Thursday, 19 May 2022

AM — Amer says we’re negotiating a “limited” IMF facility

TL;DR

WHAT WE’RE TRACKING TODAY

Well, friends, we’ve made it through another workweek together. One long, hard push and the end of the workday will be here before you know it. But first:

It’s interest rate day: The Central Bank of Egypt will likely raise interest rates when it meets today, according to a near consensus of analysts and economists we surveyed last week. Six of the seven respondents said they expect the Monetary Policy Committee to go ahead with a rate hike in a bid to tamp-down inflation and stem portfolio outflows. Five of them expect to see rates rise as much as 200 bps. You can expect to hear about the decision late in the afternoon.

Banque Misr has no plans to issue fresh CDs at a higher rate should the central bank raise rates today, Banque Misr Chairman Mohamed El Etreby told Sky News Arabia. Banque Misr and the National Bank of Egypt are paying an “extremely high cost” for the 18% CDs launched in the aftermath of March’s devaluation and 100-bps rate hike. Savers have so far plowed c. EGP 662 bn into the high-interest certificates since they were launched on 22 March, according to recent figures.

What’s next with the government’s plan to get out of as many as 79 industries, opening the door to greater private sector involvement in the economy? Reaction in the business community was broadly positive among the senior folks with whom we spoke yesterday, with the primary concern (at this very early stage) being the pace of implementation. While the Madbouly cabinet has yet to release its strategy, the AMAY report we picked up yesterday has been followed by a report from Hapi Journal that includes what appears to be a full draft of the position paper. Have a read for yourself here (pdf) and keep your eyes peeled for more on this in the coming weeks.

And policymakers at the highest level will need to remember: Business doesn’t just want a roadmap of where it is “welcome” to invest — we need red tape to simply fade away. Speed and consistency in the implementation of policy (from the issuance of permits of all forms to regulatory approvals for M&As, listings and other transactions) are absolutely key for businesses deciding where, when and how to invest and create jobs.

WHAT’S HAPPENING TODAY-

The Consumer Protection Agency will today decide whether to raise the price cap on cars by 5-10% after distributors and dealers made an official request in light of rising operating costs, Al Mal reports. As of last month, individual car dealers are no longer able to set prices above those listed by official agents, a rule that was introduced in response to large price hikes that occurred following the EGP devaluation in March. Dealers that sell at higher rates face fines of up to EGP 2 mn.

The auto industry hasn’t been happy with the cap: Some dealers have been forced to close showrooms to stem losses caused by the price cap, industry figures have said. Others have been using loopholes to sell at higher prices or refusing to sell their stock at all.

REMEMBER- Dual-fuel vehicles sold through the government’s swap scheme just got a lot more expensive: The government is allowing companies to hike prices by 19-45% in response to rising inflation. This means that people who applied to the state-subsidized scheme after 24 April will pay up to EGP 75k extra for their new vehicles.

Green finance and COP27 is the theme of the British Egyptian Business Association’s (BEBA) annual business mission to the UK, which started Tuesday and wraps up tomorrow. Headlined Road to COP27: bridging the implementation and financing gap, the mission includes a series of roundtable discussions, private meetings and seminars featuring business leaders, cabinet ministers and policymakers. You can check out the agenda here (pdf).

EGX launches IR training program: The EGX today wraps up a three-day workshop for investor relations officers at EGX-listed companies, according to a statement (pdf), marking the launch of a training program for IR officers meant to help them communicate better with shareholders and boost the performance of their companies’ shares. Need some practical help building your IR program? Contact Moustafa Taalab at InktankIR, our parent company.

ON THE HORIZON-

Households are set to see their electricity bills rise from July — and you’ll find out exactly how much in the next two weeks: The Electricity Ministry will decide on electricity tariffs for the coming fiscal year within two weeks, Al Borsa reported. The newspaper reports that proposals would see low voltage prices paid by households, stores, and small and micro businesses rise as much as 40% to EGP 1.37 per KWh from EGP 0.98/KWh currently.

Prices will remain the same for everyone else: Prices for medium, high, and ultra-high voltages — used by industry and other businesses — will remain frozen at the current price until 2025, sources told the newspaper. This will mean the average price would rise 2% to EGP 1.94 per KWh from EGP 1.69/KWh currently.

Another sign of warming relations with Turkey? Turkish Finance Minister Nureddin Nebati will visit Egypt on 1 June to attend the annual meeting of the Islamic Development Bank, state broadcaster TRT Haber reported yesterday. This would be the first time a Turkish minister has traveled to Egypt since President Abdel Fattah El Sisi came into office in 2013.

Over the past year the two countries have been trying to normalize ties, but progress has been slow despite several rounds of face-to-face talks. Diplomatic relations were severed after the Muslim Brotherhood was removed from office nine years ago.

