Thursday, 11 June 2020

Inflation has (unexpectedly) cooled to a six-month low

TL;DR

What We’re Tracking Today

Good morning, friends, and welcome to the end of the workweek at a time of year when we would normally be thinking thoughts of summer vacation at home and abroad.

Beaches at home are still closed and we’re not leaving on a jet plane anytime soon. The Madbouly cabinet gave no guidance on when airspace might reopen to regularly scheduled commercial flights despite widespread expectations it would do so after its weekly meeting yesterday. But domestic media reports suggest officials are looking at July (see examples here and here). The current ban is due to expire on Sunday.

SMART POLICY- Entry visas for tourists arriving on charter flights will be issued at no charge until 31 October, Cabinet decided yesterday. Officials earlier this week said they would offer breaks on landing, parking and ground-services fees for Red Sea destinations. The government is also planning to cover the cost of treatment for any tourist who contracts the virus while visiting Egypt, unconfirmed reports suggest.

Red Sea destinations will be the first to fully reopen, Al Mal quoted Tourism Minister Khaled El Enany as saying. But don’t expect a mad rush even if there is strong demand: Enany added that he would prefer to keep doling out financial support to the tourism industry rather than prematurely giving hotels the okay to open at full capacity.

Hotels will be capped at 50% occupancy until October, at which time they will likely be allowed to go to 75%.

The Pyramids, Karnak Temple and King Tutankhamun’s tomb will be reopened “soon” with reduced footfall, El Enany said.

*** How much do you love (or hate) e-learning? The Madbouly government signaled this week that e-learning could be on the menu again this fall — by itself or as part of a hybrid approach. Tell us how e-learning is working out in your household in a poll for our weekly Blackboard focus on education. As is our custom, we’ll draw the names of three respondents who will receive an Enterprise mug and a bag of our favorite coffee from our friends at 30 North. Tap or click here to take the survey. It’s quick and painless, we promise.

COVID-19 IN EGYPT-

The Health Ministry confirmed 36 new deaths from covid-19 yesterday, bringing the country’s total death toll to 1,342. Egypt has now disclosed a total of 38,284 confirmed cases of covid-19, after the ministry reported 1,455 new infections yesterday. We now have a total of 11,583 confirmed cases that have since tested negative for the virus after being hospitalized or isolated, of whom 10,289 have fully recovered.

Former GAFI boss Mohsen Adel has died of complications from covid-19, Youm7 reports. Adel completed a one-year term as chairman of GAFI in 2019 and had also served as deputy head of the Egyptian Exchange.

Foreign appetite for Egyptian sovereign debt is returning -bank sources: Foreign funds bought USD 400 mn of the USD 509 mn on offer at a T-bill auction on Tuesday, state-run news agency MENA said, quoting unnamed banking sources. The report suggests appetite is returning after foreigners dumped more than USD 15 bn in bond holdings amid a wider sell-off in emerging-market assets in March.

Kouchouk chats with top execs from multinationals, telling them that international institutions “are confident” of Egypt’s ability to handle the economic repercussions of the pandemic due to the pre-covid-19 economic reform program. That was the key takeaway from Vice Minister of Finance Ahmed Kouchouk in a virtual meeting hosted by our friends at USAID with global executives.

Egypt could face employment challenges at home in a post-pandemic world given that 70% of Egyptians working abroad are employed in hard-hit Gulf countries, EFG Hermes Head of Research Ahmed Shams ElDin said in a webinar hosted by Khodeir & Partners, Hapi Journal reports. Policymakers should focus on creating conditions that allow the private sector to create opportunities through digital transformation and a new focus on logistics services. Healthcare, e-commerce and financial services will be growth sectors going forward, Sham ElDin suggested.

Foreign labor is already being hit hard in the GCC, with Kuwait saying it will not hire expats in 2020-2021 to work at Kuwait Petroleum Corp, the primary state-run energy producer or its subsidiaries. Qatar, meanwhile, said it will cut pay and benefits for non-nationals working for the statelet’s government.

