AM — CBE leaves rates on hold.
Plus: Take our annual reader poll.

Good morning, friends. Want to have breakfast with us in 2022? Go take our annual Enterprise Reader Poll. It won’t take more than a couple of minutes of your time. We’ll be inviting eight readers who take the poll to have breakfast with us early in the new year (covid restrictions permitting and all that), and another dozen of you will get spiffy Enterprise mugs to help you mainline your morning java.

And with that, let’s get this second-to-last week of 2021 on the road.

HAPPENING TODAY-

PSA #1- Property owners have until Friday, 31 December to pay the second installment of their annual real estate taxes without incurring a late fee, Tax Authority boss Anwar Fawzy said in a statement yesterday. The first installment was due between 1 January and 30 June. Homeowners whose primary residence is valued at less than EGP 2 mn are exempt from paying the tax, Fawzy noted.

PSA #2- Sandstorms + rainfall to hit most parts of Egypt: Parts of Greater Cairo, northern Upper Egypt, the Suez Canal region, and the Delta are going to be hit by gusting winds today and tomorrow that could develop into sandstorms, the national weather service predicts. Look for the mercury to plunge in tandem. Showers could begin later tonight and continue Monday and into Tuesday, the Egyptian Meteorological Authority’s Iman Shaker told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 5:06).

Our favourite weather app concurs and is calling for rain starting tonight in the capital city. Look for the mercury to peak at 18°C today and 15°C tomorrow.

School’s out in four governorates: Alexandria, Matrouh, Kafr El Sheikh and Beheira have suspended classes for public and private schools in the expectation of “moderate to heavy” rains, as well as bouts of dust storms. Matrouh and Beheira suspended classes today, while Alexandria went ahead and canceled classes for today and tomorrow, Alexandria Governor Mohamed El Sherif told El Hekaya’s Amr Adib (watch, runtime: 8:07).

A potential overhaul of Alexandria’s drainage system? El Sherif is scheduled to meet Housing Minister Assem El Gazzar and Local Development Minister Mahmoud Shaarawi in a couple of days to discuss a plan to develop and reform Alexandria’s drainage system in several phases, he told Adib. A similar proposal was made by Alexandria University back in 2016 to build a new drainage network to collect, store, and recycle rainwater, but no steps have been taken since then.

THE BIG STORY ABROAD- It’s feeling kind of apocalyptic out there this morning — in a covid-19 way as the Omicron variant spreads globally. The bug, which landed in Egypt this weekend, has led the Netherlands to order bars, restaurants, cinemas, gyms and many shops to close until mid-January (Financial Times | CNBC). The Dutch are the first in the EU to go to that length this time ‘round. Offices are canceling holiday parties (New York Times | Wall Street Journal | Axios). US President Joe Biden is going to issue a “stark warning” on vaccinations (Bloomberg), while Fortune notes that Omicron has “blindsided” the world and Canada is starting to reimpose restrictions (Globe & Mail).

The TRY hit fresh lows (again) on Friday, closing at 16.41 to the USD, after plunging to record 15.65 to the USD immediately following the Turkish central bank’s announcement that it would cut interest rates for the fourth consecutive month. The TRY’s downward spiral, which has seen it shed half its value since the start of the year, caused trading to be temporarily suspended on the Istanbul bourse on Friday after its main index crashed 5%, the Financial Times reports.

Annual inflation now stands at 21% in Turkey, leading President Recep Tayyip Erdogan to announce a 50% hike in the minimum wage in an attempt to cushion the blow to workers (and his poll ratings). Erdogan has repeatedly refused to raise rates, the result of his theory that high borrowing costs stoke inflation — a belief that the Wall Street Journal succinctly describes as “the opposite of what economies around the world have experienced through history.”

IN MEMORIAM- Emirati b’naire Majid Al Futtaim passed away on Friday. Al Futtaim, who was in his 80s, is the founder of his namesake conglomerate Majid Al Futtaim Group and is known for overseeing the development of Dubai from the 1960s. The National was out with an obituary.

Egypt walked away from the Arab Cup in fourth place after losing 5-4 following a penalty shoot-out in its consolation game against Qatar.

Algeria took home the trophy for the first time in its history after beating Tunisia 2-0, with two strikes in overtime sealing the historic victory.