THE BIG STORIES ABROAD-

US stocks saw yesterday their biggest single-day drop since June 2020 after poor earnings from retailers reignited investors’ fears about the impact of surging inflation on the economy. The sell-off wiped out three days of gains, resuming the downward trend that has seen the Nasdaq fall into bear territory and the S&P 500 enter a correction. The S&P tumbled 4% during trading, with retailer Target posting its biggest loss since 1987 (-24.9%) after it warned that inflation would hit profits. The tech-heavy Nasdaq was the hardest hit, falling 5.1% as the rally in growth stocks came to an abrupt halt.

More recession talk — this time from Goldman’s Blankfein: The risk of the US entering a recession is “very, very high,” and US consumers and businesses should be prepared, former Goldman Sachs Group Senior Chairman Lloyd Blankfein told CBS News. His warning comes as the US Federal Reserve tightens policy to try to curb soaring inflation, triggered by pandemic-era government stimulus, supply chain issues, ongoing lockdowns in China, and the Russia-Ukraine conflict.

The news is everywhere in the financial press this morning: Reuters | AP | Bloomberg | FT | WSJ | CNBC.

Turkey blocks Finland, Sweden Nato bids: Hopes in Stockholm and Helsinki of a swift entry into Nato were dashed yesterday after Turkey blocked a vote on opening accession talks with the two countries, the Financial Times reports, citing a person familiar with the matter. Ankara’s move came during a meeting of Nato ambassadors yesterday aiming to start talks after the two countries formally applied to join the military alliance.

No doesn’t mean no: A Turkish official confirmed the news to the salmon-colored paper, but stressed that his country “is not ruling out the prospect of Sweden and Finland joining.” Turkey has accused the Scandinavian nations of supporting Kurdish militants and President Recep Tayyip Erdogan is demanding they extradite 30 “terrorists.”

CIRCLE YOUR CALENDAR-

PSA: Tourism registration for Hajj has been extended: You can now register for this year’s Hajj through tourism companies until next Monday, 23 May, after the deadline was pushed from this Friday, 20 May, the Tourism Ministry said in a statement.

The Islamic Development Bank will hold its 2022 annual meetings in Sharm El Sheikh from 1-4 June under the slogan “post-pandemic recovery: resilience and sustainability,” according to a statement from the Planning Ministry. Several Egyptian ministries and representatives from the bank’s 57 member countries and other financial institutions are set to attend the meetings.

Venture capital 101: The Egyptian Private Equity Association (EPEA) is hosting a paid crash course in all things venture capital at the Zamalek Marriott on 21-23 May. Led by Avanz Capital Egypt MD Hany Assaad, the three-day course will cover everything you need to know about Planet VC, from fund structures and portfolio-building to due diligence and valuations.

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

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ECONOMY

Egypt negotiating “limited” IMF loan -Amer

Amer dials back expectations for large IMF package: Negotiations between Egypt and the IMF for a fresh assistance program are focusing on a “limited” amount of funding, Central Bank of Egypt Governor Tarek Amer told Bloomberg Asharq on the sidelines of a meeting of the Union of Arab Banks yesterday (watch, runtime: 0:20).

REFRESHER- The government has been in talks with the IMF since March for a new assistance program to help it mitigate the impact on our economy of Russia’s war in Ukraine and rising interest rates around the world. The talks were said to be in the technical phase in April, though Prime Minister Moustafa Madbouly said earlier this week that it could still take months before an agreement is reached.

We could be looking at USD 3-4 bn: Fakhry El Fiky, head of the House Planning Committee, said last month that Egypt could be in line for a precautionary and liquidity line worth around USD 3.5 bn.

Why a small program? Egypt has exhausted its quota. Egypt has borrowed USD 20 bn from the IMF since 2016, and though it started to pay back the first USD 12 bn facility last year, it remains far beyond its quota. This means that further borrowing will be under exceptional access criteria, requiring us to comply with more stringent conditions. “Egypt has taken a big allocation so [the loan] will not be big,” Amer said at the Union of Arab Banks meeting yesterday. “We’re going to the IMF to benefit from structural reforms.”

Here’s what could be on the table: “A commitment to continued exchange rate flexibility will likely be a key pillar of any programme, alongside primary balance targets that set debt on a sustainable downward path, and a greater commitment to longer-term structural reforms that have so far gained little traction,” Patrick Curran, senior economist at Tellimer Research, wrote in a note earlier this month.

Precursors to financing? The CBE in March allowed the EGP to slide roughly 18% against the USD. The negotiations have also coincided with the government announcing new pledges to privatize a swathe of industries, doubling the private sector’s share of the economy over the next three years.

What happens next depends on how the IMF assesses the sustainability of our debt position: Comments made recently by IMF head Kristalina Georgieva raised the possibility that the IMF could declare Egypt’s debt as unsustainable. “We have to press for debt restructuring … we will sit with Sri Lanka, we will sit with Egypt, we will sit with Tunisia, and we will discuss what realistically needs to be done," she said in an interview prior to last month’s Spring Meetings. “This raises the risk that the IMF may classify Egypt’s debt as unsustainable and require a restructuring to unlock Fund support,” Curran wrote. The government expects debt payments to eat almost half its revenues in the coming fiscal year.


