Monday, 13 April 2020

MPs want funding for bank industry fund + separate bailout mechanism

TL;DR

What We’re Tracking Today

Good morning, friends. Only four more days until our four-day weekend. Banks and the stock exchange are closed on Sunday in observance of Coptic Easter, while Monday is a national holiday for Sham El Nessim.

STORY OF THE MORNING: Saudi Arabia, Russia, and the US have officially put an end to the oil price war after reaching an agreement that would see a multinational coalition cutting output to put a floor under falling prices. Agreement to end the Saudi-Russian price floor came after US President Donald Trump intervened to resolve a standoff between Saudi and Mexico over the extent of the cuts. Under the new agreement, 23 oil-producing countries will withhold a total of 9.7 mn bbl / day from global markets. Brent crude was up 4.2% on the news overnight at dispatch time.

The story dominates the front page in the global press: WSJ | FT | NYT | CNBC | Reuters | Bloomberg.


The oil pact wasn’t enough to distract investors from worries that this coming earnings season will be one of the worst in a generation, the global business press suggests. Futures point to a lower open tomorrow for US shares (markets are closed today for Easter Monday), while stocks in Japan, China, and South Korea started the trading week this morning modestly in the red.

Companies in Egypt have an extra month to disclose 1Q20 earnings after the Financial Regulatory Authority (FRA) said companies could have until 15 June. What’s more, companies won’t have to conform with IFRS 9 and IFRS 15 until the end of the year, according to an FRA decision yesterday carried by Hapi Journal.

Egyptian companies will soon be required to disclose what covid-19 means to their financials, the newspaper reports, as the regulator strikes a sensible middle ground: Give companies a bit more time, but prompt them to be as transparent with investors as possible under the circumstances.

Across the pond: Banks and healthcare companies are first up in the US: JPMorgan, Wells Fargo and Johnson & Johnson will all report first quarter earnings tomorrow, with Citi, Bank of America, Goldman and UnitedHealth following on Wednesday.

Over in Europe, luxury-goods company LVMH, chipmaker ASML Holding and cosmetics giant L’Oreal will release figures this week before reporting moves up a gear next week.

“Looming,” “terrible” and “brutal” are all words being used by the global financial press to describe the coming earnings season:

  • Global investment banks could see their profits completely wiped out during the first quarter — and that’s apparently the best case scenario, according to a report published by Oliver Wyman and Morgan Stanley picked up by the Financial Times.
  • Forecasts for the auto, aviation and oil sectors have been cut dramatically, pushing down average earnings for S&P 500 companies down 10% year-on-year, according to estimates.
  • Tech earnings are almost impossible to predict as supply chains in some parts of the world return to normalcy but global demand falls.

The EGX30 fell 0.8% in yesterday’s trading session as regional and foreign investors sold. Leading the decliners yesterday were EFG Hermes (down 3.8%), Emaar Misr (-3.7%), and Palm Hills (-3.5%). Trading was anemic on a holiday long weekend for western investors, with total turnover of EGP 480 mn, 22% below the 90-day trailing average. The EGX gained 9.2% last week in four consecutive sessions.


THINGS TO KEEP YOUR EYE ON-

The House of Representatives will discuss real estate tax exemptions on 29 April, the local press reported yesterday. The measures are part of the government’s program to support businesses hit by the economic fallout from measures taken to contain the spread of covid-19.

The community is waiting for specifics on the corporate income tax relief announced last week by President Abdel Fattah El Sisi. The measure would allow companies to pay income taxes for FY2019 in installments through 30 June, and we’re told companies can expect to have to pay in three equal installments at the end of April, May and June. Policymakers are not planning to extend deadlines for remittance of VAT, wage tax or any other levy, we’re told.


COVID-19 IN EGYPT-

Egypt now has 2,065 confirmed cases of covid-19 after the Health Ministry reported 126 new infections yesterday. The ministry also said that another 13 people had died from the virus, taking the death toll to 159. We now have a total of 589 cases that have tested negative for the virus after first testing positive and being isolated or hospitalized, of whom 447 have fully recovered.

