Polls open Saturday in constitutional referendum.

It’s official, folks: Ramadan will begin on Monday, 6 May. The National Astronomy Institute confirmed yesterday the first day of the holy month, Ahram Online reports. That gives us all one normal work day after we return from the extended month-end holiday.

The House of Representatives yesterday voted overwhelmingly in favor of constitutional amendments that would extend presidential terms, bring back the upper house of parliament, restore the office of the vice president and more.

You’re going to have the chance to go vote on Saturday: Polling stations in Egypt open on 20 April and will close in the evening on 22 April. Expats will be able to vote in the referendum a day earlier, running from 19-21. We have more in this morning’s Speed Round.

President Abdel Fattah El Sisi heading to Beijing for China’s Belt and Road Forum for International Cooperation. El Sisi is expected to sign three agreements with China during the forum, China’s commercial attaché said, according to Al Mal. It remains unclear when El Sisi is scheduled to land in the Chinese capital.

Saudi Arabia’s clout in the oil world is the theme of the OPEC+ meeting in Vienna today and tomorrow to discuss an extension to the oil supply cuts. KSA has always been a key OPEC+ player, but its influence increased when it brought Russia on to the most recent cut pledges in December 2018, writes the WSJ. With this increased muscle and backing from Moscow, Saudi Arabia could push through its plans to keep the supply cuts in place — and send prices rising again. However, the FT’s David Sheppard says Riyadh should now be signaling its willingness to “step in to damp the impact” of dropping oil output as Venezuela, Iran, and Libya each grapple with their own constraints.

Brent his hovering just below USD 72 / bbl heading into the gathering.The Finance Ministry has oil at USD 70 in its draft 2019-2020 budget. Each USD 1 increase in the price of a barrel costs the Egyptian government EGP 2.3 bn.

How many of your colleagues at work suffer from the Dunning-Kruger effect? Not up to speed? Thank us later: “The Dunning–Kruger effect is a cognitive bias in which people mistakenly assess their cognitive ability as greater than it is. It is related to the cognitive bias of illusory superiority and comes from the inability of people to recognize their lack of ability. Without the self-awareness of metacognition, people cannot objectively evaluate their competence or incompetence.”

Can we please not talk about a “melt up” in global equities? It’s almost as annoying as our generation’s constant misuse of the word “around.” Nevertheless: Larry Fink, CEO at BlackRock, the world’s largest asset manager, thinks “signs of healthier economic growth in the US and China will reassure big investors that have largely stayed on the sidelines of the 2019 market recovery.”

That earnings recession in the US everyone expected? It’s actually a mixed bag: BlackRock and JP Morgan have reported strong 1Q19 results, while Johnson & Johnson beat analyst expectations and Netflix saw improvements in revenue and net profit, but slower subscriber growth in the US. IBM shares slid after revenues fell, and United Continental also missed on revenues (though earnings beat Wall Street expectations).

Among those still due to report today or tomorrow: Morgan Stanley, American Express, PepsiCo and Honeywell. Reuters and Bloomberg have more.

But, but, but… US industrial output was “unexpectedly” flat in March after dropping in both January and February, delivering the first quarterly drop in production since The Donald was elected president in Amreeka. The FT and Reuters have more.

The top earners in finance don’t work at commercial or investment banks, but at real estate investment trusts, according to the Wall Street Journal. That’s virgin territory here in Omm El Donia, ladies and gentlemen. Just sayin’.

Shocker: CEO pay is out of control at US companies, where the CEOs of 11 of the largest companies by revenue to have reported their 2018 results have been found to earn more than 1000x their company’s average employee wage. The Financial Times takes a deep dive and finds corporate bosses in the US are paid better than their counterparts at any other country on earth.

French President Emmanuel Macron has promised to rebuild Notre Dame Cathedral within five years after a fire swept the 850-year old building yesterday, reports the New York Times. French corporate giants have already pledged more than EUR 450 mn in donations. President Abdel Fattah El Sisi extended his condolences to the French president following the incident.

