Thursday, 17 September 2020

The EGP is going to stay strong and rate cuts won’t spook carry trade –Goldman

TL;DR

What We’re Tracking Today

It’s Thursday, friends, and while we’re looking forward to the weekend, we’re also a bit daunted by the mountain of work we need to finish before we slide into Friday. It’s a special weekend for us: We celebrate six years of Enterprise next week and are busily banging away in the kitchen on “what’s next” for your morning read. More on that front next week.

Also next week: EFG Hermes is kicking off its second virtual investor conference on Monday, 21 September. The eight-day conference will wrap next Thursday, 1 October. You can visit the conference website here.

Our prayers for faster internet (and the ability to have a voice call without resorting to VoIP because the line keeps breaking up) may be answered today: The country’s four mobile network operators (MNOs) will submit bids today for 60 MHz of new cellular frequency being offered by the National Telecom Regulatory Authority (NTRA), Youm7 reports. Vodafone, Orange, Etisalat and We can bid for more than one allocation at once. The NTRA hasn’t confirmed which frequencies will be up for auction or how much they will cost, but sources said earlier this week that it will sell a 40-MHz package for USD 600 mn and two 20-MHz packages at a cost of USD 300 mn each. The hope: That more spectrum for the MNOs will allow them to deliver faster data speeds and better voice calls.

You can update your iPhone and iPad to iOS / iPadOS 14 today. We’ve been running iPadOS 14 betas for more than a month now and love it — and we’re really looking forward to having new features on our phones including widgets and better app organization options. Check out Joanna Stern’s Your iPhone will look completely different now, if you want in the WSJ or head over to MacStories for a rundown on what’s new in the OSes powering your Apple phone, tablet, watch and TV. Missing: macOS Big Sur, which isn’t out of beta yet.

How do I get it? Go to the settings icon on your iPhone or iPad and then head to General > Software Update. Make sure your device is hooked up to wifi, then tap Download & Install.

CIRCLE YOUR CALENDAR- If you, like the resident 13-year-old, are looking forward to the launch of Sony’s PlayStation 5, you may want to set a reminder to check where in the world you can pick up a console on 12 November, when the device will be available from “select retailers.” Pre-orders have begun, and the process is apparently a bit messy. The Verge has a rundown of the biggest announcements and trailers from Sony’s event yesterday.

WEEKEND MUST READ- If you, like us, are in a pensive kind of fall mood, we recommend How to deal with longing for a distant home in the New York Times, which asks, “Where is home, really?” Covid-19 has made family, friends and favourite activities seem an ocean away, even when they’re just across town. So what is homesickness? Can you be homesick for your “former” life? Is it friends (with whom you may never have been as close as you thought)? A place? A moment in time? We love the Welsh definition of “‘hiraeth’… yearning, for a home that you cannot return to, no longer exists, or maybe never was.”


MARKETS WATCH- Asian markets are down in early trading this morning and futures suggest at dispatch time that Wall Street and European markets will follow suit later today.


The Health Ministry reported 160 new covid-19 infections yesterday, down from 163 the day before. Egypt has now disclosed a total of 101,500 confirmed cases of covid-19. The ministry also reported 17 new deaths, bringing the country’s total death toll to 5,696. We now have a total of 86,549 confirmed cases that have fully recovered.

You can now enter Egypt with a PCR test taken 96 hours before arrival if you’re arriving from Australia, New Zealand, Japan, China, Thailand, North and South America as well as from London Heathrow, Paris, and Frankfurt airports, the Civil Aviation Ministry said yesterday. The change from 72 hours came as many travelers complained that wait times for test results made it challenging — or even impossible — for them to board flights.

International tourism dropped by around 65% y-o-y in 1H2020, according to figures from the UN’s World Tourism Organization. There were around 440 mn fewer international arrivals during the six-month period compared to last year, causing losses of USD 460 bn. Asia and the Pacific was the hardest hit with a 72% drop in tourism for the period, while Africa and the Middle East suffered a 57% decline.

A six-month export ban on medical supplies has ended and will not be extended past the mid-September cut-off now that there is a surplus in local production, according to a Trade & Industry Ministry statement. The local market appears to be flooded with these supplies — masks in particular — as supply has outpaced demand, leading to a slump in utilization rates and production. The ministry imposed the ban in March amid reported shortages in the local market.

VACCINE WATCH- That illness that briefly derailed testing of AstraZeneca’s covid vaccine? It may not have been due to the shot, Reuters reports.

