Wednesday, 9 October 2019

MPs attack economic reform program


What We’re Tracking Today

Prime Minister Moustafa Madbouly’s statement to the House yesterday didn’t quite have the intended effect. MPs stepped up their criticism of the government’s reform program, despite Madbouly painting a positive picture of the macroeconomy. One by one, MPs took turns attacking the government for everything from the rising cost of living and the poor state of hospitals to the failure of ministers to attend committee meetings and discuss legislation. We have more on the parliamentary offensive in this morning’s Speed Round.

Is a cabinet shuffle in the cards? Deputy Speaker Soliman Wahdan seems to think it’s just a matter of time, telling Al Masry Al Youm that “there is no doubt” that we’ll be seeing new faces around the cabinet table soon.

Does he have any particular ministries in mind? Wahdan said the education and health ministers should be first in line.

Expect a statement on GERD today: Madbouly is expected to be back in parliament today with the foreign and irrigation ministers to discuss the latest developments on the Grand Ethiopian Renaissance Dam (GERD) fiasco, Al Shorouk notes. We have an update on this in this morning’s Speed Round, below.

A Russian business delegation headed by Trade Minister Denis Mantrov is in town until Thursday for a joint forum to discuss cooperation.

A Portuguese equivalent is also in Suez for investment prospects in the Suez Canal Economic Zone. The Portugese delegation is also interested in setting up shipping line agencies, according to Masrawy.

Key dates for your diaries this month:

  • The IMF and World Bank annual meetings take place next week from 14-20 October.
  • The fifth ‘Egypt Can’ conference will be held on 16-17 October. The event will be attended by 65 of the biggest foreign investors in Egypt, as well as representatives from international financial institutions, businesses and the Egyptian government.
  • The Intelligent Cities Exhibition & Conference will take place at the Hilton Heliopolis on 23-24 October.
  • B2B conference for German, Egyptian companies to talk cooperation: The German-Arab Chamber of Industry and Commerce and the Bavarian Ministry of Economic Affairs, Regional Development, and Energy are hosting a B2B conference for a German delegation that will be in Cairo later this month to talk potential cooperation with Egyptian businesses. The four-day event will kick off on Sunday, 27 October in Cairo. Click or tap here to register.
  • The US Federal Reserve will meet on 29-30 October to review key interest rates.

High demand from Saudi investors for Aramco IPO prompts probe into lending exposure: Saudi’s central bank, the Saudi Arabian Monetary Authority (SAMA) is weighing its commercial banks’ exposure to Saudi Aramco ahead of the state-owned oil giant’s planned initial public offering, three sources familiar told Reuters. Some 6-7 mn local investors, many of whom could be seeking loans, are expected to get the lion’s share of the IPO. This is prompting SAMA to review lending regulations that could cause breaches and ensure liquidity is available to the investors, Governor Ahmed Al-Kholifey said.

As IPO approaches, look for Saudi-led oil cut: The kingdom could push for an oil output supply within the next couple of months after crude prices recovered from a temporary spike following the drone attacks only to fall back again, writes the Financial Times' David Sheppard. An “enduring oil weakness” driving crude indices in reverse puts Saudi’s new energy minister, Prince Abdulaziz bin Salman, in a position to reach for “Saudi Arabia’s old playbook” and call for larger-than-usual cuts, especially as the kingdom is looking to achieve an ambitious USD 2 tn valuation for Aramco.

And speaking of Saudi, Riyadh has published a new set of rules intended to increase the diversity of investment prospects on the Tadawul in the latest of several bids to bring foreign investment to the exchange, the Financial Times reports. The rules should make it easier for foreign companies to list on the main market, as well as promoting trading and listing on the secondary market. The move has drawn mixed responses from investors, with some lauding efforts to open up the business landscape, while others question whether there are ulterior motives at play.

Fed to restart bond-buying program, insists it’s not QE: The US Federal Reserve will soon begin buying short-term US treasury bonds in an effort to avoid another cash shortage in the repo market, Fed chair Jay Powell said yesterday, CNBC reports. The central bank will explain how it intends to expand its balance sheet in the coming days, Powell said, making sure to differentiate the new round of purchases from stimulus measures introduced in the wake of the 2007/08 financial crash. “This is not QE. In no sense is this QE,” he said, referring to the Fed’s crisis-era bond-buying program.

