Sunday, 15 January 2023

AM — It’s day three of The Float



Good morning, wonderful people, and welcome to a brand new week.

THE BIG STORY here at home continues to be movements in the EGP: Signs last week that foreign investors are starting to return to the local market have set the stage for an interesting day in the interbank FX market today. We’ll be keeping a close eye to see which way the EGP / USD rate moves from its current level of 29.61 to the greenback on Day Three of the float.

What to watch for: Trading dynamics on Wednesday and Thursday suggest that the start of the business day in London means a lot for the EGP — it started rebounding against the USD just after 10:30am CLT both days. The workday begins for most London-based institutions at 8:30am local time.

DATA POINT #1- Egypt’s trade deficit widened in October 2022 to USD 3.58 bn, up 21% from October 2021, according to figures (pdf) from the state statistics agency Capmas.

  • Exports fell almost 10% y-o-y in October to USD 3.77 bn, down from USD 4.16 bn in October 2021. Capmas attributed the lower exports to declining oil and fertilizer prices.
  • Imports rose slightly to USD 7.35 bn, up 3.0% y-o-y from USD 7.11 bn last year.

THE BIG STORY ABROAD: The revelation that more classified documents were found at US President Joe Biden’s Delaware home marks a reputational blow to the president just as he gears up for a tough re-election bid. The Financial Times, Reuters, AP, the WSJ, WaPo, and the NYT have more.

There’s bad press for the other world superpower, too: Chinese authorities reported a country wide death toll of 60k covid patients in five weeks after Beijjing relaxed strict covid restrictions, the Financial Times and Reuters report.

MEANWHILE- Egypt shocked Croatia 31-22 at the start of 2023 World Men’s Handball Championships. It was Egypt’s first-ever victory over Croatia. Egypt next takes on Morocco tonight at 7pm CLT, while Croatia will play the United States at 9:30pm. Whatever happens tonight, Egypt will play its next group stage match against the United States on Tuesday at 7pm.


Chinese Foreign Minister Qin Gang will meet with Foreign Minister Sameh Shoukry in Cairo, state-owned agency MENA reports. The pair will hold a press conference after their meeting. Egypt is the last stop on an African tour that saw Qin last week visit Ethiopia, Gabon, Angola, and Benin.


Tourism Minister Ahmed Issa is making an appearance at AmCham’s monthly luncheon tomorrow, where he will speak on the government’s strategy to develop Egypt’s tourism industry. The event will be held at the Four Seasons Nile Plaza Hotel, Plaza Ballroom, from 1:30pm.

It’s Davos time: The great and the good of global finance, business, politics and media will converge on the Swiss town this week to chew over the biggest challenges facing the planet. With “Cooperation in a Fragmented World” the chosen theme for this year’s event, expect discussions to be dominated by the war in Ukraine, deglobalization, and food and energy security.

Representing Egypt at this year’s event are Planning Minister Hala El Said and International Cooperation Minister Rania Al Mashat, who will take part in a number of panel discussions over the five days.

PSA- It’s a short week in the US of A: Our readers in the US are off tomorrow in observance of Martin Luther King Day. Here at home, we’ll next observe a public holiday on Thursday, 26 January.

We have a COP28 president: Sultan Al Jaber, the head of the UAE’s state oil company, Adnoc, has been appointed to lead the COP28 climate summit which will be hosted in Dubai later this year. He will take the reins from current COP president Sameh Shoukry, who will spend the remainder of his presidency trying to negotiate the details of the landmark loss and damage fund agreed at COP27.

His appointment hasn’t gone down well with the activist set, who are questioning the decision to allow the head of one of the world’s largest oil companies to preside over the climate summit.

Al Jaber’s appointment and backlash is getting coverage from several international media outlets: AP | Reuters | Bloomberg | FT | BBC | CNBC.

The House of Representatives is back in session and has a busy agenda for the next three days.

