Tuesday, 30 March 2021

The boat has floated and we have three listings in the market. Not a bad week, huh?

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people. It’s hump day, we know, but it’s shaping up to be the best week in forever. Consider:

  • The Suez Canal is open again now that the Ever Whatever is floated and chilling in the Great Bitter Lake.
  • CI Capital has priced Taaleem’s IPO on the Egyptian Exchange at the midpoint of its range amid strong appetite from global and institutional investors.
  • Macro Pharma Group has announced pricing for its IPO on the EGX, as we noted yesterday, giving investors an entry point to a brand new segment (cosmeceuticals and neutraceuticals) that’s growing gangbusters.
  • And IDH is kicking off a roadshow today in support of its local listing on the EGX in the first “technical listing” we’ve seen in Egypt.

(Yes, we’re touching wood as we say the above.)

Conventional wisdom for some time now has been that investors are howling for new paper on the EGX. Macro and Taaleem are very interesting companies in very exciting sectors and IDH is a name that will really stand out on the EGX when it comes home. We can’t recall a more exciting week for capital markets.

We have more on all of the above in this morning’s news well, below.

It’s official: There are boats other than the Ever Given in the Suez Canal. Ship traffic through the critical trade gateway resumed in both directions as of yesterday night at 8pm — an hour after the Panama-flagged ship pulled up at the Great Bitter Lake to undergo a full inspection for seaworthiness, Port Said Shipping Chamber President Adel Lamei told Extra News (watch, runtime: 5:34). The Ever Given was finally dislodged from the canal after disrupting nearly some 10-15% of global trade for almost a week. Watch the Suez Canal Authority’s livestream of the final steps (runtime 3:36).

IT’S A BIG DAY FOR: Information Minister Osama Heikal, whose policy statement to MPs is up for discussion at the House of Representatives today, House Culture and Media Committee Undersecretary Tamer Abdel Kader told Ala Mas’ouleety’s Ahmed Moussa (watch, runtime: 4:14). Discussion of the report was originally scheduled to take place last month but was postponed for six weeks to give the minister a chance to prepare a response. Heikal’s policy statement was sharply criticized by MPs, who alleged the minister delivered insufficient results after spending state funds.

CIRCLE YOUR CALENDAR-

The two-day Arab Federation of Exchanges Annual Conference 2021 wraps today. This year’s virtual conference will discuss ESGs for economic growth and capital markets as well as fintech and innovation.

The Spring Meetings of the IMF and the World Bank Group are set to kick off next Monday, 5 April and wrap the following Sunday, 11 April. This year’s virtual meetings will bring together central bankers, ministers of finance and development, private sector executives, representatives from civil society organizations and academics. The topics up for discussion include the world economic outlook, poverty eradication, economic development, aid effectiveness, and the global financial system. Some events will be open to the public and can be streamed live from the World Bank’s platform.

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*** It’s Going Green day — your weekly briefing of all things green economy in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: In round 2 of our startup spotlight, we look at how agritech startup Plug’n’Grow and watertech startup Wai Technologies are solving our drinking and irrigation water leakage issues.

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Organized to the highest of international endurance sports standards, you don’t want to miss this year’s event taking place at Somabay on 8-10 April.

IPO WATCH

Taaleem prices IPO amid strong institutional investor appetite

CI Capital has priced the IPO of multi-brand higher education player Taaleem Management Services at EGP 5.75 per share, roughly the midpoint of the EGP 5.48-6.02 range announced in the prospectus last week amid strong investor demand.

The offering to institutional shareholders was 2.34x oversubscribed, and pricing values the offering at EGP 4.2 bn, Taaleem said in an announcement (pdf). Almost 340 mn shares are earmarked for institutional buyers, equivalent to a 46.55% stake in the company and roughly 95% of the 49% stake Taaleem is listing on the EGX.

Taaleem’s base of institutional investors will be nicely diversified by geography: “In spite of the significant headwinds facing the market recently, the institutional tranche of Taaleem’s offering generated very strong interest from quality investors from the GCC, Europe, South Africa and Egypt, among others,” CI Capital Investment Bank CEO Hesham Gohar told us. Gohar is also chairman of Taaleem. “Demand was predominantly driven by institutional investors, which represent the vast majority of the order book. I look forward to a successful retail offering and to the first day of trading on the EGX on 7 April.”

