AM — We’re getting 180k tons of wheat from India + gov’t looks at ways to make our wheat stretch further

We have three working days left to the long weekend, ladies and gentlemen. And yes, we’re counting every day. On that note…

Bank holiday confirmed: The Central Bank of Egypt (CBE) has confirmed that it will be off this coming Thursday in observance of the 30 June Revolution. Prime Minister Moustafa Madbouly said over the weekend that Thursday will be a national holiday for the public and private sector.

THE BIG STORY here at home: After a brief lull, wheat news is back at the top of the agenda, after we secured some (though not all) of the Indian grain that we’d been hoping to get past the country’s recently introduced export ban. Meanwhile, the state is looking at a range of innovations to make our local wheat stretch further — including making more flour from the same amount of grain, and making flour from sweet potato.

Privatization and FDI continues to be a dominant theme, with more potential investments coming from our friends in KSA. This time, we appear to have garnered their sovereign wealth fund’s interest in tourism and in aluminum. We have more in this morning’s Investment Watch story.

On that front, Prime Minister Moustafa Madbouly discussed all things privatization with Planning Minister Hala El Said and Sovereign Fund of Egypt CEO Ayman Soliman yesterday, according to a cabinet statement. El Said discussed her ongoing negotiations for further investments with regional sovereign funds, while Soliman discussed setting up the new sub-fund that will manage the sale of state-owned companies.

The government’s public consultations over its privatization plans continued yesterday with the electronics industry. In attendance were top executives of manufacturers, including SICO, academics and the state’s Arab Organization of Industrialization among others.

The key takeaway: Much much more is needed to get this fledgeling industry off the ground. This would require incentives from the state, and even investment to crowd in the private sector.

What sessions, you may ask? Every Sunday and Tuesday will see workshops on how privatization plans will affect specific industries. Look for detailed coverage on the talks in EnterpriseAM or across our various industry features.

CATCH UP on yesterday’s edition of Inside Industry where we talked to FMCG business leaders about what they think the state’s plans to privatize the sector. They also discuss with us what else needs to happen in the food sector for the privatization push to play out well. From pricing, to strategy, to changing policy and regulations in the sector, the executives we talked to see positive potential for the move but think there are many steps ahead before the initiative can really take off.

UP NEXT- The government will hold its next public consultations on telecoms.

PSA- Thinking of renting your summer home? Owners of chalets and apartments in tourist towns will need to notify the Egyptian Tax Authority (ETA) before renting out their units as the rent will be considered taxable revenue, ETA Head Reda Abdel Kader said, according to an authority statement.

CORRECTION- In yesterday’s AM, we incorrectly stated that GB Auto’s car finance arm Drive has closed its first EGP 700 mn securitized bond issuance. The issuance was a regular corporate bond. The story has been updated on our website.

THE BIG STORY ABROAD is the latest from the G7 summit being hosted by Germany. Here’s what the international press is leading with as we enter the second day of the three-day meeting:

• A united front on Ukraine: The G7 leaders vowed to give Ukraine financial, humanitarian, military and diplomatic support against the Russian invasion “for as long as it takes,” according to a draft statement by the G7 seen by Bloomberg.

• Price cap on Russian oil? The G7 leaders want to lead alongside partner countries on an agreement to “cap” the price of Russian oil to limit energy income to Moscow, the Financial Times reports. Talks reportedly continued through last night.

• Moscow’s response: Russia hit the Ukrainian capital Kyiv with missile strikes for the first time in weeks yesterday, in what the AP called “an apparent Kremlin show-of-force” meant to coincide with the summit. US President Joe Biden said the attacks were “barbarism.” Reuters also had the story.
• Combating China’s rise: A US-led push by the G7 will seek to raise USD 600 bn by 2027 for infrastructure funding to developing countries, in a challenge to China’s Belt and Road Initiative, Reuters reports.

WHAT’S HAPPENING TODAY-

Amcham AGM: Our friends over at Amcham will hold their annual general meeting today at the St. Regis Cairo Hotel. Finance Minister Mohamed Maait will address the gathering.

President Abdel Fattah El Sisi heads to Oman: El Sisi will hold talks with Omani officials during a two-day visit to the country, according to the state-run Oman News Agency (ONA), which cites a statement from Oman’s Diwan of Royal Court.

FOR TOMORROW-

Key stats from OPEC: The oil cartel will release its annual statistical bulletin tomorrow, according to a press release. The flagship publication provides data on the global hydrocarbons industry, with a focus on the 13 OPEC member countries. Market watchers will be paying close attention to the figures this year, given rising energy prices brought on by a major supply-demand imbalance, the ongoing energy crisis in Europe, and ever-louder calls to transition away from polluting fossil fuels.

