Ethiopia plans to start filling GERD in July 2020.

‘Twas the morning before Christmas … and the festivities have begun early here at Enterprise, with some of us having sported Santa hats all day long. A very Merry Christmas to all those of you celebrating today and tomorrow. Enterprise will publish as usual tomorrow, though we suspect it will be a quiet news day. Our traditional end-of-year publication break will be 1-7 January 2020.

…And a Happy New Year: Don’t expect fuel prices to go up (or down) too much in early 2020, gov’t sources say: The government committee in charge of setting fuel prices is expected to leave them unchanged when it meets for its quarterly price review in early January, a government official tells Al Mal. Fuel prices dropped EGP 0.25 per liter when the committee met for last quarter’s review under the new fuel pricing mechanism, which allows local fuel prices to fluctuate ±10% in tandem with global prices. The government’s call on oil prices has been largely solid this year, and Brent futures have hovered above the USD 60 / bbl mark for the better part of 4Q2019, according to Bloomberg’s one-year chart, underscoring the (current) lack of volatility in global oil prices.

The Central Bank of Egypt’s Monetary Policy Committee meets on Thursday for the final time this year. Seven of 10 economists we surveyed expect the CBE to hold off on delivering a fifth rate cut for the year, with most saying the central bank will adopt a wait-and-see approach as it gauges impact of the previous cuts before pushing ahead with more.

Egypt will host the next Conference of the States Parties (COSP9) on corruption, which is scheduled for 2021, according to the State Information Service. The conference, organized by the United Nations Convention Against Corruption, will review the implementation of a 16-year-old UN agreement ratified by 186 governments to curb corruption.

PSA #1- Consider deleting ToTok from your phone, suggests the New York Times. The messaging app, popular with expats living in the UAE as basically the only way to put through a VoIP call, is spyware, the Gray Lady writes in a deeply investigated piece quoting Western intelligence officials. Users of Botim may want to do the same: The app sent an alert to users urging them to switch to ToTok, with the message saying the new app was available without charge, “fast and secure.” Read: It seemed like a popular chat app. It’s secretly a spy tool.

PSA #2- Consider bundling up this morning. The national weather service is warning again of “unstable” weather with high winds and a heightened chance of rain today through Friday. Our favourite weather app agrees, calling for a daytime high of 19°C today and an overnight low of 12°C.

Turkey is trying to make things interesting for us on our western border: Turkey’s parliament ratified on Saturday a military cooperation agreement originally agreed with Libya’s Government of National Accord (GNA) last month, reports Reuters. Libya started implementing the pact two days earlier. Ankara is already sending arms to the GNA and the agreement could pave the way for it to send troops as the GNA looks to stem the advance of longtime Egypt ally Khalifa Haftar of Tripoli.

Greece, Cyprus, Israel to sign EastMed gas pipeline agreement next week: The leaders of Greece, Cyprus, and Israel are expected to sign an agreement on Thursday, 2 January to construct a natural gas pipeline to Europe, the Greek prime minister’s office announced Sunday, according to Israel Hayom. The Eastern Mediterranean (EastMed) pipeline will run from the Levantine Basin off the coast of Cyprus and Israel to western Greece, and then connect to Italy through another planned pipeline. The project still needs Italy’s signature, which is due to come at a later date, Mitsotakis’ office said.

The project is a rival to our ambitions to be the gas export hub of the East Mediterrannean through our liquefaction plants. Israel is effectively looking to ease its concentration risk by pushing forward with a pipeline that has been flagged as costly and challenging on both commercial and political grounds. Why politically? The pipeline will need Turkey on board as it passes through waters it either controls or lays claim to.

Global news worth knowing this morning:

Foreign investors were net buyers of Aramco shares last week, snapping up some SAR 3.56 bn-worth of shares, reports Bloomberg, as the share attracted passive inflows.

Also in KSA: A court in the kingdom sentenced five men to death for the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul last year, the kingdom's public prosecutor said Monday, according to The Guardian.

Washington and Beijing are inching toward a trade pact after China’s cabinet agreed yesterday to lower import tariffs on hundreds of products as of 1 January, Wall Street Journal reports.

