AM — Madbouly, key cabinet members in Qatar to talk investment

Good morning, ladies and gents. Before we dive into another busy news day, we have an announcement to make:

We are delighted to share with you that the Enterprise Exports & FDI Forum will be taking place on Monday, 15 May at the Four Seasons Hotel at Nile Plaza.

DO YOU WANT TO ATTEND? The first wave of invites is going out soon. If you’re a C-suite exec, exporter, investor, official, banker, or someone who should be part of the conversation, please TAP OR CLICK HERE to request a spot at this exclusive event.

What’s the Enterprise Exports & FDI Forum? It is the latest in our series of must-attend, invitation-only gatherings for C-suite-level business leaders. The Enterprise Exports & FDI Forum will discuss the critical topics of exports and foreign direct investment (FDI) in Egypt.

We will be taking an in-depth look into some of the most vital industry topics, including:

• How to effectively break into new export markets
• How to leverage domestic trends in order to create export opportunities
• What foreign investors are looking for
• What the government’s role should be

Why now? 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.

Think of the Enterprise Exports & FDI Forum as a hands-on lab for how to turn the devaluation of the EGP into something that will turbocharge your company and our economy.

Who’s on board? Some of the biggest names in business and finance are on board — are you? If you’d like to partner with us on the conference, ping a note to Moustafa Taalab, our head of commercial, here.

WHAT’S HAPPENING TODAY-

Madbouly, key cabinet members in Qatar: Prime Minister Moustafa Madbouly arrived in Doha yesterday evening and was met by Qatar’s transport minister on arrival, the cabinet and Qatar News Agency said. The prime minister is visiting the Gulf country to accelerate talks for sought fresh Qatari investment in Egypt, which have failed to make progress in recent weeks.

Accompanying the PM: The finance, planning, health, and trade and industry ministers, as well as the heads of the Suez Canal Economic Zone and GAFI are part of the delegation, cabinet said. His visit comes a few weeks after Planning Minister Hala El Said and Sovereign Fund of Egypt head Ayman Soliman visited the Gulf country to discuss investment.

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Shoukry in Syria + Turkey: Foreign Minister Sameh Shoukry is visiting Syria and Turkey today in what the ministry said was to “deliver a message of solidarity” following the earthquakes earlier this month. The ministry provided little information about the trip, though talk show host Ahmed Moussa suggested that Shoukry could meet personally with President Bashar Al Assad while in Damascus (watch, runtime: 7:18). While in Turkey, Shoukry will hold talks with Turkish Foreign Minister Mevlut Cavusoglu and visit the southern province of Adana where a shipment of Egyptian aid is expected to arrive, the Turkish foreign ministry said.

A month of firsts: Shoukry will be the first Egyptian foreign minister to visit Syria in more than a decade, a trip that comes a few weeks after President El Sisi spoke to Assad for the first time in the wake of the disaster.

Assad in from the cold: Shoukry’s trip to Damascus comes a day after a delegation of senior Arab lawmakers visited the Syrian capital to discuss bringing the country back into the Arab League. Egyptian House Speaker Hanafi El Gibali was among the visitors, becoming the highest-ranking Egyptian official to travel to Syria in more than a decade, according to the Associated Press.

REMEMBER- Syria was suspended from the Arab League in 2011 after Assad’s government brutally suppressed demonstrations against his rule. The rebellion escalated into a brutal civil war that ravaged the country.

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The House is back in session: The House will discuss and vote on bills that will extend the government’s expat car import scheme and exempt phone components from being charged development fees. It will also discuss and vote on three foreign agreements on human rights, economic governance, and the Montreal Protocol, an environmental pact. Meanwhile, the House Industrial Committee will review the government’s industrial strategy.

TOMORROW- Social Solidarity Minister Nevine El Qabbaj will be in the hot seat to answer questions from MPs on pensions, social protection programs, and services offered to disabled people.

You can forget about these bills for a while: Amendments to the Investment Act, the draft Unified Ins. and Labor acts , the new building violation reconciliation law, and the bill to establish the Digital Egypt Fund aren’t expected to head to the House any time soon, officials say.