Will the resident 11-year-old’s favourite video game help rebuild Notre Dame? The makers of Assassin’s Creed tasked one level artist to spend two years modeling Notre Dame inside and out, Business Insider reports — data that could prove important in the rebuilding of the cathedral. BI was picking up on a 2014 feature in The Verge.

PSA for iSheep- iOS 13 is going to turn the iPad into the work machine of your dreams, 9to5 Mac claims, citing unnamed sources who say it will include “the ability for apps to have multiple windows,” dark mode, a new undo gesture other than shaking your [redacted] tablet, automatic desktop-mode websites in Safari and lots more. The new operating system is likely to be unveiled in June at Apple’s annual developer conference and made available for download in fall.

An academic perspective on Egypt’s economic reform program caught our attention on an otherwise bland night for business on the nation’s airwaves.

Are economic progress reports telling the full picture? Despite many positive reports on the economy by international bodies and research houses, most Egyptians feel they aren’t faring any better. That was the opening salvo for a conversation between Masaa DMC’s Osama Kamal and Arab Academy for Science Technology visiting professor of management Sherif Delawar (watch, runtime: 4:37). The key, Delawar said, is that financial institutions who tend to see the economy in isolation.

We should be paying more attention to institutions with multidisciplinary approaches, he added, citing as an example socioeconomic reports by the UN or the World Economic Forum that address “every aspect of citizen welfare.” Delawar pointed out that there have been improvements including a rise in export revenues for the first time in 15 years and progressive legislation. But there is still a long way to go before the average person the street feels the benefits.

Madbouly, El Gazzar tour New Alamein: Al Hayah Al Youm’s Lobna Assal highlighted a visit by Prime Minister Moustafa Madbouly and Housing Minister Assem El Gazzar to inspect construction works at New Alamein’s beachfront (watch, runtime: 2:17). New Alamein is part of the “fourth generation of new cities,” Assal added, noting that infrastructure in the city (which is being built to serve as home to 3 mn residents) will be eco-friendly.

We’re going to vote next week on a new constitution after House passes proposed changes: The House of Representatives has overwhelmingly voted in favor yesterday of a package of constitutional amendments that will extend presidential terms and reinstate the upper house of parliament if approved in a national referendum, Youm7 reports. The amendments passed with 531 of 554 (98%) MPs voting in favor. In all, 22 MPs voted against the package and one abstained.

Bring on the referendum: Voters in Egypt will be able to cast our ballots from Saturday, 20 April until Monday, 22 April while the polls will open a day earlier for expats, running from 19-21 April, according to an Akhbar El Yom report out overnight.

What’s in the final package?

• Six-year presidential terms, with a maximum of two consecutive terms;
• An extension to President Abdel Fattah’s El Sisi’s current term in office by two years (ending 2024) under a transition clause. That makes him eligible to run for a final six-year term that would see him in office until 2030 should he run and win;
• A new upper house of parliament. The Senate will replace the disbanded Shura Council;
• The restoration of the office of the vice president;
• A 25% quota for women in the House of Representatives;
• The president will have the right to appoint pre-nominated judges, the head of the constitutional court, and the prosecutor general;
• A declaration that the army is the “guardian of the land, the constitution, democratic and personal rights, the civil state, and the gains of the people”; and
• The Supreme Council of the Armed Forces will have the authority to approve the appointment of the nation’s defense minister.

We have background and more detail on the amendments here in our coverage from earlier this week.

The vote is dominating coverage of Egypt in the foreign press this morning. Bloomberg writes that the motion has upset rights groups and some politicians — including Mohamed Anwar El Sadat who has argued that the move will return the country to the pre-25 January revolution years. For more: AP, Washington Post, WSJ, Reuters, BBC and The Guardian. The list is effectively endless. Rights groups are also in on the action. Representative is Amnesty International’s suggestion that the amendments could have a negative impact on civil liberties.

EXCLUSIVE- BMW to pay EGP 55 mn settlement to end customs dispute: The Customs Authority has reached an agreement with automotive giant BMW to end a dispute over customs tariffs and valuations of imported cars, Customs Authority head Kamal Negm told Enterprise. The company will stipulate a price list for its vehicles after the agreement is signed, Negm said. BMW vehicles will enjoy zero-customs access to the Egyptian market under a trade agreement with the EU. A government official told us separately that the company will pay EGP 55 mn to end the dispute. The company is planning to invest in Egypt, which it sees as a gateway for its cars into Africa, the official said.

