Wednesday, 1 February 2023

AM — IMF trims Egypt growth forecast to 4.0% in 2023



Good morning, wonderful people, and welcome to the first day of February. It’s another macro-heavy kind of news day here at home, with plenty on the state of our economy — and more speculation about the government’s privatization plans.

DRIVING THE CONVERSATION here at home this morning: The Madbouly government is teasing a big announcement on its privatization plans. Cabinet will “soon” hold a press conference to announce the details of the state-owned firms it plans to offer to strategic investors and on the EGX, Prime Minister Moustafa Madbouly said at a meeting yesterday.

Key words: “Strategic investors.” Madbouly noted that “a part of the offering will be on the EGX, and another part will be to strategic investors.” As Lamees El Hadidi noted on the airwaves last night, these words — and the makeup of yesterday’s meeting, which included Sovereign Fund of Egypt officials but no EGX reps — suggest that stake sales to strategic investors could be the first order of the day. We have more in Last Night’s Talk Shows, below.

When will we know more? Madbouly remained tightlipped on when the announcement would be made, but had earlier this week said to expect it in two weeks’ time.

A quick take: The talk in recent days about asset sales is very welcome. With no IPOs now in the market, cabinet should have a bias toward stake sales to strategics, retaining modest stakes that they could monetize in a later IPO after the new strategic partner improves corporate and financial performance at the asset. If the investment bankers get mandates soon, there will be a post-Ramadan window lasting until early June in which to go to market with IPOs before the summer slowdown. The next window would then be in September.

EGX WRAP- The benchmark EGX30 fell for the second day in a row yesterday, ending the trading session 3.4% in the red. Foreign and institutional investors were net sellers on a high turnover of EGP 2 bn. CIB — the largest component of the index — lost 5.7%. The benchmark index has fallen 5.5% since Monday.

Only six companies saw gains yesterday, with Telecom Egypt leading the pack closing 5.4% up. Alexandria Containers was the worst performer, losing 7.9%.

Don’t panic, says EGX board member Rania Yacoub — this is a natural wave of profit-taking. The EGX30 was up nearly 20% YTD by the close of trading on Monday. “It’s natural for institutional investors in particular to close out profitable positions” Yacoub told us. She says yesterday’s dip is “nothing to worry about so long as it’s part of an upward trend and doesn’t coincide with negative announcements on macro indicators.”

EGP WATCH- The EGP slipped 0.6% against the greenback yesterday to 30.23.

DATA POINT- Good news on NFAs: Egypt’s net foreign assets (NFAs) position improved for the second consecutive month, standing at a negative EGP 494.3 bn in December. That’s an EGP 47.3 bn narrowing of the gap from EGP 541.5 bn the month before, Reuters reports citing central bank data. The newswire puts the improvement down to the October devaluation. “Changes in the amount of NFAs represent net transactions of the banking system with the foreign sector, including those of the central bank,” Reuters says, citing the CBE.

DATA POINT- Good as gold: Gold purchases in Egypt surged 83% y-o-y in 2022 as Egyptians flocked to the metal amid the FX crunch, according to the World Gold Council’s full-year report. Egyptian investors bought 4.4 tons of gold during the year as the precious metal became the go-to asset to hedge against the falling EGP.

The Central Bank of Egypt is MENA’s biggest goldbug: The CBE bought 47 tons of gold during the year, above second-placed Qatar which purchased 37 tons. Both are dwarfed by Turkey’s central bank, which was the world’s biggest gold buyer among central banks at 148 tons, Bloomberg notes.

It’s the start of a new month: Here are the key news triggers over the coming weeks.

  • Interest rates: The Central Bank of Egypt will hold its policy meeting this Thursday. Most of the analysts we talked to last week expect the central bank to raise interest rates by 100-200 bps.
  • PMI: S&P Global will publish January’s PMI on Sunday, 5 February.
  • Foreign reserves: The central bank will release January’s foreign reserves figures next week.
  • Inflation: The CBE and Capmas will publish inflation data for January the week after next.