Lebanon has appointed Hezbollah-backed Hassan Diab as its new PM, according to The Financial Times.

Tesla is the best-performing car company of the decade in share-price terms, with the company’s stock having risen 1,190% since it went public in 2010 against a 158% rise for the rest of the automotive industry, according to data compiled by Bloomberg. Tesla is the undisputed champion in total return terms, sales growth and long-term shareholder value, the business information service says.

THIRST WATCH- Ethiopia plans to start filling its GERD in July 2020, Ethiopian Irrigation Minister Seleshi Bekele reportedly said during Egypt-Sudan-Ethiopia technical talks that wrapped up in Khartoum on Sunday, according to a report in Asharq Al Awsat yesterday. Bekele was quoted by reporters as commenting on the Khartoum meetings’ outcome as disappointing, saying “we hoped to reach an agreement on disputed issues between Sudan, Egypt, and Ethiopia.”

Background: The foreign ministers of Egypt, Ethiopia, and Sudan vowed after a get-together in Washington, DC, last month to hash out their differences by no later than mid-January. Pre-arranged technical talks were then scheduled, the last of which was the Khartoum sit-down.

What’s next? Talks in Addis Ababa 9-10 January will pave the way for another round of discussions in Washington on 13 January.

The news comes as Ethiopia closes the 2010s as the world’s fastest-growing economy in both absolute and per-capita terms, the Financial Times wirtes. GDP has soared nearly 147% since 2009 and the East African nation’s per capita purchasing power grew 149% in the past decade. “[Ethiopia’s growth] was state-led … public investment in infrastructure — roads and a lot of electricity,” chief economist at Renaissance Capital Charles Robertson said. The country has reaped significant gains from embracing the “statist” Chinese-inspired growth model in the 2010s despite the global economic doom and gloom. One of the outgrowths of the model is the USD 4 bn GERD, which Addis Ababa sees as critical to overcoming food shortages and drought.

Egypt set to be among top African bond markets in 2020: Global investors have “reaped rich rewards” from African countries’ debt markets, which have outperformed all other EM regions in 2019, Bloomberg’s Paul Wallace says. The strong performance should be sustained in 2020 “if the world’s major central banks remain dovish,” pushing investors seeking higher yields to African markets including Egypt, Angola, Ghana, Ethiopia, and Nigeria. “Egypt remains a favorite among portfolio investors. Carry traders, attracted by yields of around 14% on [EGP] bonds, have flocked to the Arab nation. The currency has rallied 12% this year, its best performance in at least 25 years,” Bloomberg says.

Where will the EGP settle in 2020? Bloomberg notes that Societe Generale expects the EGP strengthen 4.5% next year to hit EGP 15.35 against the greenback.

The EGP has offered the second-best carry trade in the world over the past five years, outperformed only by the RUB, the business information service notes. At 72.9%, the Russian currency has delivered more than double the 30.0% carry trade return the EGP has been able to offer investors, making it a safe haven currency amid trade war concerns. The RUB’s stellar performance comes five years after the Russian central bank let the currency float, which initially triggered a “nosedive” in 2014.

CABINET WATCH- Prime minister mandates civil service, administrative development tasks to CAOA chief. In the wake of Sunday’s cabinet shuffle, Prime Minister Mostafa Madbouly mandated Central Agency for Organization and Administration (CAOA) boss Saleh El Sheikh with the majority of his duties pertaining to the civil service and administrative development, a Cabinet statement said. Madbouly also appointed Deputy Housing Minister Randa El-Menshawy as the First Assistant to the Prime Minister for Follow-up Affairs.

El Wazir presents new railway plans following cabinet shuffle: Transport Minister Kamel El Wazir presented plans yesterday for a fully-serviced central railway station in Giza’s Bashtil in his first meeting with Prime Minister Mostafa Madbouly and President Abdel Fattah El Sisi after Sunday’s cabinet reshuffle, according to an Ittihadiya statement. El Wazir was among several ministers who maintained their spots at the cabinet table in this week’s shakeup, including the ministers of finance, supply, electricity, petroleum, and public enterprises, among others.

Get the rundown on the new faces in cabinet and their likely policy priorities in our report of yesterday.

