Monday, 25 November 2019

Talk of a cabinet shuffle has reached a fever pitch amid expectations the House will reconvene on Wednesday


What We’re Tracking Today

The words “cabinet shuffle” are on everyone’s lips today as MPs, pundits and the press alike joined the chorus of voices suggesting we could see as many as 12 new faces around the cabinet table as soon as Wednesday. That’s when MPs could be recalled from their current recess to discuss the shuffle.

The potential cabinet shuffle is but one of a number of big stories that are making headlines today in an unusually busy Monday. We have chapter and verse on all of it in this morning’s Speed Round, below.

The latest on the Aramco IPO: Saudi banks are not facing liquidity problems after regulators eased lending limits for local investors to increase subscription for the Aramco IPO, the central bank governor told Reuters yesterday. The central bank is monitoring the sector on a daily basis amid concerns that the IPO could cause a liquidity squeeze.

This came as Aramco officials arrived in Dubai to drum up support among investors the offering. Bloomberg has more on the Gulf roadshow.


Emerging market bonds will continue to curry favor with investors as low and negative-yielding debt persists in the US, Europe and Japan, analysts tell MarketWatch. Despite the risks involved with investing in EMs — demonstrated perfectly this year by Argentina, Lebanon and Ecuador — they are one of the only places investors can make an adequate rate of return, especially following the recent wave of rate-cuts across the world.

As the Federal Reserve and the ECB press pause on stimulus, EM central banks could keep cutting: A host of EM central banks — including Brazil, India, Indonesia and Turkey — could continue to cut rates next year if economic growth does not rebound, Morgan Stanley economists have forecast, according to Bloomberg.

Real interest rates will remain high even if central banks continue easing, meaning that EM debt is unlikely to lose its luster. “Although the yield on EM local currency bonds hit a historic low in October, the asset class still offers the best value of all major bond markets – better yield, attractive currencies and valuations,” Luca Paolini, chief strategist at Pictet Asset management, told MarketWatch.

US private equity is on the defensive as politicians, campaign groups, and Taylor Swift fans rail against its growing economic power. The Financial Times says lobbyists are stepping up efforts to portray private equity in a positive light as Democratic presidential candidate Elizabeth Warren promises to outlaw leveraged buyouts and Congress increases its scrutiny of industry practices. Then there are the Hollywood screenwriters complaining about private equity’s entrance into talent agencies, and the Carlyle Group, whose Twitter profile has been under attack by legions of Taylor Swift fans for its role in a dispute between her and her former music label.

The man that private equity firms would love to see win the Democratic nomination just officially entered the race: Former New York Mayor Michael Bloomberg has officially launched his Democratic bid for the presidency. “I’m running for president to defeat Donald Trump and rebuild America,” he wrote on his campaign website. “We cannot afford four more years of President Trump’s reckless and unethical actions … If he wins another term in office, we may never recover from the damage.”

Money aside, the going will probably be tough for Bloomberg: The bn’aire man of Wall Street is faced with the task of building support among a Democratic base fired up against corporate overreach and economic inequality. Bloomberg’s USD 37 mn ad buy has already been slammed by leading progressive candidates Bernie Sanders and Elizabeth Warren as an attempt to buy the nomination. The Associated Press has more.


*** It’s Blackboard day: Blackboard is the first of our ‘verticals’ — specialized editions that focus on individual industries. For Blackboard, that focus is the business of education in Egypt, from pre-K through the highest reaches of higher ed. Each edition of Blackboard will mix news, deep dives, analysis, raw data (plus context) and a touch of humor with the goal of making industry players think — and of getting non-experts up to speed. Our goal: To give you the inside track, whether you’re an investor or operator in the field or just passingly interested in the topic. Blackboard appears every Monday in Enterprise right after Egypt in the News in the place of our traditional industry news roundups.

Missed us last week? Catch our feature last Monday on why the demand from international schools for foreign teachers remains high, despite the impact on COGS of FX-denominated salaries in a challenging macroeconomic climate.

In today’s issue: Blackboard looks at the growth and popularity of college prep businesses — education service providers, whose primary focus is to help students gain admissions to universities — and what that growth tells us about where Egyptians are looking to access higher education.

Enterprise+: Last Night’s Talk Shows

Speculation about an imminent cabinet shuffle — and a suggestion that the Investment Ministry could be rolled into a Supreme Investment Council — reached fever pitch on the talk shows last night: We have the breakdown in this morning’s Speed Round, below.

