Wednesday, 17 February 2021

We’re not going to have another lockdown –Madbouly

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people, and welcome to a cold late-week morning.

THE BIG STORY AT HOME: Cabinet is preparing a three-year budget outlook to unveil in March as budget season kicks off, and we have a spate of investment and M&A news (healthcare is again in the lead) to keep market watchers busy. All of this and more in this morning’s news well, below.

ALSO: We don’t have the luxury of considering a lockdown even as new daily cases of covid-19 continue to tick up, Prime Minister Moustafa Madbouly said yesterday. (See this morning’s Covid Watch, below.)

Watch this space: The Biden administration is recalibrating its approach to key regional allies. We have more in Egypt in the News.

THE BIG STORY ABROAD this morning: Once again, no single story has captured the imagination of the global business press. The Financial Times says that the “Republican schism” is deepening after Agent Orange launched a broadside against Mitch McConnell, the senior GOP member of the Senate. The WSJ notes that Marriott’s CEO has died at age 62 after a battle with cancer and Reuters is leading with the fact that mns are still without power in Texas after an “historic” winter storm that killed 21 people.

Sound smart- Rolling blackouts are affecting mns in Texas and beyond, and it’s a sign of what’s to come across the globe as climate change boosts demand for power from infrastructure that has suffered decades of underinvestment (or that simply isn’t up to the challenge ahead), leaving it unprepared to handle surges in demand and the interruption of supply lines. “Wild and unpredictable weather linked to global warming will very likely push grids beyond their limits,” the New York Times writes.

*** CATCH UP QUICK The top stories from yesterday’s edition of EnterprisePM:

  • The central bank will wind down its EGP 3 bn tourism support program at the end of June, two weeks earlier than planned, and has issued new guidelines for bank lending to real estate developers.
  • Deep tech startup Si-Ware Systems has raised a funding round worth nearly USD 9 mn from Sawari Ventures and Egypt Ventures, bringing their total funding to USD 19 mn.
  • Some good news: The drop in unemployment at the end of last year was driven by job creation, not reduced labor force, EFG Hermes’ Mohamed Abu Basha said in a note.

MARKET WATCH- Bitcoin kept shooting for the moon yesterday, smashing through the USD 50k barrier for the first time, CoinDesk reports. The cryptocurrency is up more than 65% YTD.

HAPPENING TODAY-

The House of Representatives is on recess for a week and a half as of today, with MPs expected to reconvene on Sunday, 28 February.

The cold spell continues into today, with a 50% chance of showers at various intervals in Cairo and a high likelihood of rain along the coast, according to the national weather service. Winds will be high all day long nationwide, according to our favourite weather app, and we can expect a daytime high of just 13°C in both Cairo and Alexandria. The wind will start to die down (and temperatures are set to rise a bit) starting tomorrow.

A MENA x CEO panel on venture capital and entrepreneurism in our neck of the woods hosted by the Columbia Entrepreneurs Organization runs today at 7:30pm CLT with a great lineup of speakers. Tap or click here to register.

Expect more gold exploration contracts to be signed in the next week and a half: All remaining contracts for gold exploration concessions awarded in the Oil Ministry’s tender last year will be signed by the end of February, Minister Tarek El Molla said yesterday.

Who has taken home a contract? Canadian miners Barrick Gold, Lotus Gold and B2Gold, British firms Red Sea Resources, AKH Gold and SRK, and Australian gold miner and Sukkari operator Centamin. Four local firms also snagged exploration rights: Mining and Manufacturing Company (MEDAF), North Africa Mining and Petroleum Company (NAMC), Al-Abadi and Ebdaa for Gold Mining.

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Everyone’s favorite foul-mouthed puppet is coming to Netflix (finally): Abla Fahita’s new show, aptly titled “Drama Queen,” is set to be released on Netflix “soon” after its planned 2020 release ran a little over schedule. Abla Fahita is no newcomer to drama, having run into trouble with her show on CBC, and a Vodafone ad she starred in a few years ago.

CIRCLE YOUR CALENDAR-

PSA- Madbouly’s chat with the business community is now happening next week. AmCham Egypt and the Egypt-US Business Council will host a webinar headlined "Egypt: 2021 and Beyond" next Thursday, 25 February. The original date was tomorrow. Guest speaker Prime Minister Moustafa Madbouly will talk about Egypt’s strategy to mitigate the effects of the global downturn as well as the country’s future plans to maintain economic growth.

