AM — The private sector ❤️ higher education

Good morning, ladies and gents, and welcome to the second-to-last Thursday of the year. We’re within arm’s reach of (western) Christmas and it’ll be time to ring in the new year before you know it.

PSA #1- Our customary end-of-year publication holiday season is upon us: EnterprisePM will continue to be on break through the end of the month and will be back in your inboxes on the afternoon of Sunday, 2 January. EnterpriseAM will be off this coming Sunday (26 December) and then again on Thursday (30 December). We’re using both days to get some pipefitting and plumbing done ahead of the new year.

By the time we return to your inboxes:

• The window for Cleopatra Hospitals Group shareholders to subscribe to CI Capital’s voluntary tender offer for 26% of the company will be over, with the deadline set for the end of trading on Sunday, 26 December.
• The House of Representatives will be back from a short recess, with plenary sessions set to resume on Sunday, 26 December. Several new taxes and development fees the Madbouly Cabinet proposed earlier this month will likely be back on the House’s agenda, after House Speaker Hanafi El Gebali decided to push the vote on the bill because of the ruckus it caused among MPs.

PSA #2- Alexandria suspended classes again: Schools are closed today in Alexandria as it is again expected to see heavy rainfall and colder temperatures — which saw snow descend on the city days ago — and heavy rains, Governor Mohamed El Sherif announced, according to Youm7.

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WANT TO HAVE BREAKFAST WITH US? Every year, we ask our readers to weigh in on what you expect for the year ahead in our Enterprise Reader Poll. Take a few minutes to give us your take on the outlook for your business and industry, whether you’re planning fresh investments and new hires, and how your business fared in the year past. We’ll share the results with the entire community in early January to help you shape your view of the year — and will invite eight of you to break bread with us. Another dozen of you who complete the poll will also get special Enterprise mugs to enjoy your morning beverage of choice.

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Arsenal gets a slap on the wrist from UK regulator over crypto tokens: The UK’s advertising watchdog has ruled that the club’s online promotion of its crypto fan tokens was “irresponsible,” arguing that it “trivialized investment in crypto assets.” As we reported earlier this week, fan tokens could be the next big thing in club financing — though critics say the trending cryptocurrencies reward savvy traders while blindsiding crypto-illiterate fans.

CIRCLE YOUR CALENDAR-

PSA- Property owners have until Friday, 31 December to pay the second installment of their annual real estate taxes without incurring a late fee. 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.

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

Actis-backed Honoris makes an entry into Egypt with Merit University acquisition: Pan-African private sector higher education operator Honoris United Universities announced (pdf) today that it signed a transaction to acquire Merit University in New Sohag City for an undisclosed amount. The transaction, which is pending regulatory approvals, marks Honoris’ entry into Egypt, adding Merit to its lineup of other universities in Morocco, Nigeria, Tunisia, Southern Africa and Mauritius. “Given Egypt’s significant potential and strength in higher education, we are pleased to be making this investment in the educational system of the country,” Honoris CEO Jonathan Louw said.

A sizable investment: While Honoris, which is majority owned by private equity giant Actis, did not disclose the size of the acquisition, it is sizable, Actis partner and head of MENA and Honoris board member Sherif El Kholy told Enterprise in an exclusive statement. The transaction, which had been in the works for the past six months, is “up there with the bigger tickets we have done,” he tells us.

More to come in Egyptian education: Actis is working on other transactions, as the private equity firm is a big believer in Egypt and its education market, he tells us.

Why Merit? The allure of a health sciences program in Upper Egypt: What apparently made Merit appealing to Honoris is its focus on STEM, with faculties in medicine, pharmacy and physiotherapy. Upon completing the transaction Merit would be the second university in Honoris’ portfolio to have a dedicated faculty of medicine, the statement from Honoris said. Merit is also one of only four private universities operating in Upper Egypt, and the only one in Sohag, Honoris said. The university opened its doors to students in October 2020.

The private sector and gov’t are increasingly eyeing universities outside of Cairo and Alex: New private and nonprofit universities have been opening up recently or are expected to. These include Al Salam University in Gharbia, and Sphinx University. Private sector education outfit CIRA, is partnering with privately owned investment company Elsewedy Capital Holding to build and run a private university in New Damietta.

Universities outside Cairo have an advantage over K-12, sector leaders told us earlier this year. For one, land availability for schools is limited, as opposed to universities, while land outside the main cities is always cheaper. Location isn’t as important for universities as it is for K-12 as much as quality higher education. The government also appears to be cutting red tape for private universities to open their doors outside of Cairo.

