

Oh, and yesterday’s Emmy telecast was flat this year — on par with last year’s “new low” as it competed with American football for eyeballs, the Wall Street Journal reports. You can catch the New York Times’ excellent recap of the “best and worst moments” awards here.

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Egypt in the News

Let’s hope this is laid to rest for good: Leading the conversation on Egypt in the foreign press this morning is Irish citizen Ibrahim Halawa’s acquittal. He and his three sisters were cleared of all charges yesterday, Reuters reports. Halawa, who spent four years in jail pending a verdict, is expected to be released within days, The Irish Times notes. He was being tried alongside some 500 others, most of whom received sentences, including 43 who got life terms. Amnesty International issued a statement lauding Halawa’s release, but criticizing the conviction of the 442 other defendants. The Financial Time reports is among the many international media outlets to have picked up the story.

Among the other defendants who were not as lucky as Halawa was 27-year-old Egyptian-American citizen Ahmed Etiwy, who was handed down a five-year sentence, and whose case became known after Aya Hijazi’s release earlier this year, the New York Times’ Declan Walsh writes.

The detention of others, including activists, is also getting widespread coverage. 24-year-old Egyptian human rights lawyer Tarek Hussein says he was recently held unlawfully by security forces for five weeks, The Guardian reports. This jailing of “the children of the Arab Spring” and any other human rights issues in Egypt is unlikely to be resolved by the United States, Scott Long writes for The Nation.

Also in the headlines this morning: Students nationwide are taking to social media to mock a government decision to have students salute the flag at the beginning of every academic year, writes the BBC.

Diplomacy + Foreign Trade

President Abdel Fattah El Sisi met in New York yesterday with a number of world leaders, holding one-on-one meetings with UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan (pdf) and Saudi Arabia’s US Ambassador Prince Khaled Bin Salman (pdf) to talk regional and Arab affairs — where the Qatar smackdown featured heavily. He also met both Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu, according to an Ittihadiya statement. The meeting with Abbas focused on the Palestinian reconciliation efforts which appear to bearing fruit, while the meeting with Netanyahu — which was their first ever public meeting, according to the Times of Israel — discussed the peace process.

Foreign Minister Sameh Shoukry also held meetings with his counterparts from Saudi Arabia, the UAE, and Bahrain in New York yesterday, according to a ministry statement. The quartet discussed the next steps to take in their spat with Qatar, and agreed that they will maintain their demands for Doha to stop funding and supporting terrorism, Al Shorouk reports.

Shoukry also participated yesterday in a ministerial meeting of countries which see eye-to-eye on resolving the Syrian crisis (which naturally included Russia and Iran) on the sidelines of the UN General Assembly session. The group discussed their countries’ proposed plans to enact a political resolution in Syria, and their visions for the country post-Daesh.

Dabaa is also on the gov’t diplomatic agenda: This comes as Electricity Minister Mohamed Shaker assured the International Atomic Energy Agency that the Dabaa nuclear plant will be managed with a high level of safety, at organization’s general meeting in Vienna yesterday, Al Masry Al Youm reports. He added that Egypt has already secured the fuel rods to power the plant.

The European Investment Bank (EIB) is looking forward to funding more projects in Egypt under its Economic Resilience Initiative, which aims to raise EUR 4.5 bn in additional financing for southern Mediterranean countries, bank Vice President Dario Scannapieco tells Daily News Egypt in an interview. Scannapieco also discussed the EUR 400 mn in MoUs he signed last week for wastewater and sanitation projects in Egypt, as well as energy projects that he said EIB has provided EUR 920 mn in funding for since 2011, and SME support. We noted on Sunday that the EIB is also willing to provide EUR 255 mn to help fund the Cairo Metro’s Lines 1 and 2.

This comes as the European Bank for Reconstruction and Development (EBRD) will offer technical assistance to boost Egypt’s furniture exports, EBRD National Program Manager for Small Business Support Reem El Saady said yesterday, Al Masry Al Youm reports. The bank currently funds technical assistance programs for eight industrial sectors, according to El Saady.