Today is econ heavy. The House is set to discuss and vote on agreements that could see Egypt join three multilateral economic entities:

  • The African Development Bank’s food security and economic resilience support program, which has offered us a USD 271 mn loan;
  • the BRICS economic group’s USD 100 bn multilateral lender New Development Bank;
  • and a multilateral agreement offering administrative assistance on tax matters.

MPs will also table 30 questions on recent economic developments, ranging from the IMF loan to newly introduced budget cutbacks. The House will also discuss and vote on amendments to the law regulating police officers’ performance and disciplinary measures against them.

Oil exploration bill on Monday: The House will vote tomorrow on a draft law that allows the Oil Minister to contract the Egyptian General Petroleum Corporation (EGPC) and Brenco to explore for oil offshore North Sinai.

Tuesday will see Water and Irrigation Minister Hani Sewilam face questions from MPs.

MEANWHILE- National dialogue kickoff postponed: The board of trustees of the national dialogue has pushed back the 14 January date set for its launch, after political parties failed to name their representatives to the sessions on time, National Dialogue General Coordinator Diaa Rashwan said on Friday (watch, runtime: 36:15). The board will meet midweek to set a new date for the kickoff, which will be “very soon,” Rashwan said. The dialogue’s 19 subcommittees are set to meet 3-6 times per week to discuss around 122 issues in total, Rashwan said, with high inflation and public debt topping the agenda of the 45 issues set to be discussed by the economic subcommittee.

DATA POINT #2- The majority of our wheat imports (57%) came from Russia in 2022, up from 50% in 2021, Reuters reports. Russia accounted for the lion’s share of our wheat imports last year despite a 6.7% y-o-y in decline in shipments from the country, as total wheat imports fell 18.7% y-o-y to 9.5 mn tons. Ukrainian shipments, meanwhile, made up just 8.9% of the total, down from 28% in 2021.

If the price is right: “It’s about the prices of course. We tender, and we check free-on-board and freight costs and then we buy no matter the origin,” Supply Minister Ali Moselhy is quoted as telling Reuters.

ICYMI- War in Ukraine sent international grain prices soaring last year, forcing Egypt — the world’s largest importer of wheat — to rely more on the local harvest, diversify the source of its imports, and pivot from international tenders to direct purchases on the global markets.

CORRECTION- In Thursday’s edition of EnterpriseAM, we incorrectly said Tarek Metwally is currently the deputy managing director of Blom Bank Egypt. Metwally resigned from his position in 2018. Rabih El Halabi (LinkedIn) is Blom Bank Egypt’s current deputy managing director. The story has been amended on our web edition.


*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.

In today’s issue: What does 2023 have in store for StartupLand?


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Foreign investors are starting to come back into the market after Wednesday’s devaluation

The Central Bank of Egypt’s move towards a more flexible EGP seems to be paying off, helping draw in much-needed USDs into the market. Hundreds of mns of USD have changed hands in the interbank market since Wednesday morning, when the central bank allowed the EGP to weaken past 32.00 / USD for the first time ever, bankers reportedly told Reuters.

So where do we stand? The EGP was at 29.61 to the greenback at the end of the banking day on Thursday, down more than 9% for the week and nearly 20% from its value immediately before the 4 January devaluation.

More than USD 800 mn in FX changed hands in the interbank market on Wednesday, according to two bankers, who indicated that foreign institutions were entering the market ahead of Thursday’s t-bill auction. A separate report in state news agency MENA last week put the figure at USD 650-750 mn, around USD 250 mn of which reportedly came from international investors. We have previously reported that senior bankers had said JPMorgan and Morgan Stanley were transferring funds into the country, setting them up to take positions in any number of asset classes.

Thursday’s treasury auction was more than 3x oversubscribed: The central bank was looking to sell EGP 20 bn worth of six-month bills and received bids for EGP 67.7 bn. It ultimately sold EGP 51.9 bn worth of bills at a weighted average yield of 21.0%, according to central bank figures. In the secondary bond market, Arab investors put EGP 7 bn into treasury bonds on Wednesday alone, Bloomberg wrote, citing EGX data.

