TL;DR

Justice Minister Ahmed El Zend sacked over ‘blasphemous’ comments. (Speed Round)

Government strategy to lower budget deficit to 8%, inflation to 9% -Ismail. (Speed Round)

Domty to use post-IPO capital injection for local, African expansion. (Speed Round)

Wall Street Journal profiles the Spahis, the richest Egyptian family you’ve likely never heard of. (Speed Round)

Tourism sector lost half of its employees, report shows. (Tourism)

Careem, Uber to be subject to corporate withholding tax. (Automotive + Transportation)

EFSA will not set interest rates for microenterprise loans. (Banking + Finance)

Additional export subsidy to be implemented starting April. (Egypt Politics + Economics)

By the Numbers + GB Auto – Q4-15 Earnings Preview

WHAT WE’RE TRACKING TODAY

On an achingly slow news day in Egypt and across the region, we note that the US and Canada switched to daylight saving time yesterday. Be sure to check your conference call settings. Depending on your mood: Cue the usual arguments about why DST is a bad idea, or be nostalgic for the era (not so long ago) in which we once observed daylight savings time, except during Ramadan, necessitating four time changes a year…

The Canadian Chamber of Commerce is holding a panel discussion tomorrow at the Conrad Hotel centered around tax returns in 2016 and value-added tax legislation, according to Al Mal. Head of the Egyptian Tax Authority Abdel-Moniem Matar will speak as will Abdalla El Adly, head of the tax division at PwC.

Weather is likely to be ugly today nationwide, with the National Meterological Authority predicting that lower temperatures will be accompanied by blowing sand and the possiblity of rain, Ahram Online says.

WHAT WE’RE TRACKING THIS WEEK

The U.S. Federal Reserve’s Federal Open Market Committee meets on Tuesday and Wednesday, with the Fed chair set to hold a press conference on Wednesday evening our time. Economists don’t seem to expect the Fed to tinker with interest rates before its June 2016 meeting: 70% of economists polled by the Financial Times say that’s the meeting at which they expect the Fed to next raise rates. Meanwhile, 76% of those surveyed by the Wall Street Journal point to the same 14-15 June policy meeting. The New York Times’ Binyamin Appelbaum, always a cogent writer on the economy, argues that “Fed’s Plans to Raise Interest Rates Are Delayed, Not Derailed.”

One day later: The Central Bank of Egypt’s Monetary Policy Committee meets this coming Thursday to consider interest rates.

Also on Thursday: SODIC is holding its FY2015 earnings conference call on Thursday, 17 March at 4:00pm CLT. Tap here for the official invitation for call (pdf).

ON THE HORIZON

AmCham is holding its Women in Business: The Key to Economic Growth summit on 22 March. The conference will also announce the regional winners of the fourth AmCham MENA Council Women Awards. Egypt finalists vying for titles include CEO and Managing Director at ADIB Capital Zeinab Hashim; CEO and founding partner at Ahead of the Curve Dina Sherif; and founder and Executive Director at Educate-Me Yasmin Helal. You can register for the summit here.

The Africa CEO Forum, Sofitel Abidjan Hotel Ivoire, Abidjan, Ivory Coast is taking place from 21-22 March.

Microfinance Egypt follows right after from 23-24 March at the Nile Ritz-Carlton, Cairo on how microfinance institutions can navigate a new operating environment.

** DO YOU WANT TO READ OUR GCC EDITION? **

We have recently launched the beta version of our Enterprise GCC edition, and are now publishing Sunday-Thursday at 3 am UTC/ GMT (7 am UAE, 6 am KSA, 5 am Cairo), give or take a few minutes. We’re in beta, after all. You can sign up via this link and may view the Enterprise GCC site online at gcc.enterprise.press. Comments, suggestions and criticisms are always welcome at editorial@enterprisemea.com.

