Wednesday, 11 November 2020

Inflation at a four-month high heading into tomorrow’s central bank meeting

TL;DR

What We’re Tracking Today

Good morning, friends. ‘Twas the morning before Interest Rate Day, and all anybody could talk about was … covid. That’s right, folks — it’s starting to dawn on the maskless hordes surrounding us that the Madbouly government just might have a reason to hammer us all about mask-wearing ahead of a second wave of covid-19.

There is no shortage of covid meds, the government said yesterday, and the Health Ministry was all over the airwaves last night talking about one aspect of the pandemic or another. The Education Ministry, meanwhile, won’t rule out shutting down physical classrooms if things get bad, but emphasized that it’s ready to support full online learning. We have more in Last Night’s Talk Shows, below.

The Central Bank of Egypt’s Monetary Policy Committee will meet tomorrow to review interest rates. The consensus among analysts we polled earlier this week is that rates will remain unchanged with an eye on the second wave of covid-19 infections and an uncertain global political climate. Bloomberg reports that with October inflation numbers coming in yesterday as expected, “real-interest rates and covid-19” could be the “key factors” when the MPC meets tomorrow.

We’d be surprised if there was a rate cut. After all, corporations tend not to take on significant long-term debt at the end of fiscal years, and demand for corporate credit is already depressed thanks to corona. We suspect MPC will wait for the year-end meeting to pull the trigger, preferring instead to remain really, really attractive as a carry trade play in the meantime.

A World Bank delegation is in town for 10 days for talks with the Madbouly government, the International Cooperation Ministry said in a statement. The delegation kicked off its visit yesterday with the launch of a detailed report on the Egyptian economy, which we dissect in full in this morning’s Speed Round, below.

President Abdel Fattah El Sisi is in Athens to discuss energy and investment ties with Greek Prime Minister Kiriyakos Mitsutakis and the country’s energy minister, an Ittihadiya statement said.

Renaissance Capital’s virtual conference on the 2021 outlook for emerging and frontier markets continues today and wraps on Friday. The conference includes macro updates on key countries and regions, as well as panel discussions on sectors in specific countries. Look for a panel discussion on Egypt’s fintech space with Fawry CEO Ashraf Sabry, Ebtikar CEO Ayman El Dessouky, Actis Partner Hossam Abou Moussa, and e-Finance subsidiary Khales CEO Moataz El Sayed. Tap / click here to stream the public sessions.

Are emerging markets looking at currency and FDI comebacks thanks to the end of the Trump era? A change in administration in the US is expected to be a boon for emerging markets, particularly with the anticipated reversal of Donald Trump’s aggressive trade policies, which hit EMs and saw foreign direct investment (FDI) flowing into the US and strengthening the USD, Renaissance Capital Chief Economist Charles Robertson said at the conference yesterday. A split Senate would also be particularly good news for EMs “as it implies more emphasis on monetary stimulus” and a weak USD would drive investors on a yield hunt that will take them to EMs, Robertson said. A weaker USD also “suggests investors may move up the risk curve, rotating out of Asia towards cheaper currencies in Latin America and EMEA.”


The Health Ministry reported 232 new covid-19 infections yesterday, up from 221 the day before. Egypt has now disclosed a total of 109,654 confirmed cases of covid-19. The ministry also reported 14 new deaths, bringing the country’s total death toll to 6,394. We now have a total of 100,540 confirmed cases that have fully recovered.

There is no shortage of meds used to treat the disease caused by covid-19, Cabinet said in a statement yesterday in response to rumors online claiming the recent uptick in cases is depleting supplies. The government’s strategic reserves of the meds is “safe and sound” and are made available wherever necessary, the statement said.

The Health Ministry’s covid-19 testing labs are internationally certified as being up to global standards for PCR testing after earning their accreditation through the Egyptian Accreditation Council (EGAC), Health Minister Hala Zayed said, according to a statement.

The US authorized the emergency use of the Eli Lilly covid-19 antibody med for people aged 12 and above with mild or moderate symptoms, according to the Associated Press. While the med is still being tested, experts hope it might lessen hospitalizations by helping the immune system fight the virus.

