Monday, 27 June 2022

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

TL;DR

WHAT WE’RE TRACKING TODAY

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.

enterprise

*** 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.

enterprise

A sizzling summer awaits you by the bay as we’ve saved you the hassle of planning by bringing you a lineup of unmatched energy and fun packed vacation activities to last you all season long. It’s time to create magical memories with relaxed beach-side days and excitingly fresh nights. From pumping up the adrenaline with Footgolf and Go-Karting to turning up the music and heat at Sobar with Ladies’ nights, groovy beats and lots of dancing. From BBQ beach parties at S-cape to riding horses by the sea — there’s a little special something for everyone. We look forward to seeing you at the Bay.

COMMODITIES

We’re getting a third of the Indian wheat we’d hoped for + Bread could get browner

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.

INVESTMENT WATCH

A 30% stake in the new hotels company will be up for grabs + the Saudis have their eyes on the stake in Egyptalum

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.

DEBT WATCH

Are securitized bonds gaining momentum in our mortgage market?

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.

TELECOM

Say goodbye to the Etisalat green

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.

enterprise

LAST NIGHT’S TALK SHOWS

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.

EGYPT IN THE NEWS

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.

ALSO ON OUR RADAR

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)

PLANET FINANCE

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EFG Hermes - https://efghermes.com/

What’s worse than a recession? Entrenched inflation, influential banking body warns: The Bank for International Settlements — which performs banking services for central banks worldwide — has called for a “decisive” wave of global rate hikes from central banks to curb inflation in its flagship annual economic report (pdf) published yesterday. “The key for central banks is to act quickly and decisively before inflation becomes entrenched,” said Agustín Carstens, BIS general manager. The fear is that major economies could reach “a tipping point, beyond which an inflationary psychology spreads,” BIS warns, counseling that short-term pain in the form of a recession triggered by rate hikes would be preferable to that scenario.

Value stocks are holding up better than their growth siblings as global policy tightens: Value equities are currently outperforming growth equities with a 13% margin so far this year, which if maintained would mark their largest margin since 2001, the Wall Street Journal writes. “I’ve never been more excited about value,” one investor told the outlet.

But remember — all equities are down, value stocks just less so. The Russell 1000 Value index has dropped 12% so far this year, while the Russell 1000 Growth index saw a 25% drop.

Value vs. growth: Value stocks — companies with cheaper valuations and higher dividend payouts — tend to do well in higher interest rate environments as investors rotate out of the more expensive, dividend-less growth stocks. Why? Higher earnings and larger dividends are a better hedge against rising borrowing costs than growth companies, whose valuations are more reliant on future earnings and vulnerable to rising rates.

The Saudi bourse will launch Single Stock Futures (SSFs) contracts next week, marking the Tadawul’s second derivatives product following the launch of index futures, the bourse said in a disclosure. The move comes “as part of wider efforts to develop an advanced capital market in Saudi Arabia,” the disclosure read.

Up

EGX30

9,444

+0.0% (YTD: -21.0%)

None

USD (CBE)

Buy 18.71

Sell 18.79

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USD at CIB

Buy 18.73

Sell 18.79

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Interest rates CBE

11.25% deposit

12.25% lending

Up

Tadawul

11,513

+1.8% (YTD: +2.1%)

Down

ADX

9,238

-0.1% (YTD: +8.8%)

Up

DFM

3,202

+0.1% (YTD: +0.2%)

Up

S&P 500

3,912

+3.1% (YTD: -17.9%)

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FTSE 100

7,209

+2.7% (YTD: -2.4%)

Up

Euro Stoxx 50

3,533

+2.8% (YTD: -17.8%)

Down

Brent crude

USD 112.46

-0.6%

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Natural gas (Nymex)

USD 6.16

-1.0%

Up

Gold

USD 1,833.70

+0.2%

Down

BTC

USD 21,021

-2.2% (YTD: -54.4%)

THE CLOSING BELL-

The EGX30 rose less than 0.1% at yesterday’s close on turnover of EGP 483 mn (41.4% below the 90-day average). Local investors were net buyers. The index is down 21.0% YTD.

In the green: Madinet Nasr Housing (+8.9%), Abu Dhabi Islamic Bank Egypt (+6.5%) and Heliopolis Housing (+2.7%).

In the red: GB Auto (-6.5%), MM Group (-5.2%) and e-Finance (-3.0%).

Asian markets are up in early trading this morning, with the exception of the Shanghai index, which was in the red as of dispatch time. Futures suggest most European indices will open in the green later on today, though Wall Street is faring less well, with the Dow Jones, Nasdaq, and the S&P 500 all threatening to open down.

DIPLOMACY

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.

blackboard

Education financing sounds good in theory — but tuition loans fall short in practice: The desire for prestigious, high-quality education means that demand for enrollment in private, international schools — which are not particularly cheap to attend — is growing here in Egypt. There are at least 2.5 mn children (around 10.6% of our total student population) enrolled in private schools, according to figures cited in a recent Colliers report (pdf). But with rising inflation, private school tuition has been on the rise, making it increasingly expensive to finance a child’s K-12 education. Could education loans help?

As was the case back in 2020, K-12 education loans have not really picked up among parents, although the banking sector has been working to make loans more attractive. Banks are still trying to get creative with their offerings and tap into new pockets of demand — but many parents we spoke to maintain that traditional financing options available to them are simply not attractive enough, whether due to high interest rates or short tenors.

Private K-12 education is not a cheap endeavor: Parents should have at least EGP 769k on hand for the entire duration of their kids’ private school education, according to a recent study by EdArabia, which found that international schools can cost up to a total of EGP 3 mn per child. “The biggest bulk of my annual income goes to my kids’ school,” Omar Ayman, a father and an engineer at a construction company admitted. Tuition fees for his two sons for their current school year cost around EGP 188k per child.