** TAKE OUR JANUARY ENTERPRISE READER SURVEY and get a chance to have lunch with us: Give us your thoughts on how 2022 panned out for your business and industry, and what you’re expecting in the year ahead in our Enterprise Reader Survey.

We’re asking you to share your expectations on the EGP / USD rate in 2023, how you’re managing expenses amid the rising cost of living, where you see your industry as a whole heading, and whether you expect to make fresh investments — among a few other questions we ask our community on a regular basis. As is our custom, we’ll be sharing the results with all of you in a few weeks’ time to help you shape your view of the year.

You can take the Reader Survey here — it won’t take more than a few minutes to complete.

Want to have lunch with us? Leave your name, email, mobile number, and where you work in the box for “Is there anything else you want to tell us.” We’ll be inviting eight participating readers to breakfast at one of our favorite restaurants.


Companies recognize the benefits of reaching net zero: More than 90% of 300 global companies surveyed by HSBC believe reaching net-zero emissions will play a significant role in growing their businesses. The bank’s survey (pdf) shows that more than half see it as “fundamentally important” while only 2% don’t consider it important at all.

More companies are deploying a chunk of their capex into going green: Some 31% of energy companies surveyed are already investing more than 10% of their capex into transitioning to net zero and almost half plan to do so in the coming 2-3 years.

SIGN OF THE TIMES– Uber Egypt has hiked its fares again. In Cairo, the UberX base rate is now up to EGP 12.00 from EGP 9.00, while the minimum fare has risen to EGP 20 from EGP 15. In Alexandria, the base rate has risen to EGP 10.00 from EGP 8.70, while the minimum fare is up to EGP 18.00 from EGP 13.00. The price increases come to “ease the pressures that drivers are facing,” the company said in an email to customers.

PSA #1- Fancy a stopover in Saudi? Travelers transiting through Saudi Arabia can now apply online through Saudia Airlines and Flynas for a stopover visa that allows them to stay in the country for up to four days, according to a tweet by the Saudi Foreign Affairs Ministry. The stopover visa permits travelers to make the Umrah pilgrimage and is valid for three months from the date of issuance.

PSA #2- Covid-era Ramadan measures dropped: Taraweeh prayers will no longer be limited to 30 minutes, and the practice of I’tikaf — seclusion inside mosques — will be allowed for the first time in three years this Ramadan, Religious Endowments Minister Mohamed Mokhtar Gomaa said (watch, runtime: 29:31.) The taraweeh prayer limit and I’tikaf ban were part of measures introduced to curb the spread of covid-19.

We have 49 days left until the first day of Ramadan, which will likely start on Thursday, 23 March.


Italian lawmakers in town: An Italian parliamentary delegation kicks off a two-day visit to Cairo today for a “constructive dialogue” with Egyptian officials, including meetings with counterparts at the Senate and House, and with Foreign Minister Sameh Shoukry. The delegation is led by Stefania Craxi, who heads the Italian senate’s defense and foreign affairs committee. “Our visit to Cairo aims to conduct a new constructive dialogue with Egyptian MPs and senators amid many political and economic challenges facing the Mediterranean region,” Craxi told Italy’s NOVA news agency, according to Ahram Online. The case of Italian student Guilio Regeni, who was killed in Egypt in 2016, is also set to be addressed during the talks, she said.

OPEC+ is meeting remotely today and delegates are expecting the committee to keep oil output unchanged as global demand picks up.


The House of Representatives will reconvene on Sunday, 12 February, having adjourned yesterday after three days of debate. We have all the details on yesterday’s votes in our Legislation Watch section, below.

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: What is the state doing to support the real estate sector through economic turbulence?


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IMF trims GDP growth forecast for Egypt

The IMF has cut its economic growth forecast for Egypt, saying it sees GDP growing 4.0% this year, a 0.4 percentage point trim from its previous forecast in October, according to its updated World Economic Outlook released yesterday (here and here, pdf). That’s in line with forecasts from the Madbouly government, which in November predicted 4.0% growth in a letter of intent (pdf) sent to the IMF to secure its USD 3 bn loan.