On the heels of Pfizer’s breakthrough, Russia says it will register a third covid-19 vaccine, CNBC reports. Russia was the first country to register and approve a vaccine, Sputnik V, in August, before signing off on the peptide-based EpiVacCorona in October. It has not announced a timeframe for when its third vaccine will receive regulatory approval.

PSA- How excited should you be about the Pfizer vaccine? Very, argues Andy Slavitt, the former healthcare lead for the Obama administration, who spoke with a bunch of really smart people to ask just this question. It’s all on this awesome Twitter thread.

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The US election / Pfizer equity rally fizzled out yesterday as the economic consequences of the current covid surge overtook Monday’s optimism that a vaccine would quickly return us to normalcy. The S&P 500 fell back from Monday’s record high as tech stocks continued to come back down to earth. The Nasdaq fell for the second consecutive day, hitting intraday lows of 2.7% as investors looked ahead to a post-pandemic future less reliant on Zoom.

The US smashed its previous record when it reported a stunning 143k cases on Monday, causing analysts to reconsider whether the market had jumped the gun on an imminent recovery from the virus. “You still have a tremendous amount of uncertainty out there, and while equities may continue to climb a wall of worry, the stock market is still subject to the rules of gravity,” Jonathan Boyar, managing director at Boyar Value Group, told Bloomberg.

Futures: The picture was mixed at the time of dispatch, with European stocks projected to open in the red and US stocks to see early gains.


Good morning, iSheep — did you enjoy last night’s event? Apple unveiled three new Macs powered for the first time by a chip of its own design during a virtual event yesterday (watch, runtime: 48;59). The Arm-based M1 chip promises substantial battery life and speed advantages over the Intel chips that have powered Macs for 15 years now. Apple unveiled a 13” MacBook Pro, an Air and a desktop-bound Mac Mini, and you can find all of the specs here. Pre-orders opened last night for delivery starting next week (not in Egypt, taban). Dive deeper with the Verge if you’re so inclined.

What the new Macs don’t have: Integrated modems that allow them to connect to the outside world via LTE. Also: No touch screen, and the physical design of each of the three devices is unchanged (so far as we can see) from the current Intel generation.

Wait — the “I’m a PC guy is back” to talk about the M1 chip.

MacOS Big Sur will roll out on Thursday, featuring new design language and the ability to run iOS and iPadOS apps on your (M1) Macs and speed and security boosts for everybody else.

Meanwhile, reviews of the iPhone 12 Mini and iPhone 12 Pro Max are out, and Apple’s two most hotly-anticipated smartphones of the year are generally being (very) well-received. Dieter Bohn and Nilay Patel from the Verge have got you covered, as does John Gruber over on Daring Fireball.


SIGN OF THE TIMES- The guy who made a USD 2.6 bn profit with a ballsy corona trade is back, and he’s betting against US corporate credit this time around. Pershing Square’s Bill Ackman told a Financial Times conference yesterday that markets are being really complacent about what the coronavirus means for corporations.

Covid has claimed the life of long-time Palestinian negotiator Saeb Erakat, Reuters reports. Egypt’s Foreign Ministry expressed “sadness and deep sorrow” in a statement.

TRUMP NON-TRANSITION- Republicans are closing ranks around Agent Orange and refusing to concede the election to Joe Biden. Senior Republicans are standing by The Donald, giving credence to his allegations of electoral fraud and supporting the plethora of lawsuits filed to challenge Joe Biden’s victory. Attorney-General William Barr has authorized the Justice Department to begin investigations into the president’s claims, while Secretary of State Mike Pompeo and Kentucky Senator Lindsay Graham joined Mitch McConnell in expressing support for the president’s refusal to concede the election (Bloomberg | WSJ | FT).

Biden has responded to the president’s recalcitrance terming it “embarrassing,” while pledging to continue preparations for entering the White House in January irrespective of the legal challenges (Washington Post | Bloomberg | FT).

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Taking on a USD 48 bn industry: MagicCube cofounders Nancy Zayed and Hisham Shawki developed a software replacement for costly hardware security components found in the point of sale machines we all use every day — and could offer massive boost for policymakers looking to get more people to participate in the formal economy, a strategy that attracted investments from Visa and CIB’s VC arm CVentures.

You already have a podcast player on your iPhone and you can listen to Making It on our Website | Apple Podcasts | Google Podcasts | Anghami | Omny. We’re also available on Spotify, but only for non-MENA accounts.