Real estate watchers, take note: Sodic sells 1 bn-worth of units in Vye in two days: Sodic’s 500 acre Vye project in New Zayed City recorded EGP 1 bn in sales two days after the first phase of the project was launched, the company said in a press release (pdf). Sodic is expecting to sell a total of EGP 43 bn-worth of units in the project, which includes solar energy-operated townhouses and expandable apartments that allow customers to add extensions to their apartments through pre-designed floor plans for expansion. “We are very happy about the successful launch. Vye is the beginning of an exciting journey for Sodic where we think about the changing needs of this new generation of home buyers.” Nabil Amaasha, Sodic’s Chief Commercial and Operations Officer said. Vye is the second of four new projects in Zayed this year after the company launched The Estates in September.

DEBT WATCH- NUCA’s securitization program to get underway: A consortium made up of CIB and the National Bank of Egypt (NBE) is taking to market EGP 6 bn-worth of securitized bonds for the New Urban Communities Authority (NUCA), sources close to the matter told Al Mal. The issuance is expected to get underway in 1Q2020, the sources said. This is part of a program announced by the authority last month 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).

Egypt’s securitized debt market has been quite active in recent months, with Madinet Nasr Housing (MNHD) being the latest eye an EGP 370 mn issuance last week advised by our friends at EFG Hermes and CIB.

Corrected on 24 December 2019: A previous version of this article mistakenly said that MNHD is a state-owned company. MNHD has been publicly traded on the EGX30 since 1995. Today, the company isn’t majority-owned by the government. Its largest state-owned shareholder is the Holding Company for Construction and Development, with a 15.19% stake, but it also has shareholders including private equity firm B Investments and privately-held BIG Investment Group. 

M&A WATCH- It’s a Christmas miracle: Endeavour gets deadline extension to make a merger offer to Centamin: A UK regulator gave Egypt-focused miner Centamin approval to give Canada’s Endeavour Mining more time to make a takeover offer “as shareholder pressure mounted on the London-listed gold miner to engage in talks,” Reuters reports. The new deadline is 14 January from an initial 31 December under UK law. Endeavour had appealed to Centamin to request an extension until 31 January, saying it has little time to study Centamin’s assets, which only include the Sukari gold mine and Cleopatra project in Egypt. The deadline was triggered when Centamin rejected an all-share merger bid from Endeavour.

Additional note for the hometown audience: This is another Naguib Sawiris production: VanEck International Investors, a major shareholder in both companies, and Naguib Sawiris’ La Mancha, the largest shareholder in Endeavour, have both urged Centamin to make the merger work.

Background: Centamin’s board rejected Endeavour’s initial offer on the grounds that it would disproportionately benefit Endeavour’s shareholders. The Canadian miner offered to exchange 0.0846 of its shares for every Centamin share, valuing the latter’s share capital at around USD 1.9 bn. Centamin would have received a 47.1% stake in the new company while Endeavour would have been the majority shareholder. Centamin said last week that Endeavour is refusing to share information for a reciprocal due diligence exercise that leaders of both companies agreed to conduct in a meeting last week, and that Endeavour would refuse to go ahead with the due diligence proposal unless it was granted the extension on the deadline to present a new bid.

CBE’s USD 200 mn Africa export risk assurance company coming in 1Q2020: The Central Bank of Egypt (CBE) is set to launch a USD 200 mn risk assurance company to protect exporters doing business in Africa in 1Q2020, CBE Advisor for African Affairs Naglaa Nozahie tells the local press. The central bank is in the process of finalizing the procedures to set up the company. The CBE will be the main shareholder in the company, which was announced in July to support exports into Africa as part of Egypt’s strategy to improve its trade position. Latham and Watkins LLP is advising the CBE on the company’s establishment, and will advise on its management once it is up and running.

LEGISLATION WATCH- The House SMEs Committee is set to begin its review of proposed amendments to the 2014 microfinance law once it wraps up discussions on the proposed SMEs Act, to which the committee gave a preliminary nod last month, according to the local press. The Financial Regulatory Authority’s (FRA) board of directors had proposed amendments that would bring dedicated SME lenders (including finance companies and NGOs) under the microfinance law. Proposed amendments would introduce a EGP 20 mn capital requirement for SME lenders and keep the requirement for their microfinance counterparts at EGP 5 mn. They would also allow SME finance providers to be members of a rebranded Egyptian Microfinance Federation.

