Good morning, wonderful people — and happy last day of November. There are now 31 days left in 2022.

We have a packed issue for you this morning, including the latest in CEO poll of top executives on why we need to focus on FDI and exports, word that BMW has appointed a new agent in Egypt, the formal end to the CBE’s subsidized loans program, and more.

WATCH THIS SPACE- Could Ryanair be landing in Egypt? The Irish budget airline is in talks to launch flights to Egypt and Libya, Reuters reports, citing statements by CEO Michael O’Leary during an event. “We’re talking to the Egyptians, the Libyans,” O’Leary said, without providing further details. Europe’s largest airline by passenger numbers currently only operates flights outside of Europe to and from Morocco, Israel and Jordan.

More flights is exactly what we need right now: Making it easier to visit Egypt (and improving our offering) is an immediate way to boost our nation’s FX receipts, Somabay CEO Ibrahim El Missiri told Enterprise as part of our CEO poll on FDI and exports. Speaking of which…

DATA POINT- Nearly 30k Egyptian expats have registered on the government’s app to import cars since it launched on 15 November, Finance Minister Mohamed Maait told Al Arabiya TV in an interview (watch, runtime: 4:16), describing it as a “good turnout.” Customs Authority boss El Shahat El Ghatwary put the figure at 21.6k t the start of this week. The government is trying to draw foreign currency into Egypt through the scheme, which allows expats to import cars using foreign currency in exchange for a full rebate on taxes and dues. It will close on 15 March, 2023.

HAPPENING TODAY-

The Industrial Development Authority (IDA) will open tenders on vacant units in seven of its industrial complexes today, according to a statement. Bidders can take out the tender conditions booklet for the units from the IDA’s headquarters or its bureaus at the complexes. Bidding will remain open until all the units have been allocated.

FURTHER AFIELD- The US Fed could drop some hints today. Traders will be paying close attention to a speech US Federal Reserve head Jerome Powell is set to give today, Reuters reports. Powell is expected to make some indication as to where the Fed’s head is at in terms of its tightening cycle, amid speculation that the central bank could soon start slowing interest rate hikes as inflation slows and recession threats ramp up.

WORLD CUP UPDATE-

It’s day 11 of the World Cup: Teams in Group C and D face off today (all times CLT):

• Tunisia v France (5pm)
• Australia v Denmark (5pm)
• Poland v Argentina (9pm)
• Saudi Arabia v Mexico (9pm)

Senegal, Netherlands, and the USA got through to knockouts yesterday: Senegal earned its place in the knockout stage after beating Ecuador 2-1, with captain Kalidou Koulibaly scoring a second goal to restore Senegal’s lead only minutes after Ecuador equalized. Netherlands also qualified to the next stage after its 2-0 victory against host Qatar. The USA is also through, beating Iran 1-0 in a politically charged game between the two diplomatic foes. England is through to knockouts on the back of its 3-0 victory against Wales.

We already know some of the knockout clashes: It’s going to be England v Senegal + Netherlands v USA.

Speaking of the World Cup: More signs we’ll be teaming up with the KSA and Greece for a 2030 bid. KSA Tourism Minister Ahmed Al Khateeb told Bloomberg that his country is considering a joint bid to host the 2030 World Cup. “We are considering a bid with Greece and Egypt and we wish that it will be a [successful] bid,” he said. “Definitely the three countries would invest heavily in infrastructure and would definitely be ready. And I know by then Saudi Arabia would have state of the art stadiums and fanzones built,” he added. His statements come days after Egypt’s Sports Minister Ashraf Sobhy said that Egypt is working on joining a bid to host the World Cup in 2030 or 2034, after weeks of murmurs in the media that the three countries could team up.

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MARKET WATCH-

Next week’s OPEC+ meeting goes WFH: The oil cartel and allies will hold a much-discussed 4 December meeting online instead of in Vienna as planned, Bloomberg reports, citing sources it says are in the know.

Would OPEC make major policy changes over Zoom? The shift to an online meeting is leading market watchers to wager that the meeting won’t see the cartel change its October decision to cut supply by some 2 mn barrels per day. Five OPEC+ sources told Reuters that it’s likely to keep policy unchanged, while two other sources said that further cuts could be on the table in a bid to boost prices.