Retail investors have until Thursday to bid for the 17.89 mn shares up for grabs in the public offering, which kicked off on Sunday. A 2.4% stake in the company is being made available to retail traders, representing 5% of the shares being listed on the exchange. Subscribers should pay 25% of the shares they wish to purchase upfront to a licensed brokerage company, the company said.

Who are the sellers? Taaleem hasn’t identified who is offering how much in the secondary sale, in which the selling shareholder is an SPV named Sphinx Obelisk, but key players in building Taaleem included founder Seddik Afifi, Ahmed Badreldin’s RMBV, and CI Capital.

TAALEEM IN NUMBERS:

  • Taaleem is a multi-brand player with Nahda University in Beni Suef (where it has two campuses) as its largest brand. Nahda’s capacity of 11k students (6.3k enrolled now) makes it the largest private university in Upper Egypt.
  • Launching Badya University in West Cairo with a potential capacity of 9.2k students.
  • Tight focus on what the job market wants in graduates from faculties, including computer science and engineering, business and marketing.
  • Heavy emphasis on health sciences, including medicine, pharma, dentistry and physiotherapy, including through a partnership with the internationally ranked Medical University of Vienna.
  • Operating revenue CAGR of 28% between FY2017-2018 and FY2019-2020, with operating revenue of EGP 450 mn in FY2019-2020.
  • Adjusted EBITDA of EGP 240 mn in the same year, good for a CAGR of 37%.
  • Net profit of EGP 144 mn in FY2019-2020, up from the EGP 110 mn the previous year and EGP 62 mn in FY2017-2018.

Ticker: The company’s shares will be on the EGX under the ticker TALM.

Advisors: CI Capital, also a shareholder in Taaleem, is running the sale and serving as the bookrunner. MHR & Partners in association with White & Case are the counsel for CI Capital, while Matouk Bassiouny & Hennawy are domestic counsel to Taaleem. PwC acts as an auditor for the transaction, and BDO is the independent financial advisor.

MARKET WATCH

IDH eyes April listing on the EGX

Consumer healthcare giant Integrated Diagnostics Holdings (IDH) aims to go ahead with its listing on the EGX in April, a source with direct knowledge of the matter told Enterprise, noting that the timeline is subject to customary regulatory approvals. The London-listed company received approval last week from the Financial Regulatory Authority to proceed with the transaction, which will see the company list 5% of its shares on the EGX in the bourse’s first “technical listing.”

Hold up. What’s a technical listing? That’s when a company lists its shares on an exchange, but doesn’t offer new or existing equity for sale. Instead, what IDH has done is convince enough shareholders in London to come over to the EGX and transfer their shares here. Others could follow suit in the future at their convenience — the shares on both exchanges are what the finance nerds call “fungible.”

IDH will kick off this afternoon its roadshow in support of the listing, CEO Dr. Hend El Sherbini tells us. The roadshow will see El Sherbini and top IDH execs meet potential institutional investors from across the region and beyond.

The roadshow will include meetings in Egypt with local institutions, El Sherbini says, a fact that underscores one of the challenges IDH is looking to address with the EGX listing: “We don’t have Egyptian institutions in our shareholder registry,” she explains. “Our shareholders are very much concentrated right now in Europe and the United Kingdom. We would really like to see Egyptian as well as GCC- and MENA-based funds in the shareholder base, and we’d love some US representation as well.”

IDH listed in London back in 2015 in a very well-received offering that was more than 11x oversubscribed, but the firm is very tightly held: The investors who have bought in like the story and haven’t been big sellers. That’s made it hard for new investors to buy in, and it’s one reason IDH is moving ahead the transaction.

At least 5% of current shareholders will transfer their shares from the LSE to the Egyptian Exchange to satisfy regulatory requirements here, El Sherbini says.

“We want to give institutions and individuals who want to invest in healthcare the chance to be part of IDH,” El Sherbini explains. “The goal is to widen our base of investors at the same time as we give a boost to both the liquidity of the share and, ultimately, the share price. Egypt is our largest market. Our brands — Al Borg and Al Mokhtabar — are trusted, and the Al Mokhtabar brand has been in this market for more than 40 years. It just makes sense.”