CIRCLE YOUR CALENDAR-

The deadline for companies to submit bids for the redevelopment of the National Democratic Party headquarters is this Thursday, 30 June.

The government’s fuel pricing committee will likely meet to review fuel prices as part of its quarterly review sometime next week.

The national dialogue to set Egypt’s political and economic roadmap will also kick off next week. President Abdel Fattah El Sisi had called for the dialogue in April. Check out our explainer on the dialogue, its agenda, participants, and targeted outcomes here.

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: With growing demand for private K-12 schooling, education financing sounds good in theory — but traditional loans fall short in practice. The banking sector has been working to make loans more attractive and getting creative with their offerings, but.K-12 education financing has not really picked up among parents. We look at why, and how banks can appeal to more parents through offering different options.

The Madbouly government has inked a contract to buy 180k tons of wheat from India, which should be heading our way soon, Supply Minister Ali El Moselhy said at a presser yesterday, where he spoke broadly on our wheat import policies in FY2022-2023, according to Reuters and Bloomberg.

We were hoping for more Indian wheat: This is a little over a third of the 500k tons we had originally expected to receive from India — but we hadn’t signed final contracts on the order before New Delhi imposed a ban on exports last month. As a semi-exemption from the restrictions following negotiations, the supplier agreed to ship us the 180k tons that were already in port before the export ban was imposed, El Moselhy said.

…And more Russian grain: We’re in talks with Russian suppliers on a potential wheat purchase, Moselhy added. While the Ukraine conflict has blocked all imports from Ukraine — once a key supplier to Egypt — wheat has continued to roll in from Russia, with imports from the country even climbing 84% in the three months to May, though they remain down YTD.

Egypt’s total wheat imports for FY2022-2023 are expected to come in at 10 mn tons, with the state looking to import some 5-5.5 mn tons of that during the upcoming fiscal year, the minister said, according to Bloomberg Asharq.

We’re relying more on local wheat — but it’s not coming cheap: Increasing local wheat procurement prices is costing the state an additional EGP 22 bn, El Moselhy said (watch, runtime 8:40). Farmers are receiving EGP 865-885 per ardeb of wheat they sell to the state, after the government raised the price of local wheat in a bid to encourage farmers to sell more of their crop to the government. The government will spend around EGP 36 bn to purchase 6 mn tons of local wheat this harvest season, which ends in August, the Finance Ministry has said. It had at last count bought more than 4.1 mn tons so far.

Extracting more flour per ton of wheat could trim 500k tons off our wheat imports in FY 2022-2023, El Moselhy also said (watch, runtime: 26:54). The plan would see the government raise the percentage of flour extracted from wheat after milling and sifting to 87.5%, from 82% currently. Flour with high extraction rates has more bran and germ content, which makes it generally healthier than highly refined flour, El Moselhy added. Your average white flour has an extraction rate of around 72%, while whole wheat flour has a 100% extraction rate.

Sweet potato bread is also on the table: The government is also looking into technology that would allow it to swap out wheat for sweet potatoes in bread production, the minister said. If successful, using sweet potatoes would cut 10% of the state’s current wheat consumption.

PIF has its eyes on our tourism and aluminum sectors: The Saudi sovereign wealth fund could be snagging a “significant” stake in the new hotels company made up of several merged state hotels, Hapi Journal quotes Public Enterprises Minister Hisham Tawfik as saying. The Public Investment Fund (PIF) could snag a 20% stake in the hotels company, Tawfik said.

A sale on the EGX could follow: Following the acquisition, the government could then list a 10% on the bourse, he added.

What new hotels company? The state is currently working on merging seven or eight state-owned hotels into a single entity to be offered up as part of the state’s privatization plans, which aims to attract USD 40 bn of fresh foreign investment into the country over the next four years by selling stakes in state-owned assets to local and international investors.

Who’s getting the golden ticket? Aswan’s Sofitel Legend Old Cataract, Cairo Marriott Hotel, Marriott Mena House, and Steigenberger Cecil Hotel Alexandria are among some of the most notable hotels to be offered to investors, Tawfik reportedly said, according to local press coverage of his interview with state run MENA agency.

Talks are still in very early stages: Talks between the fund and the Sovereign Fund of Egypt (SFE) are still at an early stage, Tawfik reportedly said. Hapi Journal quotes Tawfik as saying that the timing of the sale and listing will be agreed on with the fund at a later stage. Tawfik has previously said that state IPOs could begin starting September. The government still hasn’t selected its advisors on the transaction but is in the process of selecting them, Tawfik reportedly said.

The PIF might also get a chunk of shares in EGX-listed Egypt Aluminum (EgyptAlum), Tawfik said, without disclosing the size of the stake the fund could acquire in EgyptAlum. We know from Tawfik’s previous statements that there’s a 20-25% stake up for grabs. The proceeds from the stake sale would partially finance an overhaul costing as much as USD 300 mn, designed in part to help EgyptAlum maintain its 320k-ton annual production capacity.

