Happy New Year, friends — see you next in 2019

It’s interest rate day, ladies and gentlemen, and our poll of 10 economists sees the central bank leaving overnight deposit (16.75%) and lending rates (17.75%) unchanged even as inflation fell back into the government’s target range of 13%, plus or minus 3 ppt. Leaving rates on hold could help maintain foreign appetite for Egyptian debt, the economists said, particularly after the turbulence that has swept markets this year and after the US Federal Reserve raised interest rates again last week.

“Why would I want interest rates to come down? I like parking cash in the bank at high interest rates.” Sure: High rates attract savers, giving banks deposits they can then lend out to government — at a rate the government finds a just a bit too high, to be frank. And the carry trade is happy, too, so their inflows help support the EGP. But high interest rates are corrosive to the real economy. 19% of respondents to our 2018 Enterprise Reader Poll, the largest survey of executive sentiment in Egypt, said that the high interest rate environment is the most significant obstacle facing their businesses — and 64% of respondents said high interest rates are negatively affecting their investment plans.

So when are rates coming down? The emerging consensus is that we’re not going to see the central bank cut interest rates until sometime in late 2019: Both EFG Hermes and Pharos Holding are calling 4Q2019. Among the brand name firms we surveyed, only Capital Economics is suggesting the central bank’s easing cycle could begin in early 2019.

US equities rallied yesterday on reports of strong holiday retail sales, with markets surging more than 1,000 points in a single day for the first time. The rally left the Dow, Nasdaq and S&P 500 with their largest daily percentage gains in nearly a decade, Reuters reports, snapping a losing streak that left the main indexes all down at least 10% this month alone. The performance yesterday of major US benchmarks is the lead story on the digital editions of the Financial Times and the Wall Street Journal.

Asian shares are following suit this morning, and oil is also rallying as he head into dispatch time.

Is this “miracle resurrection” really a “dead-cat bounce,” Bloomberg wonders. Rallies may be common in troubled times, the business information service writes, but perhaps this time the market got ahead of itself with the recent plunge “when everything from hiring to earnings to the economy are still rising. ‘We’ve had times when we dropped 20 percent and went into recession, but this is an example, so far, where the market realizes a recession isn’t imminent, and going down 20% doesn’t make sense,’” one analyst told Bloomberg.

One warning signal to keep in mind: Less money is flowing into exchange-traded funds and mutual funds, the WSJ reports, suggesting that “investor pullback from the asset-management industry in 2018 is the most severe since the last financial crisis, a sign that doubts about the direction of global markets are intensifying.”

Investors like green bonds not because they’re “good,” but because “of the additional disclosure that it forces issuers to provide.” Green bonds may soon be on the investment menu in Egypt, but the market for “environmentally labelled debt,” as the FT calls it, slowed in 2018 after “growing exponentially” for a decade: “After expanding 77 per cent from 2015 to 2016, and 65 per cent in the year to 2017, the value of green bond sales grew just 12 per cent from 2017 to 2018.

Qatar FTW? The statelet’s benchmark equities index is up the most of any in the GCC this year, it snagged more foreign inflows into its stocks than any other Gulf market, and the cost of insuring its debt plunged this year while the cost of markets from Oman to KSA spiraled upward. (Bloomberg)

Shocker: Lots of investors still want to do business with KSA. (WSJ)

Words of the year for 2018: It was “GDPR” for the Financial Times and “crypto” for the Economist, which nevertheless says it wishes it could have chosen “tariffs” instead.

Some New Year’s miscellany for you this morning:

Warning: Low-rise jeans will start staging a comeback in 2019, trend watchers suggest.

Plan your year with the Hollywood Reporter’s list of 65 of 2019’s most anticipated movies.

NYT tip-lists we’re saving to read later:

• 6 ways to work smarter, not harder, in 2019
• 7 ways to age well in 2019
• 8 delightful tips for a smarter life in 2019

Reality check of the morning: The relentlessness of modern parenting.

Another day, another insipid night on the airwaves: The end-of-year news slowdown has clearly hit the nation’s talk shows rather hard, or the talking heads are already mentally on a beach somewhere.

