All eyes on UN as Arab League calls for action on GERD

Good morning, wonderful people. You know it’s something of a slow news day when the United Nations plays a role in our lead story. Think of it as a welcome breather after what has so far been a very busy news week. We’ll be back later this afternoon to see whether that holds for the day.

It’s slow beyond our borders, too. Perhaps the biggest news in the global business press is that Lina Khan is going to be running the US Federal Trade Commission. The 32-year-old professor helped redefine how lawmakers in the US and around the world view antitrust cases in the digital age with her paper Amazon’s Antitrust Paradox. Her thinking resonates as far abroad as Egypt, as we discussed back in February. Now positioned as a “critic of Big Tech,” her swearing-in yesterday is being positioned as a win for “progressives” in the Democratic party. The story leads the global business press, from the Financial Times to Reuters and far beyond.

THE BIG STORY THIS AFTERNOON is sure to be the “summit” in Geneva between US President Joe Biden and Russia’s Vladimir Putin, which the Wall Street Journal is framing as a “showdown between two leaders who have long been at odds.” The New York Times has picked up on Biden calling Putin a “worthy adversary” — and notes that where superpower summits used to focus on nukes, they now dwell on cyberweapons.

FROM THE DEPT. OF GOOD NEWS-

Asset manager Franklin Templeton is overweight on Egypt: Sustained GDP growth in a contractionary climate and a stable currency together support a positive outlook on Egypt, MENA managing director Basel Khatoun said at a virtual seminar earlier this week, Zawya reports. Despite liquidity challenges, contained inflation combined with “strong fundamentals” and “solid international reserves” have supported the investment bank’s optimism on Egypt, Khatoun added. Please come back, fund and portfolio managers. We miss you.

STOP WORRYING and enjoy your morning Joe. After decades of pseudo-scientific vilification, coffee is getting a clean bill of health from researchers who now say folks who drink three to five cups a day are 15% less likely to die early from all causes — and have better mental health to boot. Caffeine and dozens of other substances in your morning brew appears to help protect you from “heart disease, Type 2 diabetes, depression, suicide, Parkinson’s disease, gallstones, cirrhosis, liver cancer, melanoma and prostate cancer,” writes the NYT’s inimitable health reporter Jane Brody. (We really do take issue with her comment about French press and “artery-damaging” LDL cholesterol, but that’s an argument for another morning.

ECB mulls taking lid off bank dividends: The European Central Bank (ECB) will revisit a cap it had imposed on bank dividends at a board meeting on 23 July as it looks to roll back pandemic regulations that had sought to preserve capital reserves and prevent high payouts to shareholders, Bloomberg reports.

Sound familiar? Banks in Egypt were barred from paying out dividends on 2020 returns under a CBE directive earlier this year designed to bolster liquidity in the banking system.

WHAT’S HAPPENING TODAY-

It’s day two of the Fed meeting: Don’t expect a change in policy when the Fed’s Open Market Committee wraps up its two-day meeting later today. Still, Fed chair Jay Powell may give some clues about when the central bank may begin to unwind its stimulus. The Fed has insisted that the recent rise in inflation will only be temporary and not serious enough to warrant a rise in interest rates.

One crucial part of US financial markets wants the Fed to act: Money market funds are coming under increasing pressure as a stimulus-fuelled buying frenzy in the US treasury market causes short-term yields to approach negative territory, the Financial Times reports. Some, who are worried that a funding crisis in the USD 4 tn industry could destabilize the financial system, are calling for the Fed to raise short-term rates.

TOMORROW- It’s interest rate day here at home: All 11 analysts and economists surveyed in our poll are calling another hold when the CBE’s Monetary Policy Committee meets tomorrow as inflation hit its highest level all year in May with the global commodities boom beginning to hit the domestic economy. A Reuters poll out yesterday found a similar consensus, with all 18 surveyed analysts predicting a hold.

CLARIFICATION on Elsewedy’s appetite for acquisition- We picked up a story in Acuris’ Mergermarket yesterday suggesting that industrial giant Elsewedy Electric is looking to close acquisitions of three companies “with equity worth USD 100 mn per transaction.” We have updated the story to clarify that Elsewedy is looking at targets with a value up to USD 100 mn — or more if it makes strategic sense — at the request of a senior company official. Elsewedy is reportedly eying companies in the technology, cable, and electric equipment spaces and will remain in acquisition mode in 2022. None of the three potential acquisitions has yet been finalized.

