Tuesday, 6 September 2022

AM — Three GCC sovereign wealth funds have their eye on TE’s stake in Vodafone Egypt

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, everyone, and happy hump day.

THE BIG STORY here at home this morning is that not one, but three, GCC sovereign wealth funds are eyeing TE’s stake in Vodafone Egypt. We also think you should read today’s Going Green feature, which looks at how climate change is impacting small dairy farmers — the people who account for the majority of the milk our nation produces.

^^ We have both stories and plenty more below.

Welcome back, US and Canadian readers. We hope you enjoyed your Labor Day holiday — and that you’re now settling comfortably into the fall grind. It really is the best season of the year for you folks (all the more so if you live at a latitude that allows you to enjoy fall foliage).

*** You have just three days to tell us how you’re feeling about your business and the wider economy. We’ll have the results for mid-month — just in time to give you a sense of what everyone else is thinking heading into budget season. Make your voice heard in our Fall Reader Survey. It won’t take more than a few minutes to complete.

HAPPENING TODAY-

Palestinian President Mahmoud Abbas is in Cairo for an Egyptian-Palestinian summit. The two sides will discuss the situation in Palestine and the possibility of releasing Palestinian prisoners in Israeli custody. Egypt played a key role in brokering last month’s ceasefire following clashes between Israel and Gaza militants.

HAPPENING THIS WEEK-

We’re expecting some sort of announcement from the government on how it plans to proceed with its privatization program, according to comments given to the media by Finance Minister Mohamed Maait last week. This came on the same day as the Prime Minister Moustafa Madbouy met with the heads of the EGX and the Financial Regulatory Authority to discuss plans to sell stakes in state-owned enterprises on the bourse.

US climate envoy John Kerry will be in town tomorrow for the Egypt-International Cooperation Forum (Egypt-ICF), which runs 7-9 September at Almasa Convention Center in the new administrative capital. The three-day event will bring together global policymakers, ministers, development partners and other participants ahead of COP27 to discuss climate action and green transition, food security, and others with a focus on Africa. Check the full agenda here (pdf).

Tourism expo starts tomorrow: The four-day Gate Travel Expo 2022 starts tomorrow at El Qubba Palace.

Support measures coming for local commercial ships? Transport Minister Kamel El Wazir will hold a meeting this week with the maritime transport sector and private shipping companies to discuss ways to boost the commercial fleet, Al Mal reports, citing an unnamed source.

THE BIG STORY ABROAD-

Chaos has returned to the European energy markets on the first trading day since Gazprom said it would be indefinitely shuttering the vital Nord Stream gas pipeline. Gas and power prices soared, equities tumbled, and the EUR hit a fresh 20-year low against the greenback as markets freaked out about the escalating energy crisis and its implication for eurozone economies. The move — the latest round in a tit-for-tat energy war with Russia that came shortly after the G7 agreed to cap Russian oil prices — has forced Brussels into considering unprecedented measures to curb the crisis, including emergency caps on wholesale prices and hundred-bn EUR bailout packages to prevent utilities companies and household finances from collapsing. (Reuters | FT | Bloomberg | Politico | WSJ)

enterprise

And in its most escalatory move yet: Moscow slapped sanctions on Zoolander. Ben Stiller and Sean Penn have been permanently banned from entering Russia for showing support for Kyiv’s war effort. The White House is yet to comment on how it might respond to the latest escalation.

CIRCLE YOUR CALENDAR-

The German-Arab Chamber of Industry and Commerce will commemorate 70 years of German-Egyptian business and economic ties with a gala celebration on 15 September.

Our monthly list of data points to keep your eye on over the next few days and weeks:

  • Foreign reserves figures for August should be out during the first week of the month.
  • Inflation figures: Inflation data for August from Capmas will land on Saturday, 10 September. Expect the Central Bank of Egypt to follow up on Sunday, 11 September with its inflation report.
  • Interest rates: The Central Bank of Egypt’s Monetary Policy Committee meets on Thursday, 22 September to review interest rates.

The National Dialogue’s board of trustees will hold its next meeting on Saturday to name 30 rapporteurs and assistant rapporteurs for the dialogue’s 15 political, social and economic subcommittees.

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

enterprise

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: How the changing climate is threatening the future of Egypt’s dairy farms.


*** WE’RE LOOKING FOR SMART, TALENTED PEOPLE to help us build some very cool new things. Today, we run two daily publications, one regional publication, five weekly industry verticals, and a monthly newsletter designed to make our readers feel just a bit smarter.

