AM — Two big conferences next week are the perfect opportunity to talk about our 5-step plan to build a new Egyptian economy

Good morning, wonderful people. We hope the week has been kind to you and that you’re looking forward to a couple of days of downtime as much as we are. But first: We have packed issue on this final workday of the week.

THE BIG STORY here at home this morning: It seems our Qatari neighbors are lining up investments worth as much as USD 2.5 bn in local firms. Word on the street this morning is that Qatar’s sovereign wealth fund is in advanced talks to buy up to 20% of Vodafone Egypt from (large) minority shareholder Telecom Egypt. The QIA is also reportedly kicking the tires on state-held stakes in other, unlisted companies.

ALSO THIS MORNING: We have a look ahead at three conferences that will set the agenda for the business community over the coming month. Two take place next week (below) and this morning’s Going Green looks at what the good people at EBRD expect of COP27. We also have updates on our ambition to become a world-class energy hub, including news that our national electricity grid should be linked up to KSA by mid-2025 and a look at how Turkey may be challenging our bid to become Europe’s natural gas bestie. Throw in some M&A news and the launch of the nation’s first black sand minerals plant and, well … it’s a lot — in the best possible way.

MEANWHILE- There’s still no sign of when we can expect that IMF facility we’ve all been waiting for, though it would be somehow poetic if it were to land on or before Sunday, when the first of the three big conferences kicks off. The IMF executive board’s public agenda shows no meetings scheduled.

HAPPENING NEXT WEEK-

Not one, but two big economic conferences will drive the news agenda for the business community next week.

CONFERENCE #1- The Madbouly government’s highly-anticipated economic conference kicks off on Sunday and runs through Tuesday. The gathering will see government officials, experts, and economists come together with the aim of creating a roadmap for the country’s economic future, Cabinet Spokesperson Nader Saad said in a statement.

The conference has three main tracks: Macroeconomic policies; empowering the private sector and improving the business environment; and formulating a future roadmap for priority sectors.

A technical committee is already looking into some 300 economic proposals for policies and measures to increase the flexibility and competitiveness of the Egyptian economy. They’re being filtered and passed on to the relevant authorities. At the end of the three days, a closing session will be held to draw attention to the conference’s outcomes.

Want to weigh in throughout the conference? Download the app. The Madbouly government has released the economic conference app for Android and iOS to give participants the chance to follow the proceedings and share their input.

CONFERENCE #2- Egypt and the UAE will host a two-day gathering marking 50 years of bilateral ties. The conference takes place Wednesday-Friday (26-28 October) and is being produced in association with the two governments. Day one is an economic forum featuring ministers, senior officials and business leaders from the two countries, while the following day will feature a cultural forum, according to a statement.

WE’RE CONVINCED THERE IS A (RELATIVELY) SIMPLE 5-STEP RECIPE policymakers can follow to turn the economy around by capturing a once-in-a-century chance to turn Egypt into a magnet for FDI and make us into an export powerhouse in the process. Tap or click here to read the story.

What can you do to help?

• Talk up our recipe if you’re attending either of next week’s conferences;
• Hit “reply” to this morning’s edition and send us an email and let us know your thoughts. We’re not even close to done talking about this yet.

MORNING MUST-READ

THE LATEST SIGN of how big the chance to capture part of the global supply chain could be for us here in Egypt? Look no further than this morning’s Financial Times, wherein the salmon-colored newspaper worries that the energy crisis in Europe could crush industry on the continent, writing that “executives and politicians fear a wave of deindustrialisation.”

IT’S AS IF EUROPEAN CEOs WERE READING OUR MINDS: “In an effort not to cede ground to competitors, some companies are tapping their lower cost plants outside Europe,” the FT writes. “We are a global company and can leverage assets outside Europe to compensate for any reduction in volume there,” Solvay CEO Ilham Kadri is quoted as saying.

But they’re also making us cry: The story quotes a steel producer as noting that rising natural gas prices in Europe and the continent’s carbon tax means it “makes a lot more sense for us to move production to Asia.” (Again: We haven’t made specific pitches to specific global CEOs — and that means we’re not even part of the conversation on where to move production. We need a private-sector-backed investment promotion agency to take over.)

Which European industry might move off the continent first? Fertilizer makers who use natural gas as feedstock, the paper argues, with producers in Hungary, Croatia, Poland and Romania feeling the squeeze.