• Unified Ins. Act in limbo: There has been no progress on the Unified Ins. Act since at least January, according to officials on the House Economic Committee. The government is currently amending the legislation, which was passed by the Senate last April.
• Ditto the draft Labor Act: The legislation — passed by the Senate over a year ago — is undergoing a revision in response to objections from both the business community and labor unions.
• We’re waiting on those Investment Act amendments: It is unknown when amendments to the Investment Act designed to attract more FX into the country will be voted on in the House. Senators approved the bill in November.
• Digital Egypt Fund bill MIA: The legislation has been in the House since January but there are no signs that it will be put up for discussion any time soon. The bill has been in the works for over a year, and was given the greenlight by the House Communications Committee last month and the Senate in December.
• Building reconciliation bill lost in the ether: The House Housing Committee approved in December the new bill that will make it easier for owners of illegal buildings to go legit, but it remains unknown when it will head to the general assembly for a vote.

SIGN OF THE TIMES- Another one bites the dust: Digital money circle (AKA gameya) provider MoneyMaster is winding down operations less than two years after launching, Al Mal reports, citing a company statement. The startup’s legal team will carry out the liquidation process and pay customers their dues before it shuts down. The Egypt-born company kicked off operations in 2021.

Tough times on Planet Startup: Emirati buy now, pay later firm Tabby last week said it would suspend its operations in Egypt six months after entering the country due to the challenging economic conditions. The news follows struggles at a number of more high-profile startups, including last year’s implosion of Capiter.

THIS WEEK-

Egypt-UN Partnership week is taking place ahead of the signing of the UN Sustainable Development Cooperation Framework (UNSDCF) 2023-2027. International Cooperation Minister Rania Al Mashat visited a refugee support center in Alexandria run by Caritas with UN Resident Coordinator in Egypt Elena Panova yesterday.

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THE BIG STORY ABROAD-

No single story is dominating the conversation on the global front pages this morning, though the latest from Ukraine is occupying most of the column space. Bloomberg leads with the Saudi foreign minister’s surprise visit to Kyiv, Reuters covers Washington’s latest warning to Beijing against providing arms to Russia while the New York Times says that the war has ended the European continent as we knew it.

US to back “China did it” covid theory? The US Energy Department now believes that the covid-19 pandemic occurred due to a lab leak after obtaining classified intelligence regarding its origins, the Wall Street Journal and the New York Times reported yesterday. The department has until now held back from endorsing the idea that the virus was a creation of Chinese scientists but now says with “low confidence” that an accidental lab leak is the most likely cause of the pandemic, rather than natural transmission as Beijing maintains. Republican lawmakers have jumped on the reports and are calling for action to be taken against China.

When your boss realizes you’re using ChatGPT: JPMorgan Chase has restricted its staff’s use of ChatGPT’s AI bot, an anonymous employee told Bloomberg. The decision was made in line with the bank’s rules on third-party software, rather than in response to a specific incident involving use of the AI, the source said.

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Egypt is going to the International Basketball Federation (FIBA) World Cup: The Pharaohs qualified for the international competitions with two matches still to play after beating Tunisia 71-67 in Alexandria on Friday. The victory sees Egypt return to the tournament after a nine-year absence. The FIBA World Cup will run from 5 August until 10 September.

ICYMI-

Missed this week’s Inside Industry? In our weekly vertical exploring all things industry and manufacturing, we looked at the government’s plans to revitalize the spinning and weaving industry.

CIRCLE YOUR CALENDAR-

The AUC Business Forum continues today and runs through to Tuesday. The event features five roundtables on the changing role of business schools and how to remain relevant and impactful in society, with a lineup of scholars, practitioners, policymakers, and executives from Egypt and abroad. You can follow the forum as it unfolds on the AUC School of Business Facebook page.

Oil Minister Tarek El Molla will be guest of honor at a dinner organized by the British Egyptian Business Association (BEBA Egypt) next month. The event will take place on Monday, 13 March at Cairo Marriott Hotel.

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

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed.

In today’s issue: Private education players — from K-12 outfits to higher ed — are shelving construction plans amid worries over costs of raw materials and financing.

Egypt, UAE, Jordan + Bahrain sign agreements for USD 2 bn worth of industrial projects: Egypt, the UAE, Jordan and Bahrain signed agreements to establish nine joint industrial projects at an investment cost of USD 2 bn, the Egyptian Trade Ministry said yesterday. The four countries inked 12 agreements in Jordan yesterday for the projects, which span sectors including agriculture, electric vehicles, minerals, pharma, and petrochemicals.

This is part of the regional industrial partnership set up last year: The agreements were signed at the end of a two-day meeting in Amman to discuss the USD 10 bn industrial partnership established in 2022. Abu Dhabi sovereign wealth fund ADQ is contributing USD 10 bn to the initiative, which will channel finance into large-scale industrial projects in the four countries to bolster regional supply chains.

We’re expecting even more: The four countries last year said they had identified USD 3.4 bn-worth of joint investment projects for the first phase of the partnership.

