AM — Six international banks to manage our USD 2 bn maiden sovereign sukuk issuance

Good morning, friends, and welcome to THURSDAY. It’s a nail-biter of a finish to the week on a morning that we’d otherwise consider a “slow news day” — were it not for the incessant beat of war drums in the air.

With the US now claiming that Russia will invade Ukraine “before dawn,” Egypt’s cabinet is drawing up a Plan B for wheat + tourism. Ministers are working to develop alternate inbound tourism markets to cushion the impact on our resurgent tourism industry should tensions escalate further, Cabinet said at a meeting held to chew over the economic impact on Egypt of the crisis. We’re also going to be looking at ways to further diversify our wheat imports. The cabinet readout further nodded at the fact that escalating tensions could help drive up energy prices in an already-inflationary world environment.

Why we’re worried: Ukraine and Russia are our friends — they’re our two largest suppliers of wheat and two of our biggest tourism markets. Against a backdrop of rising tensions, state grain buyer GASC has already pivoted slightly away from Ukraine, locking in its latest shipment of wheat from Romania despite Ukrainian suppliers offering a better price.

No longer waiting for Godot? Just minutes before we press “send” on this morning’s issue, the international press is picking up reports from Russian media that President Vladimir Putin has just authorized a “special military operation” in Ukraine’s eastern Donbass region. Putin is quoted as saying he couldn’t tolerate Ukrainian “threats” and warning against third countries getting involved.

The Kremlin had sparked fears tanks could roll at any time when it said yesterday that pro-Russian separatists in two breakaway regions of eastern Ukraine had called on Russia for military backing. Explosions were heard in the separatist stronghold of Donetsk hours after the Kremlin’s announcement, while Russian tanks were seen rolling eastwards toward the city, a witness told Reuters. Kyiv, meanwhile, has pivoted to a war footing, declaring a state of emergency. Putin earlier this week gained legislative approval for a military deployment abroad and formally recognised the separatist blocs as “people’s republics.”

Overnight, the US said it believes Russia would invade Ukraine within hours. US Secretary of State Anthony J. Blinken has said he expects a Russian attack on Ukraine before dawn. The Pentagon’s top official said Russian troops were in combat position and “ready to go.”

As of dispatch time, tanks were not rolling, but we’d suggest you head over to your international news outlet of choice throughout the day to see what’s up. Pundits in our socials (including some folks who are genuine experts on Russia, not rebadged covid experts) believe Putin will stop short of ordering troops to move past the Donbas — for now.

The Associated Press, Reuters, Financial Times, Bloomberg, New York Times, and the Wall Street Journal all have the latest on the rapidly developing situation.

The UN Security Council called an emergency overnight meeting at Ukraine’s request to work on a draft resolution condemning Russia’s actions — but it will almost certainly be voted down, Reuters reports: As one of the five permanent members of the council, Russia has veto power.

MARKET REAX-

US equities extended their fall yesterday as the US and other countries expanded sanctions on Russia, Bloomberg reports. The EGX30 was flat yesterday in exceptionally light trading.

Brent crude has broken the USD 98 barrier, gaining 1.4% after a day in which it had settled flat (just below USD 97) on news the US would not likely seek to sanction Russian energy suppliers.

Major Asia-Pacific benchmarks are all in the red this morning, with selling hitting the Kospi and Australian Securities Exchange particularly hard.

Future suggest the selloff will extend to all major European markets and to Wall Street at the opening bell later today.

Wheat continued its turbo-charged rally: Chicago wheat futures climbed as much as 4.2% during trading to hit a decade-high, and backwardation — when spot prices exceed futures prices, signaling scarcity — was at its most pronounced in at least 15 years.

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PSA- Our favourite weather app suggests we’re in for a cooler weekend after the mercury hit 26°C in the capital city yesterday. Look for a high of 18°C today with a chance of a brief shower in the afternoon. The mercury looks set to hit 18°C tomorrow and 19°C on Saturday.

LOOKING AHEAD-

We’re inching closer to local EV production: The government is set to sign two MoUs with two partners, one from China and the second from Germany, to locally produce electric cars in El Nasr Auto’s factory “within the coming days,” Public Enterprises Minister Hisham Tawfik told Al Borsa. This comes after negotiations with Chinese auto firm Dongfeng to locally assemble its E70 cars collapsed in November.