MORNING MUST READ-

Investing might never be the same, or so says Bloomberg, which takes us on a journey of the wild and wonderful changes that 2021 — a year that catapulted NFTs to the spotlight and made crypto trendy rather than just the domain of underworldly internet geeks — has brought to investing. Kicking off with meme-stock traders plying the Internet for the next big thing — which in early 2021 was Gamestop — to the birth of new virtual communities during lockdown and a growing fascination with crypto and NFTs, the column looks at all the ways that managing your monies has changed this year. And that’s not to say that investing the old-fashioned way hasn’t been profitable: The S&P 500 index fund grew by 25% this year. In the meantime, crypto exchanges like Coinbase have more than doubled their user base in just under two years.

Not sure what an NFT is? We’ve got your back.

CIRCLE YOUR CALENDAR-

Swvl and Magalix are holding a virtual fireside chat titled Stories of Women in the Tech Field on Tuesday 21 December, at 7pm. Connect to the event here.

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

*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.

In today’s issue: How two family businesses transformed themselves into publicly-traded institutions. In the past two weeks, we looked at how Egyptian family businesses fared in the covid era — and what they need to do to be ready for the challenges ahead. Now, it’s time we hear from people who’ve actually taken the leap. Today, we speak to the leaders of IDH and CIRA about the lessons they’ve learned as they’ve transitioned from family-run operations to leading players in their respective markets.

The Central Bank of Egypt (CBE) left interest rates on hold for the ninth consecutive meeting on Thursday as policymakers weighed the possibility of sooner-than-expected US rate hikes in 2022 and the economic impact of the Omicron variant of the virus that causes covid-19. The central bank left the overnight deposit rate at 8.25% and the lending rate at 9.25%, while the main operation and discount rates are still at 8.75%, it said in a statement (pdf) following the meeting.

This lines up with what we were told last week: All 11 economists and analysts we surveyed in our regular interest rate poll predicted the CBE would leave rates unchanged due to uncertainty generated by Omicron and the possibility of global rates. Lower-than-expected November inflation figures would also give the bank space to hold off any changes, poll respondents said.

What the Monetary Policy Committee said: The bank attributed the hold to a slow-down in global economic activity thanks in large part to supply chain disruptions, explaining that global recovery still depends on covid vaccine efficiency and countries’ ability to limit the spread of the virus.

The decision means that Egypt holds onto its status as having one of the highest real interest rates in the world, maintaining the attractiveness of the EGP carry trade for foreign investors. “We believe Egyptian treasuries will remain attractive, underpinned by EGP stability and maintained real interest rates,” Beltone Financial’s head of macro Alia Mamdouh wrote in a note following the meeting. “Among emerging markets with comparable yields, Egypt still stands out with a relatively less impacted economy from the repercussions of the covid-19 pandemic as it provides growth potential.”

Inflation has slowed in recent months, raising real rates: Annual urban inflation slowed for the second month running in November and dipped to its lowest since July as pressure on food prices continued to ease. The CBE said that its current policy will see prices stabilize in the medium term, and is consistent with achieving its inflation target of 7% (+/-2%) by 4Q2022.

But expect it to trend upwards over the next several months: Naeem Brokerage is forecasting inflation to rise to 6-7% during the first quarter of next year as recent increases in food and energy commodities filter through to consumer prices and the favorable base effect that has brought down figures over the past two months goes into reverse. HC Securities expects consumer prices to rise further due to persistent global inflation, the possibility of easing subsidies on basic food items, potential electricity price increases, and a rise in demand following higher employment rates, Monette Doss, chief economist at the firm, told us.

Analysts disagree on what happens next: Capital Economics is expecting inflation to fall back below the central bank’s target range by the middle of the year. HC Securities doesn’t see the trend being so short-lived, and expects inflation to average 8% through to the end of 2022.

The high rate-low inflation combo will be increasingly important as we head into what is expected to be a rocky 2022 for the EM-verse: A hard hawkish turn by the Federal Reserve a day before the CBE meeting saw the US central bank signal that it could hike rates at least three times next year to combat soaring inflation. The Fed will also double the pace at which it’s tapering covid stimulus, which will now see it stop purchasing treasuries and mortgage bonds completely by the end of the first quarter.

This is going to cause serious problems for some emerging markets, particularly those with high debt obligations, a lack of market access, and their own inflationary struggles, Harvard economist Kenneth Rogoff told Bloomberg last week. Emerging markets are “very sensitive to the hiking-more-quickly scenario,” he said, warning that just a one percentage-point increase next year could shut countries out of the debt markets, name-checking Egypt along with Pakistan and Ghana. The risks of rising rates were articulated by Fitch last week, which said that tighter credit conditions are a “key risk” for Egypt due to its dependence on external financing.

