AM — Companies slapped with import suspensions failed to submit paperwork on time -Trade Ministry

Good morning, friends, and welcome to the first truly slow news day of Ramadan. It took the confluence of Ramadan, Western Easter, Coptic Good Friday and Passover to slow down the freight train that is the 2022 news cycle, but we’re not complaining.

Sound smart: The overlapping of Ramadan, two Easters and Passover? It won’t happen for another 33 years or so.

SCARY THOUGHT of the morning: Did someone say “stagflation”? Look no further than the Financial Times’ front page, which warns that “the twin perils of slowing growth and high inflation, or stagflation, will hit the global economy this year as Russia’s war against Ukraine exacerbates a slowdown in the recovery from the coronavirus pandemic.”

Odds are good you, like us, don’t have memories of what stagflation felt like. In the absence of a Hot Tub Time Machine back to the real-life That 70s Show, you’ll need to use your imagination: It’s corrosive to the economy, hell for businesses, and it leaves policymakers with few levers to pull. Rising prices, low growth and sagging business confidence are an unholy trinity, and policymakers around the world looking for solutions will find their room to maneuver constrained because debt levels are already high, the salmon-colored paper warns.

Why is the FT banging the drum about stagflation? Cast your eyes across the ocean to Washington, DC:

That’s where the IMF + World Bank spring meetings start today: Global finance chiefs have descended on Washington for the IMF and World Bank annual spring meetings. Expect the global economic impact of the war in Ukraine and fears of food insecurity to dominate the agenda.

What to watch for:

• Just how badly will the conflict in Ukraine knock the Egyptian + global economies? We’ll find out the IMF’s assessment tomorrow when it releases its latest World Economic Outlook. Expect the Fund to downgrade its growth projections for both Egypt and the world. In January the IMF forecast the Egyptian economy to grow at a 5.6% clip in FY 2021-2022 and penciled in 4.4% growth for the global economy.
• Will we see progress in our talks with the IMF for a new assistance package? Egyptian officials are scheduled to sit down with IMF officials to discuss what a program might look like in view of our current debt level. We’re currently in talks with the Fund for a new emergency program to help us cope with surging food and energy price inflation that has been turbocharged by the war in Ukraine.
• Moves on debt relief for developing countries? Debt relief for teetering sovereigns in the developing world is once again a topic of conversation ahead of the meetings as spiraling inflation pushes more countries to the brink of default. The IMF is once again talking about fresh policy moves to alleviate some of the debt distress in the global south, — but if the covid experience has taught us anything, we can expect the private bondholders to take priority.

MORNING MUST-READ: “Photographing hell” by the outstanding photographer David Hume Kennerly is a must-read packed with wrenching images. Kennerly won the Pulitzer for his photojournalism in Vietnam and was later White House photographer for Gerald Ford. (NYT)

FROM THE DUMPSTER FIRE that is our social media:

• Egypt’s men’s junior épée team won gold at the world championships in Dubai, edging out the United States 45-40. Check out the awesome photo of the team’s celebration.
• Is Ramadan still Ramadan if you treat it like Christmas? Read it for the spiritual question. Or read it for advance warning of the baubles and ideas that global capitalism will soon be bringing our way. (CBC. Canada’s, thankfully, not ours.)
• Lionizing yet another hedgie, this time from Gen Z (or a cusp-Millennial, depending on how you cut it): “Eva Shang is doing the hedge-fund thing her way. That means making money but also making time to blog about dreams, her labradoodle and her fear of becoming a Silicon Valley has-been at age 26.” (WSJ)
• For our fellow iSheep: Go deep into the creation of Apple Silicon. Bonus: There are now just 49 days left until WWDC. (WSJ)

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:24pm CLT this evening in the capital city, and fajr prayers are at 3:54am.

THE BIG STORY ABROAD- Mariupol mounts last stand: The last Ukrainian soldiers standing in Mariupol are reportedly refusing to stand down, though Russian troops have all but captured the key eastern Ukrainian city, “They will fight until the end,” Ukrainian Prime Minister Denys Shmyhal told ABC’s This Week (watch, runtime: 6:25). Meanwhile, Ukraine has asked the G7 countries for USD 50 bn to help it cover its gaping budget deficit over the next six months, Reuters reports citing televised statements by the Ukrainian president's economic adviser.

