Thursday, 4 July 2019

Business activity contracted again in June

TL;DR

What We’re Tracking Today

Good morning, friends, and welcome to the last day of the week. May we start off by saying we are very happy that we are just hours away from enjoying the calm that will take over Cairo thanks to the weekly exodus to Sahel?

Our elected representatives may not be as happy, as an extended legislative cycle starts to nibble away at their beach time: The House of Representatives has postponed the start of the summer recess into July as it rushes to finish its legislative duties. MPs were originally due to begin their three-month holiday at the end of June, but our sources tell us that the legislative session has been extended in order to vote on legislation yet to make its way to the House.

The PMI results are in — and we saw a marginal improvement from the previous month. Non-oil business activity continued to contract in June, but at a slightly slower rate than the month prior. We have chapter and verse in this morning’s Speed Round, below.

Finance Minister Mohamed Maait is in Napoli, Italy today to participate in the Euro-Mediterranean Investment Forum, according to a ministry statement. Maait is expected to meet with Italian Finance Minister Giovanni Tria and Intesa Sanpaolo Chairman Gian Maria Gros-Pietro, among other officials, on the sidelines of the forum.

Keep your eyes on these news triggers over the coming days:

  • Foreign reserves: The CBE is expected to release net foreign reserve figures for June today.
  • Inflation: Monthly inflation figures are due out next week.
  • Interest rate day: The central bank’s Monetary Policy Committee is due to meet next Thursday, 11 July, to review interest rates.

Afcon’s round of 16 kicks off tomorrow with Morocco playing against Benin at 6 pm CLT at Al Salam Stadium, followed by Uganda vs. Senegal at 9 pm.

Egypt, meanwhile, will be up against South Africa on Saturday at 9 pm CLT at Cairo International Stadium. By the looks of it, the winners will take on either Nigeria or Cameroon in the quarter finals. You can find the full round of 16 fixtures here.


Another sign The Donald is pushing to control US monetary policy? US President Donald Trump is planning to nominate two new Fed governors likely sharing his dovish monetary policy beliefs, according to the Associated Press. Trump said in a tweet on Tuesday that he plans to send Judy Shelton and Christopher Waller’s names to the Senate. Shelton, who has recently made clear her leaning toward accommodative policy, and Waller, whose stance is likely accommodative but is much less clear, are Donald’s latest attempts to “bring two dovish votes” to the Fed.

Trump has been outwardly critical of the Fed’s neutral and restrictive policies as of late, arguing that Jerome Powell’s four rate hikes last year and reluctance to ease this year are stifling economic growth and depressing stocks.

Why have assets risen across the board so far in 2019? Market addiction to easy money, markets sage Mohamed El Erian suggests in a Bloomberg opinion piece. The signals of further stimulus put out by the world’s key central banks have resulted in an abnormal rally among asset classes on opposite poles of the risk spectrum: Long-term US treasuries and high-yielding emerging-market bonds, gold, and bitcoin. Despite the ominous backdrop of intensifying trade conflict, global slowdown and geopolitical tensions, assets across the board have risen in the hope of fresh stimulus measures.

This raises deeper questions about the strength of the economic fundamentals. Optimists point to the US labor market and the growing impact of technology on supply to suggest that the economy has finally ended its reliance on central bank liquidity, and has begun to experience genuine growth. However, a long list of uncertainties is accompanying the ongoing rally, signifying that the economic and corporate fundamentals are not as stable as the optimists would have us believe. “Such belief is yet to be warranted by developments on the ground,” El Erian writes. “Prospects remain not just fluid but also unusually uncertain.”


In global miscellany this morning:

  • Hassan Rouhani has threatened to increase Iran’s enrichment of uranium to “any amount that we want” starting Sunday, according to the Associated Press. Tehran had intentionally breached the 2015 nuclear agreement earlier this week by exceeding the agreed-upon limit of enriched uranium to persuade the EU to offer a way around US oil sanctions.
  • An air strike on a Tripoli migrant detention center killed 40 and injured at least 80 on Tuesday evening. Libyan National Army chief Gen. Khalifa Haftar has accused government forces of the attack, the BBC reports.
  • White House advisor Jared Kushner’s latest attempt to bring the Palestinians to the negotiating table for the US’ Middle East peace plan: Telling reporters that Donald Trump is “very fond” of Palestinian Authority President Mahmoud Abbas, who doesn’t seem to reciprocate, according to Reuters.

