AM — War, wheat, bread and babies

Good morning, friends, and welcome to March. Anyone else struggling to process how we’re already in the last month of Q1? Or is it just us?

THE BIG STORY ABROAD for the foreseeable future is the war between two of our most important friends, Russia and Ukraine. Here’s what you need to know as fighting enters its sixth day:

• Talks, but no ceasefire: Negotiations between the two sides ended yesterday with no agreement to lay down weapons, though the Russian side reportedly said more meetings will follow within days.
• Russia’s assault on Ukrainian cities grows deadlier: At least eleven people were killed and dozens wounded in Kharkiv, Ukraine’s second-largest city, yesterday, as Russia ramped up rocket fire. Meanwhile, a massive convoy of Russian forces is inching closer to the capital Kyiv.
• Ukraine called on its allies to enforce a no-fly zone to stop Russia bombing its cities— something Western nations have so far stopped short of, as they try to avoid being sucked into direct conflict with Russia.
• Russia’s economy is being pummeled by sanctions. The RUB lost nearly a third of its value against the dollar yesterday after the EU and US hit the country’s banks with stringent restrictions, before paring the losses following an emergency rate hike from Russia’s central bank.
• Efforts are ongoing to extract Egyptians from the conflict: The Foreign ministry is coordinating with embassies in nearby countries to ensure the safe evacuation of Egyptian nationals, while some 1.2k Egyptian students have now arrived in Poland from Ukraine.

We have more on all these stories in today’s War Watch section, below, and a rundown on what all of this means to the denizens of Planet Finance in that section, too.

We’re feeling the war’s impact on wheat markets here at home: State grain buyer GASC yesterday canceled its second tender since the conflict began, saying the offers it received for French and US wheat were too high. Russia and Ukraine (in peacetime) account for the bulk of our wheat imports. More on that in our Commodities section, below.

DATA WATCH-

It’s the start of a new month. The key news triggers to keep your eye on:

• PMI: Purchasing managers’ index figures for February for Egypt, Saudi Arabia, the UAE, and Qatar will be released this Thursday, 3 March.
• Foreign reserves: February’s foreign reserves figures will most likely be announced this week or next.
• Inflation: Inflation figures for February will be released on Thursday, 10 March.
• Interest rates: The Central Bank of Egypt (CBE) will hold its next monetary policy meeting on Thursday, 24 March.

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WHAT’S HAPPENING TODAY-

PSA- We’re in for a couple of days of hot weather in the capital city, with the mercury heading to 25°C today and 30°C tomorrow, according to our favourite weather app. Look for more seasonally appropriate temps in the 20-24°C range Thursday through the weekend before things get hot again the first few days of next week. There’s no real heat in store for Alexandria, where you can expect a daytime high of 21°C today and 24°C tomorrow.

Suez Canal tolls will rise by up to 10% for transiting vessels starting today, according to circulars from the canal authority. Most tankers will see fees rise by 5-10%, with larger vessels set to pay more. You can find the details here.

Back-to-back hikes: The authority at the start of February hiked transit fees by 6% for most ships, excluding LNG carriers and cruise ships, as it works to wind down pandemic-era incentives and reductions.

Clinical studies for our new Made-in-Egypt vaccine EgyVax are kicking off today. Higher Education Minister Khaled Abdel Ghaffar is set to announce the details in a presser later today. The new jab is set to be manufactured by Eva Pharma, which is currently a local manufacturer of Sinovac vaccines.

MARKET WATCH-

Are the days of USD 100+ oil upon us? Brent futures surged past USD 105 at one point in early Asian trading this morning, Bloomberg reports, after closing a hair’s breadth above USD 100 yesterday. Goldman Sachs is now tipping the global benchmark to rise beyond USD 115 “with significant upside risk” in its one-month forecast, saying demand destruction is the only thing that can now stop its rise. US sanctions on Russia are tipping oil yet higher, following a months-long rally as supply fails to keep up with demand amid the pandemic recovery.

CIRCLE YOUR CALENDAR-

Contemporary art and culture center Darb1718 is hosting its 3031 Art Festival from 4-12 March on its premises in Fustat, Old Cairo. Unique collections of multidisciplinary art will be on display along with live music, dance, theater performances, and interactive workshops. Guest speakers Adsum Art Consultancy will be on hand to discuss investing in art. Catch a full day of activities from 1:00pm–9:30pm on weekends and weekdays from 4:00pm–10:00pm.