Other analysts are a bit more optimistic: A Reuters poll last week predicted growth of 4.8% in the current fiscal year, while the World Bank expects 4.5%, and Fitch has penciled in 4.4%.

We may put the worst behind us at the end of the year: The IMF expects the economy to expand at a 5.3% clip in 2024. The Madbouly government, meanwhile, sees growth clocking in at 5.5-6.0% in the medium term.

Global growth will also bottom out this year: The Fund’s updated 2023 forecast for the global economy is a little less somber than in October thanks to slowing inflation, China’s re-opening, and demand resilience in Europe and the US. The IMF now expects global economic growth to slow to 2.9% this year from 3.4% in 2022, a slight upgrade of 0.2 percentage points.

MENA growth downgraded: MENA GDP will slow to 3.2% in 2023 from 5.4% last year, according to the Fund’s latest forecasts. That’s a downgrade from the 3.6% it was projecting in October.

Half of EMs are already out of the slump: Only around 50% of emerging markets (EMs) and developing economies will see higher growth this year than they did last year. However, overall growth in EMs and developing economies already bottomed out at 3.9% in 2022, the IMF says, and is projected to rise to 3.9% this year and 4.2% in 2024. The downslide that’s expected in global growth this year is driven by a lag in advanced economies.

UH, ENTERPRISE? What’s GDP, anyway? Think of it as an attempt to sum up the total value of everything made inside a country’s borders — all the finished goods and services cranked out in a 12-month period. The good folks at Planet Money (our favorite econ podcast) had a deep dive into GDP, where the concept came from, and how it’s used in their 2022 “Summer School” series. You can listen here on the web or here on Apple Podcasts (runtime: 25:00).


ADIB + NBK give thumbs-up to econ reforms

Two Gulf lenders are positive on Egypt: Senior staff at Abu Dhabi Islamic Bank (ADIB) and National Bank of Kuwait (NBK) both expressed optimism about Egypt and their businesses here in interviews yesterday.

ADIB is reassured that we’re taking the right measures: Group CFO Mohamed Abdel Bary said he has confidence that Egypt has all the “needed underlying fundamentals and resources to navigate the debt specific situation” in a talk with Bloomberg (watch, runtime: 7:03). ADIB’s Egypt unit is a “long-term strategic” priority for the bank, which is “very much supporting its presence” in the country, he said. While volatility places Egypt as the bank’s greatest international exposure concern, Abdelbary said that ADIB’s position was “fully consolidated by the end of December 2022.”

Predicting a positive long-term outlook, NBK wants to expand its presence here: Egypt is the bank’s second priority market after Saudi — and the recent devaluation here was a “move in the right direction” despite the short-term economic impact, NBK Deputy Group CEO Shaikha Al Bahar said in a sitdown with the business information service (watch, runtime: 5:59). She added that a weaker currency will increase foreign inflows, including in the form of FDI.


IDH ends its pursuit of Pakistani diagnostics firm IDC

IDH pulls the plug on acquisition of a major stake in IDC: Integrated Diagnostics Holdings (IDH) has walked away from its bid to acquire a major stake in one of Pakistan’s largest diagnostics providers due to regulatory issues and challenging economic conditions, the multinational consumer healthcare outfit said in disclosures to the London Stock Exchange and EGX (pdf) yesterday. IDH said in December 2021 it would acquire 50% of the owner of Islamabad Diagnostic Center (IDC) for USD 72.35 mn, a move that would have given it a presence in South Asia for the first time.

Why the pullback? IDH said it was backing out of the acquisition because of “extensive delays in the regulatory review process, the challenging global economic environment and the condition precedent related to repatriating funds.”

