AM — Tons and tons of privatization chatter ahead of Madbouly’s Wednesday presser

Good morning, friends, and happy hump day. We have a packed issue for you this morning, so let’s jump right in:

TAKE OUR JANUARY ENTERPRISE READER SURVEY and get a chance to break bread 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.

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EGP WATCH- The EGP continued to inch lower against the greenback yesterday, with the USD changing hands at 30.35, according to central bank figures. The currency hit the 30 mark at the end of January following a sharper devaluation that helped spur the return of foreign inflows and alleviate FX woes that had stalled imports. The EGP has lost almost half of its value over the past year and is down 17% since the beginning of January.

WATCH THIS SPACE- Cabinet will release its hydrogen strategy within a month, Prime Minister Madbouly said yesterday. The document is expected to provide a roadmap for how Egypt can develop a globally-competitive green hydrogen sector. An unnamed global consulting office has finished work on the strategy, he said.

REMEMBER– In the works since 2021, the government was expected to reveal the strategy at COP27 in November. Egypt has signed framework agreements with a number of international companies to establish green hydrogen and ammonia projects that could attract as much as USD 83 bn in investment if they were all to reach the implementation phase.

WATCH THIS SPACE- Preventing another 2016, 2020, 2022: Prime Minister Moustafa Madbouly has tasked the Cabinet Information and Decision Support Center to work on strategies that could reduce our exposure to external risks in the coming years, according to a cabinet statement. The center will work with experts on regular reports to cabinet on how policymakers can strengthen the country’s food and energy security, bolster supply chains and prevent a repeat of the 2022-2023 FX liquidity crisis.

The state has in recent months signaled willingness to give private-sector players the chance to be heard on policy development. The challenge now is to turn it into concrete action that will make it easier to do business. It engaged in weeks of consultations last summer that fed into its privatization strategy and helped to produce the final state ownership policy document. It has also created a Supreme Council for Investment, to which a number of private sector leaders have been appointed, although few details have been made public. And the National Dialogue process is also expected to allow non-government actors to express views on a range of economic, social and political topics.

HAPPENING TODAY-

Bok, gospodine predsjedniče: Croatia’s President Zoran Milanovic will meet with PM Moustafa Madbouly and House Speaker Hanafi El Gebali this morning as he wraps up a two-day visit to Cairo, according to a statement by his office. We have coverage of Milanovic’s meeting with President Abdel Fattah El Sisi yesterday in this morning’s Diplomacy section, below.

The Organisation Internationale de la Francophonie’s (OIF) two-day economic prospecting forum in Cairo concludes today. Representatives of 100 companies from more than 20 french-speaking countries are gathering to explore ways to boost cooperation with Egyptian firms working in agriculture, renewable energy and the digital economy.

PSA- Enjoy your last week of (relatively easy) commutes: The mid-year break at public schools is winding down and universities are back in session on Saturday, 11 February for the second semester of the 2022-2023 academic year.

THIS WEEK-

Inflation: The CBE and Capmas are expected to publish inflation data for January on Thursday.

NEXT WEEK-

President Abdel Fattah El Sisi will be in Dubai next week to attend the World Government Summit, which runs 13-15 February. Twenty heads of state will be in town for the Davos-like gathering, which will see policymakers from around the world discuss global trends, according to Emirati state news agency WAM.

Petro-show next week: Oil and gas industry figures from Egypt and the region will congregate at the Egypt International Exhibition Center for the Egypt Petroleum Show (Egyps) starting next Monday. The three-day conference runs 13-15 February.

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THE BIG STORY ABROAD- The devastating earthquake that struck Syria and Turkey in the early hours of yesterday morning is front-page news everywhere this morning. More than 4k people have now been pronounced dead after a 7.8 magnitude quake leveled thousands of buildings in southern Turkey and northern Syria. (AP | Reuters | FT | Bloomberg | NYT | Washington Post)

President El Sisi has offered to send aid while the Foreign Ministry said it was following up on the situation of Egyptians living in the two countries. Four Egyptian students were rescued in Iskenderun yesterday after being stuck under rubble for hours, Ahram Online reported.

No tsunami risks: Egypt’s National Research Institute for Astronomy and Geophysics has said there is no possibility of the quake triggering a tsunami in the Mediterranean, according to state-run MENA news agency. Italy issued a tsunami warning following the disaster but has since withdrawn it.

COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event: The Enterprise FDI + Exports Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Exports and foreign direct investment (FDI) have never been more important to our economy — or our businesses — than in the wake of the float of the EGP. We think we have a once-in-a-lifetime chance to build an export-led economy that makes us a magnet for FDI and all the benefits that will come with it for our nation.