SPEED ROUND

Prime Minister Sherif Ismail sacked Justice Minister Ahmed El Zend yesterday evening after El Zend said during a televised interview on Friday that he would arrest Prophet Muhammad himself if he broke the law. The comments were in the context of arresting journalists in violation of the law, with El Zend saying, “I would arrest the Prophet himself.” The statement sparked widespread public outcry and calls for the dismissal of a minister who had failed to win over public opinion since his appointment, never recovering from his statement that judges “are the masters and the rest are the slaves.” Calls for his ouster intensified after his apology on Saturday, in which he accused his detractors of being part of the Muslim Brotherhood. First Deputy Minister of Justice Reda Shawkat has been appointed interim justice minister, according to AMAY. The Judges Club issued a statement opposing the removal over what they say was a slip of the tongue, Reuters reports. Several ministry officials have also threatened to resign following the move, according to comments made by ministry official Mustafa Issa in a call-in to Lamees El Hadidy’s Hona El Assema last night, Al Mal reports (watch on Youtube). Among El Zend’s other colorful statements in the past: suggesting that the parents of terrorists be jailed and calling for the death of thousands of Ikhwan members.

The government’s plan of action will target lowering the budget deficit to 8% from 11.5% and reducing inflation to 9% from 11.5%, according to a cabinet statement published in Al Mal; the statement stopped short of specifying the time frame in which the Ismail government hopes to achieve this target. The strategy will also target a growth rate of 6% within two years, said Prime Minister Sherif Ismail in a meeting with MPs from Qaliubya on Sunday. Ismail promised new legislation to cut red tape and facilitate obtaining permits, an evergreen promise of governments dating to the time of the Pharaohs and ostensibly enshrined in the Investment Act. Ismail promised to meet the constitutionally mandated government spending minimums on health and education, adding that the education system needs an EGP 30 bn overhaul. He also promised local elections when the Local Administration Act passes in mid-2016. Ismail also said the FX crunch would be resolved “soon,” adding that the government hopes to end it by staying the course on current policies, including supporting exports, restricting imports, and promoting tourism and remittances from expats, Al Mal reports. Ismail appears to be on a public offensive that began last week when he met with MPs from Alexandria and outlined some features of the plan in a bid to receive their approval. Ismail said the plan will be presented to the House of Representatives on 27 March.

Pick a rate, any rate: The EGP continued to gain strength on the parallel market, with the exchange rate reaching EGP 9.25 to the USD, Al Ahram reports, saying FX dealers claim demand for the USD has been tapering since the CBE’s decision to lift deposit and withdrawal caps on individuals. These dealers also speculate the drop in demand could be related to implementing the import registry on 16 March, which drove a rush to deposit USD at banks. The registry is estimated to cut imports by 40-50%, which will reduce demand on the USD. Al Ahram likely sourced the 9.25 rate from Reuters, while Youm7 said it found USD changing hands for 9.15 and Al Mal suggests it’s going for 9.05.

The Domty IPO is apparently entering the home stretch. Al Borsa reports that Egypt’s largest cheese manufacturer by market share will use the EGP 300 mn to be injected into the company by selling shareholders to expand production capacity and enter new markets. On the latter, the paper quotes Managing Director Mohamed Al Domaty as saying the company will announce a partnership with a “well-known” global food company to open up a new export market in Africa, which it speculates could be Nigeria, Ethiopia, or Sudan. Meanwhile, Daily News Egypt quotes EFG Hermes Investment Banking VP Mohamed Abou Samra and Al Ahly Fund Management’s Essam Khalifa on taking an IPO to market against the current macro backdrop.

The Wall Street Journal (paywall) has a great piece this morning on the wealthiest family of Egyptians you’ve quite possibly never heard of — the Spahis of the United States, who left Egypt after losing their textile business to Nasser’s nationalization program in the 1960s. The piece dwells on 27-year-old Omar Spahi’s drive to “re-establish a New York foothold for the family” as his father John longs for “5,000 percent profit.” Says the WSJ: “The family recognizes it would have made much more on its earlier New York investments if it had waited out a few years in the early ’90s when the New York real estate industry fell and then quickly recovered, Omar Spahi said. The family doesn’t ‘want to make [the] same mistakes.’” While father and son share a love of real estate, John’s sideline remains textiles and Omar (here on Twitter) is an author of comics and founder of his own comic publishing house.