TransGlobe well-positioned for growth in Egypt, CEO says

TransGlobe will be developing new oil fields in Egypt’s Eastern Desert along with a field in the Western Desert, TransGlobe Energy CEO Ross Clarkson tells Proactive Investors Stocktube (runtime: 5:15). The company has five production sharing contracts in Egypt producing 13,300 bpd of oil, Clarkson says. He says issues regarding receivables were resolved “about two years ago.” Clarkson is saying TransGlobe is considering listing away from North America as there are more shareholders who are comfortable with investing in Egypt “on this side of the Atlantic.”

Egypt targets importing LNG cargoes worth USD 1.8 bn in FY2017-18

Egypt has budgeted to import LNG cargoes worth USD 1.8 bn in FY2017-18, Oil Minister Tarek El Molla said yesterday, Reuters’ Arabic service reports. El Molla had said last month that Egypt would buy 80 LNG cargoes in FY2017-18. An increase in local production had driven last fiscal year’s LNG purchases down to 118 cargoes from an initial projection of 154. The trend continues this year, as Egypt is reducing its monthly LNG imports by 30% starting this month.

Oil Ministry building USD 160 mn Damietta Port pier, studying new petrochemicals projects

Engineering designs are being drafted for a new USD 160 mn pier at Damietta Port to expand shipping and storage services, according to an Oil Ministry statement. The pier, set to be completed in 3Q2020, will support urea and ammonia exports by MOPCO. The Ministry is also studying building a refinery in Suez, a propylene and derivatives manufacturing complex by Sidpec in Alexandria, and a methanol derivatives manufacturing project by Suez Petroleum Services Company in Damietta.

Solar companies complain of delays in infrastructure development for Benban solar power complex

Solar power companies developing projects under the second phase of the feed-in tariff program are complaining about the slow pace at which infrastructure is being built for the solar power complex Benban, Aswan, Al Borsa reports. Sources from the companies tell the newspaper that they haven’t seen any work being done on site over the past week, causing concern as the energy companies work to reach financial close on the projects within the next month.


Transport Minister to break ground on Dekheila port’s liquid bulk terminal

Transport Minister Hisham Arafat is set to break ground today on the EGP 350 mn liquid bulk terminal at the Dekheila port, which the Middle East Oil Tankage & Pipelines (MIDTAP) is constructing in partnership with the Alexandria Port Authority, Al Mal reports. Arafat will also break ground on a EGP 260 mn project to establish a four-story garage at the Alexandria Port.

Basic Materials + Commodities

Poppy-seed wheat cargoes could require eight months for sieving -source

Hopes for a quick ending over the poppy seed-containing wheat cargoes have been dashed as the two cargoes rejected by agricultural quarantine will most likely have to be moved for sieving. The process could take up to eight months and sieving is not possible in Safaga, Reuters notes. “The wheat silos that are present in Safaga are not equipped to sieve the Romanian and French wheat cargoes if a decision for that is issued by the public prosecutor,” a source said, adding that the process could take place in Sohag or Qena. “At this point re-export would be less costly for the suppliers,” said one agricultural quarantine inspector.

Domty sees revenues hitting EGP 700 mn in 3Q2017

Domty expects to generate a total of EGP 700 mn in revenues in 3Q2017, driven by an increase in sales in July and August compared to the first two quarters of the year, according to an EGX filing (pdf).

Health + Education

Saudi’s SAJA buys 51% stake in Biopharm

Saudi Arabia’s SAJA Pharma bought a 51% stake in Egyptian pharma company Biopharm, according to Al Borsa. The acquisition, whose was not revealed, was followed by an additional EGP 132.6 mn by SAJA into the company. The move comes as part of a strategy to increase their presence in Egypt. Baker and Mckenzie was the legal advisor on the transaction.

EGP 1 bn Canadian university to be built in New Capital

A Canadian university in the New Administrative Capital will be completed by the end of 2018 at a cost of EGP 1 bn, Youm7 reports, citing remarks by Fayez Ezeldin, chairman of the Canadian Chamber of Commerce in Cairo. The Higher Education Ministry announced in August the building of four universities, one of them the Canadian institution, in the New Administrative Capital.

Telecoms + ICT

Schneider looking to build four labs in Egypt

Schneider Electric intends to build four specialized engineering laboratories in collaboration with the Information Technology Industry Development Agency and under the auspices of the Communications Ministry, according to an official statement from The Ministry.