There’s more to come from KSA: The Saudi fund said in March that it was looking to invest USD 10 bn in Egypt’s healthcare, education, agriculture and financial services sectors as part of a USD 15 bn package to support the economy. Last week, Saudi Arabia also said it would “lead” USD 30 bn in investments in Egypt.

…And our other neighbors: The SFE is marketing investment through partnerships with other Arab sovereign and investment funds, “many” of whom are interested in the hotel company, Soliman said earlier, adding that multiple investors could come on board as partners with the SFE.

IN OTHER INVESTMENT NEWS-

Energy, transport, ports and tourism top Emirati investment plans: The UAE wants to increase its investments in Egypt, especially in the sectors of energy, transport, tourism and ports, according to an Ittihadiya statement. This came during a meeting between President Abdel Fattah El Sisi and Emirati Foreign Affairs Minister Abdullah bin Zayed Al Nahyan. It’s worth noting that ADQ invested USD 1.8 bn in five EGX-listed companies this year already.

A group of Saudi Arabian real estate companies looked into potential investments in Egypt during a meeting between GAFI head Mohamed Abdel Wahab and a delegation of the Saudi National Real Estate Committee and major Saudi companies, according to a cabinet statement. This meeting comes after Egypt signed USD 7.7 bn worth of MoUs with Saudi to develop key sectors last week, when the KSA pledged to lead on some USD 30 bn of investments here overall.

A consortium of local mortgage lenders is mulling a securitization program that could be worth over EGP 2.5 bn, Enterprise has confirmed, just a week after the local mortgage market saw its first ever securitization. Al Oula, Al Ahly Mortgage Finance, and Amlak Egypt are part of the consortium currently negotiating the terms of a potential joint issuance, Al Oula MD and Vice Chair Ayman Abdel Hamid told Enterprise, confirming a report from Al Mal. The firms have not yet decided on a timeline for the issuance, he said.

Strength in numbers? The joint issuance will only go ahead if assessments show it will bring the companies higher returns than they would see through individual issuances, Abdel Hamid said. Each firm could issue securitized bonds on an individual basis if it proves more cost-efficient, he added.

Al Oula would issue EGP 1 bn of the securitized bonds in a first phase, Abdel Hamid told us. The company has already shortlisted three potential managers for its issuance, including Egyptian Mortgage Refinance, he said, according to Al Mal.

Al Oula had been looking to issue EGP 900 mn in securitized bonds in 1H 2022, according to local media reports back in January, while Al Ahly Mortgage Finance reportedly has plans to securitize EGP 1 bn of its portfolio this year.

Is securitization the latest hot ticket for mortgage lenders? This comes less than a week after EFG Hermes closed an EGP 651.2 mn securitized bond issuance on behalf of mortgage provider Bedaya, billed as the first ever for a real estate mortgage firm in Egypt. EFG expects to complete Bedaya’s full EGP 3 bn securitization program in the next three years.

Etisalat Egypt becomes etisalat by e&: UAE-based telecom giant e& (formerly known as Etisalat Group) has extended its corporate brand makeover to its Egyptian telecom operations, which will now be known as etisalat by e&. The rebrand was announced at an event attended by some of us here at Enterprise yesterday.

Goodbye, green: As part of the rebrand, Etisalat is leaving behind its bright green logo. “The green color will disappear,” Chief Consumer Officer Ahmed Yahia said at yesterday’s event.

The local rebrand comes as e& moves beyond telecom services to position itself as a “a global technology and investment conglomerate that accelerates digital transformation while empowering societies,” it said in a statement (pdf). The UAE firm rebranded itself as e& back in February, when it also said it would stage a push into Egypt’s fintech sector. The company’s entertainment arm E-Vision and Abu Dhabi sovereign wealth fund ADQ in March acquired a controlling stake in streaming platform Starzplay Arabia. Meanwhile, e& last month bought a 9.8% stake in UK’s Vodafone Global.

More to come for etisalat by e&: The Egypt arm is focusing on expanding its entertainment and technology services, Yahia said, and is still eyeing our fintech sector, with an emphasis on mobile wallets and financial inclusion tools. It will soon make announcements on new investments, he added, without disclosing more details.

The telecom giant’s Egypt operations saw a 15% y-o-y increase in revenues to hit AED 1.3 bn (c. EGP 6.55 bn) in 1Q2022, according to the parent company’s latest earnings release. Top line growth was mainly driven by an increase in subscribers (up 6% y-o-y to reach 28.1 mn users) and mobile data and voice revenues. Egyptian users accounted for almost 20% of the group’s total subscribers at the end of the quarter.

