AM — Is Khazna going to SPAC in ‘24?
Plus: Keep an eye out for new fintech regulations coming later this week

We seem to have traded the fire hose of news for a sprinkler today — and that’s just fine with us as we hope for the newsflow slowdown that often accompanies the holy month in Egypt. That said, something tells us that Ramadan 2022 won’t be keeping to that trend…

Ramadan starts this Saturday — and covid restrictions are being eased: Shops, restaurants and cafes will be allowed to stay open until 2 am, mawa’id rahman (charity table) gatherings are back, and event halls at major mosques’ will reopen, the government’s covid-19 crisis management committee announced yesterday.

Good news for our friends in the hotel industry: Weddings and celebrations will be allowed in hotel ballrooms starting April, provided everybody follows the precautionary measures, the statement said.

But make no mistake: Wearing masks is still mandatory in closed public spaces and public transport, and shishas are still banned, Cabinet spokesperson Nader Saad said in a phone-in last night (watch, runtime 3:37). Closed spaces include shops, banks and government offices.

Good news for fellow Gourmet Egypt fans: The high-end food retailer is launching a 24-hour home delivery service just in time for Ramadan. The service may just become indispensable to help us through our inevitable late night sohour cravings.

REMINDER- Looking to take the family abroad for Eid, but your kids haven’t registered yet for a vaccine? You can show up at any of the Health Ministry’s designated vaccination centers, youth centers and kiosks at Cairo metro stations to both register and get jabbed on the spot. Kids must be at least 12 years old, according to the Health Ministry’s last update back in December.

The 2022 Oscars were in full swing when we hit ‘Send’ this morning: We’ll have the full rundown on who won what — and the Sean Penn smeltdown — in this afternoon’s EnterprisePM.

WHAT’S HAPPENING TODAY-

Foreign Minister Sameh Shoukry is in Israel for a landmark Middle East summit: Shoukry landed yesterday to attend a major two-day summit that will also bring together the foreign ministers of Israel, the UAE, Morocco, Bahrain and the United States.

At the top of the agenda: The Iran nuclear agreement. Sources told Israeli media that ministers discussed regional responses to the possible revival of the Iran nuclear agreement, a topic that is expected to dominate the conversation during the two-day gathering. US Secretary of State Antony Blinken offered reassurances to Israel over a potential accord on the same day that Washington’’s top negotiator downplayed recent optimism from Tehran that an agreement could be imminent.

And the Ukraine conflict: The US is also expected to push the Arab world to provide more support to Ukraine. Israel and the Arab world have so far remained neutral, with Tel Aviv positioning itself as a mediator to end the conflict.

The global press is positioning the “Negev summit” as part of a “geopolitical realignment,” as this Wall Street Journal story makes clear: “New diplomatic and security ties are reshaping the Middle East as former enemies seek unity in containing Iran, the US rethinks its security role in the region, and Russia and China seek to exploit openings left by Washington.”

Cyprus Energy Minister Natasa Pilidou is in town this week heading a delegation of Cypriot companies to discuss business ties with ministers and Egyptian firms. The delegation lands today and stays until 31 March.

The gov’t will sign a loan agreement worth around EUR 75 mn today to finance the acquisition of 55 rail cars for Metro Line 1, Transport Ministry Kamel El Wazir said yesterday.

THIS WEEK-

More fintech regs are due this week: The Financial Regulatory Authority (FRA) will announce regulations governing the establishment of fintech firms this week, Assistant Chairman Hesham Ramadan told Al Borsa. The rules are drawn from the long-awaited legislation recently passed by the House of Representatives that hands the regulator broad oversight powers over licensing and corporate governance in the sector. We have a run-down on everything we know about the fintech regs here.

PLUS- Credit for the unbanked? The FRA is developing a credit rating system that will allow the unbanked to access credit, Ramadan told the newspaper. Ratings will be assessed based on consumer behavior and non-financial data, he said, without providing further details.

Everyone with a bank account in Egypt will be able to access the Central Bank of Egypt’s new digital payments app by the end of April: All banks operating in Egypt will be integrated into the CBE’s newly-launched InstaPay app by the end of April, Al Mal quoted CBE Assistant Sub-Governor Ehab Nasr as saying. The app provides instant secure payments between Egyptian banks, Meeza cards, and mobile wallets via the central bank’s nationwide instant payment network.