There are 35 mn people with manufacturing jobs in Europe. Imagine the economic impact of moving just 10% of that here…

WATCH THIS SPACE- Gov’t will offer land on the cheap to spur industrial investment: While we’re on the topic of boosting FDI and exports, the Madbouly government is working on a package of incentives that includes offering industrial investors land at a more affordable price and with lower downpayments — especially for projects in Upper Egypt and Port Said. Trade and Industry Minister Ahmed Samir told MPs about the idea yesterday. Authorities are also looking at how to make it easier to snag an industrial license and offer more support to export-led businesses, he said.

The takeaway: Expect announcements on the incentives at next week’s conference.

ALSO NEXT WEEK- The House of Representatives will reconvene on Sunday, but expect a lot of empty seats as representatives flock to the economic conference. Those in attendance will discuss a new legislative agenda that includes “economic and social laws,” a source in the know tells us, stopping short of offering more details.

COUNTDOWN TO COP (17 days to go)-

Some 150 electric buses are coming to COP, courtesy of GM and Mansour: General Motors (GM) and Al Mansour Automotive signed an MoU with Egypt’s Foreign Ministry to provide 150 EVs to transport COP27 participants around Sharm El Sheikh. The two are COP27’s exclusive mobility partners, they said in a statement (pdf).

It’s your last chance to take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?

We want to hear from you: We’re taking the pulse on how the nation feels about Egypt’s nascent EV transition. Take a few minutes to fill out our short survey. We’ll be back soon with the results.

No single story is driving the agenda for the global business press this morning. There are several headlines vying for our attention:

• Russian President Vladimir Putin has declared martial law in annexed parts of Ukraine. (NYT | AP)
• The US and its western allies want a UN security council meeting over Russia’s alleged use of Iranian drones in Ukraine. (Bloomberg)
• If you’re into Musk stuff: Tesla’s 3Q earnings (mixed) and CEO Elon Musk’s Twitter takeover (overpriced, in his opinion) get ink in the WSJ and Reuters.
• Or more of a Murdoch-watcher: The FT has the latest on the media mogul’s real-life Succession story as he vies to put News Corp and Fox back together again.
• UK politics is still bonkers. The end could be drawing near for PM Liz Truss after Home Secretary Suella Braverman headed for the exit. (AP)

SIGNS OF THE TIMES-

Tougher times for smartphone makers: The global smartphone market just had its worst third quarter in eight years as the economic slowdown hits consumer spending. Smartphone shipments fell 9% y-o-y in the July-September period, continuing a period of slowing sales that has lasted through 2022, according to data research firm Canalys, which is forecasting demand to remain muted for another six to nine months. The slowdown has forced Apple to cut production of the iPhone 14 Plus just weeks before it is due to begin shipping. (Bloomberg | The Information).

There are going to be 8 bn people on our planet by the middle of next month: The world’s population is set to hit 8 bn on 15 November, according to UN forecasts, which also expects India to overtake China as the world’s most populous country next year. But don’t panic: That’s the message coming from the head of the UN Population Fund, Dr Natalia Kanem, who according to the Guardian is cautioning against “population alarmism” which she warns could lead to “ineffective and even dangerous” population controls.

What about us, you ask? Egypt is among eight nations where more than half of the projected increase in the world’s population up to 2050 will be concentrated. The UN expects the global population to hit 9.7 bn by the middle of the century, rising by 1.7 bn over the next 27 years. Egypt’s population has now surpassed 104 mn, rising by more than 1 mn this year alone, and is expected to near 160 mn by 2050.

WEEKEND MUST READS-

How should a business bro dress? As more and more “finance bros” return to their “native habitat” (ie: as bosses end WFH), men are “trading hoodies at the home office for hard pants,” the New York Times reports.

How many more warning signs does Mark Zuckerberg need to see before he pulls the plug on his metaverse? Business Insider argues that Meta has poured USD bns into Zuck’s pet project with little to show for it.

Could a UK-style market blowout happen in the United States? That’s the tn-USD question keeping Wall Street and US government officials alike awake at night. (New York Times)

CIRCLE YOUR CALENDAR-

The Suez Canal Economic Zone (SCZone) will launch a promotional campaign ahead of COP27 on potential investments in the zone next week. The campaign will be launched domestically on Sunday, 23 October, before the international campaign kicks off on Monday, 24 October.

Fuel prices to rise this month? We’re expecting the government to hike fuel prices for the seventh consecutive quarter when the fuel pricing committee meets this month. Fuel prices have risen by as much as 28% over the past 18 months in response to heightened international oil prices, which surged earlier this year on the back of Russia’s invasion of Ukraine.