Who are Honoris? Honoris owns and operates 70 campuses and learning centers in 10 African countries and 32 cities catering to around 61,000 students. It operates 14 institutions ranging from multidisciplinary universities, to specialized schools, to technical and vocational institutes. It is Actis’ main education platform in Africa.

Advisers: Compass Capital acted as advisor to Merit, with Al Tamimi & Co providing counsel on the sell-side. Honoris was represented locally by Matouk Bassiouny & Hennawy, while Clifford Chance acted as international counsel, with PwC having conducted financial and tax due diligence for Honoris.

Newly married individuals “shouldn’t” be able to receive subsidy ration cards, President Abdel Fattah El Sisi said in televised remarks yesterday (watch, runtime 5:18). According to the president, if a couple that’s about to get married or recently got hitched needs subsidies to get by, they shouldn’t be getting married in the first place since they’re not able to meet the financial responsibilities that come with marriage. This issue becomes more pronounced when couples on the welfare rolls start having children and need to add them to the subsidy system too, El Sisi said.

Two-person maximum per card? The president suggested that already-issued cards can be used for a maximum of two people, but that this limit won’t be applied to new cards. Currently, a maximum of four people are allowed per card — typically, a husband and wife and two children.

No changes on the ground yet: El Sisi’s remarks are about a “mentality” that the community needs to adopt and isn’t an announcement of a new decision, Supply Minister Ali El Moselhy later told reporters (watch, runtime: 2:51). The steps that the government will need to take to that end “will be taken under study” before coming up with a proposal, El Moselhy said.

What we don’t know: First and foremost, there’s no confirmation on whether the government will actually enact a decision changing up the eligibility standards for ration cards. If this decision is implemented, it’s also unclear whether the line will be drawn at adding newborns or if newlyweds won’t be allowed to get subsidy cards. And, critically, it is entirely unclear what would happen — if the government were to implement this policy change — in a scenario where somebody who already had a subsidy card gets married. Neither the president nor El Moselhy gave any indicators on whether newlyweds could have their subsidy cards revoked, aside from being barred from getting a new card issued.

Background: Subsidy reforms have been a hallmark of El Sisi’s presidency. The overhaul of the commodity subsidy system kicked off in 2017, starting with bread subsidies, the so-called “bread points” system, and ending subsidies on flour used for producing subsidized bread. In later stages of the subsidy reform program, the Supply Ministry has worked to scrub its roster of welfare cheats. Last year, the ministry gave the boot to some 10 mn people alleged to have been cheating the welfare system, bringing the number of subsidy recipients down to 70 mn and reducing annual welfare spending by about EGP 5 bn. The forms also entailed changing the eligibility requirements for receiving subsidies, including a number of ancillary rules stipulated in 2018 like owning a “modern car,” spending over EGP 500 per month on phone bills and paying for more than one mobile phone line, that bar individuals from receiving subsidies. The government decided earlier this year to raise the earnings cap on subsidy recipients to EGP 2.4k per month, up from EGP 1.5k per month previously.

Gov’t to rule on USD 3 bn-worth of desalination bids in 1H2022: Al Nowais, ACWA Power, Mitsubishi, Schneider Electric, Shanghai SafBon Water Service, and the Hassan Allam Holding / Orascom Construction consortium should hear back from the government on their bids, worth a combined USD 3 bn, to build desalination plants in 1H2022, Al Borsa reports, citing unnamed government sources. The bids will be under review after the government announces the rules and regulations governing the construction and operation of the plants, according to the sources.

What will the regulations include? The government will decide on the land allocation mechanism for the projects, as well as the necessary electricity capacity requirements to run the plants. The desalination facilities will be required to rely on reverse osmosis technology and run on renewable energy sources. The regs will also lay out the tariff structure for water sold from the plants.

We don’t know when the regulations will be out, and it’s not clear whether the Housing Ministry-led committee responsible for them has finalized drafting the rules.

Background: Egypt’s sovereign wealth fund issued tenders for private companies to build 17 solar-powered desalination plants in October, as part of a USD 2.5 bn plan to quadruple our desalination capacity in the next five years. Orascom Construction and Metito have already successfully delivered a USD 130 mn seawater desalination plant in East Port Said. And KarmWater, the newly-launched water solutions division of local solar power developer KarmSolar, is running a solar-powered water desalination project in Marsa Alam (pdf).

For more on Egypt’s green economy ambitions and how far we’ve come in 2021 to achieve them, check out our latest Going Green.