How will the local listing crack the liquidity problem? “The benefits to shareholders, including myself, is that we’re giving much more visibility to the shares. Whether you’re a foreign, regional or local investor — institutional or high net worth — investors in the EGX know the market. So we’re automatically limiting the pool of potential investors to people who are looking for shares like ours. And when we list in Egypt, we’ll be an important company just by virtue of our revenues, our profitability and our market cap. We’re going to stand out when it comes to people who want to buy shares like ours. We’re simply less visible in London.”

So if shareholders with at least 5% have already agreed to transfer their holdings to the EGX, why the roadshow? It’s all about education, El Sherbini says: “We need fund and portfolio managers to understand us, to ensure there’s knowledge of our story among both potential buyers and sellers going forward.”

What’s El Sherbini’s pitch to investors? “We’re the biggest consumer healthcare player in our part of the world, offering medical diagnostics and radiology services through a portfolio of leading brands in Egypt, Jordan, Sudan and Nigeria. For the past decade, we’ve been and remain the only lab in Egypt accredited by the College of American Pathologists. Our market is growing fast: As we said in our recent trading update, we grew the top line by c. 19% last year to about EGP 2.6 bn and our EBITDA margin has consistently been around 40% for years and years. We’re profitable and cash generative, so we have traditionally paid dividends on a yearly basis,” El Sheribini said.

The company is also well-governed, she said, with a world-class board led by chairman Lord St John of Bletso and including industry veterans from Europe and beyond. “The quality of the board — which is majority independent non-execs — and the fact that we have and will continue to abide by the very strict governance rules of the London Stock Exchange should give investors a lot of comfort.”

IDH IN NUMBERS:

  • The group offers 2k medical tests and diagnostics at 480 branches across Egypt, Jodan, Sudan and Nigeria.
  • It ran more than 30 mn tests for 7 mn patients in 2019, the last year for which full financials have been released.
  • The company’s MegaLab in Egypt can run 20k tests per hour on global-standard equipment.
  • Consistent top-line growth delivered revenues of EGP 2.2 bn in 2019 with a 2015-2019 CAGR of 17%.
  • It’s a cash-generative business, with an EBITDA CAGR of 25% in the same period and an EBITDA margin consistently at c. 40%
  • It has paid dividends even after the float of the EGP and during covid, a move appreciated last year in particular by fund managers struggling with redemptions.

ADVISORS: EFG Hermes and Renaissance Capital are quarterbacking the transaction, while White & Case, Clifford Chance and Ogier are counsel. Inktank is IDH’s investor relations advisor.

SUEZ CANAL

So long, farewell

At least 113 container ships are traveling in both directions after the Suez Canal reopened to marine traffic yesterday evening, with more ships set to sail as of today 8am, Suez Canal Authority (SCA) boss Osama Rabie said at a presser yesterday (watch, runtime: 32:00). Traffic in the Canal resumed yesterday after the MV Ever Given was dislodged following six days of dredging work to create maneuvering space, along with push and tow maneuvers from several tug boats. The ship apparently did not swing back across the Canal yesterday — engineers simply put the operation on hold temporarily because of strong winds that could have caused damage to the ship, Ezzat Adel, captain of one of the tug boats that refloated the ship told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 4:23).

It’s going to take three or four days to clear the backlog of 422 ships that were stalled at the Canal as they waited for the Ever Given mega-vessel to be dislodged from the Canal’s banks, Rabie said. More than four dozen ships decided to change course to take the long way around the Cape of Good Hope.

Investigations are now underway to determine the cause of the grounding, after which the Ever Given will finally leave Egypt. Initial reports show that the MV Ever Given, chartered by Taiwan’s Evergreen, became wedged sideways across the Canal after strong winds and a dust storm caused the crew to lose control of the ship as it was en route from China to Rotterdam on Tuesday morning. The investigation will also look at potential human error and will probe the ship’s captain and two pilots who were on board the vessel — who are meant to act as “consultants … to give advice, for instance on how to maneuver the vessel or what course to steer,” the Washington Post says. The Suez Canal pilots, who are required to be on board any vessel that passes through, are ultimately not liable for damages to the ship they are assigned to under Egyptian law, the newspaper notes.