Theranos-like questions are being asked of iAbra, a small UK-based company that claims to have developed a 20-second coronavirus test. The Financial Times has an excellent dive into the test and TT Electronics, which saw its share price soar 40% on the back of test announcements despite the device not having a virologist on board — or regulatory approval.


No Fed rate hikes for another three years: The Federal Reserve has indicated that interest rates will remain at zero until at least the end of 2023, suggesting that it would not look to tighten policy until inflation had remained above 2% “for some time,” Chairman Jerome Powell announced following the two-day Fed meeting. The story is leading the business press this morning: FT | Bloomberg | WSJ | AP.

Snowflake sets record for largest-ever software IPO: Cloud data platform Snowflake’s shares rocketed more than 111% on its trading debut yesterday, setting a new record as the largest-ever software IPO, CNBC reports. Having priced its shares at USD 120 ahead of trading, the company closed the session at USD 253.93, raising its valuation to USD 70.4 bn — more than 5x it’s USD 12.4 bn valuation in February. Snowflake is just one of many companies rushing to go public this year, looking to capitalize on the post-stimulus investor frenzy for tech stocks. Data software firm Sumo Logic — which yesterday priced at USD 22 / share — will make its trading debut today, while video game software company Unity — which raised its price range yesterday to USD 44-48/share from USD 34-42 — goes public on Friday.

enterprise

BY THE NUMBERS:

  • Retail spending in the US was up 0.6% in August (pdf), its fourth consecutive monthly rise, but at a slower pace.
  • China’s retail sales inched up 0.5% last month for the first time since the beginning of the year, signaling that consumer spending is finally catching up with other parts of the economy.
  • Asia’s developing economies will fall into contraction territory for the first time in six decades this year, shrinking 0.7% in 2020 before rebounding in 2021 to grow at a 6.8% clip, which would keep them below pre-covid forecasts, according to an Asian Development Bank report.

The US is requiring Qatari mouthpiece Al Jazeera’s digital news network AJ+ to “register as a foreign agent,” after the Department of Justice said it “engages in political activity,” according to the New York Times. According to the DoJ, Doha’s government finances AJ+ and chooses its board members. Egypt, Saudi Arabia, Bahrain, and the UAE have been demanding since mid-2017 that Qatar shut down Al Jazeera as a condition of ending the quartet’s boycott of Doha.

Also worth knowing this morning:

  • UAE-Israel rapprochement: The UAE’s DP World and Israel’s DoverTower have signed partnership agreements that could set up a shipping trade link between the two countries and cooperate in developing Israeli ports, Emirates News Agency (WAM) reports.
  • Japan has a new PM: Yoshihide Suga has been confirmed as Japan’s new prime minister and has appointed a “continuity cabinet” that retains nearly half his predecessor’s ministers, Reuters reports.
  • Boeing accused of negligence: A US House panel has accused Boeing of a series of errors and the Federal Aviation Administration of negligence which resulted in two Boeing 737 Max crashes, Reuters reports.

Enterprise+: Last Night’s Talk Shows

Last night’s talk shows took a look ahead to what’s in store for the October parliamentary elections, covered the inauguration of the new Egypt-Japan University, and continued to provide updates on the settlement of building code violations nationwide

How many people will come out to vote in the upcoming parliamentary elections? Al Hayah Al Youm’s Mostafa Sherdy interviewed head of the Republican People's Party, Hazem Omar, who forecast an historic turnout from voters in the upcoming House of Representatives elections, especially with the large numbers of candidates standing — at least 20 candidates in every constituency, and a total of 7k candidates across the country. He said that turnout could range from 36-46% — which doesn’t sound particularly historic, but would handily top the 14% who turned out for last month’s Senate elections (watch, runtime: 33:42).

Madbouly had more to say on illegal construction: Masaa DMC's Ramy Radwan highlighted Prime Minister Moustafa Madbouly's speech during the inauguration of the Egypt-Japan University of Science and Technology in Borg El Arab, Alexandria. Madbouly reiterated that Egypt has lost 400k feddans of agricultural land due to illegal construction and said that he has to expropriate more agricultural land every week just to provide educational, health and water services for people living in informal settlements. Some 62k feddans of agricultural land have had to be used to provide such services, he said (watch, runtime: 8:16).

