AM — GASC is once again tapping the int’l wheat markets — but only wants European offers

Good morning, friends, and happy hump day. It’s a brisk day on the news front, but there’s no single theme running through it.

THE BIG STORY here at home is that state wheat tenders are back on — for European suppliers, at least. Meanwhile, Nigerian fintech player Opay (of no relation to Orascom despite the name) is expanding in Egypt, the latest sign of how hot our fintech market has become. We have the full rundown on both stories in the news well, below.

MORNING MUST-READ: Our interview with World Bank Managing Director Mari Pangestu about COP 27, which appears in this week’s Going Green, also below.

UPDATE- The new Visit Egypt website though which arriving travelers can register personal and covid-19 data before arrival is now up and running. Citizens, residents and visitors can register online up to two days before arrival and expedite their clearance through their port of entry. You can still fill out paper health forms on arrival, the site notes. The website was not live at dispatch time yesterday.

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:20pm CLT this evening in the capital city, and fajr prayers are at 4:02am.

WHAT’S HAPPENING TODAY-

Foreign Minister Sameh Shoukry is in Washington today for talks with his US counterpart, Antony J. Blinken, according to a ministry statement. Shoukry will also meet with other US officials, members of the US chambers of commerce, and think tanks.

The European Bank for Reconstruction and Development (EBRD) will launch its 2021-2022 Transition Report today at an event taking place at the Nile Ritz Carlton, the lender said (pdf) yesterday. The report looks at how countries have used technology and digitalization to fuel economic growth in the post-covid era. EBRD chief economist Beata Javorcik will present its findings and discuss the implications for the private sector in a panel discussion with Algebra Ventures Managing Partner Karim Hussein and Orange Egypt CEO Yasser Shaker. You can read the Egypt chapter of the report here (pdf).

THE BIG STORY ABROAD- Russia looks set to launch a fresh offensive in eastern Ukraine, which has put out a plea for more help from its allies (more on that in today’s War Watch section, below).

Meanwhile, the international business press has its gaze firmly fixed on the rout in global markets as central banks — led by the US Federal Reserve — solidify plans to significantly hike rates this year. Some economists spy a recession on the horizon, as we noted yesterday. We have the full rundown just below.

KUDOS- Props to the six Egyptian healthcare players who were included in Forbes Middle East’s Top 50 Healthcare Leaders for 2022. They are:

• 12- Pharco Pharma CEO Sherine Helmy
• 16- Ibnsina Pharma Vice Chairman and Managing Director Mohsen Mahgoub
• 20- IDH CEO Hend El Sherbini
• 38- Alameda Healthcare Owner and Chairman Fahad Khater
• 41- Cleopatra Hospitals CEO Ahmed Ezzeldin
• 43- EIPICO Chairman and Managing Director Ahmed Kelani.

MARKET WATCH-

The only way is up: US inflation figures are out today and analysts are expecting the CPI to have hit fresh 40-year highs in March on the back of surging commodity prices caused by the war in Ukraine. A FactSet survey of analysts picked up by Axios has the headline rate reaching 8.4% in March from 7.9% the month prior — a reading that will pile even more pressure on the Federal Reserve to accelerate its tightening cycle.

A Reuters poll of economists expects the Fed to do just that: The survey of more than 100 economists sees the Fed going ahead with 50-bps rate hikes at each of its May and June meetings in response to surging inflation. This would take the benchmark interest rate to 1.25-1.50%, and mark the first back-to-back half-point rate hikes since 1994.

The bond markets are reacting: Long-term US Treasury yields rose to the highest level in almost three years yesterday as investors dumped bonds, Bloomberg reports. Rates on 10-year bonds surpassed 2.75% for the first time since May 2019, while yields in Europe also surged amid rate-hike expectations.

Other asset classes weren’t spared: Risk-off sentiment also saw the S&P 500 fall and the tech-heavy Nasdaq close down more than 2%. BTC felt the impact too, falling below the key USD 40k threshold for the first time since mid-March.