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

• Khazna, Masria Digital Payments, ADIB partner to launch salary advance card: Underbanked employees and gig workers will be able to instantly access their wages in advance through “Khazna Card,” which gives users 24/7 instant access to their earned wages in advance upon submitting a request through the Khazna app.
• Waste Management Act’s exec regulations in cabinet’s hands: The bill will set up a new state agency responsible for waste management, and should be approved within the next 6-8 weeks.

CIRCLE YOUR CALENDAR-

The EFG Hermes and Saudi Exchange Virtual Investor Conference is ongoing until 17 June, according to a press release (pdf). The event will see execs from 61 companies meet with more than 450 international investors from over 190 institutions.

Entrepreneurs in the tourism sector have until 20 June to apply for the six-month Tourism Recovery Program launched by Enpact and the TUI Care Foundation and supported by GIZ, according to a press release (pdf). Some 100 startups will be eligible for direct support to the tune of EUR 9k each. The program also aims to create an international network of tourism business to expand cooperation between Egypt, Germany, and other European countries. You can apply here.

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

*** 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, and urban development, as well as social infrastructure such as health and education.

In today’s issue: What sort of growth and trends took place in Egypt’s digital infrastructure in 2020? The Digital 2021: Egypt report by Data Reportal offers a comprehensive look. Trends like growing social media use and e-commerce accelerated in 2020, and there were also interesting new developments, like increased adoption of smart home devices. But Egypt still lags behind in some key areas, like financial inclusion.

Arab League calls on UN Security Council to intervene on GERD impasse: Arab foreign ministers yesterday called on the UN Security Council to hold an “urgent session” to discuss the dispute over the Grand Ethiopian Renaissance Dam (GERD), Arab League Secretary General Ahmed Aboul Gheit said yesterday, Al Masry Al Youm reports.

The intervention came following an emergency Arab League meeting in Doha yesterday called by Egypt and Sudan. The two aim to ramp up pressure on Ethiopia as it prepares to resume unilaterally filling the dam next month.

“Gradual measures”: Arab countries could take “gradual measures” to support Egypt and Sudan, Qatari Foreign Minister Mohammed bin Abdulrahman Al Thani said during the press conference without giving further details, according to BBC Arabic.

Ethiopia issues stern rebuke: Ethiopia’s Foreign Ministry said in a statement that it “rejects the resolution in its entirety” and expressed “dismay” at what it called thye “misguided positions” of the Arab League and its “egregious” support for Egypt and Sudan’s position.

Egypt has already been making overtures to the UN, sending a letter to the Security Council last week to persuade it to intervene in the dispute.

The story is everywhere in the global press this morning from Bloomberg and the AP to Reuters and Kuwaiti state news agency KUNA.

Foreign Minister Sameh Shoukry held a number of discussions on the sidelines of yesterday’s meeting:

• An invitation to Qatar: Shoukry invited Qatari Emir Tamim bin Hamad Al Thani to visit Egypt as soon as possible. El Sisi received in late May an official invitation to Doha from the Qatari Emir, following the restoration of ties between both countries.
• Libya FM incoming: Libyan Foreign Minister Najla Al Mangoush is expected to visit Egypt in the coming days after being invited byu Shoukry for talks.

IN OTHER DIPLO NEWS- US Centcom chief in Cairo: Defence Minister Mohamed Zaki met with US Central Command chief Kenneth McKenzie to discuss US-Egypt military ties, the Armed Forces said in a statement. Zaki earlier held talks with Gen. Daniel Hokanson, chief of the US National Guard Bureau, and signed a partnership agreement with the Texas Army National Guard.

Chinese smartphone maker Vivo is planning to invest USD 30 mn in Egypt over the next two years, Vivo Egypt chief executive Alex Jan told reporters in a presser yesterday, according to Hapi Journal. The plan includes establishing five new customer services centers by the end of 2021, two of which are currently under construction, Jan said. The Guangdong-based company currently operates five centers in Egypt. Vivo then expects to see its investments in Egypt grow by some 80% throughout 2022, its PR and communications manager, Wafeya El Badry, said.

Private sector education outfit CIRA will establish Egypt’s first applied tech university by the start of the 2022-2023 academic year, the company announced in a press release (pdf) after signing a management consulting agreement yesterday with Saxony International School (SIS), a German private sector education provider.

About the uni: The university will be founded at CIRA’s Badr University before being expanded to more locations nationwide, and will initially offer diplomas and bachelor’s degrees in logistics, tourism, medical and industrial manufacturing. Graduates can then sit the Meister exam — a German vocational qualification that allows holders to study at German applied sciences universities.