Enterprise+: Last Night’s Talk Shows

The nation’s talking heads didn’t have much to keep them occupied last night beyond the World Bank’s recent approval of a USD 500 mn financing package for Egypt’s social safety net and yesterday’s disruption of Facebook, WhatsApp, and Instagram.

Funding for social safety: Al Hayah Al Youm’s Khaled Abu Bakr highlighted the World Bank’s recent approval of a USD 500 mn facility to extend for three years a program to support Egypt’s social safety net (watch, runtime: 5:58).

Social media glitches: Facebook issued a statement yesterday after many users around the world reported experiencing issues using the group’s social media platforms, including WhatsApp and Instagram, Masaa DMC’s Osama Kamal highlighted (watch, runtime: 2:17).

Speed Round

Speed Round is presented in association with

Non-oil business activity continues to contract in June: Falling demand caused non-oil business activity to contract for the second consecutive month in June, according to the Markit / Emirates NBD PMI gauge (pdf). The latest purchasing managers’ index rose slightly to 49.2 last month from 48.2 in May, indicating a “softer deterioration in business conditions,” as businesses reported a slowdown in demand from local and international customers, causing a drop in new orders — albeit at a slightly slower rate than in May. Business conditions had worsened in May as declining tourism activity contributed to a fall in new orders. A figure above 50.0 indicates that business activity is expanding while a reading below this shows contraction. Reuters also took note of the latest reading.

Output continues to decline but shows signs of life: Output saw “substantial improvements” last month, said Daniel Richards, MENA economist at Emirates NBD, despite remaining in contraction territory. Just 11% of survey respondents reported a decline in output and 10% increased output. Businesses also remain confident about their prospects over the next 12 months, with 25% of respondents predicting an improvement in conditions versus just 3% expecting them to worsen.

Businesses hold selling prices as input prices slow: Many companies chose to keep their selling prices on hold in a bid to lift sales, after two consecutive months of price cuts. This was likely helped by input prices growing at the second-slowest rate on record last month, providing a reprieve to businesses whose margins will likely be squeezed by rising fuel and energy prices that will follow the latest round of subsidy cuts.

EGP appreciation drives confidence to five-month low: Some businesses voiced concern about the impact of the recent appreciation of the EGP on new contracts, pushing confidence to new five-month lows. The strengthening of the currency could “potentially pose a challenge to export-oriented businesses” in the months ahead, Richards said.

INVESTMENT WATCH- UAE banks invested USD 11.8 bn in Egypt in 1Q2019: Investments by Emirati banks in Egypt reached AED 43.4 bn (USD 11.8 bn) at the end of 1Q2019,according to UAE Central Bank data, Emirates News Agency (WAM) reports. Investments in Egypt by UAE banks grew AED 11.7 bn (USD 3.1 bn) over 1Q2018 — the highest annual increase in investment by Emirati banks in any country, according to WAM. The other countries to see substantial annual increases are Saudi Arabia, with an increase of USD 3.04 bn to USD 12.7 bn and the UK, with an increase of USD 2.06 bn to reach USD 16.6 bn.

INVESTMENT WATCH- Kharafi Nationalmulls investing up to EGP 1 bn in Future City infrastructure project: Infrastructure contractor Kharafi National could compete for a EGP 1 bn water and sanitation project in Future City, General Manager Elia Saber said, according to Al Mal. The company is currently close to completing an electricity and a sanitation project worth a combined EGP 1.45 bn, Saber said. The company earlier this week signed a syndicated loan agreement with four local banks led by SAIB Bank to arrange an EGP 750 mn facility. Kharafi National is a Kuwait-based subsidiary of Saudi Al Kharafi Group.

EXCLUSIVE- Tata joins host of automotive companies in talks to invest in Egypt: India’s Tata Motors is in talks with the Egyptian government to assemble its cars locally in Egypt, two officials close to the talks told Enterprise. Meetings with Tata and other automotive companies from Japan and China will continue until early next year, with agreements expected to be signed soon after, the officials said. This comes as Nissan is in talks with the Trade and Industry Ministry for a project in Ain Sokhna, Public Enterprises Minister Hisham Tawfik told the local press, without providing details on the potential project. The Trade and Industry Ministry is also in talks with China’s Dongfeng, which is seriously studying the possibility of manufacturing electric cars in Egypt, which can be used by the government, turned into taxis, or exported to Europe, the ministry said. Sources had told us last month that Suzuki and Isuzu were also holding talks with the government to invest here.