You might want to check if your health insurer covers covid-19: The largest health insurance providers in Egypt, which together hold a 71% market share, cover their clients’ covid-19 treatment costs under full coverage policies, the Financial Regulatory Authority said yesterday in a statement (pdf). The remaining 29% should also have full coverage programs that cover the cost of check-ups and early detection of the virus that causes the disease.

The Egyptian Medical Syndicate is calling for the Health Ministry to step up efforts to provide frontline workers with personal protective equipment and enhance measures in hospitals as 50 physicians have now died of covid-19.

The domestic press claims there is now a black market for the blood plasma of recovered covid patients offering on social media to sell blood for up to EGP 30k a pop.

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ON THE GLOBAL FRONT-

Blood type might have something to do with how sick you get from covid-19: Research conducted by genetic testing firm 23andMe with some 750k participants suggest that having O blood may be your best bet at protection from the virus’ worst symptoms according to Bloomberg.

Goldman Sachs staff are heading back to the office this month. Some employees in London will start trickling in on 15 June, while others in New York, New Jersey, Texas and Utah test the waters from 22 June.

But what if working from home goes on forever? asks the New York Times magazine in our must-read for the weekend.

GLOBAL MACRO

The US Federal Reserve says it will likely leave rates on hold at close to zero until at least the end of 2022 — and said it would take years for employment levels to return to pre-covid levels. Speaking at the end of its two-day Federal Open Markets Committee meeting, Jay Powell said a surprisingly good jobs report last week was welcome, but that it was “too early” to suggest whether the recovery would be stronger than initially expected. In a policy statement that observers said was “mostly unchanged compared to April,” the FOMC said it was “committed to using its full range of tools to support the US economy.” Speaking at a post-meeting presser, Powell said “We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates.” The story dominates business news on both sides of the Atlantic this morning: Financial Times | Wall Street Journal | CNBC | Reuters.

Our gas hub ambitions are on track to materialize slowly amid projections demand is on course to fall to its lowest level in history this year thanks to the pandemic and to mild temperatures in the first months of the year. That’s the bottom-line conclusion we’re drawing from the International Energy Agency’s 2020 outlook, published yesterday, which sees global demand set to fall by 4% to 3.85 bcm this year, double the decline seen during the 2008 financial crisis. The IEA sees it taking two years for demand to recover.

EGYPT BEYOND COVID-

The Tax Authority will extend until 30 September a mechanism allowing taxpayers to unlock assets frozen due to tax disputes, the authority said in a statement (pdf). Those who have had assets frozen for failure to pay taxes can get them back if they make a downpayment equal to 5% of the amount owed, and commit to paying off the remainder within two years. Those that had missed deadlines to submit appeals or claims for relief can have those deadlines extended provided they pay 1% of the amount owed.

The Youth Ministry is launching a EGP 10 mn Sports Fund to support athletes with contributions from Banque Misr and Beltone Financial, according to the local press.

AND THE REST OF THE WORLD-

Big Tech is (kinda-sorta) hitting pause on facial recognition. Amazon will block US law enforcement from using its facial recognition technology for a year, while IBM will no longer offer the technology full-stop, becoming the latest to declare the tech “too troubling.”

HSBC backs China’s Hong Kong security law — and the US and UK are not happy: HSBC has broken with years of neutrality after a top executive signed a petition in favor of the controversial security law China is preparing to impose on Hong Kong, angering officials in London and Washington, the Financial Times reports.

enterprise

It’s Making It day: Our latest episode of the second season of our podcast on building a great business in Egypt is out today.

Hoda Mansour, Managing Director of SAP Egypt and Frontier Markets: Twice recognized by Forbes as one of the top businesswomen in the Middle East, her tenure in Egypt saw her record the multinational’s best performance since launching local operations by expanding SAP’s role in government projects and growing its SME customer base.