The financing: CIRA will receive finance from National Bank of Egypt’s investment arm Al Ahly Capital Holdings and undisclosed international investors, the company said.

CIRA is already working with SIS to open a school in Sixth of October: The SIS school based in O West is expected to be ready for the 2021-2022 academic year.

Switzerland’s Business and Hotel Management School is also involved with Badr, which agreed last year to offer hospitality management training and degrees at the university.

The Egyptian Chemical Industries (Kima) is in talks with a syndicate of six local banks to restructure EGP 6.8 bn in outstanding debt, the state-owned company said in a regulatory filing (pdf) on Monday. Kima did not name the banks involved in the transaction, which it says has been approved in principle, but said the lenders will finish studying the restructuring process during the second half of July.

What’s going on at Kima? Unnamed sources tell Al Mal that the debt is linked to Kima’s EGP 11.6 bn ammonia-urea plant Kima-2, which it completed in Aswan earlier this year. The company reportedly agreed to take on loans at a high interest rate to pay for the construction of the plant, which it is now unable to pay off. Kima also owes dues to the Egyptian Natural Gas Holding Company (EGAS) for transferring gas through Kima-2, and to the Italian contractor Maire Tecnimont for constructing the plant.

Capital increase approved: The banks want the company to complete a capital increase before they agree to extend the repayment period or lower the interest rate. The Financial Regulatory Authority last week approved (pdf) a EGP 2 bn capital increase.

Kima has also been suffering losses: The company finished 2020 significantly in the red, reporting a EGP 631 mn loss after carrying over EGP 1.4 bn in prior losses.

Next month’s public sector wage hikes are now the law of the land: Legislation that raises basic salaries for public sector workers on 1 July has been ratified by President Abdel Fattah El Sisi, El Watan reports. The bill — approved by the House last month — raises wages by 13% and hikes monthly bonuses by EGP 175-400. It also stipulates a EGP 75 minimum raise to the monthly gross salaries of civil servants who are not covered by the Civil Service Act, who will receive annual raises at the start of the fiscal year, beginning next month.

Other amendments to draft laws approved by El Sisi as published in the Official Gazette yesterday:

• Amendments that cap notary fees for companies that apply to have overseas businesses at EGP 100k;
• Amendments to the Electricity Act to allow the Egyptian Electricity Holding Company (EEHC) to partner with the Egyptian Electricity Transmission Company (EETC) on projects following their planned demerger in 2025, which was approved in principle by the House in April;
• Amendments to the Penal Code that criminalize the unauthorized filming of criminal trials.

Eni to merge two concessions in Western Desert: Eni has signed an agreement with the Egyptian General Petroleum Corporation (EGPC) and Russian multinational energy corporation Lukoil to merge its Meleiha and Meleiha Deep concessions in the Western Desert, the Italian oil and gas operator said in a statement yesterday. The new concession, dubbed Merged Meleiha, will be extended to 2036, with a possibile stretch to 2041. Eni operates some of Egypt’s most important oil and gas resources including the giant Zohr natural gas field, the Noor concession, and the Damietta LNG plant.

Who will own what? Eni subsidiary IEOC will own 76% of Merged Meleiha while Lukoil will hold the remaining 24%. The new concession will be operated by Agiba — a joint venture between IEOC and the EGPC.

Now that we’re past the third wave, will there be wave #4? Maybe and maybe not, head of the government’s covid-19 task force Hossam Hosny told CBC last night. Whether the country experiences a new resurgence of cases later this year depends on how many of the public sign up for vaccines and follow the government’s preventative measures, he said (watch, runtime: 3:57). Deputy health minister for intensive care affairs Sherif Wadea called an end to the third wave this week, citing falling case figures and declining hospital occupancy rates in recent weeks.

Cases declined again yesterday: The Health Ministry reported 609 new covid-19 infections yesterday, down from 613 the day before and down 50% from the peak of the third wave a month ago. The country has now disclosed a total of 274,404 confirmed cases of covid-19. The ministry also reported 37 new deaths, bringing the country’s total death toll to 15,691.

Banque Misr has appointed Mohamed Khairat (LinkedIn) as the general manager and head of the corporate credit and syndicated loans sector, Hapi Journal reports. Khairat has more than 30 years of experience in banking, and joins from Ahli United Bank where he served as deputy CEO for corporate banking for two years.