Al Hayah Al Youm’s Khaled Abu Bakr really got in the end-of-year mindset with a recap of the government’s infrastructure projects throughout 2018 (watch, runtime: 1:29 and runtime: 00:19 and runtime: 01:53) and President Abdel Fattah El Sisi’s diplomatic visits (watch, runtime: 02:00).

Businesses and government are both responsible for developing industry in Egypt, Federation of Egyptian Industries boss Mohamed Elsewedy told Masaa DMC’s Osama Kamal. Elsewedy noted that the federation has a committee focused on expanding Egypt’s cooperation and business with the remainder of Africa, but that these ventures require certain regulations from the government (watch, runtime: 15:14).

The Alexandrian governor’s plans to eliminate slum areas within a year don’t seem plausible to Kamal, who tried to poke holes in the plan and wondered out loud whether the governor intends to prioritize high-risk or newly constructed illegal buildings (watch, runtime: 06:42).

Writer Fatma Naoot had a chat about a controversial op-ed she wrote denouncing calls to seize Egyptian Jews’ assets with Yahduth fi Masr’s Sherif Amer and historian Assem Dessouky (watch, runtime: 01:48 and runtime: 02:21)

Egypt’s renewable energy framework one of three fastest-improving globally, says World Bank: Egypt is one of the three fastest-improving countries in terms of regulatory frameworks for renewable energy between 2010 and 2017, according to the World Bank’s Regulatory Indicators for Sustainable Energy (RISE) 2018 report (pdf). Egypt’s total RISE score — which assesses regulation for universal access, renewable energy, and energy efficiency — rose to 68 at the end of 2017, from 10 at the end of 2010. By scoring above 60, Egypt is included in the green category, which indicates “a relatively mature policy and regulatory environment.” Tunisia and the UAE round out the top three.

But there’s room for improvement: “The fastest area of growth was in the legal framework for renewable energy, which includes private-sector ownership of renewables … By the end of 2017, all three of these countries had legislation in place that allowed private-sector ownership of renewable energy and had a legal framework for renewable energy. However, all three countries have been slow to develop policies that support network connections and use by third parties, and policies that promote renewable energy outside of the electricity sector.”

No surprise in reported conditions document for USD 1 bn World Bank loan: Conditions and policy priorities for a USD 1 bn loan to Egypt offered by the World Bank earlier this month are exactly what you would expect: improve the business climate, support SMEs and entrepreneurship, curb energy subsidies, and come up with a strategy for debt control. The conditions for the two-part facility are laid out in a supporting document reported on yesterday by the financial daily Al Mal. The conditions dovetail with those the IMF has in place for the release of the fifth USD 2 bn tranche of its USD 12 bn bailout package for Egypt. The IMF has reportedly made the tranche’s release contingent on the implementation of a mechanism through which Egypt will peg fuel prices to the global market.

Another spoonful of financing to help the medicine of reform go down: The World Bank document adds that it is planning to provide Egypt with a separate USD 500 mn financing package for social safety programs to protect the most vulnerable in society as the Sisi administration pushes ahead with reforms, Al Mal reports.

EXCLUSIVE- FinMin looking to automate retailers’ disclosures of sales, VAT to Tax Authority: The Finance Ministry is looking to outfit major retailers, shopping malls, and auto showrooms with devices that would automatically the relay of sales data to the Tax Authority, a senior government official tells Enterprise. The move is designed to clamp down on tax evasion and the exceptionally common practice of keeping two sets of books and refusing to provide “tax receipts.”

The ministry has already tested the devices in a limited number of stores over the past year, and is now planning to issue a tender for 20k devices after the trial run proved successful. Increasing tax revenues has been a key policy for the ministry, which is planning to implement in May 2019 an electronic billing and tax payment platform to set a single tax ID number for companies to pay all their taxes, Minister Mohamed Maait had said.

LEGISLATION WATCH- Expect a new legislative framework for electric cars: A government committee is preparing a legislative framework for electric vehicles in Egypt, according to remarks attributed by Al Mal to a senior advisor to the minister of trade and industry. The framework would regulate companies importing and manufacturing charging docks and batteries and provide a framework for the creation of networks of charging docks. It would also introduce a single mechanism in government offices for licensing the vehicles and require stations to obtain licenses to sell electricity to vehicle owners at set tariffs.

