iPhone manufacturer Foxconn looking at Egypt

We are nearly half-way through the month of Ramadan. Just sayin’.

Foreign ministers from Egypt, Jordan, and Palestine foreign ministers are meeting in Cairo today to discuss the latest developments in Palestine, Al Shorouk reports. Egypt has been trying to broker a ceasefire in the latest flare-up between Israel and Gaza by urging Hamas to stop attacks on Israel.

Afreximbank is hosting today a conference on how to grow trade between Egypt and the rest of Africa. The event is a precursor to the Afreximbank-backed Intra-African Trade Fair, set to run in Cairo from 11-18 December. More information on today’s conference is on the event’s Facebook page.

Is the lack of interest in finance careers among twentysomethings just an “Egyptian thing”? If you’re like us, you spend a considerable amount of time wondering why your friends / siblings / kids don’t share your interest in a career in finance. In the 1990s and early 2000s, Egyptians seeking non-government employment looked to finance (or, secondarily, to multinationals of any flavour) as the ‘hot’ career path. Today, nearly everyone we know in the industry has complained to us that investment banking, brokerage, asset management, research and PE jobs are going unfilled. At a time when the economy is starting to boom, investment banking jobs are of little interest to really bright people in their early-to-mid 20s.

What are they doing instead? Based on dozens of conversations in recent months, the hot paths today for recent grads are: Going to startups in the hope of picking up skills they think will help them start their own businesses. Seeking employment (any kind of employment) abroad. Briefly touching down in the workforce after uni before rocketing off to grad school — in a non-business, non-finance field. Gigs in civil society are are also increasingly cool, and STEM graduates (today’s equivalent of the handassa grads of the 1990s and early 2000s who once flocked to finance) are being hoovered up by Sweden, France and Germany, all of which have built one-way talent pipelines into Egypt.

Guess what? Twentysomethings in Europe are very interested in careers in finance, the Financial Times reports, noting that “about 110,000 students applied for Deutsche Bank’s graduate scheme this year in the most striking example of millennials’ appetite for careers at even the most troubled banks.”

Remember how we said 2018 would be about volatility? After a global freakout on Tuesday that saw a broad selloff from Asia to Wall Street that hammered bank shares in particular, US stocks rallied yesterday. The S&P 500 erased its Tuesday losses on “signs of easing political turmoil in Italy and as a surge in oil prices boosted energy stocks,” Reuters reports. Here at home, the EGX is now up 11.6% year-to-date.

Across the pond: US regulators have begun a major easing of the Volcker rule. The change will make it easier for banks to engage in market making and, at the same time, lower compliance requirements for traders. The rule was originally created by the 2010 Dodd-Frank act to “ban lenders that accept U.S. taxpayer-insured deposits from engaging in proprietary trading or investing in investment vehicles such as hedge funds or private equity funds,” Reuters reports, noting that financial outfits from Europe to Asia will benefit from yesterday’s changes. The Financial Times has more, as does the Wall Street Journal, which emphasizes that the change would lower compliance requirements for traders while giving them more freedom to buy and sell securities.

If your business is even partly influenced by trends on the internet, we have your must-read for the weekend: Mary Meeker’s annual internet trends report is out. The 294-page slide deck, presented this year at the Recode’s Code 2018 conference, is the ultimate authority on the state of affairs on the interwebs. Among her nuggets out overnight:

• Growth in internet users is going to slow, because the majority of the world’s population (as in just about exactly 50%) has access to the internet;
• People are spending more and more time online;
• And more than 50% of those hours spent online are spent on mobile;
• Global smartphone sales have ground to a halt;
• “Google is evolving from an ad platform into a commerce platform. And Amazon is evolving from a commerce platform to an ad platform.”

It goes on and on — one of those decks in which there really is something for everyone. You can flip through Meeker’s full presentation here(Slideshare) or watch her on stage at Code 2018 (runtime: 33:15). Recode has a transcript of her talk if you’d rather read than listen this morning, and her predictions are sufficiently influential that the deck is, as usual, in the Financial Times and CNBC.