Amer defends CBE record: Speaking to a room of bankers and monetary policymakers at the UAB meeting, Amer used the occasion to outline how he sees the CBE’s record responding to a succession of domestic and global economic crises. “Egypt was subject to a large exodus of international investors and pressure caused by inflation, prompting the CBE to take a set of measures such as using part of the cash reserves to support the markets and issuing certificates with an 18% interest rate,” he said during his address (pdf).

From the speech:

  • He defended the devaluation of the EGP in March, saying that it resulted in a 30% increase in foreign exchange revenues, though it wasn’t immediately clear what he was referring to. The decision to maintain exchange-rate stability through much of the past year had protected household, corporate and government finances from a potential currency shock, he said, voicing optimism that the EGP will become more attractive than other currencies over the medium term;
  • Amer went to considerable lengths to say that despite “imported inflation,” Egyptian manufacturers are in an enviable position, with access to capital and affordable energy that makes them the envy of many of their global peers. It is up to the business community to “take advantage of Egypt’s encouraging investment climate and the facilities provided by the state to productive industry.”
  • Amer denied there is a liquidity crisis in the banking system, saying FX liquidity has risen by 68%.

Cabinet and Ittihadiya have recently met with Amer and senior officials at the central bank to discuss manufacturer’s problems managing inflows of production inputs and raw materials since the central bank switched from documentary collection to letters of credit to cover imports.

DEBT WATCH

CIRA could be the first to tap the future flow securitization market

CIRA could issue Egypt’s first future flow securities: EGX-listed private sector education outfit CIRA is in talks with the Financial Regulatory Authority (FRA) to issue EGP 1.5 bn worth of future flow securities, a source with first-hand knowledge of the transaction told Enterprise yesterday. The securities will be backed by receivables from the company’s educational services. The company could take the issuance to market within four months, the source said, adding that talks remain at an early stage.

Advisors: EFG Hermes is financial advisor for the issuance, while Zulficar and Partners is acting as legal advisor.

Wait, what’s future flow securitization again? Future flow securitization differs from traditional securitization in that it allows the securitization of payments that aren’t yet on the company’s balance sheet, giving companies access to liquidity without needing a big portfolio of accounts receivables (think: home and car financing, leasing portfolios and the like). Future income — whether from club memberships, phone bills, utility payments, tuition fees or rents — is packaged into securities and offered to investors to raise capital. This gives public- and private-sector companies such as utilities providers, healthcare companies, telecom players, and education outfits a new way to access liquidity.

Contact Financial Holding is also in the running to be the first in the country to securitize future flows on behalf of “one of the largest corporate firms in Egypt,” CFO Ayman Elsawy told us earlier this year. The company is expected to issue the securities in 2H 2022, he said. Contact Financial (formerly Sarwa Capital) was also responsible for Palm Hills Developments’ maiden sukuk issuance earlier this year.

Background: Amendments to the Capital Markets Act that introduce future flow securitization were signed into law in March, after the FRA approved the instruments for use last May.

M&A WATCH

Shell subsidiary acquires ExxonMobil’s offshore Mediterranean block

Shell subsidiary BG International is acquiring 100% of ExxonMobil’s North East El Amriya offshore gas block under a farm-out agreement, according to a press release (pdf) from Shell. BG will become the sole operator of the block once the transaction — which is pending government and regulatory approvals — is complete. It plans to begin drilling the first well during the first half of next year. Shell Egypt declined to disclose the value of the transaction or the block’s expected production capacity when we asked yesterday.

SOUND SMART- A farm-out agreement is when a company that owns the right explore for (or produce) oil or natural gas lets another party do the actual work. Think of it this way: You have the right to bake and sell Brand X muffins in Egypt — but you don’t have the money or interest in doing so. Under a farm-out agreement, you would assign the rights to a second company that would be allowed to bake and sell Brand X muffins. You (the “farmor”) would typically get an up-front payment from the “farmee” — and you’d get a royalty, cut of sales or percentage of profits. The farmee would also have to meet specific targets or spending requirements. Farm-out agreements are common in the oil, gas and mining industries.

Exxon owned the block for less than 2.5 years: The US oil company acquired the block at the end of 2019 and had planned to invest some USD 220 mn to drill four wells in the area.

What they said: “The proximity of this block to our existing assets and other exploration blocks Shell holds in the area will help us accelerate our offshore ambitions,” Chairman and Managing Director of Shell Egypt Khaled Kacem said. “This agreement strengthens our portfolio and is a significant milestone along the delivery of our strategy to build a solid gas position in the country.”

Shell has upped its presence in the Med over the last three years: Shell and Malaysia’s Petronas were granted two other concessions close to Amriya — North Sidi Gaber and Al Fanar — in 2020. Shell also last year offloaded its onshore oil and gas assets in the Western Desert, shifting its focus to projects including its West Delta Deep Marine offshore gas concession in partnership with Petronas — which is also right next door to the newly acquired block.