Consoleya is holding its second Women Meet-up this Wednesday, 2 March, to discuss topics including inclusivity in investment. The agenda includes a panel discussion on gender-lens funding here in Egypt.

The Diarna Handicrafts Fair kicked off last Thursday and runs through 7 March at Cairo Festival City from 10am until 10pm daily.

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

*** 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: The government’s recently approved incentives for net metering and self-consumption solar power systems are set to give the solar industry a boost ahead of the November’s COP27 climate summit in Sharm El Sheikh. In this week’s Going Green, we break down the new incentives, and take a look at how they’ve been received amid what some are calling tough times for local solar players.

“Some progress” — but no ceasefire agreement — was made in five hours of talks between Russian and Ukrainian officials yesterday, the Wall Street Journal reports. Russian negotiators said the two sides had agreed to reconvene on the Polish-Belarusuian border in the coming days, without specifying a date, the Interfax news service reported yesterday, according to Bloomberg.

ON THE BATTLEFIELD-

Talks were overshadowed by Russia’s heavy assault on Kharkiv, Ukraine’s second-largest city. At least 11 people were killed in some of the heaviest shelling so far, according to Ukrainian officials, while dozens were wounded as Russia targeted buildings with suspected cluster bombs.

Ukraine asked its allies to enforce a no-fly zone over its airspace to stop the bombing — a request Western nations are unlikely to grant, as they have no intention of entering a direct conflict with Putin.

Ukraine eyes “war bonds” to fund its armed forces: The country’s finance ministry is looking to borrow money from international investors “to meet the needs of the armed forces of Ukraine and to ensure the uninterrupted provision of the state’s financial needs under the war,” it said in a statement yesterday, the Financial Times reported.

EGYPTIANS IN UKRAINE-

More than 1.2k students have now arrived safely in Poland from Ukraine, Emigration Minister Nabila Makram told Sada El Balad’s Ahmed Moussa (watch, runtime: 5:49 | 8:37), while 250 others have reached Romania.

Egyptians with expired passports in Ukraine will be allowed to cross the border into Poland, the Egyptian embassy in Warsaw announced, according to Ahram Online. Our embassy in Bucharest is also working on a similar arrangement with the Romanian government. A Romanian flight will take off for Cairo from Bucharest this evening. The foreign ministry has issued emergency directives to Egyptian embassies in countries neighboring Ukraine to provide transport and temporary housing to Egyptians fleeing the war over land borders, according to a statement.

FINANCIAL MELTDOWN IN MOSCOW-

Russia faces a financial meltdown as Western countries impose sanctions. The US imposed further “crushing” sanctions on Russia including blocking transactions involving the country’s central bank, finance ministry or national wealth fund, while the EU has frozen the assets of several of Russia’s most powerful oligarchs, who have close ties to President Vladimir Putin.

The punitive measures sent the Russian currency crashing and resulted in frantic cash withdrawals by Russian citizens, many of whom are on the hunt for USDs and considering fleeing the country, according to a Financial Times report.

Russia took emergency measures to stabilize the RUB: Russia’s central bank doubled interest rates to 20% to boost the sinking RUB, authorities instructed local exporters to sell 80% of their FX reserves, and Putin banned some foreign currency transfers by Russian citizens. The RUB tumbled nearly 30%, before paring losses after the central bank’s decisions. It closed at an 11.6% decline — around 95 RUB to 1 USD.

Global markets tumbled, with several US and European indexes falling. European financial institutions were hit hard, with those most exposed to Russian banks plunging between 9.5% and 14%. Investors dumped Russian bonds and went for safer assets including gold, which rose to cap its best month since May 2021, the Wall Street Journal reported. The New York Stock Exchange and the Nasdaq halted trading of several Russia-based stocks due to “regulatory concern,” said the NYSE website.

RESHAPING THE WORLD ORDER-

Ukraine wants to join the EU *right now* as it searches for leverage in ceasefire negotiations: EU leaders may next week discuss the possibility of Ukraine joining the bloc, a senior EU official told Reuters, after Ukrainian President Volodymyr Zelenskiy said he had signed an official request for “immediate membership” through a “new special procedure.” The presidents of eight EU members have called for immediate talks.