The Armed Forces began yesterday handing out face masks to citizens without charge in Cairo’s major squares, metro and railway stations, according to a statement. Military-owned companies have ramped up daily output of masks to 100k units.

The Council of State (Maglis El Dawla) is postponing all of its sessions until 23 April, according to Al Shorouk. Judges and employees will still be required to tend to administrative work.

Al Azhar issued a decree outlining burial and mourning rites for covid-19 victims through its electronic center for digital fatwas. The religious authority said funeral prayers are not required to be carried out at mosques and can take place at hospitals, onsite at graves, and in open spaces.


BUSINESS IMPACT IN EGYPT-

The near-collapse of the automotive market is expected to hit the industry for months to come, says Kayan Egypt CEO Karim El Naggar, according to Hapi Journal. Naggar says sales have come to a complete halt and repair services are operating at 40% capacity. Modern Motors has also cut back on production at its Suzuki minibus facility in light of the slowdown, company head Mohamed Yunis said in a Hapi Journal report.

AmCham’s take on covid and the economy + the administration’s stimulus measures: Our friends at AmCham are out with a new report on how the pandemic will affect each sector of the Egyptian economy and a run-down on the details of each stimulus measure rolled out by the government to support businesses. Read the full report here (pdf).

Egypt is set to make a “robust” economic recovery by 2021, the director of the North Africa Office of the United Nations Economic Commission for Africa, Khaled Hussein, told MENA. Hussein lauded the state’s stimulus package and said that Egypt’s recent growth rates and its robust infrastructure make it well positioned for a rapid economic recovery next year.

City Stars Mall reopened yesterday after a two-week closure that began on March 25 for all retail outlets, according to Al Mal. Commercial tenants at the mall have been granted a rent holiday throughout the duration of the closure. Only banks, supermarkets, and food delivery were permitted during the closure.

DONATIONS-

The 22 banks comprising the Federation of Egyptian Banks will donate EGP 660 mn over a period of three months in coordination with the Central Bank of Egypt and the Planning Ministry, according to Al Mal. The amount each bank is donating has been determined based on their profits last year.

Cleopatra Hospitals Group is donating EGP 10 mn, according to the local press.

Al Yassin Holding chairman Yassin El Shokery donated EGP 7 mn, including EGP 5 mn to support day labourers workers through the Tahya Misr Fund, EGP 1 mn to Al Azhar's Zakat and Charity House, and EGP 1 mn to support the poor families, according to a cabinet statement.

Palm Hills has handed over to the government a fully equipped 200-room hotel to be used as a quarantine center, Chairman Yassin Mansour said, according to a cabinet statement. The company is also donating EGP 5 mn to the Health Ministry and will cover the needs of 10k vulnerable families impacted by the pandemic.


ON THE GLOBAL FRONT-

Covid-19 cases appear to be slowing in some of the hardest hit European countries, the WHO said, but the organization has called on countries to think about ongoing containment before they lift lockdown restrictions to avoid a second wave of infections, CNBC reports. The WHO is also worried about the rapid acceleration of cases in Africa.

Parts of the US may be able to ease emergency measures in May, but there won’t be a “light switch” moment where everything simultaneously starts up again, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CNN yesterday. Fauci advocates a slow and cautious approach to reduce the likelihood of a covid-19 rebound — which could happen in the fall in any case, Bloomberg reports.

UK Prime Minister Boris Johnson has left hospital and is on the road to recovery, after a worrisome stint in intensive care for persistent covid-19 symptoms, the BBC reports.


SUPPORTING BUSINESS + EMPLOYEES-

US lawmakers are similarly exploring ways for the federal government to ensure private sector salaries amid unprecedented layoffs, according to the Wall Street Journal. The proposals would be a sharp expansion beyond the paycheck protection program already enacted as part of the US response.

Qatar has earmarked USD 820 mn for a support fund to pay the salaries of private companies for up to three months, according to Bloomberg.