The second edition of the Egypt International Art Fair will be held from 26-28 February, and will showcase the work of 120 regional artists at Dusit Thani Lakeview.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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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: With the Sisi administration prioritizing road infrastructure development as a key component of its policy agenda, Egypt is doubling down on constructing thousands of km of new roads and bridges. We take a look at one aspect of the planning process for this infrastructure — choosing between concrete and asphalt for paving the roads — and ask which material is best suited for Egypt’s priorities and conditions.

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ECONOMY

Cabinet is getting its three-year priorities in order

A three-year state budget and fiscal policy priority framework will be on the House of Representatives’ agenda when cabinet submits the FY2021-2022 state budget at the end of March, Prime Minister Moustafa Madbouly said at a meeting with parliamentary committee heads yesterday, Al Mal reports. The budget framework will outline the government’s medium-term spending priorities and will be taken up as a new approach by the government and submitted alongside the standard detailed annual budget, the prime minister said.

What will the framework entail? This isn’t a return to statist five-year planning cycles, but rather a look ahead to the outlines of our post-covid economic recovery plan. In FY2019-2020, we saw an increase in spending on health, education, wages and welfare, and included fuel and electricity subsidy cuts — a trend we can expect to continue. We would also expect the framework to include the government’s plans to continue cutting back its debt bill, which has been a priority point for several years. The Finance Ministry had begun implementing a long-term debt reduction strategy back in 2019, with the aim of cutting down the debt-to-GDP ratio to 80% by 2022.

INVESTMENT WATCH

Adwia’s former owners eye toll manufacturing + Nuwa Capital closes USD 75 mn fundraising round

The former owners of Adwia Pharma are investing more than EGP 1 bn to set up a new toll manufacturing business, Al Mal reports. Hossam Taher and his family — who sold their 90% stake in Adwia to a European Bank for Reconstruction and Development-CDC Group consortium last year — have dubbed their new venture “Dawana,” which will launch this year with a plant in Obour City, Taher told the newspaper. The facility’s land was formerly owned by Adwia and wasn’t included in the recent transaction, he said.

In detail: The new outfit will run three production lines at launch, but seven more will be up and running by the end of the year after a EUR 55 mn agreement was sealed with an undisclosed German company, Taher added. Taher and his family have other, unnamed partners in the venture.

Background: The EBRD, CDC and an unnamed UK fund acquired 99.6% of Adwia in November in a USD 126 mn transaction.

OTHER INVESTMENT NEWS-

Emirati-Saudi VC firm Nuwa Capital is tight-lipped on its plans for Egypt after announcing (pdf) yesterday it had closed its first fund, raising USD 75 mn of its USD 100 mn target. The team told us that they will announce new investments in the coming weeks and that they are keen on healthcare, fintech, foodtech and real estate technology, but declined to give details on their plans for Egypt. Nuwa has already invested in Cairo-based furniture marketplace Homzmart before closing the fund.

Al Futtaim Group is investing EGP 200 mn in the renovation of its Cairo Festival City mall, Al Futtaim Malls Group Director Timothy Earnest told the local press this week. The first phase of the development started this month, and is expected to be finished at the end of 2021, he said. This investment is part of a EGP 2 bn program to expand the mall that will see the addition of 80 retail stores and 15 food outlets. Earnest said this week that the development is now being earmarked for completion in 1Q2023 — a year later than expected. Thanks, covid.

CLARIFICATION- The facility being built by the former owners of Adwia is a toll manufacturing plant being built on land formerly owned by Adwia, not a new pharma manufacturer as we had said in a previous version of this story. (Updated 17 February 2021)

DEMERGER WATCH

OFH shares hit the EGX today

Shares of newly spun-off Orascom Financial Holdings’ (OFH) will begin trading on the EGX today in the final step of its split from Orascom Investment Holdings (OIH), OIH said in a regulatory filing (pdf). The Financial Regulatory Authority and OIH shareholders approved the demerger late last year.

Trading of OIH’s shares on the EGX as well its global depositary receipts on the London Stock Exchange stock will also resume. Both were temporarily suspended last week pending share ownership transfers of OIH subsidiaries Beltone and Sarwa Capital as part of the demerger. Both companies will continue to trade on the main exchange, according to an EGX disclosure.

