AM — Fresh 12.5% minimum wage hike in FY2022-2023

Good morning, friends, and welcome to another very busy news morning as this packed work week races to a close.

WHAT’S HAPPENING TODAY-

South Korean President Moon Jae-in is due in town from today through Friday in what will be the first visit to Egypt by a South Korean president in 16 years. Moon will meet with President Abdel Fattah El Sisi during a regional tour. The South Korean leader was in Riyadh yesterday, after swinging through the UAE the day before.

On the agenda: The two presidents are expected to hold talks with the aim of signing a trade agreement between the countries, as well as discuss cooperation on EVs, water desalination, green hydrogen and renewables.

Irrigation Minister Mohamed Abdel Aty is at the Dubai Expo today for the two-day Water-Food-Energy Summit, which kicked off yesterday, according to the ministry.

It’s Day 3 of digital Davos: Environment Minister Yasmine Fouad will make an appearance on the third day of the virtual Davos Agenda today when she takes part in a discussion on investment in low-carbon technologies. Also today Germany’s new chancellor Olaf Scholz will address the forum at the same time as the Saudi energy minister, Prince Abdulaziz bin Salman Al Saud, joins a panel to discuss the transition to green energy.

Tax breaks for real estate funds coming? The Financial Regulatory Authority and the Finance Ministry are in talks over introducing tax incentives for real estate funds and issuing new rules for establishing mining funds, FRA head Mohamed Omran told Al Arabiya on Monday.

Investor requests for incentives will now be handled and reviewed through a new “special incentives” unit the General Authority for Investments and FreeZones (GAFI) set up, according to a statement yesterday. The unit will determine whether or not they are eligible for incentives and streamline procedures for filing for a request, GAFI said.

THE BIG STORIES ABROAD-

Microsoft just made the largest-ever gaming acquisition: Microsoft has announced that it will buy leading games publisher Activision for USD 68.7 bn, a purchase which could help the tech giant in its push into the mobile-gaming and metaverse markets. The company has agreed to purchase Activision at USD 95 per share, making it both the biggest-ever gaming industry acquisition and a record-breaking all-cash transaction. The transaction will make Microsoft the third-largest gaming company in the world by revenue, after Tencent and Sony. The story is getting a lot of traction in the foreign press this morning, from Bloomberg and Reuters to the Wall Street Journal and the New York Times.

US, Russian foreign ministers to meet as tensions escalate over Ukraine: US Secretary of State Anthony J. Blinken will meet with Russian Foreign Minister Sergey Lavrov in Geneva on Friday, as warnings escalate of an impending Russian invasion of Ukraine.

The Ukraine crisis could impact Europe’s gas supply: Germany yesterday said it could halt plans for the Nord Stream 2 pipeline that will transport Russian gas to Europe if Ukraine is invaded, while Greece said it would back a strong EU response to Russian aggression.

Egyptian gas could plug the gap if Europe loses Russia as a supplier, Greece’s foreign minister said — as could Cyprus and Israel. We humbly suggest that Enterprise may have pointed that out before, too.

MEANWHILE, TO OUR WEST- The UN thinks it is still “very reasonable and possible” for Libya to hold elections by June, UN special adviser on Libya Stephanie Williams told the Associated Press. The country was set in December to elect its first president since the 2011 ouster of former President Muammar Gaddafi, but elections were postponed at the request of its election body amid disputes threatening the ballot.

PSA- Get your booster if you want to visit Abu Dhabi: Anyone wanting to enter the emirate must obtain a booster if it’s been more than six months since they were fully jabbed — and residents already in Abu Dhabi will need to do the same to access public spaces. The National has a good explainer and Q&A if you’re heading to Abu Dhabi anytime soon and you can check out the emirate’s Al Hosn app on Twitter. The Associated Press and Bloomberg also have the story.

MARKET WATCH-

Oil prices hit a fresh seven-year high yesterday — and are up another 1.6% this morning as Brent futures rose to 88.90 / bbl. That’s the highest level since October 2014.

You can trace this morning’s rise to an explosion yesterday that knocked out a key pipeline in the transport of oil from Iraq to Europe, Bloomberg reports, pushing prices yet higher after they passed the seven-year record during Tuesday’s trading. The cause of the blast, which occurred in the Turkish stretch of the pipeline running from Iraq to the Mediterranean port of Ceyhan, is not yet known.

Making matters worse: Russia may only be able to deliver about half of the production increases agreed by OPEC+ over the next six months, Bloomberg adds, on the back of a reduction in drilling. Planned production increases by the cartel to meet the recovery in demand have fallen short of targets as several member countries struggle to up their output, meaning the market could be set to get even tighter this year.

