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Sunday, 15 May 2022

THIS EVENING: Gov’t announces strategy to spur private sector activity in the economy + Unemployment fell in Jan-March + Europe considers cap on natural gas prices

Good afternoon, friends, and welcome to a busy start to the week. We have some big news for you to catch up on as you wrap up the workday, and plenty of tidbits to get you thinking, so let’s get right to it.

BUT FIRST, A CORRECTION- In this morning’s EnterpriseAM, we mistakenly reported that Amazon purchased a stake in EFG Hermes’ London-listed global depositary receipts (GDRs) that is equivalent to 10% of EFG’s market cap. Amazon’s purchase represents 1% of EFG Hermes’ GDRs. The story has been updated on our website.


#1- Gov’t announces some of its strategy to spur private sector activity in the economy: The government plans to more than double the private sector’s contribution to the country’s economy to 65%, from 30% currently, within the next three years, Prime Minister Moustafa Madbouly said at a highly-anticipated press conference today (watch, runtime: 47:57). This target rests on the government’s long-term strategy to reduce the state’s involvement in the economy, which will be announced “within days” and will provide a roadmap for reducing the state’s economic activities, charting which industries it will withdraw from and when, as well as ring fencing strategic sectors where it wants to retain a presence — all within three years. The government also expects to reach its targets with unspecified incentives geared towards improving the business climate, as well as opening lines of communication with the private sector to help cater to their needs.

ALSO IN THE STRATEGY: The government’s plan to attract a total of USD 40 bn of local and foreign private sector investment in state-owned assets, at a pace of USD 10 bn annually over the course of the next four years. The assets include new and renewable energy projects, real estate assets in new cities, desalination projects, as well as ICT and education projects. President Abdel Fattah El Sisi had announced this goal last month. The government has already selected USD 9.1 bn-worth of assets out of this year’s allotted USD 10 bn, and is currently working on appraising assets worth another USD 15 bn as part of a “fast-tracked” component of the strategy, which should be completed this year, Madbouly said.

#2- Unemployment fell in 1Q2022: Egypt’s unemployment rate eased to 7.2% during the first quarter of the year, from 7.4% in 4Q2021, according to the latest data by statistics agency CAPMAS (pdf). This is the second consecutive quarter during which the jobless rate eased, after remaining somewhat steady over the past year.

^^We’ll have more on these stories and others in tomorrow’s edition of EnterpriseAM.


It’s all about energy, with the European Commission considering setting a cap on natural gas prices if Russia cuts off supply to avoid “unbearably high” costs, Bloomberg reports. European energy markets are grappling with uncertainty over gas supplies after Moscow demanded “unfriendly countries” pay for Russian gas in RUB, which would breach EU sanctions.

Separately, but also related: Iran says it has the capacity to double its oil exports if there’s sufficient demand, said Mohsen Khojastehmehr, managing director of the National Iranian Oil Company yesterday, Bloomberg reported. His comments come as Iran is engaged in faltering negotiations to revive the 2015 nuclear pact — an agreement would restore Iranian oil exports and grant the country much-needed sanctions relief (in return for curbs on its nuclear program). Analysts estimate that Iran sells as much as 1 mn barrels per day, though the country does not publish official production figures.


  • Ukrainian military infrastructure in the Lviv region was destroyed this morning due to a Russian missile strike, the region's Governor Maxim Kozitsky announced, reports Reuters. No casualties have since been identified.
  • The US Senate met with Ukrainian President Volodymyr Zelenskyy yesterday, with Senate Leader Mitch McConnell heading the delegation which discussed additional sanctions on Russia as well as a potential USD 40 bn aid package, reported CNBC.

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

  • Amazon snaps up EFG GDRs, with option to swap for valU shares: Amazon has agreed to purchase USD 10 mn worth of EFG Hermes’ London-listed global depositary receipts (GDRs) with an option to convert the investment into an equity stake in EFG’s consumer finance arm valU.
  • MSCI adds EFG Hermes to global standard index, e-Finance enters small-cap index: EFG Hermes has been added to MSCI’s standard equities index from its small cap index following its semi-annual review. E-payments giant Fawry has been moved from the standard index to the small-cap index, and is joined by state-owned fintech player E-finance, which makes its index debut. Meanwhile, real estate firms Palm Hills Developments (PHD) and Heliopolis Housing were removed from the small-cap index.
  • Canal Sugar Company has secured loans worth EGP 12.5 bn from a consortium of 10 banks led by the National Bank of Egypt (NBE) to help finance its USD 1 bn sugar beet processing facility in West Minya.


*** It’s Inside Industry day — your weekly briefing of all things industrial in Egypt. Inside Industry focuses each Sunday on what it takes to turn Egypt into a manufacturing and export powerhouse, ranging from initial investment and planning to product distribution, through to land allocation to industrial processes, supply chain management, labor, automation and technology, inputs and exports, regulation and policy.

In today’s issue: Industrial park developers in Egypt are, slowly but surely, beginning to move towards developing smart industrial parks — think the technology of smart cities but applied to factory complexes. Today, we look at the advantages that smart parks have over regular industrial parks, and whether or not they have the potential to change the manufacturing landscape in Egypt.


Budget season is in full swing at the House: The House of Representatives will begin holding committee-level discussions of the draft FY 2022-23 budget and economic and social development plan this week, Ahram Online reports. If approved, the budget will be signed into law by the president. Head here for a refresher on the draft budget’s key figures, and here for a look into how our state budget process works.

Need to get your head around the new e-receipt system? Lynx Strategic Business Advisors are following up their recent webinar on e-invoicing with a session introducing the Finance Ministry’s new e-receipt system, which is set to officially roll out on 1 July. The webinar will feature FinMin tax development advisor Yasser Taymour, as well as reps from Talabat, Jumia, Yoco, and the World Bank. It takes place on 18 May at 12:00-1:30pm CLT. Register 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- Expect a daytime high of 30°C tomorrow and a nighttime low of 17°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.

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