Coming soon: More funding from the EU? The EU is lining up to provide Egypt another EUR 1 bn in grants and loans from entities including the European Investment Bank and the European Bank for Reconstruction and Development, Al Borsa quotes EU ambassador to Egypt Christian Berger as saying yesterday, without providing further information. We’ll be keeping an eye out for more details.

CIRCLE YOUR CALENDAR-

ARE YOU BUILDING A FINTECH STARTUP? You might want to apply for Visa’s global startup competition, the Visa Everywhere Initiative, the payments firm said in a statement (pdf) yesterday. In collaboration with the Central Bank of Egypt’s new Fintech Egypt project, the local contest will see Egyptian fintech players go head-to-head for a monetary award and the chance to advance to the regional and global finals. On offer: EGP 500k for the first-place finisher and a place in the Central and Eastern Europe, Middle East and Africa (CEMEA) regional finals in June.

What you need to know: A full breakdown on the entry criteria, the application process, and the schedule is available online here. The deadline for applications in Egypt is 20 March.

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

Egypt has reportedly appointed six international banks to manage its maiden USD 2 bn sovereign sukuk issuance, Bloomberg reports, citing unnamed sources it says have knowledge of the matter. The sources reportedly said the issuance could go ahead in the second quarter of this year — in line with previous statements from the Finance Ministry, which has said it expects to wrap the issuance by the end of the fiscal year in June.

The banks: HSBC, Citigroup, Abu Dhabi Islamic Bank, Credit Agricole, Emirates NBD and First Abu Dhabi Bank.

Now we just need those exec regs. FinMin in January got the green light from Cabinet to start preparing to take the issuance to international markets, but it won’t go ahead until the executive regulations of the Sovereign Sukuk Act — which was signed into law last year — are published. The government had been looking to finalize the exec regs by the end of January, but we’ve seen no sign of them yet. The Financial Regulatory Authority (FRA) and Al Azhar are working with the ministry on the regulations.

What we know about the sukuk so far: The sharia-compliant bonds will be issued on both the local and international stock exchanges, Finance Minister Mohamed Maait said previously, adding that returns and trading on the securities will be subject to the same tax rules as treasury bonds. The issuance is part of FinMin’s strategy to reduce government debt and shift towards longer-term borrowing, which saw it issue its first green bonds in 2020. Plans are also underway to sell new “floating rate” bonds.

Bigger penalties for improperly licensed pharmacies: The Madbouly Cabinet approved yesterday proposed amendments to the Pharmacists Act that would impose more stringent penalties or jail time on those who set up pharmacies by “borrowing” another pharmacist’s name and license, according to a statement.

What do you mean “improperly licensed”? Any given pharmacy must be run by a licensed proprietor (whose name should be displayed on the premises, and who must be present and involved in day-to-day operations.) The law allows each individual pharmacist to open a maximum of two pharmacies under one license. That’s caused a bureaucratic hurdle for pharmacy chains looking to expand, some of which (see: El Ezaby, Roshdy, and 19011) have in the past come under scrutiny for “renting” the names of pharmacists who have already obtained licenses, bringing those names under their brand.

The penalties: Under the proposed amendments, both the chain renting the license and the pharmacist “lending” their name and license would face at least one year in prison or a fine ranging between EGP 200k-1 mn. Additionally, owners of unlicensed pharmacies would be imprisoned for no less than two years and would face a fine ranging from EGP 1 mn-2 mn. Tougher penalties will also be imposed on anyone who sells unlicensed medical products.

Also approved yesterday:

• Executive regulations for the law regulating billboards and roadside advertisements. The regulations stipulate that billboard licenses last for only three years and can be revoked.
• New Hajj online portal: The ministers also signed off yesterday on a draft bill that would set up a unified Hajj portal and would task one entity with distributing visas among Hajj travel agencies. A ministerial committee would also be set up to lay out the criteria for selecting who gets the visa, as well as deciding how many people will be authorized to perform Hajj annually. The portal would mimic a similar mechanism set up for Egyptians seeking to go on Umrah.

SolarizEgypt, Amarenco Group sign USD 255 mn acquisition + JV agreement: European solar player Amarenco Group is acquiring 74% of independent power producer SolarizEgypt’s portfolio, establishing a joint venture that will co-develop 300 MW of solar power projects worth EGP 4 bn over the next four years, a joint statement (pdf) says.

SolarizEgypt has a portfolio of over 50 MW of signed solar power purchase agreements with firms including Orascom Development Holding, Arabian Cement Company, Coca Cola Bottling, and others operating in various industries, according to the press release. The independent power producer builds captive systems for corporations.

