AM — “Marked” improvement in investor confidence in Egypt -EFG CEO

Good morning, wonderful people. Remember how we talked a couple of weeks ago about signs of rising investor interest in Egypt? The roadshows coming through, the listed companies being peppered with meeting requests, the torrent of funding coming into ever-larger startup fundraising rounds?

The latest sign: EFG Hermes held its first Egypt Day since the start of the pandemic yesterday, as global institutional investors met with officials from the Madbouly government as well as C-suite execs from top Egyptian companies. Group CEO Karim Awad sounded an optimistic note on the sidelines of the gathering, and Planning Minister Hala Said used the occasion to raise the government’s growth forecast. We have chapter and verse in the news well this morning, below.

THE BIG STORIES ABROAD- It’s a mixed bag on the international front pages this morning:

Across the Atlantic, many news orgs are running with the federal jury verdict that ordered the organizers of the 2017 white nationalist rally in Charlotteville to pay USD 26 mn in damages to people injured during the demonstration. (Reuters | NYT | AP).

David Cameron hasn’t escaped the Greensill scandal: The Financial Times is adding colour to the lobbying scandal that ensnared the former UK prime minister earlier this year regarding his ties to doomed financial services company Greensill Capital.

More covid: Bloomberg is leading with a US covid update, reporting that even in highly-vaccinated states, hospitals are starting to come under pressure as cases rise.

Qatar 2022 just keeps getting shadier: Host of the 2022 World Cup Qatar has for years employed ex-CIA officers to spy on Fifa officials in an effort to host the tournament, an investigation by the Associated Press has found. The Gulf state is widely regarded to have bribed officials at football’s governing body to vote for their bid, allegations denied by Qatar and Fifa.

MORNING DISTRACTIONS-

NASA is setting out to save the planet today as the US space agency launches a “planetary defense mission” to see whether it might be possible to shove an asteroid off a collision course with our planet. We’ll know next fall whether the “DART” mission successfully changes the course of a harmless asteroid about 9.6 mn kilometers away in a “test of a technology that may one day save the world.”

Why should you care? Go ask the dinosaurs whether they’d have preferred shoving off-course the asteroid that saw them go extinct after it slammed into Earth. The Wall Street Journal, CNN and the BBC all have more.

Even the youts among us love the New York Times’ It’s Never Too Late series. The latest installment: It’s never too late to pick up your life and move to Italy. Sounds good to us. (Or maybe it’s simply that we’ve not travelled outside the nation’s borders in going on two years?) Whether you’re having a quarterlife or midlife crisis, the series has inspiration for you.

From the dumpster fire that is our social media: A reminder from pre-swole Bezos that sometimes, PowerPoint isn’t the answer. Long-form writing is (watch, runtime: 1:18).

WHAT’S HAPPENING TODAY-

Cairo dwellers may soon be able to hitch a ride with DiDi: Chinese ride-sharing app DiDi is set to start operating in Cairo next month, Moenes Amin, an advisor to the company, told Al Mal. The company is currently adding “final touches” before making its debut in the capital, Amin said. The news comes a few months after DiDi entered Egypt’s rideshare market with its launch in Alexandria. Amin did not reply by dispatch time this morning to a request for comment and a DiDi customer service rep was unable to provide any information.

CIRCLE YOUR CALENDAR-

Startup gathering RiseUp starts tomorrow and runs through Saturday.

The Cairo International Film Festival kicks off its weeklong run this coming Friday.

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

In today’s issue: Although the scenes of mass food stockpiling and supply chain disruptions that accompanied covid-19 brought Egypt’s food security into greater focus than before, these are issues that long predate the pandemic. Today, in the first part of a two-part series, we look at the underlying stressors — including land and water scarcity, food import dependency, rapid population growth, and unhealthy changes to diets from urbanization — that strain our food system. Next week, we look at which infrastructure upgrades we need to start solving these problems.

Investor confidence in Egypt is showing a “marked improvement,” EFG Hermes Group CEO Karim Awad said at EFG Hermes’ Egypt Day conference yesterday. Awad pointed to international institutions’ positive growth outlook for Egypt and the government’s progress on its economic reform program as having a significant positive impact on the business climate.

MORE of the same, please: We’re on track to see five or six state-owned companies tap the EGX before the end of the current fiscal year as part of the state privatization program, Prime Minister Moustafa Madbouly said during the event yesterday, without disclosing names. Public Enterprises Minister Hisham Tawfik said last month that five state-owned companies would IPO on the EGX by the end of FY2021-2022.