Building violation settlements in Daqahliyah: Ala Mas'ouleety's Ahmed Moussa phoned Daqahliyah Governor Ayman Mukhtar, who said that the governorate is now offering 45% discounts on fines for settling building violations. Some 73% of the governorate’s violations have now been settled, yielding some EGP 630 mn, he said (watch, runtime: 4:33).

No garbage on streets by 2024: Masaa DMC's Ramy Radwan phoned Environment Minister Yasmine Fouad, who discussed the government’s efforts to improve waste management. Under the new legislation, informal workers would be offered licenses to work in the waste sector, Fouad said, explaining that garbage collectors earn EGP 2-40 from solid waste collection fees, which are added to electricity bills paid by households and governments. Fouad pointed out that there are several Egyptian and foreign companies interested in investing in waste management, without elaborating. The government has allocated EGP 10 bn to waste management and is aiming to rid our streets of garbage by 2024, she said (watch, runtime: 14:49).

High schools are now book-free: Ala Mas'ouleety's Ahmed Moussa phoned Education Minister Tarek Shawki, who said that high school students will no longer have to use books. Every student now will be equipped with a tablet, and schools will be fitted with Internet and Wi-Fi networks (watch, runtime: 2:34). Shawki noted that the ministry has collaborated with book publishers to develop the new curriculum and added that he plans to talk with the finance minister about additional incentives for the teachers (watch, runtime: 2:00), (watch, runtime: 4:36).

Promising growth in tech: Yahduth Fi Misr’s Sherif Amer phoned Communications Minister Amr Talaat, who said that the number of jobs in the Egyptian tech sector is increasing 20% every year. There are now some 6 mn people working in the sector, he said, which is now valued at around USD 36 bn (watch, runtime: 3:45), (watch, runtime: 3:40).

** Where is Lamees? Are we the only ones who miss the Queen of Night Time Talk?

Speed Round

EGP to stay strong, interest rate cuts won’t dent carry trade enthusiasm for Egypt -Goldman: Bulge Bracket stalwart Goldman Sachs sounds optimistic about Egypt, writing in a recent report picked up by the local press that improved hard currency inflows will see a stable EGP — and predicting that an interest rate cut (necessary to spur activity in the real economy) won’t spook the carry trade.

Inflows: Egypt saw close to USD 20 bn flee the country in the early months of the covid-19 pandemic (March to June) amid a general risk-off that swept emerging markets, but has seen almost half of that sum (about USD 10 bn) return in recent months. The report suggests that recoveries are imminent for both tourism receipts and remittances of Egyptians working abroad, both major sources of hard currency.

That sees GS expecting the EGP to remain strong and continue to tick upward against the greenback without posing any significant threat to the competitiveness of Egyptian exports. Meanwhile, the investment bank sees inflation stabilizing around the 4.5% mark in the coming two months, before rising to 7-7.5%, well within the CBE’s target range of 6% (+/- 3%).

Rate cuts unlikely to dent investor appetite: Goldman expects the CBE to continue cutting interest rates in the medium term, but thinks it will likely hold off in the coming months to protect inflows. Any further cuts would not adversely affect foreign currency inflows due to Egypt’s strong economic growth, it said. The CBE will likely cut by another 200 bps over the medium term, bringing real interest rates to 2.5% from 6.5% currently (assuming inflation ticks up another 2%). The CBE left interest rates unchanged for the fourth consecutive meeting after slashing them by an unprecedented 300 bps during its meeting on 16 March 2020.

Covid is slowing the pace of foreign direct investment in Egypt, two announcements yesterday suggest. Kuwait’s Arzan Financial Group has postponed its Egypt expansion plans — including setting up an investment bank — until 2022, citing covid, Al Mal report. Mohamed Asran, the CEO of Arzan’s Egypt-based brokerage firm, says the firm was planning to begin financial advisory, asset management, and private equity practices as early as this year — but “[liquidity] in financial institutions, including those that are Arab, came under pressure during the pandemic,” Asran said. Businesses in the GCC “are facing a liquidity crunch,” Pharos Holding said in a recent research note commenting on the potential acquisition of Vodafone Egypt by Saudi Telecom Company, another transaction that has been impacted by the pandemic.

Ikea has pushed the planned inauguration of its full-scale store in Sixth of October City to March 2021, the Swedish furniture retailer said in a statement (pdf) yesterday. The permanent branch was due to open its doors this year, but seems to have been delayed due to the pandemic, which Ikea Egypt manager Thomas Sirguey said had made 2020 a “difficult” year. Ikea inaugurated a smaller branch in Mall of Arabia late last year to serve customers until its permanent, 20k-sqm branch opens its doors under a long-term lease agreement signed with Al Futtaim Misr for Retail in 2018. In 2019, the company signed a EGP 395 mn loan with Emirates NBD Egypt to finance the plan.