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

*** 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: We sit down with Khalid Hamza, head of Egypt at the European Bank for Reconstruction and Development (EBRD), to find out what the multilateral lender has in store for COP27.

Qatar could invest as much as USD 2.5 bn in state-held firms: Qatar’s sovereign wealth fund is in advanced talks to buy up 20% of Vodafone Egypt from minority shareholder Telecom Egypt, as well as other state-held stakes in unlisted companies, in transactions worth up to USD 2.5 bn, sources close to the matter told Bloomberg. The sources did not disclose the other state-held firms Qatar is eyeing.

Telecom Egypt hasn’t received a formal offer from anyone yet: TE is in talks with three Arab sovereign funds to divest part of its stake in Vodafone Egypt, though the telecoms giant has yet to receive any official bids, a source close to the matter confirmed to Enterprise. We’ve previously reported that the Qatar Investment Authority (QIA), Saudi Arabia’s Public Investment Fund, and Abu Dhabi’s ADQ are all in talks with the government over a piece of Vodafone Egypt.

What’s the timeline on the Vodafone Egypt stake sale? TE could come to an agreement with one of the funds by the end of the year, our source confirmed.

We knew this was coming: The three funds have been in talks with the government — which owns 80% of TE — over the Vodafone stake for the past few months. Bloomberg Asharq reported previously that QIA is looking to acquire as much as 25% of the company, while our source tells us TE is open to selling up to a 20% stake in Vodafone Egypt “at the right price that would bring maximum returns to shareholders.” The EGX-listed telecoms giant holds a 45% stake in the company.

QIA has reportedly been eyeing several Egyptian companies: The fund was rumored to be 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, denied knowledge of the talks when we reached out recently. The fund’s investment arm last month signed an MoU with the Transport Ministry to explore investment in Egypt’s container terminals.

Background: Qatar earlier this year pledged to invest as much as USD 5 bn in Egyptian companies as part of wider Gulf efforts to shore up our economy and provide us with vital FX. Both PIF and ADQ have already made their to the EGX, investing bns of USD in a number of locally listed companies this year. PIF is reportedly still eyeing stakes in at least three high profile local firms. Gulf state neighbors have pledged over USD 22 bn in total to support the economy amid the fallout from the crisis in Ukraine.

This all comes as part of the government’s privatization push, which should see it more than double the private sector’s role in the economy to 65% over the next three years and attract USD 40 bn in investment by 2026.

EFG Hermes’ BNPL platform, valU, has acquired an undisclosed minority stake in fintech Kiwe, Kiwe CEO Fatma Ibrahim confirmed to Enterprise, following a company press release (pdf). The e-payments startup counts our friends at EFG Hermes Finance, EFG EV Fintech, dFin Holding, and Marakez among its existing shareholders.

What they said: “Through the acquisition Kiwe can offer our users an enhanced service by paying in installments while expanding our service to people who are unbanked or underbanked, and leverage valU’s network beyond Cairo and Giza,” Ibrahim tells us. “ValU will also be able to leverage our younger segment and enhance the overall payment experience,” she added.

About Kiwe: Kiwe's fintech solutions provide small companies and startups (mostly youth-led small businesses) with a cost-effective digital payment platform that makes it simple for them to carry out transactions electronically. The e-payment app closed its first, undisclosed investment round last year.

Another strategic move for valU: valU is continuing its expansion of fintech services, following on its recent acquisition of Paynas, an employee management and benefits company.

Our 3 GW electricity linkup with Saudi is going live in mid-2025: Trial operations for the USD 1.8 bn Egypt-Saudi electricity interconnection are set to begin in May 2025 with an official operational launch set for later in the same year, Bloomberg Asharq quotes Egyptian Electricity Transmission Company (EETC) head Sabah Mashaly as saying. The first 1.5 GW phase will go live in June 2025, followed by the second and final 1.5 GW phase in November 2025.

The funding is in place: Egypt has already secured USD 600 mn from several undisclosed Arab funds and agencies, Mashaly told Bloomberg Asharq. Standard Chartered Bank and Sumitomo Mitsui Banking Corporation this week announced the provision of USD 566.4 mn for the Saudi Electricity Company to facilitate the project.

We’ve been waiting on a clear timeline for the project’s operation for some time now: A consortium of Orascom Construction (OC) and Japan’s Hitachi ABB Power Grids was awarded the project’s execution contracts by the EETC last October. The project had reportedly been on hold since at least 2018, when initial tenders were launched, primarily due to the Saudi government’s work on Neom City.