CABINET WATCH

Sphinx International Airport to open in July

Sphinx International Airport near the Giza pyramids will open in mid-July, cabinet said in a statement yesterday. The airport is part of the state’s plans to boost tourist arrivals and provide easier access to archaeological sites such as the pyramids and the new Grand Egyptian Museum. An expansion of the airport, which began pilot operations in January 2020, will raise its capacity to 900 passengers per hour, Civil Aviation Minister Mohamed Manar said during the weekly cabinet meeting.

Approved in yesterday’s meeting:

  • An EUR 83 mn loan from the African Development Bank, agreed last year, to help finance the second phase of the government’s Electricity and Green Growth Support Program;
  • An EUR 600k grant from the European Bank for Reconstruction and Development to help finance Alexandria’s Abu Qir metro project.

MANUFACTURING

Elsewedy Electric opens Africa’s first busway system factory

Elsewedy Electric has launched Africa’s first busway epoxy system factory in Tenth of Ramadan City, according to a statement (pdf). The factory will cost some USD 10 mn to build and will come online in mid-July, Investor Relations Director Noha Agaiby Enterprise yesterday. Elsewedy says it will be one of the largest facilities of its kind in the Middle East, and will manufacture the housing, conductors, insulators, and electro-plating used in busway electrical systems.

SOUND SMART- Bus-what system? A busway system distributes electricity around buildings through overhead busbars (conductors) that are enclosed in housing. They typically take less time to install than a traditional cable assembly and can be more energy efficient because they do not hinder airflow as some cable hotspots do. The systems are usually used in heavy duty, large-built structures such as high-rise buildings, commercial and residential centers, hospitals, airports, data centers and buildings that have high security standards.

Elsewedy will export half of the factory’s products and sell the other half in the local market, CEO Ahmed Elsewedy told Enterprise, without disclosing the factory’s production capacity.

More expansion ahead: Elsewedy Electric is investing an undisclosed amount to expand in Egypt, the Gulf, Africa, Latin America, Pakistan and Indonesia, Elsewedy told Enterprise, and is working to up capacity at its existing cable factories.

OTHER MANUFACTURING NEWS-

Packaging company Taiba Pack will spend EGP 300 mn to build a new plant to make packaging for the pharma industry, Al Borsa quotes Chairman Ahmed Sharara as saying. The company hopes to break ground this year and have it up and running within two years. The factory will be built in either Badr City or the Alf factory area in East Cairo.

STARTUP WATCH

Healthtech startup Doxx raises USD 1.5 mn seed funding

Egyptian healthtech startup Doxx raised USD 1.5 mn in a seed round led by international VC outfit Openner, with participation from Egypt’s Elevate Private Equity, Doxx announced in a press release (pdf). The funds will help develop Doxx’s digital platform, which connects patients to various healthcare providers including labs, pharmacies and ins. companies.

About Doxx: Founded by Sherif Broudy (LinkedIn) in 2021, Doxx’s integrated healthcare platform allows patients to easily access and share their medical records across different providers, book at-home, online, and in-clinic services from doctors and nurses, and order tests and meds. Doxx currently has 2.6k doctors, 18 polyclinics, 52 pharmacies, 26 medical labs, and 10 diagnostic centers on its app. It plans to expand its meds delivery services over the next few months to cover several governorates outside Greater Cairo.

More healthcare investments from Elevate to come: This marks Elevate’s first in a “series of investments” via its USD 380 mn healthcare platform it set up with Misr Capital last year, Elevate CEO Tarek Moharram said in the release. The fund aims to invest in healthcare in Egypt and sub-Saharan Africa and has been billed as the biggest specialist fund of its kind on the continent.

ALSO FROM PLANET STARTUP-

Women entrepreneurs in Egypt will get support from HSBC: HSBC will lend USD 1 bn to female-led startups in Egypt and 10 other markets over the next year via a new fund, the bank said a press release (pdf) yesterday. Egypt will be the only country in the Middle East, Africa and Turkey (MENAT) that will receive money from the Female Entrepreneur Fund, which will be deployed alongside a separate initiative that will provide courses, advice and pitching opportunities to women in the startup scene.

The launch in Egypt “reflects our commitment to provide female entrepreneurs with the opportunity to grow as part of our support to the SME sector in the country,” said Yasmin Farid, head of SMEs and business banking at HSBC Egypt.

Egypt lacks funds targeted at female entrepreneurs, though it has a number of programs and accelerators that target women exclusively,such as ITIDA’s She Program.

INVESTMENT WATCH

Benya Group to set up Saudi arm by end of 2022

Benya eyes Saudi expansion by end of 2022: IT infrastructure contractor Benya Group plans to set up an investment arm in Saudi Arabia by the end of the year, a company representative told Enterprise. The move will mark Benya’s first expansion in the Gulf region.