OneOrder scores USD 1 mn round upon launch: Tech-enabled F&B logistics platform OneOrder announced its launch in tandem with securing a USD 1 mn funding round led by A15, according to a press release (pdf). OneOrder’s founder and CEO is Egyptian restaurateur Tamer Amer, who founded Fuego Sushi and Longhorn Texas BBQ.

What is OneOrder? The startup’s platform offers a one-stop shop for restaurants to source all their produce and equipment, in a bid to address inefficiencies and fragmentation in the restaurant supply chain and standardize quality, prices and delivery times. OneOrder is the country’s first logistics firm to focus on solving supply issues in the restaurant industry, according to the statement.

Regional expansion in the cards? OneOrder has plans to expand across the MENA region “over time,” the release said.

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Egypt Post, Visa, and digital payments firm PaySky have officially launched payments superapp Yalla Super App, according to a CIT Ministry statement.

All under the Yalla Super App umbrella: The superapp allows customers to make money transfers, pay bills, get meds delivered, find markdowns and offers, do online shopping, buy ins., book transportation, and access Egypt Post’s digital services.

Superapps have been gaining popularity: Egypt and the wider region are proving fertile ground for the do-everything apps, with MNT-Halan and MyFawry joining Yalla Super App among key players in the market.

Want to dive deeper into superapps? Head to our three-part What’s Next series tackling superapps’ emergence in Egypt, the challenges they face, and why they’re still worth the investment.

Chambers Global names Egypt’s top arbitration litigators: Chambers and Partners has released its 2022 list of top-ranked Egyptian arbitration firms and lawyers. Shahid Law Firm, Youssef & Partners, and Zulficar & Partners made the research firm’s top-ranked band. Youssef’s Karim Youssef and Zulficar’s Mohamed Abdel Wahab were awarded the title of “star individuals” on the basis of “exceptional recommendations,” while Shahid’s Girgis Abd El-Shahid and Shalakany Law Office’s Khaled El Shalakany made the top band for individual lawyers.

Other firms with team members getting nods include:

• ALC Alieldean Weshahi & Partners
• Matouk Bassiouny
• Rizkana & Partners
• Khodeir & Partners
• Nour & Partners in association with Al Tamimi & Company)
• Shehata law office

You can get the full run-down on the rankings here.

Top exporters get inaugural excellence awards: The Trade Ministry and the Engineering Export Council gave awards to nine of fifty competing exporters as it launched the Engineering Export Excellence Award (EXXA).

The nine awardees: Kandil Egypt was named best small exporter, Chloride Egypt was the top medium-sized exporter, and Elsewedy Electric was the best large exporter. Sumitomo Egypt was the top freezone exporter, Groupe Atlantic exported to the most countries, and Samsung Electronics was the top among multinationals and for exports to Africa. Everest Egypt Industrial, Elaraby Group, and ZMC also got gongs.

Raya CX earned the gold award for Digital Transformation Strategy at this year’s Gulf Customer Experience Awards.

Gas supplies to Lebanon waiting on “final” US approval + World Bank financing: Cairo is “waiting for the final green light” from Washington, as well as a funding commitment between Beirut and the World Bank, before it goes ahead with plans to ship natural gas to Lebanon via Syria, Lebanese Energy Minister Walid Fayyad told Bloomberg Asharq. Both Egypt and Jordan are reportedly seeking further assurances that the move will not run afoul of US sanctions in place against Syria, despite written promises from the US that it would not penalize countries involved in the plan, which was hatched last year to alleviate Lebanon’s power crisis

How much longer could this take? Oil Minister Tarek El Molla reportedly told Lebanese officials that Egypt will be pumping gas to Lebanon by “spring,” according to Fayyad. El Molla’s most recent public estimate was for the pipeline to be up and running by the end of February or the beginning of March, after several delays. Meanwhile, US energy advisor Amos Hochstein said earlier this month that Lebanon could agree a financing agreement with the World Bank for the gas “in a matter of weeks.”

EFG Hermes’ fintech platform valU has expanded its partnership with Waffarha, allowing the savings platform to become an accepted payment method through valU’s POS, it said in a statement (pdf) yesterday. Customers will also be able to recharge their Waffarha wallet using ValU per the agreement, alongside other services.