Once the investigation wraps, the SCA will evaluate the necessary compensations for vessels that faced delays while the vital waterway was blocked, Rabie said. The six-day blockage of the Suez Canal has cost Egypt some USD 15 mn in foregone daily revenues, he said. Previous estimates put that figure at USD 14 mn per day. Egypt is also entitled to claim damages from the ship owner, former SCA boss Mohab Mamish reminded Ala Mas’ouleety’s Ahmed Moussa (watch, runtime: 16:52).

The good news: Egypt’s balance of payments shouldn’t see “significant disruption” in the aftermath of the Suez Canal debacle, thanks to Canal receipts faring better than any other cross-border services in the face of previous crises, Moody’s said (pdf) in a periodic review of Egypt’s credit rating, which does not involve a rating or outlook update. Suez Canal receipts remained almost stable and slipped by just 0.7% when the pandemic was wreaking havoc on global economies as it hit the world in early 2020. “We expect that other Suez Canal-reliant exporters, including oil-exporting countries in the Middle East, are unlikely to be affected in the absence of an extended disruption,” Moody’s writes, affirming Egypt’s credit rating at B2 with a stable outlook.

More good news: The resolution of the situation is expected to bolster shipping lines’ confidence in the Canal, particularly as the ship was dislodged and traffic resumed faster than initial forecasts expected, Mamish told El Hekaya’s Amr Adib (watch, runtime: 1:09).

Keep an eye on Russia, which looks to be capitalizing on the Ever Given saga to tout its own Northern Sea route as an alternative to the Suez Canal, according to Reuters. Moscow had said back in 2019 that it plans to make the route viable year-round (rather than only between July and October) by 2030, and that it could cover ins. for commercial shippers taking on risks of possible supply disruptions.

But don’t expect Egypt to dig a newer New Suez Canal in a bid to remain competitive, since the economic feasibility just isn’t there, Rabie said at yesterday’s presser.

The internet had its fun while it lasted: While holding up USD 10 bn in global trade, the stuck ship yielded some A-class memes, the Washington Post notes.

The story is still topping coverage of Egypt in the foreign press, with everyone from the Financial Times to the Wall Street Journal and Bloomberg covering the story.

INVESTMENT WATCH

Emaar loves Egypt + Edita’s big move in Morocco

Emaar Properties plans to double its Egypt operations to 30% of its overall business, founder Mohamed Alabbar told Asharq Business, describing Emaar Misr as the “star performer” of 2020. This follows the company’s announcement earlier this week of its intention to spend EGP 37.8 bn developing a 500-feddan residential project in Sheikh Zayed.

IN OTHER INVESTMENT NEWS-

Snackfood maker Edita aims to have its Moroccan plant fully operational by mid-year, head of Investor Relations Mennatallah Shams El Din told the local press. The plant’s construction, which began in 4Q2019, has since been completed, and the production lines are in the process of being installed. Edita’s Morocco-based subsidiary acquired a USD 8.2 mn loan last June to fund the facility, which was slated to begin production last year but suffered covid-19 induced delays.

Edita will receive an EGP 90 mn seven-year loan from the National Bank of Kuwait to finance the company’s local capital expenditures, the company announced in an EGX disclosure (pdf). The loan will be issued at low interest rates under a CBE initiative to support manufacturers through covid-19, and follows a EGP 105 mn loan agreement the company signed with Arab Bank last September to finance a new production line.

DEBT WATCH

Egypt could be back on JP Morgan’s EM bonds index in 2H2021

Egypt is expected to secure a spot on JP Morgan’s emerging-market government bonds index in 2H2021, unlocking up to USD 4.8 bn in new inflows from passive funds that track the index, and potentially leading to a 5% EGP appreciation against the USD, Rand Merchant Bank economist Neville Mandimika told Reuters. This would end a decade of absence from the index, which Egypt was removed from in 2011 in the aftermath of the 25 January Revolution.

Why we’re eligible now: Egypt now has a combined nominal USD 28.2 bn in longer-term bonds maturing in over 2.5 years, which is the minimum maturity for inclusion in the index. The inclusion of its eligible debt instruments would give Egypt a 2% weighting in the index and divert a portion of around USD 240 bn of assets under management. It could also lead to a natural decrease in yields, which tend to drop an average 130 bps before inclusion, Mandimika said.

