What we’re tracking on 5 April 2020
The Central Bank of Egypt left interest rates unchanged on Thursday after delivering an emergency 300 bps cut last month to contain the fallout from the covid-19 pandemic. The Monetary Policy Committee’s Thursday decision was in line with expectations from our poll last week, in which 10 of 11 analysts expected the committee to pause and assess the effect of its dramatic cut before using up more of its arsenal. We have chapter and verse in this morning’s Speed Round, below.
It’s PMI day — buckle up, folks, as March’s PMI figures for Egypt, Saudi Arabia and the UAE drop (literally and figuratively) this morning at 06:15 CLT. You can find it here when it’s out.
Foreign reserve figures for March should also be out today, while inflation figures for March land on Thursday, 9 April.
A couple of things before we get underway this morning. People smarter than us (such as this guy) have thoughts about how bad the economy is now, how bad it could get, and what governments around the world should do now. But a couple of us were talking it through recently and we are — so far — very cautiously optimistic that the recovery on the other side, while painful, could be faster than many think right now. Unlike in past crises, there has not yet been destruction of capital. There’s been no destruction of financial intermediaries. And no destruction of the labor force.
THINGS TO READ while you guzzle enough coffee to trudge to your home office:
- CIB’s Hisham Ezz Al-Arab reminds us that many Egyptian businesses already have the crisis management skills they need to weather this storm — lessons we all learned in 2011. (Euromoney)
- The US has called for everyone to wear cloth face masks in public. Here’s why that’s a good idea (pdf), and here are two masks you can easily make at home — one super-quick, the other that will take only a bit more time, but that offers more complete protection.
- Remember the immunity passports we suggested might become a thing? The Italians are well ahead of the Germans, it turns out. (New York Times)
- We’ve said it before, we’ll say it again: Stop trying to be productive when you’re not on the clock. Don’t believe the New York Times? Try this tweet, which spoke for us this weekend.
- Thoughts on why it feels like time is dragging, making weeks feel like months. (Toronto Star)
COVID-19 IN EGYPT-
Egypt’s total number of covid-19 cases officially broke the 1,000 barrier over the weekend. The country recorded 291 new cases and 19 deaths between Thursday and Saturday, bringing our total tally to 1,070 as of last night, the Health Ministry said. Friday alone saw 120 new recorded cases — the biggest one-day leap since the beginning of the outbreak. We now have a total of 306 people who have tested negative for the virus, of whom 241 have fully recovered.
The new milestone is expected to make it significantly more difficult to contain the outbreak and the number of infections is expected to increase exponentially from this point through community spread, Cabinet’s crisis management head Mohamed Abdel Maksoud said in an interview with Al Hayah Al Youm (watch, runtime: 15:33).
A hard lockdown isn’t in the works yet: The government is prepared to impose more stringent measures to flatten the curve if the situation continues to deteriorate, Information Minister Osama Heikal said on Sada Al Balad on Friday (watch, runtime: 04:48). The minister said yesterday that a hard lockdown will only come into effect if we reach the point of 1,000 new infections per day. We have more on this in Last Night’s Talk Shows, below.
Despite the growth in cases, Egypt is still faring well in the face of the outbreak in comparison to other countries, Ittihadiya spokesman Bassam Rady said yesterday (watch, runtime: 2:44). Rady attributed the relatively contained situation to preemptive measures the government implemented before the virus spread rapidly in the country.
Seventeen doctors and nurses at the National Cancer Institute have tested positive for covid-19, Masrawy reports. Those who tested positive have since been quarantined, the Doctors’ Syndicate , and the institute will be sanitized before being reopened to patients. The Associated Press also had the story, and we have more in Last Night’s Talk Shows, below.
No “mercy tables” this year: The Religious Endowments Ministry has banned privately produced “mercy tables” that feed the nation’s poor during this year’s Ramadan and has asked charity organizations and private citizens alike to instead distribute food packages or cash donations to the poor, according to a cabinet statement.
No pre-Easter services in church: The Coptic Orthodox Church will not be holding masses preceding Easter celebrations this month, El Watan reports. The Church had suspended masses and other activities in churches across the country last month. AFP also has the story.
Court hearings have been suspended until 16 April in another effort to minimize crowding in a single place, Justice Minister Omar Marwan said on Egypt’s Channel One (watch, runtime: 05:55). All scheduled court sessions will be postponed to a later date. The suspension excludes administrative work but courts have reduced the number of employees as a precaution.
Gov’t pulling together state healthcare system ahead of infection peak: The government is working on a plan to make full use of its healthcare infrastructure by relying on teaching hospitals under the Higher Education Ministry’s purview and other hospitals under the Health Ministry’s jurisdiction, Prime Minister Moustafa Madbouly said on Thursday. The plan would give all governorates across the country enough hospitals to handle covid-19 cases as they come, Madbouly said.
Egyptians are starting to pay attention to social distancing: Data released by Google over the weekend (pdf) suggests an increasing number of Egyptians are taking social distancing measures seriously. The data, based on Google’s tracking of the location of many who use its services, found:
- Time spent at home is up 15% nationwide;
- The number of people traveling to work dropped 35%;
- Footfall in Egypt’s retail and recreational outlets is down 50% since the middle of March;
- Use of transportation hubs is down 52%;
- Footfall in grocery stores and pharmacies is down 24%.