Our next episode of Making It is out tomorrow, and you can get early access if you’re subscribed.

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*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, urban development and as well as social infrastructure such as health and education.

In today’s issue: As Egypt expands its green infrastructure, including by relying on green bonds to finance projects in clean transportation, renewable energy, pollution prevention and waste management, energy efficiency, and water and wastewater management, we take a look at Egypt’s carbon emissions and the country’s most polluting industries.

Enterprise+: Last Night’s Talk Shows

It was International Cooperation Minister Rania Al Mashat’s turn to headline the talk shows last. She dropped in to Lamees El Hadidi’s Kelma Akhira (watch: runtime: 1:27) and Sherif Amer’s Yahduth Fi Misr (watch, runtime: 5:17) to discuss the World Bank’s latest Egyptian Economic Monitor report, published yesterday to coincide with the visit of a WB delegation. Al Mashat said that the government intends to move forward with reforms related to productivity and employment outlined in the report. We have full coverage of the report in this morning’s Speed Round, below.

Education Minister Tarek Shawki refused to rule out the closure of schools in the event of a second wave, telling Ala Mas’ouleety’s Ahmed Moussa that it is not his decision to make. Either way, the academic year will not be interrupted and teaching will continue online should schools need to close. (watch, runtime: 15:26).

But there are no plans to fine covidiots: Shawki denied rumors circulating that parents and students caught not wearing face masks in schools will be fined by authorities. Students found without a mask will receive a warning, he said, noting that pupils under 12 years’ old are not expected to wear masks but should wear face shields instead.

There was plenty of coverage on covid treatment:

The Health Ministry is bullish on its treatment strategy: Moussa phoned Hossam Hosni, the head of the Health Ministry’s covid-19 committee, who said that as many as 98% of people given medication included in the ministry’s “fourth protocol” could recover from the virus. The country has enough supplies to last another six months, and the ministry is prepared for the worst case scenario, he said (watch, runtime: 24:19).

Where do we stand in the global race for a vaccine? Higher Education Minister Khaled Abd El Ghaffar was on Kelma Akhira to give an update on where we stand with vaccines around the world. Only 7% of the fifty-two vaccines now in clinical trials are expected to be successful, he said, noting that the Health Ministry is in contact with all manufacturers regarding obtaining a successful vaccine (watch, runtime: 9:48).

Eli Lilly’s new antibody treatment is pricey: Mohammad Ismail, a member of the medical team of the US Embassy, was also on with Lamees to explain Eli Lilly’s new antibody treatment, which was this week granted regulatory approval in the US. One dose is likely to cost in the region of USD 1,200-1,500, he said, adding that the company could provide about 50 mn doses by March 2021 if it is proven effective in more than 50% during the trials and is able to start mass production (watch, runtime: 2:18 | 0:41).

Speed Round

Annual headline inflation accelerated to 4.6% in October from 3.7% in September, according to Capmas figures (pdf) released yesterday. October’s inflation figure is the highest since July’s 4.2%. Reuters and Bloomberg also had the story.

The delayed start to the academic year was the main driver, with the prices of educational services seeing a 29.7% m-o-m increase and the price of a high school education rising 55.6% m-o-m. The annual 1% increase seen during the back-to-school season shifted to October this year as the pandemic forced the academic year to begin a month later. School-related supplies also drove up inflation, with books and stationery supplies increasing 4.2% on a monthly basis.

The uptick in education price increases outpaced the 0.8% y-o-y decline in food and beverage prices, which are typically responsible for driving the headline rate in Egypt.

Annual core inflation — which strips out volatile items such as food and fuel — rose to 3.9% from 3.3% in September, according to central bank figures (pdf). On a monthly basis, the core rate increased to 1.7% from 0.1% in September

Will we close out the year with inflation within the central bank’s target range? It’s unlikely, but we’ll probably get close, Pharos Holding and Beltone Financial said in research notes yesterday. “We expect inflation to pick up again around 5-5.8% y-o-y during the last two months of 2020, despite a weak monthly growth in prices, as both these months had monthly price declines last year which created an unfavorable base effect,” Pharos analyst Sandy Eskaros wrote in a note. Average inflation for the year will likely come in at 5%, which is slightly below the lower end of the Central Bank of Egypt’s 6-12% target range, she said. Beltone’s Alia Mamdouh also expects inflation to “hover closer to the lower bound” of the target range by the end of the year.