THE AGREEMENTS THAT INVOLVE US–

#1- Emirati fertilizer company CFC Group signed MoUs to lock in raw materials for its USD 400 mn industrial complex in Qena Governorate. Jordan’s Arab Potash Company will supply the complex with potash, while Misr Phosphate will supply it with phosphates. The project, which was first announced last year, has since obtained a golden license from the government and has been allocated a plot.

Construction on the project will start in July, the ministry said. The complex is set to produce up to 500k tons of fertilizers, 500k tons of animal feed and 1.1k tons of phosphoric acid each year. CFC will also establish a school for applied science near the complex, which is set to start operations during the upcoming academic year.

#2- The Egyptian Soda Chemical Industries Company will invest USD 500 mn to produce 500k tons per year of sodium carbonate — a raw material used in glass and detergent production. The company inked an MoU with the Emirates Float Glass to buy the sodium carbonate.

#3- Emirates’ M Glory Holding has earmarked USD 550 mn to establish three EV factories with production and assembly lines in the UAE, Egypt, and Jordan. The factories are set to produce 40k vehicles in total during their first three years of operations. M Glory inked MoUs with the Egyptian military’s Arab Organization for Industrialization and the Jordan Design and Development Bureau (JODDB) to act as its partners and an agreement with Bahrain’s Gulf Aluminium Rolling Mill (GARMCO) to supply aluminum sheets for the cars.

#4- The UAE’s Global Pharma inked a technology transfer partnership with Egypt’s Nerhadou to develop their meds and nutritional supplements manufacturing tech in the UAE. Global Pharma also inked an agreement with Jordan’s Savvy Pharma for research and development. The two agreements are together worth USD 60 mn in investment.

ALSO IN MEDS PRODUCTION-

• Egypt’s BioGeneric Pharma inked a technology transfer agreement with Bahraini firm Gulf Biotech to help it set up a USD 103 mn vaccines factory that is set to produce 105 mn doses a year.
• Local firm Marcyrl Pharma signed an agreement to transfer its biosimilars manufacturing tech to Jordanian firm Itqan Pharma.

Scatec + Norway-backed Europe electricity link? The CEO of Norwegian renewable energy developer Scatec proposed a new electricity interconnection project between Egypt and Europe in a meeting with Prime Minister Moustafa Madbouly last week, according to a cabinet statement. The project would be backed by the Norwegian government and would export power generated by renewable energy to Europe via a 3-GW link, according to the plan put forward by CEO Terje Pilskog.

What they said: “We look forward to exporting electricity from Egypt to Europe, and we have a ready MoU to sign with the Egyptian government in that regard,” the statement quotes Pilskog as saying. He said the project would help secure Europe’s energy resources from clean energy and backs the continent’s green transition plans.

More study needed, says electricity minister: Electricity Minister Mohamed Shaker said that the proposal will require further discussions, though he expressed willingness to cooperate with the company.

We make that five proposed Europe interconnectors: Egypt has been preparing to link its electricity grids with Greece and Cyprus through a subsea cable as part of the USD 4 bn EuroAfrica Interconnector project since 2018, while two direct Egypt-Greece links — the 3-GW Greece-Egypt Interconnector (GREGY) and the 2-GW Greece–Africa Power Interconnector (GAP) — are both being studied. Egypt and Italy are also discussing a separate 3-GW link and could sign MoUs for the project in June. Our grid is currently linked with Jordan, Palestine, Libya, and most recently Sudan, and will link up with Saudi via a 3-GW interconnection in 2025.

Europe is looking across the Med as it faces a future without Russian gas: The EU is looking to import electricity and secure new long-term gas supplies from Egypt following the loss of Russian gas last year.

REMEMBER- Scatec has emerged as a key player in Egypt’s energy sector, building the country’s first green hydrogen plant with Fertiglobe, Orascom Construction, and the Sovereign Fund of Egypt (SFE). The Norwegian company plans to sign a joint development agreement for a USD 5.5 bn green ammonia plant in Ain Sokhna with Egyptian Petrochemicals Holding Company (ECHEM) and state fertilizer company Mopco, according to Thursday’s statement.

Record sales for MNHD in 2022: Madinet Nasr Housing and Development’s (MNHD) net income more than doubled in 2022 on the back of a surge in revenues, the company said in its earnings release (pdf) yesterday. Net income surged 165% y-o-y to EGP 747 mn during the year after a rise in deliveries and record-breaking gross contracted sales caused revenues to more than double to EGP 5.2 bn.

