Is the CBE about to announce an EGP 50 bn initiative to support tourism industry players?

News this morning is as thin as trading volumes on the EGX, unusual for a Sunday morning. Has the dreaded (but secretly welcomed) end-of-year news slowdown begun? Or is it just that journalists were preoccupied with conferences in Aswan (Thursday) and Sharm (this weekend through Tuesday)?

The third edition of the World Youth Forum kicked off in Sharm El Sheikh yesterday, and will likely dominate today’s news cycle here at home. The three-day event will feature discussions on a range of topics including Mediterranean security and development, food security in Africa, and climate change.

One thing from the forum certain to get plenty of attention: The CBE is launching a new (EGP 50 bn?) tourism support initiative. We should expect to see details on what sources describe as Egypt’s largest initiative to support the tourism sector, which was agreed upon at the WYF, according to Al Shorouk. The initiative will reportedly allocate EGP 50 bn in soft loans to finance the renovation and development of hotels and tourism facilities, sources tell the newspaper. The sources also said to expect the announcement of an important decision on arrears and debt, without giving further details.

El Sisi pledges not to sign Personal Status Act unless it is fair to Egyptian women: President Abdel Fattah El Sisi said during the Aswan Forum for Peace last week that he would reject the Personal Status Act currently being debated in the House of Representatives if it does not treat women fairly, according to Al Mal.

ADDH delegation in town this week for talks on USD 20 bn investment platform with Egypt’s sovereign wealth fund: A delegation from the Abu Dhabi Development Holding Company (ADDH) will be in Cairo sometime this week for meetings on potential investments for its USD 20 bn investment platform with the Sovereign Fund of Egypt, an unnamed source from the fund tells Masrawy. The ADDH officials and an accompanying delegation of Emirati investors have the chance to kick the tires on potential transactions in fields including energy, industry, agriculture, real estate, and tourism, the source says.

Google’s annual search trends indicated that sports topped Egyptians’ interests this year, with the Egyptian football league being the most widely searched topic on the search engine. Coming in at second place is the results of the secondary school examinations, followed by more football and former army contractor Mohamed Ali. Also on the list: Mohamed Ramadan’s song Mafia, footballer Amr Warda, the National Elections Committee and … Thanos. Tap here to see the full list of Egypt’s top searches or here for the full global rankings.

PSA- You’ll want to consider bringing your umbrella with you this morning. The national weather service and our favourite weather app alike agree that we’re looking at a daytime high of 17°C with a chance of rain. You may also want to leave a few minutes early this morning: Our app of choice is showing a 100% chance of rain between 6am and 8am, and that won’t do anything good for traffic…

The robots could be coming to Egypt: The Arab League’s Arab Union for Development will invest USD 6 mn in a factory to produce industrial, service, and educational robots, union Chairman Khaled Abed told the local press. The factory will be built either in Egypt, Jordan, or the UAE and will be completed by the end of 2022, he added.

Brexit is now a certainty after voters handed Boris Johnson and his Conservative Party a commanding parliamentary majority in the UK election on Thursday, according to the BBC. Johnson has pledged to pass his EU withdrawal bill through parliament before the end of the year, paving the way for the country to leave the bloc at the end of January.

MUST READ- “The decisive Conservative victory leaves no doubt that in today’s global equation, national interests are supreme and globalization is suspect,” writes the New York Times. “The sense that policy moves in one direction, toward more liberalization and more integration, has been replaced by recognition that policy can go backward as well as forward.”

Central bankers getting woke on climate change can be a good thing — but there are limits to what they can achieve. Central bankers are always going to take a backseat when it comes to pro-climate policymaking despite the economic risks posed by global warming, Megan Greene argues in the Financial Times. Figures like Christine Lagarde and Mark Carney can perhaps generate momentum within certain circles, but it’s not immediately clear how the central bankers’ toolkit can actually be put in service of meeting climate targets. Purchasing green bonds is an option, but doing this would result in resource allocation, threatening central bank independence. In the end, monetary policymakers may have to accept their role as firefighters and not fireproofers: “Perhaps [banks] can find ways to finance the fight. But they have no real policy role. Their job is to contain the fallout,” Greene writes.