Arab countries have dished out a combined USD 180 bn in covid-19 stimulus packages, equivalent to 9.5% of their total GDP, the Arab Monetary Fund (AMF) said in a research paper (pdf). Growth rates for Arab countries in 2020 are set to be cut by half, the AMF said, but could recover next year if the impact of the pandemic is confined to 1H2020. A lasting crisis could pave the way for recession, it warned.


MARKETS + MACRO-

Equity and high-yield debt investors should be cautious about false dawns in the markets and expect a “lopsided recovery” from one of the greatest economic shocks in living memory, Michael Mackenzie writes for the FT. Although last week was by far the best for global markets since covid-19 hit, investors shouldn’t underestimate “second- and third-order effects on growth” such as “rising unemployment, falling capital expenditures and tighter financial conditions,” Anrea Cicione of London-based research house TS Lombard said.

Debt payments by countries in the global south should be canceled this year, argues the Jubilee Debt Campaign, as data shows that 64 out of 121 low and middle-income countries surveyed spent more on debt servicing than public health in 2019, the Guardian reports. This is before covid-19 compounded existing pressure, with the economic fallout including plummeting commodity prices and remittances, substantial capital flight, and increased borrowing costs. The question of debt relief will be discussed in a series of virtual meetings this week between G20 finance ministers, the World Bank and the IMF.

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Six Egyptians made the Forbes list of World’s Richest Arabs 2020: Nassef Sawiris tops the list of 21 bn’aires with a net worth of USD 5 bn, followed closely by Mohamed Mansour at #4 and Nassef’s brother Naguib at #6. Yassin and Youssef Mansour came in at #7 and #13, and Mohamed Al Fayed was rated #15 with a net worth of USD 1.4 bn. Forbes noted that the covid-19 pandemic’s hit to the global economy affected number of bn’aire on the list as well as their total wealth.

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*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: We look at an emerging dispute over tuition relief between parents and private schools that teach the national and national language curriculums. Parents want 15% of total tuition to be deferred, refunded, or counted towards upcoming tuition hikes. Schools are saying the move could put them and teachers’ jobs at risk.

Enterprise+: Last Night’s Talk Shows

On a relatively uneventful night on the airwaves, the talking heads mostly kept themselves busy with covid-19-related news and commentary, including the Health Ministry’s daily case tally (watch, runtime: 0:43 and runtime: 0:48).

The government hasn’t yet decided on the covid-19 policies it will implement during Ramadan and those will be shaped largely by how the next two weeks progress, Information Minister Osama Heikal told Al Hayah Al Youm’s Lobna Assal. Heikal did not explicitly say that the semi-lockdown could be eased if people adhere to the rules over the next two weeks and said we’ll also be taking our cue from other countries with similar experiences

Heikal also noted that the curfew starting one hour later is not an invitation for workplaces to extend their hours, since that would defeat the purpose of starting curfew hours later to ease crowding on mass transport during rush hour (watch, runtime: 42:40).

The specific procedures for the disbursal of a monthly EGP 500 stipend for day labourers earned a good amount of attention, with Masaa DMC’s Eman El Hosary phoning Manpower Minister Mohamed Saafan (watch, runtime: 9:21) Al Kahera Alaan’s Lamees El Hadidi speaking to Manpower Minister spokesman Haitham Saad Eldin (watch, runtime: 6:13) and El Hekaya’s Amr Adib speaking to CIT Minister Amr Talaat for a chat (watch, runtime: 6:15).

SCZone projects are moving along on schedule despite covid: The Suez Canal Economic Zone (SCZOne) is expecting to sign new contracts with DP World and other major companies “soon,” SCZone boss Yehia Zaki told ‘Ala Mas’ouleety’s Ahmed Moussa. Zaki otherwise remained tight-lipped on the topic, but noted that the zone has not seen any significant slowdown resulting from the covid-19 outbreak, reiterating what he told us last month (watch, runtime: 10:36).

Speed Round

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State-owned banks snap up TMG sukuk issuance: Three state-owned banks have taken 97.25% of the EGP 2 bn of sukuk issued by Talaat Moustafa Group last week, Al Mal reports, citing unnamed informed sources. Banque Misr and Banque du Caire each bought EGP 725 mn of the securities and Suez Canal Bank bought EGP 495 mn. Other investors and funds took the remaining EGP 55 mn.