Germany seals long-term LNG supply agreement with Qatar: Qatar will begin supplying Germany with 2 mn tons of liquefied natural gas (LNG) per year as of 2026 under a 15-year agreement signed yesterday by ConocoPhillips and state-owned Qatar Energy, Qatar’s energy minister told reporters yesterday, according to Bloomberg. The minister did not disclose the agreement’s price tag.

It’s not going to plug the Russia-shaped hole in Germany’s natgas needs, but it’s a start: The LNG volumes Germany will import from Qatar under the agreement are equivalent to only around 6% of Germany’s natgas imports from Russia last year, according to Bloomberg.

CIRCLE YOUR CALENDAR-

The House Manpower Committee will continue hearings on the new draft Labor Act next Wednesday, 7 December. The session will see representatives from the Federation of Egyptian Industries (FEI) and the Egyptian Trade Union Federation in attendance. The bill, which was approved by the Senate in February, extends both maternity leave and notice periods, caps working hours, and changes minimum raise increments, among other things. We have more on the bill’s finer points here.

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

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We take a closer look at how new legislation could boost the river transport industry and attract private investment.

We recently had breakfast with 20 top CEOs to talk about why exports and FDI are key to our economy going forward. After reading our five-step recipe for turning Egypt into a global export hub and FDI magnet, participating CEOs agreed to answer two questions on the record for our latest CEO Poll.

We have already heard from:

• GSK’s Mohamed El Dababy, who says the starting point is tourism;
• McKinsey’s Jalil Bensouda, who points to business process outsourcing and customer relationship management.
• Somabay’s Ibrahim El Missiri, who believes tourism and aviation can be quick draws for FX.

TODAY- Bahaa Alieldean (bio) is managing partner at ALC Alieldean Weshahi & Partners, where he specializes in capital market, banking, and projects and infrastructure with a deep roster of foreign clients who invest across a range of industries here in Egypt. He holds a PhD in business law from King’s College London. Excerpts from our discussion:

ENTERPRISE- Which industry would you put on a focused short list — and why?

BAHAA ALIELDEAN- Part of the five-step plan that Enterprise proposed and that people loved was the enabling environment. As a lawyer, I’d be stepping out of my lane if I talk about which industries make the most sense. Instead, I’ll say that from where I sit, the make it or break it is the enabling environment.

The enabling environment is something we’ve been trying to create since 1952. Did you know that the nation’s first freezone law dates back to December 1952? That’s 70 years ago almost to the day. It’s telling, and it makes sense: Given our geographic location, our interlocking web of trade agreements, our abundance of energy, and our large (trainable) workforce? We need to look at exports, and I would frankly propose that we have freezones for every priority industry. And I’m not talking just about land, energy, and a highly functional customs window. I’m talking about freezones with strong management teams that understand exactly how to pitch themselves to global companies and local giants alike — and who understand that feeder industries are key.

I see this all the time as a lawyer: This desire to transcend the past and learn something new. But that just won’t work in Egypt. The one thing that has succeeded in Egypt is the freezone concept. Regulators understand it. Businesses understand it. And we have success stories: The SCZone is fantastic and it has all the right ingredients. So my approach would be to build on what has worked in the past — as if your five-step plan was not about what I’m going to focus on, but how I’m going to focus on those things.

E- Why are exports and FDI the way forward?

BA- There’s no doubt that exports and FDI are the way forward. They are key to our survival, foreign currency, employment, etc. Hot money is not the solution, and asset sales will only get us so far. We need to attract foreign investment — capital and know-how — into industries that will help us become an export powerhouse and lock in positions in the global supply chains of multinationals of all descriptions, whether they’re buying from us strawberry jam, call center services, or electrolyzers.

An international JV now represents BMW and Mini in Egypt, says it’s restarting local assembly: BMW has made Global Auto Group its new importer and agent in Egypt. Global is a joint venture between Kuwait’s Ali Alghanim & Sons Automotive, Saudi Arabia’s Mohamed Yousuf Naghi Motors, and local firms Organi Group and Al Safi Group, according to a statement (pdf). Global has also acquired Bavarian Auto Group (BAG), the former importer of both brands, the statement said.