Is Raya getting a piece of the action? Raya Holding subsidiary Raya Auto CEO Tamer Abdel Aziz was quoted in the press yesterday saying the company is in talks with one Indian and two Chinese global automotive companies, all of which were unnamed, to manufacture electric vehicles and motorcycles in Raya’s recently inaugurated 6 October factory. The company opened talks with the Trade and Industry Ministry last month to obtain a manufacturing license, and then said it is planning to assemble light electric vehicles with initial investments of EGP 110 mn.

What’s gotten all these companies interested? News of the talks began appearing not long after it was revealed that the government was leaning towards a package of incentives for the auto industry eerily similar to the long-awaited automotive directive. Sources told Enterprise at the time that the incentives, which would include customs breaks reaching 100%, would be a sliding scale based on how much local content manufacturers use, starting at 10%. The new incentives program is with the Madbouly Cabinet for review. Mercedes-Benz signed an MoU earlier this week with the government to set up an assembly plant in the Suez Canal Economic Zone (SCZone).

Can we just forget about El Nasr, already? An MoU signed between Nissan and state-owned El Nasr Automotive in March, which would have seen the former use the latter’s factories to produce 100k cars annually, has been terminated, Tawfik said. The signing had followed remarks by Nissan’s MENA and India Chairman Peyman Kargar to Bloomberg that the company was looking to increase its output from its factory in Egypt to 28,000 vehicles, up from 22,000, this fiscal year. Yet despite this, and the decades-long flatlining of the company, the government still cannot bring itself to pull the plug on it. The Public Enterprises Ministry is also planning talks with a number of Chinese and Korean companies to manufacture electric cars at El Nasr-owned facilities, Tawfik said.

IPO WATCH- Misr Insurance, Misr Life Insurance will IPO-ready by the end of 2020: State-owned Misr Insurance and Misr Life Insurance should be ready to IPO as part of the state privatization program by the end of next year, Chairman Basel El Hiny told CNBC Arabia (watch, runtime 1:50). The companies’ IPOs are “not on the fast track,” El Hiny said, adding that the IPOs will not necessarily go to market as soon as the companies are ready. El Hiny did not provide further details on the expected size of the IPOs, saying only that the companies would offer up to 30%, as dictated by the government committee managing the privatization program. The IPOs of the two companies had been postponed last year until they undergo restructuring. Misr Life Insurance Chairman Ahmed Abdel Aziz had said last year that the company was working on completing a valuation study and hiring advisers with an eye to offer 15-30% of the company’s shares in 1Q2019.

Energean in pole position to take over Edison’s oil and gas unit: Greek energy company Energean is the frontrunner to take over Edison’s oil and gas unit, sources told Reuters. The company is said to be locked in a bidding war with Cairn Energy over the EDF-owned company’s oil and gas assets, which include several concessions in Egypt’s Mediterranean waters. EDF and Edison will make a final decision in the coming days, according to one of the sources.

Edison is continuing work as normal: Edison has contracted Maersk Drilling for a deepwater semi-submersible drilling rig to drill an exploration well in its North Theqa gas field, Offshore Engineer cited Maersk Drilling as saying. The contract is expected to begin in 4Q2019.

Background: Sources had told Bloomberg earlier this year that EDF was looking to sell Edison’s oil and gas assets in Egypt and Italy in a private auction where bidders were expected to offer up to USD 2 bn. Edison last year had denied reports in the domestic press that it has forfeited its right to explore for natural gas in the northeastern Hapi and Theqa concessions.

M&A WATCH- Univert is seeking a minority stake in Sohag Food Industries: Pasta-maker Univert Food Industries has opened talks to acquire a 10% stake in Sohag Food Industries, Al Mal reported, citing unidentified sources. Univert is looking to become a shareholder in order to secure a reliable supply of flour needed for production.

ITFC floats USD 3 bn trade financing agreement with Egypt in 2020: The International Islamic Trade Finance Corporation (ITFC) expects to reach a new trade financing agreement with Egypt worth USD 3 bn in 2020, CEO Hany Sonbol said, according to Al Mal. Sonbol told us last week that the IFTC and Egypt will sign the second USD 1.5 bn tranche of a previous USD 3 bn trade financing agreement in July. The funds are used to finance imports of petroleum products and basic commodities.