The TMG sale is Egypt’s first ever corporate sukuk issuance: The offering, issued by TMG subsidiary the Arab Company for Projects and Urban Development, was 2.5x oversubscribed during the private placement and will be listed on the EGX to be publicly traded by investors. The certificates carry a 57-month tenor, maturing at the end of 2024, and each will have a nominal value of EGP 100. TMG had announced plans earlier this year to launch a three-year EGP 4.5-5 bn sukuk program in April to finance the company’s real estate leasing projects.

Understanding sukuk: Unlike conventional debt-based bonds which pay out interest to investors, sukuk generate returns based on an underlying asset linked to the issuance. Ownership of the asset — in this case TMG’s open-air mall in Madinaty — is typically transferred to a special purpose vehicle which issues trust certificates to investors. Investors will then receive periodic payments based on the profits generated by the asset. The SPV will manage the asset for the duration of the sukuk’s maturity period.

The FRA says five other sukuk offerings worth a combined EGP 5 bn are in the pipeline for this year, the authority’s head of central financing Sayed Abdelfadil told the local press. These include offerings from our friends at Sawa Capital as well as CIAF Leasing and three other unnamed private sector companies operating in housing development, agriculture, and hospitality, he said without providing further details.

Advisors: EFG Hermes acted as the sole coordinator and underwriter for the issuance. The investment bank is also acting as the issuing company, meaning that it will take ownership of the mall until the end of 2024 and issue the certificates. Banque Misr acted as guarantor and received the subscriptions. Banque Misr and Abu Dhabi Islamic Bank are also expecting to obtain sukuk issuer licenses this year, joining EFG Hermes and Sarwa as the country’s only sukuk managers.

Correction (13/04/2020): A previous version of this story incorrectly stated that First Abu Dhabi Bank was expecting to acquire a sukuk license.


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LEGISLATION WATCH- Remember that proposed tithe on bank profits to endow an industry development fund? Legislators want to resurrect it. The House Economic Committee has proposed setting up two new banking sector funds — one effectively a deposit insurance and emergency bailout fund, the other a controversial industry development fund that would be endowed by an annual tithe on bank profits. The measures are part of a package of amendments it is suggesting to the draft Banking Act, Al Mal reports.

The bid to have banks contribute to an industry development fund isn’t new, dating back at least to a 2017 draft of the act that would have seen banks required to kick 5% of their annual net income into the fund. The proposal was scrapped in later drafts of the bill after it went over poorly with the industry.

MPs are proposing the fund be established to “modernize and develop” the banking system in line with “global standards.” The fund would be capitalized by a 1% annual tithe on bank profits and would be chaired by the governor of the central bank.

A second levy would set up an industry bailout fund to provide emergency assistance to banks and effectively serve as a provider of deposit insurance. If the measure passes, banks would be required to contribute a sum equivalent to 0.5% of their total deposits to the fund over a 10-year period.

Look for the amendments to be tabled as early as 29 April for debate by the House in plenary session.

Background: The draft Banking Act will grant the CBE greater oversight of the sector, introduce measures governing e-payment, fintech businesses, and cryptocurrencies, and strengthen data protection and consumer privacy. The bill has been in the works since 2017, and you can find out more about it here and here.

IPO WATCH- Banque du Caire postpones IPO on market turmoil, chairman confirms: State-owned Banque du Caire (BdC) has shelved plans to debut 20-30% of its shares on the EGX in April thanks to fallout from the covid-19 pandemic, Chairman Tarek Fayed confirmed to Al Masry Al Youm in an interview published yesterday. “Plans to offer shares on the EGX have been postponed due to the global and local spread of covid-19 and its impact on global and local markets,” Fayed said.

It was expected: Fayed had indicated last month that completion of the transaction would depend on the state of the markets.