Want to join the conversation? Drop us a line on events@enterprisemea.com.

CIRCLE YOUR CALENDAR-

Fuel price announcement when? We’re still waiting to hear what the government plans to do with fuel prices this quarter. Its fuel pricing committee was supposed to meet at the beginning of January to set prices for 1Q. The government has increased prices at the pump by 23-28% since April 2021, and decided on a rare fuel oil price hike last July.

Expect prices to rise: The government has committed to changing local fuel prices in line with movements in the global markets under the USD 3 bn loan agreement with the IMF.

The Senate is out of session for two weeks: Senators will reconvene on Sunday 19 February.

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

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

In today’s issue: As Egypt looks to build out a local green hydrogen industry, what needs to happen to make it a viable export product for Europe?

Could BdC IPO in the first half — or will we “just” see the sale of a stake to a strategic investor? Or will United Bank go first? What about Semadco? Chatter about which companies are on the auction block (and which aren’t) as part of the state asset program is reaching a crescendo a bit more than 24 hours ahead of the presser Prime Minister Moustafa Madbouly has said would take place after Wednesday’s cabinet meeting.

Madbouly is expected to unveil a list of 20+ companies in which the state plans to sell shares.

FIRST OFF- Take it all with a grain of salt: Policymakers have a habit of using the terms “list,” “IPO,” and “stake sale” interchangeably. We’re not aware of anybody in the market with an IPO at the moment, suggesting that any activity before Ramadan (22 March or so) would be in the form of stake sales to strategics.

Herewith, a rundown on who’s said what — and what you might actually expect:

House Planning Committee boss Fakhri El Fiqi waded in, telling Al Mal Banque du Caire (BdC) will go ahead with its long-awaited IPO in 1H 2023 as part of the government’s rebooted privatization program. The state-owned bank plans to sell 45% of its shares to investors — as it had planned back in 2020 — but around half of that stake may now be offered to one or more strategic investor, El Fiqi said. BdC currently has until 31 March 2023 to wrap up IPO procedures after getting an extension from the Financial Regulatory Authority.

Also set to sell shares in the first half of the year: The four other companies that have already been added to the Sovereign Fund of Egypt’s pre-IPO fund alongside BdC should also sell stakes in 1H 2023, El Fiqi said. These reportedly include two military-owned firms — bottled drinks firm Safi and fuel retailer Wataniya — alongside Misr Life Ins., and Egyptian Linear Alkyl Benzene (Elab). Another private sale we’ve been hearing reports of — Saudi sovereign fund PIF’s acquisition of United Bank — is set to go ahead by the end of 1Q, according to El Fiqi.

Could we be looking at 21 companies? That’s the contention of Asharq Business, which is out with a list of 21 firms it says will sell stakes this year — most of which were flagged by the EGX (pdf) itself last month as being in the privatization pipeline — citing an anonymous source.

Secondary offerings, too? The list includes EGX-listed firms at which existing shareholders could sell down their positions, including chemicals companies Sidpec and Abu Qir. Madbouly, however, said last week that all of the companies in the pipeline will be offering stakes for the first time.

eMethanex and Alex Bank have also been reported to be on the sale list, but public offerings of shares in either would need a green light from other shareholders, making it more likely we’ll see stake sales if they are, indeed, on the list.

A BIG QUESTION: How much equity will the state sell in each company? Anywhere from 5-20% of each, Asharq’s report suggests — a range we think may not be sufficiently attractive to investors. Strategics typically don’t want minority positions and they don’t want to invest in the absence of clear management control.

Khaleejis are apparently eyeing another fertilizer player: Al Borsa reported yesterday that Gulf sovereign funds are interested in acquiring an undisclosed stake in El Nasr for Fertilizers and Chemical Industries (Semadco), citing anonymous sources. Egyptian fertilizer companies have been targeted by wealth funds in the UAE and Saudi over the past year: between them, ADQ and the Public Investment Fund now own almost half of Abu Qir and Mopco after purchasing shares from state institutions last year.

Some senators want the Investment Ministry back: The Senate Financial and Economic Affairs Committee and GAFI officials yesterday called on the government to bring back the Investment Ministry. “We — senators and officials from the General Authority for Freezones and Investment (GAFI) — agreed that there is a pressing need for the return of the Investment Ministry as this could play a very positive role in doubling foreign direct investments coming to Egypt and offering facilities to investors,” said committee chair Hani Sarieddin.

Egypt hasn’t had an investment ministry since 2019: The ministry was abolished as part of a cabinet shuffle in late 2019 that saw Prime Minister Moustafa Madbouly assume greater responsibility for attracting FDI and take charge of GAFI.