Your Ramadan rundown for today:

Bank hours run 09:30 am to 01:30 pm for customers and from 09:00 am to 02:00 pm for employees, CBE announced.

The EGX is running shorter trading hours. The trading session kicks off at 10:00 am, but closes at 1:30 pm. Tap or click here for the full schedule.

So, when do we eat? For those of us observing, Maghrib is at 6:51 pm CLT today. You’ll have until 3:11 am tomorrow to finish your sohour.

In miscellany today:

If you’re north of age 45, it’s probably time to send a probe where the light doesn’t usually shine. New guidelines from the American Cancer Society now recommend that people begin routine colorectal cancer screening at age 45, not 50 as was previously the case. Why? “Colorectal cancer … has been rising in young adults [and] is no longer just a disease of older people.” Read the guidelines or pick up the story in the New York Times.

If you’re a gadget geek, the coming few days are goig to be fun. Apple’s WWDC conference gets underway on Monday, leaving our fellow iSheep to spend the weekend speculating about what iOS 12 has in store and what hardware, if any, may be unveiled. And Mark Gurman is out with a piece for Bloomberg with detail on Google’s Pixel 3 and Pixel 3 XL. The latter will have an iPhone X-style notch, he suggests.

The season’s finale of The Americans was last night. No spoilers, please — we’ve saved the full final season for a Ramadan weekend / Eid weekend binge.

President Abdel Fattah El Sisi will be sworn in for his second presidential term on Saturday, 2 June, at the House of Representatives, Al Masry Al Youm reports. The ceremony will begin at 10:30am CLT.

Do you have an idea for a tech-enabled business idea that could make agriculture in Egypt more efficient? The World Bank may have seed funding, access to mentorship, and an accelerator / incubator program for you through its “DigitalAG4Egypt” program. The deadline for submissions is 1 July. Tap or click here for more information.

Upcoming milestones to watch on our march toward becoming a regional energy hub:

• Egypt could sign the contracts its USD 60-70 mn grid connection project with Sudan just about any time now. Eight local and global players have been invited to participate in the prospective tender to develop the project;
• Talks with Cyprus and Greece on a USD 4 bn interconnection project will kickstart within the coming month when a Cypriot delegation visits;
• Contracts for an interconnection with Saudi Arabia could be signed by the end of June, sources say.

Nothing to see here, people. Move on. Talkshows are on hiatus until after Eid.

INVESTMENT WATCH- iPhone manufacturer Foxconn eyeing Egypt opportunities: Prime Minister Sherif Ismail met on Wednesday with execs from Taiwanese electronics giant Foxconn Group to discuss potential partnerships in manufacturing, according to a cabinet statement. The meeting comes one day after representatives of the company, formally known as Hon Hai Precision Industry Co., met with executives from the Arab Organization for Industry (AOI) and ICT Minister Yasser El Kady to discuss a potential collaboration to locally manufacture tablet devices for the Education Ministry. Education Minister Tarek Shawki separately told Al Mal yesterday that the Education Ministry received seven offers from international technology companies to supply tablets for schools.

Don’t expect an imminent announcement, but still: One doesn’t get a meeting with the PM if one’s intentions aren’t serious — and haven’t been seriously vetted.

IPO WATCH- Eastern Company to sell additional stake on the EGX after Eid Al Fitr: The Eastern Tobacco Company will be the first state-owned enterprise to float additional shares on the EGX under the government’s privatization program immediately after the Eid Al Fitr break (which ends around 17-18 June), Public Enterprises Minister Khaled Badawy told the press yesterday. The government expects to raise around EGP 2.5 bn from the sale of 4% of the Chemical Industries Holding Company’s (CIHC) stake in Eastern, Badawy said.

The sale could be split in two stages, each offering 2% of the company’s shares, CIHC boss Emad El Din Mostafa tells Al Mal. The offering will be priced at the average share price in the one-month period immediately after the company’s board of directors approved the transaction, he adds. Badawy had announced on Monday that Eastern Company’s board signed off on the sale, the proceeds from which will be used to fund the restructuring of other companies in CIHC’s portfolio. The move would ensure the CIHC retains a 51% stake of the tobacco-maker, with 49% in free float.