M&A WATCH- Is ENOC’s Dragon Oil about to acquire select BP assets in Egypt? Emirates National Oil Company (ENOC) subsidiary Dragon Oil is set to acquire unspecified assets in Egypt within the next three to four months, Dragon Oil CEO Ali Al Jarwan told Oil & Gas Middle East. According to Al Jarwan, the asset should add 70k bpd to the company’s production. While Al Jarawan did not disclose which assets the company was eyeing up, a longtime industry insider tells us the transaction likely involves some of BP’s maturing Egypt assets, which have been on the market for the past two years. Dragon Oil had also announced last year it plans to invest about USD 500 mn this year in oil and gas assets as part of an international expansion strategy, and is looking mainly at Africa for these investments.

Background: We had reported in March 2018 that BP was meeting with prospective buyers for its stake in its 50-year-old JV with EGPC, the Gulf of Suez Oil Company (GUPCO), as part of a plan to shore up its finances through the sale this year of USD 2-3 bn-worth of maturing assets. Sources had then valued the GUPCO transaction at EGP 500 mn but others had said that BP was hoping to raise as much as USD 1 bn from the sale. SDX Energy had announced in September of last year it had entered talks with BP to acquire “a significant package” of these assets, but the talks ultimately broke down in October.

Egypt’s GDP grew 5.6% in 1H2018-19, up from 5.3% during the same period last year, according to preliminary Planning Ministry figures announced to the House of Representatives by Finance Minister Mohamed Maait, according to ِAhram Gate. Growth was primarily driven by the gas, ICT, and construction sectors, Planning Minister Hala El Said told the House, according to a cabinet statement. Preliminary figures released at the end of January suggested that growth over the first two quarters came in at 5.4%. The draft state budget showed last month that the government is targeting 6% GDP growth in FY2019-20.

Maait confirmed a 6% economic growth forecast for the fiscal year starting in June and told MPs the coming year wills ee the finance ministry focusing on themes including tax reform, the broadening of the tax base through a package of incentives to bring SMEs into the formal economy, and stability in tax rates. You can read the Finance Ministry’s statement on Maait’s remarks to the House here (pdf).

LEGISLATION WATCH- Parliament approves amendment giving treasury big chunk of FRA proceeds: The House of Representatives gave its final approval to amendments to the monitoring regulations of non-banking financial markets and tools, Ahram Gate reports. The amendments will see the Financial Regulatory Authority channel 80% of its proceeds to state coffers.

CBE to renew mortgage financing program for middle-income homeowners: The Central Bank of Egypt (CBE) has agreed to a proposal from the Federation of Egyptian Industries’ Real Estate Development Chamber to reintroduce lower interest rates for would-be middle-income homebuyers, Zawya reports. The initiative will offer preferential interest rates of 10.5% to prospective homeowners starting from July, the chamber’s chairman Tarek Shoukry said at a real estate development conference on Monday. The program originally ran from 2014 until january this year and offered middle-income homeowners long-term loans at a 5-7% rate of interest. The government said last month it was considering setting up a fund to support middle-income Egyptians looking to buy homes.

EARNINGS WATCH- Cairo for Real Estate and Investment (CIRA) reported a 47% y-o-y increase in net profit to EGP 167.1 mn in the first half of its fiscal year, according to the company’s earnings release (pdf). Revenues rose 32% y-o-y during the period, coming in at EGP 424.1 mn, with revenues from higher education tuition revenues growing at a faster rate than those from K-12 tuition, the company said. At the operational level, “CIRA worked to differentiate its offerings, services and identity from alternative providers of education in the middle-income segment,” the release said. The company also revamped its online and social media presence, and made “considerable improvements in the look and feel of student transportation services during the period.”