The Egyptian company is also pushing into Africa: Benya is currently awaiting a license to build and extend a telecom network in the Democratic Republic of the Congo, and has started working with contractors who will supply fiber cables as part of an ongoing USD 500 mn agreement to set up a national fiber optic network, company representatives confirmed to Enterprise. The company has also submitted an application to DRC regulators for a license to set up a company to construct and operate shared mobile towers, Benya Group Chairman and CEO Ahmed Mekky told Enterprise.

Benya is also partnering with Swiss cable developer and provider R&M to collaborate on infrastructure projects in Egypt and Africa, as part of the company’s expansion plans, Benya said in a press release sent to Enterprise yesterday. The company recently launched a USD 50 mn venture capital fund, dubbed Benya Ventures, that will focus primarily on tech, IoT and AI startups in Africa.

MOVES

Banque Misr’s El Etreby named UAB head: Banque Misr Chairman Mohamed El Etreby (bio) has been selected to succeed Sheikh Mohamed El Jarrah Al Sabbah as the head of the Union of Arab Banks (UAB) for a three-year term, according to a statement. Banque du Caire’s Tarek Fayed was also appointed to serve on the board for a three-year term.

KUDOS

Manal Rostom (LinkedIn) has become the first Egyptian woman to climb Mount Everest. Rostom spent two months hiking to the top of the world’s tallest mountain above sea level, Arab News reported. The athlete gained international prominence in 2015 when she became Nike’s first veiled model and coach.

The Egyptian Competition Authority (ECA) got an “honorable mention” in the 2022 competition advocacy awards run by the World Bank and International Competition Network (ICN), according to an ICN tweet. The ECA was recognised for its “effective public procurement during the covid-19 crisis through a wide awareness campaign, greater cooperation with the public procurement agency, and a stronger enforcement with intelligence,” ICN said.

enterprise

LAST NIGHT’S TALK SHOWS

Still dominating airwaves yesterday: A leaked draft of the government’s ownership policy, which outlines the state’s plan to fully withdraw from as much as 79 industries over the new three years, led the conversation on Ahmed Moussa’s Ala Mas’ouleety (watch, 52:26).

Working groups have been formed to implement the state’s ambitious plans to attract bns in private investment and increase the private sector’s role in the economy, a cabinet statement said yesterday. Al Hayah Al Youm had coverage (watch, runtime: 6:01).

Covid got a mention: An order by President Abdel Fattah El Sisi to continue the establishment of plasma collection and derivatives centers also received coverage on Al Hayah Al Youm (watch, runtime: 0:56). The president also ordered officials to continue vaccination campaigns (watch, runtime: 5:29).

EGYPT IN THE NEWS

Leading the conversation on Egypt in the international press: Twenty-seven British lawmakers have submitted a letter to UK Foreign Secretary Liz Truss urging the government to press for the release of imprisoned activist Alaa Abdel Fattah, the BBC reported. Abdel Fattah gained UK citizenship in mid-April. The appeal by British MPs came after the Interior Ministry transferred Abdel Fattah — who has been on a hunger strike since early April — to Wadi Al Natrun correctional facility at the request of the National Council for Human Rights.

Also making headlines:

ALSO ON OUR RADAR

valU, Majid Al Futtaim launch consumer finance product

valU, MAF partner on consumer finance: EFG Hermes’ buy-now-pay-later platform valU is partnering with Majid Al Futtaim (MAF) to introduce its ‘Sha2labaz’ consumer finance product at MAF’s flagship Mall of Egypt and City Centre Almaza malls, according to a statement (pdf). Through Sha2labaz, shoppers can redeem the value of their purchases at MAF retail outlets for cash, which they then pay back to valU in installments over six months to five years. valU is aiming to make EGP 5 mn in sales per day from ‘Sha2labaz’ during August and September, CEO Walid Hassouna told Al Mal.

Saudi tech firm Brmaja’s Egypt-based subsidiary Brmaja Innovation is looking to list 35% of its shares on the Nilex within the next few months, investment director Ahmed Said told Enterprise. The company said last year that it was aiming for an IPO on the EGX in March, but now tells us that is a longer-term ambition. The group plans to move its headquarters from the KSA to Egypt within the next three months, Said added. Brmaja’s Egypt arm is also still planning to acquire its Saudi parent company in a reverse acquisition, and is currently in the process of getting the necessary approvals from both countries.

Mubarak family cleared of corruption charges -Gamal Mubarak: The Mubarak family have been cleared of all charges of corruption pressed against them by EU courts and others over the past decade, the son of late president Hosni Mubarak, Gamal, said in a video statement Tuesday (watch, runtime: 20:55). The family’s public statement was prompted by what Mubarak called “a consistent international media campaign of false allegations of corruption.” “My family has decided that we simply cannot stay silent anymore in the face of such persistent defamatory reporting. It is time that the family responds, and directly,” he said.