Background: The Ismail Cabinet had announced earlier this month that the government was hoping to raise as much as EGP 15-18 bn from the first phase of the privatization program, which will run from June to end of 2018 or early 2019, and see four-six state-owned petroleum and petrochemical industries companies offer additional stakes and list new shares on the EGX. A cabinet committee that includes the ministers of investment, finance, petroleum, and public enterprises is overseeing the privatization program, candidates for which include some 23 companies.

INVESTMENT WATCH- British American Tobacco is planning to invest GBP 30 mn in Egypt over the next 12 months to add new production lines to its factories, General Manager Steven Harvie announced yesterday. The company plans to focus on marketing its Pall Mall cigarette brand during the coming period, in addition to developing other products, according to Harvie. A portion of the investment will also be used to set up the company’s new head office New Cairo.

TE cozying up to China: Telecom Egypt and China’s Huawei Technologies signed a USD 200 mn long-term financing agreement with a number of Chinese financial institutions, including the the Bank of China and the China Export and Credit Insurance Corporation (Sinosure). The four-year loan, which Huawei facilitated for TE with “competitive financing conditions,” will be used to finance the roll out of TE’s 4G services and “the deployment of transmission and core networks,” TE said in a press release yesterday (pdf). “TE has several strategic long-term expansion plans to be delivered in the coming years. To achieve such plans we have worked on attaining long-term financing at the lowest possible cost as well as the most convenient payment terms to match our cash flow generation,” CEO and Managing Director Ahmed El Beheiry said. “The facility benefits Telecom Egypt by providing a simplified purchasing process through a packaged financial solution, while it allows Huawei to further expand its business in Egypt.”

The news comes as TE is still reportedly seeking a USD 200 mn short-term facility from the African Export-Import Bank, which sources said will be used to finance the USD 90 mn acquisition of MENA Cables from Orascom Telecom Media and Technology, as well as other investments in telecom infrastructure.

Industrial license issuances are up 25x since Industrial Permits Act: Cutting red tape is doing wonders for industry, with the number of permits for plants growing 25x since the Industrial Permits Act was signed into law last summer, Industrial Development Authority head Ahmed Abdel Razek said. The authority has issued 8,400 licenses since the law came into effect versus 340 the year before, he tells Bloomberg in an interview. The law effectively cuts the wait-time to receive approval for permits to seven or 30 days (depending on the licensing track) from a previous average of 600 days.

Domestic and foreign manufacturers alike are driving demand for licenses: “A lot of existing investors are expanding, and many foreign investors started to enter the Egyptian market after they found a good investing environment,” he added. “Half of the requests for land on my waiting lists are by foreign investors.”

What’s next for the Authority? Making more land available for industrial use, said Abdel Razek. To attract more interest, the authority plans to offer about 30 mn sqm of land for industrial purposes through 2020, up from 9.5 mn sqm in the period between 2007 and 2016. In a separate statement to the press, he said that the government is planning to introduce to the House of Representatives a new law governing the formation and management of industrial zones following the Eid break.

Egypt’s foreign debt obligations reached USD 82.9 bn at the end of December 2017, or around 36.1% of GDP, up from USD 67.3 bn at the end of December 2016, according to the central bank’s March statistical bulletin report. Egypt settled USD 8.6 bn of its debt service between July and December 2017. Government officials had previously said that Egypt’s foreign debt levels remain within a safe range, especially as the country plans to repay some USD 12 bn in dues this year, including USD 850 mn to international oil companies.

BUDGET WATCH- President Abdel Fattah El Sisi will reportedly receive the FY2018-19 state budget “within days” after it comes to a vote at the House of Representatives. The bill contains a number of scenarios for how to adjust for a potential surge in global oil prices, sources with knowledge of the matter tell Al Mal. The rise in global oil prices has been a source of concern, as state estimates put the barrel at an average USD 67 in the budget. Oil prices, however, have been on a steady incline, trading at levels not seen since 2014, with Brent crude briedly crossing the USD 80/bbl mark in recent weeks. Some MPs had called on the government to amend its fuel price projections if it hopes to meet its target budget deficit of 8.4% of GDP. But with subsidy cuts still in the offing, the government appears confident it can plug the gap. Analysts see fuel prices rising by c. 60% next fiscal year.