A return to three-figure oil? Brent — which has risen almost 14% since the start of the year — could breach the USD 100 / bbl mark this year unless supply is increased, analysts told the Financial Times.

Coming up today: Time for Erdonomics-lite? The Turkish central bank looks likely to leave interest rates on hold when it meets tomorrow, after President Recep Tayyip Erdogan indicated that interest and FX rates will come down “slowly,” marking a change of tone, according to Bloomberg. This comes as inflation in Turkey is expected to peak at around 40% in the coming months before dropping to about 27% by the end of the year, according to a Reuters poll, having surged to 36% in December. The country’s economy is reeling from a series of unorthodox rate cuts spearheaded by Erdogan that saw the TRY lose almost half its value against the greenback last year, making it 2021’s worst performing currency.

CIRCLE YOUR CALENDAR-

Taking stock of Nafeza: Lynx Strategic Business Advisors is hosting a webinar this Thursday, 20 January, at 1pm CLT that will see Customs Authority chief Elshahat Ghatwary and Misr Technology Services’ Khaled Nassef discuss the progress on implementing the new digital customs system, Nafeza. The keynote speakers will also discuss their recommendations for the way forward and how to expand the application of the system. You can register for the webinar here.

The Cairo International Book Fair opens on 26 January at the Egypt International Exhibition Center. The event runs 13 days until 7 February.

Applications are open until 31 March to join the Femtech Accelerator Program run by Flat6Labs and women’s healthcare firm Organon. The four-month-long virtual accelerator will support women-led digital healthcare start-ups operating in MENA to build products, test market fit and improve business models. You can register at this link.

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

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: The Decent Life initiative — aka Hayah Karima — is being hailed as the biggest developmental initiative ever undertaken by Egypt. The initiative spans sectors such as infrastructure, health, education, and water, with earmarked investments around USD 45-50 bn. In today’s story we detail how the initiative started, the current phase and its targets, as well as the impact the initiative has had and how it’s measured.

SMART POLICY- El Sisi raises public-sector minimum wage to EGP 2.7k: The monthly minimum wage paid to public sector workers will rise by 12.5% from July on the instruction of President Abdel Fattah El Sisi. An Ittihadiya statement yesterday said that the president had told the Finance Ministry to raise the minimum wage from 2.4k to EGP 2.7k per month.

The new wage is set to come into effect at the beginning of the next fiscal year in July and will be included in the FY2022-2023 budget, Magdy El Badawy, a member of the National Council for Wages (NCW), confirmed to Enterprise.

This is the third public sector wage hike since El Sisi took office in 2014 — and the second raise in two years. The minimum wage for public sector employees increased to EGP 2.4k last July from EGP 2k in FY2019-2020.

Annual raises set to continue: Public sector employees will receive the same annual raise as last year, according to the statement. Last year civil servants had their basic salaries hiked by 7% and other public sector workers received a 13% raise. Pension payouts, meanwhile, were raised 13%. Unspecified additional bonuses will be put in place for all public sector employees at a cost of EGP 18 bn, yesterday’s statement read

How will this affect the private sector? Whether or not private sector firms will be compelled to raise wages at the same time will be decided by the NCW in the coming months, Elbadawy told us.

Some private companies are struggling to implement the last wage hike: Thousands of private sector firms haven’t yet brought wages into line with the current EGP 2.4k minimum wage, which came into effect for the private sector at the start of 2022. The NCW has granted thousands of temporary exemptions, allowing companies to continue paying the old EGP 2k minimum wage until mid-February when it will make a final decision on which firms have to comply with the new requirements.

Solving the teacher shortage: In a bid to plug the shortfall in teachers, the government will hire an additional 30k teachers annually for the next five years and up the amount it spends on bonuses for teachers to EGP 3.1 bn, Ittihadiya said. At the beginning of the current academic year the Education Ministry was forced to call on people to volunteer as teaching assistants. Education Minister Tarek Shawki said at the time that there is currently a 250k person shortfall in teachers.

And more money for higher-ed staff and students: The Sisi administration has earmarked EGP 1.5 bn in the budget for bonuses for academics and researchers, in addition to financing a new law on tenured professors’ salaries. Dentistry, physiotherapy and nursing students will also be included in a prior decision to hike medical students’ training salaries.

What’s next for the budget: The Finance Ministry plans to begin public consultations on the budget and the government’s strategic targets this month.

Vodafone Plc took a step closer to offloading its majority stake in Vodafone Egypt to its South African subsidiary yesterday after receiving shareholder backing. A majority of shareholders in Vodacom approved the acquisition of the 55% stake in Vodafone Egypt during a general meeting, the Johannesburg-listed company announced in a disclosure (pdf).

