Tuesday, 11 January 2022

AM — Urban inflation rises to 5.9% in December, below expectations

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, friends, and happy hump day. Two themes stand out in a very busy issue this morning: The crazy progress we’ve made building out green energy infrastructure in the past decade (see Coffee with… and Going Green, below) and continued strong interest in retail (where the sports segment is about to see high-energy UAE competitor GMG invest here).

EARTHQUAKE WATCH: A magnitude 6.4 earthquake off the coast of Cyprus in the early hours of this morning was felt in Egypt, with some of us residing in the People’s Republic of Maadi noticing a slight tremor soon after 3am. We weren’t the only ones: Hundreds of people in Egypt have taken to social media to report feeling the shake. No damage has been reported in Egypt or Cyprus.

WHAT’S HAPPENING TODAY-

Egypt kicks off its Afcon 2021 campaign today, meeting Nigeria in the opening game of Group D at 6pm. The other tie in the group will see Sudan play Guinea-Bissau at 9pm.

It’s day two of the World Youth Forum in Sharm El Sheikh, which got underway yesterday. You can check out the full agenda for the forum here (pdf). President Abdel Fattah El Sisi met with Lebanese Prime Minister Najib Mikati yesterday on the sidelines of the forum, according to an Ittihadiya statement.

Chinese ride-sharing app DiDi started operating in Cairo yesterday, a few months after it entered Egypt with its launch in Alexandria.

CIRCLE YOUR CALENDAR-

PSA- Calling seed-stage fintech startups: You have until Tuesday, 15 February to apply to Orange Ventures’ seed challenge for a shot at EUR 500k. To qualify you need to have a seed-stage fintech business that has raised less than EUR 1 mn so far. You can apply here.

Abu Dhabi Sustainability Week looks ahead to COP27: The UAE will host heads of state, business leaders and policymakers at Abu Dhabi Sustainability Week (ADSW) from 15-19 January. ADSW will see 45k attendees from 175 countries meet to discuss climate action. Expectations for the UN’s COP27 summit in Sharm El-Sheikh in November will likely be high on the agenda. COP28 is set to be hosted by the UAE in 2023.

South Korean President Moon Jae-in is due in town from 20-21 January on an official visit, during which he will meet President Abdel Fattah El Sisi. Bilateral ties and how to deepen cooperation on environmentally-friendly businesses are high on the agenda, according to Youm7 and the Korean press. Egypt is the last leg of a Middle East tour that will also take Moon to the UAE and Saudi Arabia.

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

THE BIG STORY ABROAD- Federal Reserve vice chair Richard Clarida will step down two weeks early amid questions about his trading activity during the early days of the pandemic. Clarida’s four-year stint was supposed to wrap at the end of the month but the central bank announced yesterday he will resign on Friday.

The news is getting the headline treatment in the global business press, from the Financial Times to CNBC and the Wall Street Journal.

And now back to the Fed’s regularly scheduled programming: Fed head Jay Powell will go before the Senate’s banking committee today in a hearing to confirm his nomination by President Joe Biden for a second four-year term at the helm. Fed governor Lael Brainard’s confirmation hearing to replace Clarida as vice-chair is set for Thursday.

The Fed is still teasing coming rate hikes: The central bank will “use the tools” at its disposal to “prevent higher inflation from becoming entrenched,” Powell will say in prepared remarks at today’s hearing, indicating the bank’s readiness to hike interest rates this year.

A changing of the guard is also underway at the IMF: UC-Berkeley economist Pierre-Olivier Gourinch will be the IMF’s new chief economist, replacing Gita Gopinath, the fund announced in a statement yesterday. Gopinath will become the fund’s first deputy managing director.

The progress (or lack thereof) in yesterday’s talks between US and Russia is featuring heavily on the global front pages this morning. Talks aimed at calming tensions over Ukraine didn’t get very far yesterday after the US indicated that Moscow’s key demand — preventing Ukraine from entering Nato — is not up for discussion. The story is getting prominent treatment in the Washington Post, Reuters and the AP.

enterprise

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

In today’s issue: Over the next five years, the International Energy Agency expects countries in the MENA region to more than double their renewable energy production, with an eye on building a post-hydrocarbon future. But even as the regional growth in renewables — led by Egypt and others — gains momentum, MENA continues to lag behind other parts of the world that are pushing forwards with that shift at a faster pace.

enterprise

Elevate your spirit where breathtaking mountains rise wherever you turn. Somabay; so magnificent, every day.