What’s included: The acquisition sees BMW Group hand Global Auto the exclusive rights to import and assemble BMW and Mini cars in the local market. The JV has acquired BAG’s existing network of service centers and showrooms, as well as its BMW assembly plant. The facility is home to three production lines with an annual production capacity of 10k vehicles. It’s not clear if the acquisition includes the local rights to Brilliance Auto, the Chinese brand for which Bavarian has been the local agent and assembler.

The Gulf partners are bringing plenty of experience: Alghanim is a BMW distributor in Kuwait and Iraq, while Naghi Motors is the exclusive BMW, Mini, and Rolls Royce importer to the KSA.

Global Auto is set to invest USD 100 mn in the local market, chairman Fahad Alghanim told CNBC Arabia and Bloomberg Asharq in separate interviews (watch, runtime: 2:24 | watch, runtime: 2:05). Part of the capex spending will go to refurbishing existing showrooms and service centers and opening new ones powered by renewables, “especially in new urban cities,” the press release reads. Global Auto will also adopt BMW Group’s “Retail Next” corporate identity for dealerships.

The company wants to bring back local BMW assembly ASAP: The company will restart assembly at the former BAG plant in January 2023, Alghanim said. It wants to assemble 1.5k vehicles annually in a first phase, with plans to expand and export locally assembled vehicles in the future. Like other international brands, BMW downed tools on local assembly when it became clear the European Union was insisting Egypt honor its agreement to allow tariffs on fully assembled imports from Europe to fall to zero in 2019.

Fancy an electric BMW? Global Auto plans to introduce BMW i all-electric vehicles in the market. BMW has just rolled out its new i7 luxury EV in the UAE, Enterprise Climate reported yesterday.

This transaction is back from two years in the wilderness: We reported back in 2020 that Alghanim and BAG chairman Farid El Tobgui were competing to acquire the 99% stake in BAG held by a group of Qatari investors. Alghanim reportedly offered USD 300 mn for the dealership, while El Tobgui’s offer was not disclosed. We don’t know when El Tobgui bowed out, when the transaction was finalized, or how much Global Auto ultimately paid for BAG. BMW Group would have the final say in the transaction, we were told previously.

Saudi Arabia is extending by one year its USD 5 bn deposit at the Central Bank of Egypt (CBE), state-run Saudi Press Agency reports. The kingdom made the deposit in March. The sum forms part of over USD 22 bn pledged in investments and deposits by our GCC neighbors to help shore up Egypt’s finances and contain the fallout from Russia’s war in Ukraine.

The Saudi statement noted Egypt’s “enormous growth potential” amid ongoing structural reforms and moves to boost the role of the private sector in the economy. The statement also notes that Riyadh believes the deposit is important to Egypt’s bid to line up deposits and other lines of finance from other sources — including paving the way for us to land a USD 3 bn IMF facility.

What about the IMF facility? As of this morning, we still don’t appear on the IMF executive board’s public agenda, which is public through to 7 December.

Subsidized loans to industrial, agricultural, and construction companies will be axed, Deputy Central Bank of Egypt (CBE) Governor Gamal Negm said during a cabinet meeting yesterday. Borrowers who have already taken out loans under the program will continue to benefit from the subsidized 8% interest rate. However, industry players who want to extend or borrow more under existing facilities will have to do so at prevailing interest rates, according to the statement. The central bank has informed the Federation of Egyptian Industries (FEI) and local banks of the move, Negm said.

REFRESHER- A decree issued by Prime Minister Moustafa Madbouly last week saw the CBE end support for the 8% subsidized loans. The central bank will pass responsibility for some loan programs — including mortgages, tourism industry loans, the dual-fuel vehicle replacement scheme, and loans to farmers for irrigation upgrades — to the housing, finance, and tourism ministries. The fate of loans to industry wasn’t clear until yesterday.

The Egyptian Businessmen’s Association (EBA) called the decision to end subsidized loans “surprising” — and is (unsurprisingly) less than happy about it. The EBA wasn’t notified of the move despite flagging concerns to the PM over ending the central bank’s role in the program last week, chairman Ali Eissa told Kelma Akhira’s Lamis El Hadidi (watch, runtime: 12:43). The industry body had hoped to propose setting up a fund at the Finance Ministry to help fund the loans, and phasing out the central bank’s involvement over the next five years.

Manufacturers won’t be able to afford a sudden jump in interest rates, Eissa argues. “This could cause factories to slash production…and have producers hike prices for consumers amid limited supply,” he said.