What’s next? The committee is close to completing the framework, the newspaper suggests, and the proposal will then go to cabinet for review. If it passes cabinet, the earliest we would expect this to hit the House of Representatives would be fall 2019.

The government is planning to launch 20 electronic public services in 2019, amid a drive by the Sisi administration to curb corruption by pushing for digitization, Communications and Information Technology Minister Amr Talaat told Egypt Today. The new electronic system will allow citizens to be directly linked to the service providers through their phone numbers and payments can be made via Meeza, a national debit card the government plans to roll out next year.

One public service that is now available online: Requesting a travel permit from the military. The Armed Forces have launched an online service through which men can apply and pay for travel permits (watch, runtime: 4:04).

In related news, state statistics agency CAPMAS is planning to launch its first nationwide electronic economic census, Youm7 reported. The agency will officially announce the initiative in a conference on Sunday, 30 December.

LEGISLATION WATCH- SMEs to get leg up in public tenders: SMEs will get priority treatment and a 20% quota of government tenders under the anticipated Public Contracts Act, according to a Finance Ministry statement. The new legislation will also exclude SMEs the requirement to submit financial guarantees with their bids under some state tender contracts and make the eligible for advance payments in the event they win a tender.

Background: The legislation passed the House of Representatives this past July and, at the time, Finance Minister Mohamed Maait said we should expect the executive regulations to be out in six months’ time. The act aims to decentralize and streamline government tenders as well as support SMEs and entrepreneurship.

The success of the Egyptian-American Enterprise Fund (EAEF) should encourage the US to set up similar funds as a tool of foreign policy, EAEF Chairman James Harmon writes for the Hill. The EAEF, which was established in 2013 under former US president Barack Obama, has invested in multiple companies in Egypt that have since flourished, including consumer- and structured-finance player Sarwa Capital and e-payments firm Fawry. “The results show an enterprise fund’s ability to deliver a healthy return while improving an ally’s economy and stabilizing the Arab Spring — in other words, how we can do well while doing good.” These early successes, Harmon says, should serve “as an example of how to promote long-term growth and prosperity. What is clear today … is that EAEF is a model for future enterprise funds in other countries like Jordan, but also potentially in other parts of the world like Africa and Asia as America tries to check China’s growing presence on those continents.”

Fatwa bill coming up for a vote soon? The House Religious Affairs Committee will refer a bill that would regulate fatwas issued by Dar Al-Ifta to the House general assembly in the next few days for a final review and vote, according to Youm7.

El Sisi expresses frustration with slow pace change: President Abdel Fattah El Sisi appeared “to lose his temper several times” with the governor of Alexandria and other officials at a ceremony yesterday to mark the opening of a housing project in the nation’s second city. Noting that “his comments at such ceremonies often provide policy direction,” Bloomberg reports that El Sisi is frustrated that officials have not collected for the state what it is owed, saying “Give them their due and we take ours” El Sisi said (watch, runtime: 04:56).

The president is pushing a switch to prepaid electricity, gas and water meters and ordered “the interior minister, Alexandria’s governor and the military’s chief for the northern part of the country to devise a strategy to deal with illegal housing across the area.”

El Sisi denies he fat-shamed Egyptians: “How can I shame my own family? Egyptians are my family. How can I watch them [putting on weight] and stay quiet?” President Abdel Fattah El Sisi asked at a conference (watch, runtime: 01:55), defending himself against a wave of social media criticism that followed earlier remarks from him that he was concerned about how overweight Egyptians are. The Associated Press had the story.

Two of Egypt’s former presidents came face-to-face in court yesterday when Hosni Mubarak testified against Mohamed Morsi during the latter’s retrial for allegedly organizing prison breaks in 2011, according to Reuters. Mubarak said that Egypt’s border with Gaza was breached during the uprising that ousted him from power, allowing some 800 individuals into Egypt, where they helped members of Hamas and the Ikhwan escape from prison. The story — and the fact that Mubarak requested President Abdel Fattah El Sisi’s permission to divulge further details in his testimony against Morsi — is getting plenty of digital ink in the foreign press this morning. See Bloomberg, the Saudi Gazette, Anadolu Agency, AFP, and Arab News for more.