ECONOMY

Urban inflation rises to 5.9% in December, below expectations

Annual urban inflation rose to 5.9% in December from 5.6% in November, ending a two-month downward trend despite a slowdown in food price inflation, according to figures released yesterday by statistics agency Capmas. On a monthly basis, consumer prices fell for the first time in 11 months, dipping 0.1% due to a 1.1% fall in food prices. The annual rate remains at the lower end of the central bank’s 7% (±2%) target range by 4Q2022.

Annual core inflation hit its highest level since June 2019, climbing to 6% y-o-y from 5.8% in November, according to Central Bank of Egypt data (pdf). The core index removes volatile items such as food and fuel from the headline annual urban rate.

What’s behind the headline figure? Less expensive vegetables didn’t outweigh an unfavorable base effect: A slower-than-expected rise in food and beverage costs led to a more muted rise in the annual headline figure than some had anticipated. Food and beverage costs (which make up the largest component of the basket of goods used to measure prices) rose 8.4% on an annual basis but fell 1.0% from November, Capmas said. Vegetables were the only item included in inflation figures to register a y-o-y decrease in price, falling 9.6% on an annual basis and 7.1% on a monthly basis.

Analysts were expecting prices to rise faster: December’s headline rate was lower than CI Capital’s expectation of around 6.5% y-o-y, but in line with their 2H2021 estimate average of 6%, according to a note. The latest reading takes the average rate for the second half of 2021 to almost 5.9%, it added. The figure also came in lower than Prime Research’s 6.1% prediction, the brokerage said in a note.

Also rising last month: Housing and utility prices rose by 4.2% y-o-y, largely on the back of an 11.6% increase in gas, electricity, and other fuel prices, while clothing and footwear rose to 2.7% from 1.2% the month prior. Healthcare costs rose 2.7% annually, transport increased 4.8%, while recreation and culture rose by 14.8%.

LOOKING AHEAD- EFG Hermes said in a note yesterday that it expects “inflation to accelerate to an average 7% in 2022, from 5.2% in 2021, as more of global inflation filters through into the local market.”

TRADE

Gov’t wants to nearly double annual exports by 2025

Egypt aims to increase export revenues to USD 60 bn a year by the middle of the decade as part of plans to eventually reach USD 100 bn a year, Trade Minister Nevine Gamea said in a phone-in with Al Arabiya (watch, runtime: 7:37).

This would nearly double the record USD 31 bn export revenues recorded in 2021. The 2021 figure was up 22.5% from 2020, when proceeds from exports came in at USD 25.3 bn, according to Gamea. Rising demand as the global pandemic eases, ramped up government support, and the increased attractiveness of Egyptian exports in light of rising global shipping costs helped drive last year’s increase, Gamea said last week.

More than 15% of the target could come from African business: The government previously announced plans to push African exports to USD 10 bn by 2025, with an interim target of USD 7 bn this year. The first phase of a three-phase strategy to boost African exports is slated to begin this month, targeting 10 countries. The ministry’s export subsidy program and other forms of support are also helping exporters tap new markets, including in Africa, Gamea said.

A long way to go: During the last fiscal year, Egypt’s exports to Africa (excluding Arab countries) recorded USD 607 mn, accounting for only 2.1% of our total exports, according to Central Bank of Egypt data.

Increasing exports is one of the key targets of the government’s new structural reform program, which aims to ramp up agricultural, manufacturing, telecoms and IT exports through the subsidy program and supportive reforms.

enterprise

TOURISM

UK tourists head to Egypt as covid test rules eased

More UK tourists heading to Egypt after covid test rules eased: The UK arm of travel agency TUI is reporting a rise in bookings to Egypt after the UK government relaxed covid testing requirements last week, according to Bloomberg. The company has seen an “immediate and strong uptick in bookings” to Egypt, as well as Mexico, the Dominican Republic, the Canary Islands and Cape Verde, it said.