In all likelihood cheering the news? The IMF. Reports in the press had suggested in the past weeks that ending subsidized loans was one of the conditions set by the IMF for our fresh financing. The Washington-based lender argues that providing financing at below-market rates is a lever best left in the hands of fiscal policymakers and is not the purview of the folks who set monetary policy. If we want, as a nation, to offer lower rates for SMEs, certain types of corporates, women-owned businesses, et cetera, it’s going to have to come out of ministries — using tax receipts — and not via CBE policy.

Wildcat building law gets Senate sign off: After three days of debate, the Senate gave its final nod yesterday to legislation aimed at making it easier for owners of illegal buildings to go legit.

What will it cost owners to get their buildings legalized? The current draft of the bill sets reconciliation fees at a minimum EGP 50 and a maximum EGP 2.5k per square meter. Owners who cough up immediately would receive a 25% break. They would also have the option to stretch out the period to five years.

The bill aims to seal some gaps in the current legislation on illegal building. The government has offered owners the option to pay to reconcile illegal buildings since 2020 — but authorities have reportedly only responded to a fraction of the mns of requests received, while fines have gone unpaid. Meanwhile, a lack of unified rules has meant that various governorates around the country have been implementing the law differently. The new draft bill aims to address these issues, amid a wider crackdown on illegal construction by the authorities.

ICYMI- Cabinet last month finalized the draft bill, which widens the scope for property owners in violation of the building code to pay “reconciliation fees” to the government to legalize their buildings. It would allow more owners of illegal buildings to enter the reconciliation process, provided that their buildings are structurally sound and not built on land protected by the Nile Protection Law or the Antiquities Protection Law. Reconciliation could also be possible for buildings that don’t meet the eligibility criteria if, for example, they are difficult to remove — but owners will pay triple the usual reconciliation fee.

What’s next: The bill will now make its way to the House of Representatives. If passed, it will be signed into law by President Abdel Fattah El Sisi.

Mini-break: The Senate is now off and will reconvene on Sunday 11 December.

Standardized parking fees to be rolled out across Cairo by the spring

Is haggling over parking fees about to become a thing of the past? Some 70% of Cairo’s streets will be governed by a street parking bill that aims to standardize and regulate the business of the “sayes” (street parking attendant) by March 2023, Ibrahim Awad, secretary general of Cairo governorate, told the House Local Administration Committee yesterday.

Nothing new for some: A pilot application of the bill has been in effect across six neighborhoods in Cairo, and in Dokki in Giza, since August 2021. The pilot met with criticism on social media, with some saying it was unfair to charge residents monthly fees to park on the streets where they reside, and others saying the fees and fines are too expensive amid a cost of living crisis.

Parking will be pricier in upscale neighborhoods: The capital’s streets will be classified in three bands with varying prices for parking “according to the social status of districts,” Awad said, without specifying a price range. Companies will be established to collect parking fees.

GB Auto has filed an arbitration case against the Algerian government for what it says are “severe damages and losses suffered” due to unspecified measures taken against GB Auto’s units and investments in the country. In an EGX disclosure (pdf), the company says its Algerian units — GBR Auto and GBR Services — have suffered at least USD 24 mn in losses due to actions taken by the Algerian government. GB Auto indirectly holds 54% of GBR Auto and 48.8% of GBR Services. GB Auto representatives declined to comment when approached by Enterprise yesterday.

The case: The company claims that the Algerian government’s actions were in breach of a 1997 investment treaty signed between the two countries, which enshrines the protection of investments.

GB Auto moved into Algeria in 2009 when it set up a JV to distribute trailers before going on to distribute car and tire brands in the country from 2013. Algeria later turned its back on foreign investors in the nation’s auto industry and GB Auto’s operations there have amounted to little more than a rounding error in its results since 2018.

What we don’t know: GB Auto’s statement does not get into details of its statement of claim against the Algerian government, including how much it is seeking in damages.

Misr Beni Suef Cement will appeal EGP 380 mn arbitration ruling:

Misr Beni Suef Cement has filed to appeal a September arbitration ruling by the Cairo Regional Centre for International Commercial Arbitration (CRCICA) that fined the company EGP 380 mn to settle a dispute with Qalaa Holdings’ unit ASEC, according to a disclosure to the EGX (pdf). The company filed the case with the Cairo Court of Appeal.