Looking ahead: CIRA will continue focusing on its growth strategy “with continuous efforts to differentiate its institutions in the market and cement the presence of its brand,” CEO Mohamed El Kalla said. The company expects to inaugurate four new faculties at Badr University in September 2019, which CIRA says is crucial to allow the university to “accommodate expected rapid growth in new registrations over the coming academic years.”

IPO WATCH- Alhokair malls unit IPO is back on Fawaz Alhokair Group is gearing up for a USD 1 bn IPO of its mall unit, Arabian Centres Co., Bloomberg reports. The Saudi retail giant is planning to sell about 65 mn existing shares and 30 mn new shares on the Tadawul, starting April 28. The IPO, which was put on hold back in 2017, would be the biggest IPO in Saudi Arabia in five years, CEO Olivier Nougarou was quoted as saying. The company will use the proceeds to reduce debt. Reuters also has the story. Our friends at EFG Hermes are doing joint book runner duties on the transaction, which is being led by Morgan Stanley, Samba Capital, NCB Capital and Goldman Sachs. It’s the latest in a string of wins for EFG’s investment banking unit including serving as joint bookrunner on Finabler’s LSE IPO and advising on LSE-listed NMC Health’s joint venture with Saudi Arabia’s Hassana Investment Company.

The Legal 500 directory has released its 2019 rankings of Egypt’s top firms. The publisher says the rankings are based on feedback from the firms’ clients as well as performance in different practice areas. Many of our friends have made the “tier one” ranking. Among those making one or more appearance this year are, in alphabetical order:

• Al Kamel Law Office
• El-Saghir Law Firm
• Helmy, Hamza & Partners
• Ibrachy Legal Consultancy
• Kosheri, Rashed & Riad
• Matouk Bassiouny
• NAL & Partners
• Nour & Partners in Association with Al Tamimi & Company
• Shahid Law Firm
• Shalakany Law Office
• Youssef & Partners
• Zaki Hashem & Partners, Attorneys at Law
• Zulficar & Partners Law Firm

Egyptian firms were ranked in categories including banking and finance; commercial corporate and M&A; dispute resolution (arbitration); dispute resolution (litigation); employment; energy; intellectual property; projects and infrastructure; shipping; and TMT;

Coffee with Banque du Caire Chairman and CEO Tarek Fayed: If there’s one transaction in the reborn state privatization program to which market watchers are looking forward, it is the initial public offering of the (rebranded this week) Banque du Caire. BdC is led by Tarek Fayed as chairman and CEO, who recently sat down with us for the latest installment in our Coffee With… series. The most latest on that transaction: It will likely happen this year and see the bank offer 20-30% of its equity for sale, CBE Governor Tarek Amer said earlier this week.

Who is Tarek Fayed? Prior to joining Banque du Caire in January 2018, Fayed held posts in Egypt and abroad with Citibank, the Egyptian American Bank, and Samba, where he worked in areas including corporate and investment banking, risk management and audit. Fayed also had a distinguished career in public service, having served as sub-governor of the Central Bank of Egypt, where he oversaw the development of a number of regulatory guidelines and mechanisms. He also represented the CBE on the boards of banks including the Agriculture Bank, United Bank, and Arab International Bank.

BdC has embarked on an ambitious turnaround, reporting a 207% jump in net profit after tax to EGP 2.5 bn in 2018, up from EGP 808 mn a year earlier, while undertaking an expansion in the region and services.

Key takeaways from our conversation:

• Fayed’s turnaround strategy rested on building staff capabilities, technology infrastructure, and adopting a customer-centric approach;
• The bank's corporate banking portfolio grew 80% y-o-y on the back of a restructured department, while total customer loans grew 50% y-o-y;
• Financial inclusion has become a major focus at the bank through SME and microfinance lending;
• The bank is looking to expand regionally in East Africa and the GCC through offices and subsidiaries in Uganda and the UAE;
• BdC is internally ready for the IPO and is awaiting a decision by stakeholders and regulators;
• The market is awaiting single digit inflation before CAPEX comes back.

Enterprise: Let’s start with the bank’s performance based on the recent release of your financial results. How did this unfold?