OFH owns high-profile financial industry outfits including Beltone Financial (74.5%) and tightly held Sarwa Capital (28.8%). It’s also in line to collect deferred proceeds from the sale of an investment bank, Pharos’ Bassma Bakry writes.

OIH will hold legacy assets including the group’s Pyramids Plateau tourism venture, a telecoms cable outfit in Pakistan, a real estate asset in Brazil and North Korea’s mobile network, Koryolink. Resolution on the status of Koryolink would be the “saviour” of OIH, Bakry says.

M&A WATCH

Speed Medical buying out partners in Prime Speed?

Diagnostics and healthcare firm Speed Medical (SPMD) wants to take 100% ownership of Prime Speed Healthcare, according to a report in Al Mal’s print edition, citing unnamed sources that claim Speed Medical’s board of directors signed off on the acquisition yesterday. The value of the transaction was not disclosed.

The transaction would give SPMD 100% ownership of Prime Speed for Medical Services, in which it currently holds a 30% stake. SPMD had set up Prime Speed last year, with other shareholders including Prime Egypt Group Chairman Tamer Waguih, as well as Modern Solutions Company.

SPMD has been on an acquisition spree for several months. It recently completed the purchase of Misr Laboratories’ Beni Suef branches and is preparing to sign the final agreements to buy 100% of Al Hayat Labs and 50% of City Lab. Its subsidiary Speed Hospitals is also leading a consortium that is looking to acquire a 100% stake in Six of October’s New Al Safwa Specialized Hospital

HEALTHCARE

First phase of universal healthcare rollout picks up steam

The universal healthcare scheme is now up and running on a trial basis in Luxor, Ismailia, and South Sinai, with President Abdel Fattah El Sisi cutting the proverbial ribbon on the rollout in the governorates yesterday, according to the local press. El Sisi announced yesterday that his government now plans to cover the entire country in 10 years, instead of the previously planned 15-year timeline. Under the scheme, first introduced on a pilot basis in Port Said in July 2019, the state will contract out the delivery of healthcare services to the private sector hospitals signed up to provide services under the Universal Healthcare Act.

Investment in new healthcare infrastructure: The government has also invested EGP 438 mn in developing 34 chest and fever hospitals, alongside another EGP 4.5 bn to set up 30 model hospitals and EGP 846 mn to upgrade the ambulance system as part of the universal health scheme, Health Minister Hala Zayed noted. The ministry has also set up eight plasma collection centers, with an eye to bring the total to 20 this year, Zayed said. Cabinet approved in November a draft bill, currently with the Health Committee, to regulate the centers. El Sisi announced the launch of the program in the three governorates as he inaugurated the Ismailia Integrated Healthcare Complex yesterday.

DEVELOPMENT

Japan targets green projects in USD 240 mn development loan

Green projects in Egypt will get a portion of a USD 240 mn loan from the Japan International Cooperation Agency (JICA), with the remainder of the loan earmarked for supporting the state budget and softening the impact of the covid-19 pandemic on the economy, cabinet said in a statement yesterday. The agreement, signed by the international cooperation and finance ministers yesterday, comes following a year of negotiations with the Japanese over the terms, and takes JICA’s total commitment to Egypt to USD 2.7 bn.

Which projects is this going to fund? The statement is sketchy on the details, only saying that it will help the government’s efforts to “shift towards a green economy, clean energy and fight climate change.” The money will also help the government undertake structural reform of the electricity sector, streamline the energy sector and support public finances, it says.

LEGISLATION WATCH

Much ado about nothing

The draft executive regulations (pdf) of the Unified Tax Act are apparently not to the liking of the Federation of Egyptian Chambers of Commerce, with nearly three-quarters of its members objecting to the regulations for not delivering enough change, El Watan reports. The draft regulations, in their current form, only remove a handful of articles and amend figures in others, the federation said in its report on the draft. The draft regs, which the Finance Ministry finalized and put up for public consultation in January, introduced harsher penalties across the board for violators without taking into account the different categories of tax defaulters, head of the Kafr El Sheikh chamber Hatem Abdel Ghaffar said.