Background- The dispute dates back to October 2020, when Misr Beni Suef began procedures to let go of ASEC, leading ASEC to object and halt production. In turn, Misr Beni-Suef withheld funds from ASEC’s paycheck to prevent it from leaving the partnership with technical staff and engineers. ASEC has been managing Beni-Suef’s factory for over 20 years.

500 Global is setting up shop here: Silicon Valley VC fund 500 Global is working on opening an office in Egypt, which will also be its first foothold in Africa, according to a press release picked up by Wamda.

The fund has appointed our friend Amal Enan (LinkedIn) to oversee its Egypt operations. Enan was previously Global Ventures’ managing director and is currently the American University in Cairo’s chief investment officer.

Fresh programs + accelerators: 500 Global has also partnered with the CIT Ministry’s ITIDA to launch three programs that will support around 200 startups and 60 accelerator managers over the next three years. The VC will launch a bootcamp for seed-stage companies, a scale-up program for pre-series A companies, and a bootcamp for accelerator managers.

What they said: “We strongly believe in the potential of the Egyptian startup ecosystem, which has seen significant growth over the past two years,” Enan told Enterprise, adding that dealflow from the local market remains strong.

500 Global is no stranger to the Egyptian market: The VC has previously deployed funds in local startups including e-commerce startup MaxAB, online furniture marketplace Homzmart, grocery and bakery delivery startup Breadfast, and outsourcing startup Stllr Network.

The end of subsidized loans to industry was the big business topic on the talk shows last night as the pundits parsed the reaction to the Central Bank of Egypt’s (CBE) clarification that subsidized 8% loans to the industrial, agricultural, and construction industries will be axed. Egyptian Businessmen’s Association (EBA) chairman Ali Eissa voiced his concerns over the move to Kelma Akhira’s Lamis El Hadidi (watch, runtime: 12:43). Masa’a DMC and Ala Mas’ouleety also had coverage (watch, runtime: 10:57 | watch, runtime: 8:21).

^^ We have full coverage in this morning’s news well, above.

SMART POLICY- The Health Ministry plans to introduce an organ donation option on national ID cards and driving licenses “like in the rest of the world,” chair of the House Health Committee and former health minister Ashraf Hatem told Al Hadath Al Youm. (watch, runtime: 5:29). We’re all in favor of the move, which could get more of us talking on the topic of organ donation — and ultimately help save lives.

It’s another very slow day for Egypt in the international press — not that we’re complaining.

A tongue of gold: Mummies with solid gold tongues were unearthed last week at the Quweisna necropolis in Menoufia governorate, according to a Tourism Ministry statement. The news is making headlines at the Times, the Independent, and the New York Post, among others.

MEANWHILE- Reuters and the AP are picking up the news that Saudi Arabia will extend its USD 5 bn deposit at the Central Bank of Egypt (more on that above).

Among the other stories we’re paying attention to this morning:

ENERGY-

A 200 MW solar tender in Benban? The New and Renewable Energy Authority is reportedly planning to issue a tender for one company to develop solar power plants with a combined production capacity of 200 MW across several land plots in Aswan’s Benban solar park, Amwal Al Ghad reports, citing Electricity Ministry sources. The authority is looking to reach financial close on the plants in 2023, the sources are quoted as saying. Local media has previously reported that the government will look to tender six solar projects with a combined 300-MW capacity in Aswan this year.

We’re expecting expansions at Benban: The European Bank for Reconstruction and Development is helping the government tender off more of the 350 MW of unutilized capacity at Benban, EBRD Managing Director Harry Boyd-Carpenter told us during COP27.

SUSTAINABILITY-

SODIC is out with its very first sustainability report: Our friends at SODIC published a sustainability report (pdf) showcasing their economic, environmental, social, and governance (EESG) strategy and measuring the company’s EESG impact in 2021. SODIC is currently conducting its first standalone carbon footprint report, the company says. EGX-listed firms and NBFS companies are now required to file mandatory annual ESG reports, following a decree from the Financial Regulatory Authority last year.

FINTECH-

EFG Hermes’ BNPL platform valU will offer payment solutions for customers at TotalEnergies service stations, according to a statement (pdf).