We have tons more in the pipeline — come help us build new publications. We offer the chance to work in a fast-paced newsroom on a broad range of topics and in a variety of formats. Our goal is simple: To create value for our growing community of >199k readers by telling stories that matter.

We’re looking for editors who want to run publications and teams, editors to help reporters craft stories, and talented reporters. Egyptian and foreign nationals alike are welcome to apply. So are job-switchers: If you’re an equities analyst tired of the rat race, we’re a great place to come work.

Apply directly to jobs@enterprisemea.com and mention Patrick in your subject line.

Or hit this link for more information. It’s worth it — trust us.

enterprise

The Somabay Endurance Festival, organized by The TriFactory, returns this month for the fourth time. Featuring four different races that combine swimming, cycling, and running, as well as the 1K Kids Race (ages 5-10) and the 10K Race, the Somabay Endurance Festival has got something for everyone. Taking place from 29 September though 1 October, spots are running out for Egypt’s favorite multi-sport event. To find out more and sign up, head to www.thetrifactory.com/somabay.

M&A WATCH

Three GCC sovereign funds have their eye on TE’s stake in Vodafone Egypt

Could Telecom Egypt’s stake in Vodafone Egypt be in play? The Qatar Investment Authority (QIA), Saudi Arabia’s Public Investment Fund, and Abu Dhabi’s ADQ are all eyeing part of state-owned landline monopoly Telecom Egypt’s stake in Vodafone Egypt, a source with first-hand knowledge of the matter confirmed to Enterprise. Bloomberg Asharq reported earlier yesterday that QIA is looking to acquire as much as 25% of the company, citing three anonymous sources.

TE is open to selling up to a 20% stake in Vodafone Egypt “at the right price that would bring maximum returns to shareholders,” our source tells us. The EGX-listed telecoms giant holds a 45% stake in the company.

Nothing official yet: Talks are ongoing with the government — which owns 80% of EGX-listed TE — on the potential stake sale, the source said. TE has yet to receive an official bid from QIA or other sovereign funds, the company said in an EGX disclosure (pdf) yesterday.

TE shares rose 15.8% to EGP 17.70 in trading yesterday following its disclosure. The EGX suspended intraday trading TE shares for ten minutes before publishing the disclosure, it said in a bulletin (pdf).

QIA has reportedly been eyeing several Egyptian companies: The fund is rumored to be planning looking at the EGX as an entry point to deploy capital as part of moves by our neighbors in the region to help shore up our economy with an influx of FDI. Local media outlets have reported that the Qatari fund is interested in purchasing stakes in Alexandria Containers and Eastern Company, though a source at Eastern’s majority shareholder, Chemical Industries Holding (CIHC), denied knowledge of the talks when we reached out recently.

Other Arab sovereign funds have been buying big: The Saudi Public Investment Fund (PIF) and ADQ have invested bns of USD in a number of EGX-listed companies this year, with PIF reportedly still eyeing stakes in at least three high profile Egyptian companies. Gulf state neighbors have pledged more than USD 22 bn in total to support the economy amid the fallout from the crisis in Ukraine.

ECONOMY

Private sector downturn eases in August amid softening inflation

Activity in Egypt’s non-oil private sector contracted at a slower pace in August on a relative easing of inflationary pressures, according to S&P Global’s latest purchasing managers’ index (pdf). Output and new orders inched higher for the second consecutive month from June's lows as clients’ spending constraints began to relax. The index rose to 47.6 last month, up from 46.4 in July — its highest reading since February, though still well below the 50.0 threshold that separates growth from contraction. This is the 21st consecutive month that the gauge suggests activity in Egypt’s private sector has declined.

The outlook remains uncertain: August's PMI shows a “move in the right direction with the headline index up for the second month running,” said S&P Global economist David Owen. “Monetary policy uncertainty, a weakening exchange rate, and the continued war in Ukraine mean there are still high levels of risk for the economy over the rest of 2022,” he said.

Input cost pressures eased: Input costs rose at a slower pace in August, although raw material supplies continue to be impacted by pressure on the EGP and import restrictions aimed at keeping foreign currency in the country. Input purchase levels dropped for the eighth successive month as companies curb their spending due to weak sales.

New orders continued to decline, but at a slower pace: Businesses continued to see a drop in client demand, though new orders decreased at the softest rate since April, leading to a slower fall in output. End prices for products and services continued to record “solid” rises in August, though also at a much slower rate.