SAP makes the unglamorous software on which Big Business runs, integrating key functions including procurement, finance, logistics, and human resources, all with a view to ensuring business leaders have actionable insights into what’s going on in their organizations.

There’s plenty of opportunity for multinationals in Egypt who are ready to invest in training local staff, Mansour tells us. She credits SAP’s success to hiring talent based on a prospective employee’s experience in other sectors and then upskill their coding skills.

Tap or click to listen to the episode on: Our website or your podcatcher of choice here. We’re also available on Spotify, but only for non-MENA accounts.

Enterprise+: Last Night’s Talk Shows

Egypt, Sudan, and Ethiopia’s GERD talks led the conversation on an otherwise insipid night on the airwaves.

Irrigation Ministry spokesman Mohamed El Sebai gave Yahduth fi Misr a somber recap of yesterday’s negotiations, which are set to continue until Saturday (watch, runtime: 1:29). We have the details in this morning’s Speed Round, below.

Ethiopia’s obstinacy and “show of power” on matters pertaining to the dam will eventually have adverse effects for Addis Ababa, political commentator Mostafa El Fekky told Yahduth fi Misr’s Sherif Amer in their weekly political analysis sit-down. El Fekky slammed Ethiopia’s approach to the negotiations as being diplomatically inappropriate, and called for international mediation in future talks (watch, runtime: 3:56).

Private hospitals are for the most part sticking to the Health Ministry’s mandatory pricing scheme for covid-19 treatment services, and reports of the contrary are “very limited,” spokesman of the Federation of Egyptian Industries’ private sector healthcare division Ahmed Nazih told Masaa DMC’s Ramy Radwan (watch, runtime: 5:07). Nazih didn’t have any updates on earlier reports that the ministry had agreed to amend the pricing scheme after meeting with representatives from private hospitals complaining the prices were untenable.

Speed Round

Speed Round is presented in association with

We caught a break: Inflation cools to six-month low: Annual urban inflation in May slowed to its lowest level since November, dropping to 4.7% from 5.9% in April, according to data from state statistics agency Capmas.

Food and beverage prices continue to be the main drivers: Food prices fell 0.7% on an annual basis during the month — in a reversal to the 4.4% spike in April — and 0.4% on a monthly basis.

Core inflation falls: Annual core inflation fell to 1.5% in May from 2.5% in April, while monthly core prices fell to 0.3% from 1% the month before, according to figures released by the Central Bank of Egypt (pdf).

Figures came in lower than expected, paving the way for <9% annual inflation: “The May inflation figures are lower than expected because of the drop in food and beverage prices after Ramadan,” Radwa El Swaify, head of research at Pharos Investment Bank, told Enterprise. “We expect June figures to rise to 6% an annual basis, drop to 5.5% over July and August, and reach 6.5% for September and October, and 7-7.5% for November and December, to the end the year below the CBE’s 9% target.” Capital Economics also said in a statement (pdf) that they expect the headline rate to fall within the CBE’s target range, even as the EGP weakening against the greenback and the recent announcement of electricity price hikes are likely to drive up inflation.

Effect of higher electricity prices, FX rate might still be muted: Prime Holding Senior Economist Mona Bedeir doesn’t expect the electricity price hikes and FX rate to have much of an effect on 2H2020 inflation readings, however. Bedeir notes the currency had seen some appreciation earlier in the year that will help offset the recent dip, and commercial and industrial consumers were exempt from the electricity price hikes, “which will limit the probability of a second-round effect on final prices.”

Leeway for more rate cuts? Analysts are divided on what this means as the central bank meets a week from today to discuss interest rates. Pharos El Swaify sees rates being left on hold as does Naeem’s Allen Sandeep, who expects “the status quo to continue” despite the CBE now having a little more theoretical room to cut rates. Capital Economics, however, said that “with policymakers’ focus shifting away from supporting the EGP to boosting the economy, we expect interest rate cuts to resume in the coming months.”