The transaction: Vodafone Plc — which currently owns a 60.5% stake in Vodacom — last year agreed to sell its holdings in its Egypt unit for EUR 2.34 bn in a stock and cash transaction. The South African company will pay 20% in cash and the other 80% by issuing new shares, which will increase Vodafone’s stake in Vodacom to 65.1%.

There are still some boxes to tick: Vodacom still needs the blessing of the Egypt’s National Telecom Regulatory Authority before the shares can be transferred — and the Financial Regulatory Authority here will need to give it an exemption from the legal requirement to make a mandatory tender offer for the Vodafone Egypt shares it is not buying, it said in the disclosure. The company also needs to jump through regulatory hoops in South Africa, including approval from the Financial Surveillance Department of the South African Reserve Bank and listing on the Johannesburg Stock Exchange of the new shares it is issuing Vodafone Plc

Don’t expect Telecom Egypt to get in the way: The EGX-listed telecoms giant still holds a 45% stake in Vodafone Egypt and contractually has a right of first refusal, which would allow it to make a counter-offer. However, the company doesn’t plan to invoke this right, Investor Relations head Sarah Shabayek told Enterprise in November.

Expect movement this quarter: Vodafone Group expects the transaction to close before 31 March.

IN OTHER M&A-

Reliance Logistics has acquired an undisclosed stake in investment firm Catalyst Partners, as the logistics firm eyes expansion into financing, digital transformation and entrepreneurship, according to a statement (pdf). No details were provided on the value or mechanism of the transaction. Catalyst Partners’ board will undergo changes to reflect the new ownership structure, according to Chairman Maged Shawky.

ADIB to offload National Co. for Glass and Crystal: Abu Dhabi Islamic Bank and its subsidiaries will sell their entire combined 88.3% stake in the National Company for Glass and Crystal, according to an EGX disclosure (pdf). The bank is currently in the process of wrapping up regulatory procedures.

Construction on the Dabaa nuclear power plant is on track to begin “this summer, tentatively in July,” the director of Russia’s state-owned Rosatom, General Alexey Likhachev, told TASS. The timeline matches what we were told by Egyptian Nuclear and Radiological Regulatory Authority (ENRRA) spokesperson Karim Al Adham last year, after covid disruptions caused a two-year delay to the Rosatom-constructed project.

Next step: construction permits. Rosatom submitted its documents to the ENRRA in early January, which the company said was ahead of schedule. It expects to break ground on the plant as soon as it receives the construction permits back from the authority.

Background: Construction work on Egypt’s first nuclear power plant was set to begin in the second half of 2020 and complete by the 2028-2029 fiscal year, but covid-related disruptions pushed the expected completion date to 2030.

About the plant: Russian state-owned nuclear company Rosatom was contracted in 2015 to construct the 4.8 GW plant. The facility will cost somewhere around USD 30 bn, 85% of which is being financed through a USD 25 bn loan from Russia, with Egypt scheduled to begin repaying the sum in October 2029.

Reminder- We could see an announcement on South Korean participation in Dabaa this week: President Moon Jae-in, who is visiting from today until Friday, will reportedly discuss the topic with President Abdel Fattah El Sisi.

Who got in on Ghazl El Mahalla FC’s institutional offering? Misr Ins. Holding, Ghazl El Mahalla Spinning and Weaving, Kuwaiti and Egyptian investment institutions, two companies from Saudi Arabia, and “some high net-worth individuals” all received allocations in the EGP 37 mn institutional component of Ghazl El Mahalla’s upcoming IPO, Al Mal quotes the CEO of bookrunner Prime Holding, Mohamed Maher, as saying.

Misr Ins. bid for 40% of the institutional component, subscribing to EGP 15 mn worth of the shares on offer in the private placement, back in November. The institutional component wrapped at the end of December.

Ghazl El Mahalla will make its EGX debut next month, according to the Public Enterprises Ministry. The EGP 98 mn public offering to individual retail investors is still pending sign-off from the club’s general assembly, which is set to meet on Saturday.

Refresher: Ghazl El Mahalla is offering a 67.5% stake in its IPO, which is expected to raise EGP 135 mn, while While tiny, the transaction will mark the first time a football club is publicly traded in the Arab world and could pave the way for more IPOs of this sort. Football giant Al Ahly has also expressed interest in offering as much as 49% of the club.

Crypto platform Rain raises USD 110 mn series B: Bahrain’s Rain Financial, the parent company of crypto trading platform Rain Management, has raised USD 110 mn in a series B funding round led by Paradigm and Kleiner Perkins, according to a company release. The round saw participation from Coinbase Ventures, Global Founders Capital, Middle East Venture Partners (MEVP), Cadenza Ventures and CMT Digital, among others.