What do you mean “easing inflationary pressures,” S&P? Inflation in the wider economy reached a three-year high of 13.6% y-o-y in July — largely on the back of higher food and fuel prices. That said, global commodities markets have on the whole been cooling as the immediate impacts of war in Ukraine subside, which could explain the relative easing of cost increases in the private sector in August compared with July, economist Mona Bedeir tells Enterprise. Most analysts are expecting the reprieve to be short-lived, predicting inflation to continue rising through the rest of the year as underlying pressures remain high.

Some good news on hiring: Hiring picked up at its fastest rate since October 2019, as firms brought on staff to make up for job cuts earlier in the year. Meanwhile, wage costs decreased for the first time in five months despite record-high inflation.

Businesses are still wary: Confidence fell to their lowest level on record barring last March, with only 9% of companies forecast output growth over the coming year. Weak market conditions, high inflation and supply issues dampened expectations on the business outlook.

In the foreign press: Reuters is stressing the doom and gloom in its report on this month’s PMI, while Bloomberg is more optimistic, emphasizing strong readings out of the Gulf and the softening contraction here.

FROM THE REGION –

UAE output at 3+ year high: Private sector activity in the UAE continued to grow in August as output rose at the fastest rate since June 2019. The PMI (pdf) rose to 56.7 from 55.4 in July in response to an increase in demand and new orders on the back of lower fuel prices and slowing inflation.

BUT- Confidence fell to its lowest level in 17 months due to fears of an oncoming global recession.

Saudi private sector growth hits 10-month high: Growth in the Saudi private sector picked up pace in August, with the PMI (pdf) rising to 57.7 from 56.3 in July — its highest since October last year. Purchasing saw its sharpest uptick in seven years, backed by high demand and strengthened business activity, providing further evidence of the resilience of the Saudi economy amid global growth fears.

BANKING

CIB plans record capital increase

EGX-listed private sector giant CIB is planning a multi-bn EGP capital increase that would raise its capital by around a third. The bank submitted documents to the EGX yesterday and the bourse is studying the proposal, it said, according to an EGX bulletin yesterday.

The plan: CIB would issue EGP 10 bn in new shares to shareholders, raising its capital to EGP 29.82 bn from EGP 19.85 bn currently. The bank would issue 1 bn shares at EGP 10 apiece to be covered by the general reserves for the period ended 31 December 2021.

Market reax: Traders didn’t get a chance to respond to the news yesterday because the EGX published the bulletin after the closing bell.

Earnings: CIB’s net income rose 9% y-o-y to EGP 3.5 bn in 2Q 2022 as demand for short-term credit picked up, according to the bank’s latest earnings release (pdf). The bank recorded revenues of EGP 6.9 bn, up 8% from the same period last year. On a 1H 2022 basis, the bank reported net income of EGP 7.8 bn (+28% y-o-y) on revenues of EGP 14.7 bn (+16% y-o-y).

INVESTMENT WATCH

Americana to invest USD 26 mn in Egypt

Americana Egypt to expand food production: F&B conglomerate Americana is planning to invest USD 26 mn in new food production lines in Egypt, Vice Chairman Ihab Hajjaj said during a sit-down with General Authority for Investment and Freezones (GAFI) CEO Mohamed Abdel Wahab, cabinet said yesterday. The increased capacity would be directed to the local market and to target new markets for export, especially Gulf countries.

SOUND SMART- Parent company Americana Group, which runs the KFC and Pizza Hut franchises across MENA, earlier this summer tapped several big-name banks to work on its planned IPO, which could take the form of a dual listing in Riyadh and Abu Dhabi and raise as much as USD 1 bn.

DEBT WATCH

Aman Microfinance in talks for EGP 1 bn facility

Raya Holding subsidiary Aman Microfinance is negotiating an EGP 1 bn credit facility with four banks, Raya IR head Ahmed Nour Eldin told Enterprise, confirming a story first reported by Amwal Alghad. Aman is in talks with Credit Agricole, United Bank, Abu Dhabi Islamic Bank and Al Ahli Bank of Kuwait for the facility, which will fund working capital, Nour Eldin said.

Negotiations shouldn’t take long: “It normally takes us only 2-3 months to negotiate credit facilities and receive approvals from banks since they are particularly supportive when it comes to providing credit facilities for microfinancing,” Nour Eldin said.

STARTUP WATCH

E-commerce platform El Dokan + used-car retailer Carzami close first funding rounds

Two local startups get a first foot on the funding ladder: E-commerce software provider El Dokan raised USD 550k in a seed round, while online used car marketplace Carzami bagged pre-seed funding, but declined to say how much it had raised.

