Back to the complete issue
Thursday, 16 December 2021

TONIGHT: It’s interest rate day + expect a message soon if you’re eligible for a booster shot + Also: Fireside chats on women in tech + Jobzilla’s job fair are events to attend

We close out the week with the final interest rate day of 2021, ladies and gentlemen, as the central bank’s Monetary Policy Committee meets to review interest rates. All 11 economists and analysts we surveyed expect the MPC to leave rates unchanged for the ninth consecutive meeting.

Where rates stand now: The overnight deposit rate is at 8.25%, the lending rate at 9.25% and the main operation and discount rates are at 8.75%. The central bank slashed rates by 400 bps last year, including an emergency 300 bps cut in March, to protect the economy from the fallout from covid-19. It has since maintained rates for eight consecutive meetings, including its most recent in October, amid concerns about an increase in inflation.

Inflation does not appear to be a concern: Annual urban inflation slowed for the second month running in November and dipped to its lowest since July as pressure on food prices continued to ease, according to official figures released on Thursday. The headline rate fell to 5.6% last month from 6.3% in October, the lowest rate since July and within the lower end of the central bank’s target range of 5-9% for 4Q2022. On a monthly basis, consumer prices rose ever-so-slightly by 0.1%, following October’s 1.1% rise. With Egypt’s inflationary pressures cooling off in November, the bank now has a bit of breathing space to hold off changes and protect the economic recovery, amid an uncertain outlook due to the spread of the new Omicron variant, analysts told us last week.

The Fed, however, is a very different matter: The CBE’s decision will likely factor in the US Federal Reserve’s major pivot from its “wait and see” policy towards a hawkish strategy. The Fed announced yesterday it will taper its bond-buying program at double the pace it originally expected, as it braces for three rate hikes in 2022. After keeping interest rates near zero throughout the pandemic in efforts to support the economy, the Fed is now taking a harder line due to US inflation surging to an almost 40-year high.

Why should it matter? It puts emerging-market debt — including Egyptian bonds and T-bills — at risk of becoming less attractive to foreign investors. Tighter monetary policy in the US could leave emerging markets vulnerable to a drop in foreign inflows as risk-averse managers seek safer returns in the US.

Following suit, the Bank of England has raised interest rates today to 0.25%, the first hike in more than three years, in an effort to contain the UK’s decade-high inflation. The move came as a surprise to some economists who had anticipated no change from the BoE, amid fears that the country’s surging cases of Covid could slow the UK economy. Policymakers said more “modest” tightening is likely needed in response to rising prices.

But it’s still business as usual at the ECB: The European Central Bank, meanwhile, is maintaining the “inflation is temporary” narrative, deciding to keep rates unchanged in its meeting today. The ECB confirmed it will end net bond purchases under its pandemic emergency purchase program by the end of March, but will ramp up other stimulus measures. The bank will expand a separate bond-buying program in 2022, and does not plan to raise its key interest rate, currently set at minus 0.5%, until it ends its net bond purchases. This comes despite inflation in the EUR area reaching a record high of 4.9% in November.

Over in EM-land we have Erdonomics, or as we like to call it, monetary policy for dummies: Turkey’s TRY plunged to an all-time low today, as the central bank cut interest rates for the fourth consecutive month, Bloomberg reports. The TRY is now worth about half its value at the beginning of the year, hitting 15.65 to the USD immediately following the news. Turkey’s inflation is now at more than 21%, climbing steadily as President Recep Tayyip Erdogan has refused to raise rates, which he has previously called “the mother of all evil.“

The CBE’s decision on interest rates should be out by 6pm CLT today. We will have detailed coverage in Sunday’s EnterpriseAM.


THE BIG STORY TODAY-

The Health Ministry will be offering booster shots to those “eligible” without requiring them to register, according to a decision by the Madbouly Cabinet announced today. Eligible people — currently include only medical staff, senior citizens, and people with chronic medical conditions — will be chosen from the ministry’s current directory of people who signed up for the vaccine. Cabinet spokesman Nader Saad previously said that around 4 mn people fall within this category. The statement did not note when the roll out of boosters will begin.

The Health Ministry will be sending those eligible messages with booster shot time and date. The ministry was previously expected to allow registration for boosters from its website, but the launch of booster shot online registration was delayed in the past few weeks.