This had been in the cards: IDH said last September that it was looking to renegotiate terms of the acquisition after the two sides failed to finalize terms by the deadline set out in the sale and purchase agreement. IDH signed the initial agreement with UAE-based Evercare, which owns 100% of IDC via a special purpose vehicle, in late 2021. IDC is a major diagnostics firm in Pakistan and has more than 80 branches across the country.

Pakistan’s economy is in crisis: Mass floods last year and political turmoil have exacerbated economic woes in the heavily indebted country, where foreign reserves are running dangerously low, leading some to warn a Sri-Lanka style default is in the cards. The local currency has lost some 14% since last Thursday to reach a record low against the USD, as authorities move to liberalize the exchange rate in hopes of restarting a stalled USD 7 bn assistance package from the IMF.

IDH’s share price held up here, but dipped in London on the news: IDH’s EGX-listed shares remained unchanged at EGP 25.20. LSE-listed shares, on the other hand, dropped 6.6% to close at USD 0.54.


EBRD and partners fund more green finance for SMEs + EBRD, BII lend USD 100 mn to BdC

DFIs to fund more green projects + privatization candidate BdC gets funding: More funding for green projects will be available to local SMEs courtesy of the European Bank for Reconstruction and Development (EBRD), the EU, and the Green Climate Fund. Meanwhile, EBRD and British International Investment said they would provide a USD 100 mn facility to support Banque du Caire’s growth.


The EBRD, the EU, and the Green Climate Fund (GCF) will provide USD 175.5 mn to local banks to on-lend to green projects and SMEs in Egypt, the EBRD said in a press release yesterday. The funding comes under the EBRD’s Green Economy Financing Facility (GEFF), which channels finance to small, private-sector businesses to help them invest in energy-efficiency projects and green technologies.

This isn’t GEFF’s first gig in Egypt: Egypt has received up to EUR 290 mn from GEFF under a first round of funding. The facility has partnered with the National Bank of Egypt, QNB Alahli, Alexbank and Arab African International Bank for on-lending to SMEs.

2022 was a big year: The EBRD provided EUR 1.3 bn to Egypt in 2022, 70% of which was directed towards the private sector to promote social inclusion and green transformation, the International Cooperation Ministry said yesterday.


EBRD, BII to finance Banque du Caire growth: The European Bank of Reconstruction and Development (EBRD) and British International Investment (BII), the UK government’s development finance arm, are providing a USD 100 mn loan to state-owned Banque du Caire, they said in a joint statement (pdf) yesterday. The loan will strengthen the bank’s Tier II capital, helping to support its growth plans. The two lenders will also provide technical support and guidance to improve BdC’s climate governance practices and ESG risk management.

REMINDER- BdC is one of the names being floated for an EGX debut some time soon. The state-owned bank is a perennial IPO prospect and was among four companies that the EGX recently said are ready to list on the bourse. It is also reportedly among the companies included in the Sovereign Fund of Egypt’s pre-IPO fund.


TE to buy USD 125 mn of new bandwidth to bolster its network

TE lands new frequencies: Telecom Egypt will pay USD 125 mn to acquire 5 MHz of new bandwidth in the 1800-MHz frequency band, after the National Telecommunications Regulatory Authority accepted the company’s bid, TE said in a statement (pdf) yesterday. The new bandwidth will help the state-owned operator provide faster service and support heavier traffic, it said.

TE’s last band acquisition was almost three years ago, when it acquired two 10-MHz bands for USD 305 mn in 2020.

EIB is helping the company scale its network: TE last year secured an EUR 150 mn loan from the European Investment Bank (EIB) to expand its 4G broadband network — deploying around 2k new mobile sites and upping its cellular tower capacity.


CIB is lending Etisalat Egypt EGP 4 bn to invest in its tech infrastructure, according to a press release (pdf) from the telecom operator. The CEO of the network operator did not say in the statement how the company plans to deploy the funds.


House approves USD 47 mn grant from the US for small-scale farmers

The House of Representatives yesterday approved three foreign financing agreements to fund rural development, irrigation, and rail infrastructure. It also gave its final nod to some articles of a draft tourism bill it passed in principle earlier this week. The House has now adjourned and will reconvene on Sunday, 12 February.