FIRST UP- Cairo-based e-commerce platform El Dokan has raised USD 550k in its first funding round, led by EFG EV, Flat6Labs, 500 Global and Hala Ventures, the company said in a statement (pdf) yesterday.

About El Dokan: Founded in late 2020 by Ahmed Maher (LinkedIn), Mohammed Yousry (LinkedIn) and Sherif Alaa (LinkedIn), the company offers large retailers software to develop their own e-commerce platforms. El Dokan has more than 50 clients on its roster, including P&G, Misr Pharmacies, and startups such as Appetito. “We focus on medium and large enterprises because their operations are more complex,” Maher, who serves as the company’s CEO, told us. “Small businesses can go to any retailer to launch their e-commerce operations.” Earlier this year, the firm was among two startups chosen to work with P&G Egypt through its MEA Innovation Challenge.

The company has its eye on GCC expansion: The seed funding will go towards growing the company’s operations across the region by expanding its sales and marketing team, Maher told us. El Dokan is already registered in Saudi Arabia in preparation for launch, he said, adding that it is also planning expansion into other GCC and African countries. “We’ve been working on building our tech and working with local enterprises but our main goal is to scale our tech across the Middle East and Africa,” he said.

More funding to come: The startup is hoping to raise a USD 5 mn round by the end of next year, the CEO said.


AND- Carzami closes first funding round: Egyptian used car trading platform Carzami has raised pre-seed funding round led by Contact Financial Holding, along with an inventory financing facility, the startup said in a statement. Representatives from Contact and Carzami weren’t available for comment when we reached out yesterday.

MOVES

Foreign Minister Sameh Shoukry has appointed Ahmed Abu Zeid to return as spokesperson for the Foreign Ministry and director of the public diplomacy department, marking the second time he has held the position, according to a Foreign Ministry statement. Abu Zeid is switching roles with Ahmed Hafez, who replaces Abu Zeid as ambassador to Canada after serving as spokesman for four years.

Classifieds platform 4Sale has appointed Nabil Mohamed (LinkedIn) as its chief product officer, according to a press release (pdf). Mohamed most recently served as vice president of product at Instabug, a global computer software company. Prior to that he was senior product manager in Amazon’s Prime video and recommerce divisions. Founded by local entrepreneur Tarek Sakr (LinkedIn), 4Sale’s online marketplace caters to the Kuwaiti market but operates out of Egypt.

Amr Ahmed Lotfy Shehata Morsi is the new head of Alexandria Mineral Oils Company (AMOC) while Sayed Al Rawi Mahmoud Abdullah will lead refiner Midor in a shuffle of leadership at a number of ministry-controlled stories.

enterprise

LAST NIGHT’S TALK SHOWS

The Sisi administration’s national dialogue dominated the conversation on the airwaves last night after the board of trustees yesterday appointed several rapporteurs for the process (more on this in this morning’s Also on our Radar, below). Nothing particularly interesting was said, but if you’ve run out of things to kill time: Al Hayah Al Youm (watch, runtime: 19:16), Kelma Akhira (watch, runtime: 3:45), and Al Hayah Al Youm (watch, runtime: 4:21).

The economic crisis and the future of the EGP got a selective mention: Hazem El Beblawy rang the alarm bells about Egypt’s increasing indebtedness in an interview with Al Hadath Al Youm. The former PM called on the government to take action to prevent a debt crisis — but didn’t provide much in the way of a solution himself (watch, runtime: 6:42).

Meanwhile, Wael Ziada, executive chairman of Zilla Capital, speculated that the IMF isn’t likely to force the government into a sudden currency devaluation but could give it space for a gradual decline (watch, runtime: 6:24).

The gradual vs. sudden debate is key right now: Hassan Abdalla’s appointment to head the central bank has brought with it a strong consensus that the government is preparing to let the currency fall against the greenback. The main debate is whether it will do so at a slow pace or opt for a sudden devaluation as happened in March.

While the rest of the country has to rationalize consumption to boost foreign currency, New Alamein can use all the power it wants. Why? To attract tourists to the area, Housing Minister Assem Al Gazzar told Kelma Akhira’s Lamis El Hadidi (watch, runtime: 3:25).

EGYPT IN THE NEWS

It’s a quiet morning in the international press: Haaretz is the latest foreign outlet to examine the likelihood of Egypt defaulting on its debt while Bloomberg is drawing attention to the government’s pivot towards local treasury bill issuances this year. Meanwhile, AFP reports on the eviction of Warraq islanders whose houses are being destroyed so the government can redevelop the island.