Decisions made in Washington may prompt the CBE to reverse course on its easing cycle: “The low-rate environment that dominated the world in the past decade is coming to an end,” EFG Hermes’ head of macro research Mohamed Abu Basha told Enterprise. The central bank will likely leave rates on hold through to the middle of 2022, but “if they do change, it’s going to be upwards,” he said.

This would be carry trade-positive: “Rates are projected to remain on hold with the risks skewed in favor of rate hikes as the Federal Reserve pushes ahead with its policy tightening,” analysts at emerging-market research firm Tellimer wrote on Friday. “This suggests that Egypt is likely to maintain one of the highest real interest rates in the world in 2022, which should continue to underpin demand for Egyptian bonds.”

Others aren’t quite ready to pronounce the end of the easing cycle: Capital Economics still thinks there is a “good chance” of a one-off 50 bps cut should inflation moderate by the middle of the year, while Goldman Sachs economist Farouk Soussa told Bloomberg that lower inflation over the medium-term would allow the central bank to resume easing.

Three Omicron cases were detected over the weekend, marking the variant’s first appearance in the country, according to the Health Ministry. The three cases were detected in people arriving from countries where the variant is already circulating, the statement reads. Two of the three cases are asymptomatic, while the third patient has shown only mild symptoms. All three are currently in isolation under medical supervision, while no further cases have been discovered among people they had come into contact with, the ministry said.

Don’t be surprised: Authorities (and basic science) previously said that it was only a matter of time until the variant made an appearance in Egypt. WHO chief Tedros Adhanom Ghebreyesus last week said Omicron had been reported in 77 countries and had probably already spread undetected to most other nations. The Health Ministry is encouraging citizens to continue to adhere to precautionary measures including mask-wearing and social distancing, and to get vaccinated if they haven’t already done so.

Good thing booster shots are rolling out: The Health Ministry began sending out text messages as of Friday to those eligible for booster shots, notifying them that they’re qualified, without requiring them to register, ministry spokesperson Hossam Abdel Ghaffar told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 2:57). Eligible people — currently only medical staff and senior citizens with chronic medical conditions who completed their regular vaccine dose at least six months ago — will be contacted from the ministry’s current directory of people who signed up for the vaccine. Masaa DMC’s Injy Al Qadi (watch, runtime: 8:17) and Al Hayah Al Youm’s Lobna Assal also had similar coverage (watch, runtime: 24:47).

Everybody above the age of 70 should immediately receive a booster shot to help guard against Omicron, regardless of how long it’s been since they got their first round of jabs or what their health condition is, Ashraf El Fiky, a medical officer at Washington-based clinical research organization Emmes, told Lamees (watch, runtime: 11:27).

A total of 53 mn jabs have been administered in Egypt to date, according to Abdel Ghaffar. Around 30% of those who have been vaccinated have received the full dosage of their jabs, the spokesperson told Lamees. University students are also around 95% vaccinated, he said (watch, runtime: 7:36).

We received 200k AstraZeneca vaccine doses from Hungary on Friday, pushing the total number of AstraZeneca jabs we’ve received from Hungary to 450k, the foreign ministry said in a statement.

The Health Ministry reported 902 new covid-19 infections yesterday, down from 910 the day before. Egypt has now disclosed a total of 374,411 confirmed cases of covid-19. The ministry also reported 38 new deaths, bringing the country’s total death toll to 21,315.

Egypt wasn’t the only country to report its first cases of Omicron over the weekend: Qatar’s Health Ministry picked up its first four cases.

Already had covid, or even two jabs? It might not help protect you from Omicron: Risk of reinfection with the Omicron variant is 5.4 times greater than with the Delta variant, according to a new report from Imperial College London’s covid response team.

The weekend brought record covid case numbers for a number of countries/states:

• The UK recorded on Friday its highest daily number of recorded cases since the pandemic began, with 93k confirmed cases.
• New York City reported 21k new covid cases on Friday, its highest single-day total.

PSA #1- Canada has dropped a widely criticized ban on direct travel from Egypt and nine other African countries and has imposed a covid-19 test requirements for people arriving from all destinations, the Globe and Mail reports.

PSA #2- All travelers to Greece now need to show on entry either a negative PCR test taken no more than 72 hours prior to arrival, or a rapid antigen test taken within 24 hours of arrival, national flag carrier EgyptAir said in a statement. The temporary measure applies for the holiday season, Reuters reported citing a government spokesperson, and follows similar restrictions announced by Italy last week amid the spread of Omicron.