CABINET WATCH- The Ismail Cabinet signed off yesterday on an EGP 70 bn overdraft for the FY2017-18 state budget to cover “necessary expenditures,” according to a statement. The statement does not provide further details on the decision, but Vice Minister of Finance Mohamed Maait had told Enterprise last week that Cabinet was looking into raising the budget’s overdraft on account of higher oil prices. The government had assumed oil would average EGP 55/bbl but Egypt has reportedly been importing fuel at USD 75/bbl as oil now trading at a high not seen since 2014.

The Council of Ministers also signed off on a USD 500 mn loan agreement with the World Bank aimed at supporting the state’s K-12 educational reform strategy. The new system will be implemented as of the new academic year starting in September for kindergarten and students in the first years of primary and secondary education. The Education Ministry plans to do away with the education system currently in place by 2026, minister Tarek Shawki had said earlier this week. The revamp is expected to cost a total USD 2 bn when all is said and done.

New financing for development of electricity grid: The government has allocated EGP 25 bn to develop the country’s electricity grid over the next two years, Electricity Minister Mohamed Shaker told reporters yesterday, according to Al Masry Al Youm. Ministers also signed off on a USD 198 mn loan from the Arab Fund for Economic and Social Development earmarked for the nation’s power grid.

Also at yesterday’s cabinet meeting, ministers approved:

• The Military Production Ministry’s MoU with China’s GCL Group to establish a USD 2 bn solar panel factory;
• Taking the necessary measures to select a company to manage and operate the Grand Egyptian Museum;
• A bundle of decisions and recommendations from the ministerial committee for the resolution of investment disputes;
• A presidential pardon for an unspecified number of prisoners ahead of Eid Al Fitr.

EXCLUSIVE- New tariffs on luxury goods, tariff cuts on production inputs coming in December? The government is preparing to announce changes to import tariffs that will come into effect in December, sources tell Enterprise. Changes reportedly being considered by the Higher Tariffs Committee include higher tariffs on luxury goods, our sources tell us, stopping short of providing additional detail. President Abdel Fattah El Sisi imposed in late 2016 a series of higher tariffs on luxury imports.

Production inputs for glass, plastic and paint manufacturing will see customs duties reduced, as their tariffs are currently higher than those of the finished products, sources added.

Private sector being consulted on changes: Business associations and export councils have sent recommendations to the tariff committee. The Federation of Egyptian Industries sent its recommendations last month, Mohamed El Bahey, head of the taxes and customs division of the FEI, confirmed. The plastics division suggested that industrial cleaners and other chemicals be put up for review by the committee, division head Khaled Aboul Makarem tells us.

The Electricity Ministry will create just one company to operate the three Siemens-built combined cycle power plants rather than setting up one company per station, unidentified government sources said. The Egyptian Electricity Holding Company (EEHC) had said in December it was in the process of establishing three separate companies to manage the plants in Burullus, Beni Suef, and the new administrative capital, but determined it would be simpler and more cost-effective to make do with one company, according to the sources. The EEHC is currently in the process of selecting one of five candidates to head the company, and is expected to make a final choice in two weeks’ time. The government will only IPO the company once the state fully eliminates electricity subsidies in 2022, the sources confirmed. The three fully commissioned plants are expected to be inaugurated next month with a combined production output of 14.4 GW.

Who is benefiting from Egypt’s economic growth? Professional freelancers and contractors, according to data from contractor recruitment and management firm 6CATS International. The country saw a 73% y-o-y increase in hires of freelance professional between January and May of this year, on the back of a growth in business activity. “There’s certainly been a growth in business activity in Egypt that is leading to a significant increase in demand for contract professionals to plug talent gaps. What we’re seeing is that this positivity is being reflected across multiple areas, ranging from pharma and technical engineering to solar energy and offshore oil & gas,” CEO Michelle Reilly said of the statistics.