ALSO ON OUR RADAR

National dialogue rapporteurs appointed: The 19-member board of trustees overseeing the Sisi administration’s national dialogue named six rapporteurs and assistant rapporteurs for the process’ main political, social and economic committees. Board members appointed:

  • Our friend Alieldean Helal, professor of political science at Cairo University and former sports minister, as the political rapporteur;
  • Ex-finance minister Ahmed Galal as the economic rapporteur;
  • and former youth and sports minister Khaled Abdel Aziz as the social rapporteur.

It also selected rapporteurs to each of the three political subcommittees.

Up next: The board will hold its next meeting on Saturday to name rapporteurs and assistant rapporteurs for the social and economic subcommittees.

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

  • ADIB gets the all-clear for capital increase: Abu Dhabi Islamic Bank Egypt (ADIB) will move forward with an EGP 1 bn capital increase, after the Financial Regulatory Authority greenlit the move. ADIB will offer an additional 100 mn shares at EGP 10 per share to existing investors. (Disclosure, pdf)
  • Scotland’s Queen Margaret University could be interested in opening a branch in the new capital. (Statement)

PLANET FINANCE

Powered by
EFG Hermes - https://efghermes.com/

And Europe learned the meaning of the word A_a… OPEC+ will cut supply in October in a surprise move meant to support oil prices, which have fallen back in recent weeks on fears of a global slowdown. The Saudi Arabia and Russia-led alliance agreed to reduce output by 100k barrels a day in October in its monthly meeting yesterday, it said in a statement.

Market reax: Brent crude jumped 3.0% yesterday to USD 95.78 a barrel while US crude briefly rose above USD 90 for the first time since August before falling back.

Let’s not overstate this: The cut will take us back to where we were in August and reverses the paltry hike made to supply following pressure from Western countries to cool oil prices.

But let’s not understate it either: The move will not be welcomed in European capitals and the US where soaring energy costs and supply shortages driven by the sanctions war with Russia are provoking an unprecedented energy crisis in Europe and fuelling inflation across the Atlantic. The cut also comes as Western nations try to drum up support around the world for a price cap on Russian oil, a policy which, if successful, will send further shockwaves through energy markets.


Dubai’s road-toll operator could become the third state-owned firm to IPO this year: Dubai will sell a 20% stake in Salik on the stock exchange in a transaction that it hopes could raise USD 1 bn, according to Bloomberg. The company will offer 1.5 bn shares to investors in an IPO scheduled to take place in September, it said in a statement (pdf) yesterday. Subscription will open on 13 September to retail and institutional investors.

Advisors- Our friends at EFG Hermes and HSBC have been appointed as joint bookrunners alongside Citigroup, while Emirates NBD, Goldman Sachs and Merrill Lynch are global coordinators.


The CNY is falling — and that’s not great news for emerging markets: The People’s Bank of China (PBOC) is cutting local banks’ FX deposit ratio — the amount of foreign currency banks must hold in reserve — to 6% from 8% in a bid to stop the CNY’s slide, Bloomberg reports. The local currency has hit a two-year low against the greenback, as Beijing’s zero-covid policy and a struggling property market pressure the Chinese economy just as the USD strengthens on rising interest rates. The CNY has lost nearly 10% to the USD over the last six months to trade at around USD 6.93 to the USD, with banks including Goldman Sachs expecting it to pass the USD 7.00 mark.

There will be consequences for EMs: The deepening trade and financial connections between China and other developing economies mean that the fate of other EM currencies are more closely tied to the CNY than ever before. “With the CNY set to weaken further, other emerging markets will face downward pressure on their currencies,” a senior analyst at Nordic lender SEB told the business newswire. “The impact will be felt the most by nations which compete directly with China on exports.”

Up

EGX30

10,178

+1.8% (YTD: -14.8%)

None

USD (CBE)

Buy 19.17

Sell 19.28

None

USD at CIB

Buy 19.20

Sell 19.26

None

Interest rates CBE

11.25% deposit

12.25% lending

Down

Tadawul

12,100

-0.8% (YTD: +7.3%)

Down

ADX

9,687

-0.7% (YTD: +14.1%)

Down

DFM

3,354

-1.2% (YTD: +5.0%)

Down

S&P 500

3,924

-1.1% (YTD: -17.7%)

Up

FTSE 100

7,287

+0.1% (YTD: -1.3%)

Down

Euro Stoxx 50

3,490

-1.5% (YTD: -18.8%)

Up

Brent crude

USD 95.74

+2.3%

Down

Natural gas (Nymex)

USD 8.76

-0.3%

Down

Gold

USD 1,721.20

-0.1%

Down

BTC

USD 19,748

-0.6% (YTD: -57.3%)

THE CLOSING BELL-

The EGX30 rose 1.8% at yesterday’s close on turnover of EGP 1.63 bn (46.4% above the 90-day average). Local investors were net buyers. The index is down 14.8% YTD.