House to extend temporary law to settle building code violations: The House of Representative approved “in principle” proposals by two MPs that would extend a temporary law to settle building code violations and clarify some of its stipulations, reports Youm7. The changes would, if passed, allow authorities to continue receiving violation settlement requests for six months after amended executive regulations are issued. According to a committee report presented during a House general assembly session, the recently-passed legislation failed to attract the desired number of requests due to “vague articles” and lengthy processes.

In other House news, the House Health Committee approved changes a bill to set up a fund dedicated to mental health, Youm7 reports.

MOVES- Heike Harmgart is the next managing director of the EBRD’s SEMED region: Heike Harmgart (LinkedIn) has been appointed managing director covering the southern and eastern Mediterranean (SEMED) region for the European Bank for Reconstruction and Development (EBRD), the bank said yesterday in a press release (pdf). She will take up the position on 1 January. Harmgart, who joined the EBRD in 2006 as an economist, was formerly the EBRD head in Jordan in 2013 before she assumed responsibility for the wider eastern Mediterranean region. “I look forward to building yet further on the achievements of my predecessors in working to deliver robust and sustainable economies in support of the people who live there,” Harmgart said.

She will succeed Janet Heckman, who is retiring after taking on her role in February 2017. In an Investment Ministry statement released recently, the bank said its investments in Egypt reached about EUR 3.5 bn during the past 3 years in more than 80 projects in which the private sector got 70% of the portfolio. Heckman briefly discussed the EBRD’s policy engagement strategies is to get the right conditions in place to attract foreign investors in a Morning Routine entry on Enterprise back in July. We wish her well.

Heckman’s parting gift: A USD 150 mn green SME support package with NBE. Heckman signed a USD 150 mn loan agreement with the National Bank of Egypt (NBE) for the Egyptian bank to lend to SMEs working on green projects, according to Hapi Journal. The proceeds will allow NBE to open a USD 100 mn credit line to help Egyptian SMEs participate in energy efficiency and climate projects, we noted last week. The remainder will be channeled into two new EBRD programs, with USD 30 mn going to its Youth in Business project and USD 20 mn financing the Skills in Business program.

MOVES- Ahmed Hafez appointed MD of Raya Contact Center, Alaa El Shafei as a head of operations: The board of directors of Raya Contact Center has approved the appointment of Ahmed Hafez as the managing Director of the company, after accepting the resignation of Reem Ibrahim as vice chairman and managing director, the company said in a statement to the EGX (pdf). Alaa El Shafei was appointed head of operations, the statement added.

No single topic is driving the conversation on Egypt this morning in the foreign press, which has left us with a handful of headlines to note in brief, including:

• The National took note of Egyptian author Shady Botros Lewis’ Arabic novel “Ala Khat Greenwich,” saying that it painted a timely and “painful picture of the lives of immigrants in the West.”
• Palestinian journalist Daoud Kuttab tells his story of being denied entry to Egypt to the Washington Post and claims it is a part of a bigger trend of cracking down on journalists in the country.
• Learning Egyptian hieroglyphics through texting tools: The Israel Museum in Jerusalem are explaining hieroglyphics to a wide audience by comparing them to cell phone emojis in the recently opened the "Emoglyphs" exhibition, according to the Jerusalem Post.
• Hurghada is taking plastic waste pollution seriously, according to Gulf Today, the governorate is enforcing the single-use plastic products ban with stiff fines and other environmental organizations are doing their part to make sure the ban is implemented, namely, HEPCA.

Is wine the next safe haven asset? Investors are starting to regain their finer tastes by investing in wine as an asset, even though it doesn’t yield returns, according to The Financial Times. Its potential for capital growth is wine’s redeeming factor and in the recent period, negative interest rates are pushing investors to rethink wine’s ability to be a safe haven asset along with fine art, classic cars, or cryptocurrencies. “In a record-low interest rate environment, people are being forced to look outside their normal sources of return,” said Tom Gearing, co-founder of Cult Wines, a company that trades wine on behalf of private investors. The London-based company has seen the assets it manages surge to GBP 121 mn this year from GBP 33 mn in 2016 as investors flock back to wine (which they always have the option to just drink).