Already included in the network: CIB, the National Bank of Egypt, Banque Misr, Alexbank, QNB Al Ahli, Arab Bank, AAIB, Banque du Caire, Egyptian Gulf Bank, and SAIB. You can download the app on Google Play and the App Store.

MARKET WATCH-

US oil won’t be a silver bullet for spiraling crude prices: “A chronic shortage of essential labor and equipment” at Texan oil fields could scupper US President Joe Biden’s plans to halt the runaway rise of crude oil prices, the Financial Times suggests. US production has not yet recovered to pre-pandemic levels amid lingering bottlenecks, meaning it could take up to a year to significantly increase output, analysts told the FT. That will deal a blow to White House plans to up domestic supply to mitigate rising prices, which have hit USD 120 per barrel since Russia launched its war in Ukraine. And with OPEC+ members facing a similarly slow ramp-up in production, it begs the question as to what — short of complete demand destruction — can realistically be done to stop crude breaching the USD 200 per barrel mark this year as some traders now predict.

CIRCLE YOUR CALENDAR-

PSA #1: Companies have a little less than two weeks to file their first quarterly ESG compliance report: Listed firms and non-bank financial services companies need to submit their first quarterly ESG report by 10 April, the FRA has said (pdf). The regulator is making it mandatory for corporates to publicly disclose their performance on key environmental, social and governance (ESG) metrics each year when they submit their annual financial statements, starting 2023.

Then why does the FRA need ESG reports this April? Companies are required to make quarterly updates throughout 2022 to get feedback from the FRA on the steps they’re taking, before making the official submission at the end of the current financial year.

Check out our Going Green series, where we outlined the new rules around ESG reporting: Part I | Part II.

(** NEED HELP GETTING READY? ** Our parent company can help. Inktank is Egypt’s leading investor relations, ESG and corporate reporting firm. Reach out to Moustafa Taalab on mtaalab@inktankir.com if you’d like to get the conversation started.)

PSA #2– All individual taxpayers have until this Thursday, 31 March, to submit their 2021 tax returns to the Tax Authority. The deadline for companies with January-December fiscal years is 30 April.

Afreximbank and the Angolan Embassy in Egypt are hosting (pdf) an Angola-Egypt investment roundtable on Wednesday at the Hilton Cairo Heliopolis Hotel. Click here to RSVP and join the discussion.

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

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: Nurses represent the biggest occupation in healthcare provision, but qualified nursing staff continues to be in short supply in Egypt. As formalized nursing education programs generally do not institutionalize training in patient management and soft skills, private sector healthcare providers are increasingly relying on constant training for nurses on the job to ensure they deliver on quality requirements.

Fintech startup Khazna could set up a SPAC in 2024, a company spokesperson told Enterprise, confirming a report from Al Shorouk that quoted Khazna co-founder and CEO Omar Saleh. Khazna is looking into setting up a blank check company with international investors, which could be listed either at home or abroad, Saleh is quoted as having said, without disclosing further details.

All part of wider expansion plans? The fintech player is considering acquiring three technology companies operating in the local market, Saleh said, without explicitly linking the SPAC plans to any potential acquisitions. The company is also considering expanding abroad in one or two regional markets in the first quarter of 2023, he added.

SPEAKING OF SPACs- Whatever happened to our first homegrown blank check firm? The paperwork for Egypt’s first SPAC has been filed and is still waiting on approvals from the Financial Regulatory Authority, an FRA spokesperson told Enterprise. FRA head Mohamed Omran caused a bit of a stir yesterday when he appeared to suggest that Egypt’s first SPAC had already been established in a televised interview with Bloomberg Asharq (watch, runtime: 1:45), without providing further details. The firm had been set to list on the EGX by the end of January or early February, Omran said previously — but that was before the global tide turned against SPACs, which were struggling even before the major blow dealt to equities markets amid the Russia-Ukraine war.