Trading on the EGX was heavy on Thursday as local investors plowed into equities. Turnover came in at nearly EGP 2.6 bn, or just about 56% above the trailing 90-day averages. Local investors were net buyers. The benchmark EGX30 was just about flat for the day, closing up 0.2%.


“The end of the devaluation process is close,” Citigroup strategists wrote last week in a report picked up by Bloomberg. “Although we do not expect the authorities to shift to a free-floating regime, further flexibility is expected, in line with the fund’s requirements.”

Look for inflation to rise in 1Q 2023: Annual headline inflation is projected to average 25% this quarter as the EGP slides, S&P Global Market Intelligence Senior Economist Yasmine Ghozzi told Bloomberg Asharq in an interview (watch, runtime: 6:56). The weakening currency has already caused inflation to accelerate at its fastest rate in five years.

Another rate hike in the cards? Like most other analysts, Ghozzi expects the CBE to hike interest rates in its next meeting in a bid to tamp down on price hikes, penciling in 100-150 basis points of rate rises this quarter.

Slower buildout of national projects? “Gulf states are unlikely to facilitate additional investment into the private sector unless the government rationalizes un-costed, large mega projects. This is likely to reduce the scope of projects connected to the New Administrative Capital east of Cairo and will probably delay short-term development progress around the El Dabaa Nuclear Plant development on the Mediterranean coast,” Ghozzi writes in a report.

It’s already happening: The government has already committed to budget cutbacks at all but “essential” ministries until the end of the current fiscal year and to limit spending on some national projects that require FX, though some ministries have been ringfenced from the move.

It’s all about reforms: “Pushing through structural reforms and getting investments into state assets will really be key. In terms of Egypt’s longer-term prospects, they depend ultimately on how much the current regime is willing to loosen its grip over the economy,” senior EM economist at Capital Economics, Jason Tuvey, told Bloomberg on Thursday (watch, runtime: 3:06). “The debt position is more vulnerable to weak currency than it was in 2016. The short maturity of debt means it's vulnerable to rising borrowing costs,” Tuvey said, adding that as long as Egypt keeps policy tight debt will come back down.

What to look for now: Progress on attracting fresh funding from the Gulf to priority sectors, rising inflows from Egyptian expats and portfolio investors, and general improvements in EM market sentiment would all improve risk perception and give the country “greater access to the international capital markets,” Ghozzi writes.


Goods worth a combined USD 645 mn were released from ports last Wednesday and Thursday, Prime Minister Moustafa Madbouly said at a press conference in North Sinai yesterday, according to a cabinet statement. That would put the total value of goods cleared since 1 December at some USD 9.1 bn by our math. The statement didn’t disclose how much remains stuck in ports, though the government previously pegged the value at USD 9.5 bn as of 25 December.

Gov’t emphasizes increased social spend + taxation: Finance Minister Mohamed Maait stressed the government’s increased spending on social security as well as a boost to state coffers thanks to tax reform in a brief mid-year review of the state budget. Maait highlighted the following preliminary figures for 1H 2022-2023:

  • The 14.2% rise in state revenues was largely due to a 19.4% increase in tax receipts, following moves to integrate informal business and widen the taxpaying base;
  • Budget spending on subsidies, grants and social protection grew by 2% y-o-y;
  • Cash subsidies grew 14% y-o-y to EGP 10.7 bn as another 1 mn families were onboarded to the Takaful and Karama social security program;
  • Ration-card subsidies increased 17.5% y-o-y;
  • Education expenditure grew 14.4% y-o-y to register EGP 103 bn;
  • Health expenditure grew 6.6% y-o-y to register EGP 60 bn;
  • The primary surplus grew more than eightfold y-o-y to register EGP 25.5 bn (2.3% of GDP) before debt servicing, up from EGP 3 bn in 1H FY 2021-2022.

What we don’t know: Maait didn’t disclose mid-year figures for growth, the budget deficit, or debt to GDP. We expect more details in the ministry’s annual mid-year report, which should be published in February.


