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Tuesday, 5 October 2021

THIS EVENING: Senate back in session today; Georgieva faces IMF on corruption allegations; Bad day for FB; Nobel Physics prize winners announced.

It’s been a busy day, ladies and gentlemen, as we approach the end of the short work week. We have everything from key macro indicators and updates on long awaited projects on the local front. As for globally, let’s just say it’s a day of reckoning if you head up Facebook or the IMF.

THE BIG STORIES TODAY-

#1- Egypt’s non-oil private sector activity hit a four-month low last month: The non-oil private sector’s activity continued its contraction for the tenth consecutive month in September, according to the latest reading of IHS Markit’s Purchasing Managers’ Index (pdf). The index dropped to 48.9 in September from 49.8 in August — a four-month low from 48.6 in May.

That said, Egyptian non-oil private sector firms reported a record level of confidence in upcoming business activity, with about 71% of the panellists giving a positive forecast indicating that firms are growing hopeful that the Egyptian economy is on route to recover from the pandemic over the coming 12 months.

#2- OC-led consortium signs contract for electricity grid connection with KSA: An Orascom Construction-led consortium signed a contract with the Egyptian Electricity Transmission Company (EETC) to connect the national power grids of Egypt and Saudi Arabia, according to an OC press release (pdf) out today. The long-awaited project — the first inter-continent high-voltage direct current (HDVC) project in the world, according to OC — had been on hold since 2018 when the Saudi’s began work on the Neom project.

#3- EFG Hermes’ leasing and factoring arm has signed an EGP 750 mn sale and leaseback agreement with Misr Italia Properties to refinance its Garden 8 Mall in New Cairo, EFG Hermes Corp Lease said in a statement today (pdf).

^^ We’ll have more details on those stories and more in tomorrow’s EnterpriseAM.

CLARIFICATION- Sorry to disappoint, but commuters cannot in fact buy metro passes online through operator RATP Dev as we reported in this morning’s EnterpriseAM. What you can do is fill out the application form for seasonal, student and senior tickets through this website, before taking a copy with you to a physical station where you pay for and pick up the pass.

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

  • DPI could have built the largest-ever Africa-focused PE fund: Development Partners International (DPI) is on track for a USD 900 mn final close to its third fund, giving the firm a total of USD 1.15 bn for investing in Africa.
  • Vortex invests EUR 625 mn in Spanish solar developer: EFG Hermes’ energy investment platform Vortex Energy will invest EUR 625 mn in Spanish solar developer Ignis Energia, reportedly in return for a 49% equity stake.
  • ACWA Power eyes desalination plants: The Saudi renewables company may be looking to partner with Egyptian companies to bid for desalination projects being offered by the SFE.

HAPPENING TODAY-

The Senate is beginning its new legislative session today following the end of its summer recess. This comes four days after MPs returned to the House over the weekend with a raft of business-relevant legislation to chew over in the coming months. Check out our run-down of the legislative agenda here.

IMF head Kristalina Georgieva is being grilled by the Fund’s executive board today over allegations that she pressured World Bank staffers to rig the 2018 Doing Business report in favor of China during her time as the bank’s chief executive. Hundreds of former bank staff earlier this week urged the IMF to take “decisive action” against the IMF chief, calling the allegations — made recently in a report commissioned by the bank — a form of “institutional corruption.”

Egypt is among 16 African countries to come out in support of Georgieva, calling her a “true partner” to the continent for her efforts during the pandemic, Bloomberg reports. Under her leadership, the Fund mobilized USD 30 bn in new reserve assets for African countries and has promoted new debt relief efforts to help low-income countries through the crisis.

There may be more to this than meets the eye, according to Nobel laureate Joseph Stiglitz, who characterizes the report in Project Syndicate as a “coup attempt” against Georgieva by conservative forces and a group bondholders, unhappy with her focus on poverty and climate change, and er hesitancy to get tougher on indebted countries. Errors and omissions in the report, he says, renders it a “hatchet job” against the IMF head, and one that ignores the behaviour of World Bank president David Malpass, who discussed changing the report’s methodology to downgrade China in the rankings.

IMF + World Bank meetings next week: The IMF and the World Bank will hold their annual meetings during the week beginning 11 October.

THE BIG STORIES ABROAD-

Facebook’s PR team is going to have a hard time cleaning up the front pages of the global press this afternoon:

#1 Facebook an “urgent threat” to the US, whistleblower to tell Congress: The whistleblower who accused Facebook of knowingly contributing to users’ mental health problems and spreading disinformation will appear before the US Senate later today to warn lawmakers that the company is "one of the most urgent threats" facing the country. Frances Haugen, who spilled the beans on the company to the Wall Street Journal last month, will also accuse the company of intentionally misleading investors by downplaying a decline in younger users and misrepresenting the size of its audience. Ahead of the congressional hearing, the social media giant is mounting what one ex-executive characterizes as “much more aggressive, defensive and dismissive of the whistleblower’s claims.” The hearing is getting a lot of play in the international media: AP | Reuters | FT | Washington Post | Bloomberg | WSJ.

#2 Facebook’s fat finger: “A faulty configuration change” was apparently the reason why 3.5 bn users couldn’t log in to Facebook, Whatsapp and Instagram yesterday, the company said today. Facebook’s shares fell by 4.9% yesterday — their biggest daily drop since last November — as users flocked to other platforms where the memes exploded.

Nobel prize for physics announced: The 2021 Nobel Prize for physics has been divided between three scientists studying “complex physical systems.” One half of the prize has been allocated to US citizen Syukuro Manabe and German Klaus Hasselmann "for the physical modelling of Earth's climate, quantifying variability and reliably predicting global warming", with the two scientists to each take a quarter of the USD 1.15 mn prize. The other half went to Italy’s Giorgio Parisi "for the discovery of the interplay of disorder and fluctuations in physical systems from atomic to planetary scales.”

The Evergrande crisis is pulling other Chinese property developers down with it: The world’s most indebted company may have started a chain reaction in the Chinese real estate market as smaller developers are hit with credit rating downgrades, writes Reuters. Developers’ repayment ability is coming under scrutiny amid continued uncertainty over Evergrande’s future as it attempts one of China’s largest-ever debt restructurings. First off on the hit list was developer Sinic, whose long-term issuer default rating was cut to 'C' from 'CCC' by Fitch, and taken down a peg by S&P Global Ratings, which warned that the company has a “severe liquidity problem and its debt-servicing ability has almost been depleted.”

🗓 CIRCLE YOUR CALENDAR-

Key dates for your diaries this month:

  • Public schools are back in session this coming Saturday, as are universities.
  • Inflation: Inflation figures for September will be released on Sunday, 10 October.
  • Interest rates: The Central Bank of Egypt will meet to review interest rates on Thursday, 28 October.

The Cairo International Fair continues today at the Cairo International Conference Center, running through 8 October.

A series of webinars on digital credit scoring led by the Egyptian Banking Institute, the Financial Services Institute, I-Score and GIZ Egypt will launch later this month, according to a press statement (pdf) out today.

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

☀️ TOMORROW’S WEATHER- Expect highs of 31°C during the daytime and lows of 20°C at night, our favorite weather app tells us.

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