In the green: Telecom Egypt (+15.8%), Ezz Steel (+8.6%) and Citadel Capital (+6.9%).

In the red: Egyptian Kuwaiti Holding-EGP (-1.4%), Abu Qir Fertilizers (-0.7%) and GB Auto (-0.5%).

Asian markets are mixed so far today, with the Nikkei, Kospi and Hang Seng facing selling pressure while shares are up in Shanghai and Australia. Futures suggest European stocks will come under selling pressure at the opening bell (perhaps thanks to fears of how OPEC’s surprise production cut could impact economies this fall). The Dow, S&P, Nasdaq and TSX Composite all look set to gain later today when markets in the US and Canada re-open following labor day weekend.

AROUND THE WORLD

UN appoints new envoy to Libya amid rising tensions: UN Secretary-General Antonio Guterres has appointed a new envoy to Libya amid an uptick in clashes that threaten to unwind months of negotiations to end the country’s years-long civil war. The UN Security council has finally agreed to appoint Senegalese diplomat Abdoulaye Bathily to the job following a nine-month search that has seen several candidates rejected by council members, Libya or other countries in the region. Bathily replaces Jan Kubis who resigned last year in the lead up to ill-fated national elections. Egypt’s Foreign Ministry welcomed Bathily’s appointment in a statement yesterday.

Israel admits “high possibility” its soldiers killed Shireen Abu Akleh: The Israeli military has conceded for the first time that there is a “high possibility” one of its soldiers killed veteran Al Jazeera correspondent Shireen Abu Akleh in May, CNN reported, citing a statement by the military. The IDF said any attack on the journalist by soldiers would have been accidental and will not launch a criminal investigation into the killing.

Also worth knowing this morning:

  • Bomb blast at Russian embassy kills six in Kabul: At least two Russian embassy staffers and four Afghan citizens were killed and another 10 people injured in a suicide bomb attack near the embassy’s entrance yesterday. Islamic State claimed responsibility for the attack. (Reuters)
greenEconomy

Climate change is threatening the future of our dairy farms. Extreme heat affects the growth, milk production, and reproductive rates of cattle. That’s bad news for small-scale Egyptian livestock farmers, who make up the bulk of the local dairy industry — and comes as some of them are already struggling to make a living as feed prices rise thanks to the global commodities crunch.

Dairy is a huge part of our agriculture industry — and demand is growing: Milk production is worth some USD 3.3 bn annually — making up a full third of Egypt’s total animal production sector and nearly 1.6% of the country’s total GDP, according to International Labor Organization estimates (pdf). Local cattle produce over 5 mn tons of milk every year, covering some 72% of the market’s needs, with imported milk powder covering the rest.

Small scale dairy farms supply more than 80% of all locally produced milk. They’ll need to up their production capacity to keep pace with the market, as our increasing population and rising demand for liquid milk in urban areas propels growth in the sector, the ILO says.

But hotter weather means less milk: Extreme temperatures expose all livestock to the threat of heat stress, which can suppress their appetite, lower their reproduction rates, and inhibit the functioning of their immune systems. Heat stress is especially worrisome for dairy cows, causing “a direct adverse effect on milk production, growth, feed intake, reproductive efficiency, and disease incidence,” according to a November study co-authored by Dr. Amira Goma, a member of Alexandria University’s faculty of veterinary medicine. Using the most recent estimates on population growth and expected temperature increases, the study’s authors predict that the availability of local milk could fall drastically in the coming decades. They predict milk production to stand at 26 kg per capita by the mid-2060s — less than half what it was in 2011.

Local dairy farmers told Enterprise that their herds are producing less milk as temperatures rise. “The most bothersome thing for breeders is the lack of production, and this has happened as a result of climatic changes,” Thabet Al Baqari, who owns Al Baqari farms, told Enterprise. He estimates that milk production drops by up to 10% in severe heat, adding that this year the impact was slightly more severe than last.