A car bomb killed 32 people in Ankara on Sunday and wounded at least 75 more in the second attack on the city in less than a month, Reuters reports. A senior security official told Reuters that findings suggested the attack was carried out by the Kurdistan Workers Party (PKK) while a second official pointed to both the PKK and the Kurdistan Freedom Hawks, which claimed responsibility for the car bombing in February.

EGYPT IN THE NEWS

The FT profiled Loutfy Mansour, CEO of Man Capital, Mansour Group’s investment vehicle, and his role as part of the third generation of the Mansour family to work in the family business. Explaining his strategy at Man Capital, Mansour says “We try to buy and build companies … We don’t have an exit strategy … There is no J-curve: We can invest today and do nothing for two years. We don’t have to report something every quarter.” Working from London, Mansour says, is a “strategic move” and not because some members of the Mansour family find the situation in Egypt “untenable.” He adds “Man Cap was founded in 2010, before the Egyptian Revolution. The family office is an integral part of the Mansour Group’s strategy for future growth and London is the best place for expanding internationally.”

The coverage on discontent continues this morning, with NPR’s Leila Fadel speaking to with Rachel Martin about Egypt’s increased suppression of civil society and crackdown on dissent (listen, run time 3:24)

Another story gaining tracking in the foreign press this morning is a report that parliament is drafting a new law preventing women from wearing the niqab (face veil) in government institutions and public spaces, according to MP Amna Nosseir, professor of comparative jurisprudence at Al-Azhar University. The Independent picked up on the story, as did a number of Israeli papers due to Nosseir’s comments that the niqab had “Jewish” roots. An Egyptian court upheld in January a decision to ban professors at Cairo University from wearing the niqab.

THE MACRO PICTURE

For the first time this year, Turkey and Brazil are tapping international debt markets as oil prices rally and central bank stimulus plans create an opening for bonds in emerging markets, the FT (paywall) reports. The two countries issued debt in the last two weeks after a prolonged market absence, boosting this year’s emerging market debt issuance to USD 25 bn from USD 15 bn in late February, according to Dealogic.

Iran will join discussions on freezing oil production after its own output reaches 4 mn bpd, Reuters quotes Oil Minister Bijan Zanganeh as saying. Zanganeh said Iran saw USD 70 per barrel as a suitable oil price, but would be satisfied with less, Iran’s ISNA news agency reported. “They should leave us alone as long as Iran’s crude oil has not reached 4 [mn]. We will accompany them afterwards,” Zanganeh was quoted as saying.

In Europe, German chancellor Angela Merkel suffered a dramatic setback in regional elections as voters backed right-wing populist forces in what is being seen as a statement on her contentious open-door refugee policies. Meanwhile, U.K. Chancellor of the Exchequer George Osborne warned that he must set out more austerity measures as economic conditions remain cumbersome. Osborne will attempt to plug the hole in the public finances with GBP 4 bn in new spending cuts after admitting on Friday that the economy was GBP 18 bn smaller than originally thought.

WORTH READING

The secret world of the Dunkin’ Donuts franchise kings: “Most of Dunkin’s 7,800 US shops look alike, but they’re owned by about 1,000 franchisees who pay fees each month to their franchisor, Canton-based Dunkin’ Brands. [Dunkin franchisee Mark] Cafua’s Portuguese parents bought their first shop when he was 5, standing him atop two milk crates so he could reach the cash register. Today, the family’s empire encompasses nearly 300 stores… After some cajoling, Cafua reports that his family’s private firm… grosses more than USD 250 mn a year.” (Read, word count c.5,400 words, close the window that opens on the article from the upper left hand corner)

WORTH WATCHING

The Chemical Brothers – Believe. (Watch, running time: 4:20)