PCR tests for UK travel are history: This comes just a few days after the UK replaced requirements for incoming travelers to take a PCR test before and after flying with a cheaper lateral flow test on the second day after arrival. “There’s no doubt the positive travel changes have given Brits the reassurance that travel will once again be easier and more affordable,” the company said in a statement. TUI now expects bookings for the summer to be “normalized,” it said.

Egypt’s tourism sector is firmly in recovery mode: The rebound in Egypt’s tourism sector — which prior to the pandemic accounted for 12% of GDP — gathered pace through 2021 as international travel began to normalize, with the most recent data showing revenues rose 20% y-o-y in the first half of the year.

STARTUP WATCH

Homzmart wants to grow its footprint in Asia

Homzmart is eyeing South Asian expansion: Furniture and home goods marketplace Homzmart is targeting expansion into South Asian countries, Al Mal quotes company head Mahmoud Ibrahim as saying. The company entered Saudi Arabia in November, giving it access to a USD 15 bn market that’s growing 10% each year.

Local expansion is also on the wishlist: Homzmart wants to serve between 20-25 mn homes and is eyeing new customers in the new administrative capital and on the North Coast. The company currently has between 100k-200k customers, Ibrahim said. No timeline was given for the local or international expansion plans.

More funding coming? The company is currently holding talks with investors to raise more financing, the company head said, without giving any details. Investors from Europe and the US are finding Arab markets increasingly appealing, he said.

About Homzmart: Founded in 2019, Homzmart connects suppliers with consumers, showcasing 55k furniture products from different brands and merchants. Last year, the company landed USD 15 mn in a series A round led by China’s MSA Capital and Emirati-Saudi VC firm Nuwa Capital, bringing the total amount raised by the company to USD 17.2 mn.

MOVES

Veteran American diplomat David Satterfield will replace Jeffrey Feltman as the United States’ special envoy for the Horn of Africa, Secretary of State Anthony Blinken announced last week. The statement did not disclose when Feltman will step down from his position but sources told Reuters last week that he will leave this month.

Out: Since being appointed by the Biden administration in April, Feltman has taken charge of the US diplomatic response to a number of crises in the region, including the dispute over the Grand Ethiopian Renaissance Dam (GERD), the Tigray conflict in Ethiopia, and the military coup in Sudan in October.

In: Satterfield has more than four decades of diplomatic experience in the Middle East, and has served as the country’s ambassador to Lebanon and Jordan, as well as completing stints in Saudi Arabia, Tunisia, Iraq, Syria and Algeria. He most recently served as the ambassador to Turkey, ending his term in Ankara last week.

enterprise

COFFEE WITH

Infinity eyes Jordan and South Africa acquisitions, sees desalination and green hydrogen helping drive growth this year

Coffee with Mohamed Mansour, co-founder and CEO of Infinity: 2021 marked a big year for renewables in Egypt, with several big projects being announced including new wind and solar generation capacity, green hydrogen, carbon capture, and of course, our natgas transition plans and electric vehicles (EV) push. And this was all ahead of our selection to host the COP27 global climate summit this year. One of the major players on the scene is renewable energy provider Infinity, which is building the infrastructure of EV charging stations across Egypt. The company, which is the largest local solar energy producer at the Benban solar park in Aswan, is now looking to substantially raise its output in Egypt and the region.

The CEO at the center of it: Mohamed Mansour (linkedin), who prior to founding Infinity in 2014 was managing director of Manfoods — fast food giant McDonald’s Egypt franchise — where he helped push its expansion throughout Egypt. Mansour has led Infinity’s growth from a small solar start-up to becoming one Egypt’s largest utility-scale renewable energy company in solar, wind, and EV charging solutions.

We sat down for coffee to discuss all things renewable, from the viability of Egypt’s renewable energy targets, to scaling a thriving EV industry, to Infinity’s pipeline and his expectations for COP27.

Below are edited excerpts from our conversation:

The future is looking bright for renewables in Egypt: Egypt’s ambition to raise the supply of electricity generated from renewable sources to 42% by 2030 is not only on track, but can even be surpassed. That would require the manufacturing industry to pick up and increase demand for electricity, and the quick adoption of electric vehicles.

But what about the electricity supply glut? We likely won’t see renewable energy generation feeding into the national grid in 2022 due to the oversupply of electricity. A smart solution to this problem is to have water desalination and new green hydrogen projects drive growth in the renewable energy sector, which is what is currently being implemented. This is why sales growth over the next three to five years will primarily be driven by these types of projects.