This summer was particularly bad for some: Mustafa Mohamed, the owner of Sheikh Mohamed dairy farms, expects milk production to decrease by 10-20% during hot periods — but this summer production dropped by more than half, he told us, adding that he hasn’t witnessed a similar rise in temperatures in twenty years. “Our farm production has decreased from 800 kg of milk to 300 kg of milk per day due to the heat and foot-and-mouth disease," Mohamed said.

Heat stress isn’t the only threat to the industry from climate change: Temperature increases also impact growing conditions for livestock feed, with any drop in production likely to lead to higher prices in global feed markets. Egypt imports more than 70% of its fodder, from markets including Brazil, Argentina, the US, and Ukraine. A hit to feed production on the back of climate change in those parts of the world would lead to higher input costs for our livestock farmers, former assistant deputy minister of agriculture and veterinarian Zagloul Khedr told Enterprise. Farmers respond to higher prices by reducing the amount of feed per animal — which has nutritional impacts that weigh on beef and dairy productivity, Khedr says.

And farmers’ margins are already being squeezed. Rising fuel prices on the back of the war in Ukraine and the strengthening USD have led to higher freight and transport costs for farmers, at the same time as feed prices have shot up, Khedr says. Al-Baraka farm owner Amr Magdy estimates that the price of corn has risen by more than 25% since the start of July.

Some have been forced to downsize or even shut up shop: Raising livestock in Egypt is no longer profitable due to the significant increases in input costs, Anani farm owner Ahmed Harbi told us, while several farmers said the price rises have prompted some to quit the business altogether. Mustafa Mohamed has reduced the size of his dairy herds to 70 head of cattle from 300. "We decrease the numbers year after year with the increase in costs, and there are farmers who stopped due to the lack of returns,” he said.

So how to address the challenges facing our dairy farmers? “The best coping response to these adverse climatic conditions is the development of resilient management strategies and the genetic selection of heat tolerant livestock species,” write the authors of the milk production study. Farm owner Al Baqari suggests managing the higher temperatures by increasing shaded areas, improving ventilation with fans in cowsheds, and making sure animals have enough water in periods of extreme heat. Khedr notes that making sure calves have all their vaccinations is key to stopping the spread of disease. Meanwhile, the government is working on boosting local production of feed grains in a bid to bring down the high import bill and insulate the industry from global cost pressures.

One climate-friendly solution: Drink less milk. Cattle farming is itself a contributor to climate change, the milk production study notes — meaning a decrease in livestock production “could reduce the anticipated temperature changes.” Plant-based dairy alternatives would need to see wider takeup as the population grows. That would “require the re-education of the Egyptian population about the value of alternatives to livestock in their diet and the provision of assistance for Egyptian livestock farmers who are willing to convert to more efficient methods of producing food for a secure future,” they write.


Your top green economy stories for the week:

  • Eni eyes renewables capacity in Egypt: Eni could establish 10 GW of renewable energy projects in Egypt “in the forthcoming years,” the Italian energy giant said.
  • Egypt + Greece could collab on renewable energy projects: Egypt and Greece are working on a plan to add 9.5 GW of renewable power generation capacity in Egypt for export to Greece.
  • Green hydrogen regs are coming: The Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) plans to announce a regulatory framework governing investments in green hydrogen projects in October.
  • Restoring Red Sea coral reefs: The Egyptian Environmental Affairs Agency, the Academy of Scientific Research and Technology and Gabrtek will work on a pilot project to restore coral reefs in the Red Sea.
  • A break for waste management players: NGOs operating in waste management will receive discounts on licensing fees and micro-businesses will be fully exempt from paying them.

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.

SEPTEMBER

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

September: Egyptian-German Joint Economic Committee.

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

September: Government to launch an international promotional campaign for Egyptian tourism.

September: Egypt will host the second edition of the Egypt-International Cooperation Forum (ICF).

5-8 September (Monday-Thursday): Gastech 2022, Milan, Italy.

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

7-9 September (Wednesday-Friday): Second edition of Egypt-ICF at Almasa Convention Center at the New Administrative Capital + African Finance Ministers meeting to coordinate an African-led position during COP27.

10 September (Saturday): National Dialogue board meeting to name 30 rapporteurs and assistant rapporteurs for 15 political, social and economic subcommittees.

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

11-13 September (Sunday-Tuesday): Environment and Development Forum (EDF), InterContinental City Stars, Cairo.

12-13 September (Monday-Tuesday): Cityscape holds its first pre-summit ahead of the main annual exhibition.