Elsewhere this morning:

Grand Egyptian Museum’s “triumphant” 2020 inauguration: Egypt’s decision to scrap the Grand Egyptian Museum’s soft opening next year in favor of a final inauguration in 2020 to make the project’s launch more “triumphant” and help attract the tourists Egypt’s economy is in need of, the Associated Press says. The newswire also says the museum will likely be one of the successful megaprojects launched under President Abdel Fattah El Sisi, who has had “mixed results” with other major undertakings.

President Abdel Fattah El Sisi’s calls for officials to implement the law without exceptions are front and center in the front pages of this morning’s edition of the three main state-owned newspapers (Al Ahram | Al Akhbar | Al Gomhuria). Al Ahram also took note of former president Hosni Mubarak’s testimony against former president Mohamed Morsi in court yesterday (which we recount in detail in Egypt in the News, above).

Ever feel isolated in the city? Blame it on the architecture. It’s ironic how many of us feel lonely despite probably living in (suffocatingly) crowded cities. An increasing number of people today are suffering from chronic social isolation, which has the same effect on our health as smoking 15 cigarettes per day, Tanzil Shafiq writes for Fast Company. Confined spaces and rare sights of playgrounds or other venues that promote social interactions are examples of city features that have left us all feeling isolated despite often being crammed like sardines in commutes and housing compounds.

Some countries are obviously worse than others and if you’re thinking of Japan as being on the “worse” end of the spectrum, well, you’re right. But in other parts of the world too, city loneliness is being raised as a serious issue; the UK has, for instance, devoted an entire ministry to combat the phenomenon, while in Australia, MPs are pushing for a similar move. So what can we do?

According to a studyconducted by Shafiq, innovative ideas that create spaces for interactions in commutes and other public spheres can go a long way. One of the popular ideas proposed in the study was offering discounts at student restaurants for sharing tables. Another student suggested combining kindergartens with nursing homes, a move that would certainly benefit both sides as members of the former learn from members of the later who are in return given a sense of purpose.

One last Mo Salah video to round off the year: We thought for our final issue this year, we’d share a video of Mo Salah paying schoolchildren a surprise visit, with his Liverpool teammates, Xherdan Shaqiri and Andrew “Robbo” Robertson. For some of the students, this was nothing short of a Christmas miracle, especially since many of those interviewed said Salah is their favorite football player — some bursting into song to recite the iconic anthem “Mo Salah, Egyptian king” (watch, runtime 08:12).

A Japanese business delegation will visit in March to look at ways to strengthen cooperation with Egypt, especially in the investment and trade sectors, MENAFN reports. The visit will include a sit-down with President Abdel Fattah El Sisi, Japan External Trade Organizations’ (JETRO) Managing Director Takashi Tsunemi said.

Foreign Minister Sameh Shoukry met yesterday with Saudi Arabia’s Shura Council Speaker Abdullah bin Mohamed Al Sheikh to talk ties and cooperation, according to a ministry statement.

The Egyptian Electricity Transmission Company (EETC) plans to sign next month the final power purchasing agreement with Lekela Power next month for its 250 MW wind farm in the Gulf of Suez, after Lekela secured funding for the project, according to unnamed sources. The European Bank for Reconstruction and Development will provide USD 82 mn, the International Finance Corporation will provide USD 81 mn, and an overseas private investment corporation will provide USD 82 mn. Lekela expects to reach financial close 3-5 months after the final funding agreements are secured.

The National Authority For Tunnels has launched a tender for the supply and installment of circuit breakers along Cairo Metro Line 1, and has set the deadline for bids on 27 January, a source familiar with the matter said,according to Al Mal. The company will be required to complete its work within 12 months. The project will be funded through a EUR 350 mn loan from the European Investment Bank, and another EUR 205 mn loan from the European Bank for Reconstruction and Development.

The New Administrative Capital Company for Urban Development (NACCUD) has awarded US-based Honeywell contracts to develop USD 31 mn-worth of digital security systems the new capital, NACCUD spokesperson Khaled El Hosseini said, according to Al Mal. The company will install public surveillance cameras, posts, control systems, and other devices expected to be operational early 2020.