Sales climber in terms of both number and value of units sold: MNHD’s gross contracted sales more than tripled to a record EGP 11.2 bn on the sale of 3.2k units in 2022, triple the number of units it sold a year before. More than half of sales were in the company’s Taj City project, with the remainder coming from Sarai. Meanwhile, deliveries doubled to more than 2k during the year. MNHD’s newly-acquired subsidiaries Minka and related special purpose vehicle EgyCan generated another EGP 1.2 bn in sales that didn’t show up in MNHD’s consolidated results 2022, it said.

On a 4Q basis: Net income grew more than eightfold to EGP 202.5 mn on revenues of EGP 2.15 bn, up 173% on 4Q 2021.

Shareholders are in line for a payout: The board has proposed paying out a dividend of 15 piasters per share, according to an EGX disclosure (pdf).

What they said: “Despite a challenging operating environment, we pushed ahead with our growth,” management said. “While inflationary pressures have generally hindered consumer purchasing power, it benefitted MNHD as people resorted to the real estate market to safeguard their financial interests.”

SOUND SMART- In real estate, sales ≠ revenues. With off-plan sales dominating the industry, most real estate companies book a sale when you sign a contract to buy a home. But they only record (some or all) of the value of the unit it sold you when it (a) delivers the unit to you or (b) hits a percentage completion on a total project. In most cases, then, revenues are composed of sales from past periods, while sales in a given quarter will be recognized as revenues in the future when units are completed or delivered.

ECONOMIC HEADWINDS WEIGH ON GB AUTO REVENUES-

MNT stake sale boosts GB Auto amid challenging market conditions: GB Auto’s net income rose in 4Q 2022 thanks to the sale of its stake in MNT Investments, according to its earnings release (pdf) released yesterday. The company reported EGP 8.7 bn in net income in the final quarter of the year, up from EGP 412.6 mn the year prior, after recording a EGP 8.2 bn gain from the sale of a 7.5% stake in the Netherlands-based payments company.

FX shortage + import crisis hits revenues: The company’s revenues fell almost 25% y-o-y to EGP 6.9 bn during the quarter on what it described as “challenging market conditions.” A shortage of FX and import restrictions caused the passenger car market to contract by almost 75% during the quarter, causing revenues from the segment to decline by more than 60% to EGP 1.4 bn, it said.

Financing arm sees growth: GB Capital reported a 11% increase in revenues while net income rose 25% to EGP 847.1 mn excluding proceeds from the MNT sale.

In 2022: The company’s net income rose 26% to EGP 1.8 bn (excluding the MNT gains) in 2022 even as revenues slipped 5% to EGP 29.8 bn.

What they said: “The past year has truly tested the resilience of our business model and the strength of our market position. We believe that the CBE’s adoption of a flexible exchange rate will ease import restrictions and improve supply levels in the course of 2023. However, inflationary pressures are likely to persist. We expect the market will take a few quarters to stabilize and we will closely monitor the effects of inflation on purchasing power and consumer demand across our lines of business,” GB Auto CEO Nader Ghabbour said.

Mobile payments player EasyCash has appointed Abdeen Abuarida (LinkedIn) as the company’s chairman, Al Mal reports. Abuarida currently also serves as chairman of several other companies including Incent and Wateen and serves as chairman and CEO of Abu Arida Sons Contracting Company.

It was a bit of a one-note night on the airwaves last night, with state media dedicating much of the airtime to covering statements by the president and prime minister yesterday about the government’s Sinai development plan. Ala Mas’ouleety (watch, runtime: 6:33), Masa’a DMC (watch, runtime: 5:34), Al Hayah Al Youm (watch, runtime: 1:55), and Kelma Akhira (watch, runtime: 3:42) dedicated most of their coverage to the story.

Foreign Minister Sameh Shoukry’s planned visit to Syria and Turkey today also got attention, with journalist Emad El Din Adib telling El Hekaya’s Amr Adib that the visit “resembles an opportunity [by Cairo] under the umbrella of humanitarian aid to help achieve peace and stability or de-escalate tensions in the region” (watch, runtime: 20:20). Ala Mas’ouleety’s Ahmed Moussa said the visit by Shoukry is the first by an Egyptian FM in over a decade (watch, runtime: 7:18).

Chicken prices received far less attention than on Saturday, though Masa’a DMC dedicated a few minutes to noting a decline in prices on the back of increased imports entering the country (watch, runtime: 5:13).

Zamalek’s post-Mortada Mansour era received attention from Adib (who previously had beefs with the pugnacious club president). Sports pundit Mohamed Khairy told the show that naming a new head from among the board would lead to Mansour getting his club membership revoked (watch, runtime: 6:46).