Banking + Finance

Banque Misr plans to exit investments worth EGP 10 bn in FY2017-18

State-owned Banque Misr is planning to exit private equity investments worth EGP 10 bn during FY2017-18, Vice Chairman Akef El Maghraby tells Al Borsa. The bank is looking to redirect the funds towards new projects in sectors such as tech and is currently running an evaluation to determine which companies to cut from its EGP 55 bn portfolio. The bank is waiting for news from the European Investment Bank, whose board will vote today on a USD 500 mn facility for Banque Misr, El Maghraby adds.

Barclays getting a name change to Attijariwafa Egypt

Barclays outlets in Egypt be rebranded Attijariwafa Egypt in November, according to Al Borsa. Morocco’s Attijariwafa bought Barclays Egypt operations last year in a transaction worth between USD 400-500 mn.

Other Business News of Note

Samih Sawiris invests in Dutch hotel booking startup Bidroom

Orascom Hotels and Development Chairman Samih Sawiris has agreed to invest a “substantial, though undisclosed” amount of money in Dutch online booking platform Bidroom, the startup announced in a press release last week.

Egypt Politics + Economics

Average yields on seven- and three-year treasury bonds drop

The average yield on seven-year treasury bonds plummeted yesterday to 15.5% from 16.692% at the last auction on 5 September, Reuters reports. Three-year bond yields fell to 15.504% from 16.518%.

National Security

Egypt to receive at least one naval vessel from South Korea

Egypt will be receiving at least one naval vessel from South Korea, according to an Armed Forces statement from Thursday, which says that Defense Minister Sedki Sobhi had inspected “one of the naval units that the Egyptian military will be adding to its fleet soon” during his visit to Seoul last week. The vessel, which the statement doesn’t name, is pictured above.

On Your Way Out

ON THIS DAY- On this day in 1893 New Zealand became the first self-governing country in the world in which all women had the right to vote in parliamentary elections. New Zealand’s women’s suffrage preceded the US’ and the UK’s, and the achievement was the result of years of effort by suffrage campaigners, led by Kate Sheppard. In 1957, the first entirely contained underground nuclear explosion producing no fallout took place in Nevada when the Plumbbob Rainier was detonated at 899 ft underground. Ötzi the Iceman, a 5,300 year-old glacier mummy from the Copper Age, was discovered in the Alps on this day in 1991. This time last year, Enterprise readers we reading about Egypt’s reversal of the zero-tolerance policy for ergot and Bloomberg’s note on how Egyptians were using EFG Hermes’ GDRs to get USD.

The Market Yesterday

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EGP / USD CBE market average: Buy 17.6171 | Sell 17.7171
EGP / USD at CIB: Buy 17.63 | Sell 17.73
EGP / USD at NBE: Buy 17.63 | Sell 17.73

EGX30 (Monday): 13,593 (-0.2%)
Turnover: EGP 1.2 bn (41% above the 90-day average)
EGX 30 year-to-date: +10.1%

THE MARKET ON MONDAY: The EGX30 ended Monday’s session down 0.2%. CIB, the index heaviest constituent ended down 0.5%. EGX30’s top performing constituents were: Elsewedy Electric up 5.1%, Arab Cotton Ginning up 2.5%, and Egyptian Iron & Steel up 1.5%. Yesterday’s worst performing stocks included: Qalaa Holdings down 2.0%, SODIC down 1.9%, and Abu Dhabi Islamic Bank down 1.6%. The market turnover was EGP 1.2 bn, and regional investors were the sole net buyers.

Foreigners: Net Short | EGP -15.6 mn
Regional: Net Long | EGP +17.9 mn
Domestic: Net Short | EGP -2.3 mn

Retail: 69.8% of total trades | 67.8% of buyers | 71.8% of sellers
Institutions: 30.2% of total trades | 32.2% of buyers | 28.2% of sellers

Foreign: 19.5% of total | 18.8% of buyers | 20.1% of sellers
Regional: 8.7% of total | 9.4% of buyers | 7.9% of sellers
Domestic: 71.8% of total | 71.8% of buyers | 72.0% of sellers


Healing the Egyptian Economic Structural Rigidities — A Long-Term Approach: Pharos Research issued a new report (pdf) investigating the structural rigidities that were characteristic of the Egyptian economy in the last 30 years. The report highlights current efforts to restructure the economy, and provides recommendations on how to achieve more sustainable and inclusive economic growth in Egypt, which requires that the government remain open and actively engaged.