Eni, BP announce new gas discovery in EastMed: Eni and BP have made a new gas discovery in the offshore “Great Nooros Area” surrounding Eni’s Nooros field in the Nile Delta, the Italian oil giant announced in a statement. Eni, which operates the Abu Madi West Development Lease, and contractor BP found “gas-bearing sands … with good petrophysical properties” through the Nidoco NW-1 exploratory well, the statement says. Preliminary evaluation of the discovery, alongside recent finds in the area, raises gas estimates in the Great Nooros Area to over 4 tcf (c.110 bcm). By way of comparison, Zohr, Egypt’s largest gas field, holds nearly 30 tcf (or 850 bcm) of reserves.

This is the second discovery made by the two companies in recent months: Eni and BP, together with Total, announced in July the discovery of a gas field in the North El Hammad concession in the EastMed after completing tests at the Bashrush well. The tests yielded flow rates of up to 32 mn scf/d, which is expected to increase to 100 mn scf/d per well in the future. There is yet to be an official reserve estimate, but an official at the state-owned gas company EGAS claimed that reserves could be as much as 250 bn cubic feet.

STARTUP WATCH- Sawari Ventures has made a follow-on investment in high-profile AI startup Elves, bringing Elves’ total pre-series A funding to nearly USD 5 mn, according to a statement (pdf). The initial funding round, which has been ongoing for two years, closed in February, “with additional follow-on in July reflecting confidence in Elves pre- and post-covid,” the statement says.

How Elves boomed during covid-19: The concierge and personal assistant app has grown its user base by a whopping 500% in the last six months, according to the statement. The bulk of the company’s revenue stream was from industries that were paralyzed by the pandemic, such as booking flight tickets, making hotel reservations, and buying tickets for concerts and the cinema. “We shifted rapidly to a focus on what people would need most while they were confined to their homes,” Elves founder and CEO Karim El Sahy said.

Elves has also brought on optimization whiz Mohamed El Beltagy (LinkedIn) as its new CTO in April as the company scales up its machine learning development, the statement notes. El Beltagy has served as CTO of Swedish AI-powered coaching app Racefox and is also the CEO of machine learning and optimization company Optomatica.

Want to know more about Elves? We sat down with El Sahy and his partner (and wife), Abeer El Sisi, who together founded Elves for the very first episode of our podcast, Making It. Listen to the episode on our website here or try Apple Podcast or Google Podcast.

The National Election Authority (NEA) announced the winners of the remaining 26 seats in the newly-constituted upper chamber, after last month’s election of 174 members in the first round of voting, authority head Lashin Ibrahim said in a press conference at the NEA’s headquarters on Wednesday to announce the winners (watch, runtime: 5:39). President Abdel Fattah El Sisi will now appoint the remaining 100 members of the 300-seat Senate.

Pro-government representation: The Mostaqbal Watan party led a 100-member pro-government National Unified List coalition that ran unopposed in the first round of voting and secured the 100 seats reserved for party lists, after meeting the required 5% of votes to be declared the winner. The party fielded 59 candidates as part of the coalition. Mostaqbal Watan members also won 68 of the 74 individual seats where election results are clear. A total of 797 candidates had competed for the 100 individual seats.

Election participation: Some 2.8 mn citizens cast their ballots in the run-offs out of some 28.8 mn registered voters eligible to cast ballots in this round, to record a participation rate of 10.2%. The first round of voting saw around 8 mn — or 14.23% — of some 62 mn registered voters cast their ballots in the elections at home and abroad.

Background: The Senate was reconstituted last June under the 2019 Constitution. Operating in an advisory capacity, it will weigh in on proposed amendments to the constitution and all laws that are supplementary to the constitution, as well as all pacts or agreements related to sovereign rights. The upper house of parliament will also be consulted on the government’s plans for economic and social development. Parliament’s bill set a 10% membership quota for women in the chamber, whose members will be reappointed or elected once every five years.