But just in case the Fed is considering a QE redux, the Bank of International Settlements is out with a timely dressing-down of central bank stimulus. Bond-buying programs launched in response to the financial crisis have distorted markets by creating a scarcity of bonds, reducing trading volumes and increasing concentration of ownership. This “could result in market malfunctioning when large central bank balance sheets are eventually unwound,” the BIS said. You can read the report here.

Is HSBC’s decision to slash up to 10k jobs a sign of things to come in the banking sector? A Financial Times editorial suggests that “slowing global growth and the mounting pressure on lending margins from looser monetary policy” could force other banks into making dramatic cutbacks.

US blacklists more Chinese entities ahead of trade talks: The US blacklisted exports from an additional 28 Chinese entities on Monday over Beijing’s alleged involvement in the repression of Muslim minorities, according to the Wall Street Journal. The US says the move has nothing to do with the new round of trade talks scheduled for Thursday, but the decision isn’t exactly inspiring confidence in the potential for a breakthrough.

The low expectations are hitting EMs: Although emerging market stocks have rebounded by 5.8% since early September, when it was decided that negotiations would resume, the rally has slowed since US President Donald Trump said he wouldn’t seek an interim agreement, Bloomberg reports.

Politicians need to unite to work on the global economy — or else, says new IMF boss Georgieva: Failing to resolve current trade tensions could produce fundamental fractures in the global economy and worsen the slowdown, Kristalina Georgieva has warned in her first speech as head of the IMF. She called for a “synchronized policy response” from world leaders to remedy the current “synchronized slowdown,” and warned that deglobalizing trends — “broken supply chains, siloed trade sectors, a “digital Berlin wall that forces countries to choose between technology systems” — would only exacerbate the situation.

Arab contenders in 2020 foreign film Oscars: The National is out with a list of films produced in the Arab region that could be nominated for the Best International Feature Film Academy Award next year, including films directed by Egypt’s Ahmad Fawzi Saleh, Lebanon’s Nadine Labaki, and Palestine’s Elia Suleiman.

Record labels aren’t happy about Apple’s bid to bundle music and TV programs into a single subscription. Sources told the Financial Times that some labels are hesitant to cut prices for the tech giant, which pressured them 10 years ago to sell tracks on iTunes for USD 0.99.

Enterprise+: Last Night’s Talk Shows

Politics took top billing on the talk shows last night:

The outpouring of anger in parliament towards the government during Prime Minister Moustafa Madbouly’s House speech yesterday earned some airtime on DMC (watch, runtime: 05:42). We also have more on this in the Speed Round, below.

The Egypt-Greece-Cyprus summit kicked off yesterday. President Abdel Fattah El Sisi met with his Cypriot and Greek counterparts to discuss a wide range of topics, including Mediterranean security and the latest developments in Libya and Syria, Al Hayah Al Youm’s Khaled Abu Bakr noted (watch, runtime: 03:16). We have more on the summit in this morning’s Speed Round, below.

Comedian Talaat Zakaria has passed away after a long struggle with illness,Hona Al Asema’s Reham Ibrahim noted (watch, runtime: 02:38).

Speed Round

Speed Round is presented in association with

Prime minister’s statement to the House yesterday did little to dampen MPs’ criticism of government economic policy. The House of Representatives sharply and repeatedly criticized the government yesterday after Prime Minister Moustafa Madbouly gave a speech defending his economic record, Masrawy reports. Madbouly emphasized positive economic indicators brought about by the IMF-backed reform program during his statement, but MPs offered a sharp rebuke of ongoing austerity measures, blaming them for plunging many Egyptians into poverty.

A watershed moment? Many of the same MPs who had previously lined up to cheer the program have been criticizing the government since returning from summer recess last week, seemingly spurred into action by last month’s scattered protests. At the same time, the deputy speaker of the House is now openly discussing the need for a cabinet shuffle, singling out the ministers of health and education — two front-line portfolios that touch the lives of mns of citizens every day that are traditionally lightning rods for discontent.

Austerity measures are the main bone of contention, but other issues are getting MPs riled up. Social Solidarity Committee chair Abdel Hady El Kassaby urged Madbouly to review policies that affect citizens including price hikes, pensions, education, health, unemployment and the minimum wage. “The PM’s statement that we heard makes it seem as if the people live in prosperity, which is not true. Citizens are facing more than they can bear and do not feel any benefits from the economic reforms,” MP Atef Nasr was quoted as saying. He asked how citizens should be expected to live when electricity and water bills now reach EGP 500. The MPs also complained about a lack of communication from the government about progress on the Karama and Takaful social programs, the poor state of medical services, and the failure of ministers to attend committee sessions and discuss legislation.