Tarek Fayed: We first had to formulate a very clear strategy for the bank and a strong growth map to achieve our objectives. We strongly believe that the two pillars that we needed to work on were people and infrastructure, including restructuring within existing departments across the bank. We hired a very strong caliber of people to fill in the gaps and our focus on the rest of the employees was to set clear objectives and focus on training and capacity building.

We rebuilt our corporate banking division and we’ve added new departments including the wholesale banking side’s global transaction banking department, which takes care of our product offering for corporates, financial institutions and non-banking financial institutions — services ranging from cash management solutions and trade finance to customized business solutions. We also restructured our corporate finance and investment banking department by bringing in a high-caliber team. And we’ve totally revamped our retail banking business and added new talent across the board, with a focus on introducing products and services tailored to a wide spectrum of retail customers and focusing on ancillary business and cross-selling opportunities.

We’re not there yet, we have lots of plans in terms of capacity building. We have more than 7,500 employees, and we have to work hard at developing their skills. That’s why we significantly increased our training budget in 2018 and increased the number of training hours for employees. Our main objective is to keep our people updated with the best international banking practice worldwide.

On the technology front, we want to be at the forefront of digital banking, and we have taken the time to build infrastructure and our core banking system, including signing last year with Temenos — one of the top global core banking system providers — to roll out their T24 system within 24-36 months. But we’re not waiting until we finish our core banking system upgrade to introduce digital banking solutions.

Tap or click here to continue reading our sit-down with Tarek Fayed.

The vultures are circling around Venezuela: Hedge funds in Venezuela are looking to mimic what their peers did in Argentina in 2001 by suing the borderline insolvent government to repay its debt, Colby Smith writes for the Financial Times. Paul Singer’s Elliott Management laid down the template for gunboat debt collection when it managed to reap USD 2.4 bn from the Argentinian government 15 years after it had defaulted. The FT says funds are now divided over whether suing the Venezuelan government has any legal basis, but all agree the timing is not quite right considering the food and humanitarian crises the country is facing.

Predatory funds can still do good though. Elliott Management’s squeezing of the Argentinian government resulted in Italian pensioners getting paid, Wall Streeter-turned-academic at American University Arturo Porzecanski, points out. Italian bondholders received a USD 1.35 bn payment from the Argentinian government in 2016, thanks to Singer’s pressure. Odette Lienau, a professor of law at Cornell University and Yale, also makes the argument that vulture funds are in a way holding government accountable for financial shortcomings or corruption. Whether these are good reasons for profiting off economic crises, we’ll let you decide.

Everyone and their mother is talking about the constitutional amendments in the foreign press this morning. We have chapter and verse in Speed Round, above.

Other stories worth a skim:

• Regional diplomacy: Egypt has a chance to resume its role as a major regional player through its diplomatic efforts to solve the conflict in Libya, argues Seth J. Frantzman in The Jerusalem Post.
• Crime and punishment: An Alexandrian court has sentenced 36 people convicted of joining the Ikhwan to five years in prison with a five-year probation term, reports the AP.
• An inclusive arts festival: The Downtown Cairo Arts Festival (D-CAF) gets a glowing review in The National for working with poor and marginalized populations.
• Women’s rights: An Egyptian digital market agency has become the first company in the country to grant its women employees menstrual leave, the Independent reports.

The House of Representatives’ approval of the proposed constitutional amendments, and a tour by President El Sisi of Mohamed Naguib military base topped the front pages of the government-owned dailies this morning (Al Ahram | Al Gomhuria | Al Akhbar). Al Gomhuria is dedicating the bottom half of its front page to a banner urging Egyptians to vote in favor of the upcoming national referendum.

Inside the Fed: Interview transcripts with top Federal Reserve officials and staffers released on Friday tell the story of over 50 years of operations inside the central bank, including conflicts of personality and vision, pressure and the sometimes diverging priorities of the Fed’s leaders and the White House, David Harrison writes for the Wall Street Journal. The interviews took place as part of an oral history project to mark the Fed’s centennial in 2013, and were designed to be personal recollections. Among the participants, former Fed chairmen Paul Volcker, Alan Greenspan and Janet Yellen are able to look back on their approaches to determining monetary policy with the benefit of hindsight. Still, the struggle to strike a balance between tempering inflation, maintaining strong economic growth and considering electoral concerns — often, it seems, conflicting interests — is apparently an ongoing one.