Egypt’s strong economic performance since the completion of the IMF reform program is another factor: The government has, since 2019, maintained consistent primary budget surpluses, and “paved the way for its debt-to-gross-domestic-product profile to compress,” Mandimika says. Egypt began implementing a comprehensive debt strategy last March, focusing on moving toward longer-term debt and prioritizing a long-term reduction in the debt-to-GDP, which stood at 86.1% at the end of the last fiscal year after having been above 100% before authorities started implementing the IMF-backed program in 2016.

Why is inclusion good for Egypt? Authorities have been working towards this goal for over two years in a bid to cut borrowing costs and boost inflows. Inclusion would add Egyptian bonds to a list of sovereign instruments gauged by leading investment banks to inform large index-tracking ETFs which invest in the entire EM debt market. The index is among the most popular benchmarks for bond performance and is widely used by money managers.

The ball’s in JPMorgan’s court now: Finance Minister Mohamed Maait told Bloomberg in December 2020 that the ministry had fulfilled nearly all of JPMorgan’s requirements, and was waiting to hear back from them, but we’ve heard nothing official from the ministry since then.

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LEGISLATION WATCH

A little TLC

Age discrimination for those aged 65 and above could soon be outlawed after the House Social Solidarity Committee approved yesterday a draft bill to support the elderly by ensuring their integration, and full and effective inclusion in society, according to the local press. The law would also set up other benefits and rights for senior citizens with special needs, the newspaper notes, without providing further details. The Senior Care Act will now be sent to the Council of State (Maglis El Dawla) before going up for discussion and a final vote in the House general assembly.

MOVES

SCCT appoints Steven Yoogalingam as managing director

Steven Yoogalingam (LinkedIn) has been named managing director of the Suez Canal Container Terminal (SCCT), according to a press release (pdf). Prior to coming to SCCT, which is majority-owned by Maersk subsidiary APM Terminals, Yoogalingam was CEO of the Aqaba Container Terminal in Jordan.

ENTERPRISE+: LAST NIGHT’S TALK SHOWS

Now that the Suez Canal debacle is behind us, it’s time for the Grand Ethiopian Renaissance Dam to take center stage again. Or at least that’s what El Hekaya’s Amr Adib thinks is going to (and should) happen now, saying that the Ever Given was a temporary distraction from our ongoing crisis with Ethiopia (watch, runtime: 1:32).

The international community needs to step up and intervene to mediate between Egypt, Sudan, and Ethiopia to reach a binding agreement on filling and operating the dam, international law professor Mofeed Shehab told Adib. He suggested that Egypt has wide international backing in its position on the matter, since we have been patient and remained committed for a full decade to negotiations and a peaceful resolution to the matter (watch, runtime: 5:44).

Also getting attention on the airwaves: The upcoming royal mummy parade, which will see the transfer of 22 mummies from the Egyptian Museum in Tahrir to the National Museum of Egyptian Civilization in Fustat. The transfer is meant to help alleviate some of the overcrowding at the Tahrir Museum, where artefacts aren’t getting the attention they deserve due to the lack of space, Tourism Minister Khaled Anany told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 1:03). Anany also briefed Ala Mas’ouleety’s Ahmed Moussa on the parade (watch, runtime: 11:47).

EGYPT IN THE NEWS

The aftermath of our series of unfortunate events is still earning us plenty of digital ink in the foreign press. On a positive note, a six-month-old baby has been pulled alive from the rubble of the 10-story building that collapsed in Cairo's Gesr El Suez neighborhood on Friday, which left 25 people dead and 26 injured, the Associated Press reports. The recent string of misfortunes (including the blockage of the Suez Canal, the Sohag train crash, and the Gesr El Suez building collapse) were not triggered by a pharaonic curse, archaeologists apparently found themselves needing to say, according to Arab News.

ALSO ON OUR RADAR

Arrests made as Sohag train crash death toll revised downwards: Eight people have been arrested over the collision of two trains in Sohag on Friday that claimed the lives of 18 people and injured hundreds, the Prosecutor General’s office said in a video statement (watch, runtime: 5:45). These include the drivers of the two trains and their two assistants, the head of traffic control in Assiut, and three other guards. The prosecutor also revised the death toll down to 18 from 19, and raised the number of people found injured to 200. Initial reports suggested that 32 people had lost their lives in the collision, but the Health Ministry revised the figure to 19.