The soon-to-launch national dialogue spearheaded by President Abdel Fattah El Sisi led the airwaves last night, after the event’s 19-member board of trustees was announced yesterday, according to a state information service (SIS) statement. Board members include lawmakers, journalists, and political and economic experts. The dialogue will start in the first week of July.

The selection reflects the diversity of society, Diaa Rashwan, the general coordinator of the dialogue and head of the Journalists’ Syndicate, told eXtraNews (watch, runtime: 6:52). The board of trustees will be tasked with managing the dialogue, he said, before presenting its recommendations to the presidency after review.

All of the dialogue’s sessions will be recorded, with the majority televised, Rashwan told Ala Mas’ouleety (watch, runtime: 3:36), adding that over 100k requests have so far been submitted by the public to take part. There was more coverage from Kelma Akhira (watch, runtime: 2:13), Ala Mas’ouleety (watch, runtime: 3:36) and Al Hayah Al Youm (watch, runtime: 2:31).

Every grain counts: Ala Mas’ouleety had positive coverage of the moves announced by the government yesterday to make our wheat supply stretch further — including by making flour from sweet potato (watch, runtime: 3:55). “We are with anything that the state [does] to preserve a grain of wheat amid such extraordinary circumstances,” Attia Hamad, head of the bakeries division at the Cairo Chamber of Commerce, told the program (watch, runtime: 4:04), in reference to the global commodities squeeze triggered by war in Ukraine. El Hekaya aso had coverage (watch, runtime: 3:09). Get the full details on the story in our Commodities section, above.

The murder of university student Naira Ashraf by a male classmate — and what it means for the safety of women across the country — is continuing to garner international ink, this time from France24 and Haaretz.

Sports drama: Meanwhile, the AFP is out with a piece suggesting that squash player Mohamed El Shorbaghy’s decision to join the English national team is indicative of a wider “exodus” of Egyptian athletes from the country.

International Cooperation Minister Rania Al Mashat called on the finance sector to promote ESG principles and help fund private-sector projects to tackle climate change, in a keynote speech launching a series of climate seminars by HSBC, according to a cabinet statement. Al Mashat also held talks on adaptation finance with Stephen Moss, HSBC’s regional CEO for the Middle East, North Africa and Turkey, and Todd Wilcox, CEO and deputy chair of HSBC Egypt.

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

• FACT CHECK- Ezz Steel is not merging with Al Ezz Dekheila Steel, the company clarified in an EGX disclosure (pdf), denying reports that emerged in the local press.
• Standard Chartered will explore with the Sovereign Fund of Egypt (SFE) ways to finance our highway projects, as the government looks to net investments from the private sector for infrastructure projects. (Statement)
• New Zealand has opened its market to all Egyptian citrus exports for the first time, after allowing our oranges into the country two years ago. (statement)
• Banque Misr will facilitate the withdrawal and deposit of funds through POS terminals for customers of all banks. (Statement, pdf)
• The new chiefs of the Court of Cassation, State Council (Maglis El Dawla), and State Lawsuits Authority were sworn into office in the presence of President Abdel Fattah El Sisi. (Statement)
• Dubai’s Shuaa Capital has sold its Egyptian brokerage unit via a capital reduction transaction worth AED 3.6 mn (USD 980k), as part of the company’s wider strategy to exit its non-core businesses. (Statement, pdf)

A second Negev summit will aim to cement new regional alliances ahead of a visit to Saudi Arabia in July by US President Joe Biden, and amid reports that a new round of talks on reviving the US-Iran 2015 nuclear agreement is imminent. Israeli officials will meet today with officials from Bahrain, UAE, Morocco, Egypt, and the US in Manama, according to tweets by the Israeli Foreign Ministry.

Among the topics discussed will be a new “regional security architecture,” Israeli Foreign Ministry Deputy Director-General Oded Joseph told reporters, according to the Jerusalem Post. Iran will also be on the table, Joseph said, after Tehran and the EU earlier this week said Iran’s indirect talks with the US on reviving the 2015 nuclear pact would restart soon.

The Negev realignment could become a bigger deal: The regional group will continue to hold meetings, Joseph reportedly said, and could even expand to one day include Jordan and Saudi Arabia. The first meeting Arab-Israeli sit-down in the Negev in April was described by the international press as a major realignment of regional alliances, but was only expected to take place annually going forward.

Speaking of regional re-alignments: High-ranking Arab and Israeli military officials gathered in March for an unusual and previously undisclosed meeting in Sharm El Sheikh, to discuss Iran’s missile and drone threat, the WSJ reports. The meeting included officials from Saudi Arabia, Qatar, Jordan, Egypt, the UAE, and Bahrain, along with the IDF chief of staff and the head of the US Central Command, marking the first meeting of military officials from these countries.