Also on the airwaves: Local government elections could be pushed to 2021. Elections for municipal officers are likely to be pushed to 2021 as the names of candidates for both the Senate and House of Representatives will be at the polls next year, MP Salah Hasaballah said on Ala Mas’ouleety (watch, runtime: 3:04). Political pundit Abdel Moneim Said told Al Kahera Alaan’s Lamees El Hadidi last week that effective government reform in the country should start with devolving more power to the traditionally limited and underutilized local government.

Other topics from last night’s talk shows:

  • Planning Ministry out with report on administrative reform plan: The Planning Ministry released a report outlining a plan to digitize government offices, reports Masaa DMC’s Eman El Hosary (watch, runtime: 4:52).
  • Nubians disapprove of Sawiris hotel project in Aswan’s Amun, Klada islands: A planned project by Samih Sawiris-led Orascom Development Egypt and state-owned General Company for Tourism and Hotels (EGOTH) to build an opulent hotel on the Amun and Klada islands in Aswan has been on hold for nearly 10 years amid conflict with the locals, the b’naire tells El Hadidi (watch, runtime: 7:43).
  • CBE to begin collecting mortgage payments electronically: The Central Bank of Egypt will start collecting installments for subsidized home loans taken out as part of its mortgage financing program electronically, says Hona Al Asema’s Reham Ibrahim (watch, runtime: 5:36).

Speed Round

Speed Round is presented in association with

Could we see a cabinet shuffle as soon as Wednesday? House Planning and Budgeting Committee Secretary Essam El Fekky has joined a host of other MPs suggesting that the House of Representatives may hold an extraordinary meeting as early as Wednesday to approve a cabinet shuffle. Analysts expect MPs to come back early from recess to sign off on the appointment of as many as 12 new faces around the cabinet table.

Not idle chatter? The speculation kicked off last week after the head of state the state-owned news institution Akhbar El Yom, who presents as being close to President Abdel Fattah El Sisi, suggested that change was coming.

The possibility of a shuffle featured prominently on last night’s talk shows. Al Kahera Alaan’s Lamees El Hadidi recapped the state of play and noted that long-serving Social Solidarity Minister Ghada Waly will be the first to leave cabinet after having been named the next executive director of the UNODC (watch, runime: 5:18).

Outspoken MP Moustafa Bakry told El Hadidi in a call-in that he is aware of “information” suggesting the Investment Ministry could be rolled into a Supreme Investment Council.

Bakry also suggested the House will discuss the shuffle on Wednesday, saying it is the only day of the week in which Speaker Ali Abdel Aal will be in town. The president will likely ratify the shuffle later in the same day. The shuffle will see as many as 10 new faces around the cabinet table, Bakry added, suggesting we may also see “major changes” in several state bodies, as well as “a shift in attitude.”

Lamees’ husband, El Hekaya’s Amr Adib, also spoke of the expected shuffle, saying that Egypt needs ministers skilled in the political side of the trade and who are “fully biased” toward the poor to mitigate the spillover effects of the ongoing economic reform program (watch, runtime: 15:23).

So, who’s out? There’s growing speculation that the supply, trade and industry, health, and environment ministers will be among those shown the door, and it is unclear whether the Supreme Investment Council would have a cabinet-level head or be chaired by the president or prime minister.

Rania Mashat, whose E-TRP program stands out as one of the success stories of the ongoing reform program, is widely seen as continuing in government service, but could move to the central bank or take over a new cabinet-level portfolio, press reports suggest.

Who’s getting a new seat at the table? Deputy Social Solidarity Minister Nevine El Kabbag is in the running to replace Ghada Waly as the latter leaves for her UN post, Al Shorouk reports, while SME Authority head Nevine Gamea is allegedly the frontrunner for the trade and industry minister’s job. Police Major General Rady Abdel Moaty, currently the head of the Consumer Protection Authority is reportedly a candidate for supply, while Cairo U agriculture faculty researcher Mohsen El Batran is said to be favoured for agriculture.

Planning Minister Hala El Said is also said to be in the running for additional responsibilities as she’s a candidate to add deputy prime minister to her business card.