A premature exit raised temperatures further. MPs were livid after the prime minister left in the middle of the debate, promptingHouse Speaker Ali Abdel Al Aal to explain to the chamber that Madbouly had to leave “due to commitments with the presidency,” Al Masry Al Youm reported.

How real is the risk of “fiscal slippage”? Analysts warned last week that the government could respond to the protests by reversing some of the fiscal reforms undertaken as part of the economic program. Analysts were writing after the government restored some 1.8 mn people to subsidy rolls who had previously been disqualified for earning too much, and some members of parliament are suggesting that the value of commodities covered under the state ration program should substantially increase. With MPs now demanding the government take action on the minimum wage, pensions and social programs, investors will be watching closely to see how far the government goes to mitigate the negative impact of its austerity program.

EXCLUSIVE- FinMin’s new Income Tax Act would look to close loopholes enjoyed by multinationals, fully bring digital economy into the fold: The Finance Ministry is planning to introduce amendments to the tax code that would make it harder for foreign companies to sidestep Egyptian taxes, according to a copy of the proposed bill seen by Enterprise. The legislation, which the ministry finalized after consultations with the Federation of Egyptian Industries’ (FEI) tax and customs committee, would scrap the current Income Tax Act, which has become a patchwork after multiple rounds of changes, FEI committee head Mohamed El Bahi told us.

Don’t expect changes to income tax rates: El Bahi was careful to note that the draft now under discussion would effectively deliver stability in tax policy — and other than closing loopholes used by foreign companies, its biggest features are things that domestic business leaders should largely welcome. Finance Minister Mohamed Maait is now set to review the bill before it heads to the House of Representatives for debate.

Closing down loopholes: The draft law would introduce a semantic amendment that would see all companies headquartered abroad, but operating in Egypt, face the 22.5% income tax. The proposed legislation would make the tax applicable to all Egypt-based subsidiaries of foreign companies and would not allow them to claim their country of origin as their tax domicile. The move is designed to curb the ability of foreign companies to repatriate profits generated from their businesses in Egypt without paying tax to the Egyptian treasury.

Here’s a quick rundown on other features of the act:

You can finally claim your Microsoft Office 365 (or G Suite or whatever) as a legit business expense: The bill, if enacted as it currently stands, would allow companies to use receipts for online payments and phone messages as proof of expenses. It would also cap the percentage of undocumented expenses allowed by any company at 2% of total revenues. The amendment is reportedly designed to expand what can be claimed as a tax-deductible expense, thus allowing companies to be taxed on a more accurate calculation of their net profits.

Bringing the digital economy into the fold: The bill establishes a legal definition for e-commerce that would bring all commercial transactions conducted through electronic channels under the law. Tax treatment for freezones would remain unchanged. And remember, we’re not alone in wanting to tax tech giants: Canada’s governing Liberal party has said that it will, if re-elected, enact a French-style tax on foreign tech companies operating in Canada

Higher personal income tax exemptions: The new bill would raise the personal income tax exemption threshold to EGP 24k per year, from an original EGP 8k per year. Annual incomes above this ceiling would be subject to taxes under the following bands:

  • Those earning between EGP 24k and 45k per year would be taxed at 10%;
  • Those earning between EGP 45k and 80k per year would be taxed at 15%;
  • Those earning between EGP 80k and 200k per year would be taxed at 20%;
  • Those earning above EGP 200k would be taxed 22.5%.
  • Any income a taxpayer nets from something other than their day job would still be taxed at 10%.

Tax dispute resolution: The new bill would extend the mandate of the government’s tax dispute resolution committees to resolve disputes dated between the end of 2018 and until 31 December 2019. All currently open disputes that date back to before October 2018 or involve small sums would automatically be dropped, unless the business files a request to keep the case open. Investors involved in disputes worth EGP 100k or less would have to file the request within six months of the law’s ratification, while those worth more than EGP 100k would have one year. They would then have the option of either pushing ahead with dispute resolution procedures, or pay a percentage of the disputed amount to resolve the issue, under the following tiers:

  • 10% of disputes worth EGP 100k;
  • 25% of disputes worth EGP 100-500k;
  • 40% of disputes worth more than EGP 500k.