Qalaa Holdings subsidiary Egyptian Refining Company (ERC) is in talks for a debt restructuring agreement, ERC President Mohamed Saad said on 22 December. Negotiations to extend the loan’s tenor are currently ongoing, but lenders have not yet approved the extension, CFO Aliaa Heikal said. ERC reportedly has c. 2.1 bn in senior debt outstanding.

Who’s on the other side of the negotiating table? The lenders are Japan Bank for International Cooperation, European Investment Bank, Export-Import Bank of Korea, Nippon Export Investment Ins., and African Development Bank.

Qalaa had said last year it would begin a “full debt restructuring” for ERC, its flagship greenfield. ERC had been meeting its debt finance obligations since 2019 but began struggling to continue making the scheduled payments since the pandemic hit, attributing the disruption to the decline in demand pushing down oil prices. The company has, however, managed to begin making partial loan repayment installments last December.

ERC is currently carrying out technical studies to assess potentially increasing its capacity by 15% in the coming few years. ERC successfully inaugurated its USD 4.3 bn Mostorod petrochem facility — the largest private sector project of its kind in Africa — last year, which alone produces 2.3 mn tonnes of diesel fuel and 860k tonnes of high octane fuel, jet fuel and butane.

EDITOR’S NOTE- Updated on 24 December, 2021.

A previous version of this story stated that ERC had reached a preliminary agreement with its lenders to extend the tenor of the debt, which an ERC official told us was reported incorrectly by Al Mal. The story previously included an expected investment plan for next year following the debt restructuring, as well as a figure for outstanding loan payments, both of which were also reported incorrectly.

The institutional subscription for Ghazl El Mahalla’s micro-IPO will be completed by the end of the week, the Public Enterprises Ministry said in a statement (pdf). Bookrunner Prime Holding is expected to finish the placement of at least EGP 37 mn worth of shares with institutional investors this week, while the prospectus for the EGP 98 mn public offering is currently being drawn up.

We’re still waiting on the timeline for the retail subscription: The ministry has said it wants to complete the IPO, which will see Ghazl El Mahalla list at least two-thirds of its shares on the EGX and raise EGP 135 mn, before 2022 rolls around. The company expects to hit a market cap of EGP 200 mn by the time it lists on the bourse.

This marks the Arab world’s first football club IPO, Bloomberg reported, which sets the foundation for other clubs to follow suit. Football giant Al Ahly has already expressed interest in listing as much as 49% of the club.

Recent IPOs have breathed new life into the state privatization program: e-Finance’s success on the EGX has stirred a series of planned listings for state-owned companies, with the latest being Abu Qir’s sale of an additional 10% of its shares earlier this month, which saw it raise EGP 2.25 bn. Four more state-owned companies could hit the bourse before the end of the current fiscal year in June, Public Enterprises Minister Hisham Tawfik said previously.

Egyptian Iron and Steel workers could soon be compensated after approval of an EGP 1.3 bn loan: The Metallurgical Industries Holding Company (MIHC), the parent company of Egyptian Iron and Steel, has the green light to obtain up to EGP 1.3 bn in financing from local banks to compensate former workers amid the state-owned company’s liquidation, as per a bill President Abdel Fattah El Sisi approved, according to the Official Gazette (pdf).

Egyptian Iron and Steel will pay its former workers EGP 14k for each year worked — with a cap of EGP 450k — under the terms of an agreement reached in October. Disagreement over the level of compensation had triggered protests earlier this year from factory workers, whose union had requested higher compensation.

Background: At the start of this year, Egyptian Iron and Steel embarked on its liquidation process, which is expected to take up to two years as the perennial lossmaker sells its land assets to pay off EGP 9 bn in debts. The liquidation, which came as part of the government’s strategy to streamline the public sector, also saw the company sell its steel plant in Helwan and spin off its mining operations in a new firm, Iron and Steel for Mines and Quarries, which was listed on the EGX in May.

Schneider Electric has appointed Sebastien Riez (LinkedIn) as its cluster president for the North East Africa and Levant region, a scope that will cover Egypt, Iraq, Jordan, Lebanon, and Malta, according to a press release (pdf). Riez, who has been with Schneider Electric for over a decade, was most recently the company’s Middle East & Africa Power Systems VP.

The Egyptian Banking Institute (EBI) has been named the best financial training institute in MENA for 2021 by business journal Capital Finance International (CFI). The central bank’s training arm offers courses on best practice in banking, management, leadership, IT and SMEs for professionals in Egypt and across Africa.