The 1H2020 IPO season is ending without an offering after state-owned e-payments firm E-Finance pushed its IPO date to the final quarter of 2020 after having previously been expected to go public this month. No private-sector companies are in the market now, and no serious analyst expects the government to go ahead with stake sales of already-listed SoCs in the current climate. As one of the smartest guys we know in finance put it yesterday: “The market for new equity offerings in this part of the world is dead until fall, probably late fall, at the earliest.”

Background: BdC was hoping to raise some USD 500 mn via its IPO on the EGX this month in what was expected to be the country’s biggest sale of state assets since 2006. The European Bank for Reconstruction and Development, the Sovereign Fund of Egypt, and Abu Dhabi Development Holding were reportedly considering purchasing a stake.

IFC commits USD 20 mn to North Africa-focused PE fund: The International Finance Corporation (IFC) is committing USD 20 mn to Egypt- and North Africa-focused private equity fund SPE AIF I as its seeks to “boost growth in MENA amid economic disruption,” the IFC said in a press release (pdf). The fund, which is managed by SPE Capital Partners — a private equity firm set up in 2016 as a spin-off from Swicorp — invests in manufacturing, healthcare, and education across Egypt, Tunisia and Morocco. It currently holds large minority interests in Egypt-based FPI.

IFC aims to help improve private sector access to capital: Private equity is underutilized in our region by emerging markets standards despite being a key source of funding for smaller cap companies around the world. The penetration rate is as little 0.02%, compared to the EM average of 0.11%, says the IFC, citing data from the Emerging Markets Private Equity Association (EMPEA). “Greater access to such financing can help spur private sector development and job creation, which are both still needed in the region,” the IFC MENA regional director Beatrice Maser said.

M&A WATCH- Cairo 3A gets seller approval on Egyptian Starch & Glucose (ESGC) acquisition: Egyptian International Tourism Projects Company (Americana Egypt), Americana Group and Cairo Poultry have all agreed to sell their stakes in ESGC to Cairo 3A at EGP 8.54 per share, according to EGX disclosures here, here, and here (pdfs). Cairo 3A is seeking clearance from the Egyptian Competition Authority to go ahead tomorrow with a mandatory tender offer for the ESGC shares it does not already hold, the company said in a regulatory filing (pdf).

(ECA approval is not strictly required for any merger or acquisition, but the agency has for some time now sought the authority to reject pre-execution any transaction it thinks would be anti-competitive.)

Background: Cairo 3A earlier this year launched a bid to acquire ESGC shares held by Egyptian International Tourism Projects Company (Americana Egypt, 23.2%), Americana Egypt’s parent company Americana Group (41%) and Cairo Poultry (27.3%). Cairo 3A offered to buy the combined 45.8 mn shares for EGP 8.54 apiece, valuing the company at about EGP 428 mn. ESGC and the board of all three shareholders approved the offer shortly after Cairo 3A declared its bid.

Alexandria Medical Services unaffected by NMC fiasco -CEO: Alexandria for Medical Services CEO Alaa Abdel Meguid is trying to distance the company from its embattled chairman and majority shareholder BR Shetty, whose Emirati company NMC Health is now in administration as an investigation into allegations of widespread fraud still unfolds, Al Mal reports.

Abdel Maguid downplayed Shetty’s involvement in Alex Medical Services, telling the newspaper that the Indian bn’aire is one of 430 shareholders and served as non-executive chairman. Shetty is believed to hold an 87% stake in Alexandria Medical Services.

Alexandria Medical Services’ financial position is sound and NMC’s insolvency has no bearing on the company’s stability, Abdel Meguid said. The company has told the EGX that it does not expect to be damaged by the still-unfolding NMC scandal.

The power of the shorts: NMC’s woes began with a December report by short seller Muddy Waters that alleged that the company had downplayed its debt load and lied about its cash position.

INVESTMENT WATCH- Russian companies plan to invest USD 1.5 bn in Egypt this year: Unnamed Russian companies are planning to invest a combined USD 1.5 bn in agriculture, railway infrastructure, automobile manufacturing and shipbuilding in Egypt this year, Russian Trade Representation head in Cairo Nikolai Aslanov tells Al Mal. Aslanov did not provide further details on the specific companies or projects these investments are earmarked for.