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EXCLUSIVE- Covid-19 dents auto sector recovery — but a rebound might be in the cards in the coming months: Egypt’s automotive industry looked in the first quarter to be recovering from several years of slow sales — but is now suffering another setback thanks to covid-19. Since the middle of March, assemblers and distributors alike have been faced with a twin supply-demand shock: Global supply chains have brought imports of cars and components to a standstill — and consumer demand has faltered amid both lockdown measures and uncertainty about how the economy will fare.

What’s the damage? Promising sales growth through much of the first quarter gave way in the final two weeks of March as consumer demand slumped in response to the pandemic, distancing measures, and the partial lockdown of the economy. Data from the Automotive Information Council (AMIC) shows that passenger car sales fell to 5.8k in April, down 26% from the almost 8k cars bought in April 2019. The trucks segment (which reflects mostly corporate demand) fared even worse, seeing a 42% decline in sales to 1.5k units during the month. The overall market saw a 22% drop in volumes to 8.9k, down from 11.5k in April last year. Many companies approached by Enterprise were reluctant to talk about recent sales performance, with one senior exec telling us that sales across the industry “were hit sharply during Ramadan and the week-long Eid vacation.”

There were some surprising bright spots in the latest data: Bus sales surged by 58% during the month to hit 1.6k, up from 1k last year. And the disruption caused by the government’s preventative measures hasn’t yet been enough to push volumes down year-to-date: sales in the first four months of 2020 are almost 33% higher than during the equivalent period last year. Still, April’s figures are hardly anything to write home about: volumes fell below levels seen in April 2017, when the EGP devaluation, surging inflation, and a hangover from the FX crunch that marred 2016 caused sales to fall to 9.5k. What happened?

#1- Uncertainty in the market: Amid reports that businesses have laid off staff or cut salaries, many consumers put their plans to buy a new car on hold. EGX-listed GB Auto reported “plummeting” footfall in its showrooms during the early days of the government’s lockdown measures. “One would not risk putting their savings in a car that they cannot even drive when they may soon be jobless and in need of every pound,” Khaled Saad, secretary-general of the Egyptian Association of Automobile Manufacturers, told Enterprise.

#2- Issuance of new licenses was suspended: Even those who took a leap of faith and bought new cars were effectively unable to drive them. The Interior Ministry suspended in-office operations of the traffic police — the body entrusted with renewing and issuing new car and driver’s licenses — under an edict that froze most citizen-facing government services. Consumers who bought used cars were unable to transfer ownership as the Real Estate notary offices were closed for the same reason.

#3- The CBE barred car dealers from trading in cash: At the same time, the Central Bank of Egypt (CBE) warned it would impose hefty fines on car dealers who dealt in cash (part of a longstanding drive to reduce the economy’s reliance on cash) and temporarily capped withdrawals and deposits at banks. This caused major headaches for cash-reliant car showrooms, 95% of which don’t have the required operating permits and thus do not have access to business bank accounts, said Osama Aboul Magd, chairman of the Egyptian Automotive Dealers Association.

#4- The curfew hasn’t helped the situation: Companies have had to cut their working hours to comply with the government’s night-time curfew. The restricted opening times have affected sales at El-Saba Automotive, which usually sees the majority of its trade take place in the second half of the day, CEO Alaa El Saba tells us. The cherry on the top: multiple days of full shutdown in recent months as the government ordered stores closed.

All of this is taking place during unprecedented disruption to global supply chains: Local auto assemblers and distributors have been hit by the global lockdown, which caused car manufacturers and suppliers to either close down or significantly reduce production capacity. According to El Saba, Egypt has not received automotive parts or vehicles since the escalation of the outbreak in March.