Actis has confirmed it is in the running to acquire a stake in a combined-cycle power plant: Private equity giant Actis has formally submitted a letter of intention to acquire a stake in the Siemens / Orascom Construction / Elsewedy Electric combined-cycle power plants, Sherif El Kholy, partner and head of Middle East and Africa at Actis, tells Hapi Journal. Sources had told Bloomberg earlier this month that Actis is among those bidding for the stake, but the company had declined to comment at the time. Actis is competing alongside France’s Engie, China Datang Overseas, Blackstone Group’s Zarou, and Edra Holdings. Electricity Ministry sources had said previously that Zarou had submitted the best financial offer, making it the top contender.

Actis is looking to get a piece of all three power plants once Egyptian sovereign wealth fund Tharaa begins to offer up stakes in the other two. According to El Kholy, Actis wants to hold at least 51% of the three plants in Burullus, the new administrative capital, and Beni Suef.

Background: Tharaa CEO Soliman said earlier this month that an agreement to sell a stake in only a single plant is expected to be finalized in less than a year. Stake sales in the other two plants would then follow. He also said that the fund is planning to acquire 30% of the plants’ equity, and offer the remaining stake to an international investor as part of its efforts to encourage foreign participation in the economy. Post-sale, the shareholders could establish a joint venture that would then sign a power purchase agreement to sell the plants’ output to the government. There are two other scenarios that the fund is looking at, including one in which it takes a 60-70% stake in the plants, leaving a minority stake for the private sector. The three 14.4 GW plants were co-built by Siemens, Orascom Construction, and Elsewedy Electric, and were inaugurated in July 2018.

IPO WATCH- TAQA Arabia to IPO 30% next year, exact timing to depend on market conditions: Qalaa Holdings is planning to sell 30% of subsidiary TAQA Arabia’s shares in an IPO as early as next year,sources close to the transaction tell Al Mal. TAQA’s EGX debut is currently slated for 1H2020, but could be pushed to the second half of the year if the market conditions are not favorable during the first six months of 2020, the sources say. Qalaa Chairman Ahmed Heikal had told Reuters in an interview last month that the IPO could go ahead as early as 2Q2020.

The TAQA IPO will see the partial or full exit of some shareholders, including Saudi Arabia’s Al Rajhi Group and El Rashed, the sources say. Qalaa is planning to retain controlling stakes in the company and has no plans to sell down its stake during any IPO, a company official told Enterprise earlier this year.

Advisors: Qalaa has tapped EFG Hermes and HSBC to manage the IPO.

PRIVATIZATION WATCH- Key conditions for HHD 10% stake + management revealed: Private investors interested in taking over management at Heliopolis Housing and Development (HHD) will receive up to 20% of the state-owned company's annual profits in management fees, according to sources who briefed the local press yesterday about the draft management contracts and prospectus for the 10% stake sale. Shares will be sold at market value at the time of purchase, the sources said.

The prospectus will go on sale later today for EGP 150k (EGP 171k with stamp tax) after it was approved, along with the draft contracts, at an extraordinary general assembly on Saturday.

Investors will have until 1pm on 14 January to submit their bids, HHD said in a bourse disclosure (pdf). The opening of the bids will be done on the same day. The deadline for submitting enquiries will be 18 December when the company will hold a meeting to answer any questions.

Submission requirements: Bidders will need to hand over technical and financial offers. The technical part will outline the bidding company’s project history and propose a business development plan and a corporate structure, as well as attach CVs of the bidder’s management team. The financial offer, meanwhile, will need to include a plan for target revenue growth and a figure for proposed compensation. Sources confirmed that both private equity firms and alliances of private equity firms and real estate developers may submit bids.

Background: HHD invited private equity firms and private real estate developers in October to bid for a 10% stake with management rights after backing away in April from a secondary stake sale. Plans were then resurrected in July to offer a 25% stake in 4Q2019, before Tawfik told us that the transaction was unlikely to close this year.

Who’s in the running? Eight companies were initially reported to have been interested in HHD, including SODIC, EFG Hermes, BPE Partners, Emaar Misr, and Orascom Development.

M&A WATCH- EFG Hermes, Evercore tapped to lead United Bank sale: The Central Bank of Egypt (CBE) has appointed EFG Hermes and New York-based Evercore to act as advisors on the expected sale of state-owned United Bank, according to a statement (pdf). The EFG-Evercore consortium was the top pick from five contending consortiums, the statement says, without disclosing further details. The local press had reported earlier this year that CI Capital and Perella Weinberg Partners had partnered for the bid, while Beltone Financial had gone in with Rothchild & Co.