WTI: USD 49.94 (+0.06%)
Brent: USD 55.47 (-0.02%)
Natural Gas (Nymex, futures prices) USD 3.15 MMBtu, (+0.10%, October 2017 contract)
Gold: USD 1,310.70 / troy ounce (-0.01%)

TASI: 7,393.39 (-0.13%) (YTD: +2.54%)
ADX: 4,453.01 (+0.14%) (YTD: -2.05%)
DFM: 3,660.48 (+0.79%) (YTD: +3.67%)
KSE Weighted Index: 443.41 (-0.35%) (YTD: +16.66%)
QE: 8,278.76 (-1.15%) (YTD: -20.68%)
MSM: 4,986.83 (-0.22%) (YTD: -13.76%)
BB: 1,298.46 (-0.12%) (YTD: +6.39%)

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18-19 September (Monday-Tuesday): Euromoney Egypt conference, venue TBD, Cairo.

19 September (Tuesday): Deadline for applications for funding under the Newton Institutional Links programme.

20-23 September (Wednesday-Saturday): 2017 Automech Formula car expo, Cairo International Convention Center, Nasr City, Cairo.

21 September (Thursday): Islamic New Year, national holiday.

22-24 September (Friday-Sunday): CairoComix Festival, AUC Tahrir Campus, Cairo.

25-27 September (Monday-Wednesday): Egypt Downstream Summit and Exhibition, Kempinski Royal Maxim Palace, Cairo.

23-25 September (Saturday-Monday): Invest In Africa Conference and Exhibitors Summit, Gala Theater Complex, Cairo.

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

September — The House of Representatives is due to begin discussion of the proposed bankruptcy bill.

30 September-01 October (Saturday-Sunday): Techne Summit, Bibliotheca Alexandrina, Alexandria.

03 October (Tuesday): Egypt’s Emirates NBD PMI reading released.

03-05 October (Tuesday-Thursday): J.P. Morgan’s Credit and Equities Emerging Markets Conference, London, UK.

06 October (Friday): Armed Forces Day, national holiday.

11-12 October (Wednesday-Thursday): 2030 Mega Projects Conference, Nefertiti Hall, Cairo International Convention Center, Cairo.

11-13 October (Wednesday-Friday): Middle East and Africa Rail Show, Cairo International Convention Center, Cairo.

15-16 October (Sunday-Monday): The Marketing Kingdom Cairo 3 conference, Dusit Thani Lakeview Hotel, Cairo.

17 October (Tuesday): The Narrative PR Summit, Four Seasons Nile Plaza, Cairo.

18-19 October (Wednesday-Thursday): Middle East Info Security Summit, Sofitel El Gezirah, Cairo.

18-20 October (Wednesday-Friday): AfriLabs annual gathering with the theme “Future of Cities: Innovation, Spaces and Collaboration,” The French University, Cairo. Register here.

23-27 October (Monday-Friday): 29th Business and Professional Women International Congress themed “Making a Difference through Leadership and Action,” Mena House Hotel, Cairo. Register here.

06-07 November (Monday-Tuesday): Crisis Communications Conference, Four Seasons Nile Plaza Hotel, Cairo.

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

19-21 November (Sunday-Tuesday): 11th Annual INJAZ Young Entrepreneurs Competition, Four Seasons Nile Plaza, Cairo.

26-29 November (Sunday-Wednesday): 21st Cairo ICT, Cairo International Convention Center, Nasr City, Cairo.

01 December (Friday): Prophet’s Birthday, national holiday.

03-05 December (Sunday-Tuesday): Solar-Tec, Cairo International Exhibition & Convention Centre.

03-05 December (Sunday-Tuesday): Electrix, Cairo International Exhibition & Convention Centre.

07-09 December (Thursday-Saturday): The Africa 2017 forum: “Business for Africa, Egypt and the World” Conference, Sharm El Sheikh.

08-10 December (Friday-Sunday): RiseUp Summit, Downtown Cairo.

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

17-21 February 2018 (Wednesday-Saturday): Women For Success – Women SME’s "World of Possibilities" Conference, Cairo/Luxor.

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