Five state + military-owned companies added to pre-IPO fund

The Sovereign Fund of Egypt (SFE) has added five state- and military-owned companies to its pre-IPO fund as the government gears up to restart its privatization program, Bloomberg Asharq reported Thursday, citing two sources it says are familiar with the matter. Officials at the SFE did not reply to requests for comment before dispatch time this morning.

Who’s in? Two military-owned firms — bottled drinks firm Safi and fuel retailer Wataniya — are in the fund, alongside Banque du Caire, Misr Life Ins., and Egyptian Linear Alkyl Benzene (Elab).

Up for grabs: The fund will offer a 20-30% stake in these companies to strategic investors.

A January roadshow: The SFE will market the companies to regional and international strategic investors in a roadshow this month. A number of Arab sovereign wealth funds have expressed interest in acquiring shares in the military firms, SFE boss Ayman Soliman said previously.

A route to the EGX: The SFE set up its pre-IPO fund in September to prepare state-owned companies for eventual listing on the EGX. It will sell shares in a number of companies to strategic investors before proceeding with public share sales when global market conditions have improved.

Some context, #1- This is about what we expected. None of these are “new” names — all are perennial candidates for privatization. Wataniya and Safi have been part of the Sovereign Fund of Egypt-led program to open up military-affiliated companies for privatization since late 2020. Banque du Caire’s long-planned IPO has been subject to repeated delays while Misr Life Ins. was eyeing a 2H 2022 window for its IPO. Elab has been in the lineup for the state IPO program since 2018.

Some context, #2- Don’t expect Safi or Wataniya to start with an IPO — the state has signaled that it is much more likely to sell a stake of each to a strategic investor, with an IPO coming at a later stage.

Some context, #3- Don’t expect the IPO floodgates to open anytime soon. The EGP needs to find its footing and international institutional investors must return to the market before the EGX can support large, high-profile offerings.

BACKGROUND- The state wants to raise as much as USD 6 bn through strategic stake sales via the pre-IPO fund, Planning Minister and SFE head Hala El Said has said. The fund will sell shares worth USD 2.5-3 bn during an initial phase before offering another USD 3 bn at a later date, she said in September. The report in Asharq did not attach a value to the five companies.



Keep an eye on Capricorn in February

All eyes on Capricorn next month: London-listed Capricorn Energy plans to hold a vote on its merger with Israel’s NewMed on Wednesday 1 February, the same day that shareholders will vote on a motion to overthrow the board called by activist investor Palliser Capital, according to disclosures filed to the London Stock Exchange last week (here, pdf and here, pdf).

ICYMI- Capricorn — which has a portfolio of producing assets in Egypt’s Western Desert — and NewMed (FKA Delek Drilling) have proposed an all-share merger that would hand shareholders in the Israeli company almost 90% of the merged entity. The plan has generated significant opposition among Capricorn’s shareholders, and a group led by Palliser controlling almost 40% of the company are attempting to oust seven of the company’s nine board members.

Why this matters: Should the merger go ahead, NewMed shareholders will gain control over Capricorn’s Egypt assets, whose working interest production during 1H 2022 averaged 35.5k barrels of oil equivalent per day.

The decision to hold the votes on the same day didn’t go down well with Palliser: “We are stunned that … Capricorn's incumbent directors have desperately convened a general meeting to approve the NewMed transaction just hours ahead of the board change meeting called by Palliser,” Palliser told Reuters.

This is how the board would look if the merger goes ahead: Capricorn said Peter Kallos would become the transitional independent chair of the merged entity, instead of current CEO Simon Thomson, whom Palliser is trying to remove. NewMed CEO Yossi Abu would become the CEO and James Smith, Capricorn’s chief financial officer, would be CFO.


Are you a party to the contract? No? Then you can’t sue.

The Supreme Constitutional Court has upheld the Appeals Against State Contracts Act, rejecting a case that sought to have the act thrown out as unconstitutional, according to Al Shorouk.