Expansion plans are being put on hold: Companies are facing growing liquidity constraints, forcing some of them to put expansion plans on ice, said Saad, who is also the head of Brilliance Bavarian Auto. His company has pressed pause on plans to spend USD 120 mn on a new production line. GB Auto has also suspended its capital expenditure program and launched a cost-cutting program.

Companies are slashing prices to stimulate demand: Tens of auto showrooms and dealerships have been campaigning on social media and advertising five-figure discounts to stimulate the market (see here and here for examples).

The twin supply-demand shock is putting companies in a difficult position: Rather than raise prices to reflect the low supply of vehicles, companies have been forced to respond to the demand slump by the need for liquidity, El Saba says. “The only reason companies would offer such promotions is the need for liquidity — any liquidity to meet their own expenses,” he said. Nader Ghabbour, deputy CEO of GB Auto, downplayed the effects of the price cuts in the long term, telling investors during a recent earnings call (pdf) that any reductions in gross margin would made up for in absolute terms by higher sales.

When can we expect a recovery? Everyone we spoke to anticipated the market downturn to extend at least to the end of 2Q. GB Auto expects its passenger cars segment to remain under “sustained pressure” until the end of 2Q, after which it is “cautiously optimistic” for a recovery in 3Q, Ghabbour said. A senior exec at GB Auto told us that sales have started to show “some recovery” in June and said sales will accelerate when the government eases more restrictions — and as consumer confidence returns to pre-pandemic norms. Saad, meanwhile, suggested that volumes for the year may fall as much as 70% from 2019 levels.

Remember: This isn’t a case of “lost” sales, but of delayed sales: Hard as it may be to believe given our traffic-choked streets, Egypt is “under-motorized” compared to most regional peers and emerging markets. We have 45 cars per 1k inhabitants — Iraq is at 77, Algeria 114 and Turkey 140, according to GB Auto’s investor presentation (pdf).

Any forecasts, of course, come with a major caveat: Nobody knows how the covid-19 pandemic will play out in Egypt. Although the auto sector will celebrate the recent easing of lockdown restrictions — including the reopening of traffic offices and longer work hours thanks to relaxation of the curfew to 8pm-5am — it remains possible that the sector will face further disruptions should health conditions continue to worsen.

M&A WATCH- Speed Medical (SPMD) is set to acquire 100% of City Labs in the coming months once SPMD completes a EGP 220 mn capital increase and completes due diligence on City Lab, according to Hapi Journal. The two had already set up a joint venture, CitySpeed, in 2018. The JV is responsible for operations and management of 23 medical labs in Port Said, Port Fouad, Suez, Ismailia, Damietta, Mansoura and Mahalla.

SPMD’s capital increase also paves the way for the company to become EGX-listed: The company has had its eye on two capital increases since late last year to help it move from the small-cap NileX to the EGX. The planned EGP 220 mn capital increase will qualify the company for listing on the main market, according to Hapi Journal. SPMD is using the capital increase to purchase an 800 sqm plot of land adjacent to its Al-Obour medical facility on the Ismailia Desert Road, while the remainder will be directed towards expanding the facility and its network of analysis labs. The Egyptian healthcare company announced last year plans to invest EGP 160 mn in 30 labs and outpatient clinics over the course of 2020.

M&A WATCH- TPay Mobile acquires Payguru: TPay Mobile, a leading digital merchant acquirer that enables payments from more than 54 mobile payment types and wallets, has acquired Turkey’s Payguru, one of the MENA region’s leading payment service providers, according to a statement (pdf). The acquisition is pending regulatory approvals; the statement did not provide a value for the transaction, the latest in a string that has seen TPay grow by acquisition.

We recently sat down with TPay’s founder and CEO Sahar Salama for a chat on our podcast. You can listen to the episode here.

CABINET WATCH- EgyptAir gets a breather on arrears to EGPC: The Madbouly Cabinet agreed yesterday to waive 50% of the late fees on monthly jet fuel payments that national flag carrier EgyptAir owes the Egyptian General Petroleum Company (EGPC), according to a Cabinet statement. The decision also includes a debt restructuring agreement that will see EgyptAir pay off its arrears to the EGPC over eight years, with the repayment period beginning in one year.