Background: The Unified Tax Act includes the creation of Egypt’s single tax platform as a bid to overhaul tax administration, encourage informal businesses to go legit, and grant authorities better oversight on commercial transactions and tax accounts. The pilot phase was launched last January in the country, with 11k of the biggest taxpayers filing returns and paying taxes via the platform. Among those giving their comments on the regs (pdf) are the Egyptian Tourism Federation, the Egyptian Federation of Investors Associations, and the Federation of Egyptian Industries.

ALSO FROM THE HOUSE-

The Senate’s bylaws earned the House of Representatives’ final seal of approval yesterday, Ahram Gate reports. In their final form, the bylaws require members of the lower chamber of parliament to obtain approval from the Senate president before traveling abroad, subject senators’ stipends to taxes, and lay out the Senate’ full mandate.

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EARNINGS WATCH

Sarwa Capital’s net profit eased 9% to EGP 353 mn in 2020, from EGP 389 mn the year before, the company said in a statement (pdf) yesterday. Strong 4Q growth — EGP 159 mn, up 46% y-o-y — put the company’s finances back on track after a challenging first nine months of the year saw profits fall 30% thanks largely to the impact of covid-19. The company saw strong portfolio growth during the 12-month period, rising 17% y-o-y, and generating an operating income of EGP 942 mn, up 7% from 2019. The NBFS player’s new ins. arm saw its revenues rise almost 150% to EGP 322 mn, driven by a surge in gross written premiums.

What they said: “We are delighted to report these great results in such a challenging year … During the year we have consolidated our financing offerings under one brand and approach, with the country’s first consumer finance license, continued to build our capabilities in insurance, raised an unprecedented amount from the debt capital markets with an array of instruments, as well as fully prepared for and applied new accounting and regulatory rules,” the company said.

Sarwa is no longer Sarwa: Shareholders approved changing the company’s name from Sarwa Capital Holding to Contact Financial Holding, in what it said would “better reflect the composition of the business.”

Speed Medical’s net profit more than quadrupled in 2020 to EGP 79.2 mn, up from EGP 17.1 mn a year ago, according to an EGX filing (pdf). The strong bottom line growth was underpinned by a doubling of annual revenues, which reached EGP 174 mn during the 12-month period, and the launch of the company’s Prime Speed for Medical Services subsidiary in March last year, which provided almost half of its net income.

Kima turns to losses in 2020: The Egyptian Chemical Industries (Kima) reported net losses of EGP 631.2 mn for 2H2020, despite seeing impressive revenue growth during the period, according to the company’s unaudited financial statements (pdf). The company carried over EGP 1.4 bn in prior losses, causing it to slide into the red even as revenues surged almost 600% to EGP 691.1 mn.

ENTERPRISE+: LAST NIGHT’S TALK SHOWS

El Hekaya’s Amr Adib was briefly hospitalized yesterday after sustaining unspecified injuries in a car crash, Al Tase’a’s Youssef El Husseiny noted yesterday (watch, runtime: 1:13). The boisterous host was discharged a few hours later, the producer of Adib’s show later said. We wish Mr Adib a speedy recovery.

The importance of family planning and birth control was all the talking heads could discuss yesterday, after President Abdel Fattah El Sisi touched on the issue during the inauguration of the Ismailia Integrated Healthcare Complex. Al Hayah Al Youm’s Mohamed Sherdy (watch, runtime: 6:48) and Masaa DMC’s Ramy Radwan also had coverage of the inauguration (watch, runtime: 4:29).

Counting the costs: Egypt needs to spend some USD 1 tn to give its 100 mn (and counting) citizens a “decent” quality of life, the president said, stressing that a continuously growing population will strain state coffers and harm citizens, Kelma Akhira’s Lamees El Hadidi noted (watch, runtime: 3:02). Between birth and the age of 60, each individual costs state coffers an average of EGP 500k, Planning Minister Hala El Said told Ala Mas’ouleety’s Ahmed Moussa. The government is looking at offering incentives for family planning in a bid to curtail the country’s population growth, which overshadows any development progress when it is out of control, she said (watch, runtime: 21: 40).

Reminder that we already have a family planning program: Desiree Labib, the director of the Social Solidarity Ministry’s “Two is Enough” family planning program, spoke with Al Hayah Al Youm's Sherdy, noting that it specifically targets Takaful and Karama beneficiaries and hopes to bring down the birthrate to 2.4 children per woman by 2030 (watch, runtime: 9:59).