Background: CBE Governor Tarek Amer said in July that the advisors selected for the sale of United Bank would determine the timeline for the sale. The CBE owns 99.9% of United Bank’s shares, having created the institution through the merger of a number of smaller institutions. Amer had said last month the sale is “moving forward.”

M&A WATCH- Rx Healthcare Fund finalizes Al Mottahedoon Pharma acquisition: EFG Hermes’ Rx Healthcare Fund has finalized its acquisition of an 80% stake in meds producer Al Mottahedoon Pharma, according to Al Mal. The fund purchased shares from individual investors, the newspaper says, without providing further details. The value of the transaction was not disclosed, but local press reports from earlier this year had suggested it would cost Rx somewhere around EGP 360 mn.

Advisors: ARC Capital acted as financial advisor on the transaction, while our friends at ALC were legal counsel to the sellers.

M&A WATCH- Titan Cement to acquire IFC minority stakes in Southeast Egypt, Europe businesses for EUR 81.8 mn: Cement producer Titan Group has agreed to acquire the International Finance Corporation’s (IFC) minority stakes in all of Titan’s subsidiaries in Egypt and Southeast Europe in a EUR 81.8 mn transaction, according to a bourse disclosure (pdf). The acquisition includes IFC’s 17.28% stake in Alexandria Development Ltd., which in turn holds an 88.93% stake in Alexandria Portland Cement.

IPO WATCH- An IPO may be in Gourmet Egypt’s future, founder and CEO Jalal Abu Gazaleh told Making It, Enterprise’s first podcast. The food retailer and manufacturer also has regional expansion on his mind something, he said, in an interview that also dives into how Gourmet started, how it has used private equity funds to grow — and how it survived the float of the EGP.

You can listen to the full episode here on our website or try Apple Podcast or Google Podcast. You can also listen on Spotify if you are outside of MENA. The local edition of the streamer doesn’t presently offer podcasts.

Egypt’s tourism sector is robust enough to absorb the shock of Thomas Cook’s liquidation, says Al Mashat: The recent liquidation of British tour operator Thomas Cook won’t make a significant dent in Egypt’s tourism industry, Tourism Minister Rania Al Mashat said in an interview with Hotelier Middle East. Other tour operators are already in the process of picking up the company’s business in the country, mitigating the impact of any short-term potential slowdown. Al Mashat stressed that Egypt’s tourism sector is robust and growing, which she largely attributed her ministry’s sectoral reform program and efforts to create a brand that connects with travelers from all over the world.

The ministry’s new system to determine hotel star ratings, announced in September, is a bid to increase Egypt’s competitiveness as a destination in line with international standards, Al Mashat added.

A steady industry recovery: In an interview with Bloomberg last week, Al Mashat said that the number of tourist arrivals in Egypt are on track to reach 2010 peak levels by the end of next month, with revenues having already rebounded to previous record levels of USD 12.5 bn in FY2018-2019.

DEBT WATCH- NUCA moving to issue another EGP 10 bn in securitized bonds to fund new cities: The New Urban Communities Authority (NUCA) is planning to securitize up to EGP 10 bn of receivables from partnered private sector real estate developers in the second half of its current fiscal year (January-June 2020), sources from the Housing Ministry said. The authority will use the proceeds to complete projects in new cities, they said, without going into specifics. NUCA is currently calculating how much it is due from the partnership contracts, but will also consider backing the bonds with receivables from auctioned land. NUCA currently has partnerships with developers including SODIC, Palm Hills, Mountain View, Al Ahly for Real Estate Development, Iwan, and Ora Developers.

The news came a day after the authority completed a EGP 4 bn securitized bond issuance, for which Sarwa Capital and Banque Misr acted as lead managers, arrangers and co-underwriters.

INVESTMENT WATCH- Coca-Cola Egypt is planning to invest USD 500 mn over the next three years, General Manager Ahmed Rady said in a video published on the Investment Ministry’s Facebook page (watch, runtime: 1:28). Rady provided no details on the planned investment. The company invested USD 500 mn in Egypt between 2016 and 2019.

EARNINGS WATCH- Cleopatra Hospitals Group reported a 21% y-o-y dip in 3Q2019 net profit to EGP 72.2 mn compared to EGP 91.6 mn a year earlier, according to the company’s quarterly earnings release (pdf). Revenues rose 19% y-o-y to EGP 462 mn, up from EGP 338.3 mn in 3Q2018. On a nine-month basis, Cleopatra’s net profits recorded EGP 170 mn, down 24.5% from EGP 225 mn a year earlier, while 9M2019 revenues increased 21% y-o-y to EGP 1.29 bn, from EGP 1.06 bn last year.