The financing agreements approved by the House:

  • A USD 47 mn grant from the US to help smallholder farmers up productivity using new agricultural techniques. US Secretary of State Antony Blinken mentioned the extra USD 50 mn the US is sending us for food security in the wake of the Russia-Ukraine war when he visited Cairo earlier this week.
  • An EUR 51.5 mn loan from the Export-Import Bank of South Korea (KEXIM) that will fund part of the project to upgrade the 224-km railway line linking Luxor and Aswan. The loan will be repaid over 40 years at a 1.7% interest rate with a five-year grace period.
  • An EUR 2.2 mn grant from Italy to train Irrigation Ministry technicians in water-saving techniques and provide them with modern irrigation tech.

AND- The House gave its final nod to around one-third of the articles in a draft tourism bill that it approved in principle earlier this week. The bill would strip the power to form and regulate tourism chambers from the Tourism Minister and place it instead in the hands of the Egyptian Tourism Federation (ETF). It also aims to make tourism chambers more democratic and independent and reinforce their role in promoting the industry.



Privatization plans, interest rates, and CDs make for another econ-heavy night

We got more economy lessons from the talking heads last night, as the government’s upcoming announcement on its listing pipeline and tomorrow’s rate policy meeting at the central bank took top billing on the airwaves.

Lamees urges “significant” EGX listings — not only strategic stake sales: Noting that cabinet did not invite any EGX reps to a privatization planning meeting yesterday, El Hadidi said she hoped that strategic sales of stakes in state-owned firms would not preclude listings on the bourse. “I hope there is a significant portion for the EGX because it needs to revitalize,” she said (watch, runtime: 2:53). El Hadidi also said the government’s listing program would benefit from a “specific timetable” and not a rough timeline as indicated by Planning Minister Hala El Said during the meeting. Yesterday’s meeting also got a mention from Masa’a DMC (watch, runtime: 8:42).

This could take time: While the government will most likely accelerate its IPO plans to “meet commitments and give positive indicators to markets,” we shouldn’t expect to see any fresh listings this quarter, former EGX chairman Sameh El Torgoman told Kelma Akhira (watch, runtime: 10:03). Strategic investors could buy stakes in existing listed firms sooner, he said, but given lengthy IPO timelines and the Ramadan slowdown, we’re more likely to see movement on listings in 2Q, he said.

We agree: With no IPOs in the market right now, sales to strategics on non-listed companies (or accelerated book builds on already-listed, state-controlled companies) are the way to go. We’ll have a narrow window in which IPOs are possible in May and early June and then that’s it until September.

REFRESHER- The government yesterday said it would soon reveal details of the state-owned companies it plans to offer to investors — both through private stake sales and on the EGX — under its revamped privatization strategy. Indications thus far have been that strategic stake sales — including through the Sovereign Fund of Egypt’s pre-IPO fund — could likely precede IPOs of state-owned companies on the bourse.

Three analysts took to the airwaves last night to predict that the central bank will keep rates unchanged when it meets tomorrow — at odds with most of those we polled at the start of the week. Banking expert Sahar El Damaty and former Blom Bank Egypt deputy managing director Tarek Metwally both told Kelma Akhira they expect policymakers to hold rates steady (watch, runtime: 5:40 | watch, runtime: 8:23), while economist Mostafa Badra said the same to Yahduth Fe Masr (watch, runtime: 3:52.)

We’re not so sure: Four of the seven analysts and economists we surveyed in our rate poll see the Monetary Policy Committee raising rates by 100-200 bps later this week, while the median estimate in a Reuters poll is also for a 150-bps hike.