About the project: The Egypt-Saudi electricity interconnection project will be home to HVDC conversion stations. Those include two stations in Saudi Arabia’s Medina and Tabuk and another in Badr city, east of Cairo. It will flow power along a 1.35k km route through overhead power lines and a 22 km subsea cable in the Red Sea.

Prospects for electricity exports to third-party countries? A surplus in generated capacity between the two countries could be exported to nearby countries through other interconnection projects, Sabah said.

REMEMBER- We’ve built a large surplus of electricity generation capacity over the past few years. Our grid is currently linked with Jordan, Palestine, Libya, and most recently Sudan. We’re also looking to create energy trade relationships with Greece and other regional neighbors, including a potential gas pipeline and the 2 GW EuroAfrica Interconnector project to connect our grid with Greece and Cyprus, which is expected to begin commissioning this December.

Russia may reroute gas to Turkey: Russian and Turkish energy authorities will begin work on a Moscow proposal to export Russian gas to Turkey for re-export to Europe, Turkish President Recep Tayyip Erdogan said last week, according to the Associated Press. Russia is proposing to pump the gas via the TurkStream pipeline beneath the Black Sea as it no longer considers the Nord Stream pipelines to Germany “reliable” conduits, Turkey’s foreign minister said.

How likely is this? Any proposal would need to be examined to see whether there is a European market appetite for such a project, Turkey’s foreign minister said. That’s a likely nod toward the fact that Russia is the last country most of Europe wants to be sourcing its energy needs from these days.

REMEMBER– We’re also angling for regional energy supply: Egypt already signed a nine-year MoU with Israel earlier this year to increase gas exports to Europe via Egypt’s LNG facilities. European energy companies will also increase their investment in gas exploration and production in Egypt and Israel, as part of the agreement.

Europe really needs more LNG terminals: More than 35 liquified natural gas (LNG) laden vessels are unable to offload their cargo due to Spain’s gas terminals operating at maximum capacity, Reuters reports. The country is offering just six slots this week, leaving dozens of vessels floating off the Spanish coast. Gas grid operator Enagas declared an “exceptional operational situation” on Monday and said it might have to turn away shipments even as Europe faces an historic energy shortage due to the loss of Russian gas.

The good people at B2B logistics marketplace Trella have secured USD 6 mn in debt financing from global debt platform ALMA Sustainable Finance and the US government’s US International Development Finance Corporation (DFC), according to a press release. ALMA got a USD 4.2 mn guarantee facility from DFC, allowing it to lend the USD 6 mn to Trella, according to the statement.

SOUND SMART- Otherwise known as “venture debt,” debt financing typically combines the traditional features of a loan with some aspects of VC financing. We answer all your questions in our recent explainer.

Pakistan + Egypt focus: Trella will use the financing to help it expand in those two markets. The agreement will also see USAID offer technical assistance to Trella on its Egyptian and Pakistani operations. The company currently operates in Egypt, Pakistan, Saudi Arabia and the UAE.

What they said: “We need new sources of capital to maintain our high-growth trajectory and reach the thousands of truckers across the region who need support to access more shipments, faster payments, and other integral services,” said Trella CEO and co-founder Omar Hagrass (LinkedIn | Making It).

Trella is on a financing push: The startup last month inked an agreement with Contact Financial designed to give it and the carriers it works with the access to finance they need to grow. Trella closed one of Egypt’s largest-ever series A rounds last year, raising USD 42 mn in a round co-led by Maersk’s VC arm. The company said at the time that the money would be used to expand in the MENAP region and develop its platform.

Swiss education lands in Gouna: Naguib and Samih Sawiris last week inaugurated the first building of the Uri-Schule El Gouna campus, alongside Swiss Ambassador to Egypt Yvonne Baumman and principal Lucas Aeschbacher. The Swiss school is the first in MENA and Africa to be directly supervised by Swiss authorities and follows an adapted version of the Swiss curriculum, with plans to also introduce IB and the European Matura. It is directly supervised by the Swiss canton of Uri.

IFLR MENA awards 2022: Our friends at HSBC landed the International Financial Law Review’s (IFLR) in-house team of the year award for its investment banking team, marking the second consecutive year they’ve received the award. Helmy Hamza & Partners was named Egypt’s national law firm of the year, while Adsero-Ragy Soliman & Partners took home the rising star firm of the year in the MENA region award.