You can play with Google’s gadget here to see how other countries are doing.
Marsa Alam hotels are serving as quarantine centers for Egyptians returning home from the United States, according to Youm7. 310 returnees are already in quarantine there, and another flight is due to land today from Washington.
GOOD POLICY: We heard on Thursday and over the weekend from a number of members of the community who agree with Hassan Allam co-CEO Hassan Allam that the government should postpone tax filing and payment deadlines for businesses of all sizes to later this year. The suggestion mirrors moves in countries including the United States and Canada.
GOOD POLICY: Saudi Arabia is going to subsidize salaries for struggling companies to avert layoffs under a package that would benefit 1.2 mn Saudi nationals, according to Bloomberg, which notes that “business owners can request monthly compensation amounting to 60% of the employee’s salary for the next three months.”
BAD POLICY: The latest bright idea from our illustrious representatives: Legally enforced donations. Al Wafd Party leader and House Legislative Committee head Bahaa Abou Shoka plans to draft a bill that would require all citizens who earn more than EGP 5k per month to donate a portion of their monthly income to the Tahya Misr Fund, according to Al Shourouk. Abou Shoka’s plan would impose a tiered system where those earning EGP 5k per month would donate 5% of their income, those earning EGP 10k would donate 10%, those earning EGP 15k would donate 15%, and those earning over EGP 20k would be required to contribute 20% of their monthly earnings.
Gov’t to add to stockpiles of staple goods: The government is looking to increase the country’s strategic commodity reserves to be sufficient for a six-month period to protect against possible food supply shortages, Prime Minister Moustafa Madbouly said in a televised address on Thursday, according to a cabinet statement. Egypt currently has at least three months’ worth of staple goods in reserve, he said. The announcement came a few days after President Abdel Fattah El Sisi urged ministers to add to the country’s existing reserves.
Is the virus beginning to weigh on Egypt’s wheat tenders? In an unusual move, Egypt canceled a wheat tender within hours of announcing it late last week without giving a reason, Bloomberg reports. State grain buyer GASC reportedly included a new clause requiring suppliers to replace any shipments impacted by covid-19 transport restrictions with wheat from elsewhere, and to bear the cost. This in turn reportedly prompted concerns from some suppliers, which could have led to a lower turnout or offers at higher prices, traders said.
Health Minister Hala Zayed landed in Italy yesterday with a donation of medical supplies as a gesture of goodwill, Masrawy reports. The minister had similarly traveled to China with medical supplies last month.
The World Bank is releasing USD 7.9 mn in emergency funds to Egypt to help it battle covid-19, as part of a USD 14 bn in immediate funds it is disbursing to combat the spread of the virus in developing countries, the bank said in a statement. The funds will be issued under a larger USD 160 bn support package to vulnerable communities and businesses impacted by the crisis.
ON THE GLOBAL FRONT-
The global tally of covid-19 cases has surpassed 1 mn, while the death toll is currently at around 53k, BBC reports, citing official figures from Johns Hopkins University. Over 210k have recovered, the university’s figures show. The US has now become the epicenter of the pandemic, reporting over 1k new cases on Thursday alone. New York, Detroit, and New Orleans are still expected to peak in about a week, President Donald Trump said yesterday.
Dubai has moved to a hard lockdown for two weeks, the emirate’s media office tweeted. The UAE also indefinitely extended its curfew, which was set to expire today, Reuters reported. Only one member of each household will be allowed to leave their homes at a time, and then only to buy food or seek medical attention. You can read the full details of Dubai’s lockdown here.
Fresh Saudi-Russia rift may dash prospects for oil market recovery: An Opec+ meeting that was scheduled to take place tomorrow was pushed by “at least” a few days as Saudi and Russia continue to butt heads over who’s to blame for the oil market crash, reports Bloomberg, quoting an anonymous delegate familiar with the matter. Oil prices surged towards the end of last week, gaining nearly 50% on Thursday and at least 12% on Friday after The Donald took to Twitter to hint at a Saudi-Russia agreement and optimistically forecast production cuts of up to 15 mn bbl / d — a claim later denied by the Kremlin — and the Saudi government called for the now-postponed Monday meeting to negotiate the way forward.
‘Great Depression’ is starting to appear in headlines with alarming regularity: IMF head Kristina Georgieva was back to sounding the alarm on the trajectory of the current economic upheaval, calling it “worse than the global financial crisis,” and a situation unlike anything seen in the financial institution’s history. While economies have come to a virtual standstill on lockdown orders from governments looking to control the spread of covid-19, mns of jobs have been lost and capital has evaporated from emerging markets. The FT and CNBC have more on Georgieva’s comments.
Zoom is under fire over privacy and security concerns after users reported several incidents of hackers hijacking video conferences, according to the Wall Street Journal. The app, whose popularity has soared to 200 mn meetings after the covid-19 outbreak from 10 mn meetings last year, has pledged to enforce better end-to-end encryption, but says the feature “won’t be ready for a few months.”
*** PSA: Flat6Labs will this Tuesday hold a StartSmart webinar featuring global investor Chris Schroeder and Sawari and Flat6Labs co-founder Hany Al Sonbaty to discuss how startups can survive and thrive during the covid-19 pandemic. You can register for the session here.