Reminder: Under the terms of USD 5.2 bn stand-by facility agreed with the IMF, authorities are expected to consult with IMF technical experts should the inflation rate fall below 6% by the end of September, and with the executive board if it dips below 4%. If inflation does fall outside targets, the CBE is expected to take measures to support price growth and bring it within the target range.

The outlook for tomorrow’s Monetary Policy Committee meeting is unchanged: Beltone Financial and EFG Hermes still expect a hold, while Pharos maintains its position that a small 50 bps rate cut could be in the cards. Six out of eight economists we spoke to earlier this month expect the CBE to leave interest rates unchanged. A number of national banks have already scrapped their high interest fixed-rate savings certificates in September, in a move that is expected to support growth and boost inflation.

Job creation, productivity key as Egypt exits covid crisis -World Bank: Egypt needs to double down on reforms to stimulate job creation and private sector activity as the impact of the coronavirus pandemic on the economy begins to abate, the World Bank has said in its latest Egypt Economic Monitor report (pdf).

Egypt has largely withstood the covid shock: Thanks to the fiscal, monetary and energy sector reforms implemented in recent years, and the government’s emergency measures, Egypt has managed to hold out reasonably well against its covid-19 epidemic. Real growth remained positive over the last fiscal year and foreign reserves are intact.

But serious challenges remain: Business activity in the private sector has remained sluggish for months, low tax receipts have prevented further investment in social programs, foreign direct investment remains weak, and non-oil exports are underperforming. And while recent purchasing manager indexes have an uptick in employment, many in the workforce reported not having a contract or health insurance.

A focus on job creation is the answer: The loss of jobs in the wake of the crisis has exacerbated the long-term problem of job creation, especially in the private sector. The World Bank says that scaling up employment has been sluggish — and limited to low valued-added sectors, or to industries in decline. “The Egyptian economy has not been able to generate high-earning jobs, at scale,” the report stresses.

The World Bank is offering us a three-pronged strategy:

#1- Keeping the ship steady: If the government is going to stimulate sustainable job creation in the private sector, it is going to have to ensure the economy remains on an even keel by pushing ahead with fiscal consolidation after the crisis is over. Maintaining a flexible exchange rate and keeping inflation low is also key, the bank says.

#- Be nice to business: Although progress has been made, Egypt continues to lag behind other emerging economies that have pushed ahead with pro-business reform. Overbearing bureaucratic procedures remain problematic for businesses, and interventions made in the industrial sector, while supportive of development, need to be more coherent and targeted to improve the investment climate and better stimulate job creation.

#3 Investing in knowledge: The government needs to put more energy into upskilling the labor force, giving businesses access to talent they need if they’re going to grow in higher value-added industries. This means more PPP in K-12 education and more emphasis on tech in the the education system.

Egyptian SMEs who want to go green could be in line for a piece of EUR 220 mn in financing through two on-lending programs from the European Bank for Reconstruction and Development (EBRD), the EU and the Green Climate Fund (GCF), the EBRD said in a press release yesterday. The Green Value Chain program will provide EUR 70 mn to SMEs to invest in “climate mitigation and adaptation solutions,” while the EUR 150 mn extension of the Green Economy Financing Facility (GEFF) will finance businesses in agriculture, construction and manufacturing.The GEFF has channelled EUR 140 mn to businesses through the National Bank of Egypt, Alexbank, Arab African International Bank, and QNB Al Ahli since its launch in 2014. The bank did not disclose which banks it would work with to disburse the latest round of financing.

Bank to finalize two more green projects this year: The EBRD plans to ink agreements by the end of the year to fund two green projects worth EUR 100 mn, one in Kom Ombo in Aswan and the other in El Reyah in Menoufia, EBRD Deputy Regional Director Khaled Hamza tells Masrawy. Building a greener economy has been a policy priority for the EBRD, saying in its latest Transition Report that transitions to a green economy in the post-covid-19 recovery must be a priority for its regions.