The Sawiris family is selling its majority stake in Euronews to investment firm Alpac Capital, the loss-making broadcaster said in a statement on Friday. The Portuguese firm has signed a binding offer to buy an 88% stake in Euronews owned by the Sawiris family’s Media Globe Networks (MGN) for an undisclosed amount.

The transaction is set to be finalized during 1Q2022. The remaining 12% stake in Euronews will continue to be held by a consortium of public broadcasters and local authorities that includes France Televisions, Italy's RAI and Abu Dhabi Media Investment Company (ADMIC), though that could change as Euronews looks to tap new capital, Reuters reported, citing Euronews chief exec Michael Peters.

The company’s structure will undergo a revamp: The acquisition will see the broadcaster replace its supervisory board, currently chaired by Naguib Sawiris, with a board of directors headed by Peters. Sawiris in November announced his intention to divest from the struggling broadcaster, which the family first took control of in 2015.

Euronews is trying to claw back pandemic-era losses: The company’s total sales dropped by 23% y-o-y to EUR 58 mn in 2020, leading to losses of EUR 16 mn, Peters told Reuters. Revenue diversification should see those losses narrow by half in 2022, he said, while the company is aiming to break even in 2023, according to the statement.

Filkhedma is under new management: South African home services firm SweepSouth has acquired 100% of Cairo-based startup Filkhedma, the companies said in a joint statement (pdf). The transaction will see the company’s existing shareholders — which include Algebra Ventures, Glint Consulting and angel investor Khaled Ismail — take shares in SweepSouth, Filkhedma founder and CEO Omar Ramadan told Enterprise. Ramadan declined to disclose the terms of the agreement but told us the shares obtained by Filkhedma shareholders are worth “a few mn USD.”

The new owners: Launched in 2014, SweepSouth is Africa’s largest home services platform. It operates in South Africa, Nigeria and Kenya, according to the statement. It will now have a presence in three Egyptian cities through Filkhedma, which has more than 2k cleaning, maintenance and beauty services providers on its network.

Expect a squeakier clean from Filkhedma: The acquisition will see Filkhedma benefit from SweepSouth’s experience to upgrade its home cleaning services, Ramadan told us, noting that home cleaning is the largest vertical in the home services sector across Africa. An outdoor cleaning and gardening service, already available in SweepSouth’s existing South African, Kenyan and Nigerian markets, is also in the works, while Filkhedma will also see software updates on the back of the acquisition.

And a wider range of services in SA: SweepSouth, meanwhile, will be adding Filkhedma’s home beauty services and a wider range of maintenance options to its South African offering at some point in January, Ramadan told us. The South African company expects the acquisition to almost double the company’s potential market on the continent.

The takeover announcement comes just a few days after the company secured a new round of investment from the Cairo Angels, which Ramadan tells us was part of a larger bridge round meant to ensure that the company was well-capitalized and continued to grow as the acquisition was being negotiated. The round was the startup’s fourth, with earlier rounds raised from Algebra Ventures, Glint, and Ismail’s KiAngel.

An “aggressive” expansion plan set to start in March 2022 will see the company add three new markets next year, two on the African continent and one beyond Africa and the Middle East, Ramadan said. The company is also planning a marketing campaign set to launch in the first quarter of 2022 with the aim of growing Egypt-based business by 5-10x over the course of the next year, he said.

Management is restructuring: Following a three-month transition period, Ramadan (LinkedIn) will become the chief business officer for the combined entity, working across the company’s markets. The wider Filkhedma managing team will also see a shake-up, with staff taking on new roles both locally and regionally.

Exits: the future of our startup scene? As new funding pours into our local startups, startup-to-startup acquisitions are likely to become more common, local players told us last month. Filkhedma joins the handful of homegrown names to be acquired by international players, including Egyptian matchmaking app Hawaya (formerly known as Harmonica), which was acquired by Tinder parent company Match Group, and food-ordering platform Otlob, which Delivery Hero bought and later rebranded as Talabat.