About the Act: The Appeals Against State Contracts Act prohibits third-party lawsuits against individual contracts with the state. That means that only those parties involved in a state contract can bring a lawsuit regarding it — unless parties to a contract have been convicted of a financial crime.

Background: Signed into law by former interim president Adly Mansour in 2014, the bill was part of a post-revolution push to limit the ability of Islamist, Nasserist and other publicity-seeking lawyers to insert themselves into state contracts (and to sue cabinet members and public servants), arguing that they were doing so in the public interest.

What were the Supremes ruling on? The Administrative Court had asked the Supreme Constitutional Court to rule on the constitutionality of the act as part of a years-old case brought by employees of the Nubaria Seed Production Company (NUBASEED) against the government's decision to privatize the company.

Good news for the privatization program? The law was designed to boost investor confidence and streamline asset sales. Its being declared constitutional will provide additional comfort to investors as the state relaunches its privatization program, which aims to attract USD 40 bn in private investment by 2026 through public share offerings, stake sales to strategic investors, and expanding public-private partnerships.



Of warehouse raids, wheat prices, and shop licensing laws

It was a mixed bag on the talk shows over the weekend: Commodities was something of a theme as the pundits took a look at what went down at one of ecommerce startup MaxAB’s warehouses over the weekend, as well as getting into the nitty gritty of newly implemented shop licensing laws and an expected bump to the state’s local wheat purchase price.

Goods seized at the MaxAB warehouse in Qalyubia: The governor of Qalyubia and other “relevant authorities” ordered the seizure of tons of commodities at the warehouse of ecommerce outfit MaxAB because of a mistaken belief that the company was hoarding both subsidized and unsubsidized products, MaxAB CEO and co-founder Belal El Megharbel told El Hekaya (watch, runtime: 9:05). MaxAB will be providing receipts to the government to get back its goods, El Megharbel said. MaxAB raised a USD 40 mn round to fund its expansion in 2022.

Shop owners aren’t jumping to get licensed: Only 2.7k of the 4 mn unlicensed shops in the country have so far applied for licenses under the newly-introduced Public Shops Law, Rep. Mohamed Al Fayoumi told Al Hekaya’s Amr Adeeb in a phone call (watch, runtime: 5:32.) Licenses cost between EGP 1k and EGP 100k depending on the location and size of the shop, Al Fayoumi told Al Hadath Al Youm in a phone call (watch, runtime: 6:36.) Only shops operating in 34 specific activities — rather than all shops — need to obtain security clearances to get a license, Al Fayoumi told Sada El Balad (watch, runtime: 3:02). Owners of unlicensed shops have one year from the law’s implementation last December to apply to obtain licenses, which should be issued within 90 days.

A 25-35% increase in the state’s wheat purchase price? Ala Mas’ouleety’s Ahmed Moussa speculated that the price per ardeb of wheat that the state offers to local farmers could rise to EGP 1.25k-1.35k from last year’s EGP 1k (watch, runtime: 3:25). The cabinet will announce its final price for the 2023 season following its weekly meeting on Wednesday, according to Saad (watch, runtime: 10:26.)

AND- Prime Minister Moustafa Madbouly’s trip to North Sinai with several government ministers to follow up on development projects got airtime on Masaa DMC (watch, runtime: 1:39), Al Hayah Al Youm (watch, runtime: 5:36), and Kelma Akheera (watch, runtime: 4:32).


A new ancient discovery in Luxor: An Egyptian-British archaeological mission discovered a royal tomb in Luxor dating to the 18th Pharaonic Dynasty, according to a Tourism Ministry statement. Deutsche Welle, Agence France Presse, and the Associated Press all have coverage.

Also making headlines:

  • Natural gas exports are on the rise: “Egypt ramped up LNG exports last year to maximize use of its terminals and further its role as a hub of Mediterranean and Middle Eastern supply to Europe,” writes Natural Gas Intelligence (NGI) in a wrapper on the story.
  • Rigoletto is back at the Opera House after what Chinese state news agency Xinhua says is a 150-year break.
  • Food carts are struggling: A ubiquitous feature of Cairo’s streets, food carts are suffering from rising food prices and increasing competition. (The National)
  • Fayoum: A hidden tourist attraction. National Geographic takes us on a tour through Fayoum, its deserts and archaeological sites.