3D printing is revolutionizing medicine: Researchers at Tel Aviv University have 3D printed a heart from a patient’s own cells in a breakthrough that could revolutionize organ transplants, according to Bloomberg. The heart, about the size of a rabbit’s, is the first to be printed with ink from the patient’s own biological material, complete with blood vessels, ventricles, and chambers. From using 3D printing to upcycle food waste and sell it on to fancy restaurants, to printing food for caterers and bakeries, the 3D food printing industry is estimated to be worth USD 500 mn by 2023, according to a report by the FT. The trend in food tech doesn’t stop there, though. The next stage is making food tailored to a person’s DNA. (watch: runtime 3:50).

President Abdelfattah El Sisi called the head of Sudan’s transitional military council Abdelfattah Al Burhan yesterday to offer his backing, according to an Ittihadiya statement. El Sisi told Al Burhan that Egypt supports the wishes of the Sudanese people and stands ready to offer support during the transition.

Minister of State for Military Production Mohamed El Assar met yesterday with Bechtel’s Stuart Jones, president of the company’s Europe and Middle East operations, according to a cabinet Statement. The meeting concluded with an agreement to allow a delegation from Bechtel to visit military factories to explore areas for potential collaboration.

Resumption of Irish cattle exports to Egypt inches closer: The Irish Department of Agriculture has issued three updated health certificates for fattening, breeding, and slaughtering cattle in order to resume live cattle exports to Egypt as soon as possible, according to the Independent. Egypt and Ireland have been in talks over the issue for several months.

The Egyptian Electricity Transmission Company (EETC) and the Egyptian German Electrical Manufacturing Company (EGEMAC) have signed seven contracts worth c. EGP 660 mn to overhaul power transmission networks across the country, EETC head Sabah Mashaly said, according to Al Masry Al Youm. The contracts will see new substations worth upward of EGP 630 mn built and supplied in 10th of Ramadan City, Hawamdia, and Damietta. The contracts also involve purchasing 10 mobile substations. The European Investment Bank and the Arab Fund for Economic and Social Development will finance the projects.

Egyptian red grapes are in healthy demand from Europe, Canada, and China this season, said May Salem, general manager for FinBi for Land Reclamation and Agricultural Development, according to Fresh Plaza. Egypt’s position remains strong, despite the season being delayed by the weather, with traders expecting less competition this year from Chile, India, and South Africa.

A Cairo criminal court has sentenced to death two people accused of bombing a Helwan church in 2017, killing nine copts and a policeman in the process, according to Ahram Online. Their case files have been referred to the Grand Imam for approval.

A senior official at the Confederation of African Football (CAF) has been fired after accusing President Ahmad Ahmad of corruption and harassment, Reuters reports. General secretary Amr Fahmy was dismissed after submitting a report claiming that Ahmad had taken bribes and misused funds. This is not the first time CAF has found itself mired in controversy. In January 2017, the Egyptian Competition Authority (ECA) fined then-CAF President Issa Hayatou and former Secretary-General Hisham El Amrani a combined EGP 1 bn for violating market competition laws.

Taking center stage on Google today is late Egyptian artist and feminist Inji Aflatoun, with a Google Doodle celebrating her 95th birthday. Aflatoun was both a prolific artist whose work was characterized by broad and colorful brushstrokes and, according to the National, an outspoken advocate for women’s rights in early 20th century Egypt. Her activism, which was infused into her earlier work, centered on the premise that both gender and class oppression were linked to imperialism.

The total number of recorded road accidents in Egypt fell 23% y-o-y to 8,480 in 2018 from 11,098 in 2017, according to the latest CAPMAS report. The first half of the year saw a 24.2% decline in y-o-y terms. The key in both cases, folks: Recorded. The daily average number of road incidents declined to an average 23.2 collisions a day, compared to 30.4 in 2017. Fatalities from road accidents also dropped 15.7% over the year to 3,087 deaths, down from 3,747 in 2017.