EIB wants in on new capital monorail financing: The European Investment Bank (EIB) is interested in joining forces with the European Bank for Reconstruction and Development (EBRD) and UK Export Finance to help finance the monorail project that will link Cairo to the new administrative capital, Transport Minister Kamel El Wazir said in a statement. EBRD Vice-President Alain Pilloux said in a visit to Cairo earlier this week that the bank is interested in getting involved with the monorail project.

LEGISLATION WATCH- No new cash subsidy recipients until in-the-works Cash Subsidy Act gets House nod? It would appear that the government has put a halt to adding new welfare beneficiaries to Takaful and Karama until a newly-drafted Cash Subsidies Act is approved by the House of Representatives, according to statements attributed to the Social Solidarity Ministry by Al Mal. The act, which revamps the country’s cash subsidy programs, would provide the mechanism and basis for eligibility in the cash subsidies program. As such, approving the act is necessary to add some 120k new families during the current fiscal year, the ministry reportedly said. According to a separate local press report, the government plans to introduce the cash subsidies system starting August. The government plans to introduce the law to the House before it breaks for summer recess.

A smarter, more discerning cash subsidy program: New details on the law have emerged in the local press that indicate that the new system will be more efficient and streamlined, and less friendly to Kramers (our in-house term for subsidy moochers who are ineligible for subsidies). Under the new system, the government must review the subsidy rolls every three years and scratch off those found ineligible. The new system also adds new conditions for eligibility, including mandating that the children of recipients attend 80% of their classes in a school year and making sure they receive regular medical checkups until the age of six. Consumption of electricity and mobile phone calls will be among the criteria for determining eligible families. These conditions will apparently apply to all cash subsidy programs, including Takaful and Karama, which will all be unified under a single umbrella. This would also presumably include the two new programs — Igatha and Forsa — that were announced last year.

Kramer unemployment program: The law reportedly mandates that the government help those found to be ineligible for the program find a path to employment for a period of three years, Al Mal says. Should job offers lined up by the government be rejected three times, the Kramer will be scrapped from all subsidy programs. We had heard that the law would also guarantee the right to unemployment benefits and establish a new pension fund.

Also on the House’s agenda before MPs take off for their summer recess: The House is expected to discuss next week a draft law to regulate the Bar Association, reports Ahram Online. The proposed law, which the House Constitutional and Legislative Affairs Committee approved last month, would provide attorneys a higher degree of protection in court, aim to double the association’s revenues, and set up an academy to train fresh law graduates.

Cairo becomes 30th city to participate in EBRD urban sustainability program: Cairo has signed on to participate in the European Bank for Reconstruction and Development’s (EBRD) EUR 1 bn urban sustainability program, EBRD Green Cities, making it the 30th country to join the initiative, according to an EBRD statement. “All participants in EBRD Green Cities embark on a trigger project to improve their local environment then, with EBRD help, work on a Green City Action Plan (CGAP) to create a tailor-made list of further environmental investments and policy changes most suitable to address their environmental challenges.” Cairo’s “trigger project” is an overhaul of the Cairo Transport Authority to become energy efficient through the use of electric buses and an electronic ticketing system. “The EBRD will also support the company to develop a low carbon road map.”

Our friends at CIB have become the only representatives of Egypt's private sector to become members of the Digital Economy Task Force (DETF), an EU-AU joint venture that seeks to leverage African digital transformation to bring about cross-border integration and cooperation across the continent. Uniting financial institutions, civil society, government representatives and others, the DETF will streamline policies and actions to establish a digital economy that will improve access to jobs and service provision. CIB is committed to supporting Africa achieve universal access to affordable broadband, essential digital skills and digital financial services, the company said in a press release on its website. You can read more about the DEFT here.

CORRECTION- The average price of wheat purchased by the Supply Ministry from local farmers since the start of the harvest season is EGP 670 per ardib, not EGP 670 per tonne as we incorrectly said yesterday. H/t Ehab M. for pointing out our error. The story has since been corrected on our website.

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Egypt in the News

Human rights are once again the talk of the foreign press this morning: Although Egypt’s economic growth since 2014 has been double our population growth, Ed Cropley argues in an opinion piece for Reuters that we should not fall prey to the cause of “the African strongman.” Meanwhile, parallels once again are being drawn between Egypt and Sudan, where Egyptians in exile are being reminded of “events in their own country, even if there are some clear differences,” AFP reports. Elsewhere, Amnesty International is once again accusing Egypt’s authorities of trying to ‘legalize’ repression since the fall of former President Mohamed Morsi.