Ukraine being admitted today will do nothing to shore up the EU’s ties with Turkey, which has been dancing like an organ grinder’s monkey trying to win membership for … just about a generation now? As with opening one’s borders to refugees, apparently it helps in some quarters of Europe if you “look like us”?

Switzerland broke its historical neutrality, saying it would match EU sanctions against Russia. The decision was “unique and difficult” but “morally” imperative, Federal President Ignazio Cassis said yesterday, the Financial Times reported.

NATO holdout Finland is now openly debating whether to ask to join the military alliance, Politico reports.

FIFA and UEFA have suspended Russian national and club teams from all international football until further notice, potentially blocking Russian participation in the 2022 World Cup and women’s Euro 2022. “Football is fully united here and in full solidarity with all the people affected in Ukraine,” the two organizations said yesterday.

State grain buyer GASC was forced to cancel its wheat tender yesterday on the back of high prices, Bloomberg reports, as global grain markets face turmoil on the back of Russia’s invasion of Ukraine. The two countries together account for nearly a third of the world’s wheat supply, and some 60-80% of our grain imports at any given time.

This is the second tender Egypt has canceled in recent days: GASC called off last Thursday’s tender due to a shortage of offers.

Only three offers were submitted in yesterday’s tender: two for French wheat and one for US grain, Bloomberg cited unidentified traders as saying. Offer prices have reportedly surged by USD 80 per ton since Russia invaded Ukraine. Days before the war broke out, 17 global suppliers took part in a tender that saw GASC lock in three cargoes of Romanian wheat despite Ukrainian suppliers offering a better price. Chicago wheat futures closed up 8.6% in yesterday’s trading.

Why are traders staying away from Black Sea supplies? Although Russian commodities have so far been spared from direct sanctions, traders are avoiding Black Sea wheat due to port closures and logistical hurdles — and the possibility that sanctions are still to come. Shipment disruptions are mounting, with ins. companies either declining to cover Black Sea vessels or charging massive costs, Bloomberg reported yesterday. Russia’s exclusion from the Swift payments system is also threatening the financing of its commodities.

Our alternatives don’t look so hot right now, either: Egypt is eyeing wheat from the US, France, Romania, Kazakhstan, or Germany, Internal Trade Development Authority head Ibrahim Ashmawy said ahead of yesterday’s tender. But our ability to secure alternative supplies has been hobbled by rising costs for grain itself, as well as ins. and shipping.

However, the Supply Ministry is projecting calm. We have enough wheat stockpiled to last up to four months, Supply Minister Ali El Moselhy said earlier this week, adding that local growers will help cover Egypt’s needs until the end of the year. The harvest season starts in April and the government hopes to collect 4 mn tons of the grain.

Expect policymakers to be carefully weighing the global wheat crunch as they look to taper bread subsidies. The Supply Ministry is by the end of the month expected to announce an overhaul of the costly bread subsidy system, which has remained largely unchanged for decades.

Uber subsidiary Careem is making an investment in homegrown Egyptian food ordering platform Elmenus, the Dubai-based company said in a statement cited by Bloomberg. The investment will “extend our reach in one of our largest ride-hailing markets,” Careem co-founder and CEO Mudassir Sheikha was quoted as saying in the statement, adding that the move will also help the company launch its super app across the region.

Like its parent company, Careem wants to do more than just rides: The company previously reported plans to expand food delivery — a market worth an estimated USD 2.8 bn in Egypt — and launch courier and digital payments services. Its food delivery service is already available in cities across Saudi Arabia, the UAE, Jordan, Pakistan and Qatar, according to Bloomberg.

Our friends at Elmenus have scored a handful of investments over the past two years: Just Eat’s former CEO invested in Elmenus last year, while Fawry led a USD 10 mn pre-series C round for the company in July, following on from a USD 8 mn round in 2020.

OTHER INVESTMENT NEWS-

White goods retailer BTech will nearly double its annual investments to EGP 800 mn this year, up from EGP 500 mn in 2021, Hapi Journal quoted CEO and Managing Director Mahmoud Khattab as saying in a presser yesterday. The retailer aims to add 38 new locations across the country, bringing its total branch count to 153. The company also plans to invest EGP 1bn in tech infrastructure over the next four years, Khattab reportedly said.

Social commerce startup Brimore has invested USD 5 mn in a pre-seed round for its delivery and logistics services arm Milezmore, the company announced in a press release (pdf). The funds will help Milezmore expand its cloud solutions and double the size of its team, with a goal of increasing its customer base by 50x. The funding round comes a few weeks after Brimore raised USD 25 mn in series A funding.