CIRCLE YOUR CALENDAR-

Higher Education Minister Khaled Abdel Ghaffar will address AmCham’s pre-annual general meeting and iftar tomorrow at 6-8pm at the Nile Ritz Carlton. Abdel Ghaffar will speak on investment in the nation’s healthcare and pharma sectors.

PSA- You only have three days left to file your ESG report: EGX-listed companies and all non-bank financial services outfits regardless of listing status need to submit their first quarterly ESG questionnaire by this Wednesday, 20 April. 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.

Entrepreneurs from across Africa have until 6 June to apply to startup competition Africa’s Business Heroes, which is backed by the Jack Ma foundation, according to a press release (pdf). The top 10 businesses in the competition will earn a shared pot of USD 1.5 mn.

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: Egyptian research centers are among the best in the region, according to Spanish research organization SCImago’s first annual MENA region research rankings. In this week’s Blackboard, we take a closer look at the stats to see why our research centers came out on top.

Companies barred from importing their products didn’t submit their documents on time, says Trade Ministry: The decision to temporarily suspend some international companies from exporting products to Egypt was taken due to their failure to comply with the government’s factory registration requirements, the Trade Ministry said in a statement yesterday.

Wait, what? The local press on Saturday picked up on a list (pdf) of companies suspended from exporting their goods here, published on the General Organization for Export and Import Control’s (GOEIC) website. GOEIC, a unit of the Trade Ministry, is in charge of regulating the flow of goods in and out of the country. The list spread like wildfire across social media and WhatsApp groups, mainly because it includes companies — such as Almarai and Unilever — that produce well-known household brands. GOEIC had previously warned that some companies had until 20 May to fix issues with their registration status.

How the rules work: The government in 2016 began requiring some foreign companies to register with GOEIC before exporting goods to Egypt. Registration is currently required for 29 categories of goods, including agricultural and food products, cosmetics, toys, textiles, garments, household appliances, furniture, and ceramic tiles. Before being allowed to do business with Egyptian importers, companies must submit documents (think: quality certificates, proof of trademark ownership, etc.) to GOEIC that provide information about the factories where goods are manufactured. This allows the authority to verify that the products meet Egyptian standards.

The official explanation: Under a decision (pdf) taken last month to streamline import registration procedures, companies are now required to renew documents within 30 days of their expiry. Those who fail to meet requirements by the deadline are taken off the list of approved exporting companies and have a 60-day window to appeal. According to the ministry statement, companies that hadn’t filed their paperwork were given a two-week warning before GOEIC then moved to suspend them.

A one-year ban? The statement suggests that companies that did not submit the required documentation on time could be prevented from exporting to Egypt for an entire year. Companies can appeal to a grievance committee, the Ministry says. Some 122 companies have already submitted their updated documents since the beginning of the year, according to the statement.

Ministry insists no prejudice at work: The decision “does not target specific companies or the products of specific countries,” the ministry said. The EU last year filed a case at the World Trade Organization (WTO) against Egypt’s “arbitrary” registration requirements, alleging that they violate trade rules and are responsible for a 40% fall in European exports to Egypt.

KSA exports will continue to flow as usual: The ministry later issued a second statement announcing that no Saudi products would be blocked from entering the country despite 24 Saudi exporters being included on the list of suspended companies. A ministry spokesperson “denied the issuance of any decisions that would prevent the export of Saudi products to the Egyptian market,” the statement read. It added that some Saudi exporters to Egypt are in the process of updating their registration paperwork.

Some international companies were struck from the list after they set up factories in Egypt and no longer need to export products to the local market, the statement added.

This includes Unilever: One of the companies named in the list was consumer goods giant Unilever, which quickly denied the news that its business in Egypt had been disrupted. Unilever said that all its commercial activities in Egypt are operating normally, including export and import, in accordance with Egyptian laws and regulations. Some of the company’s products (such as Lipton tea) are not required to be registered, it added. Many other products are completely manufactured in the company’s factories in Egypt for export to more than 45 Arab, African and European countries, Unilever said.