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US consumer prices fall for the first time since May 2020: US inflation slowed to its lowest level in a year in December, in the latest sign that a surge in prices that has forced the Federal Reserve to aggressively raise interest rates is abating. The consumer price index fell to 6.5% last month from 7.1% in November, largely on the back of falling gas prices, according to figures (pdf) released Friday by the Bureau of Labor Statistics. On a monthly basis, prices fell for the first time since May 2020, declining 0.1% during the month.

The slowdown will continue to stoke hopes for an end to the Federal Reserve’s aggressive tightening cycle: Bloomberg economist Anna Wong thinks that the report will prompt the US central bank to again slow the pace of rate hikes in its coming meeting. “A mostly favorable December CPI report gives the Fed room to further downshift the pace of rate hikes to 25 bps at the 31 January-1 February meeting. We expect the Fed funds rate to peak at 5% in March and stay at that level for the rest of the year.” The central bank raised rates by 50 bps at its final meeting of 2022, breaking a run of four consecutive jumbo 75-bps hikes and bringing the target range of the federal funds rate to 4.25-4.5%.

Optimism that the worst is over is good news for EM debt: Signs that inflation may have peaked in the US — and that monetary tightening could ease — are prompting investors to pile into emerging-market sovereign debt following a choppy year. EM sovereign debt has seen more than USD 40 bn in inflows so far this year, making it one of the busiest starts to a year on record, according to Bank of America, the Financial Times reports. The bond binge comes as bond prices rebound from heavy losses last year, with the JPMorgan gauge for EM foreign currency debt now up 1.7% so far in January, compared with a 17.8% fall last year.

Is Egypt jumping on the sovereign bond bandwagon? Egypt was not among the issuers so far this month, though one fund manager tells Reuters that the country will need to issue debt in the medium-term but is likely waiting for better market conditions. Indicated yields are currently in the double-digits, but Egypt will likely wait until they drop to the 8-9% range, they said.


  • Saudi industrial oils giant Petromin is dusting off plans to IPO in Riyadh, in a share sale that could fetch as much as USD 1 bn. (Bloomberg)
  • UAE tech firm Astra Tech has purchased voice-calling app Botim for an undisclosed amount, an acquisition that brings AT closer to creating a super-app and makes it one of the region’s biggest communications tech platforms. (Bloomberg)
  • Credit Suisse plans to lay off 10% of its European investment bankers this year in another wave of job cuts for the crisis-hit firm amid leaner times for the sector. (FT)




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The EGX30 rose 0.2% at Thursday’s close on turnover of EGP 2.59 bn (55.9% above the 90-day average). Local investors were net buyers. The index is up 6.53% YTD.

In the green: Heliopolis Housing and Development (+10.6%), Alexandria Containers and Cargo Handling (+4.9%) and AMOC (+4.5%).

In the red: Cleopatra Hospitals (-3.2%), Mopco (-2.7%) and Credit Agricole Egypt (-2.5%).


Shoukry in Riyadh + Italian investment incoming?

Shoukry in Riyadh for talks: Foreign Minister Sameh Shoukry discussed a number of regional crises with his Saudi counterpart Prince Faisal bin Farhan Al Saud in Riyadh last week, according to a joint communique. The two ministers discussed the Grand Ethiopian Renaissance Dam, as well as developments in Palestine, Sudan and Yemen, among other issues.

Italy eyes new projects in Egypt: Italy’s Ambassador to Egypt Michele Quaroni discussed with Prime Minister Moustafa Madbouly new areas of cooperation between the two countries, including in energy, maritime transport, and agricultural reclamation, according to a cabinet statement. The meeting follows reports that Italy has submitted a proposal to Egypt to work on a joint USD 2.8 bn electricity interconnection project with a capacity of 2.5-3 GW.