Positive for markets? End of zero-covid as Chinese authorities make a hash of the lockdown in Shanghai. Shanghai authorities have announced plans to lift the total lockdown on the city following a sharp sell-off in the Chinese stock markets yesterday, despite covid cases continuing to reach record highs, the Financial Times reports. Restrictions in China’s financial and trade hub are now stretching into their third week, and reports of unrest are beginning to surface as residents complain about being denied access to food.

China’s move spurred a rebound in the oil markets: International benchmark Brent crude fell along with almost everything else during yesterday’s trading, losing 4.2% to below USD 100 per barrel — but pared some of the losses to trade at USD 100.23 as of early this morning on the news out of Shanghai.

CIRCLE YOUR CALENDAR-

Companies have less than 10 days 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 20 April, the Financial Regulatory Authority (FRA) announced last week. The regulator is making it mandatory for corporates to publicly disclose their performance on key environmental, social and governance metrics each year when they submit their annual financial statements, starting 2023.

Reach out to Moustafa Taalab at InkankIR, our parent company, if you need some help.

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: Enterprise talks COP 27 with Mari Pangestu, managing director of development policy at the World Bank: With less than seven months to go before the COP 27 summit takes place in Sharm El Sheikh, pressure is rising on global leaders to take decisive action. Last year’s summit in Glasgow did not accomplish what many had hoped. And UN climate scientists are now warning that global emissions will need to peak in 2025 if we are to keep temperatures beneath the all-important 1.5°C.

Enterprise sat down with Mari Pangestu, the World Bank’s managing director of development policy and partnerships, to discuss what the Bank is doing to support Egypt, how developing countries can balance climate and development targets, and how the conflict in Ukraine could impact the push to lower emissions.

GASC wants to buy wheat — but only from European suppliers: State grain buyer the General Authority for Supply Commodities (GASC) issued yesterday a limited tender for an unspecified amount of European wheat, Reuters reported. The tender is open only to European suppliers already accredited in GASC’s tender book, marking the first time in years the authority has launched a limited tender, according to traders cited by Reuters. State wheat tenders are usually open for bids from all 16 accredited import countries.

The details: Suppliers have until the end of tomorrow to submit their bids on either a cost and freight or FOB basis, with the grain set to be shipped in late May or the first half of June.

Among the contenders: Smart money may well be on France, Germany and a handful of eastern European states. France has said it will “stand by Egypt” on wheat and make sure we get what we need if the war in Ukraine drags on. Private sector traders in March secured Egypt’s first shipment of German wheat in years alongside Lithuanian and Bulgarian cargos. Buying more Romanian wheat is also on the table, Internal Trade Development Authority head Ibrahim Ashmawy said back in February.

The tender comes a month sooner than expected: Supply Minister Ali El Moselhy had previously said that Egypt wouldn’t be tapping the international wheat market before the middle of May. The news came after GASC was forced to cancel two tenders as the global wheat trade was upended by the outbreak of war in Ukraine. Egypt’s last international wheat purchase was in mid-February.

Why now? Our wheat reserves are running lower than usual thanks to war in Europe. Egypt currently has enough wheat to cover the next 2.6 months’ worth of consumption, cabinet announced last week, down from the four-month figure announced by the government in early March. We received all our backlogged orders of Russian wheat in March, but blockaded ports mean there’s little to no grain coming out of Ukraine. The two countries together supply more than 80% of our imported wheat in peacetime.

The government remains focused on the local harvest: With global markets in disarray, the Madbouly government has shifted its wheat procurement focus to local sources. The government will spend around EGP 36 bn to purchase 6 mn tons of local wheat this year, roughly doubling its purchase budget from last year.

The Senate approved yesterday the Unified Ins. Act, according to Ahram Gate. Once passed in the House, the law — which has been more than three years in the making — will grant the Financial Regulatory Authority (FRA) broad new powers to regulate the sector and mandates economic courts with adjudicating disputes under the act.

