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Tuesday, 9 November 2021

TONIGHT: StartupLand drives the conversation here at home + lots more agreements from TransMEA + Russian charter flights are back

It’s another stacked news day, ladies and gentlemen, with the big local and global conferences making big announcements. We have new agreements signed at TransMea and Cairo ICT, and pledges that include Egypt coming out of COP26. You don’t want to miss this one.

THE OTHER BIG STORIES TODAY-

StartupLand is driving the conversation here at home this afternoon: Edtech platform OTO Courses secured (pdf) a USD 400k investment from EdVentures to develop the platform and expand its services to more segments; London-based fintech player Jumo is eyeing Egypt as a potential market for expansion after raising USD 120 mn in its latest funding round; and Disrupt Africa is out with a report indicating more Egyptian tech startups participate in accelerator or incubator programs than do in the rest of the continent.

Also guiding the conversation locally were the latest agreements signed at the TransMea 2021 conference. Abu Dhabi Ports (ADP) signed today an MoU to manage and operate a multi-use terminal at the Safaga Port, according to a Transport Ministry statement (pdf). The agreement, which was signed on the penultimate day of the TransMea 2021 transport conference, comes as ADP signaled it could invest as much as USD 500 mn in Egypt should it land contracts for two port development projects, including the Safaga Port. The agreement is among eight MoUs and cooperation protocols signed at the conference.

We’ll have a deep dive into the details of the agreements signed at the transport conference in tomorrow’s edition of Hardhat, our weekly publication on infrastructure in Egypt.

Over at the Cairo ICT exhibition, Benya Capital signed an MoU (pdf) with international VC firm Openner that will see Openner participate in launching Benya’s new USD 50 mn VC fund, Benya Ventures.

And we mustn’t forget, Russian charter flights are back: Moscow resumed charter flights between Russia and Hurghada and Sharm El Sheikh today, Russia Today reports. The resumption of charter flights also follows the reinstatement of direct flights from Russia to the Red Sea resort towns in August following a six-year hiatus.

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

  • Sea change in Egypt-US relations: US Secretary of State Antony Blinken praised Egypt for its recent diplomatic efforts to negotiate ceasefires in Gaza and Libya, as well as its warming relations with Israel, but voiced “concerns” on human rights following the first “strategic dialogue” with Foreign Minister Sameh Shoukry in six years yesterday.
  • Car traders could face EGP 2 mn fines for price gouging: Car dealerships that fail to comply with new rules from the Consumer Protection Authority requiring them to clearly display the full price of the vehicle (including tax) with a sticker on the windshield could be fined up to EGP 2 mn.
  • Russian wheat prices rise again: Prices of Russian wheat hit new highs last week on the back of rising Egyptian demand, and prices could still be increasing as Russia’s state export tax is expected to rise again this week.

Egypt is among the list of 50 countries committed to developing climate resilient health systems at COP26: Some 50 countries including Egypt, the US, UK, and the UAE have made commitments to “build out climate resilient healthcare systems” at the UN Climate Change Conference in Glasgow on Monday.

What exactly did we commit to? That’s not yet clear what goals, or targets does this agreement entail.

There are, however, other agreements with more stringent aims: This comes alongside a separate list of 42 countries — which does not include Egypt— that have committed to reeling in the environmental impact of the global healthcare industry, according to a WHO press release. But as with the first agreement, the WHO has yet to provide detail on how and when they would execute the plan. Some 12 countries have set a more specific target of going net-zero by as late as 2050, but have yet to provide specifics on how they aim to achieve that goal either. Healthcare related emissions account for a total 5% of global CO2 emissions.

Separately, an agreement to halt new car emissions by 2040 due to be unveiled tomorrow is struggling to pick up steam as the US, China and Germany are holding out on committing, the Financial Times reports. Global automakers like Volkswagen and BMW have yet to sign on to any commitments due to the absence of key governments in the agreement. “There remains considerable uncertainty about the development of global infrastructure to support a complete shift to zero emission vehicles,” said BMW, who remained skeptical about the pace of shifting away from combustion engines, particularly in lower income countries. Ford, General Motors, Daimler and Volvo have said they are on board, and have pledged to phase out emissions at various points in the coming two decades.