The final tally on high-interest CDs at NBE, Banque Misr: Savers poured some EGP 500 bn into the now-scrapped record high-yield 25% CDs introduced in January at the National Bank of Egypt (NBE) and Banque Misr, NBE Deputy Chairman Yehia Aboul Fotouh told Yahduth Fe Masr (watch, runtime: 5:20.) Banque du Caire joined the other two state-owned banks in pulling the high-yield CDs at the end of the working day yesterday.


The economic crisis is still getting ink:The government’s Ahlan Ramadan discount supermarket expo is seeing high turnout amid soaring inflation, Reuters reports, while Qantara covers the economic impact of the EGP devaluation and Africa Report looks at Egyptians’ use of social media to voice disquiet about the country’s predicament.



A second World-Bank backed wheat buy: State grain buyer GASC has launched an international tender for 30-60k tons of wheat for delivery in late February or March, according to its website. Traders need to submit their bids directly to GASC by midday tomorrow. This is GASC’s second grain tender this month, breaking a hiatus after high prices and a lack of offers on the back of the war in Ukraine largely forced the authority to switch to direct purchases last year. It’s also the second tender to be financed by the USD 500 mn food security loan the World Bank agreed to extend the country last summer.


More makeovers in central Cairo? Parts of the Nile Corniche, the area surrounding Ramses Square, and the area between Giza’s new Bashteel train station, the July 26 axis, and west Cairo’s monorail have been signed off for “replanning” by the Supreme Council for Planning and Urban Development, according to a cabinet statement. The decision comes to bring “optimal utilization for state-owned land in the areas,” the statement said. The Supreme Council is headed by Prime Minister Moustafa Madbouly and includes a number of cabinet ministers and planning authority heads.

Movement on Mogamma + ex-interior ministry redevelopment: The state planning body also gave its official sign-off on the Sovereign Fund of Egypt’s (SFE) request to turn the government’s Mogamma complex in Downtown’s Tahrir Square into a hotel, and to convert the former building of the nearby interior ministry into a mixed-use service complex.

REFRESHER- The approval comes more than a year after a consortium of US-based Global Ventures, Oxford Capital, and the UAE’s Al Otaiba Investment were awarded the EGP 3.5 bn contract to revamp the Mogamma’ into a hotel. The consortium plans to finalize construction by 2024.


Baking raw materials supplier Bakeland Egypt plans to invest EGP 700 mn to build a new factory which it plans to open in the next three years, according to Al Borsa.


Transmashholding to build railway car maintenance workshop here: Russian locomotive manufacturer Transmashholding will build a rail carriage maintenance workshop in Cairo’s Abu Zabal industrial district, under a contract it signed with the National Railways Authority, the Transport Ministry said yesterday. The workshop is a first step for the company’s plans to build a factory that would localize the manufacture of spare parts, the statement read.

REFRESHER- Transmashholding is providing technical support and spare parts for the 1.3k rail cars it is delivering to Egypt under a separate 12-year contract, which will see the company train Egyptian engineers on maintenance and locally manufacture spare parts. The company is supplying 1.3k railcars to Egypt under a EGP 22 bn contract signed in 2018. The ministry said 725 have been delivered so far.


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Saudi economy on a tear + Chinese business is back in expansion

The Saudi non-oil economy expanded at its fastest pace in more than a year in 4Q 2022, according to government figures (pdf) out yesterday. The non-oil economy grew by 6.2% in the final quarter of last year while the oil sector rose 6.1% on the back of heightened oil prices.

Business activity in China expanded in January for the first time in four monthsfollowing Beijing’s decision to end its strict zero-covid policy, according to the latest official purchasing managers’ index. Renewed private-sector growth in China is the latest bit of good news for the global economy: Weakening inflation and slowing interest rate hikes have led analysts to reverse recession forecasts in the US and Europe, and the IMF to upgrade its global growth outlook.

But there’s a catch: Strong economic growth in China could undercut efforts by central banks around the world to temper inflation, Bloomberg wrote yesterday. The news outlet now expects China’s economic growth to almost double this year, potentially stoking commodity prices and making global inflation harder to tame.