IPO WATCH- BICC int’l school eyes IPO in the long term: The British International College of Cairo (BICC) plans to list on the stock exchange within the next three years, owner Ahmed Samir tells Al Mal. The New Cairo-based facility will inaugurate a EGP 450 mn branch in the new administrative capital in the next academic year, Samir said, revising upward a EGP 350 mn estimate he announced last year. The school’s holding company will look into selling shares on the exchange to finance other expansion plans within two years of the inauguration, Samir said, without specifying whether he would target the EGX or the small-cap Nilex.

The French Development Agency (AFD) has allocated EUR 1 bn to fund projects in Egypt over the coming four years, regional director Mathieu Vasseur said yesterday, according to the local press. Egypt has already received EUR 200 mn of the amount this year, Vasseur said, pointing out that the agency has recently begun focusing on projects in labor-intensive sectors, such as healthcare, education and energy. The organization is also looking to make available funding to support the private sector through its investment arm Proparco, eyeing in particular the banking, energy and higher education sectors. The AFD is also in talks with the Egyptian government to provide funding to convert the Alexandria tram into a monorail, Vasseur said without elaborating further.

AFD green-lights EUR 71 mn energy sector grants: Vasseur made the statements as the AFD signed agreements to provide two grants worth EUR 71 mn to upgrade Egypt’s energy infrastructure and improve technical support. The Investment Ministry said that a EUR 68 mn grant will go towards funding the government’s efforts to connect houses in poor areas to the national gas grid, while a second EUR 3 mn grant will assist the Electricity Ministry “promote sector governance,” a cabinet statement said, without providing further information. The AFD has provided Egypt with EUR 2.2 bn worth of loans and grants since it began supporting the country in 2007.

INVESTMENT WATCH- Twenty South Korean multinationals have appetite for Egypt, the Investment Ministry said yesterday in a statement following the Egyptian-Korean Business Council meetings. LG Electronics is looking to invest USD 15 mn in Egypt in 2020, while POSCO wants to build a power transmission plant in the new administrative capital, company officials said on the sidelines of the forum. Samsung is also interested in expanding its production lines of home appliances while Hyundai Rotem is exploring potential investment in Egypt’s railways. The delegation of 20 Korean companies also met with Environment Minister Yasmine Fouad to discuss cooperating on solid waste management infrastructure, according to a cabinet statement. They also met with Finance Minister Mohamed Maait who called on them to invest in heavy industry at the Suez Canal Economic Zone, the Finance Ministry said in a statement. Maait also urged the Korean companies to explore expansion in auto feeder industries as well as in SMEs.

LEGISLATION WATCH- Labor Act receives House committee approval: The House Manpower Committee has approved the long-languishing Labor Act, and will refer it to the general assembly for discussion and a final vote, committee head Gibali El-Maraghi said, according to Ahram Online. The act was put up for public consultations two years ago, El-Maraghi said, but it is unclear whether these drawn out consultations translated into any changes in the draft legislation. The bill would, if passed, establish specialized courts to handle labor-related cases, and could make changes to maternity leave and working hours for women.

The unofficial theme of yesterday’s Egypt-Greece-Cyprus summit: ‘Turkey = bad’. Egypt, Greece and Cyprus condemned Turkey’s attempts to drill for oil in Cypriot waters during a trilateral summit in Cairo yesterday, according to an Ittihadiya statement. President Abdel Fattah El Sisi, Cypriot President Nicos Anastasiades, and Greek Prime Minister Kyriakos Mitsotakis called Turkey’s actions a “violation of international law” and its increased military presence a “threat to the security and peace of the Mediterranean region,” in a joint statement. Turkey has stepped up its efforts to explore for oil and gas south of Cyprus in recent months, which Nicosia argues is a violation of its sovereignty. The move has provoked the ire of Turkey’s regional rivals, as well as the European Union which slapped Ankara with sanctions in July. The leaders also expressed “deep concerns” over Turkey’s plans to invade north-east Syria that were announced earlier this week.