Taking center stage on the airwaves last night: President Abdel Fattah El Sisi’s visit to Upper Egypt, which kicked off with the inauguration of the Assiut Oil Refining Company. Of particular interest to the talking heads: the EGP 1.1 tn-worth of investments that have been poured into the development of infrastructure and services in Upper Egypt over the past seven years. Footage from the event was aired by Ala Mas’ouleety (watch, runtime: 48:49), Al Hayah Al Youm’s Mohamed Sherdy (watch, runtime: 6:53), and Masaa DMC’s Ramy Radwan (watch, runtime: 6:27).

There’s more where that came from: El Sisi inaugurated a handful of other development projects yesterday, including water treatment plants in Beni Suef, Qena and Minya and hospitals in Assiut, Minya, Sohag and Luxor, and is expected to cut the proverbial ribbon at several other projects over the coming week, Yahduth Fi Masr’s Sherif Amer noted (watch, runtime: 2:25).

Meanwhile, the burden of a ballooning population on the country’s growth was the focal point of Finance Minister Mohamed Maait’s phone-in to Masaa DMC, in which he explained to host Ramy Radwan the far-reaching effects of failing to get population growth under control. To maintain the current quality of life, economists suggest that economic growth rates need to be double the annual population growth rate, Maait said. Egypt’s population grows around 2% every year, meaning the current fiscal year’s 5.6% growth target is barely enough for the state to continue providing the necessary services to its citizens, the minister said (watch, runtime: 26:05).

It’s a rather slow morning for Egypt in the foreign press. Among the headlines to skim:

• Archaeology for tourism: Efforts to put Ancient Egypt back in the spotlight through renovations of archeological sites and discoveries are designed to breathe new life into Egypt’s tourism industry. (The Africa Report)
• Better communication with Turkey? Egypt attending the Turkey-Africa Partnership Conference signals our willingness to mend fences with Ankara, but a better communication strategy is necessary to make a rapprochement feasible. (TRT World)

The Health Ministry is expanding healthcare coverage to another 15 mn people nationwide while the government rolls out its universal health ins. scheme across the country, it said in a statement yesterday. Some 69 mn people will now have access to health ins.(outside of the universal scheme) after the ministry decided to add 6.5 mn farmers, 6.2 mn irregular workers in transport, logistics and mining, 1.8 mn business owners, 700k microbus and taxi drivers, as well as tens of thousands of workers in the fishing industry and members of artists’ and actors’ unions to the system.

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

• Assiut oil refinery inaugurated: President Abdel Fattah El Sisi inaugurated yesterday Assiut Oil Refining Company’s new USD 450 mn oil refinery, which is expected to produce about 800k tonnes of high-octane gasoline each year.
• Serbia is considering setting up silos to store Serbian wheat at the Suez Canal Economic Zone to act as a distribution center for MENA and West Asia.
• Some 8.5k new hotel rooms are expected to be added to Egypt’s hospitality sector in 2022, with an expected EGP 9-10.2 bn of investment.

The Health Ministry reported 879 new covid-19 infections yesterday, up from 848 the day before. Egypt has now disclosed a total of 377,960 confirmed cases of covid-19. The ministry also reported 43 new deaths, bringing the country’s total death toll to 21,500.

First at-home pill approved for use in the US: The FDA authorized Pfizer’s at-home pill, Paxlovid, for covid-19 patients aged 12+ who are vulnerable to becoming severely ill, the New York Times reports. The pill was recently proven to be effective against the Omicron variant.

There may be good news on the omicron front out of South Africa where a new study has suggested that the variant is 80% less likely to result in hospitalization compared to other strains, reported Bloomberg and Reuters. The research was inconclusive on whether the lower hospitalization rate is because of higher population immunity or whether the strain is milder.

The UN-backed presidential election in Libya is in danger of collapsing: Libya’s presidential elections will be postponed likely until at least 24 January at the request of its election body — which just yesterday shut down election committees essential for Friday’s ballot — and has called on the country’s parliament to address disputes threatening the ballot. Reuters, DW, and the Guardian all have the story.

Sherif El Ashiry, founder and CEO of MUN Inc.: Each week, My Morning Routine looks at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Sherif El Ashiry (LinkedIn). Edited excerpts from our conversation:

My name is Sherif El Ashiry and I’m an enthusiast for Model United Nations (MUN) and sustainable development goals (SDGs). MUN has been a part of my life for the past 15 years and it led me to my current career path where I work to create diverse learning experiences for high school students through my company MUN Inc. I first joined MUN in grade 11 and I was very influenced by the community of like-minded curious individuals that want to understand more about how the world works and how international issues are solved on the ground.