Sawiris-backed Endeavour Mining continues quest to become West Africa’s gold king: Canada’s Endeavour Mining is in talks over a merger with West Africa-based miner Teranga Gold, the companies said in separate statements (here and here) yesterday, without providing further details. Endeavour and Teranga are discussing a “merger of equals style” acquisition, which would see Endeavour add another mine to its portfolio in Burkina Faso and establish a footprint in Senegal. It is also mulling an all-stock agreement and could offer a lower premium for the company, sources told Bloomberg. Both companies said that the talks will not necessarily lead to an agreement.

A major play for West Africa: Endeavour, 24.12% owned by the Sawiris family, purchased Burkina Faso’s largest gold producer Semafo for USD 690.7 mn in March to create West Africa’s largest gold mining company. Post-Semafo, Endeavour is now one of the 15 largest gold miners in the world, producing 1 mn ounces each year. “The combination of Endeavour and Teranga would further solidify Endeavour as West Africa’s leading gold producer,” Raymond James analyst Craig Stanley told Reuters.

Calls for consolidation: The CEO of Barrick Gold has recently reiterated his calls for increased consolidation in the sector so companies can increase spend on exploration amid declining reserves. The surge in gold prices this year has pushed up company valuations, resulting in a slowdown in M&A activity after a flurry of agreements in 2018.

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Property owners are getting a one-month reprieve from late payment fines for properties developed by the New Urban Communities Authority (NUCA), the Housing Ministry said in a statement. The grace period, which applies to homes, offices, retail space and plots of undeveloped land of all sizes, will be granted to those who pay all their installments in full, the ministry said. Individuals whose ownership deeds have been scrapped due to late payment but are still in possession of the property are also eligible for the waiver, but must agree to forego any legal action against the NUCA.

Who it doesn’t apply to: Owners of land or property that has been repossessed by NUCA, land that is jointly owned, or people who made payments before the decision was issued. NUCA had previously granted grace periods, as well as waivers of usufruct fees, to help individuals make payments on time in light of the economic downturn caused by covid-19.

EARNINGS WATCH- Rameda profits soar in 3Q2020: Rameda Pharma reported 134% bottom line growth during 3Q2020, with net profits rising to EGP 24.9 mn from EGP 10.7 mn last year, according to a company earnings release (pdf). Revenues remained flat during the three-month period, coming in at EGP 235.4 mn, marginally higher than EGP 235.1 mn reported in 3Q2019. Net profit rose by 117% y-o-y during 9M2020 to EGP 68.7 mn while revenues increased by 9% to EGP 627.9 mn despite the volume of private sales falling 22.4%. The easing of covid-19 restrictions helped to drive Rameda’s recovery, although export volumes still dropped 14.1% y-o-y during the first nine months of the year as a result of the general slowdown in global trade from the pandemic, said CEO Amr Morsy.

The 4Q outlook: Rameda’s outlook for the rest of 2020 “looks promising” as consumer behavior continues to normalize and covid-19 restrictions are eased, said Morsy. The company expects to increase production of freeze-dried products and hopes to up its participation in public sector contracts following improvements made to the Unified Medical Procurement Authority’s digital tender platform.

Edita’s net profit rose 0.8% to EGP 107.5 mn in 3Q2020, from EGP 106.6 mn last year, according to the company’s earnings release (pdf) on Tuesday. The snack food producer’s revenues slipped 2.7% during the quarter to EGP 1.06 bn from EGP 1.09 bn in 3Q2019. Declines during the quarter were mitigated by the company’s decision to raise prices, which increased by 10.2% on average across its product range, the statement said.

The company is staying the course on the strategy outlined at the beginning of the year and is focusing on diversifying sales revenue by expanding into new segments. It is looking to increase its share in the biscuits market in the near-term by launching new products, and will increase its range of more expensive products.

Sarwa’s net profit eased more than 30% to EGP 194 mn in the first nine months of 2020 from EGP 280 mn in the same period last year, the company said in a press statement (pdf) yesterday. Profit for the period would have been down just 2% in the period setting aside the company’s new insurance business and adjusting for ESOP amortization, the new tax treatment of interest income from t-bills, and expenses incurred from applying the IFRS 9 reporting standard. Sarwa’s total financing portfolio grew by 14% y-o-y to reach EGP 7.3 bn, driven by a 24% increase in auto financing and a recovery in consumer goods, which had declined 14% during the lockdown in 2Q. Gross premiums written by the company’s insurance ventures were up by 264% to EGP 202 mn during the period. Operating costs, meanwhile, rose 41% as the company ramped up investment in expanding its branch count, AI systems, digital platforms for clients and brokers, and marketing.

