Thursday, 9 September 2021

TONIGHT: August inflation figures up slightly. + Dates set for exporters to receive subsidy arrears. ALSO: Egypt officially a member state of Africa Finance Corporation.

Are we the only ones who feel as if the whole country woke up this week and tried to cram about two months’ worth of business into the past five or so workdays? Not that we’re complaining. As The Colonel used to tell us: It beats the alternative. Think on that as you enjoy one last weekend of relaxation before the kiddies head back to class on Sunday. That’s when international schools regulated by the Ministry of Education open their doors for the 2021-2022 school year — and our Blessed Summer of Good Commutes comes to an end.

THE BIG STORIES SO FAR TODAY-

#1- Annual urban inflation accelerated in August on the back of rising food prices and transportation costs. Headline urban inflation rose slightly to 5.7% in August, up from 5.4% in July. Although on a monthly basis, headline inflation fell to 0.1% in August, according to state statistics body Capmas, it is the highest headline inflation rate recorded since November 2020. Reuters also has the story.

Inflation (both global and domestic) will undoubtedly weigh in on the Central Bank’s Monetary Policy Committee meeting on Thursday, 16 September. That said, inflation is still within the CBE’s target range of 7% (±2%), and we have the carry trade plus the US Fed’s tapering of stimulus to keep in mind. Look to our poll of analysts this coming Sunday for their take on what the CBE is likely to do when it meets at the end of next week.

#2- Egypt can handle any tapering by the US Federal Reserve, Finance Minister Mohamed Maait said in an interview with Bloomberg out today. “We are closely monitoring” how the Fed’s decision could affect the cost of borrowing, Mohamed Maait said, adding that “we are taking into consideration our experience with such a situation. We have to be ready, always.”.

#3- Banque Misr will not be selling its 15% stake in Fawry Plus to Fawry, as it sees value in its stake in the company, sources from the bank told Enterprise this morning. The move comes a few days after Fawry announced in a bourse filing that it will buy Banque Misr’s 15% stake and CIB’s 15% stake in Fawy Plus at EGP 1.15 per share, for a total of EGP 16.2 mn per acquisition.

^^ We’ll have chapter and verse on all three stories in Sunday’s edition of EnterpriseAM.

Exporters awaiting overdue subsidy payouts, rejoice. You’ll be collecting this month and next, Finance Minister Mohamed Maait said in a statement this morning. Exporters who are eligible for overdue subsidy payments under the latest incarnation of the subsidy program that launched in July will receive payouts on 30 September and on 28 October. Maait notes that the new program has been popular, with 1,650 companies signing on.

Background: Following years of complaints of delayed payouts, the government launched last year a new program which allowed companies to receive overdue subsidies in bulk instead of in installments over several years, provided that they agree to take a 15% haircut. The current third stage of the program will include exporters in the automotive, ceramics, pharma, electronics, and chemicals industries as well as featuring specific incentives to trade with other African countries.

The government has so far doled out EGP 28 bn since the program was launched last year, Maait notes, with EGP 4.6 bn in arrears paid out in the second stage.


MEANWHILE- Egypt has officially become the newest member state of the Africa Finance Corporation (AFC), Prime Minister Moustafa Madbouly said in a press release (pdf) this morning. The move may help Egypt unlock some USD 1 bn in investments, Madbouly added. (We have background and an interview this past July with AFC chief Samaila Zubairu.)

Tahya Misr w Afriqia: “We are already in discussions with AFC on a pipeline of projects, some of which includes supporting covid-19 vaccine manufacture, working closely with the Ministry of Transportation to fund the high speed train and the Cairo Monorail projects, as well as a collaboration with the Sovereign Fund of Egypt to fund renewable projects, and we look forward to executing these projects in line with the country’s Vision 2030.”

Private sector firms hail int’l investments, green initiatives in Egypt ICF: Egyptian firms’ growing ability to obtain finance from international institutions was hailed by speakers in a session titled “Dialogue with the Private Sector” at the inaugural Egypt-International Cooperation Forum (ICF) which wrapped up today, according to a cabinet statement. Other achievements cited include green initiatives and infrastructure projects being undertaken by the government and private sector as well as the opening of new universities nationwide.

Who presented? A number of Egypt’s top companies took part in the forum, including our friends Orascom Construction, Hassan Allam, Elsewedy, TAQA Arabia. Participating development finance institutions included EBRD, IFC, and AfDB.

President Abdel Fattah El Sisi used the form to call on the international community to support a global green recovery, saying it would entail governments, private sector firms, and financial institutions to work together multilaterally to ensure that the green recovery process happens quickly and equitably post-pandemic, according to the State Information Service.

On the sidelines: Nigeria’s Finance Minister Zainab Ahmed revealed that Nigeria would sell USD 3 bn in eurobonds in October in a Bloomberg TV interview today (watch, runtime: 5:54).


HAPPENING NOW- Climate change was at the top of the agenda for Prime Minister Mostafa Madbouly as he met with top UNDP official Khalida Bouzar, according to a cabinet statement. Madbouly pressed Egypt’s case for hosting the UN Climate Change Conference (COP 27) in 2022.

Egypt, Jordan, and Palestine hold tripartite meeting to discuss Palestine-Israel peace talks: Foreign Minister Sameh Shoukry met with his counterparts, Jordan’s Ayman Safadi and Palestine’s Riyad Al Maliki, to discuss restarting peace talks with Israel, and Gaza reconstruction, according to a cabinet statement.


** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

  • MNT-Halan announces blockbuster USD 120 mn fintech round: MNT-Halan has raised c. USD 120 mn from a group of investors that includes PE house Apis, the UK’s Development Partners International (DPI) and Lorax Capital Partners. We believe it’s the largest fintech round ever raised in MENA.
  • Our debt may not become Euroclearable until 2022: The Finance Ministry will likely miss its target of making local Egyptian debt “Euroclearable” by November and instead we might be looking at a March 2022 date.
  • Egypt to re-export natural gas to crisis-hit Lebanon: Egypt will export natural gas to Lebanon via a pipeline running through Jordan and Syria following an agreement to help relieve the fuel shortage currently paralysing Lebanon

THE BIG STORIES ABROAD? A couple have struck our fancy on this very warm Thursday afternoon, including word that audit firm EY will spend USD 2 bn over the next three years to make sure that folks carrying its business cards around the world get a little bit better at detecting fraud. EY and its rivals have come under pressure to improve their audit capabilities after failing to pick up on fraud at Dubai-based healthcare group NMC and Germany payments outfit Wirecard.

Closer to home– KSA is welcoming the release of classified documents related to 9/11, saying that it will show Saudi was not complicit in the attacks on the US, the Saudi Embassy in Washington said in a statement. President Joe Biden last week signed an executive order directing federal agencies to release what information they can on the attacks. There is no timeline in place for the documents to be declassified.


SIGN OF THE TIMES #1- With the “worst of the pandemic” now behind us, London’s finance workers are “flocking” back to the office, Reuters tells us in this front-page piece. The City and Canary Wharf are bustling, with offices reporting 33-50% of staff now coming in — up from 20% in some cases last week. The most popular “back to the office” arrangement globally seems to be some version of three days a week. Nearly 40% of white collar professionals want to go back to the office every day of the week, according to a survey for Fortune magazine, but three-days a week is the “sweet spot,” the survey found.

That’s still ringing in our ears as JPMorgan says that an end to the covid crisis is in sight. That doesn’t mean the pandemic is coming to a clear end, the investment bank writes, noting that “while covid-19 is unlikely to disappear, a drop in severe outcomes to levels that are consistent with moderate-to-severe flu seasons is a reasonable threshold at which society will manage an endemic disease without meaningfully impacting the economy.” Check out the slide on CNBC host Carl Quintanilla’s twitter feed.

SIGN OF THE TIMES #2- “Closely watched” investor Cathie Woods’ Ark is cutting its positions in China, liquidating many of its holdings and “leaving only a portfolio of companies that were identifiably ‘currying favour’ with Beijing.” How you treat business owners and investors determines how willing they are to take risks on your economy. Woods is pulling back as Xi Jingping’s Great Capitalist Smackdown shows no sign of abating.

SIGN OF THE TIMES #3- Got a job offer from your current employer’s cross-town rival? You better be ready to prove it if you’re going to use it as a bargaining chip for a raise or a promotion. That’s our takeaway from The Information’s report that Google’s recruiters are asking would-be candidates to show them screenshots of offer letters if they’re claiming a rival offered them a sweeter arrangement.

SIGN OF THE TIMES #4- Need any more proof that hedgies are ascendant after a decade or more in the wilderness? They’re now muscling in on Silicon Valley, poaching transactions from VCs and PE outfits as they closed “a record-smashing USD 153 bn worth of investments in private companies in just the first six months of 2021.”

🗓 CIRCLE YOUR CALENDAR-

Israeli PM to visit Cairo next week? This is according to Axios’ Barak Ravid, who reports that Naftali Bennett will make an official diplomatic visit to Egypt next week for talks with President Abdel Fattah El Sisi.

This would be the first official visit to Egypt by an Israeli leader in more than a decade:

The official visit would mark a rare occasion in regional diplomacy and a first for El Sisi. The last Egyptian president to host an Israeli prime minister was Hosni Mubarak, who met Benjamin Netanyahu in January 2011. Israeli media reports in 2018 claimed that Netanyahu made a secret visit to meet with El Sisi in Sharm El Sheikh.

The rumored visit comes amid reports that Egypt is preparing a new roadmap to restart Israel-Palestine peace talks, while cordial bilateral relations have recently been on public display. The Egyptian president in August extended the invitation to Bennett to visit, before earlier this week calling Israeli President Isaac Herzog to wish him a happy Rosh Hashanah.

ALSO:

  • New school year: International schools begin the 2021-2022 academic year on Sunday, 12 September.
  • EFG Hermes’ fourth Virtual Investor Conference runs 13-21 September with the theme of “After Reflation — FEMs in 2022.”
  • Sahara Expo: The four-day agricultural conference, the Sahara Expo, will start on Sunday at the Egypt International Exhibition Center.
  • AmCham event: Environment Minister Yasmine Fouad will give a speech on strategies for generating green, private sector-led growth at AmCham’s virtual monthly event on Monday, 13 September. Register here.
  • Interest rates: The Central Bank of Egypt will meet to review interest rates on Thursday, 16 September.

AND- For the iSheep among us, Apple is holding a virtual event on Tuesday, 14 September. You can expect a new iPhone, new AirPods and probably a new Watch. Apple has scheduled the event for 7pm CLT and shows it running for two hours. You can stream it here.


☀️ TOMORROW’S WEATHER- We have cooler weather to look forward to this weekend, with daytime highs of 34-35°C during the day on Friday and Saturday and overnight lows of 21-22°C at night, our favorite weather app tells us.

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