This comes nearly a month after Swiss prosecutors dropped a decade-long probe into alleged money laundering by the family. The Swiss decision followed.a ruling by the EU General Court to uphold the annulment of EU sanctions against the family, unfreezing mns in assets. You can read a transcript of the statement here (pdf).

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

  • Egyptian corn farmers will soon be able to sell their produce via contract farming agreements at a minimum price of EGP 6k per ton. (Agriculture Ministry)

PLANET FINANCE

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The World Bank will deploy an extra USD 12 bn to combat the “devastating effects” of rising food insecurity around the world, driven by Russia’s invasion of Ukraine and climate change, it said yesterday. The funds will bring the Bank’s total funding for food security projects over the next 15 months to USD 30 bn. Supply shortages caused by the war in Ukraine, severe weather and growing food protectionism have cause global food prices to surge to record highs this year, piling pressure on commodity importers and raising fears of a global food crisis.

The Public Investment Fund (PIF) wealth fund has taken a 5% stake in Nintendo in its latest gaming push, Reuters reports. The fund has taken an interest in the gaming industry recently, with multiple acquisitions of stakes including in US-based Activision, Nexon, and Capcom. The fund has also launched its own video game and e-sports company, Savvy Gaming.

The US isn’t going to continue allowing Russia to pay off its foreign debt: Russia could finally default on its foreign-held debt, Bloomberg reports, as the US looks set to next week close a loophole that has allowed Moscow to continue paying coupons on its foreign bonds despite sweeping sanctions. Any default would mark Russia’s first in a century, but it's unclear what it would actually mean for the country — which has insisted that it is willing and able to make the payments on its USD 20 bn of sovereign foreign-held debt, and will go ahead and pay in RUB if USD transfers are blocked.

Also worth noting:

  • Google’s Russian subsidiary will file for bankruptcy after authorities seized the company’s bank account, making operations “untenable.” (Reuters)
  • French container giant CMA CGM will become a leading shareholder in Air France-KLM, in a partnership that will see the two firms combine their cargo networks and cross-sell their freight capacity. (Financial Times)

Up

EGX30

10,468

+0.3% (YTD: -12.4%)

None

USD (CBE)

Buy 18.22

Sell 18.31

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USD at CIB

Buy 18.24

Sell 18.31

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Interest rates CBE

9.25% deposit

10.25% lending

Up

Tadawul

12,713

+0.2% (YTD: +12.7%)

Up

ADX

9,908

+1.4% (YTD: +16.7%)

Down

DFM

3,437

-0.9% (YTD: +7.6%)

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S&P 500

3,924

-4.0% (YTD: -17.7%)

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FTSE 100

7,438

-1.1% (YTD: +0.7%)

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Euro Stoxx 50

3,691

-1.4% (YTD: -14.1%)

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Brent crude

USD 109.11

-2.5%

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Natural gas (Nymex)

USD 8.24

-1.5%

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Gold

USD 1,814.80

-0.1%

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BTC

USD 29,107

-4.6% (YTD: -36.8%)

THE CLOSING BELL-

The EGX30 rose 0.3% at yesterday’s close on turnover of EGP 644 mn (25.5% above the 90-day average). Local investors were net buyers. The index is down 12.4% YTD.

In the green: Ibnsina Pharma (+3.2%), Orascom Development Egypt (+2.0%) and MM Group (+1.5%).

In the red: Rameda (-1.8%), Fawry (-1.8%) and Elsewedy Electric (-1.5%).

Asian markets are picking up where US stocks left off: Markets across the region are in the red this morning as fears over global growth and rising inflation continue. It’s looking like it’s going to be another torrid day in Europe and the US today if the futures markets are anything to go by. A sea of red.

MY MORNING ROUTINE

Hany Assaad, Managing Director, Avanz Capital Egypt: 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 Hany Assaad (LinkedIn), co-founder and chief portfolio risk officer of Avanz Capital Management, and managing director of Avanz Capital Egypt.

My name is Hany Assaad, and I’m co-founder & chief portfolio risk officer of Avanz Capital Management, and the managing director of Avanz Capital Egypt, an Egyptian asset management company and a subsidiary of Avanz Capital, established to manage Egypt's fund of funds and other specialist private capital funds in Egypt.

Before co-founding my company, I was the chief investment officer of the International Finance Corporation’s (IFC) Private Equity and Investment Funds. I oversaw IFC’s funds business for new investments and portfolio in the Middle East and North Africa, East Africa, South Asia, Central, Eastern and Southern Europe and Central Asia. I was responsible for selecting IFC’s investment criteria and screening its transaction pipelines, overseeing the due diligence teams, negotiating investment terms, and presenting investment recommendations to IFC’s board of directors.

Egypt lags behind its peers in terms of private capital investments, and our goal at Avanz Capital Egypt is to increase those investments. Avanz Capital Egypt recently established Avanz Manara for Private Equity, an investment holding company established under the oversight of the FRA. Avanz Manara aims to support the growth of SMEs in Egypt and is designed to help Egyptian banks meet the Central Bank of Egypt’s requirements for providing financing to Egyptian SMEs. Bringing in local institutional investors is paramount and will ultimately attract foreign investors as well. We are also working in partnership with fund managers and companies in Egypt to work toward meeting Sustainable Development Goals through our investment activities.