Other stories worth a moment of your time:

  • Some of the mysteries of a Nubian pharaoh’s 2300-year old pyramid are laid bare in a daring underwater expedition. Archaeologist Kristin Romey describes the journey in National Geographic.
  • Reviving the classical: Egyptian singer Mohamed Mohsen is among a host of other young talents seeking inspiration from the good old days, the National writes.

On The Front Pages

El Sisi’s diplomatic meetings top state-owned front pages: President Abdel Fattah El Sisi’s meeting with UN General Assembly President María Fernanda Espinosa and his statements in a separate meeting with US Senator Lindsey Graham about the Palestinian peace plan topped the front page of state-owned Al Akhbar. We have more on the latter meeting in Diplomacy + Foreign Trade, below. Both Al Ahram and Al Gomhuria’s websites were still down this morning.

Worth Watching

Turki Al Sheikh’s turbulent tenure in Egyptian football: This video courtesy of Tifo Football (watch, runtime: 9:29) tells the story of Turki Al Sheikh’s venture into Egyptian football (or at least part of the saga). Head of the Saudi General Sports Authority, Al Sheikh was made Al Ahly’s honorary chairman in return for propping up the club financially. But his decision to persuade Argentinian coach Ramon Diaz to sign for Saudi club Al Ittihad over Al Ahly caused a rupture with the club’s board and fans, leading to Al Sheikh leaving the club. Enter Pyramids FC. Thoroughly annoyed with how the Ahlawys had treated him, Al Sheikh bought Al Assiouty, moved the club to Cairo, spent EUR 40 mn on Brazilian footballers and paid a group of people to become “fans.”

Diplomacy + Foreign Trade

Egypt signed with Jordan yesterday a number of cooperation protocols in various fields, including investment, trade, and ports, the cabinet said in a statement following a meeting between Prime Minister Moustafa Madbouly and his Jordanian counterpart Amr Razzaz.

President Abdel Fattah El Sisi met with US Senator Lindsey Graham yesterday to talk strengthening ties and regional issues, according to an Ittihadiya statement. El Sisi reiterated during the meeting that the Palestinian-Israeli conflict must be resolved through “international resolutions, the two-state solution and the Arab Peace Initiative.”

Basic Materials + Commodities

Egyptian agricultural exports value falls 1.5% in nine months to May 2019

The value of Egyptian agricultural exports fell to USD 1.84 bn in the nine months to May 2019, a 1.5% y-o-y drop from USD 1.87 bn during the same period a year earlier, according to an Agricultural Exports Council report picked up by the local press. Egypt exported 3.84 mn tonnes of agricultural products during the period, a 6.2% increase from last year. Citrus products made up 46% of exports, and Arab countries were the biggest customers, comprising 33% of the total value of exported products.

Automotive + Transportation

Siemens makes offer in tender to supply Egypt with 100 new railway cars

Siemens has expressed interest in supplying Egypt with 100 new railway cars, the Transport Ministry said in a statement following a meeting between minister Kamel El Wazir and a delegation from the company. El Wazir said the ministry is considering offers from a number of other companies, but not disclose them. The German conglomerate told Prime Minister Moustafa Madbouly last month that it was interested in working with the government to upgrade its railway infrastructure, and that it is willing to begin manufacturing locomotives in Egypt within the next five years.

Banking + Finance

BdC obtains USD 30 mn loan from Kuwait Fund

Banque du Caire (BdC) has secured a USD 30 mn loan from the Kuwait Fund for Arab Economic Development to increase SME financing, the bank’s head of SME banking, Nader Saad, told Mubasher. Sources told the newspaper at the end of June that the bank was in talks with the Micro, Small & Medium Enterprises Development Agency over a EGP 200 mn loan. BdC’s quarterly net profits almost tripled to EGP 1.21 bn in 1Q2019.

Egypt’s CIT Ministry in talks with World Bank to provide e-lending to the youth

The CIT Ministry is in talks with the World Bank to provide electronic lending services to young borrowers in partnership with Egypt Post, Minister Amr Talaat tells Al Mal. The minister is expecting negotiations to wrap up this year. The bank’s role will be to put in place a mechanism to provide loans to finance SMEs which doesn’t require borrowers to resort to a commercial bank.