The summit wasn’t just an occasion to bash Turkey. The leadersdiscussed a host of topics including boosting cooperation in natural gas exploration and transportation, the stalled Grand Ethiopian Renaissance Dam negotiations, counterterrorism, and illegal immigration. There were no major announcements regarding plans to set up an East Med gas market, nor was there anything new on the EuroAfrica project that will allow Egypt to export electricity to Europe via Greece and Cyprus.

The story is getting coverage in the foreign press: Associated PressBloombergRT.

Ethiopia ratchets up rhetoric in GERD row: The extent of the diplomatic impasse over the Grand Ethiopian Renaissance Dam (GERD) was laid bare yesterday after it emerged that Ethiopia had accused Egypt of having “colonial era” control of the Nile. A note distributed to embassies by the Ethiopian Foreign Ministry on 1 October called Egypt’s proposal “an effort to maintain a self-claimed colonial era-based water allocation and veto power on any project in the Nile system,” Reuters reported. Talks in Khartoum over the weekend once again failed to produce an agreement on how much water Ethiopia will release each year when the dam becomes operational. Egypt depends on the Nile for 90% of its water and wants Ethiopia to release 40 bcm a year from its reservoir, a higher quantity than the 35 bcm proposed by Addis Ababa. Egypt has called for the US to step in and mediate the talks, an idea that Ethiopia rejected from the outset.

EARNINGS WATCH- Fawry reports 7% y-o-y fall in 1H2019 profits: E-payments platform Fawry reported a 7% y-o-y decline in net profit to EGP 23.7 mn in 1H2019, compared to EGP 25.5 mn in 1H2018, according to the company’s maiden earnings release (pdf). Revenues climbed to EGP 373.3 mn during the first half, up from EGP 273.7 mn in the first half of last year. The decline in net profit was attributed to IPO-related and currency appreciation costs and Fawry’s share of losses in startup businesses. The announcement comes off the back of a successful IPO on the EGX in August, which saw the company’s share price jump 31% to EGP 8.48 on the first day of trading.

MOVES- Prime Holding has appointed Naglaa Auf as the company’s VP of strategic planning and management. Auf has more than 25 years experience of management in the banking sector.


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Image of the Day

Ahly versus Zamalek — a visual history of the great rivalry in Egyptian football: The struggle between Ahly and Zamalek for football supremacy has been going on for over 100 years, and doesn’t look likely to stop anytime soon. Since 1917, there have been 233 matches between the two teams, of which Ahly has won 102. But for any Zamalkawy who wants to contest that all these victories make Ahly the better team, this Al Hadaqa infographic paints a more nuanced picture, showing match score differences, draws, and the different categories of each match. Fun fact: The biggest victories in history actually belong to Zamalek, who twice achieved a 6-0 victory against their opponents — in 1942 and 1944.

Egypt in the News

On a relatively quiet morning for Egypt in the foreign press, we’re hearing continuing echoes of protest-related coverage. Over 100 children are among the people detained in the wake of recent demonstrations, Ruth Michaelson reports for the Guardian. Meanwhile, over 1,000 teachers have been dismissed from their positions for alleged terrorist links, Asharq Al Awsat reported Deputy Education Minister for Teachers Affairs Mohammed Omar as saying at a press conference on Monday. The report does not specify a timeframe for the dismissals, leading us to believe this is some form of cumulative total.

Worth Listening

Closer public-private sector collaboration could send entrepreneurship in MENA skyrocketing, but the private sector needs to lead the way, says World Bank private sector specialist Ali AbuKumail in this podcast (listen, runtime: 25:00). There is a direct correlation between a business-friendly environment and increased entrepreneurial activity, so entrepreneurs will gravitate towards hubs where they can operate easily. Kuwait is one such success story: A recent government partnership with Wamda has helped to build its entrepreneurship culture, and the Kuwait Business Center has become a one-stop shop to facilitate business registration, scaled nationally by the government.

But roles must be well defined: AbuKumail recommends more regional inter-government cooperation to allow entrepreneurs to move and expand their businesses easily — a must, given MENA’s market fragmentation. Building infrastructure by, for example, providing fast, accessible internet across entire countries — not merely in the center of urban areas — is another vital role for individual governments. Ultimately, there needs to be a clear delineation of roles to cater to the diverse needs of projects at different stages of the life cycle, with the public sector working on the enabling environment and the private sector taking the lead to develop models that tackle regional challenges.