Separately, Aslanov confirmed that construction of Rosatom’s Dabaa nuclear power plant has yet to experience interruptions, and work on the plant site is moving ahead according to schedule. Russian state energy agency Rosatom was contracted in 2015 to construct the 4.8 GW Dabaa nuclear plant for some USD 25 bn, 85% of which would be financed through a USD 25 bn loan from Russia, with Egypt scheduled to begin repaying the 3% interest (through biannual payments over 22 years) in October 2029.

REGULATION WATCH- Consumer finance players face new oversight requirements under FRA: The boards of consumer finance companies must now set up committees to monitor performance and ensure regulatory compliance after the new Consumer Credit Act brought the sector under the Financial Regulatory Authority’s (FRA) purview, according to a statement outlining a set of new decisions. The companies are also now required to submit yearly financial statements to the regulator. The full list of new decisions for the sector can be found on the FRA’s website.

Background: The Consumer Credit Act, which was ratified by the president last month, introduces a new regulatory framework for consumer finance companies governing business creation and operations, as well as provides companies that finance purchases of consumer durables with more clarity regarding expanding their businesses. Under the legislation, the FRA was established as the sector’s primary regulator.

EARNINGS WATCH- Orascom Development Egypt’s (ODE) profits rose 41.1% y-o-y to EGP 705.6 mn in 2019, according to the company's earnings release (pdf). ODE’s consolidated revenue rose 38.8% last year to EGP 4.7 bn up from EGP 3.3 bn in 2018 on the back of real estate sales soaring 202.5% y-o-y to a record EGP 6.9 bn. Sales in O West, ODE’s first residential development project, drove much of the increase, contributing to 62.4% of total sales.

Amer Group’s profits fell 24.5% in 2019 to EGP 56.4 mn from EGP 74.7 mn the year prior, according to an EGX disclosure (pdf). The company’s revenues also dipped to EGP 1.5 bn in 2019 from EGP 1.9 bn in 2018.

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Egypt in the News

On a quiet morning for Egypt in the foreign press, the Coptic Orthodox Church’s unprecedented decision to suspend Holy Week and Easter-time prayers and services throughout the country to curb the spread of covid-19 is receiving coverage in Arab News.

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A dispute is brewing between some parents and private schools over tuition relief: In a poor end to a period that has seen an otherwise successful transition to online learning during covid-19, some parents of students in private schools that teach the national and national language curriculums are demanding deferments and discounts on tuition for the second semester of the 2019-20 academic year. The dispute has already reached the Education Ministry and has even escalated to the House of Representatives. The issue is so far focused on the national school system, and while parents are focusing on transportation and activities fees, a number of operators say that even a small refund could hurt the sector as a whole.

Parents at private, national schools push for deferment of at least 15% of total 2019-20 fees: What’s primarily at issue here is the second installment of tuition fee payments for the academic year. Parents are officially requesting that 40% of that second installment (which amounts to 15% of the overall tuition for the academic year) be either refunded, or deferred to the 2020-21 academic year, a member of one parents association that is lobbying for the move told us last week. If that isn’t possible, they are requesting that school owners forgo the annual tuition hike — which could typically reach 15% as mandated by the ministry — during the next school year, said the source, who wished to remain anonymous.

Refund to cover costs of services “not received during the lockdown,” claim parents: Parents that are lobbying for the cut say that the move is meant to compensate for services and activities they are not receiving, including prepaid transportation and on-campus activities and events, another source from the association tells us. To put this into perspective, bus fees for schools with annual tuition fees ranging between EGP 10-40k can cost between EGP 3,500-5,800 in the 2019-20 year, according to Masrawy. The majority of parents making the request fall within that tuition range, says House Education Committee member Magda Nasr tells Enterprise. Bus fees have typically been an annual complaint, covered frequently in the local press.