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

• Expanding the ins. pool for those abroad: Families of Egyptians working and studying abroad will be able to access Egypt’s state-backed ins. policies.
• Several Kazakhstani airlines will resume flights to Sharm El Sheikh in March after the country’s covid-19 committee green-lit the move.
• Kuwaiti real estate player Urbnlanes Developments plans to invest EGP 10 bn the Egyptian property sector.
• Etisalat Misr has been awarded a contract to add automated and digital banking channels at the Agricultural Bank of Egypt’s 1.1k branches.
• Transport Minister Kamel El Wazir held talks with nine Austrian rail companies to discuss participation in the ministry’s plans to modernize Egypt’s rail network.
• Egypt Post has signed an agreement with Saudi Post to launch a remittance service allowing Egyptian expats in Saudi Arabia to send funds home through the post office.

CLARIFICATION- The headline on yesterday’s Also On Our Radar section suggested that Edita had rebranded its Molto product range. As the story in the section correctly noted, the snackmaker has rebranded its Molto Sandwich line. The headline has since been updated on our website.

Cabinet’s approval of amendments to the Pharmacists Act that would enforce more stringent penalties on improperly licensed pharmacies made the rounds on the airwaves last night. Head of the pharma division in the Federation of Egyptian Chamber of Commerce Ali Ouf spoke with Masaa DMC (watch, runtime: 8:00) to discuss the proposal to increase penalties against unlicensed individuals advertising meds on social media or TV. Pharmacists Syndicate Management Committee Member Abdel Nasser Sengab also phoned into Al Hayah Al Youm (watch, runtime: 7:56) to discuss the amendments, which he said the syndicate has been pushing for since 2017. We have more on the bill — which would introduce higher penalties and jail time for pharmacists who set up shop by “borrowing” another pharmacist’s name and license — in this morning’s Cabinet Watch section, above.

Also on the airwaves last night:

• Any proposed changes to the “old rent” law governing individuals who rent residential properties should detail the responsibilities of landlords and renters — and set price brackets for rents, Rep. Ahmed El Seginy said. (Sherif Amer on Yahduth Fi Misr | watch, runtime: 6:04)
• The Education Ministry is currently working on tests for school teachers applying to fill the teacher shortage, as well as a strategy to begin hiring specialized teachers in new fields in a multi-phase plan, Education Minister Tarek Shawki said. (Sherif Amer on Yahduth Fi Misr | watch, runtime: 6:04)

With the eyes of the world trained firmly on the steady march toward war in Ukraine, none of the international papers have much to say about us today.

The Health Ministry reported 1,892 new covid-19 infections yesterday, down from 1,989 the day before. Egypt has now disclosed a total of 475,341 confirmed cases of covid-19. The ministry also reported 32 new deaths, bringing the country’s total death toll to 23,889.

New jab on the block: Two doses of Sanofi and GSK’s new vaccine were shown to be 100% effective against severe disease and hospitalization from covid-19 in late-stage trials, the companies announced in a statement. The pharma firms are now seeking approvals for the jab from US and European health authorities.

A boost to Egyptian-Hungarian trade + investment relations: Egypt and Hungary will form a joint committee to encourage trade and industry cooperation, according to a cabinet statement. The General Authority of Investment and Freezones (GAFI) also signed an agreement with the Hungarian Export-Import Bank to promote investment between the two countries.

Separately, our efforts to combat illegal immigration got a thumbs up from Hungary’s Foreign Minister, who praised Egypt’s efforts to slow down Europe-bound migrants through the Mediterranean, the Washington Post reports. He called on the EU to provide funding to help the Egyptian government in its efforts to fight illegal immigration.

Egypt goes back to the UN Security Council after Ethiopia powers up GERD: Egypt has sent identical letters to the UN Security Council (UNSC), Ethiopia, and Sudan, rejecting Ethiopia’s decision to begin generating power from the Grand Ethiopian Renaissance Dam (GERD), according to Ahram Online. Egypt’s Foreign Ministry earlier this week issued a statement denouncing the milestone, saying it represented a “further breach of obligations” under the 2015 Declaration of Principles signed between the three countries. Sudan also slammed the move, which both countries fear would adversely impact their share of the Nile water.

It’s not the first time we’ve appealed to the UNSC on this: The council has repeatedly declined to weigh in on the hydropower dam dispute (most recently last September), despite concerted lobbying by Egypt and Sudan for a stronger stance against Ethiopia.

Sudanese exports plunged in January amid barricade of vital trade route to Egypt: Sudanese exports fell 85% y-o-y to USD 43 mn in January, according to government trade data seen by Bloomberg, after anti-regime protesters in Sudan blocked the main trade route linking the country to Egypt. The drop in exports adds further strain on Sudan’s fragile economy, which has been suffering since October’s military coup derailed the country’s democratic transition.