Diplomacy + Foreign Trade

Egypt to export mangoes to South Africa, expedite citrus exports to Europe: Egypt will begin exporting mangoes to South Africa after the Agricultural Quarantine Authority (AQA) concluded negotiations with South African authorities, Al Shorouk reports. Egypt is also set to begin its citrus export season for Europe early this year to take advantage of Spain’s decreased orange production, according to the local press. Companies will begin exporting citrus fruits on 10 November, a month earlier than initially planned.


Siyuan-MEGA consortium to set up power plant in Egypt’s Wadi El Natrun

A consortium of Shanghai Siyuan Electric and local firm MEGA for Construction and Industries has signed a contract with the Egyptian Electricity Transmission Company (EETC) to construct a power station in Wadi El Natrun on a turnkey basis, Ahram Gate reports. The project, set for inauguration in 12 months, is expected to cost EGP 83.1 mn and will be financed by the EETC.

Production at Shell’s Rashid and Burullus fields rises to 290 mcf/d in September

Royal Dutch Shell’s natural gas output from the Rashid and West Nile Delta Burullus fields increased to 290 mcf/d in September from 220 mcf/d the previous month, an EGAS source told the local press. The company recently linked 80 mcf/d from a newly-developed well to the natural gas grid, offsetting the field’s natural depreciation. Shell aims to raise production to 320 mcf/d by the end of the fiscal year, the source said.

Russia to issue 20 tenders for Dabaa nuclear power plant

Rosatom’s Atomstroyexport (ASE) aims to issue 20 tenders for construction and management projects for the USD 30 bn Dabaa nuclear power plant that Russia is building in Egypt, ASE Egypt director Anatoly Kovtunov told the local press. Kovtunov didn’t specify a timeframe, but said last year the company issued 30 tenders for projects. Petrojet has signed a contract with the Russian company, and two other Egyptian companies are expected to ink agreements by the end of the year, Kovtunov said without naming the companies or elaborating on the contracts. The company is also in talks with Orascom Construction, Hassan Allam and Arab Contractors, he said. Rosatom in July canceled a tender for local companies to conduct site preparations after offers exceeded the USD 18 mn bid ceiling.

Basic Materials + Commodities

Egypt to cultivate 4 mn tonnes of white rice this season

Egypt will produce 4 mn tonnes of white rice this year, up from 2.7 mn tonnes last year, head of the Agriculture Ministry’s crop research institute Alaa Khalil said, according to Reuters Arabic. Egypt would not need to import rice as the production would exceed the local demand of 3.2 mn tonnes. Khalil did not specify whether the surplus would be earmarked for exports, which the Sisi administration had previously banned on the grounds that exporting rice is effectively exporting water. We’re still not quite sure why we’re upping our white rice production, given that producing fewer water-intensive crops is a key ambition of the USD 50 bn plan announced by Irrigation Minister Mohamed Abdel Atti in April. The strategy is supported by legislative amendments to the Agriculture Act, and aims to clamp down on water-intensive crops to reduce water shortages.

Health + Education

AUC moves up QS Graduate Employability Rankings

The American University in Cairo (AUC) has moved up in the annual QS Graduate Employability Rankings to the 191-200 range from the 201-250 range, achieving an employment rate of 86% of graduates within a year of graduating, according to a press release (pdf). The AUC’s employability is the highest in Egypt, and the second in Africa. The university is ranked 395th in the overall QS Global World Ranking.


Gov’t could push deadline for Grand Egyptian Museum tender

The Antiquities Ministry could push the deadline to receive offers for the tender to operate and manage the Grand Egyptian Museum (GEM), Minister Khaled El Anany said. The deadline is currently set for the end of October, but some companies have requested an extension. Five consortiums made up of Egyptian, British, Italian, French, and American companies have placed bids, and a UAE-based company has applied on its own. The museum is expected to open in 4Q2020.

Automotive + Transportation

Egypt signs cooperation agreement with Deutsche Bahn to improve railway

The National Authority for Railways signed an agreement with German railway company Deutsche Bahn (DB) to aid Egypt in developing its railway services, according to the local press. DB will provide consultancy, training, and education services to improve the quality, efficiency, and safety of the Egyptian railway.