It might not be a bad idea to tie up your wealth in fine wine, says Bordeaux Traders, a fine wine investment brokerage. They explain that wine is a “recession proof investment” as unlike traditional investments, luxury wines are minimally influenced by exchange and interest rate changes (an opinion we take with a pinch Penot Noire).

Fine wine has indices and an online marketplace of its own, including the Liv-ex Fine Wine 50 index, created by Liv-ex Fine Wine Market, which tracks daily price movements of fine wines. They’ve created ane e-commerce platform where global merchants can automatically offer stocks to be globally traded before it Liv-ex send over the physical asset.

And if the investment seems attractive, Wine Enthusiast Magazine offers up a primer on wine futures.

The co-founder and CEO of Sarwa Capital, Hazem Moussa, on growing a consumer finance startup and life post-IPO: Since starting out with car financing with Contact Cars back in 2001, Sarwa Capital has grown its operations to encompass all aspects of consumer finance, including financing consumer durables, home finishing, mortgages and small businesses, and most recently, life and general insurance. The firm even invented the notion of securitized bond offerings in Egypt. He talked with us about raising money for the business before venture capital was a thing in Egypt. About life after going public on the EGX in a controversial IPO in 2018. And about how he resists micromanaging while still keeping his finger on the pulse of his business.

** Listen to this week’s episode (runtime 32:21) on our website | Apple Podcast | Google Podcast.

ITFC to finance EDA’s programs that aim to promote Egyptian exports: The International Islamic Trade Finance Corporation (ITFC) has reportedly agreed to finance some of the Export Development Authority’s (EDA) programs that seek to promote Egyptian exports to African markets in the next three years, Egypt today reports. The size and timeline of the financing were not disclosed. The agreement was concluded in a recent meeting in Jeddah. Egypt had signed in early December a USD 1.1 bn funding agreement with ITFC to help it import petroleum products and food in 2020 as part of a USD 3 bn agreement between Egypt and ITFC signed in January 2018.

Acwa Power plans to reach financial close on its USD 200 mn, 200 MW solar power plant in Kom Ombo in 1Q2020, regional director Hassan Amin told the local press. The plant is being financed by unnamed international funders that Amin did not name. The power plant is sought to launch before the end of 2020. The company had signed a power purchase agreement with the Egyptian Electricity Transmission Company earlier this year.

Siemens Gamesa has hired Elsewedy Electric subsidiary Rowad Modern Engineering to implement the civil works for its 250 MW wind farm project in West Bakr in the Gulf of Suez, according to Hapi Journal. The wind farm will increase Egypt’s wind energy capacity by 18% once completed in 2021.

The Egyptian Electricity Holding Company (EEHC) is reviewing the draft contract submitted two weeks ago by China’s Sinohydro to inaugurate a pumped-storage hydroelectricity station at Attaqa, sources told the local press. The final contracts for the project are scheduled to be signed during the first half of 2020. Plans for the massive-scale plant came into fruition during the EEDC, but were stalled for years until the president’s recent visit to China, where initial contracts were inked, before EEHC signed a funding contract for USD 2.6 bn with China Eximbank.

Edita Food Industries launched its new product “Todo Max” with a retail price of EGP 2 per pack, according to a press release from the company (pdf). Edita’s cakes business line is the biggest contributor to its total revenue, amounting to almost 45% of total revenues in9M19, the press release added. The company holds a 46% market share of the Egyptian cakes market.

Orascom Development Egypt (ODE) is planning to launch three projects in El Gouna in 2020, including a hotel and two other real estate projects, CEO Khaled Bichara said, according to Al Mal. The details and budget of the projects have not been provided but Bichara said that there are more details to follow in 1Q2020. The company is also currently working on its 1000 acre O West project in the west of Cairo that it had signed last December with the New Urban Communities Authority, according to the newspaper.