This increase was equally split between local professionals and European nationals. “For contractors, and the agencies that place them overseas, Egypt is certainly likely to be a destination of choice in the near future,” Reilly added. She noted, however, cumbersome employment and visa requirements for foreigners to work here.

Egypt’s favorite footballer could miss the start of the World Cup, according to Liverpool’s club physiotherapist. Mohamed Salah’s shoulder injury might keep him off the pitch for three to four weeks, according to Reuters. The Liverpool striker is “totally focused on recovery,” physiotherapist Ruben Pons said. Egyptian Football Association head Hany Abu Rida confirmed that Salah will not play in Egypt’s inaugural World Cup match against Uruguay but is expected to be on the pitch when the Pharaohs face off against Russia on 19 June, Al Masry Al Youm reports. Salah is in Spain for treatment after he sustained an injury at the hands of Real Madrid’s Sergio Ramos during the Champions League final last Saturday.

Soviet film posters from the post-Stalin “Khrushchev thaw” period: The Moscow Design Museum has been collecting artefacts from the former Soviet Union that were “discarded, destined to be forgotten” after the “Evil Empire” collapsd in 1991, according to the Guardian. Among these artefacts are film posters from the 1950s and 1960s, during what is known as the “Khrushchev thaw” — the period after Joseph Stalin’s death, which was characterized by increased liberalism. “At that time, design had an artistic expressiveness that reflected the thaw and dreams of a new, more open world.”

When not discussing Mo Salah or the recent clampdown on activists, the foreign press appears to have caught the summer vacation bug, and Egypt is high on the radar. A number of leading publications we follow have run travel features on Egypt. National Geographic explorer Yukinori Kawae says now is the best time to visit the Giza Pyramids. Kawae suggests visiting the Giza Plateau in May or June, and particularly on the summer solstice on 21 June, when the sun sets between the pyramids and creates the hieroglyphic sign of ‘Akhet,’ which means horizon.

We love theNew York Times, but you can count on it to be a buzzkill as it focused its Pyramids piece on how urban sprawl developing around the iconic site is ruining the scene. It particularly takes an interest in the area’s Pizza Hut having a prime view of the complex.

The mood lightens up with the Wall Street Journal’s piece on the floating wonders that are the Nile boat cruises. Here, writer Tara Isabella Burton is particularly fond of the history of the SS Sudan, which she describes as “a floating grand hotel.”

When it comes to electricity, fighting corruption is just as important as lifting subsidies to reduce fiscal spending, Massoud El Hennawy writes for Al Ahram. Prime Minister Sherif Ismail said earlier this week that the government will crack down on homes and unlicensed businesses that mooch electricity from the national grid. El Hennawy counters that previous governments have made similar vows, but were ultimately stymied by the corruption of local officials.

HBO sees Showtime’s Bns and raises with Succession: Of the many new shows being piloted this summer, one we’re eagerly looking forward to is HBO’s Succession (watch trailer; runtime: 1:47), which is coming right on time —just as Bns is starting to get stale. From the creators behind The Big Short and Veep, the shows stars the brilliant Brian Cox as an aging patriarch of a media dynasty and a stand in for Rupert Murdoch. He has to contend with watching his grown children descended like vultures on his inheritance with the same voracity and wit that he himself has fostered in them. If a NYT review / interview with creators Jesse Armstrong and Adam McKay is anything to go by, this promises to be more than just a show about Bnaires and a knockoff of prime time soaps. Instead, they plan to move it in the directions of television family greats like the Sopranos (tagline: If one family doesn’t get you, the other one will). The best part: The show debuts this coming Sunday.

Ismail, Stuart discuss possibility of UK business delegation visit to Cairo: UK Investment Minister Graham Stuart and Prime Minister Sherif Ismail discussed the possibility of sending a British business delegation to Egypt to explore potential investment opportunities, according to a Cabinet statement. Ismail told Stuart, during a meeting in Cairo yesterday, that sectors such as petrochemicals, energy, railway and transport, as well as the administrative capital and other new cities, hold a lot of potential for UK investors.