US, China make trade breakthrough: President Trump and Chinese Premier Xi Jinping have taken the first steps to winding down tensions after agreeing a preliminary trade agreement on Friday. We have more details on what we know about the accord in this morning’s Macro Picture, below.

Could we be seeing more fiscal stimulus in 2020 as governments heed the call? Central bankers are likely to start seriously turning to governments for accommodative economic measures as the “monetary sugar rush” and “seemingly limitless rate cuts” are starting to lose steam, writes Principal Global Investors chief strategist Seema Shah for the FT. This trend, which Shah says will be evident in Europe, could see central banks effectively assume a new role of negotiators with governments to affect changes in fiscal positions.

In international miscellany:

• Turkey wants to legitimize its maritime agreement with Libya: Turkey has sent the agreement made with Libya last month to redraw the maritime borders between the two countries to the UN for approval, according to a Turkish diplomatic official. (Reuters)
• Al Bashir found guilty of corruption: Ousted Sudanese president Omar Al Bashir was handed a two-year sentence in a rehabilitation facility after being found guilty of corruption and illicit possession of funds in foreign currencies, according to Bloomberg. Al Bashir’s lawyer said he would appeal the verdict, according to Reuters.

Fatma Ghali, managing director of Azza Fahmy, on generational change in a family business: It has taken 50 years and two generations to get to where they are, starting with the founder and matriarch Azza Fahmy. And like a prized family heirloom, the business has been handed down to her daughters. Fatma Ghali, the global fashion and design brand’s managing director, joined us in the studio to talk about how she and her sister spent their childhoods immersed in the business, learned the art of jewelry design, production and marketing, and overcame the challenge of taking on her family’s legacy.

** Listen to this week’s episode (runtime 29:27) on our website | Apple Podcast | Google Podcast.

Want to catch up on season one? Previous guests on our show about how to build a great business right here in Egypt have included:

• Karim Awad, group CEO of EFG Hermes
• Karim El Sahy and Abeer El Sisi from high-profile AI startup Elves
• Jalal Abugazaleh, founder of Gourmet Egypt

The airwaves were squarely focused on the World Youth Forum, which got underway yesterday in Sharm El Sheikh.

Talking point of the event: The forum’s third iteration is meant to act as a platform for constructive dialogue and promote peace and cooperation, President Abdel Fattah El Sisi said in his speech at the opening ceremony, which Masaa DMC’s Ramy Radwan (watch, runtime: 2:46) and Min Masr’s Amr Khalil highlighted (watch, runtime: 1:45). Al Hayah Al Youm, meanwhile, aired a reel of El Sisi greeting attendees as they filed into the opening ceremony (watch, runtime: 7:04).

United Nations, UNIDO bosses talk youth empowerment: UNIDO Director-General Li-Yong stressed the importance of sustainable development for the creation of jobs for the world’s youth, which he noted in his speech is a key focus in UNIDO’s strategies (watch, runtime: 8:09). UN Secretary-General António Guterres used his opening remarks to highlight the hurdles facing today’s youth, and encouraged them to continue fighting against poverty and gender inequality and maintaining support for human rights (watch, runtime: 1:25).

Separately, House Speaker Ali Abdel Aal met with his Libyan counterpart, Aqeel Saleh, on the sidelines of the forum, Masaa DMC and Min Masr noted. Abdel Aal reiterated Egypt’s support for the eastern-based parliament Saleh heads (watch, runtime: 1:14) and (watch, runtime: 2:02).

LEGISLATION WATCH- House mulls tax breaks for low income earners: The House Planning and Budget Committee is discussing potential amendments to Article 8 of the Income Tax Act that would reduce income tax for low income earners, according to a recent draft leaked by Al Mal. The draft appears to be an updated version of changes originally proposed by Rep. Mervat Alexan earlier this year and raises the income tax brackets for people earning up to EGP 30k a year but by a smaller margin than was proposed in the draft Income Tax Act seen by Enterprise in October. The new draft proposes the following brackets:

• The income tax exemption threshold would rise to EGP 14k per year (up from EGP 8k);
• Those earning between EGP 14-30k would be taxed 10%;
• Those earning between EGP 30-45k would be taxed 15%;
• Those earning between EGP 45-200k would be taxed 20% ;
• Those earning more than EGP 200k would be taxed at 22.5%.