Looking ahead: “We have also prepared fully for the application of new accounting and regulatory rules, and with an array of new funding sources being finalized, our strong balance sheet further supports the strong growth potential ahead,” Sarwa said in a statement to Enterprise.

CI Capital reported a 15% drop in net profit after tax and minority interest in 9M2020, closing the period with profits of EGP 287 mn as revenues declined 11% to EGP 1.6 bn compared with the same period last year, according the company’s earnings release (pdf).

Amer Group’s net profits fell to EGP 9.98 mn in 9M2020 from EGP 39.36 mn during the same period last year, according to an EGX disclosure (pdf). Poor performance in 9M2020 came as the group’s hotels, restaurants and mall businesses were hit by reduced footfall thanks to covid-19, according to a statement (pdf).

CORRECTION- We made a rookie mistake yesterday writing that the Egyptian-American Enterprise Fund had invested in Al Tayseer Healthcare alongside Ebtikar, rather than Ezdehar. The story has since been amended on our website.

Egypt in the News

It’s a mixed bag in the foreign press this morning: Gulf Today takes a look at the people setting up workshops among the tombs of the City of the Dead, while Arab News notes that Bassem Youssef is making his return to TV with a new health show that will preach the benefits of plant-based diets. Meanwhile, Egypt gets a passing mention in the Financial Times for being one of the few African countries to have witnessed covid-19 death rates above the continental average. We sit alongside the likes of South Africa in above average deaths resulting from the virus.

Worth Watching

Deutsche Bank is telling us we should be bullish on stocks for the remainder of 2020: Stocks have rallied in the past few days, with Sunday and Monday seeing the largest two-day post-election rally in US stocks since 1900, according to Deutsche Bank. This could continue through to the end of the year, helping 2020 end on a brighter note than where it began for fund managers, says Financial Times Markets Editor Katie Martin (watch, runtime: 02:00). While the US election result is undoubtedly a factor for the market optimism, Pfizer and BioNTech’s major vaccine announcement is what propelled stocks on Monday. The end of the pandemic would provide the hard-hit hospitality, travel and energy industries with more certainty and allow them to rebound from their unprecedented downturns.

Diplomacy + Foreign Trade

Not a lot is happening on the diplomatic + trade front this morning: Egypt is apparently the beneficiary of an onion shortage in India, while the acting US Navy under secretary Gregory Slavonic was in town yesterday for talks with Suez Canal Authority head Osama Rabie.

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CLIMATE WATCH- A look at Egypt’s most polluting sectors: We noted last week how Egypt is looking to expand the use of green bonds to help finance its green infrastructure framework. The framework is expansive, covering sectors such as clean transportation, renewable energy, pollution prevention and waste management, energy efficiency, and water and wastewater management. While we wait for the government’s Green Finance Working Group to come up with the specific projects, we thought it would be useful to try to tally how much carbon is being emitted in Egypt and what are our most polluting industries in terms of carbon emissions. To make the comparative analysis, we pooled data from government and leading international institutions. We focused on 2016 data as these were the most recent widely available year on record for Egypt.

Egypt’s greenhouse emissions profile: Egypt produced 310 mn tonnes of carbon dioxide equivalent (Mt CO2) greenhouse gas emissions in 2016, according to the World Resources Institute CAIT database. The figure — measured in Mt CO2 to approximate emissions of greenhouse gases including carbon dioxide, methane and nitrous oxide — accounted for 0.6% of a global tally of 49.3 bn tonnes of carbon dioxide equivalent and close to 10% of 3.3 bn tonnes coming out of the MENA region. In MENA, Egypt ranked third (pdf), trailing top emitters Saudi and Iran.

How has our position changed over time? Egypt’s total emissions grew 140% between 1990 and 2016 (pdf), good for a compound annual growth rate of 3.5% each year. Egypt’s total emissions growth over the period was more than three times faster than the global average, but our GDP over the last two decades grew at a faster rate than our emissions, suggesting an improving carbon footprint over the past several years, USAID calculated in a 2015 report (pdf).