Banking + Finance

ELAB to obtain EGP 1 bn syndicated loan led by the National Bank of Egypt

The National Bank of Egypt (NBE) is acting as lead arranger for a EGP 1 bn, seven-year syndicated loan for state-owned Egyptian Linear Alkyl Benzene (ELAB) to finance the company’s 2020 expansion plans, sources told Al Mal. The NBE approached Banque du Caire, the Export Development Bank Of Egypt, and the Industrial Development and Workers Bank Of Egypt to participate in the loan.

Banque Misr mulls USD 300 mn loan to DP World for Ain Sokhna port expansion

Banque Misr could extend a seven-year, USD 300 mn loan to the UAE’s DP World to part-fund the expansion of its Ain Sokhna port, an official source told Masrawy. The bank has invited other banks to join in on the loan, including the National Bank of Egypt, Banque du Caire, CIB and the Arab African International Bank, but has yet to receive final responses from them.

Other Business News of Note

Egypt’s rolling mills call for meeting with PM to discuss billet tariffs

Rolling mills have asked for “an urgent meeting” with Prime Minister Moustafa Madbouly over losses they are incurring due to the Trade Ministry’s imposition of 15% tariffs on imported steel billets, reports Al Shorouk. The mills claim that the ministry’s decision — which was overturned by the Supreme Administrative Court in July but remains in force — is paving the way for an industry dominated by long-product steel factories. The manufacturers are asking for an independent committee to be formed to assess the situation.

NACCUD to announce winner of waste management tender in March

The New Administrative Capital Company for Urban Development (NACCUD) has received tender offers from four foreign companies for waste management in the new administrative capital (NAC) and is expected to announce the winner in March, Amwal El Ghad reported. The selected bidder would be in charge of every stage of waste management in the NAC for 15 years, including collection, transportation and recycling. The bidding companies are from the UK, Italy and the UAE. NACCUD launched the tender in April 2018.

Egypt Politics + Economics

Gov’t releases 200 people detained during protest crackdown

The government has released another 200 people detained in the crackdown that followed last month’s protests, Al Masry Al Youm reports. Lawyers told the Associated Press that the people were released yesterday pending an investigation into their ties to the Ikhwan and claims they called for protests online. Authorities arrested more than 2k people after small scale protests occurred in several Egyptian cities in September.

Ministers talk pollution control with World Bank mission

The environment, local development, investment and international cooperation, and transport ministers met with World Bank Regional Director Marina Wes to discuss plans to reduce pollution from their respective ministries’ projects, according to an Investment Ministry statement. The Local Development Ministry, the Transport Ministry, and the Environment Ministry are working to reduce greenhouse gas emissions by converting public buses to run on natural gas and developing the railway system to reduce traffic.

On Your Way Out

Cairo International Film Festival has become the first festival in the Arab world to sign the 5050 by 2020 gender equality charter, which aims to achieve equity in film in a host of areas — most notably, gender — by the year 2020. Sixty international film festivals are already signatory, Emirates Woman reports. Cairo International Film Festival will hold a special screening of Saudi Arabian filmmaker Shahad Ameen’s film Scales to mark its commitment to the charter.

Giza Zoo’s last elephant, forty-year-old Naeema, died of a heart attack on Sunday, according to Ahram Online. Mohamed Ragaey, head of the Giza Zoo's managing body, said that the zoo will communicate with the Agriculture Ministry to get new animals.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.24 | Sell 16.36
Buy 16.24 | Sell 16.34
EGP / USD at NBE: Buy 16.23 | Sell 16.33

EGX30 (Tuesday): 14,349 (-0.6%)
Turnover: EGP 657 mn (5% below the 90-day average)
EGX 30 year-to-date: +10.0%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session down 0.6%. CIB, the index’s heaviest constituent, endeddown 0.2%. EGX30’s top performing constituents were Orascom Investment Holding up 2.4%, Kima up 1.1%, and Oriental Weavers up 1.0%. Yesterday’s worst performing stocks were CIRA down 3.5%, ADIB down 2.8% and Egyptian Iron & Steel down 2.7%. The market turnover was EGP 657 mn, and foreign investors were the sole net sellers.