Ezz Fayek, co-founder and CEO, WaffarX: 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 Ezz Fayek (LinkedIn), co-founder and CEO at WaffarX, a cashback provider that recently closed a multi mn USD funding round from Silicon Valley VC Lobby Capital. Edited excerpts from our conversation follow:

My name is Ezz Fayek and I’m the CEO of WaffarX. After I graduated from a French law school, I did business development for France’s former export agency Ubifrance in Dubai before starting WaffarX. I am the father of a six-year-old son and I’m enjoying the journey of WaffarX.

I never practiced law because I felt early on that it wasn’t not for me. I was always more interested in understanding the business than the litigation side, even when I did summer internships. I opened my first company in 2011 and I got the idea for WaffarX in 2016, but it wasn’t until 2018 that WaffarX was born. I was good with numbers but I never studied finance and accounting, so when I went into business, I went to Edinburgh Business School and took courses in finance, accounting and project management.

I usually wake up between 7 and 9 am and drink my coffee. I check my emails and respond to anything urgent, then I look at my calendar to make sure I’m prepared for everything for the day. If my son isn’t at school, then I spend some time with him because I don’t get to see him at night. I try to go jogging once a week on days when I don’t have calls. Then I have breakfast and go to the office.

As a startup, we’re very dynamic so my days are not identical and it depends on the company's needs: We have a flat hierarchy so we leave our titles at the door, and sometimes my job is to fill in the gaps. There are a few things I do on a daily basis, like checking the numbers, making sure everything is going in the right direction, checking the status of our partnerships, sitting with my cofounder, making daily calls and responding to emails. Sometimes I work on fundraising, prepare for board meetings or work on acquisitions with the marketing team.

One of the things I do every day is making sure that the culture of the company is going in the right direction. We believe in giving each employee ownership of the company to share in the dream. We give people a lot of freedom: we don’t check fingerprints or check working hours, but I have to make sure that no one is abusing that.

I’m not very organized by nature, but I’m doing my best to be. I try to focus on two main KPIs every day so I never get distracted from them, and I try to prioritize things as much as possible. And I’m trying to make use of tech to stay organized, so I use Microsoft’s OneNote. I also have a lot of team members that I trust, so I delegate and that helps me stay focused.

We work with both merchants and consumers at WaffarX. Merchants pay third parties like WaffarX to acquire customers, and we help them gain the insights to understand them. Customers want real and honest offers, so we show them the cashback offers from merchants. We do online and offline media buying and partnerships to build a database that we use to help customers.

We are a very customer-centric company: We focus on offering customers the things that they need. And we are working with merchants to offer them something that is valuable and that is performance-based. We only make money when our customers make money.

Cashback depends on the growth of the e-commerce market, so we create a way for brands to use us as a tool to help them grow and succeed. The e-commerce market is big and it’s growing very fast. We are not the only ones fuelling the growth, of course — there are much bigger entities in this space like banks and even the government. Right now, we only do online offers but very soon we will start to offer in-store cashback, so rewards will go on users’ cards.

We were the first cashback provider in the region and it’s good to be the first, but it’s also harder because a lot of things are uncertain. We are already backed by A15, one of the best VCs in Egypt. We wanted to do our next round of funding differently and add people to the board who have done exits in this business before. We found Ebates, which is a US-based cashback company, and the VC that invested in them, Lobby Capital. They had never invested outside of Silicon Valley. We showed them what we do and they were very impressed with our numbers. They invested in us in November last year.

Our focus for the next phase is the same but with bigger plans. One of the criteria that we had when we set up WaffarX is to have a borderless business, so we’re testing Saudi Arabia and the UAE to decide where we’re going next.

My favorite way to relax is to go to the beach. During the summer I go for long weekends every weekend. I like to spend time with Youssef, my son. I love music and I play music as well — I have a mixer and do some DJing whenever I have time. I also like watching and playing football. I read about management sometimes, but not regularly.

My favorite book is Eric Ries’ The Lean Startup. I think it’s a good one for anyone who is in the entrepreneurship or business scene. I also like Good to Great by Jim Collins a lot.

When I was in Dubai, I had a manager who told me to learn something about everything and everything about something. I’ve found that advice very useful. He explained that you should never miss an opportunity to learn a new skill, even if you think it won’t be useful. When you know something about everything, it helps you in conversation. And learn everything about something, that’s what you’re focused on, what you do everyday.