EGYPT IN THE NEWS

Expect this to dominate the conversation on Egypt in the foreign press for the next while: Relatives of Egyptian American activist Mohamed Soltan were reportedly arrested earlier this week in a move the Washington Post described as “defying the Biden administration” after the US president highlighted Soltan’s case during his election campaign as part of a call for Egypt to improve its rights record. Soltan is the son of Salah Soltan, a one-time senior leader of the Ikhwan, and was himself detained in Egypt for more than a year before being released in 2015. The Post suggests presents this as a test case for the relationship between Washington and Cairo under Biden’s presidency, noting that the new president has yet to speak with President Abdel Fattah El Sisi.

This comes as Biden is set to redefine relations with key regional allies. Reuters says the US president “will conduct diplomacy through Saudi King Salman bin Abdulaziz” rather than MbS, with White House spokesperson Jen Psaki saying, “We’ve made clear from the beginning that we are going to recalibrate our relationship with Saudi Arabia.” The approach to ties with Riyadh, she said, “certainly is a shift from the prior administration.” Psaki also sidestepped criticism that Biden hasn’t rushed fast enough to embrace Israeli leader Benjamin Netanyahu.

ALSO ON OUR RADAR

Siula, NI Capital’s money market fund, was more than 21x oversubscribed when it closed yesterday, attracting EGP 1.075 bn of inflows, Planning Minister Hala El Said announced in a statement. The fund, launched in January, was supposed to close on 10 March but was shut three weeks early thanks to strong demand. The proceeds will be invested in liquid and short-term financial instruments including bonds, treasury bills, and bank deposits.

Other things we’re keeping an eye on this morning:

  • Our friends at CIB have earned two key two security certifications: The ISO-IEC 27001 certification for information security management, and the PCI-DSS 3.2 certification, which is the industry standard for payment card security.

COVID WATCH

We can’t have the “luxury” of a lockdown –Madbouly

The Health Ministry reported 633 new covid-19 infections yesterday, up from 613 the day before. Egypt has now disclosed a total of 175,059 confirmed cases of covid-19. The ministry also reported 51 new deaths, bringing the country’s total death toll to 10,101.

Despite the daily case steadily climbing and deaths hovering in the 50 / day range, Egypt “doesn’t have the luxury of implementing lockdowns,” Prime Minister Moustafa Mabdouly said during a meeting with the heads of House committees yesterday, according to Al Masry Al Youm. A large number of families are dependent on income from seasonal and casual workers — jobs that are vaporized by lockdowns — and the government has taken that into account in its covid-19 strategy, the PM said.

And with that comes your statutorily required daily reminder to wear your masks, courtesy of Health Ministry spokesperson Khaled Megahed, who told Yahduth fi Misr’s Sherif Amer yesterday that the situation being relatively contained now doesn’t mean we’re going to avoid a third wave (watch, runtime: 3:55).

Johnson & Johnson subsidiary Janssen has applied for EU clearance of its covid-19 vaccine from the European Medicines Agency (EMA, according to a statement from the agency. The EMA could issue its decision on the vaccine, which would be the EU’s fourth to be authorized if it is cleared, as early as mid-March.

PLANET FINANCE

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Musk probably isn’t going to be tweeting about copper any time soon: Some of the world’s largest miners are getting ready to pay out bumper dividends as the sector enjoys what the Financial Times is calling a “blistering run” in commodities prices. The price of iron ore has surged almost 85% over the past 12 months while copper has gained 80% since the lows last March, driven by appetite from China, and expectations for a swell in demand from elsewhere as governments look to drive the economic recovery with large infrastructure projects. In response, BHP said yesterday it would hand investors USD 5.1 bn in dividends while Glencore will pay out USD 1.6 bn — another sign that we may be entering what some are calling the start of a new commodities “supercycle.”

Up

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11,534

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Buy 15.56

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Interest rates CBE

8.25% deposit

9.25% lending

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USD 62.78

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USD 1,790.00

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USD 48,642.45

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The EGX30 rose 0.1% yesterday on turnover of EGP 1.4 bn (2.7% below the 90-day average). Local investors were net sellers. The index is up 6.35% YTD.