Hydroponics equipment supplier Plug’n’Grow is one of seven startups selected to participate in Green for Growth Fund’s Clim@ Scaler accelerator in partnership with European VC Rockstart, the startup said in a statement (pdf). The four-month program could help provide the startup with access to investors, corporate partnerships and funding, the statement said.

Global Medical City (GMC) has launched a women’s health center dedicated to diagnosing and treating breast cancer, it said in a statement (pdf) this week. GMC is offering oncology consultations at no charge and special pricing on breast examinations during October to coincide with breast cancer awareness month.

All eyes were on the Hassan Allam-built black sand plant last night. The talking heads gave most of their attention to the inauguration of the black sand plant near Burullus in Kafr El Sheikh. President Abdel Fattah El Sisi was present for the opening.

Our friends at Hassan Allam Construction carried out the engineering and construction and contributed to the design of the plant, which the company built in a record 12 months, according to a statement (pdf) from the company. Hassan Allam landed the contract for the project from the military-affiliated National Service Products Organization’s Egyptian Black Sand Company back in 2020.

WHY IT MATTERS- Black sand has major export value “because it is of wide use in different strategic technologies like semiconductors, nuclear radiation material, vehicle frames, pharma, electronics, paints, and oil pipelines,” head of the House's Industrial Committee Moataz Mahmoud told reporters yesterday. Hassan Allam Holding CEO Hassan Allam noted that the project would both cover domestic needs and open doors to export sales.

How it works: The plant’s floating concentration station mines and dredges beach sand for ore, which is then transported for separation into rare minerals zircon, magnetite, ilmenite, rutile, garnet, and monazite.

SOUND SMART- Black sand is not sand at all — it’s an accumulation of heavy minerals, many of which have applications in industries from steel to paint, ceramics, textiles, paper, plastics, food, and renewable energy. It also looks really cool.

Our black sand reserves could last us some 200 years, Nuclear Power Plants Authority chief Hamed Mira told Ala Mas’ouleety (watch, runtime: 21:56), adding that some of the minerals to be extracted can sell for up to USD 3.2k a ton. The project will also play a part in the development of the Kafr El Sheikh city of Baltim and rid Egyptian coasts of harmful minerals, Mira said.

President El Sisi called on investors to amp up their involvement in black sand projects, either alone or through private-public partnerships, according to Masaa DMC (watch, runtime: 4:38). The country might need up to four more black sand plants, Masaa DMC’s Ramy Radwan said. Opening up more plants will create jobs and tap the state’s natural resources, Senate member Mahmoud Al Kott told Al Hayah Al Youm (watch, runtime: 9:05).

There’s not much being said about us in the international press this morning. The National profiles Downtown Cairo gallery Contemporary Image Collective’s ongoing exhibition on the experiences of Egyptian expats in the Gulf.

Dabaa contractors set to get a big tax break: The House of Representatives’ Energy and Environment Committee yesterday approved in principle draft amendments to the law regulating the Nuclear Power Plants Authority (NPPA), which would fully exempt from taxes all parties involved in building and operating nuclear projects. The legislation — which would include contractors, sub-contractors, equipment suppliers, and workers — comes to speed up the implementation of Rosatom-built Dabaa, the country’s first nuclear plant. It would also rename the NPPA as the Nuclear Power and Renewable Energy Plants Authority (NPREPA).

REMEMBER- Russian state nuclear company Rosatom was contracted in 2015 to handle the construction and provide fuel for the c. USD 30 bn plant, which will feature four 1.2-GW reactors. Construction began this summer and is slated to conclude at the start of the next decade. South Korea’s state nuclear power company in August signed a KRW 3 tn (USD 2.2 bn) contract with Rosatom to supply equipment and help build the 4.8 GW plant.

MEANWHILE- E-commerce platform Noon will launch a dedicated section on its website for the sale of products from electronics retailer BTECH per a signed MoU. (Statement, pdf)

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

• Saleh, Barsoum & Abdel Aziz will no longer represent Deloitte in Egypt from December and will instead join Grant Thornton International Ltd. as its local member firm. (Statement,pdf)
• UAE-based El Gammal Industrial Systems will reportedly invest EGP 100 mn to set up an aluminum-parts factory in Ain Sokhna. (Al Mal)
• Emirati foodtech startup Grubtech will provide its services to the Egyptian Food Bank after signing a partnership agreement with the nonprofit organization. (Statement, pdf)
• The government is preparing to offer a number of land plots and housing units in new cities to Egyptians living abroad. (Statement)