New tax-evasion clauses: The committee is also discussing new articles that would require self-employed professionals including physicians and lawyers to file a financial disclosure six months after they begin practicing, according to another draft leaked by the newspaper. The disclosures would include the incomes, assets and other financial information of both the professional and of their families, the leaked draft suggests. They would also be required to provide updates every five years, in the event of closing their business, or before emigrating from Egypt. The changes, also tabled by Alexan, would subject those who fail to submit wealth declaration forms or provide inaccurate information to prison terms or fines of between EGP 5-10k. The proposed law is designed to account for a large number of undocumented transactions conducted by the self-employed, Alexan said.

Background: The Finance Ministry is currently engaged in a comprehensive review of the 2005 Income Tax Act, which has been amended piecemeal over the years and which is now likely to be scrapped altogether in favor of new legislation, as we reported in October. The new law would, among other things, make it harder for foreign companies to sidestep Egyptian taxes and introduce news rules on resolving tax disputes. Last we heard, the bill was close to being handed to cabinet for approval, but it remains unclear when it would then make it to the House for a vote. MPs have, in the meantime, been discussing changes of their own.

DEBT WATCH- Sarwa closes EGP 1.8 bn securitized bond issuance: Structured- and consumer finance player Sarwa Capital closed the issuance of EGP 1.8 bn-worth of securitized bonds backed by the portfolios of Contact Auto Credit and its affiliates, according to a company statement (pdf). The issuance consists of three tranches with 13-month, three-year, and five- year tenors. All three tranches carry an investment-grade rating from the Middle East Ratings and Investors Service. CIB, Banque Misr, AAIB, Ahli United Bank, Misr Capital Investments, and Egyptian Gulf Bank underwrote the issuance. Our friends at Arab Legal Consultants were legal counsel on the transaction.

M&A WATCH- Ezz Dekheila fully acquires Ezz Rolling Mills: Ezz Dekheila Steel’s acquisition of 100% of Al Ezz Rolling Mills (ERM) has been implemented, according to the local press. Ezz Dekheila’s mandatory tender offer (MTO) saw the company buying 100k ERM shares at EGP 23.07 apiece while the remaining 89.7 mn shares went the share swap route with every 51 shares of ERM swapped for 1 Ezz Dekheila share. Ezz Steel’s board of directors had signed off on selling around 89 mn of its shares in Ezz Rolling Mills (ERM) through a share swap with Ezz Dekheila Steel after the Financial Regulatory Authority had greenlit the MTO last month.

Egypt signs EUR 1 bn loan agreement for Russian railcar purchase: Egyptian National Railways head Ashraf Raslan signed on Thursday a ُEUR 1.02 bn (c. EGP 18.28 bn) financing agreement for the government’s purchase of 1,300 railcars from Russia’s Transmashholding, the Transport Ministry said in a statement. The Hungarian Export-Import Bank and Russia’s State Specialized Russian Export-Import Bank have agreed to partially finance the EGP 22 bn contract signed last year that will see Transmashholding manufacture and supply 800 air-conditioned coaches and 500 with dynamic ventilation. There were no details on the loan’s repayment terms. The announcement came less than two weeks after President Abdel Fattah El Sisi discussed the contract with Hungarian President Janos Ader during talks in Cairo.

Delivery of first batch delayed by two months: The first batch of 60 railcars is set to be delivered in March, two months later than the ministry had previously said. Another 120 are expected to reach Egypt before the end of June.

STARTUP WATCH- Dental marketplace DentaCarts raises USD 450k investment: Egyptian dental marketplace DentaCarts secured USD 450k from AUC Angels, Asia Africa Investment & Consulting, and 500 Startups in an investment round that closed a few months ago, the startup told Menabytes. DentaCarts, which was founded in 2017, will use the funding to expand its product offering from the 10k products it currently has available on both its web and mobile app in Egypt, Saudi Arabia, Kuwait, and Kenya. The company targets dental professionals.

REGULATION WATCH- Mineral Resources Act exec regs should come out this month: The executive regulations of the Mineral Resources Act should be making their way to cabinet for approval before the end of this month, an unnamed source from the Egyptian Mineral Resources General Authority tells Al Shorouk. The Council of State (Maglis El Dawla) had been expected to complete its review of the draft and ship it to the Madbouly Cabinet last month, but the source did not clarify whether the council has indeed completed its work.