Rain will use the investment for expansion “across other countries and regions,” the statement said, without giving any more details. The investments will also be earmarked for improving Rain’s technology and growing its team. Rain has subsidiaries in Bahrain, Turkey and the UAE, according to the statement, while the company counts Bahrain, the UAE, Kuwait, Oman, and Saudi Arabia among its supported markets.

That means persuading regulators on crypto: The funding will allow the company to “continue conversations with regulators across the MENA region, Turkey, and Pakistan about the benefits and potential of cryptocurrency,” the statement read. Many countries in the region — including Turkey and Pakistan — are considering if and how to regulate the crypto industry.

About Rain: Based in Bahrain, Rain became the first fully licensed digital currency exchange in the region when it received its sandbox license from the Central Bank of Bahrain in 2017. The company, which counts Egypt’s Yehia Badawy among its four co-founders, last year raised USD 6 mn in a series A round led by MEVP with participation from Coinbase, Vision Ventures, CMT Digital Ventures, JIMCO, and DIFC Fintech Fund.

The US is now advising its citizens to avoid travel to Egypt due to rising covid cases. Egypt was among 22 countries — including Israel, Qatar, Bahrain and Australia — added to the Centers for Disease Control and Prevention (CDC)’s “level four” watch list yesterday, indicating a “very high” risk of covid, Reuters reports. The CDC now has more than 100 countries at level four.

The Health Ministry reported 1,303 new covid-19 infections yesterday, up from 1,232 the day before. Egypt has now disclosed a total of 402,611 confirmed cases of covid-19. The ministry also reported 26 new deaths, bringing the country’s total death toll to 22,205.

China will send another 10 mn doses of Sinovac to Egypt “in the coming period,” the Health Ministry quoted China’s ambassador to Egypt as saying yesterday. The announcement came during a meeting between the ambassador and interim health minister Khaled Abdel Ghaffar, who signed an agreement that will see the Chinese vaccine maker set up new ooling facilities at Vacsera which will be used to store vaccines.

The airwaves were full of talk of President Abdel Fattah El Sisi’s decision yesterday to raise the public sector minimum wage and hire new teachers. The announcement was covered by shows including Masaa DMC (watch, runtime: 5:25) and Al Hayah Al Youm (watch, runtime: 5:21).

Finance Minister Mohamed Maait did the rounds on the talk shows to discuss the new measures, appearing on Hadeeth Al Kahera (watch, runtime: 9:51) and Yahduth Fi Masr (watch, runtime: 5:59). Meanwhile, Education Minister Tarek Shawki phoned in to Yahduth Fi Masr to explain the new teacher recruitment drive, which will see 30k new teachers hired each year for the next five years (watch, runtime: 6:04). National Council for Wages member Magdy El Badawy talked to Masaa DMC’s Ramy Radwan about how the new wage requirements might be implemented in the private sector (watch, runtime: 5:54). We have the full story in this morning’s news well, above.

Elsewhere: US ambassador to Egypt Jonathan Cohen appeared on Yahduth Fi Masr to discuss Egyptian-US relations and last week’s World Youth Forum with show host Sherif Amer (watch, runtime: 13:48).

Steering the conversation on Egypt in the foreign press this morning: Egypt has turned out to be one of the biggest buyers of German arms, according to preliminary figures reported on by the Associated Press which show that EUR 4.3 bn of the EUR 9.35 bn of arms exported by Germany last year ended up in Egypt. Meanwhile, the New York Times reports that researchers are trying to track the antiquities looted by the Nazis from Egypt and other countries in the Mediterranean region.

UN + Switzerland to help make our industrial zones more environmentally-friendly: The Trade and Industry Ministry has signed an agreement with the UN Industrial Development Organization (UNIDO) to develop environmentally-friendly industrial zones, it announced in a statement yesterday. The project, to be funded by the Swiss government and implemented by UNIDO, will support government efforts to improve the performance of industrial zones, and support sustainable industrial policies, said Trade and Industry Minister Nevine Gamea.

Alameda Healthcare has agreed (pdf) to enter a “value partnership” with Siemens Healthineers, which will see the German firm supply it with new medical tech, deliver clinical advisory services, train staff, and provide digital solutions to improve workflow.

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

• EIPICO has approved (pdf) an initial feasibility study to establish a plant to make raw raw materials for the pharma industry in the Suez Canal Economic Zone.
• Baheya Foundation has signed an agreement with South Korean AI startup Lunit to adopt its mammography AI. Baheya Foundation — which provides comprehensive care for breast cancer patients at no cost — aims to treat some 500k women every year.
• Two Egyptians were among those injured in this week’s terror attack on Abu Dhabi airport, the Foreign Ministry said yesterday. Three people were killed and six injured during an attack on the airport by Yemen’s Houthi group on Monday.