14 September (Wednesday): Expedition Investments’ MTO for Domty expires.

15 September (Thursday): Deadline for B Investments to respond to Adnoc’s bid for TotalEnergies Egypt.

15 September (Thursday): Deadline to apply for the fifth phase of the export subsidy program.

15 September (Thursday): Egypt and UN-led regional climate roundtable ahead of COP27, Beirut, Lebanon.

15 September (Thursday): The deadline for receiving offers for the renovation of the historic Grand Continental Hotel.

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

19-22 September (Monday-Thursday): EFG Hermes One on One Conference, Dubai.

20 September (Tuesday): Fifth Egypt and UN-led regional climate roundtable ahead of COP27, Geneva, Switzerland.

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

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

22 September (Thursday): Deadline to submit prequalification applications for companies interested in submitting a proposal for sea water desalination projects

25-27 September (Sunday-Tuesday) A delegation of executives at Egyptian real estate companies visit Saudi Arabia to present developers with potential investments in Egypt’s real estate sector.

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

27-29 September (Tuesday-Thursday): Africa Renewables Investment Summit (ARIS), Cape Town, South Africa.

28-29 September (Wednesday-Thursday): The sixth edition of Arab Pensions and Social Ins. Conference in Sharm El Sheikh.

OCTOBER

October: House of Representatives reconvenes after summer recess

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.

1 October (Saturday): Start of 2022-2023 school year.

1 October (Saturday): 2022- 2023 academic year begins for public universities.

4-8 October (Tuesday-Saturday): The Chemical and Fertilizers Export Council of the Trade and Industry Ministry is organizing a trade mission to Kenya.

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, Washington, DC.

15 October (Saturday): Cairo Metro will launch a global tender for maintenance work on the power stations and overhead catenary system of Line 1.

16-19 October (Sunday-Wednesday): Cairo Water Week 2022, Nile Ritz Carlton, Cairo.

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

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

Late October-14 November: 3Q2022 earnings season.

NOVEMBER

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): Autotech auto exhibition, Cairo International Exhibition and Convention Center.

6-18 November (Sunday-Friday): Egypt will host COP27 in Sharm El Sheikh.

7 November (Monday): The inauguration of the first line of the high-speed rail.

7-13 November (Mon-Sun): The International University Sports Federation (FISU) World University Squash Championships, New Giza.

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

DECEMBER

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

13-15 December (Tuesday-Thursday): US-Africa Leaders Summit.

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

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

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

December: Egypt to expand Sudan electricity link capacity to 300 MW.

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.

1 January (Sunday): Residential electricity bills are set to rise as per the government’s six-year roadmap (pdf) to restructure electricity prices by 2025.

7 January (Saturday): Coptic Christmas.

24 January-6 February: The 54th Cairo International Book Fair, Egypt International Exhibition Center

25 January (Wednesday): 25 January revolution anniversary / Police Day.

26 January (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

FEBRUARY 2023

11 February (Saturday): Second semester of 2022-2023 academic year begins for public universities.

13-15 February (Monday-Wednesday): The Egypt Petroleum Show (Egyps), Egypt International Exhibition Center, Cairo.

MARCH 2023

March: 4Q2022 earnings season.

23 March (Wednesday) — First day of Ramadan (TBC). Maghreb will be at 6:08pm CLT.

APRIL 2023

17 April (Monday): Sham El Nessim.

22 April (Saturday): Eid El Fitr (TBC).

25 April (Tuesday): Sinai Liberation Day.

27 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

Late April – 15 May: 1Q2023 earnings season.

MAY 2023

1 May (Monday): Labor Day.

4 May (Thursday) National holiday in observance of Labor Day (TBC).

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

JUNE 2023

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

JULY 2023

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

SEPTEMBER 2023

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER 2023

6 October (Friday): Armed Forces Day.

Late October-14 November: 3Q2023 earnings season.

EVENTS WITH NO SET DATE

2H 2022: The inauguration of the Grand Egyptian Museum.

2H 2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

2H 2022: The government will have vaccinated 70% of the population.

3Q 2022: Ayady’s consumer financing arm, The Egyptian Company for Consumer Finance Services, to release its first financing product.

3Q 2022: Swvl to close acquisition of Urbvan Mobility.

4Q 2022: Infinity + Africa Finance Corporation to close acquisition of Lekela Power.

4Q 2022: Electricity Ministry to tender six solar projects in Aswan Governorate.

4Q2022: Raya Holding subsidiary Aman and Qalaa Holdings’ Taqa Arabia to launch their fintech company.

End of 2022: Decent Life first phase scheduled for completion.

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.

1Q 2023: Adnoc Distribution’s acquisition of 50% of TotalEnergies Egypt to close.

**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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