MUN Inc. happened somewhat by coincidence. A teacher at a school in Cairo asked me to help out the students on a friendly basis as they prepared for an MUN program in the US. I enjoyed the process a lot and it soon struck me that this could be a viable business idea — and so MUN Inc. was born in 2014. We started by organizing trips to MUN conferences abroad and delivering training sessions to prepare the students who would travel. At the time, SDGs had just been recently adopted and we felt we couldn’t talk about the UN without mentioning one of their most important agenda items. From there, schools started asking us to give sessions that were focused on just SDGs and we ventured away from our original business plan to incorporate more session offerings.

We take a consultancy-based approach with schools. We ask them what learning objectives they want to achieve and tailor a program based on a number of factors including their school calendar, educational system, and strategy. We try to make our sessions go hand-in-hand with educational institutions and prepare students for the future.

Our programs include a lot of gamified learning and community-based activities. We want our students to know that they can take action to make a small local impact and actually go through the planning and execution phase to really enforce that idea. Some students chose to create a carpooling initiative to lower individual carbon footprints within the school community, others planted trees around the premises, and one group launched an awareness campaign about harassment.

We recently launched a financial literacy program with EG Bank to teach students how to save and invest in the future. We teach the students about banking products, doing their taxes, investing in the stock market, and overall life skills when it comes to finances through simulations and hands-on activities. By the end of this month, we’ll have finished our goal of delivering the program to 1k students.

The pandemic forced us to pivot a bit to introduce virtual sessions and change up our business model. With the uncertainty surrounding everything, schools no longer want to commit to long-term programs so we’ve introduced more diversified, compact programs that can be delivered in the span of a few weeks.

As CEO, I stepped out of the classroom a few years back and now my responsibilities include making sure all the teams are working in sync, maintaining relationships with schools and governmental partners, and defining the strategy of the company. We’ve been entirely bootstrapped from day one, but as we expand our growth objectives we’re currently fundraising and talking to several investors.

I’m not a morning person and mornings are a personal struggle for me. I have played around with morning routines to have a productive start to my day, but what really stuck was starting the day by gaming [laughs]. I play on my PC or my PlayStation and it helps me wake up while also giving me ideas on new game-based learning. I’m currently playing the remaster of Final Fantasy VII. After that, I sit down and start reading Enterprise with breakfast and coffee.

My workdays don’t have a specific structure. I can be at the office or at a meeting at a school depending on the day. I try to have a constant in my day with three hours of deskwork where I follow up on emails or touch base with the team on tasks they have. It’s important to stay organized under these conditions and at the end of every week, we have a meeting to set up a suitable schedule for all of us as a team… Thank God for shared Outlook calendars [laughs]. I also have a physical personal planner that I take with me everywhere

What’s next for MUN Inc. is to introduce our first program where students can sign up individually instead of through a school. We also hope to bring back our international trip offerings, with ideas to launch a tech-enabled MUN conference.

The TV series I always recommend is Mad Men. I’ve watched it several times and it resonates with a lot of people. I’m somewhat of a movie junkie and I have a target to watch 100 movies a year — I keep a list and everything. So it’s very hard to recommend movies because it has to be a very tailored conversation. As for books, off the top of my head there are two that really influenced me: Power of Habit and Tipping Point.

The best piece of advice I received was to not fall in love with my products. It’s important to love what your products do for your customers, but you still need to be flexible enough to revisit them and see if there's a way you can better serve the end-goal. This really helped me in strategizing and taking into account feedback.

Scientists have revealed what might be the best-preserved dinosaur embryo ever found, a discovery that could shine new light on the biological links between birds and the prehistoric reptiles. Found in China, the fossilized egg dates back at least 66 mn years and seems to show that some dinosaurs would get into a tucked position before hatching — a behavior previously thought to be distinctive to birds, according to a study by Chinese and British scientists. The egg belongs to the oviraptorid species of dinosaur, a turkey-sized creature that existed in Asia and North America about 70-125 mn years ago.

Al Ahly crowned Super Cup champions for the 8th time: Al Ahly snagged the CAF Super Cup for the eighth time after a 6-5 shootout victory over Morocco’s Raja Casablanca, Sky News Arabia reported. Reversing what could have been a 1-0 loss, substitute Taher Mohamed Taher struck in the 90th minute to bring the score to a draw, before Al Ahly tipped the scales in its favor during penalties to land the title.