We plan to at least double our capacity in 1Q2022 across Egypt and the region. Currently, we are generating 538 GWh a year with our six assets in Cairo and Aswan, powering around 240k homes with an installed capacity of 236 MW. We’re looking to generate an extra 630 GWh per year from wind energy at the Ras Ghareb wind farm. We will sign on an additional 200 MW of wind capacity in Egypt this quarter, which should be operational by 2024.

We're looking at two or three acquisitions in 2022 in Jordan and South Africa. These include approximately 300 MW of assets in Jordan. We're also participating in a solar tender in South Africa for a capacity of approximately 600 MW.

In total, we'll be generating around 2 TWh of energy per year by the end of 2022 — 60% of which would be generated in Egypt alone. This could power around 1 bn homes across Egypt, Jordan and South Africa.

A growing EV landscape: Currently, there are approximately 1,500 EVs on Egypt’s streets used as secondary cars, but we expect that number to go up to 2-3k in 2022. Starting this year, the number of EVs in Egypt will grow substantially as we see models from global brands being offered. By 2025, we expect there will be 40-50k EVs on Egypt’s roads.

…And a drop in prices: While EVs are more expensive than fuel-powered cars, prices are expected to be on par with fossil fuel vehicles by 2025. We expect locally made electric cars to be priced within the EGP 350-400K range this year. (Editor’s note: The average EV price in Egypt currently stands at around EGP 840k, according to our calculations based on Electrified EV data.)

Egypt is the right place for a burgeoning EV market: I would love to see more EV manufacturers here, especially as Egypt has several advantages. We are perfectly situated geographically so we can export to Europe and Africa. The cost of production here when it comes to labor, transportation and energy are competitive. So, we have all the fundamental elements to make this work.

What is needed is the right partner and the right product, which we will probably see fall into place in the next 12 months. Turning El Nasr Automotive into an EV manufacturer was a great idea to get it up and running, and make it a viable automaker. Unfortunately, things fell through with Dongfang, but I’m expecting them to find another partner in 1Q2022.

But for EVs to get traction in Egypt, you need a holistic approach: You need to incentivize the consumer, the manufacturers and distributors, and infrastructure providers, which are companies like ourselves. In most countries, infrastructure players are supported by their governments either through rebates or tax holidays.

Tariffs for EVs currently in the works: We are waiting for the official announcement from Egyptera regarding the tariff and the regulations governing the EV industry in Egypt, before we can begin charging consumers. Currently, the government-proposed tariff is between EGP 1.69 per KWh and EGP 1.89 per KWh, depending on whether the charging station is in a no-rent zone (public space designated by the government for providers like Infinity) or in private areas such as compounds, where providers have to lease the land for their stations.

The proposed tariff for EV charging is a work in progress. While it isn’t ideal, it’s a start and we want to get the ball rolling. As an infrastructure player ourselves, Infinity is adamant in supporting the government’s EV plans while ensuring we are able to service and bill customers at our EV stations appropriately. The global standard is that charging an EV should cost the car owner one third of what it would take to fuel a normal car. That ratio needs to be in place. Furthermore, while the electricity cost is factored into the tariff, the value for the duration of the charge is not appropriately correlated. Depending on the charger and the vehicle, the time it takes for EVs to fully charge is different. For instance, a super-fast 350 kW charger can fully charge an EV in 15-20 minutes, depending on the model. A 50 kW charger would take more time.

On private sector financing for renewables: There is a misconception that the private sector is not involved in green economy financing. All the sector’s equity funding comes from the private sector, while the primary function of development finance institutions (DFIs) is to come in with debt funding. The bulk of the financing (sometimes up to 80%) for all these infrastructure projects comes from the DFIs through a debt facility, and I think that will always be there.

The question is when will Egyptian commercial banks start participating with private equity and developers. These projects need very long tenors of 15-20 years, and need to be financed in USD because components will be bought from abroad, which local banks are not allowed to do. If this is ever changed, and banks have a stronger appetite for longer tenors, we’ll see more local banks getting into the game.