WHAT’S NEXT- Enterprise expects more M&A from Planet Startup as we enter next year, especially in logistics, last-mile delivery, fintech, healthtech and edtech.

e-Finance’s e-commerce and tourism platform e-Aswaaq has set up the online portals to buy entry tickets for the Giza Pyramids, as well as several electronic gates at the entrance of the plateau, according to a statement picked up by Al Borsa. This comes almost three months after e-Aswaaq kicked off the rollout of its booking and ticketing portal at the Egyptian Museum in Tahrir, which was followed by the National Museum of Civilization, Hurghada Museum and Sharm El Sheikh Museum. The company is looking to finish upgrading ticketing systems and complete the rollout of the portal for 30 archeological sites by the end of 2022, according to the statement.

Egypt’s tourism recovery has largely shrugged off Omicron, with travel to tourism hotspots remaining unaffected by recently introduced travel restrictions, Al Borsa reports, citing unnamed government sources. Average occupancy rate at hotels across the Red Sea — in Sharm El Sheikh and Hurghada — are expected to reach 70-75% by the end of 2021, while Sinai hotels could end the year with an average occupancy rate of 55-60%, the sources said. Tourism has been slowly recovering from the 2020 setback due to covid-19 lockdowns and restrictions for the past year, aided by the loosening of restrictions allowing hotels to operate at full capacity and the return of direct flights from Russia to Sharm El Sheikh and Hurghada.

Omicron’s crash-landing in Egypt over the weekend was at the top of the talking heads’ agendas last night. We have chapter and verse in this morning’s Covid Watch, above.

In a close second place: Commentary on our fourth place finish at the Arab Cup. Pretty much everyone had something to say, from Kelma Akhira’s Lamees El Hadidi (watch, runtime: 1:32) to Al Hayah Al Youm’s Lobna Assal (watch, runtime: 8:57) and, of course, football aficionado El Hekaya’s Amr Adib (watch, runtime: 4:20).

What kind of news day would it be for Egypt if human rights didn’t factor in, one way or another? A statement from Germany’s government ahead of tomorrow’s hearing for lawyer Mohamed El Baqer and rights activist Alaa Abdel Fattah earned a quick response from Egypt’s Foreign Ministry condemning the attempted interference in the judicial process, El Hekaya’s Amr Adib noted (watch, runtime: 3:20).

Also getting airtime: How several days of school closures due to bad weather will affect students’ learning and exam schedules, with Kelma Akhira’s Lamees El Hadidi saying the closures are now becoming excessive at students’ expense (watch, runtime: 1:08). We also have the full rundown on the story in What We’re Tracking Today, above.

Human rights again plays heavily in the conversation on Egypt in the international press this morning. Laila Soueif, the mother of jailed activist Alaa Abd El Fattah, calls for his release in an opinion piece for the New York Times ahead of Abd El Fattah’s scheduled sentencing on Monday. Meanwhile, AP, Reuters, Bloomberg and Haaretz are picking up a Citizen Lab report on spyware targeting a politician and a talk show host, both of them in exile. And the Committee to Protect Journalists’ annual report is getting more ink from the Grey Lady’s op-ed pages.

MEANWHILE- Egypt and Turkey are vying for a stronger foothold in the Horn of Africa, with Egypt amplifying efforts to increase military and trade cooperation with Kenya following regional rival Turkey’s moves to improve relations with the African country (Al Monitor). And former Chancellor Angela Merkel’s government approved a number of arms sales to Egypt before leaving office (DW).

Natural gas exports hit 4.6 bn cubic meters in FY2020-2021, up 142% y-o-y, according to Capmas figures (pdf). Egypt became a net exporter of natural gas and LNG in 2018 after the discovery of the supergiant Zohr gas field — the Mediterranean’s largest — allowed us to pull the plug on imports.

Almost 1.7k companies have applied to join the fourth phase of FinMin’s export subsidy arrears payment program, the Finance Ministry said in a statement. The ministry opened the door for ceramic, automobile and pharma exporters to join the program’s fourth phase, the application deadline for which was at the end of November, according to the statement. The program allows exporters to receive overdue subsidies in a single payment, rather than in installments over four to five years, in return for a 15% haircut. As of last month, some 2.5k exporters had received a combined EGP 30 bn in overdue subsidies since the program launched in November last year.

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

• Foods produced in freezones for import or export will now have to pass inspection by the Egyptian Food Safety Authority.
• Egyptian company trademarks registered with the Internal Trade Development Authority’s database can now be found on the European Union’s Intellectual Property Office’s online database, Al Borsa reported.

International Atomic Energy Agency Director General Rafael Mariano Grossi was in town over the weekend, holding talks with President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry about the use of nuclear energy to lower carbon emissions (IAEA | Ittihadiya | Foreign Ministry).