M&A WATCH- IMEX acquisition of Nile Cotton on track to wrap up next week? An ongoing mandatory tender offer from energy trading company IMEX International to acquire at least 51% of Nile Cotton Ginning for EGP 50 / share is set to close successfully next week. With a 63% subscription rate, the offer has already exceeded the minimum threshold required for the acquisition to go through, Tarek Shawky, one of shareholders who accepted the bid, told Enterprise. The MTO officially wraps up next Thursday, 24 September, giving another six business days for individual shareholders to accept or reject the offer. Shawky holds less than 1% of the company and is one of its nearly 5,200 minority shareholders. Samir Afifi and Gamal El Garhy — two major shareholders who collectively own over 20% of the company — have also decided to accept the IMEX offer, Al Mal reported yesterday.

IMEX’s offer price of EGP 50 per share values the entire company at EGP 2.6 bn by our math. The company’s land bank was estimated to have an average value of EGP 2.84 bn, according to a recent report (pdf).Nile Cotton is at the center of a longstanding dispute after a 2011 court ruling sought to reverse its Mubarak-era privatization, claiming the company had been undervalued.

enterprise

Gov’t wants to partner with private sector on transport, agriculture projects: A private sector investor will be handed the reins to manage and operate the Holding Company for Maritime & Land Transport’s three passenger transport subsidiaries after they are merged into a single entity, Public Enterprises Minister Hisham Tawfik said at a meeting with the Egyptian Federation of Investors Associations, a cabinet statement said yesterday. Also on offer, the statement says:

  • A 40k feddan plot zoned for agricultural and livestock projects is for sale;
  • A piece of the EGP 1.7 bn restoration of the Continental Hotel in Cairo and the Savoy in Luxor;
  • Participation in dying and small clothing projects as part of the state’s EGP 21 bn plan to overhaul state-owned cotton ginning companies.

KUDOS- Who’s Who Legal has recognized our friend Girgis Abdel Shahid — managing partner of Shahid Law Firm — in its 2021 list of Arbitration Future Leaders, which “showcases partners and non-partners aged 45 or under who are considered to be the future leaders of the international arbitration community.” Abdel Shahid is the only Egyptian lawyer on the list.

EARNINGS WATCH- Arafa Holding reported USD 10.7 mn in losses during 1H2020 down from net profits of USD 7.8 mn in 1H2019, according to an earnings release (pdf). Net sales plunged more than 45% to USD 57.6 mn from USD 104.3 mn last year.

*** WE’RE HIRING: We’re looking for smart and talented people to join our team at Enterprise, which produces the newsletter you’re reading right now and Making It, our very first podcast. We offer the chance to work in a unique and casual work environment that promises to be intellectually challenging and rewarding. Enterprise is currently in the market for:

  • A seasoned reporter to join our team and create stories and packages that fascinate and inform our readers.
  • A full-time copy editor to enforce house style, police facts and generally make us sound smarter than we really are.

Interested in applying? To apply for the editor / reporter positions, please submit your CV along with 2-3 writing samples and a solid cover letter telling us a bit about who you are and why you’re a good fit for our team. The CV is nice, but we’re much more interested in your clips and cover letter. Please submit all applications to jobs@enterprisemea.com.

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

Egypt in the News

It’s a mixed bag in the foreign press this morning: The Times reports that authorities arrested Egyptian author and government critic Amin El Mahdy in his home last week on charges of “historic financial offences,” while Reuters says that a 4k-year-old ancient Egyptian inscription serves as a reminder of the devastating consequences of drought. Elsewhere, the National covers the recent clampdown on construction on agricultural land, and AFP reports that camel-racing is making a return following the covid-19 pandemic.

Diplomacy + Foreign Trade

Topping diplomatic coverage this morning: Libya’s head of the Government of National Accord (GNA), Prime Minister Fayez El Serraj, announced his intention on Wednesday to quit his position by the end of October, Reuters reports. Bloomberg reported earlier this week that the head of the Tripoli-based government could announce his resignation this week, staying on in a caretaker capacity through negotiations with eastern commander Khalifa Haftar in Geneva.

This came as Russian Foreign minister Sergei Lavrov announced that Russia and Turkey are working on imposing an immediate ceasefire in Libya, New Europe reports. Haftar is ready to sign on to a ceasefire agreement, and hopes that Turkey can persuade Serraj’s government can do the same, Lavrov said.