DIPLOMACY + FOREIGN TRADE

The European Parliament has not made a final decision on the fate of aid to Egypt, and negotiations are ongoing, said head of the Economic Reform Section of the EU Delegation to Egypt Angel Hidalgo. His remarks are geared to mollify concerns in Cairo that EU aid to Egypt is in jeopardy in light of last week’s non-binding resolution and statement condemning Egypt’s human rights record in the aftermath of the murder of Giulio Regeni. As we noted yesterday, the EU had promised EUR 500 mn in aid this year and has paid out EUR 200 mn, according to Al Mal. In other news, lawmaker Maj. Gen. Hamdy Bekheet said on El Mehwar TV on Saturday that the Muslim Brotherhood was bribing the European Parliament members to adopt the resolution. “The Muslim Brotherhood pays all these people in Europe … they have influence over all these people,” the AP quoted Bekheet as saying. A headline in Sunday’s Al Ahram reportedly read: “The European Parliament has fallen in the trap of the international organization of the Muslim Brotherhood.”

Tourism Minister Hisham Zaazou met with a delegation from Hilton at the iTB Berlin conference, including Executive VP Simon Vincent and MENA region president Rudi Jagersbacher, Al Mal reports. The delegation discussed the state of the market and plans to promote tourism to Egypt. Hilton currently operates 18 hotels and resorts across Egypt, in addition to another six under construction as part of the company’s expansion plan.

President Abdel Fattah El Sisi received the President of the Republic of Macedonia Gjorge Ivanov yesterday to talk bilateral cooperation in trade, investment, aviation, and culture, according to a statement from Ittihadiya. Macedonia has selected Cairo as the location for its only embassy in Africa and the first in the Middle East, said Ivanov. The pair stressed the need to strengthen ties between the private sectors in the two countries. “Macedonia can provide access for Egyptian exports into European markets while Egypt could in turn function as a gateway for Macedonian products into African markets,” according to the statement.

ENERGY

Japan consulting firm pegged for project to boost efficiency of three electricity distribution companies
The Electricity Ministry has tapped Japan’s Tokyo Electric Power Services Co. (TEPSCO) for consulting and feasibility studies on a project to increase the efficiency of three electricity distribution companies, including North Cairo, Alexandria, and North Delta, Al Borsa reports. TEPSCO will complete the project with support from the Japanese International Cooperation Agency, the World Bank, and the Asian Development Bank. TEPSCO will also provide design work, handle purchasing, and overlook construction. (Read in Arabic)

INFRASTRUCTURE

Phone infrastructure to new administrative capital will cost around EGP 3 bn
Installing telephone and internet infrastructure at the new administrative capital will cost an estimated EGP 3 bn, according to the Housing Ministry. The original value of the cables was estimated at EGP 8 bn, but the ICT Ministry was able to secure a better agreement. The Housing Ministry will work closely with the ICT Ministry and the Armed Forces Engineering Department to secure speeds of up to 1 Tbps on the main cables and 100 Mbps on cables running to residential units. (Read in Arabic)

BASIC MATERIALS + COMMODITIES

Lower gas prices to benefit Misr National Steel directly, indirectly -CEO
Misr National Steel (Ataqa) will benefit from the reduction in gas prices directly and indirectly, CEO Gamal El Garhy said in a statement to the EGX. Fuel costs will go down, he explained, especially for plants that use gas as an input. Indirectly, the price reductions will help Suez Steel, Ataqa’s sister company, operate and provide the steel factory with iron ore and pellet inputs more consistently. El Garhy was joined in his praise of the price reduction by the Metal Industries Division of the Chambers of Commerce through its board member Rafik El Dow, who stated that the move will reverse mounting losses incurred by the industry, which reached EGP 3 bn over the past two years, AMAY reports.