Background: The FRA late last year issued the rules and regulations for establishing local blank-check firms, after the regulator greenlit EGX boss Mohamed Farid’s proposal to allow SPACs in Egypt. The proposal was partly driven by an increased interest in SPACs in the MENA region, following Swvl’s move to merge with blank-check firm US Queen’s Gambit Growth Capital and list on the Nasdaq (which should complete within days), as well as Anghami’s SPAC debut earlier this year.

Lost? Check out our neat explainer for more on how SPACs work.

EIB supports 4G expansion with EUR 150 mn loan to TE: Telecom Egypt (TE) has secured a EUR 150 mn medium-term loan from the European Investment Bank (EIB) to expand its 4G broadband network, the state-owned firm announced in a statement yesterday. The facility will help TE deploy around 2k new mobile sites and up the capacity of its existing cellular towers. This will help improve the mobile network’s coverage and strengthen the network across Egypt, including in less densely populated areas, TE said.

The loan is part of the EU’s efforts to help Egypt’s digital transformation, said Tobias Krause, deputy head of the EU’s delegation to Egypt. “The EU aims to support Egyptian government efforts to secure resilient and affordable access to universal connectivity to the benefits of Egyptian citizens,” he said, adding that this project “shows the commitment of our partners in the EIB, the EU’s lending hand, to support crucial inclusive digital infrastructure planning in Egypt.”

A milestone for the EIB: This is currently the lender’s largest loan to a mobile network in Africa, according to the statement.

The state company now has more bandwidth: TE acquired another two 10-MHz bands in a government tender in 2020.

The agreement comes on the back of a strong year for TE: The company saw its net income increase 75% y-o-y to EGP 8.4 bn in 2021.

Zelensky signals compromise ahead of new round of peace talks: Ukrainian President Volodymyr Zelensky has reiterated willingness to declare neutrality and potentially give up sovereignty over some parts of the country ahead of three days of peace talks, which start today in Turkey, France24 reports. “Security guarantees and neutrality, non-nuclear status of our state. We are ready to go for it. This is the most important point,” Zelensky said during a video call with Russian journalists yesterday.

And the status of territory seized by Russia may now be up for negotiation, Zelensky suggested, in an admission that the Ukrainian military will not be able to kick Russian forces out of the country. “I understand it’s not possible to make Russia completely leave the territory — that’ll lead to World War Three,” the Financial Times reports him saying. “That’s why I’m saying this is a compromise. Go back to where this all started and then we’ll try to solve the difficult Donbas issue.” Russia annexed Crimea and sponsored separatist uprisings in the country’s east following a pro-western revolution in 2014.

This is a marked change in tone from the Ukrainian leader, who until now has consistently called for Nato to implement a no-fly zone over the country, despite the risks of the military alliance into direct confrontation with Russia.

The situation on the ground is unlikely to turn in his favor: It now appears to be a matter of time before Russian forces capture the strategic port city of Mariupol on the south coast, opening a land bridge connecting Crimea and Russian-held territory in the east. And the situation for Ukrainian troops in the east looks increasingly like a cauldron as the Russians slowly encircle from behind. Check out maps and intel at the Institute for the Study of War.

Erdogan presses for ceasefire ahead of talks: Turkish President Recep Tayyip Erdogan called on Russia and Ukraine to implement an immediate ceasefire during a phone call with Russian President Vladimir Putin yesterday, according to a statement from the Turkish presidency.

MEANWHILE- Two key US allies have distanced themselves from President Joe Biden’s off-script remarks on Saturday, referring to Putin as a “butcher” who “cannot remain in power.” Both France and the UK both rejected the apparent suggestion of regime change in Moscow, with French President Emmanuel Macron suggesting that Biden needs to tone down the rhetoric if a diplomatic solution to the crisis is going to be found.

Biden may no longer have an off-ramp, but the UK is offering Putin an exit: The UK could lift sanctions it has placed on Russia and some of its most powerful individuals if the country withdraws from Ukraine, Foreign Secretary Liz Truss told the Telegraph. Sanctions could “come off with a full ceasefire and withdrawal, but also commitments that there will be no further aggression,” she told the British newspaper. The country just last week came out with a new laundry list of sanctions against Russia targeting “strategic” industries and individuals.