My morning routine is very important to me: I usually wake up at 7:30am and use the first hour of my day to exercise, and figure out my program for the rest of the day. Before I get to work at 8:30am — usually during my commute — I read Enterprise and The Economist to catch up on the news. Enterprise, for me, is the most important source when it comes to local news. Also, since our firm is global and operates in different time zones, I always have a reservoir of emails and messages from my colleagues in Asia, so I have to catch up on that as well in the morning.

I focus on three things during any given work day: I’m always in meetings, whether physical meetings or virtual ones. I regularly talk to institutional investors to get them to invest in the company. Secondly, I meet with fund managers and focus on what we call the “due diligence of funds.” This part of my job includes a focus on reviewing the funds they are going to be investing in, thoroughly studying everything related to that fund, and helping them set up the funds from a management perspective. I dedicate the third part of my day to the Fund Manager Development Program, a capacity building program we are developing in partnership with a number of Egyptian institutions, which aims to help fund managers achieve best practices in fund management. The primary goal of the program is to educate and empower institutional investors and fund managers, because we believe this will ultimately help Egypt become an even more attractive destination for investors. We had the program’s first three-day masterclass in February at The St. Regis Hotel in Cairo. The program was organized by EPEA and AVCA, and our sponsors included the National Bank of Egypt, Misr Ins. Company, among others.

To stay focused and organized, I constantly write down notes. This enables me to track my progress with regard to my to-do list. I find this approach very practical.

To relax, and switch off from work, I spend time with my friends. I also love to go sailing. Sailing is a personal passion of mine. Because I haven’t been getting a lot of downtime recently, I don’t get to sail as much as I’d like to. I usually go sailing on Lake Ontario in the summer.

One thing that I do everyday, aside from attending lots of meetings, is constantly researching the history of ancient Egypt. I was trained as an Egyptologist, and this is kind of my secret passion. I’m fascinated by their culture. Ancient Egyptians created an extremely inclusive society and I’m always blown away by how they managed to create one, united nation. They created a unified language and national identity to bring all Egyptians together to manage the volatile Nile River, increase the amount of arable land, and thereby increase the country’s collective wealth. Another enthralling thing about ancient Egypt is the fact that the mathematics they used is similar to the mathematics used by modern computers. I believe we can learn a great deal about today’s world by studying our ancestors' way of life.

The last great thing I read was What We Owe Each Other. The book’s author, Minouche Shafik, is a friend of mine. Minouche is an Egyptian policy expert who had a stellar professional career. (Editor’s note: We sat down with Dame Minouche back in 2019 to discuss fundamental concepts that impact societal and economic growth.) She provides pragmatic solutions to the world’s current problems. It’s a fascinating book that offers a better social contract and explains how we can build a better, more inclusive world together. I also loved reading The Rosetta Stone: The Story of the Decoding of Hieroglyphics. The book brilliantly delves into the complexities of deciphering ancient Egyptian texts.

CALENDAR

OUR CALENDAR NOW APPEARS in two sections:

  • Events with specific dates or months are right here up top
  • Events happening in a quarter or other range of time with no specific date / month appear at the bottom of the calendar.

MAY

13-22 May (Friday-Sunday): PSA World Championships, Cairo.

Mid-May: The trial period to extend the Advance Cargo Information (ACI) system to air freight.

16-19 May (Monday-Thursday): HC Brokerage and Avior Capital Markets virtual conference investor conference.

19 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

19 May (Thursday): EFG Hermes’ general shareholders’ meeting to discuss, among several things, a capital increase of EGP 973 mn to finance the distribution of bonus shares to the company’s minority shareholders.

23 May (Monday): Lynx Strategic Business Advisors are hosting a webinar titled “Introducing Egypt’s New E-Receipt System.”

23-24 May (Monday-Tuesday): The International Conference on Alternative Financing Opportunities in Egypt … Towards Sustainable Financing for Development, Marriott Hotel, Zamalek.

25 May (Wednesday): The deadline for private companies to pre-register ahead of bidding for the second phase of the PPP national project to establish and operate 1k language schools.

25-26 May: (Wednesday-Thursday): Fintech gathering FIN Expo Egypt is taking place at Intercontinental Citystars, Cairo, Egypt.

30-31 May (Monday-Tuesday): Egypt Can with Industry, Cairo, Egypt.

31 May (Tuesday): Last day for EGX-listed companies to file 1Q2022 earnings

31 May (Tuesday): The application deadline for ITIDA’s annual Export IT program.

31 May (Tuesday): Extended deadline for EGX-listed companies to disclose 1Q 2021 earnings.

May: Investment in Logistics Conference, Cairo, Egypt.