My Morning Routine

Youssef Farag, co-founder and COO of Qubix: My Morning Routine looks each week at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Youssef Farag, co-founder and COO of Qubix, the first company to bring container architecture to Egypt, turning shipping containers into usable spaces for clients in retail, construction, development, F&B and other industries.

My name is Youssef Farag, and I am 27 years old. I specialized in finance, economics and sociology at AUC, and after graduation was bitten by the entrepreneurial bug, co-founding Qubix with Karim Rafla, who has been one of my closest friends since we were old enough to have friends.

Qubix specializes in container architecture or ‘cargotecture,’ which means that we turn shipping containers into usable spaces for a wide variety of clients in many different industries. We started operations in December 2016 and are proud to have delivered 60+ customized projects built out of 140+ shipping containers. Our clients include Mountain View, BRGR, TBS, Zööba, Petrojet, Cairo Airport, Amer Group, Fit & Fix, Hassan Allam, Soma Bay, and Al Futtaim, as well as government and military entities.

As COO, I’m responsible for driving and organizing the day-to-day operations, making sure that all our projects get delivered on time, that the quality is high, and that all safety and organizational requirements are fulfilled. It’s a source of great pride to me today that I have become extremely adept at this role,mastering skills and technical information that I knew literally nothing about just three short years ago.

I’d love to claim that I wake up with the sunrise and go for a refreshing run every morning, but that’s not the case. The word ‘routine’ doesn’t really resonate with me at this point in my life, but I do have habits, which I see as being slightly more flexible than a routine.

Every morning I wake up around 7-7:15am. The first thing I do is make my bed, then take a freezing cold shower, which I’ve found to be a great substitute for coffee. Once I’m out of the shower, dressed and feeling good about myself, I prepare a quick light breakfast — usually two boiled eggs, half an avocado and salmon or chicken. This is part of an eating regimen that has helped me lose 15 kg over the past 2-3 months. By 8 am I start making phone calls to the managers of the different company departments, to ensure that everything I assigned them the previous day is being taken care of, in accordance with the schedule we set as a team. I arrive at our production facility by 9am, refreshed and ready to tackle the mayhem of the day.

I spend most of my day at our production facility. We recently relocated from our first 1000 sqm facility to a new and greatly improved 3500 sqm one, which has allowed us to greatly increase our production capacity and speed. My day is a mixture of problem solving, communicating with clients, and overseeing all aspects of production. On a typical day, things start to calm down around 6-7pm, then I’m back home in my fortress of solitude.

One big change I’ve made this year is moving into my own flat, in pursuit of genuine independence. In our society, people my age tend to do this exclusively after marriage, which for me personally would run counter to my pursuit of self-discipline, independence and self-awareness. The end of each day is very important to me. In the 2-3 hours I have for myself, I can do whatever I want to stay sane, from going to the gym or socializing to doing absolutely nothing and watching Netflix. I really value alone time; I recharge by being alone with my thoughts after being surrounded by chaos and responsibilities for most of the day.

I recently read The Art of War by Sun Tzu and The Prince by Niccolo Machiavelli, two widely-known and well-regarded books I’d highly recommend to anyone. I’m currently reading Mark Manson’s The Subtle Art of Not Giving a [redacted], which I’m really enjoying. Many people have taken against it because it’s ‘Instagram famous’ but it’s genuinely a great book, especially for anyone willing to entertain a radical point of view of how to live and learn.

Qubix was born out of a need, on my part and Karim’s, to do something of our own. We were working with our parents, and one day in February 2016 we agreed we needed to do something ourselves. Karim told me about the container architecture he had seen in London, while he was studying there. It was the first time I had seen anything of this sort. After a bit of research, we felt our energy pick up, and we could see endless possibilities. We wondered why no one else in Egypt had done this before.

We decided to take the plunge and order a 20 ft shipping container after a week of research. We threw it in our backyard, and just started experimenting with a team of two workers and a shady ‘engineer’ who saw an easy target for a scam (but that’s another story). We tried out different materials for insulation, paint, cutting, wielding, hydraulics, and countless other things. After seven months of R&D, we felt confident enough to take on a project and explore whether we actually had a market. We hadn’t told many people outside of our families about what we were doing, and as luck would have it, the third friend I casually mentioned it to told me that his parents were familiar with the concept and wanted to build a small farm house using containers. Just like that, we had our first project.