Energy

TAQA to inaugurate new natgas fueling stations this year

TAQA Arabia is planning to open several natural gas fueling stations before the end of the year at a combined cost of EGP 145 mn, TAQA CEO Pakinam Kafafi said, according to Al Mal. The new stations will bring the total number operated by the Qalaa Holdings subsidiary to 21, and come as part of a recently-announced EGP 650 mn plan to have 50 stations set up over three years. This plan comes amid renewed efforts by the government to transition to natgas-powered cars by encouraging car owners to install dual-fuel engines. Take a deep dive into the plan with our three-part series in Hardhat: Part 1, part 2, and part 3.

Basic Materials + Commodities

Beheira and Sharqia to hold cotton auctions until 15 December 2020

A new cotton trading system was rolled out in Beheira and Sharqia on Tuesday, with public auctions due to be held across the two governorates until mid-December, the Public Enterprises Ministry in a statement. Sales will be restricted to government-designated collection centers where farmers go to directly auction their crops. The auctions began taking place last week in two other governorates, Fayoum and Beni Suef — the first time the private sector has participated in a state-run auction in the modern era.

Manufacturing

Greek company to invest USD 100 mn in new industrial zone

An unnamed Greek company is investing USD 100 mn to set up an industrial zone in El Wadi El Gedid governorate to manufacture juices and preserves, and cultivate 10k feddans, the Madbouly cabinet announced in a statement.

Health + Education

El Sisi inaugurates new phase of Egypt-Japan University

President Abdel Fattah El Sisi inaugurated yesterday a new phase of the Egypt-Japan University for Sciences and Technology in Borg El Arab, Alexandria, Youm7 reports. The inauguration comes as part of an EGP 5 bn expansion slated for completion in 2021. The university partners with 15 Japanese universities, and currently operates two schools, Engineering and Business and Humanities, as well as a graduate Research Institute for Basic and Applied Sciences.

Banking + Finance

Fitch affirms NBE credit rating at B+ with a stable outlook

Fitch Ratings has affirmed the long-term issuer default Rating for the National Bank of Egypt at 'B+' with a stable outlook, it said on Wednesday. The ratings agency also removed it from its rating watch negative list, reflecting its view of diminishing near-term risks to its credit profile, especially its foreign currency funding and liquidity, from the economic fallout from the covid-19 pandemic.

E-Markets Egypt seeks to expand with e-commerce platform

E-Finance subsidiary E-Markets Egypt will expand its services by launching an e-commerce platform alongside its website, Al Mal reports, citing unnamed sources familiar with the matter, who did not provide additional details on the value or timeframe for launching the platform. The company, which runs the Mobadra website created for the government’s consumer spending initiative, will initially offer e-payment services for manufacturers, merchants, SMEs and end users through the new platform, with an eye toward e-lending and other fintech services down the line. Sources said the decision was made to support the government’s program, which aims to stimulate around EGP 125-bn of consumer spending through offering discounts.

Who’s in the market for debt: Rooya + Egypt Kuwait Holding’s Nile Wood

The National Bank of Egypt (NBE) and Egypt Kuwait Holding’s (EKH) Nile Wood have signed a EGP 794 mn loan agreement to finance the construction of a planned EGP 1.37 bn factory in Sadat City to produce medium-density fibreboard, NBE Vice President Yehia Aboul Fotouh said, according to Al Masry Al Youm.

Meanwhile, real estate developer Rooya is looking to secure EGP 350 mn in additional financing from AAIB and the NBE for real estate development projects, Al Mal reports.

My Morning Routine

Yehia Ashour, CEO and co-founder of Beltone SME: 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 Yehia Ashour (LinkedIn), CEO and co-founder of Beltone SME.

My name is Yehia Ashour, CEO and co-founder of Beltone SME: Launched in April of this year, Beltone SME is introducing a revenue based financing scheme for SMEs in Egypt. Some institutions provide loans, others ask for equity in exchange for financing. What we do is somewhere in between. We finance SME growth in exchange for a percentage of revenue for a specific period of time, all while offering variable payment. We benefit from the upside potential for growth while also sharing the risk with up and coming businesses. As a business, you sort of get the benefit of both worlds.

I was heading the Egypt operations of a South African SME fund management operation called GroFin for the past five years when I decided to make the leap last October, with my partner and former colleague, to get things moving on something of our own. The company financed SMEs from a developmental and impact perspective through quasi-equity instruments which got me thinking that maybe I should try creating a more Egypt-tailored institution.

Revenue-based financing for SMEs is a relatively new idea globally and one that's never been done before in Egypt. We spoke to a bunch of potential investors until we clicked the most with Beltone. So we agreed to partner with them to launch Beltone SME as an impact fund that could strengthen local manufacturers and businesses.