(Editor’s note: We don’t use the full word and instead use the abbreviation “ins.” because the full word enrages the algorithms that govern our deliverability. Using it — along with many of the other words we use on a daily basis — tends to see us sent to a bad folder in your email client.)

About the bill: It tasks the FRA with regulating the establishment, licensing and oversight of ins. and reins. companies; will make ins. compulsory for SMEs and freelancers; and sets the economic court system as the adjudicator of disputes that fall under the act. It would also raise the minimum paid-in capital requirement for ins. companies to EGP 250 mn from a current EGP 150 mn, according to Ahram Gate. Previous drafts had also proposed upping minimum capital requirements for reinsurance companies and raising the ceiling for life ins. payouts. We’ll bring you the details once we know more.

What’s next: The act will now make its way back to the House of Representatives for further discussion and a final vote. (For those still trying to get their heads around our bicameral system, draft laws are generally passed from cabinet to the House, which sends them on to the Senate following discussion and amendment. The Senate makes its own changes and votes to send the bills back to the House, where — after another round of debate — they are granted final approval and sent on to the president to be ratified into law.)

That’s all from the Senate for now: The Senate was adjourned after yesterday’s session, Shorouk News reports. The dates for its next round of plenary sessions haven’t been announced.

OPay is expanding in Egypt: Nigeria-based fintech player OPay is preparing to expand its footprint in Egypt, launching pre-paid cards and linking up with the central bank’s new digital payment app less than a year after it first entered the country. The company has partnered with Masria Digital Payments (MDP) on its new pre-paid cards, which are pending approval from the Central Bank of Egypt (CBE), the company’s director of business development and partnership for Egypt and North Africa, Mahmoud Khedr, told Enterprise, confirming a report from Al Mal. It expects to issue some 200k cards in the first phase of its rollout, he said.

OPay plans to join the CBE’s new digital payment app + get a new PayFac license: The fintech outfit will soon apply to join the CBE’s new national digital payment app, InstaPay, Khedr said, explaining that the instant payment network is a “fundamental turning point for the payments landscape in Egypt.” OPay is also in talks with an unnamed local bank for a new payment facilitator license (which would allow it to receive and process payments on behalf of banks, making it easier for businesses to accept electronic payments), he added. Opay has already obtained licenses to receive and process credit payments for Banque Misr and the National Bank of Egypt.

SOUND SMART- Payment facilitators say they offer businesses an easier route to accepting card payments by including them under a “master merchant account” — saving them the time and effort of having to get approvals for an individual account. Payfacs help get merchants ready to process payments in hours — as opposed to days or weeks for the traditional route, which goes through banks directly. Payfacs say this spares their clients from dealing with harder-to-navigate bank bureaucracies.

“New service” to launch in 3Q2022: The company is gearing up to launch a new service in Egypt in 3Q, which would be a “first for the MENA region,” Khedr said, without disclosing what the service will be. This will come as part of its wider expansion in Egypt, which will include opening more branches and using the country as a “center” for its service operations in the MENA region.

About OPay: The Nigerian firm became Africa’s second fintech unicorn last year after raising USD 400 mn in a SoftBank-led funding round that valued it at USD 2 bn. The company opened its first brick and mortar shop in Egypt in March, after launching operations in the country in 2021. OPay currently has tens of thousands of points of sale (POS) across the country, processing mns of transactions per month, Khedr told us. It’s now expecting 300% growth this year.

More African fintechs following OPay here? Churpy, a Kenyan account receivables automation startup, and ImaliPay, a financial services firm aimed at gig workers, have both said recently they are preparing to enter Egypt.

Our fintech industry has been getting a lot of interest lately: A stream of local fintech startups have secured new investment this year, including Khazna, which raised USD 38 mn in a series A round, and Lucky, which received USD 25 mn in its series A. Other fintechs closing investment rounds in 2022 include MoneyHash, PayMint and FlapKap.

