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Thursday, 24 March 2022

THIS MORNING: Egyptian boards are becoming more diverse + CBE launches new national payment app

Well, friends, we’ve made it through another week together — and what a week it was, between a snap interest rate hike + devaluation, the announcement of a massive stimulus program, bns in fresh investment from the UAE, and now an announcement that we’re in talks for an IMF program.

Here’s hoping you can all relax a bit this weekend, because if the theme this week was about absorbing the pace of change, we think next week week will be all about “sorting out what this change means for our businesses.”

The EGP strengthened a bit against the greenback yesterday, settling at EGP 18.42 by the end of the day, a 1% rise from Tuesday’s EGP 18.57. Bankers with whom we spoke on Tuesday had suggested the currency may have overshot a bit following Monday’s devaluation, as it did immediately after the 2016 float. The EGP is now down 17.3% against the since the start of the week, while analysts had previously suggested it was 15-16% overvalued.

Savers are continuing to pour bns into the new 18% CDs launched by Banque Misr and the National Bank of Egypt in the wake of the Central Bank of Egypt’s 100-bps rate hike. More than EGP 100 bn has been invested in the certificates since they were launched on Monday: EGP 72 bn with the NBE and EGP 33 bn with Banque Misr.

MORE GOOD NEWS with which to start your Thursday: Egyptian companies are finally starting to include more women on their boards: 69.8% of companies in an AUC Women on Boards Observatory survey (pdf) had at least one woman on the board of directors in 2021, up from 54.3% the year before. The survey includes EGX-listed companies, banks, NBFS players and state-owned enterprises, all of which face regulatory requirements demanding they have women on their BoD.

HATS OFF to EFG Hermes’ aiBank and the United Bank of Egypt. They’re the only two banks at which women accounted for 30% or more of board members, according to the study. In total, 138 companies in the data set (or just shy of 13%) met that threshold, meaning they do better than the regulation in place since last year that all EGX-listed companies see at least a quarter of their board seats held by women. The FRA, which regulates the non-bank financial services sector, has separately said it would slash development and service fees for companies whose staff were at least 25% women.

Public sector firms didn’t get the memo: The number of women on boards of state-owned enterprises fell below 2018 levels to 8.1%.

Egypt may have just taken a step forward in its financial inclusion ambitions: The Central Bank of Egypt (CBE) has launched a national digital payment app, InstaPay, which provides instant and secure payments between Egyptian banks, Meeza cards, and mobile wallets via its new nationwide instant payment network (IPN), it said in a statement (pdf) yesterday.

Transaction fees will be waived on the app until June, said Ehab Nasr, CBE’s assistant sub-governor for banking operations and payment systems. The central bank didn’t disclose how much people will have to pay to transfer money after that date.

Who’s in? The network currently includes the CIB, the National Bank of Egypt, Banque Misr, Alexbank, QNB Al Ahli, Arab Bank, AAIB, Banque du Caire, Egyptian Gulf Bank, and SAIB, the statement said, with an eye to eventually include all banks in Egypt. You can download the app on Google Play and the App Store. Or search for “Instapay Egypt” in the search bar to make sure you find it and not the other apps of the same name.


The MPC meeting: The Central Bank of Egypt has canceled (pdf) today’s regularly scheduled Monetary Policy Committee meeting after enacting a surprise 100 bps rate hike at a special meeting on Monday.


EV-charging bid ends today: It’s the last day for companies applying to manage the soon-to-be-established company for EV charging stations to submit their bids. The deadline was originally set for 17 March but was extended for one week. Three companies, including the Saudi Al Sharif Holding Group, so far have expressed their interest in the project.

PSA- School’s out in Alexandria due to bad weather: All schools across Alexandria will be closed today in anticipation of rain and stormy weather forecast by the Egyptian Meteorological Authority, Alex Governor Mohamed El Sherif announced yesterday.

Yet more sanctions are going to be heading Russia’s way today as US President Joe Biden lands in Europe for emergency meetings with Nato and European officials. More Russian political figures, oligarchs, and institutions will be penalized, national security advisor Jake Sullivan said in a press briefing.

Nato members are expected to agree to deploy more troops in Central and Eastern Europe, and will also discuss a proposal put forward by Poland last week that would see Nato peacekeepers deployed in Ukraine. Russia has described the idea as “extremely dangerous,” warning that it could bring Nato troops into direct conflict with the Russian military.

The EU isn’t going to be banning Russian energy, but it wants to slash imports ASAP: Biden and European leaders are expected to reach an agreement on Friday on a plan that would enable the bloc to slash its reliance on Russian crude and natural gas, Bloomberg says. The plan will reportedly ensure supplies of US natural gas and hydrogen to Europe, according to an anonymous official.

RUB or no gas, Putin tells “unfriendly” countries: This comes as Russian President Vladimir Putin demanded that gas buyers in Europe pay for imports in RUB rather than EUR, causing prices to surge on fears that the move could exacerbate the continent’s energy crisis. European gas prices rose more than 30% after Putin gave the central bank a week to draw up plans for accepting RUB payments so they could implement the measures “in the shortest time possible.”

It’s unclear whether Russia would actually start withholding gas should European companies fail to pay in RUB, though analysts say the move indicates that Moscow may be willing to sacrifice some of its biggest customers as it escalates with the West. “This shows a greater willingness of Russia to jeopardize its gas agreements amid its political confrontation with the west,” said the head of one energy consultancy. Buyers in Europe — which imports 40% of its gas from Russia — rejected the demand and said it would amount to a breach of contract. (Reuters | Bloomberg | FT)


The market is preparing for the Fed to accelerate its tightening cycle and raise rates by 50 bps when it next meets in May. After Federal Reserve Chairman Jerome Powell said this week that the central bank will consider half-point rate hikes going forward, the market is now expecting two 50-bps increases in May and June. Strategists at Bank of America and Goldman Sachs now see interest rates being 100 bps higher by the middle of June after Powell said the Fed has to move “expeditiously” to contain soaring inflation.

The Fed raised rates by 25 bps last week in its first hike in four years, and policymakers indicated that it could end the year at around 2%, meaning quarter-point raises at each of the remaining meetings this year. Now, some Fed officials favor increasing rates to 2.5%, including Loretta Mester, who told reporters that she sees the need to be “more aggressive earlier rather than later.”

The hawkish tilt is battering bonds, which have suffered losses described by Bloomberg as “unprecedented.” US treasuries are on course for record losses this year amid concerns about inflation and fears that higher interest rates will push the US economy into recession.


The Egypt International Mining Show (EIMS 2022) kicks off next Monday. The virtual event will wrap on Tuesday.

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

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