Also approved during yesterday’s meeting:

  • Amendments to the Intellectual Property Rights Act that would reduce patent licensing fees for applicants below the age of 21 to EGP 100, from the regular rate of EGP 1k, and waiving the fee altogether for applicants with special needs or disabilities;
  • Amendments to the executive regulations of the Universities Act allowing universities and higher education institutes to use e-learning platforms and distance learning;
  • Twelve oil and gas exploration and production agreements the Oil Ministry signed with international companies.

Egypt says GERD talks “can’t be described as positive” as Addis Ababa continues to drag its feet: Tripartite negotiations yesterday between Egypt, Sudan and Ethiopia struggled to make headway over the Grand Ethiopian Renaissance Dam (GERD), as Ethiopia appeared to push to restart the negotiations from scratch, including on matters that were already agreed upon, Egypt’s Irrigation Ministry said yesterday. Addis Ababa’s request, which essentially undoes all the progress the three countries have made in previous rounds of negotiations, calls into question its commitment to reaching a constructive resolution on the dam, the ministry statement says.

Ethiopia is also still insisting on beginning to fill the dam’s reservoir next month, regardless of whether or not it reaches an agreement with its downstream neighbors by that time, according to the statement. The tripartite talks, in which officials from the US, European Union, and South Africa are acting as observers, will resume today and wrap on Monday. The National also had the story.

MOVES- Khaled Hamdy has been appointed as financial sector CEO for MM Group for Industry and International Trade, according to a statement (pdf).

EARNINGS WATCH- State-owned Telecom Egypt (TE) reported a 19% y-o-y decline in 1Q2020 net profits to EGP 1.3 bn on the back of declining investment income, according to its earnings release (pdf). TE’s consolidated revenues rose 15% y-o-y to EGP 7 bn as a result of higher retail data revenues.

Misr Cement reported 1Q2020 profits of EGP 46.6 mn, a near fourfold rise from the EGP 12 mn booked in the same period last year, according to an EGX filing. Misr Cement recorded 2.6% topline growth during the period, reporting revenues of EGP 816 mn, the company said in a statement (pdf). Management said enhanced profitability came as it cut its total debt by c. 20%.

Abu Qir Fertilizers saw profits fall by 26.3% in 3Q2019-2020, according to a regulatory filing (pdf). Profits came in at EGP 695 mn, down from EGP 944 mn in the equivalent period last year, while revenues fell by 23% to EGP 1.8 bn.

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The Macro Picture

Where does the global economy go from here? The OECD is out with two scenarios, and neither is particularly good. The global economy is on course to contract by 6% this year but if a second wave hits before the end of the year activity will tank even further, falling by 7.6%, the OECD said in its latest Economic Outlook. Unemployment in OECD countries is currently on track to rise to 9.2% before the end of the year, but in the second scenario the jobless count will double to 10%. The numbers are far worse than those put out in April by the IMF, which forecast global growth to contract by 3% this year.

No good options: Whatever trajectory the virus takes from here, it’s going to take a long time for the global economy to properly find its feet and living standards to return to pre-pandemic levels. While the OECD expects a rapid bounce-back in growth in early 2021, it doesn’t believe this will be sustained, with economic activity in OECD countries slipping back through the rest of the year. “Most people see a V-shaped recovery, but we think it’s going to stop halfway” the Financial Times quoted OECD chief economist, Laurence Boone, as saying. “By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”

Egypt in the News

Egypt’s efforts to reopen its tourist sector is getting ink this morning: AFP covers the health and safety measures put into place in hotels, and the reopening of archaeological sites and beaches.