For thoughts on What’s Next in the fintech space, check out our latest podcast, which dropped on Sunday and features Khazna and Kashat alongside VCs Accion and Cairo Angels — with a special appearance by the Central Bank of Egypt. Listen here on Apple Podcasts (or use the player at the foot of our website here) or read a summary here instead.

OTHER FINTECH NEWS- Visa will provide digital payment services for Orange Cash users after signing an agreement with the telecoms company, the two companies announced in a joint press release (pdf).

Arab African International Leasing (AAIL) plans to issue securitized bonds worth EGP 500-600 mn by the end of 2023, Chairman Mahmoud El Sakka told Enterprise, confirming a report by Al Mal. AAIL is the leasing arm of the Arab African International Bank (AAIB).

The firm is also planning to enter the factoring market: AAIL has obtained initial approval from the Financial Regulatory Authority (FRA) to set up a factoring arm, El Sakka said. It expects to receive final approval after it completes its operating structure.

The local securitization market has stepped up a gear this year: Total corporate issuances totalled around EGP 9.2 bn (based on our calculations) in 1Q2022 — 58% of the EGP 15.8 bn taken to market in the whole of 2021.

Want to know more about factoring? We have an explainer on the third-oldest profession here.

The board of Industrial Engineering Company for Construction and Development (ICON) has agreed to allow Irish insulation manufacturer Kingspan to conduct due diligence on its sandwich panel-making business, it said in a bourse disclosure (pdf) yesterday. An independent financial advisor will also be appointed to prepare a fair value study for the business.

Background: Kingspan is bidding to acquire at least 65% of Icon’s sandwich panel division. Icon is set to spin off the division (which manufactures components used to insulate the exteriors of buildings) into a separate company, in which Kingspan would then buy a stake.

Advisors: First Capital is acting as Icon’s financial advisor, while Alliance Law Firm is providing legal advice.

Egyptian exporters don’t want to lose business with Russia — even if it means getting payments in RUB. The Egyptian Businessmen’s Association wants Egyptian businesses to be able to open RUB bank accounts, Al Borsa writes citing association chairman Ali Issa. The plan is aimed at maintaining trade between the two countries amid western sanctions imposed on Russia for its invasion of Ukraine.

How would it work? The RUB generated from our exports to Russia would be used to pay for our imports from Russia, allowing traders to sidestep the USD as a trade currency, Issa reportedly said.

This could come in handy if Russia starts expecting payment for its exports in RUB. Moscow has already said it will demand payment in RUB for its key gas exports to “unfriendly countries” (read: pretty much all of Europe), later signaling that the scheme is a “prototype” and could soon expand to other categories of exports.

The association will submit its proposal to the cabinet and the central bank, Issa is quoted as saying, adding that it would then need agreement from Russia to move forward.

REALITY CHECK- Don’t hold your breath. We can’t imagine Egyptian financial institutions (or pols, for that matter) running the risk of breaching sanctions against Russian financial institutions, at least seven of which have been cut off from the global Swift network through which banks send transfer instructions. And don’t even get us started on the fact that — pre-invasion — we imported about six times more than we sold Russia.

WARTIME DIPLOMACY-

Zelensky makes a push for African support: Ukrainian President Volodymyr Zelensky wants to address the African Union, Senegalese President and current AU president Macky Sall said in a tweet after the two spoke by phone. African countries (including Egypt) accounted for 24 of the 58 countries that abstained from voting to suspend Russia from the UN Human Rights Council last weekend, while another nine African nations voted against the motion.