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

  • Misr Ins. Holding Company is planning to set up a new medical ins. arm with capital of some EGP 160 mn, and will apply for a license from the Financial Regulatory Authority in the coming days.
  • The Egyptian Chemical Industries (Kima) has agreed to assign the operation and maintenance of its ammonia-urea plant Kima-2 to Italy-based Maire Tecnimont.

COVID WATCH

Put the pedal to the metal

Egypt’s vaccine rollout should be expedited after the Health Ministry decided to redistribute people waiting for a jab across more medical centers. Some of the 400k individuals who registered for a vaccine through the Health Ministry’s website and who are now on waiting lists at one of the first 40 medical units the ministry set up will instead get their vaccines at one of the newly-introduced 98 centers across the country, advisor to the Health Minister Aysam Salah told Al Shorouk. The decision comes as the ministry has received an influx of complaints about the slow vaccination rate and long waiting lists, especially among individuals who were among the first to register for a jab.

You can now also amend your vaccine registration to select a center that doesn’t have a waiting list by calling the ministry’s hotline (15335), Salah said.

The available centers: Vaccines are now being administered at 138 medical units across the country. There are 33 sites available across Cairo, followed by another 24 units in Giza and 19 in Alexandria. The ministry is looking to set up 5k medical units and 600 hospitals to administer the vaccines soon.

So far, a total of 600k individuals have registered for a vaccine through the ministry’s website. It remains unclear how many of those have been inoculated already. Health Minister Hala Zayed had said that the aim was to have as many as 250k individuals vaccinated last week alone. It is unclear whether that target was met.

Egypt should start manufacturing China’s Sinovac vaccine within a few months, Undersecretary of the Health Ministry for Preventive Affairs Mohamed Abdel Fattah said on Sada El Balad’s Sabah El Balad (watch, runtime: 6:55). This comes as a Chinese delegation will be visiting Egypt soon to inspect state-owned vaccine maker Vacsera’s production lines. All eligible Egyptians should be vaccinated before year-end, he added.

Could the House of Representatives go on recess until all MPs are inoculated? That’s what MP Mostafa Bakry proposed at yesterday’s plenary session, pointing out that 15 MPs have been infected with the virus that causes covid-19 and that transmission is easy in the parliament building, Al Mal reports. Bakry insisted he doesn’t want MPs to jump the vaccination line or to get preferential treatment ahead of others. House Speaker Hanafi Gebali backed Bakry’s idea and said he will look into putting the proposal in motion.

The Health Ministry reported 689 new covid-19 infections yesterday, up from 686 the day before. The ministry also reported 32 new deaths, bringing the country’s total death toll to 11,914. Egypt has now disclosed a total of 200,739 confirmed cases of covid-19.

PLANET FINANCE

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The USD 20 bn “firesale” of Chinese and US tech stocks last week is the doing of hedge fund Archegos Capital Management, which defaulted on margin calls by a number of prime brokerages last week following a tumble in ViacomCBS and several tech stocks to which the fund was highly exposed, the Financial Times reports. Having been slower to offload equity blocks than Goldman Sachs and Morgan Stanley, Credit Suisse and Japanese bank Nomura are likely to suffer losses, with Credit Suisse insiders saying the bank could lose in the realm of USD 3-4 bn, and the bank saying losses “could be highly significant and material to [their] first-quarter results.” Further block sell-offs could ensue in coming days, hedge fund managers said, as other funds wind down overleveraged positions.

But how did Archegos amass such an overleveraged portfolio to begin with? Most of the money was provided by banks in swaps, or contracts-for-difference agreements, meaning Archegos may not have owned most of the securities underlying its stocks, Bloomberg reports. The types of derivatives used by Archegos are made off of exchange markets, meaning the company is not bound by market rules to disclose holdings of more than 5%, and future transactions, in a US-listed company.

MEANWHILE: Visa is jumping on the crypto bandwagon, saying yesterday that it will now support payments in cryptocurrency USD Coin as part of a pilot program with payment platform Crypto.com, in the latest sign that crypto is going mainstream, Reuters reports.