There was more speculation over what an IMF program might look like on the airwaves last night: MP Fakhri El Feki, head of the House Planning and Budget Committee, offered a few of his own guesses in a phone-in with Kelma Akhira’s Lamees El Hadidi (watch, runtime: 6:09). The MP floated the possibility of obtaining a USD 3 bn precautionary and liquidity line or a new extended fund facility under which the IMF lent Egypt USD 12 bn back in 2016. Deputy Planning Minister Ahmed Kamaly also chatted via phone with El Hadidi (watch, runtime: 14:41), reiterating that the government is preparing to make spending cuts in the coming fiscal year.

Background: The government has requested support from the IMF to mitigate the impact of the war in Ukraine on its economy, though it remains unclear what kind of assistance the Fund is willing to offer.

High-speed rail: Coming June 2024. The first phase of the high-speed electric railway — connecting Ain Sokhna to Matrouh — will start operating in June 2024, Transport Ministry Kamel El Wazir told Ala Mas’ouleety’s Ahmed Moussa in a phone-in (watch, runtime: 6:02). German rail operator Deutsche Bahn has applied to operate the first line of the high-speed service, and the ticket price will be decided in coordination with the Egyptian government, the minister said (watch, runtime: 4:16).

Background: In September, the government signed a USD 4.5 bn contract with Siemens Mobility, Orascom Construction and Arab Contractors to build the first 660-km phase of the line. The entire USD 23 bn project will see the line eventually expanded 1.8k km across the country, linking Cairo, Aswan, the North Coast and the Red Sea.

Clothing manufacturers are the latest to warn of the negative impact of mandatory L/Cs: Some apparel factories will have to temporarily halt operations due to the repercussions of the Central Bank of Egypt’s decision to require letters of credit for purchases, said Marie Louis, head of the Apparel Export Council, in a phone-in with El Hekaya’s Amr Adib (watch, runtime 3:46). As of this month, banks have required most importers to use letters of credit to import goods after the CBE banned the use of documentary collection. Tobacco manufacturers warned last week that the rules were forcing companies to hike prices.

Rent reductions for vendors at tourist sites until June: The Supreme Council of Antiquities’ will extend the 50% reduction on rents given to bazaars at museums and archaeological sites until the end of June. The discount was originally introduced to support businesses through the covid-19 pandemic. Local and international tourists will also continue to get a 50% on entry fees to archaeological areas and museums in Upper Egypt. (Hapi Journal)

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

• A net-zero city doesn’t mean sacrificing luxury: A five-star eco-resort is set to open at the world’s first net-zero city by URB, dubbed Nexgen, in the works in the eastern district of Cairo. The city will also include glamping lodges, ecotourism visitor center and a nature reserve conservation hub. (Hotelier Middle East)
• The Senate approved yesterday the draft law amending provisions of the NGO Law which gives civil society organizations another year to comply with the legislation’s requirements. (Masrawy)

Zero-covid over as China forced into another mega-lockdown: Shanghai has gone into a city-wide lockdown as China’s financial hub struggles to contain an uptick in covid cases. The city of 25 mn will enter lockdown in two stages to carry out covid testing over nine days, after recording on Saturday its highest number of cases since the pandemic’s early days, according to the BBC. All public transit will stop, all factories will close, and all companies will work remotely.

This comes a week after Shenzhen exited lockdown: One of China’s most important commercial hubs and the country’s second-largest port, the shuttering of factories and cargo terminals has put further pressure on global supply chains and trade, and with a strict testing regime still in force, shipping firms say it could be weeks for trade to normalize.

Biden vs. b’naires: US President Joe Biden plans to propose a new minimum tax on the 700 US households worth more than USD 100 mn, in the White House’s first attempt to target b’naires on tax, the Washington Post reports, citing sources and an official document. The move, which comes as part of a 2023 budget set to be unveiled in full today, would see b’naires pay at least 20% in taxes on their full annual income — including capital gains like stock appreciation (an idea that readers may remember sent Elon Musk into a Twitter tizzy when it was floated last year.) The tax would raise an estimated USD 360 bn in revenue over a decade if enacted, but expect opposition from across the aisle — as well as from members of the rich list itself, many of whom are used to paying lower rates than the average American.