The National Authority for Tunnels has invited experienced consulting firms to submit letters of interest for the management, design revision, and supervision of the monorail project linking the new administrative capital to 6th October City, according to an official statement (pdf). Interested companies must submit the required documents before 31 December 2019. The company tapped for the job will supervise a consortium of Canada’s Bombardier, Orascom Construction, and the Arab Contractors that has been tasked with constructing, operating, and maintaining the lines for at least 30 years.

State-owned public transportation company Mowasalat Misr will launch a ride-hailing company to operate smart microbuses in Cairo by 2Q2020, CEO of Mowasalat Misr Hesham Taha said, according to Al Mal. The ticket price for one trip will not exceed EGP 25, Taha added. Mowasalat Misr will also be launching a smart transport system between different governantes by mid 2020, he added.

EFG Hermes’ installment payment solutions app ValU is planning to gradually expand to Alexandria, Mansoura, Tanta, and Hurgada in 2020, as well as introduce Arabic language functionality to its platform to grow its user base, Chief Business Officer at ValU Mohamed El Feky said, according to Al Mal. The rate of customers’ inability to repay debt is around 0.3%, which is a very low rate, El Feky adds. ValU has said earlier that it is planning to expand to Upper Egypt in 3Q2019 but there is no word in the press about whether the plan got underway.

The Central Bank of Egypt has approved a request from Misr Iran Development Bank to rebrand as MIDBank, an unnamed source told Masrawy. The rebranding aims to mitigate the impact on the bank’s business from the US’ sanctions on Iran, which has reportedly had a negative effect on the bank with foreign customers.

The Saudi Arabian Monetary Authority has agreed to provide a grant of USD 15 mn to the Industrial Development Bank (IDB) to fund micro and small enterprises, IDB Chairman Maged Fahmy told Masrawy. The agreement should be signed at the beginning of next year.

Lulu Market plans to open two new branches in Egypt in 1H2020, including one in Wadi Degla and another in the Fifth Settlement, Regional Director Huzaifa Qureshi told the local press. The new branches, which will cost USD 400 mn, are part of the USD 500 mn investment agreement Egypt signed with the hypermarket in August to open four new retail outlets. Lulu is on track to open two branches in Sheikh Zayed and Obour before the year is out.

The Council of State’s (Maglis El Dawla) Administrative Court has issued a ruling to ban the broadcast of “Omar,” a 2012 television series depicting the life of Omar ibn Al-Khattab, according to Ahram Online. The decision was based on Al-Azhar Islamic Research Academy 1999 statement warning against depicting “religious figures” in any theater, cinema or television work. The 2012 series was produced by the Saudi MBC1 and Qatar TV and was screened in several Arab countries.

India’s Air Chief Marshal RKS Bhadauria is in town for six days to talk defense cooperation with top Egyptian military officials, according to the Times of India.

Egypt took home the WSF Men’s World Team Squash Championship which wrapped up in Washington over the weekend, according to PSA World Tour. The Egyptian team, with members including world no.1 Ali Farag and world no. 3 Karim Abdel Gawad, edged over England in the final round on Saturday. Egypt has cinched a total of five WSF men’s team championship titles since 2005.

Mo Salah, along with Algeria’s Riyad Mahrez, and Senegal’s Sadio Mane, will be contending for the title of African Footballer of the Year, according to the Confederation of African Football. So far, Mane is the favorite for the award, the recipient of which will be announced on 7 January at a ceremony in Hurghada.

Netflix is bringing back Abla Fahita in her first scripted series to drop in 2020, the streaming giant announced. The show will mark the streaming giant’s second Egyptian original series and will show how Fahita’s life is turned upside down following her stardom in the format of a comedy drama. It will be produced by OKWRD production in cooperation with ASAP Productions and Executive Producer Amin El Masri. In response to the partnership with Netflix, Abla Fahita said, “I always say that Egyptian comedy is a great product for export after the Egyptian cotton. And it’s obvious how the world today is a sad place in dire need of laughter. And nothing beats the Egyptian sense of humor in relieving the world of its misery.” The diva puppet is going global as Netflix will release the series in more than 20 languages and across 190 countries.