Background: The state has been committed since 2018 to either (a) IPOing companies in its portfolio or (b) pulling the trigger on secondary sales of stakes in companies in which it holds a majority interest, but that are already listed on the EGX. Fintech firm e-Finance finally broke through the barrier this fall when it went public in one of the biggest IPOs Egypt has seen in years. Its shares are up 38% since its debut.

Why the delays? Poor market conditions and then covid, EFG Hermes’ head of research Ahmed Shams told Kelma Akhira’s Lamees El Hadidi last night (watch, runtime: 6:37). The EGX has particular interest in seeing new industries represented on the bourse, he said, explaining that the exchange is currently dominated by financial and real estate sectors. Secondary stake sales are also important because they increase liquidity and market cap of existing names, he said.

The candidates: Ghazl El Mahalla Football Club is expected to go public on the EGX in the coming weeks (it’s admittedly a small sale, but could open the door for Al Ahly to follow suit). EGX-listed Abu Qir Fertilizers is on the list of companies likely to pull the trigger on a secondary sale. Meanwhile, Tawfik recently announced that Heliopolis Housing would revisit plans to list a secondary stake, likely taking place in the middle of next year. Other companies that have previously expressed intent to sell shares on the bourse include Banque du Caire, Alexandria Containers and Cargo and the Alexandria Mineral Oils Company.

What’s EFG Hermes’ Egypt Day? The investor conference, which wrapped yesterday, brought investors from 28 global financial institutions to Egypt for face-to-face meetings with senior government officials as well as C-suite execs from a number of leading Egyptian businesses.

The government is predicting growth of 5.6% in the current 2021-2022 fiscal year, Planning Minister Hala El Said said at EFG Hermes’ Egypt Day conference yesterday, according to a ministry statement. The projection marks an upwards revision of a previous prediction for 5.4% growth.

The state is slightly more optimistic on growth than others have been: The IMF is expecting Egypt’s economy to “rebound strongly” at an estimated 5.2%, the World Bank is pegging this year’s growth at 5.0%, the European Bank for Reconstruction and Development coming in at 4.9%, and an October Reuters poll putting the figure at 5.1%. The economy grew 3.3% in FY 2020-2021, according to preliminary figures released in September.

Our friends at leading private sector bank CIB have approved the allocation of USD 70 mn in proceeds from its maiden green bond issuance to fund sustainable projects, the bank said in a statement (pdf) yesterday.

CIB went ahead with Egypt’s first-ever corporate green bond issuance earlier this year, which saw the International Finance Corporation (IFC) subscribe to the full USD 100 mn issuance of noncallable, five-year, fixed-rate bonds. CIB will use the proceeds to finance businesses looking to invest in green buildings, renewable energy, and other eco-friendly solutions, while the IFC will also provide advisory support, including technical assistance.

A first for Egypt: CIB and the IFC will work together to finance green buildings in the first project of its kind in Egypt, the statement said. Three projects in the education, banking, and food and beverage sectors will receive funding to renovate their buildings to make them eligible for green building certification.

In the project portfolio: CIB has also earmarked funding for its new headquarters in the new capital, which will obtain a green building certificate, our friend CEO Hussein Abaza said.

Green bonds: A refresher: A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. The World Bank was the first organization to offer green bonds in 2008 and has since issued over USD 13 bn equivalent in green bonds through more than 150 transactions in 20 currencies.

Advisors: CIB is acting as lead manager of the issuance, Zulficar Law Office is providing legal advice, and Deloitte is the auditor.

The Central Bank of Egypt will help fund the government’s push to reduce the amount of water used by Egyptian agriculture, announcing (pdf) yesterday a multi-bn EGP program to help farmers switch to modern, more water-efficient irrigation methods. The central bank will channel EGP 55.5 bn to farmers and agribusinesses to purchase new equipment and install new irrigation systems, which will be deployed as soft loans through state-owned institutions National Bank of Egypt (NBE) and the Agricultural Bank of Egypt (ABE).

No strings: Borrowers will repay the sum over a 10-year period with zero interest, the bank said, with their first payment due one year from the date they complete the installation of the infrastructure.

This isn’t the central bank’s first gig financing irrigation policy: This initiative replaces a similar CBE program that provided finance to farmers at a 5% rate of interest.

Ambitious targets: The initiative aims to equip about 4 mn feddans of agricultural land with modern irrigation systems within three years, the CBE said.