Regeni investigation weighs on Italian warship sale: Italy is still “weighing” its EUR 1.2 bn sale of two warships to Egypt as the government faces criticism over minimal progress in the investigation into Italian PhD student Giulio Regeni’s murder in 2016, according to Reuters. The Telegraph also has the story.

Diplomacy + Foreign Trade

Shocking exactly nobody, Turkey has dismissed Egypt’s proposal for a ceasefire in Libya. Turkish Foreign Minister Mevlut Cavusoglu said the call for a ceasefire “does not seem sincere and credible,” describing the agreement as “stillborn” because it has not been accepted by both sides, according to Hurriyet.

The Donald had nicer things to say, praising Egypt’s efforts to reach a ceasefire agreement on a call with President Abdel Fattah El Sisi yesterday, Ittihadiya said.

Meanwhile:

  • Two-way WTO race? The World Trade Organization (WTO) has acknowledged former Nigerian finance minister Ngozi Okonjo Iweala’s candidacy to become the new director-general of the international trade body. Egypt has nominated Abdel Hamid Mamdouh, an Egyptian-Swiss lawyer, former trade negotiator for Egypt and an ex-WTO official, for the post.
  • Egypt has inked a USD 249 mn loan for Sinai Development from the Arab Fund for Economic and Social Development. Funding will be used to build the USD 1 bn Bahr El Baqar water treatment system
  • The House of Representatives has approved a USD 2.9 mn grant from South Korea to create an intellectual property database.

Basic Materials + Commodities

State grain buyer GASC has purchased 120k tonnes of Russian wheat

State grain buyer GASC purchased yesterday 120k tonnes of Russian wheat, according to Reuters. The shipment will bring Egypt’s total wheat imports during the local harvest season to 600k tonnes, inching the country closer towards its 800k tonne target.

Manufacturing

Smart Paper Co invests EGP 1 bn in food processing complex in Beheira

Smart Paper Co is investing over EGP 1 bn in a food processing complex in Beheira, which will mark the paper manufacturing company’s foray into the food industry, Chairman Mohamed Ashour tells Al Mal. The complex will include seven factories to produce pasta, egg cartons, juice, and vegetable oil, among other goods. The first phase is slated for completion this year, and the second phase will be complete by the end of 2024.

My Morning Routine

Ismail Selim, director of the Cairo Regional Centre for International Commercial Arbitration (CRCICA): My Morning / WFH Routine looks each week at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Ismail Selim, director of the CRCICA, an independent organization responsible for domestic and international commercial arbitration, and the oldest arbitration center in Africa and the Middle East.

My name is Ismail Selim and I’m the director of the Cairo Regional Centre for International Commercial Arbitration (CRCICA). I’ve been fortunate to travel widely and be connected to different cultures all my life. My father was a diplomat, so as a child I lived in Egypt, Geneva, the Ivory Coast, and China, and then I did my PhD in France. The CRCICA is based in Cairo, but I work with people all over the world — notably within the region and in sub-Saharan Africa.

My role comprises legal work and admin work at the same time. International commercial arbitration is a process of dispute resolution, and the CRCICA is like a private court chosen by the parties to settle commercial issues. Our community of arbitrators are like the judges and I’m like the justice minister. I don’t decide upon cases, but I have to take all the decisions to make sure they are administered properly. So I decide whether to register a case, and I oversee all the services related to it: admin, appointment of the arbitrators, financial services, the relationship with the lawyers defending the parties, coordinating with tribunals in the state courts that enforce the awards rendered. I also work with arbitration centers around the world to promote best practice, which usually requires frequent travel. And we organize training courses and conferences at the CRCICA. These are just a few of the hats I wear.

Thanks to technology, we’ve been able to organize virtual or semi-virtual hearings during the lockdown. So for example the tribunal might be sitting in our hearing rooms, but the parties might speak from their offices through Zoom or Microsoft Teams. And we might have lawyers sitting in different rooms in the center, because we can’t have more than a certain number of people in the room to ensure social distancing.