GERD once again dominated proceedings on the nation’s talk shows last night after the Arab League asked the UN Security Council to step in and pressure Ethiopia to reach an agreement with Egypt and Sudan on filling and operating the Grand Ethiopian Renaissance Dam (GERD). Kelma Akhira (watch, runtime: 2:53), Ala Mas’ouleety (watch, runtime: 6:34), Yahduth fi Masr (watch, runtime: 5:02 | 3:53), Al Hayah Al Youm (watch, runtime: 2:37), Masaa DMC (watch, runtime: 10:20) and Al Qahera Wel Nas (watch, runtime: 6:22) all had coverage last night. We have more on the story in this morning’s news well, above.

Don’t expect the UN Security Council to adopt a tough line on Ethiopia and immediately force it to shelve its plans for GERD, the Arab League’s Permanent Observer at the UN Maged Abdel Fattah said in a phone-in to Kelma Akhira (watch, runtime: 3:41). The council can, however, oblige Ethiopia to reach an agreement with Egypt and Sudan before time runs out and Addis Ababa proceeds unilaterally with the dam’s second filling next month, Abdel Fattah said. In all cases, appealing to the Security Council to issue a resolution on the GERD impasse will spark progress on three-way talks with Ethiopia, he suggested (watch, runtime: 2:30).

On the covid front: The Health Ministry reported a 50% drop in daily infections nationwide from the last two weeks, while covid-linked deaths declined 15%, thanks to a boost in the local vaccination campaign, Masaa DMC’s Ramy Radwan said (watch, runtime: 1:28) last night. Radwan also phoned Higher Education Ministry covid-19 committee member Adel Khattab, who said that the ministry will set up in the coming weeks dozens of post-covid care clinics at university hospitals nationwide, which will be specialized to treat covid-19 survivors struggling with post-covid symptoms (watch, runtime: 10:13).

It’s a mixed bag in the foreign press this morning: The Jerusalem Post is getting ahead of itself and is matching up the Egyptian and Ethiopian militaries, the UK Mirror covers the Egypt national team’s request that Mohamed Salah join them in the Tokyo Olympics, though Liverpool has yet to greenlight his travel to Japan. Meanwhile, an Al Monitor Podcast talks to the author of Midnight in Cairo, a new book that examines women’s contributions to Egypt’s early 20th century music, film and cabaret scenes.

M&A WATCH- Zeta Investments has raised its stake in Beltone Financial to 4% from 3.1%, it said in a statement (pdf) to the EGX yesterday. The Hong Kong-based investment firm purchased some 4.6 mn shares for almost EGP 17.4 mn.

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

• A project to roll out modern, water-efficient irrigation systems to 3.7 mn feddans nationwide over the next three years has kicked off in Qalyubia Governorate.
• State grain buyer GASC has called off an international wheat tender that was slated for delivery over 21-31 August, without providing a reason for the cancellation. One European trader attributed the move to expensive freight rates.
• Egypt’s public prosecutor has denied state involvement in the abduction and killing of Italian student Giulio Regeni, two weeks after an Italian judge agreed to put four members of the security forces on trial in October citing “sufficient evidence.”

14-17 June (Monday-Thursday): The EFG Hermes and Saudi Exchange Virtual Investor Conference.

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.

20 June (Sunday): Ismailia Economic Court to hold hearing on Ever Given compensation case.

20 June (Sunday): Deadline for Enpact + Tui + GIZ tourism recovery program (pdf).

22-27 June (Tuesday-Sunday): The CIB PSA World Tour Finals for 2020-2021 will take place in Cairo.

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. The Big 5 Egypt Impact Awards will also be taking place at the event on 27 June.

30 June (Wednesday): The IMF will complete a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

30 June (Wednesday): 30 June Revolution Day.

30 June- 15 July: The Cairo International Book Fair, Egypt International Exhibition Center.

July + August: Thanaweya Amma exams take place.

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

1 July (Thursday): Large taxpayers that have not yet signed 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.

1 July (Thursday): Businesses importing goods at seaports will need to file shipping documents and cargo data digitally to the Advance Cargo Information (ACI) system.

15 June (Saturday): EGX-listed will have to complete filing their financial disclosures for the period ended 31 March.

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

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

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

2-4 August (Monday-Wednesday): Egypt is hosting the Africa Food Manufacturing exhibition at the Egypt International Exhibition Center.

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.

12-15 September (Sunday-Wednesday): Sahara Expo: the 33rd International Agricultural Exhibition for Africa and the Middle East.

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.

30 September-8 October (Thursday-Friday): The Cairo International Fair, Cairo International Conference 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.

12-14 October (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

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.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

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

29 November-2 December (Monday-Thursday): Egypt Defense Expo.

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.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

1H2022: The World Economic Forum annual meeting, location TBD.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

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.