Background: Ratified in August, the amendments expand the size of concession areas, grant a new authority the power to issue licenses for areas of unlimited size, and allow companies to renew their licenses for more than one term. Separate contracts will be used for exploration and excavation areas, and royalties will be capped at 20% of the value of annual production. Industry players have lauded the recent amendments to the Mineral Resources Act for making Egypt’s mining sector more attractive for investors.

IPO WATCH- Emerald wants regulator’s sign off on potential IPO by the end of the year: Real estate investment firm Emerald hopes to win approval within two weeks from the Financial Regulatory Authority to go ahead with its initial public offering on the EGX, CEO of the Egyptians Real Estate Fund Hashem El Sayed said, according to the local press. The timing and share value will be disclosed after the FRA signs off on the IPO, he added. Emerald’s major shareholder Odin Investments will lead the transaction while Professionals for Investment Banking are on board to provide the IFA report.

Background: Odin Investments (which holds a 16% indirect stake in the company) announced plans to offer an undisclosed stake on the EGX last month. It said that a fair value report had been submitted but offered no other details on the expected size or timing of the listing.

Correction (15/12/2019): A previous version of this article incorrectly stated that Emerald had appointed Professionals for Investment Banking to quarterback the listing.

MOVES- Centamin has appointed Ross Jerrard (LinkedIn) as interim chief executive officer effective immediately as Andrew Pardey approaches his retirement, the company said in a disclosure to the LSE. Jerrard will retain his responsibilities for the finance function and as CFO. Centamin is still looking for a permanent CEO, and has come up with a shortlist that will be reviewed by the board.

The mining company has also brought in James Rutherford (LinkedIn) as independent non-executive director and deputy chairman, effective 1 January 2020. Rutherford will succeed Gordon Edward Haslam, who will not seek reelection in 2020. Rutherford, who previously served at Anglo American PLC, is intended to migrate into a non-executive chairman position by the end of 2020.

MOVES- Prime Holdings has tapped vice chairman Mohamed Maher to take over as CEO after removing Khaled Rashed, according to Hapi Journal. Rashed is expected to be appointed to the board when the company announces its formation today.

US, China announce “Phase One” trade war truce: US and Chinese trade officials have reached a preliminary trade agreement that will scrap bns of USD in tariffs and delay others. The US agreed to suspend 15% tariffs that were set to take hold today on USD 160 bn in Chinese goods, as well as reduce others already in effect. In return, Beijing has committed to importing at least USD 200 bn more in US goods and services over the coming two years than it purchased in 2017. US President Donald Trump took to Twitter to announce the pact, and told reporters later in the day he expects to see China make USD 50 bn in purchases from farmers, repeating a promise he made in October.

Concessions from Beijing: China has acceded to several key US demands: It will no longer pressure foreign companies to hand over technology in return for market access, and will allow for greater investment for US financial services companies and expand US exports of food products to the Chinese market.

Bigger challenges lie ahead: So far, we have only sparse details, but we do know that China is yet to make good on the bigger sources of contention, including its use of subsidies and state-owned enterprises and the alleged cybertheft of US trade secrets, says the Financial Times. Reuters quoted US trade representative Robert Lighthizer telling reporters over the weekend that those issues will be touched on during a second stage of talks to take place before the 2020 US presidential elections, but some analysts cited by the FT doubt this is likely.

Driving the conversation on Egypt in the international press this morning is a lengthy investigative piece from Reuters that highlights what it says is a crackdown by the state on the news and entertainment industries. The piece is getting wide attention in the international press.

It’s otherwise a quiet morning for Egypt, with the only other story of note being an interview by someone in Forbes’ contributor network with Oil Minister Tarek El Molla about the country’s sustainability plans, his role in implementing them, and the need to modernize his ministry.

Did MbS’ approach to social reform harm the Aramco IPO? Saudi Crown Prince Mohammed bin Salman’s struggle to achieve his target Aramco valuation IPO and the lack of appetite for its IPO among foreign investors has led to increased scrutiny of his much-vaunted social reforms. While some positives have been achieved — such as lifting the ban on women drivers — the murder of Jamal Khashoggi, the state’s failure to pay its bills, and the detention of more than 300 officials and businessmen in the Riyadh Ritz Carlton have hurt the investment climate in the kingdom. Lack of economic progress is one reason why MbS placed such great importance on the listing the company this year, but now that it is completed, what is next for the Saudi economy? The Financial Times has more.