Industry reacts: Companies should get two written warnings before being subject to delisting to make sure they are informed of the deadlines, Al Borsa quotes Sayed El Nawawi, vice-president of the importers decision at Egypt’s chambers of commerce (the unfortunately-named FEDCOC), as saying. Suspensions cause confusion in the markets and force companies to pay registration fees again, he added.

The House of Representatives voted in plenary session yesterday to send the draft FY 2022-2023 budget to the budget and planning committee, Youm7 reports.

The FY 2022-2023 budget was recently restructured to “reassess priorities” after the Ukraine conflict shook global commodity markets and hit state finances. It now includes a combination of austerity alongside targeted spending increases to shore up the social safety net. The government currently sees the economy growing at a 5.5% clip in the coming fiscal year, after revising down its GDP forecast from 5.7%.

Some budget targets have since been revised again as we withstand the global turmoil. The budget deficit is currently expected to narrow to 6.2% instead of 6.9%, while the state is targeting a 1.3% primary surplus.

What’s next? When all of the horse trading is done, ministries finish lobbying for new earmarks, and the House Planning Committee submits its report, the document will then go up for a vote at the House of Representatives’ general assembly before the start of the new fiscal year. If the budget doesn’t pass before 30 June, the current budget rolls forward to direct state spending until the new document is passed.

ALSO APPROVED BY THE HOUSE YESTERDAY-

• A new authority for airspace management: The House approved yesterday a draft bill to set up a new authority to regulate Egyptian airspace, Youm7 reported. The National Center for Airspace Management will be tasked with managing Egypt’s airspace, providing navigational services, enhancing air safety, and training employees in the field.
• A USD 28 mn development grant agreement with USAID: The grant will be spent on support for SMEs and improving technical and vocational education and training (TVET), according to an International Cooperation Ministry statement.

Saudi tech firm Brmaja moves to consolidate its presence here: Brmaja IT, an Egyptian subsidiary of Saudi Arabian tech firm Brmaja Group, has signed an MoU to acquire one of the group’s KSA subsidiaries, the company told us in a statement (pdf) yesterday. The targeted firm, Brmaja Commercial, has an estimated market value of USD 20 mn.

What they said: The acquisition is part of Brmaja’s plan to increase its investments here by 20% this year “to accommodate the significant growth in the company’s business in the Egyptian market, where it has contracted with many private sector and state-owned firms in various fields,” Brmaja Group CEO Hatem Bakheet said in the statement.

One step closer to bringing Brmaja HQ to Egypt? The company’s Egyptian arm in November announced plans to acquire its Saudi parent company in a reverse merger, paving the way for the tech firm to move its headquarters to Cairo and potentially make its debut on the Egyptian Exchange.

Exporters to get more of their overdue subsidies back in April: Exporters in the fourth phase of the government’s program to repay overdue subsidies will see only 8% deducted from subsidies on shipments made from July last year, down from a previous 15% haircut, the Finance Ministry said in a statement. Exporters are due to receive their payments on 28 April. The program allows exporters to receive overdue subsidies in a single payment rather than in installments over four to five years, in return for a haircut. More than 2.5k exporters have received EGP 33 bn in overdue subsidies since the program launched in November 2021, the statement added.

A Russian delegation has visited site of the the future Dabaa nuclear plant to check up on the progress of groundwork at the Rosatom-led project, according to Al Borsa. Meanwhile, French consulting and engineering firm EGIS is looking into taking part in constructing the nuclear plant, Al Mal quotes EGIS Egypt CEO Sameh Atallah as saying. The company is also hoping to take part in water desalination, sewage and smart cities projects in Egypt, he added.

Work has started on a Sinopharm-sponsored cold storage facility in Cairo, according to Chinese media. The facility will have capacity to store up to “150 mn doses once finished [and] will also help Egypt achieve the goal of vaccinating 70% of its population by mid-2022,” Chinese ambassador Liao Liqiang is quoted as saying. More on the embassy’s Twitter.