Egypt will ban the sale of live poultry in Cairo and Giza starting 1 April amid efforts to avoid the spread of disease and protect the environment, Agriculture Ministry Spokesman Hamed Abdeldayem said.

The Federation of Egyptian Industries’ Engineering Industries division has sent out a memo to the Finance Ministry objecting to a decision imposing tariffs on imported steel sheets, its boss Mohamed El Mohandes told Youm7. The complaint came after local steel manufacturers asked the ministry to introduce the tariffs to protect local production.

Egypt Aluminum (Egyptalum) has extended the deadline for a 300 MW power station tender to 31 March, it said in an EGX disclosure (pdf). Earlier this month, the company said it would review on 31 December offers for another tender to build a new USD 600 mn product line that is expected to increase its capacity to 570K tonnes from 320K tonnes.

Real estate player Al Dau Development is planning to build a hotel and residential compound near the Grand Egyptian Museum, Senior Operations Director Mohamed Salem said. The company is currently in the process of acquiring the land plot for the project, which will include 350 residential units and 250 hotel rooms. No details were provided on the time frame of the project.

Tourist arrivals in Egypt increased 40% in 2018, reaching around 11.6 mn tourists, up from 8.3 mn last year, Egyptian Tourism Federation head Hossam El Shaer said, according to Al Mal. The growth in tourist arrivals may put a strain on the sector’s transport capabilities if businesses fail to invest in expanding their bus fleets, he said, according to Ahram. El Shaer called for the removal of import duties on buses for tourism purposes.

Telecom Egypt will have replaced 95% of internet copper cables with fiber optic cables by 2020 for faster internet connection, House ICT Committee head Ahmed Zidane, tells Youm7. So far the state-owned company has replaced 60% of the cable network, he said. Egypt had expected to be done with 70% of the network by the end of 2018.

The Suez Canal Authority has extended to 31 December 2019 a 30% discount on the fees on Egyptian cargo carriers passing between Port Said Port and East Port Said Port, according to a statement picked up by Al Mal.

The SMEs Development Authority is in talks with Banque Misr to receive a EGP 500 mn loan to offer financing for new projects, Banque Misr’s SMEs division Sherif El Beheiry tells Al Mal. The bank is also near closing a separate EGP 500 mn loan with the authority.

The General Authority for Investment and Freezones (GAFI) is studying establishing 12 new freezones and investment complexes across Egypt which could host up to 8,000 projects, according to an Investment Ministry statement (pdf). The planned locations for the new zones are Banha, Arab El Olaiqat, Tanta, Meet Ghamr, Giza’s Saff, Damietta, Sharqiya, New Cairo’s Almaza, Suez’s Attaqa, Ismailia, North Sinai, and Aswan.

Egypt will propose setting up an industrial zone for Saudi small- and medium-sized companies in Egypt, Industrial Development Authority head Ahmed Abdel Razek said, according to Al Masry Al Youm. The government plans to discuss the proposal in February, according to Abdel Razek.

Prime Minister Moustafa Madbouly issued a decision altering the structure of a supreme authority governing private sector partnerships, which will see ministries most relevant to a project under discussion earn membership status, according to a ministry statement. The Madbouly Cabinet approved earlier this week legislative amendments which would streamline public-private partnership (PPP) contracts.

Egypt’s Sam Morsy has extended his contract with English football club Wigan Athletic for an additional two and a half years, according to Ahram Online. Morsy was a second-string midfielder in Egypt’s national team at this year’s World Cup.

Egyptian diver Maha Amer landed three first-place titles at the Egyptian National Diving Competition in Cairo last weekend, Arkansas Razorbacks reported. Amr claimed the 1-meter and 3-meter springboards as well as the mixed synchro-meter with her partner Mohab Mohaymen. The 19-year-old also won the Best Diver Cup for Women.

Juhayna Food Industries is planning to shift to alternative sources of energy across all its production factories next year, according to Reuters’ Zawya. The dairy and juice manufacturer is partnering with Solarize Egypt to make its El Dawleya plant 100% reliant on solar energy, while remaining factories will source 12-15% of their total energy needs from renewables.