May: General Authority for Land and Dry Ports to issue the conditions booklet for the tender to establish and operate the Tenth of Ramadan dry port.

May: Egypt to sign contracts for second and third high-speed rail lines with Siemens by the end of the month.

May: Government to announce its automotive strategy by the end of the month.

JUNE

1-4 June (Wednesday-Saturday): The Islamic Development Bank will hold its 2022 annual meetings in Sharm El Sheikh.

5-7 June (Sunday-Tuesday): Africa Health ExCon, Al Manara International Conference Center, Egypt International Exhibitions Center, and the St. Regis Almasa Hotel, New Administrative Capital.

5 June (Sunday): GB Auto is hosting an extraordinary general assembly meeting (pdf).

9 June (Thursday): European Central Bank monetary policy meeting.

14-15 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15-18 June (Wednesday-Saturday): St. Petersburg International Economic Forum (SPIEF), St. Petersburg.

16 June (Thursday): End of 2021-2022 academic year for public schools.

21-22 June (Tuesday-Wednesday): Aswan Forum for Sustainable Peace and Development, Cairo.

23 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

27 June-3 July (Monday-Sunday): World University Squash Championships, New Giza.

30 June (Thursday): June 30 Revolution Day, national holiday.

30 June (Thursday): Deadline for bids for National Democratic Party HQ redevelopment contract.

June: Egypt will launch a unified ticketing system for all means of transport at the Adly Mansour Interchange Station.

June: Polish President Andrzej Duda will visit Egypt to coordinate ways to ship Ukrainian wheat to Egypt amid the war in Ukraine.

JULY

July: A law governing ins. for seasonal contractors will come into effect.

July: Fuel pricing committee meets to decide quarterly fuel prices.

1 July (Friday): FY 2022-2023 begins.

1 July (Friday): Official rollout of e-receipt system begins.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

21 July (Thursday): European Central Bank monetary policy meeting.

26-27 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

30 July (Saturday): Islamic New Year.

Late July – 14 August: 2Q2022 earnings season.

AUGUST

August: Work to extend the capacity of the Egypt-Sudan electricity interconnection to 600 MW to be completed.

18 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

SEPTEMBER

September: Egypt will display its first naval exhibition with the title Naval Power.

September: Central Bank of Egypt’s Innovation and Financial Technology Center to launch incubator for 25 fintech startups.

8 September (Thursday): European Central Bank monetary policy meeting.

18 September (Sunday): Deadline for brokerage firms, asset managers and financial advisors to register with the Egyptian Securities Federation.

20-21 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

22 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

26–27 September (Monday-Tuesday): The Africa Women Innovation and Entrepreneurship Forum (AWIEF) at the Cairo Marriott Hotel.

OCTOBER

October: World Bank and IMF annual meetings in Washington, DC

October: Fuel pricing committee meets to decide quarterly fuel prices.

1 October (Saturday): Use of Nafeza becomes compulsory for air freight.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday, national holiday.

18-20 October(Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

27 October (Thursday): European Central Bank monetary policy meeting.

Late October – 14 November: 3Q2022 earnings season.

NOVEMBER

November: Cairo Water Week 2022.

1-2 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

4-6 November: The Autotech auto exhibition kicks off at the Cairo International Exhibition and Convention Center.

7-18 November (Monday-Friday): Egypt will host COP 27 in Sharm El Sheikh.

21 November-18 December (Monday-Sunday): 2022 Fifa World Cup, Qatar.

13-14 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 December (Thursday): European Central Bank monetary policy meeting.

DECEMBER

22 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

JANUARY 2023

January EGX-listed companies and non-bank lenders will submit ESG reports for the first time.

January: Fuel pricing committee meets to decide quarterly fuel prices.

EVENTS WITH NO SET DATE

1H2022: Target date for IDH to close its acquisition of 50% of Islamabad Diagnostic Center.

1H2022: e-Finance’s digital healthcare service platform, eHealth, will launch its services.

1H2022: The government will respond to private companies’ bids to build desalination plants.

1H2022: Egypt’s second corporate green bond issuance expected to be announced.

14 March-30 June: The “Escape to Egypt” exhibition at the Coptic Museum, in celebration of its 112th anniversary.

2Q2022: The Sovereign Fund of Egypt will invest in two companies in the financial inclusion and non-banking financial services sectors.

End of 2Q2022: The Financial Regulatory Authority’s new Ins. Act should be approved.

End of 2Q2022: Door for bidding for the contract to redevelop the site of the former National Democratic Party HQ to close.

End of 1H2022: Emirati industrial company M Glory Holding and the Military Production Ministry will begin the mass production of dual fuel pickup trucks that can run on natural gas.

2H2022: The inauguration of the Grand Egyptian Museum.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H2022: The government will have vaccinated 70% of the population.

3Q2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

End of 2022: e-Aswaaq’s tourism platform will complete the roll out of its ticketing and online booking portal across Egypt.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish above between the actual holiday and its observance.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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