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The biggest contributor to emissions is the energy sector: Energy was responsible for 71.4% of 2016 emissions in Egypt, producing a little over 221 Mt CO2. Electricity and heat production contributed the most (45%) of all activities within the energy sector. Transportation (25%), manufacturing and construction (20%), other fuel combustion and fugitive emissions (9%), and bunker fuels (1%) were responsible for the remainder. Emissions from Egypt’s energy sector grew a moderate 3.5% from 1990-2016. It’s worth noting that energy also beats out other sectors globally as the biggest contributor to climate change. In 2016, the use and combustion of fossil fuels — which include coal, oil, and natural gas — created almost three quarters of the world’s greenhouse gases.

Egypt is heavily reliant on hydrocarbon-based fossil fuels, with renewable sources only accounting for 3.4% of the country’s energy mix last year. Electricity produced from natural gas alone is estimated to account for 70-75% of our energy mix, according to World Bank data from 2015 and Fitch Solutions data from 2020. This resulted from growing natgas reserves and the government prioritizing fossil-fuel electricity generation to fight the spell of continued energy blackouts between 2011 and 2013. Eventually, we turned from having a shortage in electricity to a surplus, but this created a market heavily reliant on oil and gas.

Dig deeper into the nuances of our renewable energy policies: In a three-part series we looked at how the covid-19 crisis and oil price changes have impacted the transition toward renewable energy and explored what policymakers can do to accelerate the shift. Part one probed into the impact of the lockdown, part two into what the collapse of oil prices means, and part three an inherent overcapacity problem in electricity generation that was made worse by covid-19.

Beyond energy, the second-biggest cause of greenhouse gas emissions is the agriculture sector — which accounted for 32 Mt CO2, or 10.2% of our 2016 total. Emissions from agriculture only increased by a slight 2% from 1990-2016, as the sector’s contribution to GDP decreased over time. In 2016, agriculture made up 11.8% of Egypt’s GDP. The sector’s contribution hasn’t changed much since then, falling only slightly to 11.05% in 2019. However, the contribution of agriculture fell considerably from close to 30% in 1960, and nearly 20% in 1990, as Egypt moved toward becoming a more industry- and service-oriented economy, World Bank data showed.

Manufacturing is the third-largest contributor to emissions: Manufacturing and industrial processes collectively emitted 30 Mt CO2, or approximately 9.7% of Egypt’s total, in 2016. Particular culprits include the production of minerals, chemicals, metals, pulp and paper, food and beverages, halocarbons, aerosols and solvents, semiconductor and electronics, and electrical equipment, as well as the use of refrigeration and air conditioning, according to Climate Watch Data. Manufacturing was the second fastest growing source of emissions in Egypt between 1990-2016, growing 3.8% during that period.

Waste handling and management, meanwhile, was the fourth biggest source of greenhouse gas emissions, accounting for 27 Mt CO2 in 2016 (8.6%). Greenhouse gases are produced from waste when waste is landfilled and disposed of rather than recycled. While it is only ranked fourth, waste emissions grew 5.6% between 1990-2016, indicating that our recycling has not been growing at the same pace as our waste generation.

What’s the government doing about this? Egypt’s House of Representatives in August approved a proposed law to set up an authority to oversee and monitor waste management. The authority would be in charge of encouraging industry growth and outlining a national strategy to manage agricultural and industrial waste. In terms of spending, the government allocated EGP 10 bn to waste management through 2024, Environment Minister Yasmine Fouad said in September.

Your top infrastructure stories for the week include:

  • Energy: The Egyptian Electricity Transmission Company (EETC) is planning to launch a global tender in early 2021 for a regional energy control center in Alexandria’s Moharram Bey area.
  • Resource management: Egypt and the Netherlands’ irrigation ministers agreed to exchange experiences in agricultural methods, coastal management and wastewater treatment last week.
  • Transportation: The Transport Ministry will establish a bus rapid transit (BRT) system on the Cairo ring road to ease congestion according to Minister Kamel El Wazir.
  • Renewable energy: Six international companies have submitted bids in the tender to consult on the construction of a EGP 1.4 bn, 50 MW solar power station in Kom Ombo.
  • IT infrastructure: Telecom Egypt will provide the first submarine fiber optic cable connection to the British overseas territory of St. Helena by 2022.