Talaat meets with more Indian companies: Communications Minister Amr

Talaat met with representatives from more Indian tech companies as he wrapped up his week-long trip to India. The minister sat down with officials from eInfochips, CtrlS, Global Logic, Capgemini, and Wipro over the weekend as part of his efforts to drum up Indian investment in our CIT sector, according to two ministry statements (here and here).

FROM THE REGION- Turkey is claiming that Libya’s Tripoli-based government still backs a contentious energy exploration pact with Ankara even after a Libyan court last week suspended the agreement, Reuters reports quoting Turkish Foreign Minister Mevlut Cavusoglu. Egypt and Greece had rejected the Libyan-Turkish agreement, which has inflamed tensions between Mediterranean powers over maritime borders in the oil and gas-rich East Med.


More challenges to come for startups in 2023: Our year in review on StartupLand in 2022 recapped the biggest trends of the past year, with the most dominant themes (unsurprisingly) being the global VC squeeze, the ensuing high-profile downfall of Capiter and the waves of consolidation (and layoffs) across startups in various industries.

Many of these trends will carry through to 2023, as the global economy braces for more headwinds and a looming recession, and as VC investments continue to be viewed as a risky asset, our sources tell us. Startups going into 2023 will need to rethink their approach to growth, extend their runways, and look at alternative financing in order to come out stronger, investors say, and there’s a huge potential upside for those who play it right.

The VC squeeze is here to stay — but 2H 2023 could see some relief: Investors we spoke to agreed that the VC squeeze will continue to be a thorn in startups’ sides for most of 2023. Simon Tkachenko, partner at Modus Capital, expects the squeeze to see some relief in the second half of the year, as pressure amps up on VCs to deploy their capital.

Also here to stay: A weaker currency. A lot of startups have commitments that need to be paid in USD, like purchasing CRM systems or paying wages for foreign talent, said Aly El Shalakany, managing partner of Acasia Ventures, the VC arm of local investor outfit formerly known as Cairo Angels. The devalued EGP can also impact startups’ valuations, because most are expressed in USD terms but paid in EGP, which has made sharp FX fluctuations an issue in the past, Tkachenko said.

This will likely mean more flat and down rounds in the short term: “I think startups are going to have a hard time raising at an up round,” Tkachenko said, adding that the dominant narrative in the VC ecosystem now is that “a flat round is the new 3x multiple.” This is especially true in Egypt, where valuations since 2020 have been too high and at times “illogical,” El Shalakany told us. “The ones who raised at inflated prices last year are going to have to take down rounds and flat rounds, whereas those that raised at reasonable prices are less likely to have to do so,” he added.

That’s not necessarily a bad thing: “Ultimately, this will shake out a lot of bad companies, and a lot of good companies will be built and funded right at decent valuations,” Tkachenko explained. “The more sober environment we’re in means that companies that perform well will be able to find funding,” Algebra Ventures Managing Partner Tarek Asaad told us. “It doesn't have to be through mega rounds, but it will be enough to support companies through to the next milestone,” he added.

That’s a mixture of good and bad news: The less competitive environment is good for early-stage startups, especially when it comes to finding talent, Assad explained. However, companies hoping to raise their second and third rounds to survive are going to get tested, Karim Helal, executive chairman of Sequence Ventures, told us. Investors will be taking a closer and more critical look at startups’ expansion plans, asking how they plan to fund them, and if their plan is to fund them with their second or third rounds, that could be a concern, he added.

This could lead to more consolidations: “As funding is more limited, companies need to think of options,” Asaad said, adding that “there is a lot more potential for consolidation.” Tkachenko agrees, though he notes that the majority of acquisitions and cost-cutting is likely to have already happened in the past year. Global Ventures General Partner Noor Sweid has made the same prediction for the MENA region at a broader scale. “2023 will see increased M&A in the MENA region as a direct consequence of trends that permeated 2022, and which will intensify” this year, she wrote in an emailed note. “These trends are investors becoming more conservative, profit superseding the notion of growth at any cost, reduced liquidity and down rounds.”