CHG to finalize acquisition of major IVF center in early 2020: The group is expecting to complete its acquisition of a majority stake in one of Egypt’s largest IVF centers by early 2020, the statement says. CHG, which entered into the agreement last June, is yet to disclose the name of the company or the size of the stake. “The target acquisition currently offers an extensive list of services including obstetrics, gynaecology, infertility, andrology, erectile dysfunction, dermatology, reproductive health and laser treatments, nutrition and health coaching, fetal medicine, psychology, and family health services,” reads the statement.


Enterprise is available without charge — just visit our English or Arabic subscription page, depending on which edition you would like to receive. We give you just about everything you need to know about Egypt, in your inbox Sunday through Thursday before 7am CLT (8am for Arabic), and all we ask for is your name, email address and where you hang your hat during business hours.

Egypt in the News

A raid on independent media outlet Mada Masr is dominating the narrative on Egypt this morning in the international press: Security forces yesterday entered the office of independent media outlet Mada Masr, seizing laptops and phones and detaining three staff members, including editor-in-chief Lina Attallah. All three were later released. The news outlet also said that two foreign staff members were taken to their homes to collect their passports, but were also later released. Shady Zalat, an editor who had been arrested on Friday night, was released after the raid. The story is getting prominent play in top-tier international media including Financial Times | Wall Street Journal | Associated PressReutersAgence France-PressCNNBBCThe GuardianNew York TimesWashington PostDeutsche WelleABC NewsThe Independent.

The Committee to Protest Journalists called on the government to end its “retaliation campaign” against the news outlet in a statement on its website.

Also getting coverage in the foreign press:

  • Life as a limestone quarrier: Agence France-Presse talks to the laborers risking their lives in Egypt’s limestone quarries for just EGP 100 a day.
  • Conditions for Egyptian Christians are “getting better,” says a Bishop from Assiut, according to Christian publication Aleteia.
  • Authorities detained a Gulf citizen flying out of Cairo with “dozens” of narcotics in his luggage, the Associated Press reports.
  • In search of Queen Nefertiti: Noted Egyptologist Zahi Hawass believes that he may soon find the tomb of Queen Nefertiti in the Valley of the Kings, where a huge excavation is currently taking place, the International Business Times reports.

There’s too much carbon dioxide in the air, so maybe the solution is to sell it: A new method to use CO2 in the atmosphere for products and services, known as carbon capture and utilization (CCU), could help reduce atmospheric CO2 levels, according to Vox. The idea is for industry to use carbon dioxide, which is already a commodity used to create various products, from the atmosphere instead of from the ground, thereby reducing emissions. By some estimates, CCU could potentially become a USD 1 tn market by 2030.

Speaking of fossil fuels: ExxonMobil is bucking the green energy push. ExxonMobil has been ranked the fifth most innovative company in the US by the Drucker Institute at Claremont Graduate University, but its innovation lies in making fossil fuels as competitive as possible, rather than making significant investments in green energy, the Wall Street Journal reports. At a time when industry rivals are focused on solar and wind technology, Exxon believes fossil fuels will remain important for the foreseeable future because of the storage and intermittence limitations of alternative energy sources. It is particularly focused on carbon capture and sequestration, improving the energy efficiency of chemical plants, and developing biofuels with a lower carbon footprint.

black board

The rise of the college prep industry in Egypt: In March of this year, the College Board, which administers the SAT tests, canceled planned tests in Egypt, Morocco, and Saudi Arabia, with reports indicating that an early copy of the SATs were leaked and were being offered for sale. The theft and attempted sale of the test — eerily reminiscent of the Shou Ming Thanaweya Amma exam leaks — highlights student anxiety about the test and the outsized role its plays in admission to foreign universities, particularly in the United States.

Enter the college prep industry, which is looking to tap into that demand. In our weeks-long dive into this emerging industry, we found a sector that is growing on all fronts, including customer base, aggregate client spending, and number of players in the field. The industry has also grown in terms of services being offered and pricing scale. But with this growth comes growing pains: We’ve found that that this largely unregulated industry is dominated by individual tutors and wildcat firms, resulting in what can only be called uneven quality standards from one industry player to the next. As you might expect, tracking the industry has given us insights into what parents and students are prioritizing — and where they are looking — when it comes to higher education.