What makes Qubix special is our total involvement in each project. We’ve been able to bring all our services in-house, under one roof, as the company has grown. So we’re involved from the moment a client comes in with an idea. We take the brief and our design team creates a customized design, which can fit any brand. The approved design gets delivered to the production team and the project managers, who oversee its transformation into a real-life, tangible product. So we deliver a truly turn-key project. All our clients need to do after we deliver is install their appliances or their furniture, as we will have already taken care of A/Cs, bathrooms, windows, doors, flooring, walling, insulation, electricity, plumbing, external claddings or design, as well as logos. We guarantee the best quality in the market, and we give the paperwork and after-sales maintenance to back that up.

We try to offer consumer education, so that people understand the value of what we are doing,because the market has only been around in Egypt since we launched (and even internationally, it’s only 40 years old). Using our product, an individual can start or expand a business for a fraction of the cost they would usually incur. Take an F&B brand: Using our services will allow them to cut costs, launch more quickly and reduce a lot of worry and stress. One of the great advantages of cargotecture is that it is movable. So if a brand wants to have a presence in Sahel during the summer season, they won’t have to find an unfinished shop, pay extortionate amounts in rent, pay for finishings and decorations for the summer, then leave at the end of the season. Our clients simply go from one location to the next with their own fully-owned unit, ready for operation on arrival.

It’s also important to understand that lower prices usually lead to problems. Clients who go for cheaper alternatives have usually regretted it, because of the difference in quality and execution. Our products are in a more expensive bracket than our competition because we use the highest quality materials, so the structure will last for years and years of use and relocation. Most importantly, we always adhere to structural safety precautions and procedures. Unfortunately, there are often disregarded by others I’ve seen operating in the market.

We serve many different industries, so we are affected by changes in each and every one of them. This is part of what’s exciting about what we do: We have the potential to help many industries transform. With the ever-increasing price of homes in Egypt, people are starting to see the value in downsizing, irrespective of their net worth. Movements like this will open new markets, and we are already seeing this happen with many clients. I think change usually happens slowly, until it reaches a tipping point. Then the pace is rapid.

We are also perhaps unusual in that we’ve been able to use the devaluation of the EGP to our advantage. We’ve been able to approach foreign markets and offer them prices that local suppliers couldn’t possibly compete with.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.55 | Sell 16.67
EGP / USD at CIB:
Buy 16.55 | Sell 16.65
EGP / USD at NBE: Buy 16.58 | Sell 16.68

EGX30 (Wednesday): 14,137 (0.00%)
Turnover: EGP 696 mn (1% below the 90-day average)
EGX 30 year-to-date: +8.5%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session flat. CIB, the index heaviest constituent ended down 0.1%. EGX30’s top performing constituents were Orascom Investment Holding up 4.1%, Telecom Egypt up 3.2%, and Kima up 2.4%. Yesterday’s worst performing constituents were Ezz Steel down 2.9%, ACAMD down 2.1%, and Orascom Development Egypt down 2.0%. The market turnover was EGP 696 mn, and local investors were the sole net buyers.

Foreigners: Net Short | EGP -32.8 mn
Regional: Net Short | EGP -0.6 mn
Domestic: Net Long | EGP +33.4 mn

Retail: 63.1% of total trades | 67.5% of buyers | 58.6% of sellers
Institutions: 36.9% of total trades | 32.5% of buyers | 41.4% of sellers

WTI: USD 57.29 (-0.09%)
Brent: USD 63.82 (+2.28%)

Natural Gas (Nymex, futures prices) USD 2.28 MMBtu, (-0.35%, Aug 2019 contract)
Gold: USD 1,419.40 / troy ounce (-0.11%)

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Calendar

July: Customs officials from Egypt and the US will sit down to discuss “procedural and administrative matters” as part of the Trade and Investment Framework Agreements (TIFA).

July: The National Railway Authority will launch a tender for the purchase of 100 new locomotives expected to be financed through an agreement with the European Bank for Reconstruction and Development (EBRD).

7 July (Wednesday): The FRA will hear an appeal filed by Adeptio AD Investments, the lead shareholder of Egyptian International Tourism Projects Company’s (Americana Egypt), against an order to submit an MTO for Americana

11 July (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

19-21 July (Friday-Sunday): LED Middle East Expo, Egypt International Exhibition Center, Nasr City, Cairo.

21 July (Sunday): Amer Group and Antaradous Touristic Development will face off in court over a 2014 dispute brought by the Syria-based company for a fallout in their partnership to develop the Porto Tartous tourist resort. The date was postponed from 23 June.