COP27 will be the perfect showcase for Egypt and will come with a lot of exciting announcements, I expect. We may hear more about recently-announced projects, including Orascom Construction’s plan to build a green hydrogen facility and water desalination projects powered by renewable energy will be announced and awarded. We may even hear more initiatives on new technologies like carbon capture. And we may also see commitments by foreign companies in local projects in green hydrogen and EVs.

I expect the government may also commit to certain targets. This would include the reduction of fossil fuel consumption, more capacities for renewable energy generation and more initiatives for energy efficiency.

Why we all should look forward to it: In the past six years, Egypt has been outrunning the rest of Africa in the green economy space by putting more capacity on the grid than even South Africa. The industry has also opened up to the private sector to participate and build, which is great. The fact that you have half the country covered with EV charging stations today is a big statement, and hopefully when COP27 comes around, we'll have the whole country covered.

LAST NIGHT’S TALK SHOWS

The World Youth Forum practically had the airwaves to itself last night, with most of the nation’s talking heads (those who aren’t down and out with covid) covering the opening day live from Sharm El Sheikh. Masaa DMC (watch, runtime: 17:30), Al Hayah Al Youm (watch, runtime: 1:43 | 2:03), and Ala Mas’ouleety (watch, runtime: 4:04) all had coverage.

EGYPT IN THE NEWS

Human rights is getting attention in the foreign press this morning: The Associated Press picks up a statement from local human rights organization, the Arabic Network for Human Rights Information, which yesterday announced it has closed down due to government pressure. Over in Italy, the judge overseeing the trial of four Egyptian security officials over the death of Giulio Regeni has called on the Italian government to intervene to push the case forward, according to local news agency ANSA.

Also making headlines: Egypt’s investment in green energy is getting attention from China’s Xinhua, while Offshore Energy is covering Eni’s award of five new exploration licenses, and the Red Sea mountain trail is getting coverage as one of the New York Times52 best global destinations for 2022.

ALSO ON OUR RADAR

UAE-based retailer GMG plans to open over 100 sports retail stores in Egypt by 2026, it said in a statement (pdf) yesterday. The conglomerate has established a local office in Cairo to support the expansion, which will start by opening several stores in the capital this year. GMG sports retailer Sun & Sand Sports will open branches at the City Center Almaza and the Mall of Egypt. The company is also considering entering the local e-commerce market alongside local distributors, the statement said.

MEANWHILE- The Central Bank of Egypt has issued a circular (pdf) that puts in place a mechanism under which it could in the future provide emergency liquidity to banks that request it. The mechanism is primarily designed to provide liquidity to solvent banks if they are unable to obtain it from the interbank or financial markets. The mechanism is purely a precautionary move mandated by the Central Bank and Banking Act of 2020, bank deputy governor Gamal Negm told Al Arabiya late yesterday. Having the mechanism in place is both good governance and in line with international norms.

Negm stressed that local lenders have some of the strongest liquidity positions in emerging markets. His interview is getting domestic attention from Ahram Gate.

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

  • MoneyFellows and e-Finance subsidiary e-Cards are partnering (pdf) to provide financing for recipients of government and union pensions and state support programs.
  • e-Finance will provide smart cards to distribute fuel quotas to parties contracted with Misr Petroleum.
  • Carton manufacturer El Wessam Pack will ramp up its investments to EGP 400 mn over the next two years to add new production lines and revamp existing ones.
  • President Abdel Fattah El Sisi has given the green light to the establishment of ‘Innovation University’ — a private, nonprofit university in Tenth of Ramadan City that will teach scientific subjects such as engineering, IT, business administration and physiotherapy, according to a decision published yesterday in the Official Gazette.

COVID WATCH

Prior common cold could protect against Omicron + Pfizer and Moderna race to produce omicron jabs

The Health Ministry reported 951 new covid-19 infections yesterday, up from 912 the day before. Egypt has now disclosed a total of 393,808 confirmed cases of covid-19. The ministry also reported 31 new deaths, bringing the country’s total death toll to 21,995.

Had a cold lately? It may offer some protection against covid-19: A small UK study found high levels of T cells — protective immune cells created by the body to fight some colds — in those who didn’t contract covid-19 despite being in close contact with an infected person, Bloomberg reported. T cells tend to survive longer in the human body than antibodies from covid vaccines and protect against a wider range of pathogens, potentially making them effective against different variants.