It is hard to quantify the size of the industry as government data is virtually non-existent. Out of 480 firms in Cairo advertising themselves on Facebook as educational consultants (including professional counseling, language schools, actual schools, social counselors, and skills development centers), 91 (or around 20%) are classified as college prep providers — which we’re defining as education service providers, whose primary focus is to help students gain admissions to universities. These vary in size, prices, and services offered. Some are well-known non-profits such as AMIDEAST, but the overwhelming majority are for-profit businesses. We’ve split these up by their main line of business. It’s worth noting that a significant portion of these offer a combination of these services:

Advisors and guidance counselors:

  • What they offer: These companies fill in the role of a high school guidance counselor, helping students decide what to study and where. They also counsel the students on the application process, including guidance on essays. These primarily come in the form of workshops and classes, one-to-one guidance, or through electronic platforms.
  • How they make money: These services either charge an hourly rate or provide courses and programs for a fee. As these services tend to require hands-on guidance, they tend to charge more premium prices. Hourly prices we’ve surveyed range from EGP 750-1,000 per hour. Course packages could run a student anywhere from EGP 5,000 to EGP 10,000.
  • Notable providers: Newton Educational Services, Eduline, Apex.


  • What they offer: These firms act as recruitment agents for foreign universities, while offering advisory and guidance services to the students. They usually represent a university or group of universities from a particular country or region, and then cater their student advisory services accordingly.
  • How they make money: Most of these businesses charge universities rates for every student they recruit from Egypt. Some may then charge students for their advisory services.
  • Notable providers: IDP Education Egypt, British Educational Services Agency, Global Study UK (GSUK), EDRES-Study Abroad Egypt

Test prep:

  • What they offer: By far the most common type of college prep service, these businesses offer tutoring for both standardized tests and various high school diploma exams. Exams include SAT, IGSEs, GMATs, TOEFL, and International Baccalaureate, which has been gaining in popularity in recent years, according to a number of players in this segment.
  • How they make money: Private tutors offering hourly rates dominate the segment. Some businesses act as agents for these tutors, taking a commission from private lessons. This revenue-sharing model is also applied in workshops and classes conducted by these centers and taught by the tutors. Prices these centers charge for students range from EGP 1,000-3,000 per course.
  • Notable providers: Newton Educational Services is the biggest player in Egypt in this field. But this segment is dominated by small-time centers, including College Gate and The Egyptian SAT.

Student development:

  • What they offer: A niche segment, these service providers seek to develop non-academic skills that help students adapt to life in a new country and being away from home for the first time. The focus here is on soft-skills development. Quash, a leading player in this segment, hopes to develop 10 skills championed by the World Economic Forum, including leadership, negotiations, communications, dealing with failure, and learnability.
  • How they make money: Developing unique and engaging programs is how these businesses earn their bread and butter. These may include interactive games, and even programs modeled on the Model United Nations (MUN inc). They charge students for a package of sessions, while also selling their services to schools. Quash, for instance, charges for EGP 2,000 for 10 sessions.
  • Notable providers: Apart from Quash (Linkedin), there’s iSpark, Emkan, and Fast Forward.

A growing industry: As a largely unregulated industry, it is difficult to obtain financials. But most businesses we’ve contacted for our survey are reporting growth in both revenues and in the number of students seeking their services. Newton — the industry leader — has grown its student advisory counseling business, SAT preparation to serve more than 2,000 students since its inception in 2013, says Newton co-founder and Education Ministry advisor Nelly El Zayat. She sees openings in the B2B side of the industry, with recruitment and scholarship management driving revenue growth. Even niche players have seen growth in the revenue side and by the number of customers served. Student development provider Quash’s revenues this year are expected to reach EGP 300,000-400,000, co-founder Omar Hisham said. Its customers grew from 20 in 2016 to 150 students this year, he added.

Student counseling has its limits: While the demand is there, some argue that the industry is limited by virtue of the number of students applying for admission to international universities, especially on the student counseling side of the business. The number of students opting to study abroad at the undergraduate level is somewhat limited due to the costs involved, says Omar Khashaba, who co-founded Top Choice Admissions while still at university before transitioning into venture capital. It’s also a highly seasonal business with the bulk of activity concentrated between September and January, he added.

Others, including El Zayat, counter that other international branch universities are driving demand for these services. And this trend looks set to increase, as the government plans to construct eight international universities in the new administrative capital by 2020.