Down

EGX30

10,738

-1.2% (YTD: -1.0%)

Down

USD (CBE)

Buy 15.67

Sell 15.77

None

USD at CIB

Buy 15.67

Sell 15.77

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

9,616

+1.4% (YTD: +10.7%)

Up

ADX

5,824

+1.2% (YTD: +15.4%)

Up

DFM

2,553

+2.1% (YTD: +2.4%)

Down

S&P 500

3,971

-0.1% (YTD: +5.7%)

Down

FTSE 100

6,736

-0.1% (YTD: +4.3%)

Up

Brent crude

USD 65.22

+0.4%

Up

Natural gas (Nymex)

USD 2.59

+1.1%

Down

Gold

USD 1,709.40

-0.3%

Up

BTC

USD 57,294.13

+3.94%

The EGX30 fell 1.2% yesterday on turnover of EGP 1.1 bn (24.7% below the 90-day average). Local investors were net buyers. The index is down 1.0% YTD.

In the green: EFG Hermes (+3.0%), Pioneers (+2.0%) and GB Auto (+1.8%).

In the red: Eastern Co. (-3.6%), CIB (-2.5%) and Heliopolis Housing (-2.3%).

AROUND THE WORLD

Regional developments and anti-terrorism were on the agenda at a ministerial meeting between Egypt, Iraq, and Jordan that brought together FMs Sameh Shoukry, Fuad Hussein, and Ayman Safadi in Baghdad yesterday, Iraqi state-run news agency INA reports. The ministers also discussed joint cooperation ahead of a planned tripartite summit that was due to be held in Baghdad at the end of this month but was postponed following last Friday’s train crash in Sohag. The meeting — a new date for which is yet to be announced — is set to bring together President Abdel Fattah El Sisi, Iraqi PM Mustafa Al-Kadhimi and Jordan’s King Abdullah, along with the three countries’ foreign ministers.

greenEconomy

How Egypt’s startups are helping solve our water leakage crisis: Last week, we looked at local startups providing easy household solutions to tackling waste management and solar energy problems. Our spotlight on Egypt’s green tech startups continues with a topic that we’ve covered intensively on Enterprise: Leakages in our drinking and irrigation water, and what we can do to fix it.

This week, we dive into agritech startup Plug’n’Grow and watertech startup Wai Technologies, both of which are at the epicenter of a nationwide problem, which will likely get worse as the Grand Ethiopian Renaissance Dam crisis still looks like a ways away from being resolved.

Egypt’s water scarcity is only growing: Egypt’s annual share of water per capita is 560 cubic meters, well below the 1k cubic meter threshold for water scarcity, Prime Minister Mostafa Madbouly recently told the UN.

Agriculture, which consumes 80% of Egypt’s water, has been seeing extensive water losses due to an ancient irrigation network and outdated methods. While concrete figures do not exist for the extent of the loss, estimates put it at around 9.5 bcm in FY2018-19, according to state statistics agency Capmas (pdf). The Nile Delta alone lost 7 bn cubic meter of water in FY2018-19 due to leakages in the canals, sources previously tell us. Read our primer on Egypt’s irrigation waste and leakages.

But beyond leakages, there is an issue of inefficient water use in irrigation. Using traditional irrigation, growing 1 kg of lettuce can consume up to 250 litres of water, Mostafa Hassanen, CEO of Plug’n’Grow tells us.

Plug’n’Grow provides new, as well as seasoned growers with water-efficient hydroponics and aquaculture systems to produce vegetables and fish at affordable costs. Hydroponics entails growing plants without soil. Aquaponics relies on irrigating soilless plants with water that was used to cultivate fish or other water organisms. The water thus becomes more nutrient-rich. Both systems can be implemented at scale using greenhouses.

The modern hydroponics systems save 85-90% of water, when compared to traditional irrigation, and ensures export-ready crops, Hassanen says. Using aquaponics can save upto 99% of water, when compared to traditional irrigation processes. The use of greenhouses allows the produce coming out of 1 feddan of hydroponics to be equivalent to the produce of 26 feddans of traditional irrigation — hence, a lot of space is saved. The founder suggests that using hydroponics for vegetables can save the water needed to cultivate essential, water-heavy crops such as wheat and rice.

The startup helps existing businesses convert traditional farms into hydroponic systems. It also consults, designs and constructs the system for new land owners. This comes with continuous technical support, software for the farm management and operations.