About Milezmore: Milezmore was founded last year after Brimore struggled to find a delivery and warehousing provider that could “keep up with our pace and cost structure,” Brimore co-founder and Chief Business Officer Ahmed Sheikha told us recently. The subsidiary, which is billing itself as the country’s “first startup to provide cloud fulfillment, last-mile delivery, and customizable operations solutions,” has built 15 delivery hubs across Egypt and delivered some 1 mn packages since its launch.

ALSO FROM PLANET STARTUP-

Digital services provider Milango has acquired rival Circle for an undisclosed sum, Milango CEO Amr Mostafa told us, confirming a report from Waya. The agreement consists of a mix of client and talent transfer as well as a financial transaction, Mostafa said. The acquisition will help Milango increase its market share and expand its contracted user base to north of 100k residential units.

About Milango: The proptech startup provides online services via branded mobile apps to residential communities and sporting clubs, including SODIC, Orascom Development’s El Gouna, Travco Properties’ Almaza Bay, Emaar, and Smash Sporting Club. Back in 2020, the startup secured an undisclosed six-figure USD seed investment in a round led by VC tech fund A15.

About Circle: Founded in 2020 by Nancy Kamal and Essam Maged, the platform allows real estate and property management to communicate with tenants, handle their requests, and reduce operational costs. The platform is backed by 500 Startups MENA.

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Pan-African digital payments company Cellulant plans to roll out new SME services in Egypt and seven other main African markets, Reuters reported yesterday. Cellulant is currently looking to raise USD 100 mn in a Series D round, to help finance a pivot to small businesses by growing its SME merchant base to 50k firms from a current 1k. The Nairobi-based fintech company has traditionally catered to bigger merchants across its 35 African markets, including online retailer Jumia and food delivery firm Glovo.

Egypt Kuwait Holding Company’s net income grew 34% y-o-y in 4Q2021 to record USD 36.1 mn, according to the company’s earnings release (pdf). Revenues rose 66% y-o-y for the quarter to record USD 243.8 mn. EKH reported 47% y-o-y bottomline growth in 2021 to record USD 170.9 mn, on revenues of USD 833.4 mn, up 38% annually.

EKH attributed its top- and bottom-line growth to the fertilizer and petrochemicals segment, whose revenues rose 51% y-o-y in 2021 to record USD 447.9 mn. Revenues from the ins. and diversified segment also saw 51% annual growth in 2021 to record USD 186.6 mn.

EKH welcomes a new chairman: EKH’s board of directors signed off on appointing Vice Chairman Loay Jassim Al Kharafi as company chairman after former head Moataz Adel Al Alfi stepped down from the head of the table, according to a disclosure to the bourse (pdf). Al Alfi will stay on as a board member.

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Madinet Nasr Housing and Development’s (MNHD) consolidated net income dropped 71.5% y-o-y in 2021 to record EGP 282 mn, according to the company’s earnings release (pdf). Revenues dropped 28% y-o-y to record EGP 2.23 bn for the year. The release attributed the drop in income and revenues to a fall in large land sale transactions.

The breakdown: The company recorded EGP 2.95 bn in total pre-sales last year, dropping 57.9% y-o-y. MNHD also “took measures to scrutinize its receivable portfolio by canceling contracts with some defaulted clients, repricing, and resale of recovered units,” which played a part in its lowered net income and revenues for the year.

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State-owned Misr Ins. Holding Company’s net income grew 5.2% y-o-y in FY2020-2021, recording EGP 4.4 bn, the cabinet announced in a statement yesterday. The firm issued a total of EGP 17.5 bn in premiums, up 20.5% from the previous year, while its investments increased 23.8% to reach EGP 75.7 bn. Misr Ins. subsidiary Misr Life Ins. is looking to list 25% of its shares in an IPO during 2H2022, as part of the state privatization program.

New members on SCZone board: Prime Minister Moustafa Madbouly has tapped Federation of Egyptian Industries Chairman Mohamed El Sewedy, the Sovereign Fund of Egypt’s Ayman Soliman and litigation expert Yasser Hashem to join for a three-year term the General Authority For Suez Canal Economic Zone’s (SCZone) board, headed by Yehia Zaki, according to a statement.