Price inelasticity offers some protection in the sector: What’s interesting to note is that demand for these services have not changed with the macroeconomic climate. None of the admissions advisory businesses we’ve surveyed say they have witnessed a drop in the number of students seeking them out, despite inflation from the EGP float hitting tuition fees. This underscores education’s fundamental strength as a defensive sector of the economy — people want it in good times or bad, so it does well in good times or bad.

A chaotic landscape: Rising demand from Egyptians looking to study abroad, coupled with a low barrier to entry, has seen wildcat and informal businesses hold the largest market share in the industry, particularly in the test preparation segment. “Today, the competitors are the private tutors and the centers,” said El Zayat, adding that they’ve even beaten out non-profits. Centers themselves appear to be straining from the rising competition. Two test preparation center owners we’ve spoken to say that the number of students hiring them has dropped this year from the last from the increase in the number of centers this year. Private tutors play a big role in this chaotic environment and can dictate terms to the service provider, said one of the owners. Demand is so high, these individual tutors have very little incentive to stay with a particular center or pay them commission, he added.

Uneven quality standards? The value-added by the majority in the industry is very low, with many tutors and advisers simply relying on already available study guides and mock tests, says Apex co-founder Hussein El Kheshen. The college prep industry is by no means a results-based industry, with businesses having no say in the outcome of a test, which makes it very difficult to quantify the efficacy of a course or tutor, driving down quality, he added. That is the case with the majority of the industry. Quality appears to be the domain of premium players who, although charging high sums, provide the hands-on guidance required to effectively raise the chances of a student’s admission to universities abroad, he adds.

So what can this industry teach us about those looking for international degrees? Local tuition spikes are making studying abroad a popular option. A number of businesses we’ve spoken to tell us that prior to the EGP float, most people seeking these services were trying to gain admission into universities here such as AUC. But with the spike in tuition at the university witnessed in recent years, some are questioning whether it is more cost effective to go abroad, even to more expensive places like the US or the UK. “Economically, it’s starting to make a lot of sense. Many also want careers abroad, and use university there as an entry point. So I don’t see things slowing down anytime soon,” El Kheshen says. Tuition at AUC reached USD 15,660 per year for an Egyptian undergraduate student in 2019-20, while the average tuition fees in Canada for undergraduate international students in 2019-20 was USD 22,500 per year, according to a Statistics Canada report cited by Top Universities.

Students are also looking away from traditional destination points: The EGP float also seems to have impacted where students are looking to study abroad, says Ramy Fathy of Edres, a certified agent representing more than 200 universities in the UK, USA and Asia. “Malaysia is a rising star, Ireland is making a name for itself, and Germany now offers English language courses and are opening up to more international students,” he added.

Your top education news stories in Egypt during a very slow news week for education:

  • The Education Ministry will consider raising its 20% cap on foreign ownership of schools on a case-by-case basis but will not reverse its decision under pressure from investors, Education Minister Tarek Shawki said on the sidelines of the Africa Investment Forum.
  • Also from the forum: The Chinese government will provide USD 42 mn in grants for education, healthcare, and human resource development.
  • Concerns over Syrian schools: The emergence of schools catering to Egypt’s Syrian refugee community, but operating outside the framework of the Education Ministry, is raising questions about national security, the Arab Weekly reports.
  • More education aid is coming from Germany, after both countries agreed to move ahead with some EUR 145.9 mn in projects including technical education. President Abdel Fattah El Sisi and German Economic Cooperation and Development Minister Gerd Müller discussed how Egypt could benefit from Germany’s education system.
  • The government signed a memorandum of intent with Kent State University which would see the university cooperate on research with a number of Egyptian universities, El Watan reports.
  • The Egyptian Center For Economic Studies published its four-point roadmap to reform the Egyptian education system last Wednesday. The report identifies inefficiencies and makes recommendations on reforming education at the institutional, geographic, classroom, and economic requirements level. You can read a powerpoint presentation of the report here (pdf).

The Market Yesterday

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EGP / USD CBE market average: Buy 16.05 | Sell 16.17
EGP / USD at CIB: Buy 16.05 | Sell 16.15
EGP / USD at NBE: Buy 16.05 | Sell 16.15

EGX30 (Sunday): 14,050 (-0.3%)
Turnover: EGP 252 mn (65% below the 90-day average)
EGX 30 year-to-date: +7.8%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session down 0.3%. CIB, the index’s heaviest constituent, ended down 0.6%. EGX30’s top performing constituents were Egyptian Iron & Steel up 1.9%, Juhayna up 1.9%, and Eastern Company up 0.8%. Yesterday’s worst performing stocks were Orascom Construction down 2.5%, Abu Dhabi Islamic Bank down 1.1% and Orascom Development Egypt down 1.1%. The market turnover was EGP 252 mn, and local investors were the sole net buyers.