23 July (Tuesday): 23 July revolution anniversary, national holiday.

28 July-02 August (Sunday-Friday): Fab15 Conference and Graduation Ceremony, TU Berlin, El Gouna, Egypt.

30-31 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

August: Meetings of the Egyptian-Belarussian Committee for trade, economic, scientific and technical cooperation, Minsk.

August: The National Railway Authority is expected to sign a 15-year maintenance agreement for 1,300 railcars it had agreed to purchase from Russia’s Transmashholding under a EGP 22 bn contract.

03-04 August (Saturday-Sunday): Fab15 Festival, Tours, and Conference Closing, Greek Campus, Cairo.

7-11 August (Wednesday-Sunday): Eid El Adha (TBC).

22 August (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

28-30 August (Wednesday-Friday): Tokyo International Conference on African Development (TICAD), Yokohama, Japan.

29 August (Thursday): Islamic New Year (TBC), national holiday.

September: Cairo will host an Egypt-Hungary business forum, according to a Trade Ministry statement (pdf)

2-4 September (Monday-Wednesday): The Big 5 Construct Egypt, Egypt International Exhibition Center, Nasr City, Cairo.

03-04 September (Tuesday-Wednesday): Shared Services and Outsourcing Forum Middle East, Nile Ritz Carlton, Cairo.

8-11 September (Sunday-Wednesday): Sahara Expo, Egypt International Exhibition Center, Nasr City, Cairo.

9-12 September (Monday-Thursday): The 9th Annual EFG Hermes London Conference, Arsenal Emirates Stadium, London.

17-18 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

21 September (Saturday): Cairo’s streets get really, really crowded as students at the nation’s public schools go back to class.

26 September (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

October: A forum will be organized by Russia’s Rosatom and the Nuclear Power Plants Authority to introduce local suppliers and contractors to the Dabaa nuclear plant.

6 October (Sunday): Armed Forces Day, national holiday.

10-13 October (Tuesday-Sunday): Big Industrial Week Arabia 2019, Egypt International Exhibition Center, Nasr City, Cairo.

23-24 October (Wednesday-Thursday): Intelligent Cities Exhibition & Conference, Hilton Heliopolis, Cairo.

23 October-1 November (Wednesday-Friday): CIB PSA Women’s World Championship, Great Pyramid of Giza, Cairo.

24 October (Thursday): Russia-Africa Summit to take place in Sochi, co-chaired by Vladimir Putin and President Abdel Fattah El Sisi.

28 October-22 November (Monday-Friday): World Radiocommunication Conference 2019, Sharm El Sheikh, Egypt.

29-30 October (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

31 October-2 November (Thursday-Saturday): Angel Oasis 2019, organized by the Middle East Angel Investment Network (MAIN), El Gouna, Egypt.

3-5 November (Sunday-Tuesday): Electrix 2019, Egypt International Exhibition Center, Nasr City, Cairo.

9 November (Saturday): Prophet Mohammed’s birthday, national holiday.

10-14 November (Sunday-Thursday): GeoMEast International Congress and Exhibition, Marriott, Cairo.

14-17 November (Thursday-Sunday): Machtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Transpotech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

14-17 November (Thursday-Sunday): Airtech Expo, Egypt International Exhibition Center, Nasr City, Cairo.

November: Suez Canal Conference for Investment, organized in cooperation with the European Union

December: Egypt will host for the first time the Pack Process trade expo for the Middle East and African region.

3-6 December (Tuesday-Friday): Cairo WoodShow, Egypt International Exhibition Center, Nasr City, Cairo.

9-11 December (Monday-Wednesday): Pacprocess Middle East Africa, Egypt International Exhibition Center, Nasr City, Cairo.

9-11 December (Monday-Wednesday): Food Africa 2019 Expo, Egypt International Exhibition Center, Nasr City, Cairo.

10-11 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

26 December (Thursday): Central Bank of Egypt’s monetary policy committee will meet to review interest rates.

9-12 January 2020 (Tuesday-Sunday): PLASTEX, Egypt International Exhibition Center, Nasr City, Cairo.

25 January 2020 (Saturday): 25 January revolution anniversary / Police Day, national holiday.

25 January 2020 (Saturday): Midterm break for public schools and universities. Also known as: Two weeks of good commute.

8 February (Saturday): Midterm break ends. Traffic in Cairo stinks once more.

11-13 February 2020 (Tuesday-Thursday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

25-26 March (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

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