Monetary policy legend Paul Volcker remembered for the lesson he taught regulators: Former US Fed Chairman Paul Volcker was most famously known for his successful yet wildly unpopular approach to solving the rampant inflation that lasted through the 1970s. His decision to raise interest rates to 20% pushed the economy into recession but ultimately helped set the stage for the financial boom that occurred in the 1980s. This video from the Financial Times says that Volcker’s actions continue to impart an important lesson to regulators to this day: do what is necessary, even if it means short-term pain (watch, runtime: 03:19).

The Idku liquefaction plant has reached its full export capacity of 1.1 bcf/d for the first time since 2013, a source at state gas company EGAS told the local press. Exports have surged from 300 mcf/d in October to 1 bcf/d last month as international prices rose in response to weakening oversupply.

Natural gas production from the offshore Burullus and Rashid fields has increased to 440 mcf/d from 300 mcf/d in 1Q2019-2020, according to the local press. Some 80 mcf/d is now coming from the third well of stage 9B in Burullus, which has been recently linked to the natural gas grid. Production from the second phase of the project is due to be linked in the next fiscal year.

A number of Arab and foreign companies are in “extensive” negotiations to acquire solar plants in the recently inaugurated Benban solar power park, unnamed sources tell the local press. According to the sources, an unnamed company is closing in on acquiring Italy’s Enerray’s 50 MW plant, while two Emirati companies are looking to acquire three 150 MW plants and a Chinese firm is eyeing another 50 MW facility.

The Electricity Ministry will soon launch a tender for a smart national control center in the new administrative capital, ministry sources told Al Mal. China’s State Grid Corporation, Germany’s Siemens, Switzerland’s ABB, and France’s Schneider Electric are among the companies competing for the project. The winning company will implement the control system, develop communication networks, and improve electrical transmission. Egypt currently has six electricity control centers, and aims to increase the number to 10 in the coming period.

Emaar Misr’s planned new development Cairo Gate is due to launch in the second quarter of 2020, a source from the company told the press. The compound was recently the center of a dispute between Emaar and the New Urban Communities Authority (NUCA) which accused the Emirati real estate firm of underpaying for the land. Emaar last month reached a settlement, agreeing to purchase the land for the EGP 11.5 bn development at residential prices and buying back a plot previously handed to NUCA for infrastructure works.

Tourist bookings in Egypt during the Christmas and New Years vacation is up 20% this year compared to 2018, unnamed tourism investors tell Al Shorouk. Occupancy rates are expected to reach 90-100% in several destinations on the Red Sea, 80% in Cairo, and over 50% in Alexandria. Tourism Minister Rania Al Mashat had said last month that Egypt’s overall tourist arrivals are expected to hit pre-revolution levels by the end of the year.

Zaki Hashem & Partners acted as the legal advisor for the EGP 450 mn National Investment Charity Fund for Education, the firm said in an emailed statement. Zaki Hashem set up the fund, obtained the license, and worked with fund manager NI Capital and the Financial Regulatory Authority to draft and review its public subscription notice.

Corrected on 15 December 2019

An earlier version of this story incorrectly referred to NI Capital as CI Capital.

The General Authority for Health Insurance has formed a specialized committee to outline the conditions for citizens to be exempt from paying into the new universal healthcare scheme, according to Al Masry Al Youm. Disabled citizens, who comprise around 35% of the country’s overall population, are among those who will be exempt. The committee will include representatives from the finance and social solidarity ministries, Financial Regulatory Authority, Capmas, and the authority itself. The government’s universal healthcare scheme is set to be introduced in Ismailia in January 2020, and in Luxor and South Sinai in March 2020, after being introduced on a pilot basis in Port Said in July. The program will cover all of Egypt by 2032 over six phases.

Eleven startups will graduate from the seventh cycle of Innoventures’ Startup Reactor program at the Startup Nova conference tomorrow in Alexandria, according to the local press. The event will also launch a EGP 100 mn investment fund to support entrepreneurs, tech companies, and other startups in Egypt.