Foreigners: Net short | EGP -16.1 mn
Regional: Net short | EGP -7.4 mn
Domestic: Net local | EGP +23.5 mn

Retail: 62.7% of total trades | 59.8% of buyers | 65.6% of sellers
Institutions: 37.3% of total trades | 40.2% of buyers | 34.4% of sellers

WTI: USD 57.77 (-1.4%)

Brent: USD 63.39 (-0.9%)

Natural Gas: (Nymex, futures prices) USD 2.67 MMBtu, (+3.8%, December 2019 contract)

Gold: USD 1,470.50 / troy ounce (+0.0%)

TASI: 7,999 (-0.8%) (YTD: +2.2%)
ADX: 5,041 (-0.0%) (YTD: +2.6%)
DFM: 2,687 (+0.1%) (YTD: +6.2%)
KSE Premier Market: 6,339 (+0.4%)
QE: 10,253 (-0.1%) (YTD: -0.4%)
MSM: 4,081 (-0.0%) (YTD: -5.6%)
BB: 1,505 (-0.0%) (YTD: +12.6%)

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

November: British Egyptian Business Association’s Annual door knock mission, United Kingdom.

November: ITIDA to announce the winning bid in a tender to manage three new innovation centers.

20-29 November (Wednesday-Friday): Cairo International Film Festival, Cairo Opera House, Egypt, Cairo, Egypt.

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

25-28 November (Monday-Thursday): Intergovernmental Committee of Senior Officials and Experts (ICSOE) for North Africa, Aswan.

December: Belarus Industry Minister Pavel Utiupin will visit Egypt to discuss means of cooperation in the SCZone and plan for the seventh Egypt-Belarus Trade Meeting.

December: A Chinese automotive company delegation will visit Egypt to sign an agreement with El Nasr Automotive Manufacturing Company

December: Indian automotive delegation to visit Egypt

1-6 December: Vietnamese trade delegation visits Egypt.

1-4 December (Sunday-Wednesday): E-payment and Innovative Financial Inclusion Expo and Forum (PAFIX), Egypt International Exhibition Center, Nasr City, Cairo.

2-3 December (Monday-Tuesday): The irrigation ministers of Egypt, Sudan, and Ethiopia the second round of Grand Ethiopian Renaissance Dam negotiations in Washington, DC.

3 December (Tuesday): Emirates NBD / Markit PMI for Egypt released.

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

4 December (Wednesday): Subscription to the Aramco IPO will begin (expected).

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

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

8-9 December (Sunday-Monday): The 6 th CEOs THOUGHTS 2019.

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 December (Tuesday): Egypt Automotive summit, Nile Ritz Carlton, Cairo.

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

11 December (Wednesday): First day of trading on the Aramco IPO (expected)

12-14 December (Thursday-Saturday): 16 Egyptian real estate development companies will showcase their products at IPS Riyadh, Riyadh, Saudi Arabia

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

17-21 December (Tuesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

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.

February 2020: An Italian business delegation will visit Egypt to discuss investments in the Port Said industrial zone.

February 2020: A delegation of Swiss businesses will visit Egypt to discuss investment.

February 2020: Higher Education Minister Khaled Abdel-Ghaffar will visit Minsk, Belarus.

1 February 2020 (Saturday): The administrative court will look into an appeal by Adeptio AD Investments against a Financial Regulatory Authority to submit a mandatory tender offer (MTO) for Americana Egypt.

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 2020: 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.

4-5 March 2020 (Wednesday-Thursday): Women Economic Forum, Cairo.

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

23 April 2020 (Thursday): First day of Ramadan (TBC).

23-26 May 2020 (Saturday-Tuesday): Eid El Fitr (TBC).

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

30 June 2020 (Sunday): June 2013 protests anniversary, national holiday.

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

30 July 2020-3 August 2020 (Thursday-Monday): Eid El Adha (TBC), national holiday.

19-20 August 2020 (Wednesday-Thursday): Islamic New Year (TBC), national holiday.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.