We’re lucky to have gotten this partnership secured mid-pandemic, but it wasn’t all that bad. Working on setting up Beltone SME in the middle of the pandemic gave us the gift of time. We were working to sort out paperwork and hiring without the pressure of needing to immediately deploy assets, which kind of alleviated some stress. Licensing, on the other hand, took way longer than expected.

We’re expecting to deploy our first investment as soon as next month. Once we deploy, we have enough of our own capital secured for a full year’s worth of financing. By next year we’ll start pitching to investors who are looking to get in on the fund, which we so far have 15 transactions in the pipeline for.

I wake up at 6am everyday and take my French bulldog for a walk while I start reading Enterprise. I usually make my way over to a workout with a group of friends from 7:30-8:30/9am where we do a functional training workout routine called On-track. Afterwards I take a shower and head to the office by 9:30/10am, at which point I start by checking emails and following up on pending tasks from the day before. The day really starts off with a series of meetings with finance and legal divisions from Beltone. Building strong relationships with potential investors or people that might be interested in partnering with the fund is also super important these days, so I schedule two to three calls or meetings to pitch our idea and tell them about my background.

On most days it's an early night in for me: Sometimes I’ll run some errands after work or meet up with some friends and family but usually I head home, chill with my wife and get in bed early to start the next day feeling refreshed.

On weekends I’m usually surfing on the North Coast: We’ve been lucky to see some great waves for some five or six weekends this summer in Sahel, which is a bit unusual but something I’m very grateful for. During the winter me and a group of friends head to Alexandria or Agami where you can catch some decent-sized waves, especially during the stormy season. I'm hibernating on most afternoons so I’m prepared for a good swell on the weekend.

I'm trying to read a lot more about impact investment as I'm working to build Beltone SME into a one stop shop for SMEs. Barbarians at the Gate by Bryan Burrough and John Helyar, King of Capital David Carey and John E. Morris and Monkey Business by John Rolfe and Peter Troob have been some helpful reads. We really want to see local companies grow, so I'm trying to strengthen my knowledge as much as possible in the field. Salt and Suits by Phil Jarratt is another one about how surfing became the bn-USD industry that I'm currently enjoying. Otherwise I’ve been watching Flaked on Netflix and some random WWII documentaries whenever I get the chance.

I think my previous experience really emphasized the importance of having a local player like Beltone SME in the Egyptian market and I'm really excited about the challenge up ahead. I naturally find myself worrying, but in this journey I feel like I'm doing my best and I'm working on something that adds value. So long as I'm working towards this vision of where I want to go and where I want Beltone SME to be, I'm staying relatively calm and enjoying the ride.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.70 | Sell 15.80
EGP / USD at CIB: Buy 15.70 | Sell 15.80
EGP / USD at NBE: Buy 15.72 | Sell 15.82

EGX30 (Wednesday): 11,088 (+0.6%)
Turnover: EGP 1.2 bn (7% above the 90-day average)
EGX 30 year-to-date: -20.6%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session up 0.6%. CIB, the index’s heaviest constituent, ended up 0.6%. EGX30’s top performing constituents were GB Auto up 2.7%, Cleopatra Hospital up 2.7%, and Palm Hills up 2.7%. Yesterday’s worst performing stocks were Telecom Egypt down 0.8%, EFG Hermes down 0.7% and Orascom Construction down 0.5%. The market turnover was EGP 1.2 bn, and local investors were the sole net sellers.

Foreigners: Net long | EGP +17.5 mn
Regional: Net long | EGP +27.1 mn
Domestic: Net short | EGP -44.6 mn

Retail: 76.5% of total trades | 78.7% of buyers | 74.3% of sellers
Institutions: 23.5% of total trades | 21.3% of buyers | 25.7% of sellers

WTI: USD 40.16 (+4.91%)
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Calendar

September: The Egyptian Federation for Securities will hold elections for its board of directors after they were postponed in March due to the lockdown.

September: The General Authority for Investment (GAFI) will host a virtual meeting with the Arab-German Chamber of Commerce and Industry and some 120 German companies to discuss investment prospects in Egypt.

Mid-September: Proposed time slot for UAE-Israel normalization agreement signing ceremony which will be held in Washington, US.

16 September (Wednesday): The last day for the final results of the senate elections to be announced.

17 September (Thursday): OPEC and its allies will meet to assess whether their recent vast oil production cuts have saved the market from the global glut.