Working from home has reduced my commuting time, but I get more daytime interruptions from my children. I still wake up early, around 6:30am, and start work before working hours. Most of the day I’m on my computer or on Microsoft Teams. I only go out two days a week to the CRCICA, where I meet with people. There I’ve enforced mask wearing, and everyone uses sanitizer. WFH has given me the chance to spend more time with my wife and three children, which is something I always missed because of my heavy travel schedule.

Last year, I fainted in Siwa and it was a turning point for my health. A doctor said I needed to change my lifestyle, so since January I’ve been dieting and exercising every day. I now start the day with a cup of hot water and lemon, followed by a breakfast of salad with chia seeds and apple vinegar. Generally I’ve substituted tea for ginger tea, but occasionally I might have a cappuccino if I need a pick-me-up. I eat much earlier in the day than before, and I’ve cut out carbohydrates and soft drinks. And in the evening after work, I ride my bike in our compound or work out in the gym with my daughter.

Staying up to date on the Egyptian economy is vital for my work. I’m used to reading Al Mal every day. Enterprise is a recent discovery for me, and reading about the Egyptian economy and the companies operating here with added international context interests me greatly.

The covid-19 crisis has actually allowed us to highlight the value of arbitration. During the period where state courts were closed, we held our virtual hearings and everything ran very efficiently. We’ve been able to show that the CRCICA is a very cost-effective alternative to arbitration centers in the big European capitals — which is relevant to small and medium-sized businesses in particular. Unfortunately, disputes will arise out of covid-19 because there are businesses that simply won’t be able to fulfil their contracts. We will keep supporting dispute resolution through arbitration and through our mediation services.

What do I really miss during lockdown? Going to the movies. The movies I’ve most enjoyed watching recently were Al Mamar and the remake of The Lion King. Both were extremely well produced.

I also can’t wait to travel to Europe again. I used to go abroad at least once a month, so this is definitely something I miss.

The Market Yesterday

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EGP / USD CBE market average: Buy 16.13 | Sell 16.23
EGP / USD at CIB: Buy 16.13 | Sell 16.23
EGP / USD at NBE: Buy 16.12 | Sell 16.22

EGX30 (Wednesday): 10,934 (-1.2%)
Turnover: EGP 911 mn (21% above the 90-day average)
EGX 30 year-to-date: -21.7%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session down 1.2%. CIB, the index’s heaviest constituent, ended down 1.8%. EGX30’s top performing constituents were Egyptian Resorts up 3.8%, Cleopatra Hospital up 3.5%, and Telecom Egypt up 3.1%. Yesterday’s worst performing stocks were Eastern Company down 3.1%, Ezz Steel down 2.6% and Dice down 2.4%. The market turnover was EGP 911 mn, and domestic investors were the sole net buyers.

Foreigners: Net Short | EGP -127.9 mn
Regional: Net Short | EGP -14.3 mn
Domestic: Net Long | EGP +142.1 mn

Retail: 60.8% of total trades | 59.2% of buyers | 62.3% of sellers
Institutions: 39.2% of total trades | 40.8% of buyers | 37.7% of sellers

WTI: USD 39.14 (+0.51%)
Brent: USD 41.26 (+0.19%)

Natural Gas (Nymex, futures prices) USD 1.79 MMBtu, (+1.36%, July 2020 contract)
Gold: USD 1,747.90 / troy ounce (+1.51%)

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Calendar

13 June (Saturday): Earliest date on which suspension of international flights to / from Egypt expires.

13 June (Saturday): Earliest date by which restaurants, gyms, nightclubs, museums and archaeological sites will reopen.

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

30 June (Tuesday): Anniversary of the June 2013 protests, national holiday.

12 July (Sunday): North Cairo Court will hold a court session for the international arbitration case filed by Syrian Antrados against Porto Group for USD 176 mn after being pushed back from an initial 17 May court date.

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.