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

• We’re importing Russian coal to power cement factories for the first time: Alexandria Port is expecting a shipment of 5k tons of coal from Russia on Thursday, as the global commodities shock forces cement producers to diversify from US suppliers. (Al Mal)
• Natgas vehicle scheme reaches Luxor, Aswan: Vehicle owners from Luxor and Aswan can now replace their old, gasoline-fired cars with new ones with dual fuel engines gas under the government’s natgas transition scheme, Finance Minister Mohamed Maait said. Almost 18k vehicles have been replaced so far nationwide, including 1.2k taxis and microbuses. (Statement)
• 2Africa subsea cable makes first landing in Genoa, Italy: The 2Africa consortium — comprised of China Mobile International, Meta, MTN GlobalConnect, Orange, stc, Telecom Egypt, Vodafone and WIOCC — announced the first landing of the 2Africa cable in Genoa, Italy. A total of 46 landings in Africa, Asia and Europe will be added by the time the 45k-km cable is completed in 2024. (Statement)
• Recycling startup Dawarha is using tech to tackle plastic pollution in Egypt through reverse vending machines that reward consumers for depositing empty single-use plastic bottles.

El Ezaby Pharm. has appointed Yomna El Ezaby (LinkedIn) as managing director, vice chairman and CEO, succeeding Maha Farid Shalaby (the wife of El Ezaby Chairman Ahmed El Ezaby), who passed away in February, Al Mal reported. Yomna has served as an executive manager at the pharma firm since 2009.

Cleopatra Hospitals Group (CHG) has appointed four new board members, the company said in a disclosure (pdf) to the EGX yesterday. CI Capital Chairman and Managing Director Mahmoud Atallah, CI Capital Managing Director and CEO Hesham Gohar, Hossam El Din Abdel Wahab, and Ahmed Mohamed Sobhy Ramadan will serve as representatives of MCI Capital Healthcare Partners, a subsidiary of financial services outfit CI Capital, which late last year upped its stake in the hospital group to 26.8%.

It was another quiet Ramadan night — but one talking head was talking business: El Hekaya’s Amr Adib took to the airwaves to discuss the Trade Ministry’s move to bar some companies from exporting their products to Egypt. Companies that submit the required paperwork will once again be able to import their products within 24 hours, Head of the General Organization for Import and Export Control (GOEIC) Essam El Naggar told Adib (watch, runtime: 12:00). “This is a routine move that has been happening since 2019,” he said, adding that the list of companies suspended from exporting their goods to Egypt is updated daily. Head to our Trade section above for the full rundown on the story.

Human rights lead the conversation on Egypt in the international press this morning. The Associated Press notes the visit last week of a senior EU human rights official and links it to the recent death of economist Ayman Hadhoud, who authorities said died last month at a mental health facility in Abbasiya. Amnesty International is also calling for an investigation into his death.

Egyptian churches welcomed congregations on Palm Sunday for the first time in two years, after covid restrictions were relaxed. (Reuters | watch, runtime: 0:55)

Israeli holidaymakers in Sinai are also getting some attention: Passover saw long waits at the Taba border crossing as Israelis headed to vacation in Sinai, the Times of Israel reports. More than a few of them may have been heading to two Israeli-organized music festivals in the area, which the AFP says sparked “outrage” and calls for a boycott in some quarters.

From Damietta to the Tunisian coast: An oil tanker loaded with over 750 tonnes of diesel that departed from Damietta Port ran aground in Tunisia after water seeped into the engine room. (AP)

President Abdel Fattah El Sisi met last week with a US Congressional delegation headed by Sen. Richard Shelby, according to an Ittahidya statement. The meeting — which discussed ways to strengthen bilateral relations and touched on regional and international issues — was also attended by Foreign Minister Sameh Shoukry, who was in Washington for bilateral talks last week.

EDF in town to talk green ammonia, hydrogen: Electricity Minister Mohamed Shaker discussed green hydrogen and green ammonia with the executive vice president of EDF Renewables and the president of Egyptian firm ZeroWaste in talks on Thursday, the ministry said in a statement. The companies together form one of six international consortiums currently in talks with the Suez Canal Economic Zone (SCZone) to establish a USD 1 bn green ammonia plant that would produce green fuel for ships.