The push for modern irrigation has been ongoing for years now: The government had announced a USD 50 bn water saving plan in 2019 focusing on promoting modern irrigation methods and the cultivation of non-water intensive crops, with the aim to overcome water scarcity by encouraging the use of modern irrigation methods, cultivation of fewer water-intensive crops and establishment of desalination plants. And back in May the Cabinet agreed to a set of measures as part of the government’s shift towards modern irrigation systems, as well as setting up a specialized committee to oversee the project.

Reuse is also a priority: The government is studying proposals to reuse 3 bn cbm of agricultural drainage water each year, which could help save about 2 bn cubic meters of water annually, the cabinet said yesterday.

Critical background: We think water leakage in agriculture could be Egypt’s most pressing water infrastructure problem.

Have another USD 1 bn: Egypt may be taking out a bigger bank loan than previously disclosed thanks to heavy appetite from lenders lining up to participate in a USD 3 bn facility from a group of international banks — that’s USD 1 bn more than originally anticipated, Reuters reported yesterday, citing sources familiar with the transaction.

Part-green, part-Islamic: The facility, which is being arranged by First Abu Dhabi Bank and Emirates NBD, will partly be used to fund green ventures and partly channeled into Shara-compliant projects. Local press reports last week suggested that the loan would be split 50/50, with USD 1 bn being allocated to ESG projects and USD 1 bn going to Sharia-compliant investments. It’s unclear how the USD 3 bn loan would be divided.

Back for more: Egypt took out a USD 2 bn 12-month loan arranged by the two Gulf lenders in 2020, which it finished repaying earlier this year. The loan was taken out plug budget shortfalls and support the economy through the covid crisis, and was divided into a USD 1.5 bn conventional tranche and a USD 500 mn Islamic tranche.

Different terms: The new facility would be repayable over three-years, according to Reuters’ sources.

No confirmation on who’s involved: Sources told Reuters that a mixture of standard and Islamic banks are involved in the transaction but didn’t disclose names. Local media said last week that 10 banks were involved: Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Mashreq Bank, Bank ABC, National Bank of Kuwait, Ahli United Bank of Kuwait, Al Ahli Bank of Kuwait and Italy’s Intesa Sanpaolo Bank, in addition to the lead arrangers.

What’s next? After the loan is finalized with the banking syndicate, it will head to the House of Representatives for approval.

We’re getting a USD 360 mn loan from AIIB: The Beijing-headquartered Asian Infrastructure Investment Bank (AIIB) has approved a USD 360 mn loan to support Egypt’s post-covid economic recovery, according to a cabinet statement.

The facility matches a separate USD 360 mn loan approved by the World Bank in October, under a larger development policy financing framework (pdf) set by the International Cooperation Ministry in partnership with the two lenders.

Where exactly will the funding go? The combined USD 720 mn will go toward three key policy pillars meant to bolster the second phase of Egypt’s economic reform program: Enhancing macro sustainability, including by improving transparency at state-owned enterprises and stimulating the green transition; boosting private-sector growth; and promoting women’s participation in the workforce. The three-year phase of the reform program focuses on structural reforms designed to support private sector-led growth.

Background: The loan brings our total funding from AIIB to over USD 1 bn, according to the statement. The China-led lender has also invested funds into developing the Abu Qir metro, alongside several European lenders, and a rural sanitation project (also in partnership with the World Bank) connecting unserviced households to running water.

More than 20k Egyptians have now died as a result of covid-19, according to the Health Ministry’s daily update released early this morning. Another 61 people lost their lives due to complications arising from the virus, pushing the country’s overall death toll to 20,052.

Egypt has one of the highest covid mortality rates in the world, with 5.7% of reported cases resulting in death, though an accurate figure remains elusive — Health Ministry officials have previously acknowledged that the daily case figures it reports under-estimate the total number of cases as they include only test results from state-run labs. There have now been 352,123 confirmed cases of covid after the ministry reported another 856 new cases yesterday, down from 870 the day before.

Poor countries to receive zero-royalty covid-19 antibody test: Low- and middle-income countries will receive a global license for a serological technology that detects covid-19 antibodies, the World Health Organization (WHO) announced on Tuesday, under an agreement to boost production. The Spanish National Research Council, a public research institute, is offering the technology as part of a non-exclusive licensing agreement as a global public good.

Europe could be looking at an additional 700k covid deaths by March, pushing the total deaths to over 2.2 mn, the WHO said yesterday. A surge in cases on the continent in recent days has seen a number of European countries reimpose lockdown restrictions and institute tougher measures to force people to take the vaccine.