GASC to buy 5 mn tons of wheat from local farmers this harvest season
The General Authority for Supply Commodities (GASC) plans to buy 5 mn tons of domestically grown wheat this harvest season at EGP 420 per ardeb, GASC VP Mamdouh Abdel Fattah tells Al Borsa. Abdel Fattah went on to give stats on wheat imports, saying GASC was importing 3.9 mn tons of wheat from the start the current fiscal year in July until March. 1.9 mn tons (49%) of these were imported from Russia, followed by Romania, which sold Egypt 840k tons amounting to 21.5% of total imports. Ukraine came in third at 460k tons (12%), followed by France at 420k tons. (Read in Arabic)

MANUFACTURING

268 industrial projects approved, says trade minister
The Industrial Development Authority has approved 268 industrial projects in February with a total investment value of EGP 4 bn, said Trade and Industry Minister Tarek Kabil. The number is up 85% from the same period last year when the authority approved 145 projects with a value of EGP 3.1 bn in 2015. The lion’s share of the projects were centered around the food industry, followed by chemicals, engineering, and textiles. (Read in Arabic)

Development on Kima underway
Perpetually troubled state-owned Kima (a.k.a. The Egyptian Chemical Industries Company) will undergo a two-year, EGP 5 bn restructuring that will see it change its energy mix to include natural gas, company president Eid Al Hout said yesterday. (Read in Arabic)

HEALTH + EDUCATION

Misr El Kheir, ICT Ministry network 202 blood banks across Egypt
The total cost of the first phase of the Misr El Kheir Foundation’s project to combat hepatitis C is estimated at around EGP 30 mn, said Misr El Kheir’s health sector chief Nagwa Winget. The first phase involves networking blood banks across Egypt in cooperation with the ICT Ministry. The foundation has connected 202 blood banks in six governorates so far and aims to connect blood banks across all 27 governorates, she added. (Read in Arabic)

TOURISM

Tourism sector lost half of its employees, report shows
Half of tourism industry employees left the sector in the past two years, a report by the Chambers of Tourism Federation showed, according to Al Shorouk. The Tourism Ministry’s economic consultant Adla Ragab said there is no accurate data on the number of employees in the sector, but conceded that anecdotal evidence points to a large number of trained employees having either left or been let go. (Read in Arabic)

Ras Sedr airport project to be tendered on BOT basis
The Ras Sedr airport project will be built on a BOT basis, and land for it is currently being prepared, Al Shorouk reported. The land is being issued by GAFI and will be priced by NUCA, the Tourism Development Authority said. Sources told Al Shorouk that offers by Chinese and German developers were rejected on security concerns, saying it would be developed by Egyptian investors. (Read in Arabic)

TELECOMS + ICT

LINKdotNET to use EGP 50 mn loan to cover utilization costs to TE
LINKdotNET plans to use EGP 50 mn from a EGP 90 mn loan from parent company Orange Egypt to cover higher expenses resulting from Telecom Egypt (TE) scrapping a study to reduce infrastructure utilization fees, Al Borsa reports. LINKdotNET has been unable to reduce the prices of its services as a result of this policy. TE and its ISP subsidiary TEData have been squeezing competitors with their monopoly on telecommunications infrastructure, its refusal to reduce utilization rates, and poaching clients from competitors under the guise of upgrading infrastructure. LINKdotNET claims that it lost 80,000 clients in 2015 as a result of the latter. (Read in Arabic)

AUTOMOTIVE + TRANSPORTATION

Careem, Uber to be subject to corporate withholding tax
The Tax Authority plans to apply a corporate withholding tax on Careem and Uber and has requested that the companies submit their financials with a full roster of registered drivers, Al Borsa reports. The move is meant to ensure that private cars used for commercial purposes are accurately tallied and taxed. It’s also part the Tax Authority’s efforts to establish an appropriate taxation system for ride-hailing services and falls under a wider government objective to set up a legal framework by which these companies can operate. Uber and Careem expressed their willingness to adopt whatever taxation model the government feels is appropriate at a sit down with Social Solidarity Minister Ghada Waly. The meeting also explored ways to appease taxi drivers who have been protesting the apps. Suggestions include providing training for these drivers and establishing a body to address complaints against them. (Read in Arabic)