The call came following a committee meeting with GAFI officials to discuss obstacles to increasing FDI into the country. The “meeting agreed that there should be a single institution responsible for regulating and supervising investments in Egypt,” Sarieddin said. “We all agreed that the Investment Ministry should be back to play this role.”

A dedicated institution for promoting investment? If it is focused and has teeth, we agree. We’ve been calling on the government to establish an investment promotion agency dedicated to attracting multinationals to set up shop in Egypt. Investment Ministry or Invest Egypt: Call it what you like — it’s going to be needed if the government wants to meet its ambitious goal of attracting USD 40 bn in FDIs over the next four years. A mandate to run a targeted investment promotion program AND a clear authority to make it easier to do business in Egypt will be key.

ALSO FROM THE SENATE–

Senate Agriculture Committee wants a gov’t committee to regulate fertilizers: The Senate Agriculture Committee called for the formation of a committee dedicated to supervising the production and distribution of chemical fertilizers to ensure adequate supply for local farmers.

More calls for action on family violence: National Council for Human Rights (NCHR) head Moushira Khattab urged the passing of the new Personal Status Act during the second day of debates by the Senate on a report on family violence. "We are in a pressing need for this law to be passed as soon as possible to settle family disputes which have become a major source of violence," she said. Lawmakers are in the process of drafting new legislation that will introduce tougher penalties for perpetrators of female genital mutilation (FGM) and child marriage, Social Solidarity Minister Nevine El Qabbaj told the Senate earlier this week.

A streamlined capital increase process: The Financial Regulatory Authority (FRA) has amended rules governing capital increases in a bid to make it easier for EGX-listed firms to raise fresh capital, the FRA said in a statement yesterday.

Faster approvals: The FRA has brought in stricter timelines that the regulator says should shave up to 37 working days off the approval process.

• Companies now have two working days to disclose capital increase plans after the FRA approves them. There had previously been no time limit on when companies should disclose FRA approval.
• Companies must notify shareholders of meetings to approve capital increases seven days in advance, down from a previous 21 days.
• Existing shareholders will have seven days to subscribe to a capital increase before the shares are offered on the EGX, down from 14 days previously.

Companies can now carry out capital increases in phases, provided that the total capital increase doesn’t exceed the company’s current issued capital.

All part of efforts to revive the EGX: Authorities are working to stimulate investment on the bourse which is currently enjoying one of its strongest rallies in years on the back of the EGP devaluation. The government is preparing to reboot its state privatization program which will see fresh IPOs on the EGX and is considering a temporary waiver on capital gains tax on stock trades.

SPEAKING OF CAPITAL INCREASES- The FRA yesterday approved CIB’s request to increase its issued and paid-up capital by 0.66% to almost EGP 30.2 bn, it said in a statement (pdf) to the bourse. The capital increase will be distributed over 20.44 mn shares.

Taager shifts HQ from Cairo to Riyadh: Egyptian e-commerce startup Taager has selected Riyadh to host its regional headquarters as the company looks to expand its presence in the Saudi market, co-founder and CEO Mohammed Elhorishy told Asharq Business. “The upcoming period will see a focus on the Saudi market as part of our expansion plan,” he told the news outlet on the sidelines of a tech conference in Riyadh.

About Taager: Established in 2019, Taager is a B2B platform that connects online merchants and suppliers, supplying merchants with storage and shipping services as well as an integrated data-led digital infrastructure. It currently operates in Egypt, Saudi Arabia, and the UAE.

Aiming big for Saudi: Taager wants to invest over SAR 50 mn in the Saudi market when it closes its ongoing funding round, Elhorishy said. The firm has invested over SAR 20 mn since it launched in Saudi, he added.

REMEMBER- Taager secured USD 6.4 mn in seed funding in July 2021, bringing total funding raised from investors since its launch in 2019 to over USD 7 mn. It counts 4DX Ventures, Raed Ventures, Beco Capital and Breyer Capital among its investors.

Not the first to opt for the Gulf: Several homegrown startups like Swvl and Vezeeta have moved their HQs to the Gulf as part of efforts to expand internationally and attract more investment.

Taager is hungry for more: The company wants to expand further in the Gulf, according to Elhorishy. “We are in the final stages of finalizing an expansion to Kuwait, Oman and Qatar,” he told Asharq, adding that entries to Africa and Latin America are also in the pipeline.

Customs Law amendments bring changes for travelers: The value of new goods travelers can bring into Egypt has increased and new taxes are being raised on duty-free alcohol, under amendments to the executive regulations of the Customs Law published in the Official Gazette last week.