Pfizer’s omicron-specific booster will be ready in March, while Moderna’s will land in the fall, the CEOs of the two drugmakers told CNBC in separate interviews. Pfizer is already manufacturing its jab and expects trial results within days. Moderna’s booster is scheduled to enter clinical trials soon.

The US continues to break records: A record 132.6k people in the US are currently in hospital due to covid-19 as omicron sweeps the country, according to a Reuters tally.

PLANET FINANCE

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US unicorns could be forced into more transparency: The country’s securities regulator is planning to make big private companies disclose closely-guarded information including earnings, business outlooks, risks, and manager pay, the Wall Street Journal reports. As companies secure increasingly massive funding rounds from private capital markets, some regulators are worried about a “lack of oversight” compared to firms that go the IPO route. The strategy is likely to meet stiff opposition in Silicon Valley among other sectors, where industry insiders argue that it will saddle firms with costly paperwork on a par with going public without any of the benefits. Lots (but not all) of the downside of going public, with no benefits? Sign us up.

US tech stocks staged a dramatic late-session recovery yesterday, closing marginally in the black after paring losses that at one stage saw the Nasdaq 2.7% in the red. The sell-off, which also saw the S&P 500 and the Dow Jones close slightly in the red, came as yields on US treasuries resumed their rise, as traders position ahead of a possible rate hike in March.

BTC is having its worst ever start to a year: The world’s most popular cryptocurrency has had a “shocking” start to 2022, falling 10% so far this month, Bloomberg reports. BTC fell below USD 40k for the first time since September earlier yesterday and was down almost 40% from its November peak as of midnight. “We know that BTC is volatile but even for BTC, we’re seeing some really big moves,” one analyst said.

Up

EGX30

12,023

+0.4% (YTD: +0.6%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,665

+0.9% (YTD: +3.4%)

Down

ADX

8,354

-0.3% (YTD: -1.6%)

Up

DFM

3,230

+0.3% (YTD: +1.1%)

Down

S&P 500

4,670

-0.1% (YTD: -2.0%)

Down

FTSE 100

7,445

-0.5% (YTD: +0.8%)

Down

Brent crude

USD 80.87

-1.1%

Up

Natural gas (Nymex)

USD 4.12

+1.1%

Up

Gold

USD 1,800

+0.1%

Down

BTC

USD 41,766

-0.5% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 0.4% yesterday on turnover of EGP 959 mn (22% below the 90-day average). Foreign investors were net sellers. The index is up 0.6% YTD.

In the green: Raya Holding (+4.4%), EFG Hermes (+2.9%) and AMOC (+1.8%).

In the red: Egyptian Resorts Company (-2.9%), Heliopolis Housing (-2.2%) and Credit Agricole Egypt (-2.0%).

THE MARKETS TODAY- Hopes that the late rally in US stocks yesterday would give a lift to Asian markets seem to have been dashed, with most indexes across the region in the red in early trading this morning. Ahead of dispatch, the Nikkei was down 0.9%, the Kospi had lost 0.2% and the ASX was 0.7% in the red. Futures are currently pointing towards early gains in the US and Europe.

AROUND THE WORLD

UN launches talks to try to solve Sudan’s political deadlock: A UN mission yesterday began a series of separate meetings with civil society groups and the military, designed to stabilize the country following the army’s October takeover. The UN’s envoy to Sudan told journalists the talks were not formal negotiations, but rather “consultations” aimed at building confidence, reducing violence and eventually finding “some consensus” to ease the stalemate between protestors and the military.

Some of Sudan’s key protest groups have rejected the talks, demanding that the military first cede power.

greenEconomy

Renewable energy production in the MENA region will more than double over the coming five years as states ramp up investment in green technology and reduce reliance on hydrocarbons, according to the International Energy Agency (IEA). Capacity in the region will eclipse 32 GW by 2026, up from 15 GW currently, the organization forecast in its Renewables 2021 report (pdf), published in December.

But: The MENA region is far behind other parts of the world which are taking far bigger steps to increase their renewables footprint and phase out use of fossil fuels.

The epicenters of MENA renewables growth: Egypt, the UAE, Saudi Arabia, Morocco and Israel will account for more than 75% of renewables growth over the next five years, the IEA said.