-3.4% (YTD: +12.7%)



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Interest rates CBE

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17.25% lending




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Brent crude

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The EGX30 fell 3.4% at yesterday’s close on turnover of EGP 1.97 bn (11.5% above the 90-day average). Local investors were net buyers. The index is up 12.7% YTD.

In the green: Telecom Egypt (+5.4%), AMOC (+1.0%) and Eastern Company (+0.9%).

In the red: Alexandria Containers and Cargo Handling (-7.9%), Credit Agricole Egypt (-7.3%) and Housing and Development Bank (-6.2%).


FM Shoukry urges an end to Russia-Ukraine crisis in Moscow talks: Foreign Minister Sameh Shoukry told his Russian counterpart Sergei Lavrov that Egypt is “deeply willing to see an end to military confrontations with Ukraine” in a meeting in Moscow yesterday, according to an SIS statement. The pair also discussed strengthening bilateral relations and developments in the Israel-Palestine conflict before attending a joint press conference.

Shoukry still sees diplomacy as the way out of war: Shoukry again stressed the necessity of a political resolution to settle the Russian-Ukrainian crisis — particularly given its ramifications for developing countries including Egypt — during a separate meeting with Russian Security Council Secretary Nikolai Patrushev, according to a statement by the Foreign Ministry. At his press conference with Shoukry, Lavrov described Egypt’s position towards the crisis as “balanced” in response to a question from Asharq Business.

Joint projects and further economic cooperation on the agenda: Our Rosatom-built Dabaa nuclear plant, the planned Russian industrial zone, and Russian wheat imports to Egypt were all touched on during Shoukry and Lavrov’s presser, as well as moves to activate the Russian central bank’s recent decision to accept the EGP as a currency of trade. Extra News has clips (watch, runtime: 04:25 | 02:12 | 02:51.)

REMEMBER- We keep our social circle wide: Shoukry’s Moscow trip comes directly after US Secretary of State Antony Blinken’s visit to Cairo. Israel-Palestine topped the agenda in Blinken’s talks with Shoukry and President Abdel Fattah El Sisi, amid escalating violence in the West Bank and East Jerusalem.

Abbas sits down with Egypt and Jordan’s intelligence chiefs: Palestinian Authority President Mahmoud Abbas held talks with Egypt and Jordan’s intelligence chiefs ahead of welcoming US Secretary of State Antony Blinken to Ramallah, Palestinian news agency WAFA reports. The details of the talks were not disclosed.


What is the state doing to support the real estate sector? A perfect storm of economic headwinds — rising inflation, the devaluation of the EGP, and a shortage in construction and building materials — has led the country’s real estate sector to suffer from liquidity and operational challenges. Faced with these conditions, real estate players have lobbied authorities for intervention and support. Industry sources Enterprise spoke to all agreed that government support — in the form of financing facilities, deadline extensions, and other measures — is a necessity to help the sector cope with unfavorable macro conditions.

The government has already taken some steps: Prime Minister Moustafa Madbouly tasked a new committee with preparing an action plan to boost mortgage financing and setting a clear framework for real estate “exports” (i.e. granting foreign citizens access to purchasing local real estate units) to help the state secure some much-needed foreign currency. The committee will move forward with these plans with the central bank, the Housing Ministry, and real estate developers. Cabinet also recently called on the relevant authorities to look into funding issues the sector is facing as part of its efforts to support the sector.

And the CBE did its part before a changing of the guard: The Central Bank of Egypt (CBE) was helping construction companies take out loans on the cheap through its subsidized loan initiatives, which allowed construction players to take out loans at a preferential rate of 8%. The initiatives — which were also extended to tourism companies, among other borrowers — were designed to improve access to finance for key areas of the economy. The CBE axed its support for these initiatives at the end of last year and offloaded the funding responsibility to the housing and finance ministries.

What about buyers? The CBE also had a mortgage finance initiative for low- and middle-income earners, with some 480k borrowers taking advantage of the initiative, according to data from the Housing Ministry’s Mortgage Finance Fund. The initiative allows would-be homeowners to tap mortgage finance at a subsidized rate of 7-3% and offers a 30-year repayment period.