The Market Yesterday

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EGP / USD CBE market average: Buy 15.59 | Sell 15.69
EGP / USD at CIB: Buy 15.60 | Sell 15.70
EGP / USD at NBE: Buy 15.61 | Sell 15.71

EGX30 (Tuesday): 11,077 (+2.2%)
Turnover: EGP 1.8 bn (59% above the 90-day average)
EGX 30 year-to-date: -20.66%

THE MARKET ON TUESDAY: The EGX30 ended Tuesday’s session up 2.2%. CIB, the index’s heaviest constituent, ended up 1.9%. EGX30’s top performing constituents were Orascom Development Egypt up 16.8%, Oriental Weavers up 7.8%, and EFG Hermes up 5.0%. Yesterday’s worst performing stocks were Juhayna down 0.7%, Egyptian Iron & Steel down 0.6% and Export Development Bank of Egypt down 0.3%. The market turnover was EGP 1.8 bn, and foreign investors were the sole net buyers.

Foreigners: Net long | EGP +138.6 mn
Regional: Net short | EGP -5.8 mn
Domestic: Net short | EGP -132.8 mn

Retail: 65.5% of total trades | 62.4% of buyers | 68.5% of sellers
Institutions: 34.5% of total trades | 37.6% of buyers | 31.5% of sellers

WTI: USD 41.79 (+1.04%)
Brent: USD 43.99 (+0.87%)

Natural Gas: (Nymex, futures prices) USD 2.95 MMBtu, (+0.00%,December 2020 contract)
Gold: USD 1,976.50 / troy ounce (0.01%)

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Calendar

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.

10-19 November (Monday-Thursday): A World Bank delegation arrives in Egypt to discuss financing development projects.

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

12 November (Thursday): The African Private Equity and Venture Capital Association (AVCA) is organizing an online conference titled “State of African Private Equity & Venture Capital: Regional Perspectives.” You can sign up here.

13-15 November (Friday-Sunday): A conference on banking in the time of covid by the Union of Arab Banks, Sharm El Sheikh, Egypt.

13-20 November (Friday-Friday): Cairo Jazz Festival.

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.

15 November (Sunday): Results of the second phase of Egypt’s parliamentary elections will be announced.

16 November (Monday): Postponed trial of alleged abuser Ahmed Bassam Zaki, after he failed to attend the previous court date

18 November (Wednesday): The 50 Million African Women Speak online event will be held, organized by the Egyptian MSME Development Agency and Comesa

19-28 November (Thursday-Sunday): Cairo International Film Festival, Cairo Opera House, Egypt.

21 November (Saturday): Deadline to install electronic vehicle stickers

22-25 November (Sunday-Wednesday): Cairo ICT 2020, Egypt International Exhibition Center, Nasr City, Cairo.

23-24 November (Monday-Tuesday): Runoffs 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 (date TBC): Egypt Economic Summit, Cairo, Egypt, venue TBD.

December: Fifth round of Egypt-US Trade and Investment Framework Agreement (TIFA) talks.

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).

5 December (Saturday): A court will hold a postponed hearing to look into an appeal by Syria’s Anataradous against an arbitration ruling in favor of Amer Group and Amer Syria.

7 December: Former Civil Aviation Minister Ahmed Shafik faces trial over embezzlement allegations.

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

9-10 December (Wednesday-Thursday): BiznEx, the international business expo in Egypt, venue TBD.

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 December (Tuesday): House of Representatives reconvenes from recess.

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.

1Q2021: The Seventh Annual Egypt Automotive Summit will be held

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.

25-29 January 2021 (Monday-Friday): The World Economic Forum’s “Davos Dialogues” will take place virtually.

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.

6-18 February (Saturday-Thursday): Mid-year school break.

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).

18-21 May 2021 (Tuesday-Friday): The World Economic Forum’s annual meeting will be held under the theme of “The Great Reset” in Lucerne-Bürgenstock, Switzerland

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.

24 June 2021 (Thursday): End of the 2020-2021 academic year.

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).

1 October 2021-31 March 2022 (Friday-Thursday): Postponed Expo 2020 Dubai.

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.