In the green: Ibn Sina (+3.5%), MM Group (+3.0%) and Ezz Steel (+2.9%).

In the red: Fawry (-3.8%), Credit Agricole Egypt (-2.3%) and Eastern Company (-0.9%).

Shares are down in Japan and Korea, but up in Shanghai and Hong Kong this morning. Futures suggest a mixed opening in Europe later today, while Wall Street looks set to start the trading day in the red.

AROUND THE WORLD

The US State Department signed off on a potential USD 197 mn arms sale to Egypt, which includes 168 Rolling Airframe Missiles and “related equipment,” according to a statement from the US Defense Security Cooperation Agency. “The proposed sale will support the Egyptian Navy’s Fast Missile Craft ships” and help the navy bolster its defense capabilities on Egypt’s coasts and in the Suez Canal, the statement says. The sale is contingent on Congress approval.

IN DIPLOMACY: Egypt’s plans to reopen its embassy in Tripoli after a six year closure mark a more conciliatory position to factions in Western Libya after years spent supporting East-Libya forces led by Khalifa Haftar, Reuters says. The potential reopening would follow consultations with an Egyptian delegation currently in Libya, and comes as a Libyan interim government is about to be formed.

The UN’s newly appointed Resident Coordinator in Egypt Elena Banova discussed cooperation on sustainable development goals and covid-19 measures in her first meeting with Foreign Minister Sameh Shoukry yesterday, according to a cabinet statement.

A handful of stories worth knowing this morning:

  • Qatar wants to mediate an Iran-US nuclear accord: Qatar’s foreign minister met with Iranian President Hassan Rouhani for talks in Tehran yesterday aimed at cooling tensions between Iran and the US, the foreign ministry said in a statement. Qatar would advocate for a return to the beleaguered 2015 Iran nuclear agreement which former US President Donald Trump unilaterally abandoned in 2018 in favor of harsh sanctions.
  • The IMF will resume a USD 6 bn loan program to Pakistan, raising expectations that Islamabad may soon tap global debt markets after the restoration of its fiscal safety net, the Financial Times reports. The agreement was delayed last October due to the government’s reluctance to adopt conditional austerity measures as Pakistan struggles with structural challenges and over USD 113 bn in foreign debt and liabilities.
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Concrete or asphalt? What works best for Egypt’s road infrastructure: Egypt’s road and bridge infrastructure has been a key component of the Sisi administration’s political agenda, with EGP bns of public investments earmarked for upgrading existing infrastructure and expansions for new roads. To be specific, the government has a 10-year plan from 2014 — when President Abdel Fattah El Sisi was first voted into office — through to 2024 to build new roads at a total cost of EGP 1.1 tn, Transport Minister Kamel El Wazir said in August. The construction of this infrastructure has naturally required a large amount of raw materials, with the two most common materials used for road paving being asphalt or concrete.

Although Egypt typically uses asphalt for paving, we found a paper that suggests that concrete could be a better option for some types of highly-used roads. The paper — by Mohamed Marzouk from the Department of Structural Engineering at Cairo University, and Mohamed Moustafa Ashmawy from the Department of Commercial Construction Projects at Lafarge — arrives at this conclusion based on a number of factors and variables, including the initial cost, the frequency and cost of required maintenance, and how each material lends itself to fuel efficiency for vehicles on each type of road.

So, if concrete could actually be a better option, why does Egypt use asphalt? For starters, asphalt is generally easier to repair and maintain. The material creates a smooth surface and allows for overlay — which uses existing asphalt layers as the base for new paving, rather than tearing out the original layer in what would be a disruptive process. Additionally, asphalt has a high tolerance for different temperatures (hello, Egypt’s scorching summer sun).

Then there’s the difference in initial cost: In 2018, using asphalt to pave a road initially cost EGP 364 per sqm, as opposed to EGP 460 per sqm for concrete.

However, asphalt is not without its drawbacks. Maintenance costs are high, the material’s life span is short, it requires frequent maintenance and resurfacing, and is a significant contributor to the emission of air pollutants, according to Yale researchers. Total maintenance costs for asphalt make up almost 31% of its total initial cost, which is almost 7x more than its concrete counterpart.

Concrete maintenance costs, on the other hand, make up a mere 3.7% of the total initial cost of construction. Moreover, it enjoys high durability, a longer life span, and can additionally withstand floods and surface water.