And more startups prioritizing runway + steady growth: “Companies are focusing more on fundamentals; looking at runway and profitability,” Asaad said. Instead of layoffs, companies should now be focusing on improving their other metrics, including how to increase the lifetime value of their product for customers, Tkachenko said.

Many are also looking at expanding outside of Egypt as a way to hedge against risk: Expanding outside of Egypt diversifies startups’ operating financials and, potentially, their investor base, Asaad said. “I'm seeing several companies think of that as a sort of a hedge against some of the challenges in 2023,” he added.

And others are looking at diversifying their funding sources: More startups are in need of debt facilities to help plug working capital costs, Tkachenko said. Venture debt has a lot of potential in the region, he said, adding that he also could see new funding models take hold, like revenue-based financing, where investors provide startups with capital in return for a percentage of the company’s revenues. He also sees startups using crowdfunding as a method to fundraise, as well as venture building — which he says could thrive this year.

Those heeding this advice will find takers: Several investors we spoke to are still bullish on Egyptian startups. “I think the Egypt story will be even better” this year, El Shalakany said, adding that he expects to invest in around 16 startups out of one of Acasia’s funds — Fund I — this year, a big portion of which will be Egyptian startups. Asaad is also looking at fintech and agritech startups, while Tkachenko has named these two sectors and sustainability startups more generally, as some of the potential hot sectors for this year.

Your top stories on future trends for the week:

  • CheckMe buys Doctor Online: Healthtech startup CheckMe has acquired a majority stake in virtual clinic app Doctor Online in a transaction that gives CheckMe a total market value of USD 20 mn.
  • Fintech Galaxy acquires Underlie: Emirati fintech company Fintech Galaxy has acquired Egyptian API provider Underlie for an undisclosed sum.
  • Classera eyes expansion in Egypt: US-based MENA-focused e-learning startup Classera plans to up its investments in Egypt and add new learning and training services to its existing portfolio.
  • Enterprise sat down for separate interviews with Shaghalni’s founder and CEO Omar Khalifa and pharma platform Grinta’s co-founder Mohamed Azab.



January: Fuel pricing committee meets to decide quarterly fuel prices.

January: Infinity + Africa Finance Corporation to close acquisition of Lekela Power.

January: Global Auto to restart BMW assembly in Egypt.

16 January (Monday): Tourism Minister Ahmed Issa to speak at AmCham monthly luncheon.

16-20 January (Monday-Friday): Davos 2023.

24 January-6 February: Cairo International Book Fair, Egypt International Exhibition Center.

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

26 January (Thursday): President El Sisi will visit India as “chief guest” at celebrations to mark the 74th anniversary of Indian independence.

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

30 January-1 February (Monday-Wednesday): CI Capital’s Annual MENA Investor Conference 2023, Cairo, Egypt.


1 February (Wednesday): Capricorn Energy will hold a vote on its merger with Israel’s NewMed.

2 February (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

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.

23-27 February (Thursday-Monday): Annual Business Women of Egypt’s Women for Success conference.


March: 4Q2022 earnings season.

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

30 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.


1 April (Saturday): Deadline for banks to establish sustainability units.

10-16 April (Monday-Sunday): IMF / World Bank Spring Meetings, Marrakesh, Morocco.

16 April (Sunday): Coptic Easter

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).

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.


1 May (Monday): Labor Day.

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

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

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

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


10 June (Saturday): Thanaweya Amma examinations begin.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

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

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

30 June (Friday): June 30 Revolution Day.


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.


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


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

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

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


6 October (Friday): Armed Forces Day.

Late October-14 November: 3Q2023 earnings season.


2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.


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


2023: The inauguration of the Grand Egyptian Museum.

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.

1Q 2023: Egypt + Qatar to launch joint business forum.

1Q 2023: FRA to introduce new rules for short selling.

1Q 2023: Internal trade database to launch.

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