New pledges by Japan could help developed countries make good on their climate finance commitments: Japan’s pledge last week of an additional USD 2 bn a year for the next five years towards helping lower-income countries mitigate the impacts of climate change could help developed countries reach their target by 2022, the Financial Times estimates. Rich countries had made a 2009 pledge to commit an annual USD 100 bn in climate finance by 2020 to help lower-income countries through their green transitions, but were not expected to reach that goal till 2023, with estimates putting the total funds currently at around USD 88-90 bn annually. Additional funding from Italy, the UK and Denmark is expected to help plug the gap, though not all of it will begin flowing next year.

HAPPENING NOW-

Day two of the “strategic dialogue” between Egypt and the United States is now getting underway. Foreign Minister Sameh Shoukry and US Secretary of State Antony Blinken addressed reporters yesterday at the end of the first day of talks, which saw the two sides cover everything from Egypt’s role as a key diplomacy anchor for the US in the region, concerns over human rights, and plans for climate-related and economic cooperation between the two countries.

FOR TOMORROW-

Inflation figures for October will be released tomorrow: Egypt’s headline inflation rate has been ticking up in recent months, hitting a 20-month high of 6.6% in September on the back of rising food and energy prices. The government had decided to raise the cost of natural gas for manufacturers and gasoline prices for motorists last month, and fertilizer and chemicals producers have signaled they could raise their prices by up to 20% to protect their operating margins. Then there’s the rising international wheat prices, partially due to rising demand from Egypt.

Carry trade still trumps inflation for now: Although the headline rate remains within the Central Bank of Egypt’s target range of 7% (+/-2%) — and analysts we’ve spoken with predict a stabilization of prices next year — rising commodity prices will likely factor into inflation figures over the next few months. We have one of the highest real interest rates in the world, making our bonds attractive to foreign portfolio investors. The central bank’s Monetary Policy Committee will meet one more time this year to review interest rates on 16 December.

But we need to watch out as developed countries are in a negative real interest rate climate in developed economies despite spiraling inflation. Countries including the US, UK and Germany are seeing persistent negative real interest rates after their central banks declined to hike rates anytime soon despite rising inflation, analysts tell the Financial Times.

What’s gotten analysts so worried? Rates below the neutral mark of 0 are highly stimulative, supporting debt financing and credit growth. But with developed markets already so highly valued, that could trigger financial instability down the line, some analysts warn.

But low interest rates are unlikely to last, with the Bank of England saying last week that interest rates will need to “rise moderately” to return inflation to its 2% target. The Fed meanwhile began unwinding its huge stimulus program this month amid concerns that inflation will remain elevated for longer than previously thought, with its asset purchase program expected to be completely phased out by June 2022.

🗓 CIRCLE YOUR CALENDAR-

The two-day Africa Fintech summit kicks off next Tuesday, 16 November. The summit looks at innovation in the fintech ecosystem, venture capital and other forms of investing, and will also discuss the rise of healthtech.

Calling all Egyptian entrepreneurs aged 23-35: You have exactly two weeks to apply for the acceleration exchange program Meet Silicon Valley for a chance to travel to California for a 10-day program to meet with tech executives and investors. The program is being implemented by Injaz Egypt and TechWadi with the support of the US Embassy in Egypt, and the deadline for applications is 23 November.

THE BIG STORIES ABROAD- GE splitting up for good: Massive US conglomerate General Electric will break up into three separate entities by early 2024, the company announced in a press release today. The move will see the company spin off its healthcare division in early 2023, before merging its renewables, power equipment and digital businesses into one entity to be spun off in early 2024. The remaining company, GE Aviation, will run the company’s engine-manufacturing arm.

The bulb that burnt out: Once a giant of industry, the company founded by Thomas Edison embarked on a sell-off and restructuring in 2018, as it grappled with a growing debt pile and reputational damage dating back to the 2008 financial crisis. The split is a chance to turn a fresh leaf (or three), as each segment moves forward independent of the weighty conglomerate structure, CNN Business reports.

Saudi Arabia’s economy expanded at its fastest pace in nearly 10 years in 3Q2021 thanks to higher oil prices, with GDP growth coming in at 6.8% during the quarter, according to data from the kingdom’s General Authority for Statistics. The oil sector alone grew 9% and the non-oil economy expanded 6.2%. This is the fastest pace of growth for the kingdom since oil prices hit USD 112 / bbl in 2012, Bloomberg notes.


☀️ TOMORROW’S WEATHER- It’s the last warm day before things cool down, with a daytime high of 29°C and a low of 17°C. The following day should see the high drop to 26°C, and stay there for a couple of days.

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