Other factors to consider when looking at concrete vs asphalt are embodied energy costs and fuel consumption. Embodied energy is the sum of all energy needed for all processes required in order to construct the highway, starting with mining the material. When looking at embodied energy, concrete consumes slightly less than asphalt, the authors say. The slight difference in energy consumption can increase in the future, through the potential use of green cement products — which cuts down on emissions during the manufacturing process to create a less environmentally damaging final product.

Now for the most exciting part: Fuel consumption and efficiency. A semi-truck trailer driving on an asphalt highway will consume 1 liter of fuel per 1.9 km traveled. On concrete, the same liter of fuel will let it travel 2.33 km, the paper states. An often-cited study by the Department of Civil Engineering at the University of Texas at Arlington explains that “the rolling resistance of the pavement [is] an important contributor to the fuel consumption and the corresponding CO₂ production.” Rolling resistance refers to the friction caused by a moving object on a surface. If the surface is rigid, less energy is consumed in deflecting it. Concrete is usually more rigid than asphalt, meaning it requires less energy (in this case fuel). “In the case of a heavily loaded truck, energy is consumed in deflecting a non-rigid pavement … This makes concrete a slightly more sustainable solution,” the study adds.

Why doesn’t Egypt have more concrete roads? Egypt got its first concrete highway back in 2016, with the Cairo-Suez Highway, according to global building material provider CEMEX, which supplied 130k cbm of concrete for the highway’s construction. While this may seem like a belated introduction of a concrete highway to a country like Egypt, the answer to why we didn’t have concrete highways before could lie in the up-front costs. At the beginning of the project life cycle, concrete is more capital-intensive than asphalt, and concrete requires frequent repairs of its joints.

It’s also not a one-size-fits-all: Concrete may not be the best option for all types of roads, as demonstrated by a comprehensive framework Marzouk and Ashmawy provide in their paper to determine whether a road would be best served by using asphalt or concrete for its construction. Using the Sokhna Quarries Road as an example or base case, the model looks at cost, durability, time, safety and energy consumed by those streets and highways during and after construction.

The tool — which, in its essence, is an equation — is designed to help decision-makers assess whether asphalt or concrete best fit their priorities. The tool allows decision makers to input values for a specific set of criteria and assign weights to each one, according to preferences and priorities. The criteria are initial cost (in EGP), maintenance cost (in EGP), know-how and duration (days), embodied energy (megajoule) and fuel consumption (liters). According to the provided data and weights, the tool then recommends the optimal solution for the decision-maker, in terms of using asphalt or concrete for a specific road building project.

The framework helps decision-makers to look at the big picture and long-term considerations to weigh into their final choice. The model incorporates a life cycle cost analysis, which mainly includes the construction of a new pavement structure, regular maintenance and operations of the responsible body and the removal, re-use or disposal of materials or rehabilitation. This goes far beyond the initial tally of up-front costs.

So what’s the takeaway from the framework? Each material works best for a different type of road. Based on Marzouk and Ashmawy’s model, high-traffic highways are recommended to be built and paved with concrete, due to lifecycle costs being 17% lower as a result of fewer maintenance requirements, and a higher contribution to sustainability. For streets in areas with lower traffic, asphalt roads are recommended, as their initial cost is 23% lower and the lower usage rates would mean less frequent maintenance requirement (the latter of which is where the bulk of the lifecycle cost is concentrated).

Your top infrastructure stories for the week:

  • Energy: El Sewedy Electric signed an initial agreement to purchase a privately-owned East Asian power transformers manufacturer.
  • Canals: The government has completed lining 831 km of canals in a project that cost some EGP 3 bn, the Planning Ministry said in a statement last week.
  • Rail: General Electric was awarded the contract to manufacture and supply 100 railcars by the Egyptian National Railways, unnamed government sources told the local press, indicating that the first batch is underway for next March through EUR 290 mn in funding from the European Bank for Reconstruction and Development.
  • More rail: French rail manufacturer, Alstom, has completed construction of the Dierut section of the Beni Suef-Assiut railway line.
  • Water treatment: A consortium led by Orascom Construction will begin constructing a 6 mn cbm agricultural wastewater treatment facility to serve the West Nile Delta region.
  • Green economy: The first stage of the government’s green car incentive program will cost state coffers EGP 7.1 bn
  • Infrastructure: ElSewedy Electric has signed a contract to complete infrastructure works worth EGP 711 mn in the South Valley development project.