Hyundai market leader in car sales amid overall dominance by Japanese cars
Hyundai captured the biggest market share of any single car brand sold in Egypt in January with 21% of total sales, according to AMIC. As an aggregate, Japanese cars held the largest market share of sales, selling 2,700 cars in January, followed by Korean cars at 2,600, and American cars at 2,000. European cars, which have been subject tariff reductions, came in fourth with 1,900 cars sold. (Read in Arabic)

BANKING + FINANCE

EFSA will not set interest rates for microenterprise loans
The Egyptian Financial Supervisory Authority (EFSA) will not set market interest rates for loans to microenterprises, Al Mal reports. Setting the rates will be the decision of lenders as long as EFSA is aware of the terms of the contract signed. EFSA also believes competition will help set the lending interest rates effectively. EFSA has approved 650 microenterprise lenders with a total portfolio of EGP 3.2 bn, Al Borsa said.

HC Securities projects real GDP growth at 3.4%, lower than gov’t expectations
HC Securities and Investment does not expect the government to meet its FY2015/16 growth target of 4.0-4.25%, with their estimates pointing to a real GDP growth of 3.4% compared to 4.2% last year, according to its most recent macro note, Al Borsa reports. The report lays the blame squarely on the shoulders of the FX crunch due to lost tourist receipts since the Metrojet crash and the CBE’s limited ability to stimulate growth due to its focus on curbing inflation. (Read in Arabic)

EGYPT POLITICS + ECONOMICS

Additional export subsidy to be implemented starting April
The Trade and Industry Ministry will begin implementing an additional export subsidy program in April that will run until 31 March 2017, Trade and Industry Minister Tarek Kabil announced, according to Al Borsa. The export subsidy will add 50% to the previously agreed upon subsidy in the Export Development Program. To be eligible, companies are expected to provide documentation proving a 25% growth in exports in chemical, food, engineering, or textile industries over six-month periods. Revenues from the export of manufactured products rose 2.3% y-o-y to USD 516 mn in February,  Al Masry Al Youm quotes Kabil as saying, adding that these measures are set to boost exports further.

ON YOUR WAY OUT

The EGX has formed a higher executive committee for the exchange to develop and assess an operational strategy for the exchange. Half of the committee is made up of women, according to the bourse.

Just when you thought we were done with him: Egypt’s Prosecutor General Nabil Sadek imposed a travel ban on former MP Tawfik Okasha pending an investigation of allegations Okasha possesses a forged doctoral degree, Ahram Online reports.

CALENDAR

15-16 March 2016 (Tuesday-Wednesday): US Federal Reserve’s Federal Open Market Committee meets. Fed chair will hold press conference.

17 March (Thursday): Wamda’s Mix N’ Mentor Cairo 2016 – Marketplace Edition, The Greek Campus, Cairo. Register here.

21-22 March (Monday-Tuesday): The Africa CEO Forum, Sofitel Abidjan Hotel Ivoire, Abidjan, Ivory Coast.

23-24 March 2016 (Wednesday-Thursday): Microfinance Egypt, Nile Ritz-Carlton, Cairo.

27 March (Sunday): Business News Foundation’s Third Annual Energy Conference: Energy and Sustainable Development, InterContinental Hotel Citystars Cairo. Register here.

29-31 March 2016 (Tuesday-Thursday): Future Rail and Metro Egypt, Cairo.

13-16 April 2016 (Wednesday-Saturday): Cafex, Cairo.

17 April 2016: German economic delegation visits Cairo.

25 April 2016 (Monday): Sinai Liberation Day (national holiday)

26-28 April (Tuesday-Thursday): Arabian Hotel Investment Conference, The Madinat Jumeirah, Dubai.

01 May (Sunday): Easter Holiday / Labour Day (national holiday)

02 May (Monday): Sham El Nessim (national holiday)

02-03 May (Monday-Tuesday): The Middle East Investment Summit 2016, Ritz-Carlton DIFC, Dubai.

06 October (Thursday): Armed Forces Day (national holiday)

27 November 2016 (Sunday): 2016 Cairo ICT Conference