Finland and Sweden could join Nato as soon as this summer, indicating that Russia’s decision to invade Ukraine is inadvertently strengthening the alliance in what US officials are calling a “massive strategic blunder.” (The Times)

PAYING FOR WAR-

Ukraine calls for more military aid as it gears up for renewed attacks in the east: Ukraine’s finance minister called for USD tens of bns in support from allies to urgently plug a gaping hole in the country’s finances, in an interview with the Financial Times. “We are under great stress, in the very worst [financial] condition,” Sergii Marchenko said. “Now it is a question of the survival of our country.” Zelensky also requested more military aid during a virtual address to the South Korean parliament (watch, runtime: 19:55).

Both the US and Kyiv have warned that Russia is gearing up for a major new offensive in eastern Ukraine’s Donbas region.

ON THE FRONT LINES-

Civilian death toll mounts in Mariupol: At least 10k and potentially even more than 20k civilians have died in the besieged eastern city of Mariupol, the city’s mayor told the AP yesterday.

It was a slow night even by Ramadan standards for the country’s talking heads. New rules signed yesterday between the Federation of Egyptian Chambers of Commerce (the unfortunately-named Fedcoc) and the Tax Authority on how to collect the 14% VAT on platinum, gold, silver and precious stones got an explainer courtesy of Al Hekaya’s Amr Adib (watch, runtime: 8:28). VAT will only be applied to stamped gold pieces, Hani Milad, head of Fedcoc’s gold and jewelry division, told Adib.

Human rights is leading the conversation on Egypt in the international press this morning. Prominent activist Alaa Abdel Fattah has been granted British citizenship in a move that the Associated Press says aims to secure his release. Abdel Fattah has been imprisoned for much of the last decade and last week began a hunger strike. The story is getting wide coverage from the Guardian, Reuters and Euro News. The AP in the same story notes that economics researcher Ayman Hadhoud died in early March at Abbasiya Mental Health Hospital after reportedly being detained by government agents a month earlier. AFP also has news of Hadhoud’s death.

Also making headlines:

• Suits Arabia faces a real-life lawsuit … about suits: Local clothing brand Orange Square is taking legal action against the production company behind the Egyptian remake of the hit US show, for allegedly failing to pay EGP 2.7 mn for costumes — a claim the showrunners deny. (The National)
• Egypt’s economic ties with Israel are growing closer despite the country’s unpopularity among the Egyptian public. (Haaretz)

Egyptian exporters can (sort of) use air freight to ship goods to Australia again after Canberra relaxed a 2015 ban on air cargo earlier this month. Shipments will only be accepted if they pass through specific intermediate countries such as the UAE, the US and Japan. Egyptian exporters have had to ship products to Australia via sea since late 2015 after the government banned air freight as a security measure. The ban was introduced just a few months after the downing of the Russian metrojet in Sinai.

The war in Ukraine paired with the EGP devaluation is putting the squeeze on contractors, African Federation of Construction and Building Contractors chief Hassan Abdelaziz told CNBC Arabia (watch, runtime: 25:26).

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

• Egyptian B2B marketplace Fatura has inked an agreement with Saudi SME fintech player Geidea to provide retailers and wholesalers with e-payment services. (Al Borsa)
• Egypt will ban entry of pesticides without testing and shipments will be disposed of if proven hazardous. (Al Shorouk)
• Air Arabia Egypt will launch a new service between Cairo and Dammam in Saudi Arabia starting 26 April. (Statement)

More COP 27 discussions: Environment Minister Yasmine Fouad discussed preparations for COP 27 with the EU executive vice-president Frans Timmermans yesterday, according to a ministry statement.

Timmermans has been in Egypt this week for energy and climate talks with several senior government ministers, with discussions focusing on boosting LNG exports and developing Egypt’s green hydrogen sector ahead of the climate summit in November in Sharm El Sheikh.

ALSO IN DIPLOMACY- Gov’t and the UN launch joint tech and innovation task force: The international cooperation and communication ministries have launched a joint technology and innovation task force in cooperation with the UN, according to a statement. The task force will see UN agencies help the government develop tech-based projects that can attract development funding.