Schools say a blanket 15% deferment is unreasonable: The request is not feasible considering that academic services are ongoing and the costs of busing doesn’t come near the amount requested, several private school operators told Enterprise. “Schools are not laying off teachers and teachers’ salaries account for nearly 70% of the overall costs at my school,” one school operator who wished to remain nameless tells us. Badawy Allam, a vice president of the Private School Owners Association, tells us the schools will continue to cover their usual costs and salaries until October without new sources of revenue. The ministry has even asked schools to pay out bonuses to teachers who will supervise end-of-year exams.

E-learning and other costs piling up: Beyond teachers’ salaries, schools have had to pay “substantially” more than last year to upgrade their systems to accommodate e-learning, one school owner says. Any savings that would have come from facilities remaining dormant is eaten away, they added. Furthermore, there are contractual obligations that have been made with suppliers and schools are locked into them, covid or not, says GEMS Egypt CEO Ahmed Wahby.

Bus refunds are also tricky because most schools don’t own the vehicles, Allam adds. According to Allam, many schools have prepaid contracts with third-party providers, and can only process refunds if authorities intervene to help them reclaim the value of those contracts.

Others could be forced to cut costs, and potentially jobs: While some top-tier schools, including GEMS, have recently pledged to not lay off their staff during the crisis, mid-level schools say that may be a valid risk. At least 5,000 out of 7,800 registered private schools are on the lower end of the tuition spectrum, Ahmed El Khatib, head of El Khatib Private Schools, tells Enterprise. A 15% total cut to revenues would add pressure that could result in layoffs, he added. There isn’t as much pressure on international schools, which only number 287 across the country, he noted.

While mostly contained at national language private schools, the issue is already seeping into international schools. “Yes, parents have contacted us requesting refunds,” American International School (AIS) Director Kapono Ciotti told Enterprise. He added that these have mostly been concerning transportation, meal plans, and activity fees. “The school’s board is working on a policy that we believe will be fair and will allow parents to understand the value that they get through school and be able to refund them the services they’re not using,” he tells us.

Int’l schools are considering refunding bus fees and activities: The majority of international school owners we’ve spoken with say that they are at least looking into refunding school bus fees. These include GEMS and AIS. The latter is looking at a policy that will be fair and helpful to parents in this hard economic time with regard to bus, meal plans and activities, Ciotti tells us. El Alsson and Schutz American School have also begun reimbursing parents for activities which have had to be canceled, including field trips, representatives from the schools tell us.

Some schools have also been offering some form of relief to parents and teacher benefits. GEMS, for instance, has extended the payment deadlines for the past fall term by two to three months, Wahby tells us. He added that the school has also upgraded its medical insurance plan to cover covid-related issues.

Int’l schools in the region have already begun to feel the pressure: More than 13,900 people have signed a petition urging GEMS in Dubai to cut fees by 30% for the summer term, arguing that the schools are benefiting from being closed, according to the Financial Times. The school will take a means-tested approach to provide relief to the hardest-hit families. About half of private schools in Dubai have begun offering aid to parents, according to Which School Advisor, an educational information service.

Ministry looking into the matter, hopes to resolve it by August: Parents had been asking the government to intervene, and the Education Ministry is currently exploring the issue, Education Minister Tarek Shawky said last month. The ministry will meet with all stakeholders when exploring the issue and will look at whether the issue extends to international schools, with an eye to resolve it by August, Assistant Education Minister Mahmoud Hassounna tells Enterprise.

The House is also getting involved: In tandem with efforts to lobby the government, parents have managed to push the issue on the House Education Committee’s agenda. The committee will hold hearings on the matter on 29 and 30 April, once the House recovenes, with parents and school owners, committee chair Samy Hashem told us.

Where does the committee stand? It’s on the fence. It’s within the parents’ right to claim refunds for services they will not be receiving, including transportation and on-campus activities and events, committee member Magda Nasr told Enterprise. However, given that teaching will resume online, and that many schools incurred added costs to improve web capabilities, refunds should not be given to academic-related expenses, she said.