Egypt has assumed the chairmanship of the Common Market for Eastern and Southern Africa (Comesa), a regional trade bloc that looks to align regulatory and trade policies of its 21 members. The baton was passed to Egypt at Comesa’s annual summit held at the new capital yesterday; we’ll use our 12 months at the helm to steer the organization’s 2021-2025 goals to improve regional trade, it said in a statement.

The focus of the summit: Digital integration.

The event got headline treatment on the airwaves last night: Masaa DMC walked us through the six pillars of Egypt’s vision during its time as Comesa head (watch, runtime: 6:44), the first of which is regional trade integration and the removal of customs, followed by industrial integration, integration in the infrastructure sectors, encourage regional investments, health sector integration and finally motivate the business community in the common market. Ala Mas’ouleety (watch, runtime: 10:07), Al Hayah Al Youm (watch, runtime: 3:39) and Kelma Akhira (watch, runtime: 3:37) also had the story.

Last night’s talk shows shifted their attention from the weather for the first time all week after state-owned Akhbar El Yom reported that 118 students suffered food poisoning after consuming juice that was part of their school meal in Upper Egypt’s Naga Hamady.

Kids + food poisoning = sensational headlines. Social media and the domestic press alike were wild yesterday with news that a number of the students had been. Qena deputy governor Hazem Amr denied the reports in an interview on Kelma Akhira (watch, runtime: 3:57), telling show host Lamees El Hadidi that a number of elementary students were sent to hospitals after complaining of stomach aches — but they weren’t cases of food poisoning. Amr said that all the students sent to hospital were released hours later and that the governor has ordered an investigation into the school’s meals. Authorities are currently awaiting the investigation results and until then we can't say whether they suffered food poisoning or not.

Education Minister Sherlock Shawki has been on the case and brought us some more plausible explanations for the hospitalizations: Mass psychosis could have been to blame, the minister told Ala Mas’ouleety’s Ahmed Moussa with a straight face (watch, runtime: 31:43). There is a possible chance that a number of the students did not suffer any actual symptoms but just believed they were sick after seeing their friends complain, a condition referred to by medical professionals as mass psychogenic illness, he said last night. Another theory proposed by the minister: This could have been the work of those dastardly teachers, who could have been sending students to hospitals in a bid for higher compensation as part of a work-to-rule campaign. Masaa DMC (watch, runtime: 4:58) also had the story.

Also on the airwaves last night:

• Luxor prepares for the glamorous ceremony to inaugurate its Rams Road on Thursday. The inauguration ceremony is expected to be a re-enactment of the ancient Egyptian Opet Festival. (Kelma Akhira | watch, runtime: 1:57)
• PHD got airtime: Chairman Yassin Mansour was on Kelma Akhira to discuss the 3k-feddan Bedaya project, which has been in the works since 2015. (Kelma Akhira | watch, runtime: 2:42:18)

There’s not a lot happening in the foreign press this morning. Nothing, in fact. We’re grateful for the respite

Airlines receive 50% operating fee discount at tourist hotspots: Airlines are getting 50% off on landing, accommodation, and waiting fees at South Sinai, Marsa Matrouh, Luxor, Aswan, and Red Sea airports through April 2022, according to a decision (pdf) by the Civil Aviation Minister in the Official Gazette.

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

• Jumia links up with valU on installment payments: E-commerce platform Jumia has signed an agreement with consumer lender valU, allowing Jumia and JumiaPay customers to pay for purchases through ValU installment plans, according to a joint press release (pdf).
• SFE + Agriculture Ministry could team up: The Agriculture Ministry wants the Sovereign Fund of Egypt to help manage its assets and attract investments.

The UN’s special envoy for Libya Jan Kubis has resigned from his position just weeks before the country holds critical national elections, a UN spokesperson said yesterday, according to AFP. The spokesperson did not give a reason for his departure, but sources told the newswire that he wasn’t keen to move from Geneva to Libya, which looked increasingly likely following a tussle over the future of the UN’s Libya mission at the Security Council.

Nominations to run in next month’s presidential election are now closed: Current prime minister Abdul Hamid Dbeibeh, the son of Libya’s former ruler Seif Al Islam Gaddafi, and eastern strongman Khalifa Haftar are all bidding to become the country’s next president in an election process that has been beset with factional disputes about the rules of the vote. A total of 98 candidates have applied to have their names on the ballot, which is expected to take place on 24 December.

Libay’s acting president discusses elections with El Sisi: President Abdel Fattah El Sisi stressed the importance of going ahead with the upcoming elections in a meeting with interim Libyan president Mohamed Al Menfi during the Comesa summit yesterday, Ittihadiya said in a statement.