There are plenty of tuition loan options in the country: The majority of Egypt’s 39 banks offer products to facilitate tuition payments, according to our survey, from private banking players like HSBC and CIB, to state-owned institutions like Banque du Caire and United Bank.

By the numbers: Education loan amounts typically range between EGP 2k to 1.5 mn, depending on the bank, according to customer service agents we spoke with. The average loan tenor is around a year, though state-owned Banque Misr allows the loan to be repaid over up to 84 months — the longest time period we’ve come across.

The average interest rate for education loans is around 18%, with many maintaining that interest rates can vary on an individual basis, mostly based on the borrower’s income and creditworthiness, as well as the loan amount and tenor. CIB offers education loans at an average of 15-17.5% while the Housing & Development Bank’s interest rate is set at 22.5% is the highest we’ve recorded — however, HDB can potentially provide the biggest loans, with no maximum amount for its education facility.

Just to put that into perspective: The CBE’s deposit rate currently stands at 11.25% and the lending rate at 12.25%

Demand continues to be low: One bank exec we spoke to said she didn’t receive a single request for an education facility in over a year.

What’s holding demand up? First off, the lack of familiarity: “It’s just not an option that has ever crossed my mind when budgeting for my kids’ school fees,” admitted Ayman. “I think I may have heard about education loans being offered at my bank, but I didn’t really dig deeper.” Ayman has opted for borrowing from his parents to help plug the financing needs for his children’s tuition, but never considered taking out a loan from the bank due to lack of familiarity with the concept.

And banks haven’t been pushing the product: Credit Agricole decided to discontinue their education loans and shift its focus to educators instead, offering a special loan program designed exclusively for school teachers, “in appreciation for their important role in the education of Egypt’s youth,” the bank says.

And parents still prefer to take out personal loans to pay their school tuition: Customers are naturally more familiar with traditional products such as personal loans, and with little-to-no difference in interest rates, most parents are sticking to personal loans, which traditionally require less paperwork and allow more flexibility.

Personal loans offer more flexibility: Education loans require specific documentation from academic institutions, and the money goes directly into the schools’ pockets, whereas personal loans can be taken out and directed wherever the parent sees fit — part of it can go towards quarterly tuition installment, with the rest divided among other funding needs.

And the fine print on an education loan is often unappealing: One parent we spoke with opted for a personal loan instead of an education loan because the structure of the education loan “made no sense” as an option. “I was offered a EGP 750k personal loan, whereas the education loan was capped at EGP 100k, and I would have had to pay it back over a year, and then apply for another loan the next year,” he said.

But some banks are getting creative: Arab Bank, for example, provides a non-loan education payment plan that can be repaid over nine months at 1.25% interest. Parents can make tuition payments through their credit cards, and then notify the bank, which then makes room for more flexibility and applies a reduced interest rate, head of consumer banking Mohamed El Halawani tells us. The program has proven to be more popular among parents than traditional education loans, which the bank also offers at interest rates ranging between 14-15%.

One creative route: Tapping Egyptian students getting their education abroad: HSBC Egypt has been helping families through facilitating the opening of new international multi-currency accounts and other services, including access to exclusive partnerships with education institutions. None of the other banks we spoke with appear to be offering a similar service. The bank launched HSBC International Education in 2019 for its Premier clients, to help parents with the transition of their children moving abroad to continue their education, Nesreen Hafez, HSBC Egypt’s Head Of Wealth and Personal Banking tells Enterprise. While HSBC continues to offer traditional education loans at undisclosed “competitive rates,” they have been seeing an increasing interest in their International Education proposition, Hafez says.

So what can the banking sector do to make education financing options more appealing? “Start by lowering the interest rate,” a bank product head tells us. Despite recent attempts by many banks to reduce interest rates on their education loans, they’re still not low enough to be considered an appealing option.


Your top education stories for the week:

  • Amideast is helping set up several service centers for students with special needs at select universities over the next two years under a cooperation agreement signed with the Higher Education Ministry and 15 public universities, according to a cabinet statement.
  • Education and our privatization plans: The government has identified nonprofit and tech universities, hospitals, and healthcare projects to be offered to private sector partners.

📆 CALENDAR

OUR CALENDAR 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.

JUNE

25-27 June (Saturday-Monday): Big 5 Construct, Egypt International Exhibition Center.

27 June (Monday): AmCham annual general meeting, St. Regis Cairo Hotel.

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: Eastern Company meets to decide on prices of its tobacco products amid rising production costs and scarcity of raw materials.

JULY

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

July: Actis’ expected sale of its majority stake in Lekela to Infinity and Masdar’s Infinity Power.

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

First week of July: The national dialogue called for by President Abdel Fattah El Sisi kicks off.

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.

August: Sharm El Sheikh will host the African Sumo Championship.

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

SEPTEMBER

September: Egypt will display its first naval exhibition, Naval Power.

September: Estate Waves Egypt real estate exhibition through metaverse technology.

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

September: The sixth session of the Egyptian-German Joint Economic Committee.

September: A delegation from Germany’s Aldi will visit Egypt to look at potential investments.

6-9 September (Tuesday-Friday): Gate Travel Expo 2022, El Kobba Palace, Cairo.

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: Air Sphinx, EgyptAir’s low-cost subsidiary to commence operations.

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.

10-16 October (Monday-Sunday): World Bank and IMF annual meetings chaired by CBE Governor Tarek Amer, Washington, DC.

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.

3-5 November (Thursday-Saturday): Egypt Fashion Week.

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

6-18 November (Sunday-Friday): Egypt will host COP27 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.

December: The Sixth of October dry port will begin operations.

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.

MAY 2023

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

EVENTS WITH NO SET DATE

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.

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

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.

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.

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