Stuart also met with Trade and Industry Minister Tarek Kabil to talk trade relations ahead of Brexit, according to a UK embassy statement (pdf). Stuart, who’s in Cairo for two days to meet with state officials, had told us in an exclusive interview on Tuesday, that the UK was working to ensure the continuity of its freetrade agreements as it disengages from the EU and during its implementation period from 1 April 2019 to 31 December 2020. He also told us that the UK government is commiting USD 1.6 bn in funding to Carbon Holdings’ Tahrir petrochemicals complex.

The EU has voiced its concerns about ongoing arrests of activists and bloggers in Egypt over the past few weeks, and called for “the full respect of human rights and fundamental freedoms,” according to a statement from the EU’s External Action Service. Egypt rejected the “inaccurate reading” of the situation on the ground, the Foreign Ministry said in a statement.

The Gaza Strip and Israel border area saw a quiet morning yesterday following an Egypt-brokered ceasefire that put an end to the worst violent flare-up since 2014,Reuters reports. “An agreement was reached to return to the [2014] ceasefire understandings in the Gaza Strip. The resistance factions will abide by it as long as the Occupation does the same,” said Hamas’ deputy chief in Gaza Khalil Al Hayya.

25 domestic and international companies have expressed their interest in bidding on a tender for a 50 MW solar power plant in Zaafarana, New and Renewable Energy Authority (NREA) sources said. The list of potential bidders includes PowerChina, Sterling & Wilson, Infinifity Solar, EDF, Scatec Solar, a First Solar-Elsewedy Electric consortium, GDF, Masdar, and Sky Power. The NREA will begin accepting offers for the project on 24 June, which will see the winning company establish the station under a build-operate-transfer framework. The project will be financed through a EUR 50 mn loan from German development bank KfW.

Egypt is expected to export 100k tonnes of table grapes this year, head of produce brand Trade Waves Ahmed El Hodaiby said, Ecofin Agency reports. However, Egyptian red grapes will face some challenges in the European market due to higher supply from Chile and South Africa and lower prices offered by China. “The Chinese grapes are quite cheap, so unless Egypt offers something extraordinary it will be very difficult to compete with the Chinese production.”

Pentamed Ltd is planning to build a EGP 2 bn fully-integrated hospital in Shorouk City as part of its expansion plans in Egypt’s health care sector, the company’s Financial Manager Mohamed Abdelati said, Al Mal reports. The company had earlier purchased a three-acre land plot for EGP 75 mn and an unnamed French company will be handling the hospital’s designs.

Egypt will inaugurate early Friday the Holy Family cave in Matareya as part of the Tourism Ministry’s strategy to promote religious tourism in Egypt, Al Masry Al Youm reports.

The state-owned NI Capital’s microfinancing arm Tamweely is looking to expand geographically and grow its number of branches to 15 across the country by 2019, Chairman Amr Aboul Azm said. Tamweely is hoping to set up shop in at least five governorates in Upper Egypt.

A draft law regulating shops in public spaces would require restaurants and shop owners to install indoor and outdoor surveillance cameras in order to obtain a license, Al Monitor reports. The legislation would also prevent shops without cameras from getting their licenses renewed. The law, which some MPs have touted as necessary for security purposes in light of the spike in terror attacks, has drawn criticism for its infringement on privacy. A member of the Dostour Party says that the legislation would be used to track dissidents and activists, rather than to deter crimes such as theft. The House of Representatives is expected to pass the legislation in June.

Egypt’s state security prosecutor ordered yesterday the detention of Food Industries Holding Company head Alaa Fahmy and three Supply Ministry officials for four days pending investigations into charges of corruption and graft, Reuters reports. The Administrative Control Authority had arrested the four suspects on Tuesday for allegedly taking EGP 2 mn in bribes from an unnamed commodities firm in return for issuing direct supply orders and facilitating payments.

Coptic Christian teacher Iyad Shaker Hana has been teaching Quran to the children of Minya for over 50 years. The 85 year-old has taught Arabic, math, and religion to generations of Muslim and Christian children in his village. His class has grown from a few students to over 120 over the years, “all because of the love I sowed teaching their parents,” he says (watch, runtime: 02:51).