Limit raised on customs exemptions for new purchases: Tourists and citizens entering the country will now be able to bring up to EGP 15k worth of new purchases for personal use or as gifts, up from EGP 10k previously. The exemption will also apply to purchases from duty-free shops within 48 hours of arrival worth less than USD 200.

Dutyfree booze hit with new tax: The amendments introduce a customs tax on dutyfree alcohol purchases equal to 1% of the bottle’s value or USD 13, whichever is greater. Travelers entering Egypt may now purchase up to two liters of alcohol per person, up from one liter previously.

Yesterday’s devastating earthquake in Turkey and Syria dominated coverage on the talk shows last night. Ala Mas’ouleety got most of its air time focused on the deadly twin earthquakes with an interview with National Seismological Network head Gad El Qadi (watch, runtime: 3:32). Kelma Akhira dedicated the whole show to the disaster and also interviewed El Qadi (watch, runtime: 13:13)

Minor aftershocks are expected to occur until today, El Gadi told Ala Mas’ouleety. “Unless another earthquake occurs in a neighboring region, then we’ll see the aftershocks reinvigorated. This will further exacerbate the crisis,” he said.

El Hekaya’s Amr Adib wants everyone here at home to know the ABCs of what to do when an earthquake hits, urging authorities to train students and employees on evacuations during last night’s show (watch, runtime: 3:25). Al Hayah Al Youm (watch, runtime: 14:24) and Masaa DMC (watch, runtime: 1:56) also gave the story coverage.

President El Sisi’s sit down yesterday with his Croatian counterpart, Zoran Milanovic, got a mention from Al Hayah Al Youm (watch, runtime: 5:12) and Masaa DMC (watch, runtime: 1:46). Former Deputy FM Mohamed Hegazi spoke with Al Hayah Al Youm on the importance of recent visits by some EU leaders. He said that Egypt is looking to forge deeper partnerships with some European countries and consult over the impact of the Russia-Ukraine war.

No one story is driving the international conversation on Egypt this morning. The Washington Post has reviewed King of Koshary in Arlington, where founders Ayob Metry and Nadia Gomaa combined their culinary talents to give restaurant goers a taste of home.

Also making the rounds: Social satire Feathers is getting ink in Variety, pigeon fanciers get attention from Xinhua, the AFP is talking about 15 days in detention for three TikTokers, and Haaretz is is talking about Al Gomhuria’s retracted op-ed.

TRANSPORT-

Egypt’s aviation sector could see more private-sector involvement: State-owned flag carrier EgyptAir will work more closely with private-sector airlines as the government looks to attract private investment into the sector, Civil Aviation Minister Mohamed Abbas said yesterday. This came during a meeting between the heads of private-sector aviation companies and ministry officials yesterday.

No plans to privatize EgyptAir: The cabinet last week denied having plans to sell off the company in response to rumors circulating online.

DEBT WATCH –

Hyde Park Developments in talks with NBE for EGP 3.5 bn loan: Hyde Park Developments is seeking a EGP 3.5 bn loan from the National Bank of Egypt (NBE) to finance two of its residential projects, Asharq Business reports, citing banking sources it says have knowledge of the deal. Some EGP 1.2 bn would be used to finance the state-owned developer’s Sixth of October project, with the remaining EGP 2.3 bn to be directed to the company’s North Coast project.

AGRICULTURE-

Gov’t to increase cultivation of oilseed crops amid localization push: The government plans to more than triple local production of soybeans and sunflowers by 2024 in a bid to localize the vegetable oil industry, according to a cabinet statement yesterday. The area used to cultivate soybeans will rise to 500k acres in 2024 from 150k this year, while acreage used for sunflowers will grow to 250k from 90k, Prime Minister Mostafa Madbouly said in a cabinet meeting.

TELECOMS-

Eh? Network quality has improved? The number of areas of the country affected by mobile voice quality issues was down 34% y-o-y in 4Q 2022, while the number experiencing mobile data quality problems fell 41%, according to the National Telecommunications Regulatory Authority’s (NTRA) quarterly complaints report. Mobile internet use was up nearly fourfold y-o-y for the quarter, while callers made some 3 bn calls using voice-over-LTE (VoLTE) technology, a 3x jump over the same period last year.

Tourism + military cooperation in Egypt-Croatia talks: Cooperation on tourism, investment and the military industry were three of the key topics of discussion during talks between President Abdel Fattah El Sisi and his Croatian counterpart, Zoran Milanovic, in Cairo yesterday, according to readouts of the meeting from Ittihadiya and the Croatian president’s office. Milanovic, who is in Egypt for a two-day visit, also held talks with Suez Canal Authority chairman Osama Rabie yesterday.