Powered by the region’s most abundant resource: Solar will be the driving force, accounting for more than two-thirds of renewables growth as the technology becomes more cost effective. An increase in competitive auctions, falling system costs and better financing conditions has seen bid prices in MENA fall more than 80% over the past six years.

The UAE leads the pack: The country’s capacity is set to rise by over 6 GW by 2026 thanks to solar PV and concentrated solar power, as well as rising bioenergy and hydropower generation. This is higher than that forecasted last year on the back of higher PV production.

A close second is Saudi Arabia whose renewable capacity is also expected to rise by over 6 GW, underpinned by a rise in utility-scale solar PV.

Egypt’s renewable capacity is set to rise by 68% or 4 GW over the coming five years, bringing the country’s total capacity to around 10.1 GW from 6.1 GW currently. We covered the IEA’s forecast for Egypt in greater detail in an article in Going Green last month, which you can check out here.

Israel + Morocco: The IEA expects Israel to more than double its renewable capacity, increasing 5.2 GW over the period, while Morocco will add another 3.8 GWof utility-scale solar PV, onshore wind, CSP and hydropower capacity.

More bullish on MENA renewables is Apicorp, which said in a report last year that it expects 20 GW of solar energy alone to come online by 2025.

In any case, MENA still has a lot of catching up to do: Of the IEA’s eight regions, MENA came second to last behind Sub-Saharan Africa. China, Europe, the US, India, Latin America and ASEAN will all make bigger gains over the coming five years than MENA.

Investment in conventional energy will continue to far outweigh renewables: Of the USD 805 bn Apicorp expects to be invested in MENA energy projects in the first half of the decade, only around USD 100 bn will go towards renewables.

The region could add up to 57 GW by 2026 if it wasn’t for some major challenges: The region lacks the sufficient grid infrastructure to connect renewable plants and transport the power to demand centers, as well as utility-grade infrastructure for storing renewable energy. MENA also suffers from exacerbating overcapacity amid pandemic-driven reduced energy demand. Existing regulatory frameworks currently do not allow corporate purchase power agreements and bilateral contracts, which could open the doors to more investment in the sector.


Your top climate stories for the week:

  • Green hydrogen plan in the works: Egypt will soon sign an agreement with a foreign consultancy to put together a 12-month strategy to develop the green hydrogen industry.
  • Solar energy players call to scrap tariffs on solar panels: The Solar Energy Development Association (SEDA) has sent a letter to Electricity Minister Mohamed Shaker requesting that the ministry cancel the duty.
  • Kuwait’s sovereign wealth fund is jumping on the ESG train: The Kuwait Investment Authority is looking to make its entire USD 700 bn portfolio fully compliant with environmental, social and governance standards.

CALENDAR

1Q2022: Launch of the Egyptian Commodities Exchange.

1Q2022: Swvl acquisition of Viapool expected to close.

1Q2022: Waste collection startup Bekia plans to expand to the UAE and Saudi Arabia.

Early 2022: Results to be announced for the second round of the state’s gold and precious metals auction.

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

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

1H2022: e-Finance’s digital healthcare service platform, eHealth, will launch its services.

1H2022: The government will respond to private companies’ bids to build desalination plants.

January: Sovereign Sukuk Act executive regulations expected to be finalized.

January: Tenth of Ramadan dry port tender to be launched.

January: Three-month trial period of ACI for air freight to begin.

1-15 January (Saturday-Saturday): Qualified Industrial Zones (QIZ) Joint Committee.

9 January – 6 February (Sunday-Sunday): 2021 Africa Cup of Nations, Cameroon.

9-12 January: Plastex, Egypt International Exhibition Center, New Cairo, Egypt.

10-13 January (Monday-Thursday): World Youth Forum, Sharm El Sheikh.

Second half of January: Egypt will host the Egyptian-Bahraini Joint Committee.

Second half of January: Regulations for installing EV charging stations will be published.

16 January (Sunday): SODIC shareholders will vote on the company’s new board of directors at an extraordinary general meeting.

17-19 January (Monday-Wednesday): World Future Energy Summit, Abu Dhabi.

19 January (Wednesday): EgyptAir will operate an exceptional Casablanca-Cairo flight to bring home Egyptians expats stranded in Morocco following border closures.

20 January (Thursday): Kadmar Shipping’s new line transporting agricultural crops between Alexandria and Russia begins its operations.