Any decision could have far-reaching consequences for the sector: While it may be tempting to point to the example of the UAE private schools, it is worth considering that the move towards e-learning has been costly for the majority of the schools, many of which did not have the right infrastructure to begin with. According to Badawy, all private schools are following Education Ministry guidelines and are being monitored by a ministry committee. He says that schools see that, while parents do have a point when it comes to asking for refunds on buses, a blanket 15% tuition refund could end up hurting private sector employers and threaten teaching jobs. In a time where teacher-to-student ratios in classes are already low, any further shortage of teachers risks not only hurt e-learning, but the sector as a whole after covid-19.

Your top education stories of the week:

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EGP / USD CBE market average: Buy 15.69 | Sell 15.79
EGP / USD at CIB: Buy 15.70 | Sell 15.80
EGP / USD at NBE: Buy 15.68 | Sell 15.78

EGX30 (Sunday): 10,237 (-0.8%)
Turnover: EGP 480 mn (22% below the 90-day average)
EGX 30 year-to-date: -26.7%

THE MARKET ON SUNDAY: The EGX30 ended Sunday’s session down 0.8%. CIB, the index’s heaviest constituent, ended down 1.1%. EGX30’s top performing constituents were Juhayna up 9.9%, Dice up 5.1%, and Credit Agricole up 3.6%. Yesterday’s worst performing stocks were EFG Hermes down 3.8%, Emaar Misr down 3.7% and Palm Hills down 3.5%. The market turnover was EGP 480 mn, and domestic investors were the sole net buyers.

Foreigners: Net Short | EGP -94.3 mn
Regional: Net Short | EGP -46.2 mn
Domestic: Net Long | EGP +140.5 mn

Retail: 64.4% of total trades | 72.5% of buyers | 56.2% of sellers
Institutions: 35.6% of total trades | 27.5% of buyers | 43.8% of sellers

WTI: USD 23.02 (+1.14%)
Brent: USD 31.80 (+1.02%)

Natural Gas (Nymex, futures prices) USD 1.76 MMBtu, (+1.44%, May 2020 contract)
Gold: USD 1,740.90 / troy ounce (-0.68%)

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Calendar

16 April (Thursday): New deadline for individuals to file their tax returns to the Egyptian Tax Authority.

17-19 April (Friday-Sunday): IMF, World Bank will hold virtual Spring Meetings.

19 April (Sunday): Court session for Arabia Investments Holdings’ lawsuit against Peugeot.

19 April (Sunday): Coptic Easter Sunday, national holiday.

20 April (Monday): Sham El Nessim, national holiday.

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

23 April (Thursday): Earliest date on which suspension K-12 and university instruction is set to be lifted.

23 April (Thursday): Suspension of international flights to / from Egypt expires.

23 April (Thursday): Earliest date by which restaurants, gyms, nightclubs, museums and archaeological sites will reopen.

25 April (Saturday): Sinai Liberation Day, national holiday.

28-29 April (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

29 April (Sunday): House of Representatives covid-19 recess ends.

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

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

17 May (Sunday): A Cairo court will look into an appeal from Antaradous for Touristic Development seeking annulment of an international arbitration that granted Amer Group USD 39 mn in compensation.

23 May (Saturday): An administrative court will look into an appeal by steel rolling mills to overturn a government’s decision to place import tariffs on steel rebar and iron billets. The hearing was postponed from 22 February 2020.

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

June: Circular Economy Summit, Egypt, venue TBA.

4-6 June (Thursday-Saturday): 2020 Africa-France Summit, Bordeaux, France.

9-10 June (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

17-20 June (Wednesday-Saturday): 2019 Automech Formula car expo, Egypt International Exhibition Center, Cairo.

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

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

28-29 July (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

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

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

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

15-16 September (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

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

24 September- 2 October (Thursday-Friday): El Gouna Film Festival, El Gouna, Egypt.

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

29 October (Thursday): Prophet Mohamed’s birthday (TBC), national holiday.

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

4-5 November (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

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

15-16 December (Tuesday-Wednesday): US Federal Open Market Committee will hold its two-day policy meeting to review the interest rate.

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

25 December (Friday): Western Christmas.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, 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. © 2020 Enterprise Ventures LLC.