Foreigners: Net short | EGP -8.9 mn
Regional: Net long | EGP +4.2 mn
Domestic: Net long | EGP +4.8 mn

Retail: 67.9% of total trades | 66.8% of buyers | 68.9% of sellers
Institutions: 32.1% of total trades | 33.2% of buyers | 31.1% of sellers

WTI: USD 52.63 (-0.2%)
Brent: USD 58.12 (-0.4%)

Natural Gas (Nymex, futures prices) USD 2.29 MMBtu, (-0.7%, November 2019 contract)
Gold: USD 1,503.90 / troy ounce (-0.0%)

TASI: 7,832 (-0.6%) (YTD: -0.1%)
ADX: 5.070 (-0.1%) (YTD: +3.2%)
DFM: 2,786 (-0.2%) (YTD: +10.6%)
KSE Premier Market: 6,236 (+0.1%)
QE: 10,271 (-0.3%) (YTD: -0.3%)
MSM: 4,035 (+0.2%) (YTD: -6.7%)
BB: 1,517 (-0.1%) (YTD: +13.5%)

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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.

October: German businessman delegation will visit Egypt to discuss good projects in order to spend German funds into Egypt.

October: A delegation of 40-50 Saudi companies will visit Egypt to discuss increasing exports of Egyptian furniture.

7-10 October (Monday-Thursday): A Russian delegation will visit Cairo to attend a joint forum to discuss cooperation in various fields, including trade.

8-10 October (Tuesday-Thursday): A delegation of 20 Korean companies visits Egypt.

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

14-20 October (Monday-Sunday): IMF, World Bank annual meetings, Washington, DC.

16-17 October (Wednesday-Thursday): Egypt Can conference, undisclosed location.

20-24 October (Sunday-Thursday): German-Arab Chamber of Industry and Commerce’s ROI Week with ROI Institute, JW Marriott Hotel, New Cairo

22 October (Tuesday): Innovative Finance: A New Vision to Support Investment forum, venue TBD, Cairo.

22 October (Tuesday): 20th Century Middle Eastern Art annual auction: Sotheby’s Gallery, London

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

23-24 October (Wednesday-Thursday): Russian-African Summit, Sochi City, Russia

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

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

27-30 October (Sunday-Wednesday): B2B conference for German companies organized by the German-Arab Chamber of Industry and Commerce and the Bavarian Ministry of Economic Affairs, Regional Development and Energy, InterContinental Semiramis, Cairo.

28 October-31 October (Monday-Thursday): A Cairo court will rule on the stock manipulation case, in which Gamal and Alaa Mubarak are involved, along with seven other defendants.

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

29-30 October (Tuesday-Wednesday): South Sudan Oil & Power (SSOP) Conference, Juba, South Sudan.

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

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

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

7-9 November (Thursday-Saturday): BiznEx Egypt 2019, Egypt International Exhibition Center, Nasr City, Cairo.

8-22 November: Egypt will host Under-23 Africa Cup of Nations 2019.

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

9-11 November (Saturday-Monday): Vested Summit, Sahl Hasheesh, Red Sea.

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

11-13 November (Monday-Wednesday): Africa Investment Forum, Gauteng, South Africa.

13-15 November (Wednesday-Friday): Africa Early Stage Investor Summit, Cape Town, South Africa.

14 November (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

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.

22-23 November (Friday-Saturday): Invest in Africa 2019 conference, New Administrative Capital.

24 November (Sunday): Arabia Investments lawsuit against French Peugeot (after being postponed)

25 November (Monday): Global Trade Matters international dialogue on climate neutrality, Marriott, Cairo.

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

December: Indian automotive delegation to visit Egypt.

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

5-7 December (Thursday-Saturday): RiseUp Summit, American University in Cairo, New Cairo Campus

8 December (Sunday): Pitch by the Pyramids, Giza Pyramids

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.

14-17 December (Saturday-Tuesday): World Youth Forum 2019, Sharm El Sheikh.

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

January 2020: 2019 Confederation of African Football (CAF) Awards, Albatros Citadel Resort, Hurghada, Egypt.

January 2020: UK-Africa Investment summit, London, United Kingdom.

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 2020 (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.

March: The Middle East and North Africa Financial Action Task Force (MENAFATF) will visit Egypt to assess the progress of actions taken to combat money laundering and terrorist sponsoring activities.

25-26 March 2020 (Wednesday-Thursday): Mega Projects Conference, Egypt International Exhibition Center, Nasr City, Cairo.

5-7 May 2020 (Tuesday-Thursday): AFSIC – Investing in Africa, London, United Kingdom.

November 2020: Egypt will host simultaneously the International Capital Market Association’s emerging market, and Africa and Middle East meetings.

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