20 September (Sunday): A Cairo administrative court is due to issue a ruling in a third-party lawsuit demanding the government block YouTube in Egypt for carrying an allegedly sacreligious video. The case is an infamous 2012-vintage lawsuit still wending its way through the courts.

20-27 September (Sunday-Sunday): Welcome Schools expo, Cairo Fair Zone, Nasr City.

21 September (Monday): Government to relax some of the restrictions on mass gatherings.

21 September-1 October (Monday-Thursday): EFG Hermes’ second Virtual Investors Conference.

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

24-25 September (Thursday-Friday): The European Union will discuss imposing sanctions on Turkey to limit the country’s ability to expand its search for oil and gas in contested eastern Mediterranean waters.

27 September (Sunday): Former Finance Minister Youssef Boutros Ghali to be retried on charges he squandered public funds in a case related to the printing of coupons for butane canisters.

28 September-3 October (Monday-Saturday): CIB PSA World Tour Finals, Cairo, Egypt.

End of September: Last chance to settle building code violations for illegal buildings.

1 October (Thursday): House of Representatives reconvenes for its sixth and final legislative session before elections for the house later in October or November.

1-10 October (Thursday-Saturday): Alexandria Book Fair, Kouta, Alexandria.

4 October (Sunday): Senate convenes for its first session.

6 October (Tuesday): Armed Forces Day.

8 October (Thursday): National holiday in observance of Armed Forces Day.

17 October (Saturday): 2020-2021 academic year begins for K-12 students at state schools and students in public universities.

21-23 October (Wednesday-Friday): Polls open to international voters for first round of Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

23-31 October (Friday-Saturday): El Gouna Film Festival, El Gouna, Egypt.

24-25 October (Saturday – Sunday) Polls open for first round of Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

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.

November: An Egyptian-Russian ministerial committee will meet to discuss trade and investment in Moscow.

2 November: Former Civil Aviation Minister Ahmed Shafik faces retrial at Cairo Court of Appeals in the so-called Aviation Ministry corruption case.

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

4-6 November (Wednesday-Friday): Polls open to international voters for first round of Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

4-7 November (Wednesday-Saturday): Cityscape Egypt Expo, International Exhibition Center, Cairo

7-8 November (Saturday-Sunday): Polls open for first round of Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

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

15 November (Sunday): Egyptian Tax Authority’s online intro seminar on new electronic invoice system for first tranche of companies transitioning to e-filing program.

23-24 November (Monday-Tuesday): Reruns for Parliamentary elections in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

30 November (Monday): Final results will be announced for Parliamentary elections held in Giza, Fayoum, Beni Suef, Minya, Assiut, New Valley, Sohag, Qena, Luxor, Aswan, Red Sea, Alexandria, Beheira, Matrouh.

December: The 110th regular session of the Egyptian-Iraqi Joint Higher Committee will be held under the chairmanship of the prime ministers of the two countries

1 December (Tuesday): The IMF will conduct a first review of targets set under the USD 5.2 bn standby loan approved in June (proposed date).

7-8 December (Monday-Tuesday): Reruns for Parliamentary elections in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

14 December (Monday): Final results will be announced for Parliamentary elections held in Cairo, Qalyubia, Menofia, Gharbia, Kafr El Sheikh, Sharqia, Damietta, Port Said, Ismailia, Suez, North Sinai and South Sinai.

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.

13-31 January (Wednesday-Sunday): Egypt will host the 2021 Men’s Handball World Championship at the Giza Pyramids

25 January 2021 (Monday): 25 January revolution anniversary / Police Day.

26-28 January (Tuesday-Thursday): Future Investment Initiative, Riyadh, Saudi Arabia

28 January 2021 (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

4 February 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

18 March 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 April 2021 (Monday): First day of Ramadan (TBC).

25 April 2021 (Sunday): Sinai Liberation Day.

29 April 2021 (Thursday): National holiday in observance of Sinai Liberation Day.

29 April 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

3 May 2021 (Monday): Sham El Nessim.

6 May 2021 (Thursday): National holiday in observance of Sham El Nessim.

12-15 May 2021 (Wednesday-Saturday): Eid El Fitr (TBC).

31 May-2 June 2021 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

1 June 2021 (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

10 June 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

26-29 June 2021 (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center

22 July 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

30 July-3 August 2021 (Thursday-Monday): Eid Al Adha, national holiday (TBC).

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