Who’s doing the lending? Some 22 banks and eight real estate finance firms are taking part in the CBE’s mortgage finance initiative. So far the banks have coughed up some EGP 52.1 bn, while NBFS firms disbursed some EGP 2.3 bn.

The initiative has run its course but industry players want more — and the government is working on it: Real estate players are demanding that it be extended in efforts to help the sector. The finance and housing ministries are currently working to launch a new initiative for real estate, offering players in the sector financing at a subsidized interest rate, government sources told us. Mortgage loans currently carry a 19% interest rate, May Abdel Hamid, head of the Mortgage Finance Fund, told us.

Real estate players have submitted a number of proposals requesting more financing initiatives for still under-construction units, ensuring the rights of all parties involved — including clients, banks, and real estate firms, Ahmed El Shenawy, a member of the Egyptian Real Estate Council, told us. El Shenawy suggests that this move would help breathe life into the sector.

There may be some additional measures, too: The state is looking to reduce the amount of administrative fees imposed on loans granted for real estate companies and imposing a unified 1% administrative fee, sources tell us.

Industry players warn that there’s a risk of falling out of the market without affordable funding options, as the current high interest rate environment makes it prohibitively expensive for many companies to take out loans, Beta Egypt Chairman and member of FEDCOC’s real estate investment division Alaa Fekry told Enterprise. Interest rates are currently at 17.25%, which — when paired with hefty administrative fees — pushed real estate prices to skyrocket, Fekry said. The state also needs to forgo any late delivery fines in light of the current rise in material prices, says Daker Abdellah, a board member at the Egyptian Federation of Construction and Building Contractors.

And on the consumer side, aspiring homeowners need financing assistance, too, Fekry said. Offering financing options for real estate companies and consumers will help shield the sector against what he described as an “imminent crisis.”

Mortgage lenders need to shake things up: Mortgage lenders need to extend their loans from the current 10-year period to 15 years in efforts to help them keep up the rise in real estate prices, which are expected to see a 30% increase over the coming year, Al Oula MD and Vice Chair Ayman Abdel Hamid told Enterprise.

A potentially helpful measure: Greenlighting the use of real estate units as mortgage collateral, which would allow banks to expand their financing base and ensure cashflow for projects, Fekry said. This would allow banks the right to reach out to the real estate developer in case the buyer fails to pay his installments on time. The real estate developer would then have to pay back the bank and put the buyer’s unit back on the market.

What’s at stake: Egypt has a wealth of real estate projects, with market appetite generally going strong as consumers see real estate as an appreciating asset, our sources explained. We’re also starting to see appetite from foreign consumers, who could be a source of FX income for the country. Industry players want to take advantage of this uptick in foreign appetite by hosting marketing exhibitions abroad and reeling in international customers.

Private sector wants in on social housing projects: The proposals submitted include one that calls for private sector participation in state-owned social housing projects to provide liquidity for real estate developers, El Shenawy said.

Your top infrastructure stories for the week:



26 January-6 February (Thursday-Monday): Cairo International Book Fair, Egypt International Exhibition Center.

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

31 January-1 February (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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

1 February (Wednesday): OPEC will hold a joint ministerial monitoring committee meeting.

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

5 February (Sunday): The Senate reconvenes.

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.

6-9 March (Monday-Thursday): EFG Hermes One-on-One conference, Atlantis, Dubai.

21-22 March (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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

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


April: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

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.

21 April (Friday): 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.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

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


7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

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

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.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

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.


19-20 September (Tuesday-Wednesday): Federal Reserve interest rate 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.

31 October – 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.


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


12-13 December (Tuesday-Wednesday): Federal Reserve interest rate 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.

1Q 2023: The Madbouly government will choose which state-owned hotels will be merged into a new hotels company ahead of an offering to foreign and Gulf investors.

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