The economic crisis is front and center in the international press this morning, foreign outlets commenting on the impact of surging prices on Egyptian society.

Koshary is food of the poor no more: Spiraling food prices are putting Koshary — a traditional food of the working class — beyond the reach of Egypt’s poorest. Bloomberg’s new Koshary index estimates that the average price of the dish’s ingredients has jumped almost 60% y-o-y in December.

Doctors are leaving Egypt amid poor pay + soaring inflation: Doctors are deserting Egypt’s public healthcare system for jobs abroad as low wages and soaring inflation leaves them unable to make ends meet, the Washington Post reports. More than 11.5k doctors left Egypt’s public healthcare system between 2019 and 2022, raising pressure on hospitals amid a shrinking supply of qualified doctors.

INVESTMENT-

Ibnsina Pharma to invest up to EGP 200 mn in 2023: EGX-listed pharma player Ibnsina Pharma plans to invest as much as EGP 200 mn to add warehouses and strengthen its meds distribution network this year, IR director Mohamed Shawky told Enterprise. The company could separately deploy more funds to its investment arm AIM, he said. The company invested some EGP 126.7 mn in its core business in the first nine months of 2022, according to its latest earnings release (pdf). It also spent EGP 430 mn to acquire El Shorouk Hospital, while EGP 200 mn was used to buy back shares, Shawky said.

El Shorouk Hospital open for business: Ibnsina Pharma has begun trial operations at its Shorouk City hospital ahead of a full launch by the end of 1Q 2023, Shawky added. The company acquired the hospital last May.

INDUSTRY-

Kima wants to raise USD 300 mn: EGX-listed, state-controlled Egyptian Chemical Industries (Kima) is looking to secure USD 300 mn to fund its nitric acid and ammonium nitrate project — either through a loan or by partnering with a strategic investor, company head Abdelmeguid Hegazy told Al Mal. The company is set to sign contracts for the project within three months with Italian contractor Maire Tecnimont, with whom Kima late last year settled a dispute over former projects. It will produce some 600k tons of nitric acid and 800k tons of ammonium nitrate annually once operational, with construction expected to take two years.

Green ammonia in the works: Kima is also looking into adding three production lines at its existing fertilizer facilities to produce some 400k tons of green ammonia annually, Hegazy reportedly said. Al Ahly Pharos is advising the firm on both projects.

NON-BANK FINANCIAL SERVICES-

Aman could be preparing a sukuk issuance: Raya Holding’s non-banking financial services outfit Aman Financial Services could issue EGP 500 mn in sukuk this year, Hapi Journal reported, citing statements by CEO Hazem Moghazy. The company issued EGP 403 mn in securitized bonds a few weeks ago, kicking off a EGP 5 bn securitization program.

FINTECH-

e-Finance x Giesecke+Devrient: State-owned tech company e-Finance signed a cooperation agreement with Giesecke+Devrient (G+D) that could see the German security tech company debut new card issuance and digital payments services in Egypt, according to a press release (pdf).

ENERGY-

Petrojet awarded USD 150 mn Luberef contract: Saudi Aramco’s refining unit has awarded state-owned oil and gas contractor Petrojet a SAR 555 mn (c. USD 150 mn) contract to expand its base oils plant in Yanbu, it said in a disclosure to the Saudi stock exchange.

Israel to continue settlement expansion following Palestine talks: Palestinian and Israeli officials agreed to take steps to calm a surge in violence during rare face-to-face talks in Jordan yesterday. In a joint statement following the meeting, the two sides said they would refrain from unilateral measures and the Israelis committed to not discuss expanding settlements for the next four months or authorize more outposts for the next six months — though the country will continue with its plans to build 9.5k new settler homes in the West Bank and will not reverse its recent decision to legalize nine outposts. Officials from Egypt, Jordan and the US also attended the talks.

Members of Israel’s far-right government are unpacking the agreement: Israel’s far-right Finance Minister, Bezalel Smotrich — who is also in charge of governing Israeli areas of the West Bank — wrote on Twitter following the talks: “I have no idea what they did or didn’t say in Jordan. But one thing I do know: there will be no settlement freeze. Not even for one day.” He was then joined by Prime Minister Benjamin Netanyahu who also denied that the government had agreed to freeze settlement activity.

And violence continues on the ground: Two Israelis were shot by Palestinian gunmen in the West Bank as the talks were taking place. Later, a group of settlers entered a Palestinian village and set houses and fields on fire, according to the BBC.