The first Egyptian head of WHO’s expert panel at Eastern Mediterranean committee: Ahmed El Sobky, head of the General Authority for Healthcare, has been elected to chair the World Health Organization’s expert panel at this year’s Regional Committee for the Eastern Mediterranean, according to a statement. El Sobky is the panel’s first Egyptian head in its 14-year history.

Russia-Ukraine took center stage on our airwaves again: Kelma Akheera’s Lamees El Hadidi discussed possible actions by the UN Security Council on the invasion of Ukraine with Assistant Secretary-General of the Arab League Hossam Zaki (watch, runtime: 7:10) before turning to Al Ahram Center for Political and Strategic Studies’ Mohamed Farahat for some political analysis (watch, runtime: 11:22). Journalist Ashraf El Sabbagh dismissed the prospects of a nuclear war in a phone-in with Hadith Al Kahera (watch, runtime: 11:08). Al Hekaya’s Amr Adeeb reviewed the latest on-the-ground developments with Al-Arabiya’s correspondent in Kyiv (watch, runtime: 8:09).

Could the war impact bread subsidies? Supply Minister Ali El Moselhy gave an extensive interview to Ala Mas’ouleety’s Ahmed Moussa (watch, runtime: 1:47:10) on all things wheat and bread subsidies. On how the Russia-Ukraine conflict could affect our wheat imports, El-Moselhy was all assurances. Moscow announced that all contracted shipments would arrive, he said, adding that no sanctions have been imposed on Russian commodities or energy due to their importance in global markets. El Moselhy also reviewed the scenarios the government is considering for raising the price of subsidized bread — including replacing support in banknote form for “those who really need it,” he said. El Moselhy didn’t disclose when to expect the overhaul, saying only that the government is in no rush (watch, runtime: 6:15). He had previously said a final decision on how subsidies will be reworked would come by the end of March.

REALLY, REALLY SMART POLICY- Financial incentives for not popping out babies are on the table under a new national family planning initiative, Cairo University economics professor Amr Soliman said in a phone-in with Kelma Akheera (watch, runtime: 10:31). The talking heads gave special attention to the new national family development project — which aims to put a lid on population growth — launched by President Abdel Fattah El-Sisi yesterday. Planning Minister Hala El Said discussed the details of the project with Al Hekaya’s Amr Adeeb (watch: runtime 8:31), while Hadith Al Kahera (watch: runtime 20:31), Al Hayah Al Youm (watch: runtime 3:12), and Masaa DMC (watch: runtime 4:12) also had coverage.

With all eyes fixed firmly on the war in Ukraine, the international press isn’t paying us any mind this morning.

Creed Healthcare subsidiary Care Healthcare is restructuring its 29% stake in Cleopatra Hospital Group (CHG) by transferring it to Dutch-listed investment fund RCare CV, CHG said a regulatory filing (pdf). RCare is owned by mid-market investment firm RMBV, which in turn is led by CHG chairman Ahmed Badreldin.

Fintech firm OPay has opened its first brick and mortar store in Egypt, in the fifth settlement’s Downtown mall.

Egyptian and Czech Egyptologists uncovered the largest cache of mummification tools of its kind in the cemetery of Abusir near Cairo.

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

• France’s Alstom is looking to bid on contracts for mass transit projects at the new administrative capital.
• The Tourism Ministry now requires hotels to increase their internet speed and use fiber optics. The ministry set tiered minimum speed requirements for hotels based on their star ratings.

The Health Ministry reported 1,523 new covid-19 infections yesterday, up slightly from 1,521 the day before. Egypt has now disclosed a total of 483,771 confirmed cases of covid-19. The ministry also reported 34 new deaths, bringing the country’s total death toll to 24,074.

The UAE and Egypt have signed a reciprocal reins. agreement, Ahram Online reports. Inked between the two countries’ export credit agencies — Etihad Credit Ins. and Export Credit Guarantee Egypt — the agreement is set to offer credit ins. to protect trade and investment and boost exports between Egypt and the UAE.

Six of Turkey’s biggest political parties have formed an “historic” pact aimed at curtailing President Recep Tayyip Erdogan’s power and restoring liberal democracy to the country. Public discontent with the Turkish president is rising as spiraling inflation inflicts economic pain. (Financial Times)

Libyan legislators to vote on new gov’t this week: Libya’s parliament will “likely” vote on a new interim government in a session this week, as the incumbent administration continues to refuse to hand over power. (Reuters)