20-21 January (Thursday-Friday): South Korean President Moon Jae-in will visit Egypt as part of his diplomatic tour of the region.

23 January (Sunday): Deadline for Macro Pharma to IPO on the EGX.

25 January (Tuesday): The IMF will release its World Economic Outlook.

25 January (Tuesday): 25 January revolution anniversary / Police Day.

25-26 January (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 January (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

End of January: The Egyptian-Romanian business forum will take place with the aim of strengthening joint investment relations.

January-February 2022: Construction work on the Abu Qir metro upgrade will begin.

February: Hassan Allam Construction’s new construction firm established with Russia’s Titan-2 to handle construction work on the Dabaa nuclear power plant begins its operations.

February: Ghazl El Mahalla shares will begin trading on the EGX this month.

February: Suez canal transit fees set to increase 6%, exempting cruise ships and LNG carriers.

Mid-February: End of grace period to comply with new minimum wage for firms who sent in exemption requests.

3 February (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

3 February (Thursday): January PMI figures for Egypt, Saudi Arabia, and the UAE will be released.

4-20 February (Friday-Sunday): 2022 Winter Olympics, Beijing.

11 February (Friday): Deadline for Anghami SPAC merger.

11-13 February (Friday-Sunday) FIBA Intercontinental Cup, Cairo.

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

15 February (Tuesday): The Industrial Development Authority’s deadline for receiving offers from companies for licenses to manufacture steel products.

15 February (Tuesday): Orange Ventures’ deadline to receive applications from seed-stage fintech startups.

19 February (Saturday): Public universities begin the second term of the 2021-2022 academic year.

End of February: Lebanon to receive gas from Egypt via a pipeline crossing Jordan and Syria.

March: Rollout of the government financial management information system (GFMIS), a suite of electronic tools to automate the government’s financial management processes (pdf) that will replace the existing “closed” financial management system.

March: 4Q2021 earnings season.

March: Deadline for the World Health Organization’s intergovernmental negotiating body to meet to discuss binding treaty on future pandemic cooperation.

March: World Cup playoffs.

March: Target date for Saudi tech firm Brmaja to IPO on the EGX.

9-18 March (Wednesday-Friday): The 55th edition of the Cairo International Fair.

15-16 March (Tuesday-Wednesday): Federal Reserve interest rate meeting.

24 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28-29 March (Monday-Tuesday): The Egypt International Mining Show (EIMS 2022) will take place virtually.

31 March (Thursday): Deadline for submitting tax returns for individual taxpayers.

31 March (Thursday): Supply Ministry expected to take final decision on bread subsidies by this date.

2 April (Saturday): First day of Ramadan (TBC).

3 April (Sunday): Bidding begins on the Industrial Development Authority’s license to manufacture tobacco products.

4 April (Monday): CDC Group will formally change its name to British International Investment.

22-24 April (Friday-Sunday): World Bank-IMF spring meeting, Washington D.C.

24 April (Sunday): Coptic Easter Sunday (holiday for Coptic Christians).

25 April (Monday): Sham El Nessim.

25 April (Monday): Sinai Liberation Day.

28 April (Thursday): National Holiday in observance of Sham El Nessim.

30 April (Saturday): Deadline for submitting corporate tax returns for companies whose financial year ends 31 December.

Late April – 15 May: 1Q2022 earnings season

May: Investment in Logistics Conference, Cairo, Egypt.

1 May (Sunday): Labor Day.

3-4 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

5 May (Thursday): National Holiday in observance of Labor Day.

2 May (Monday): Eid El Fitr (TBC).

19 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

14-15 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15-18 June (Wednesday-Saturday): St. Petersburg International Economic Forum (SPIEF), St. Petersburg.

16 June (Thursday): End of 2021-2022 academic year for public schools.

23 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

27 June-3 July (Monday-Sunday): World University Squash Championships, New Giza.

30 June (Thursday): June 30 Revolution Day, national holiday.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

July: A law governing ins. for seasonal contractors will come into effect.

1 July (Friday): FY 2022-2023 begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July – 14 August: 2Q2022 earnings season.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

September: Egypt will display its first naval exhibition with the title Naval Power.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

18-20 October(Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

Late October – 14 November: 3Q2022 earnings season.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

**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 above between the actual holiday and its observance.

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