23 mn booster jabs to be administered by 1H2022: The definition of who is considered eligible will likely be expanded in the coming months as the ministry is aiming to administer 23 mn booster shots by 1H2022, the statement added. People will need to have been fully vaccinated six months prior to receiving their booster.

Where do we currently stand on our vaccine rollouts? The country currently has 64.5 mn vaccine doses available at its disposal. Some 52 mn doses of various jobs have been given so far, at a rate of 551k vaccines per day. Meanwhile, 540k doses have been administered to people less than 18 years of age since the government greenlit the rollout for the age group between 15-18 early in November and the age group between 12-15 later on in the month.


HAPPENING NOW- Saudi Foreign Minister Emir Faisal Bin Farhan is here and Cairo to discuss “political consultation mechanism” with Foreign Minister Sameh Shoukry, according to a ministry statement. The mechanism, which kicked off with members of the Gulf Cooperation Council (GCC) on Sunday, is intended to cement ties between Egypt and the Gulf region on relevant regional and international issues.

CORRECTION- Madinet Nasr Housing and Development’s (MNHD) fair value study estimates that it will shell out a maximum EGP 232 mn to acquire Minka Development, and not a minimum as we reported yesterday. Despite the valuation, MNHD’s management, which is currently negotiating a final price for the company, still expects to acquire Minka at the EGP 200-220 mn range that MNHD said it expected to pay when it first announced the acquisition plan in October, an official at the company told us today. The story has since been corrected on our website.

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

  • VAT Act amendments: As more information comes in about the proposed amendments to the VAT Act, crackers and sweet pastries have been saved from the added taxes, while other commodities can’t claim to be so lucky.
  • Fitch thinks Egypt could be up for another IMF program: Egypt’s high exposure to external financing could lead the government to seek a fresh IMF program, especially in the event of a “liquidity shock,” a Fitch report said.
  • AIM Technologies closes Sequence Ventures-led seed round: The round marks the first investment in Sequence’s Egypt Deep-Tech fund, which was launched earlier this quarter to channel investment into startups operating in health-tech, fintech, ed-tech, prop-tech, logistics, and software development.

THE BIG STORY ABROAD-

Reddit has filed for an IPO with the US Securities and Exchange Commission (SEC), the company announced in a press release (pdf) yesterday, though it has yet to share details about the price range and number of shares it is offering. The social media company was valued at USD 10 bn in August, just six months after closing a funding round that saw its valuation double. In September, a source told Reuters that the company hopes to be valued at USD 15 bn by the time it IPOs early next year. Reddit has almost 52 mn daily active users and upward of 100k communities or subreddits. The platform gained mns of new users and advertisers earlier this year when its WallStreetBets forum became a focal meme stock for investors in GameStop Corp. The announcement comes at the end of a year characterized by more than 900 IPOs worth a total of almost USD 300 bn.

The story is everywhere, including: The New York Times | Wall Street Journal | Financial Times | Reuters | The Verge | Bloomberg | CNN.

Meanwhile, Evergrande is in even deeper trouble as Chinese creditors sue the company for USD 13 bn as domestic investors hurry to seek compensation from the at-risk-of-default developer before offshore bondholders get the chance, writes the Financial Times. Over 360 cases have been locally filed against Evergrande, according to official court records seen by the FT, worth the equivalent of USD 13.2 bn. This signals that Chinese creditors have lost faith in the developer and are expecting a default or debt restructuring in the coming period. Earlier this week, Fitch declared Evergrande to be in “restricted default”, lowering its rating from ‘C’ to ‘RD’ after the property developer failed to meet bond payment deadlines for the umptheenth time.

🗓 CIRCLE YOUR CALENDAR-

The UN Convention Against Corruption in Sharm El Sheikh is on its penultimate day today. The event wraps up tomorrow.

It’s the final day of the Arab Conference on the Peaceful Uses of Atomic Energy in Aswan.

Jobzella’s Fifth Career Fair is coming to the GrEEK Campus from 11am to 6pm on Christmas Day. With ITIDA as a platinum sponsor, participating companies include Raya, NOK Human Capital, Egycham, Education for Employment, Espace and Majorel, among others.

Swvl and Magalix’ are holding a virtual fireside chat titled Stories of Women in the Tech Field on Tuesday 21 December, at 7pm. Connect to the event here.

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

☀️ TOMORROW’S WEATHER- The mercury will reach 19°C during the highs of Friday and Saturday, while the weekend’s nighttime lows are at 9-10°C, our favorite weather app tells us.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.