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Wednesday, 16 March 2022

THIS MORNING: It’s Fed decision day; Swvl on course to hit the Nasdaq on 31 March; AfDB in town for COP 27 talks

Good morning, wonderful people, and welcome to almost-THURSDAY, which longtime readers know is how we prefer to think of the day normals call “Wednesday.”

THE BIG NEWS TODAY has to be the ongoing policy maturity the Madbouly government is showing in what are indeed “very challenging times” (to recycle a crazily overused corporate euphemism that makes us miserable every time we read it). Vice Minister of Finance Ahmed Kouchouk was out yesterday noting that the ministry is revising the budget deficit target in light of a hit to the commodities line item and ministers have given the green light to price caps on unsubsidized baladi bread. We hate price controls almost as much as we do subsidies, but this is common sense in light of what’s happening now. Ministers should go a step further and make clear that there’s a sunset clause for the price caps.

Ministers are also showing more willingness to deploy smart incentives. Measures expected “within hours” (we’re as tired of that phrase as we are of “very challenging times”) will give farmers incentives to plant more wheat — with a corresponding requirement they sell more of their harvest to the state.

And looking beyond the current crisis, Cabinet announced a series of on-point incentives to drive investment in the green economy as well as other priority sectors including artificial intelligence, education, and localizing industry. More of this, please.

^^ We have chapter and verse on all of this and more in this morning’s news well, below.

WHAT’S HAPPENING TODAY-

An African Development Bank (AfDB) delegation is in town to talk COP 27. Led by VP Kevin Kariuki, the team is holding talks with several ministers to discuss our preparations for the climate summit, which will take place in Sharm El Sheikh in November. Foreign Minister Sameh Shoukry (who is double-hatted as president of COP 27), International Cooperation Minister Rania Al Mashat, Environment Minister Yasmine Fouad, and Electricity Minister Mohamed Shaker are all meeting with the delegation to discuss how the bank can assist the government with its preparations. The visit wraps up tomorrow.

Also from the AfDB: The development bank plans to invest USD 1 bn to boost wheat production in African countries, noting that much of the continent is heavily reliant on imports from Russia and Ukraine, Bloomberg reports. AfDB will channel the money into “climate-resilient technologies” that will help 40 mn farmers on the continent raise their output of wheat and other crops, the bank’s president, Akinwumi Adesina, told the business news information service.

It’s Fed decision day: The Federal Reserve will end its two-day meeting to review interest rates today and is expected to kick off its long-signposted tightening cycle with a 25-bps hike. The market previously anticipated the central bank to go bigger and raise interest rates by 50 bps, but now expects the uncertainties triggered by the conflict in Ukraine to have changed its calculations. Look for an announcement this evening, Cairo time.

The Central Bank of Egypt will hold its policy meeting next week on Thursday, 24 March, and analysts are increasingly expecting policymakers to raise rates in response to surging global inflation.

Are the Saudis really serious about ditching the petrodollar in favor of the yuan? Analysts tell Bloomberg that talks between Riyadh and Beijing to sell some of its oil in yuan is more about geopolitical posturing than a serious reconfiguration of how global oil is traded. “I don’t know if it is really real,” said one strategist. “It happens at a moment when the geopolitical order is moving. The Saudis are trying to play with what they can. It is just a signal sent to the US they want more consideration.” US-Saudi relations deteriorated with the election of Joe Biden as president, who described it as a “pariah state” during his election campaign. Riyadh reportedly refused to take Biden’s phone call last week as his administration accelerates its pursuit of a nuclear agreement with Iran.

CIRCLE YOUR CALENDAR-

Swvl is on course to hit the Nasdaq on 31 March: Egyptian mass transportation firm Swvl will go public on the Nasdaq “on or around the 31 March” should the shareholders of its SPAC, Queen’s Gambit Growth Capital, approve the listing in a meeting on 30 March, the company said in a statement (pdf) confirming that the merger has received the greenlight from US regulators. The company will list 35% of its shares on the tech-heavy exchange following a merger with Queen’s Gambit, and will trade under the tickers “SWVL.”

Backing the listing: The SPAC has raised USD 300 mn from investors and has secured USD 121.5 mn in PIPE investments from the EBRD and several US-based investors, Abu Dhabi-based Chimera Capital and Kuwaiti VC Zain Group.

A busy year for Swvl: The company has entered two new continents via its acquisition of Barcelona-based Shotl and the South American firm Viapool, which operates transit services in Chile and Argentina.

A call for agribusiness SMEs: CARE Egypt is calling on SME owners to apply for a training program aiming to equip agripreneurs to raise funds. You can apply for the program here.

Green energy forum: The German Arab Chamber of Industry and Commerce is hosting the Egyptian-German Green Energy Forum next Tuesday, 22 March. The event runs 5:30-9pm CLT at the InterContinental Cairo Semiramis.

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

enterprise

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: The commodity price shock is pushing up prices of building materials in Egypt, with local steel and cement prices soaring since the start of the Ukraine conflict. Local manufacturers say that these price increases are necessary as they face soaring input costs, including the prices of key energy sources such as coal and pet coke. Contractors, on the other hand, are feeling the pinch, and are lobbying for government support to help them absorb the shock.

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