CALENDAR

February: France’s finance minister, Bruno Le Maire, is set to visit Egypt.

6-27 February (Saturday-Saturday): Mid-year school break (public schools — enjoy the break from bumper-to-bumper traffic).

7-28 February (Sunday-Sunday): The Finance Ministry will receive applications from companies wishing to take part in the second phase of its program for the immediate payout of export subsidy arrears to exporters, minus a 15% fee.

17 February (Wednesday): MENA x CEO MENA Entrepreneurship & VC Panel: Investor Perspectives from New York to North Africa will be hosted by the Columbia Entrepreneurs Organization.

20 February (Saturday): Final results of applications for private university places will be announced on the Higher Education Ministry’s electronic university admissions site

22-24 February (Monday-Wednesday): Second Arab Land Conference on land management, efficient land use, among other topics.

22 February- 5 March (Monday-Friday) Egypt will host the World Shooting Championship in 6 October’s Shooting Club, with 31 countries set to participate

26 February (Thursday): The Afro Future Summit will take place virtually.

26-28 February (Thursday-Saturday): The second edition of the Egypt International Art Fair will be held at Dusit Thani Lakeview Cairo.

28 February (Sunday) Deadline for businesses, sole traders, and those generating income from sources other than their day job to file wage tax returns through the electronic filing system.

March: Potential visit to Cairo by Russian President Vladimir Putin.

1 March: Eastern Mediterranean Gas Forum comes into effect.

1-5 March (Monday-Friday): Aswan Forum for Peace and Development will take place virtually.

4-6 March (Thursday-Saturday): Cairo Fashion & Tex trade show, Cairo International Convention Centre, Cairo, Egypt

8 March (Monday): The IDC Future of Work Egypt conference will be held virtually featuring experts from Egypt and Jordan.

9-11 March (Tuesday-Thursday): EduGate 2021 – Enter The Future conference, Kempinski Royal Maxim Hotel, Cairo, Egypt.

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

23 March (Tuesday): The second edition of the Egypt Retail Summit takes place at the Nile Ritz Carlton hotel.

25-27 March (Thursday-Saturday): The Real Gate real estate exhibition, Egyptian International Exhibition Center, Cairo.

31 March (Wednesday): Deadline to visit the moroor and get an RFID sticker affixed to your car’s windshield — or run afoul of the Traffic Police.

1-3 April (Thursday-Saturday): HVAC-R Egypt Expo.

8-10 April (Thursday-Saturday): The TriFactory’s Endurance Festival at Somabay.

13 April (Monday): First day of Ramadan (TBC).

25 April (Sunday): Sinai Liberation Day.

29 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC),

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

1 May (Saturday): Labor Day (national holiday).

2 May (Sunday): Easter Sunday.

3 May (Monday): Sham El Nessim.

13-15 May (Thursday-Saturday): Eid El Fitr (TBC).

25-28 May (Tuesday-Friday): The World Economic Forum annual meeting, Singapore.

1 June (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).

7 June-9 June (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

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

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

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

30 June (Wednesday): 30 June Revolution Day.

1 July: (Thursday): National holiday in observance of 30 June Revolution.

30 June- 15 July: National Book Fair.

1 July (Thursday): Large taxpayers that have not yet signed on on to the e-invoicing platform will suffer a host of penalties, including removal from large taxpayer classification, losing access to government services and business, and losing subsidies.

19 July (Monday): Arafat Day (national holiday).

20-23 July (Tuesday-Friday): Eid Al Adha (national holiday)

23 July (Friday): Revolution Day (national holiday).

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

9 August (Monday): Islamic New Year.

12 August (Thursday): National holiday in observance of the Islamic New Year.

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

30 September-2 October (Thursday-Saturday): Egypt Projects 2021 expo, Egypt International Exhibition Center, Cairo, Egypt.

1 October (Friday): Expo 2020 Dubai opens.

6 October (Wednesday): Armed Forces Day.

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

18 October (Monday): Prophet’s Birthday.

21 October (Thursday): National holiday in observance of the Prophet’s Birthday.

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

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

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

27 June – 3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.

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