During covid, more individuals became interested in investing in small farms. Due to the pandemic, the produce market in Europe almost came to a halt, while interest rates in Egypt went down, Hassanen adds. This had spurred people in Egypt to enter the domain of produce export. Plug’n’Grow’s customers include big businesses, small commercial farms, as well as clients interested in building a small, self-sufficient grow house for themselves, to ensure that the food they consume is healthy.

But about our drinking water leakages? Egypt lost around 29% of its 10.7 bn cubic meters of drinking water supply (or 3.1 bcm) in FY2018-19 due to an aging network of pipelines and illegal construction, experts told us back in September. This is equivalent to 3.1 bn cubic meters. Read our primer on Egypt’s drinking water leakages.

How Wai Technologies helps plug holes in the water grid: The relatively newly-launched startup offers an AI-based solution and data analytics to pinpoint problems in the water network, such as water leakages. The startup provides a smart water platform that connects with the measurement tools of any given water company, which can detect water flow and pressure in different areas. These data points are then analyzed through an algorithm that reveals what and where leakages occur, as well as timely alerts and optimal places to place sensors. Currently, the company is piloting the project in Hurghada. The product is also available for communities and compounds with internal water networks.

While there is much more interest in saving water in agriculture through tech solutions, saving drinking water leakages could also help reduce energy consumption, Mohamed Abdelkader, founder and CEO of Wai Technologies, notes. Drinking water goes through an electricity-heavy purification process in order to be safe for consumption. This process is even more complex in the Red Sea area, due to the saltwater surroundings, which makes water more expensive.

But startups will not achieve much without policy and behavior Egypt wants to reduce the amount of leaked water to 5% by 2030, according to Egypt Vision 2030. A very ambitious goal, according to Abdelkader. But he believes that without policies that guide normal people to make more environmentally friendly decisions are needed.

Steps to address this are already being taken: The Madbouly government has made upgrading, plugging and extending old water networks a national priority. It plans to allocate part of the funding for that through settlements to violations of the building codes. The government has even begun rolling out water-saving sensors to measure irrigation leakages, government sources told Reuters back in February.

More policy changes appear to be in the offing, as the House of Representatives has finally realized that the Water Resources Act has been on its agenda for some time. Plenary discussions have reportedly begun this week in the house over the bill, which will introduce stricter penalties for water waste, while addressing pollution, dwindling resources, and climate change issues. Read our primer on water legislation that has been meandering through our legislative branch of government over many years.

Your top climate stories for the week:

  • Environment Ministry green initiatives: Eight private sector companies will take part in the plastic recycling initiatives launched by the Environment Ministry, which promised "green initiatives" to lure more players.
  • Manufacturing: Startup Brightskies and Alexandria University have received EGP 5 mn in funding from the Information Technology Industry Development Agency to locally develop technology used in electric buses.
  • Waste-to-energy investment: Green Tech Egypt will work with the military on a EGP 4.8 bn waste-to-energy project in Abu Rawash that we’re yet to hear more details about.
  • Banks ignore ESG pledges: Global banks and financial institutions have provided USD 750 bn in financing to coal, oil and gas companies in 2020, despite many having pledged to back the Paris climate accord.

CALENDAR

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

29-30 March (Monday-Tuesday): Arab Federation of Exchanges Annual Conference 2021.

30 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.

31 March (Wednesday): Income tax deadline for individuals. Real estate tax filing deadline.

31 March (Wednesday): The Egyptian-Croation Business Forum will convene.

31 March (Wednesday): British Egyptian Business Association (BEBA) webinar on workplace harassment.

1-3 April (Thursday-Saturday): HVAC-R Egypt Expo, Egypt International Exhibition Center, New Cairo.

5-11 April: The Spring Meetings of the IMF and the World Bank Group will take place virtually.

6 April (Tuesday): French Chamber of Commerce and Industry in Egypt working breakfast with Sovereign Fund of Egypt CEO Ayman Soliman.

7 April (Wednesday): British-Egyptian Business Association (BEBA) webinar on digital banking and fintech.

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): Coptic 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).

7-9 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.

17-20 June (Thursday-Sunday) : The International Exhibition of Materials and Technologies for Finishing and Construction (Turnkey Expo), Cairo International Conference Center.

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.

30 June- 15 July: National Book Fair.

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

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.

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. © 2021 Enterprise Ventures LLC.