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Tuesday, 30 August 2022

THIS MORNING: The FRA’s first policy announcement of the Farid-era + Big announcement today?

Good morning, everyone, and happy hump day. Thank you to the incredible number of people who have written to us in the past couple of days about our launch of Enterprise Climate. We’ve read every email and are sending replies as fast as we can. You folks are simply fantastic — we couldn’t ask for better, smarter, more-engaged readers.

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Take our Fall Reader Survey today and we’ll have the results for you in a couple of weeks — just in time to give you a sense of what everyone else is thinking heading into budget season.

How has 2022 been for your business? And how do you feel about what’s left of the year? Are you investing? Do you plan to hire new staff (or make cuts to your existing staff) now or in 2023? What’s the USD / EGP rate you expect to use for your 2023 budget? Where do you see your industry as a whole heading?

Let us know in our Fall Reader Survey. It won’t take more than a few minutes to complete — and we’ll be sharing the results with the entire community.

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We kick off this morning with a report FROM THE DEPT. OF GOOD NEWS- M&As will be on the fast-track in the Farid era. The Financial Regulatory Authority (FRA) said in a statement (pdf) yesterday that it will work with the General Authority for Investment and Freezones (GAFI) to fast-track M&As for companies under its jurisdiction. Recently appointed FRA chief Mohamed Farid understands from his time at the EGX that investors and business leaders value clarity above all else in a regulator, particularly after we saw Emirati lender FAB call off its in April its bid for EFG Hermes amid reports that FRA was slow-walking the transaction.

WATCH THIS SPACE #1- Some importers could be in line for a measure of relief as the Madbouly government looks set to announce measures that will allow the release of some of the goods that have piled up in Egypt’s ports. Expect an announcement as early as today, Finance Minister Mohamed Maait said last night (watch, runtime: 1:13:18), with the measures coming into effect later this week. Maait did not get into policy specifics ahead of the announcement.

^^ That wasn’t all from Maait: We have the full rundown on his presser in the news well, below.

In the background: A week of speculation that policymakers are looking for ways to ease the requirements to use letters of credit (L/Cs) for some imports, which since being introduced by the central bank in March have made it almost impossible for importers to get most goods into the country. Prime Minister Moustafa Madbouly has met with the new central bank governor, Hassan Abdalla, and Trade and Industry Minister Ahmed Samir to discuss allowing importers to purchase certain goods — including raw materials and manufacturing essentials — via documentary collection rather than L/Cs.


EGP WATCH-

The EGP continued to slide yesterday, hitting 19.26 against the USD amid continuing speculation that the currency will be allowed to continue sliding against the greenback. The currency has now fallen more than 22% against the USD since the devaluation in March and is now just 30 piasters away from its all-time-low of 19.56 set in 2016.

Deval, not default: “Strong positive catalysts” in the form of support from the IMF and our GCC friends mean the economy will likely avoid a default, Standard Chartered MENA economist Carla Slim told Bloomberg TV yesterday (watch, runtime: 05:20). Instead, “we’ll see the adjustment happen on the currency basis,” Slim said, becoming the latest market watcher to predict a further devaluation of the EGP.

Slim predicts a gradual 10-15% devaluation over the coming months, adding her voice to growing expectations that the central bank’s new leadership will manage the depreciation over time to avoid stoking inflation, rather than in a 2016-style shock move.

DATA POINT- Natural gas production at the Zohr supergiant natural gas field averaged 2.7 bn cubic feet per day in FY 2021-2022, according to Oil Ministry figures out yesterday. Zohr, one of the Mediterranean’s largest gas fields, also produced an average 5k barrels of condensate a day, the statement said.

The more gas, the better: Egypt is trying to maximize its natural gas exports to bring in vital hard currency revenues, and recently inked an agreement with Israel and the European Union that will see it ramp up shipments across the Mediterranean. European appetite for natural gas will be particularly strong this winter in the absence of additional supplies from Russia.


WATCH THIS SPACE #2- Is Alex Medical back in play? Regular readers may remember how last year’s bidding war for healthcare provider Alex Medical fizzled out. It may be that the Alex Medical is back in play after Tawasol Holdings and LimeVest sent a letter (pdf) to the Financial Regulation Authority (FRA) yesterday offering to purchase 74% of the company at EGP 47.67 a share. The revision reflects approximately 1.3 mn additional shares issued by Alex Medical to raise capital since the consortium's last bid to purchase the 74% stake at EGP 52 a share in June 2021, the letter reads. Tawasol already owns 26% of Alex Medical, meaning an acquisition would give the consortium 100% ownership. At the time of dispatch, it is unclear how many other interested parties are still in play for acquisitions of the company. We’ll be following up on the story in the coming days, so keep your eyes peeled.

In context: 2021 was a big year for healthcare M&A, ending with the late-December announcement of the transaction that saw a unit of CI Capital take a 23% stake in Cleopatra Hospitals after Fahad El Khater’s Alameda Healthcare called off its merger with the EGX-listed business. Healthcare was the top sector for inbound M&A activity in Egypt last year and number three (behind oil and gas and real estate) in total transaction value, according to our in-house M&A tracker.

SIGN OF THE TIMES- Attention, Egyptian Premier League fans: Games will start earlier next season to comply with the government’s measures to reduce public electricity consumption, Sports Minister Ashraf Sobhy told ON Time Sports (watch, runtime: 6:23). The last kickoff for games next season — which will begin on 15 October — will be at 7pm CLT, as opposed to the current 9pm, he said. Sports facilities (including stadiums, clubs, and gyms) were instructed to hold events in daylight as far as possible and to turn off their lights once evening events are over as part of measures implemented earlier this month.

Background: Stadiums were among a list of buildings and facilities that were told to begin rationing their use of electricity earlier this month as the government looks to redirect more natural gas towards exports and increase inflows of foreign currency.

HAPPENING TODAY-

The UN’s Africa Climate Week continues today in Gabon: Foreign Minister Sameh Shoukry is attending the five-day gathering which wraps on Friday. On the first day of the event, Shoukry met Gabonese President Ali Bongo Ondimba and the country’s environment minister, Lee White.

The Madbouly government will hold consultations with representatives from the food and hospitality sector on its privatization strategy. The government is holding workshops and consultations with stakeholders from different industries every Sunday, Tuesday, and Thursday on its privatization plans. You can find more details on the schedule of the meetings here.

HAPPENING TOMORROW-

Beltone Financial shareholders will elect new board members following Chimera Investments’ acquisition of a majority stake in the firm, it said in a disclosure (pdf) to the EGX yesterday. The company confirmed that it is planning to go ahead with a capital increase but only once it has formed a new board. The Abu Dhabi-based investment company purchased Orascom Financial’s 56% stake in Beltone earlier this month and appointed former investment minister and Masar chairwoman Dalia Khorshid the following week.

PSA #1- Tomorrow is your deadline to catch a 65% break off late payment fines for your taxes. The waiver applies to late payment fees for customs tariffs, income, real estate, and sales taxes, VAT, and stamp duties among others. The remaining 35% of your due payments will need to be paid before next March.

THE BIG STORY ABROAD-

It’s a mixed bag on the global front pages this morning: US monetary policy is the main thing on Bloomberg and CNBC’s minds, the Financial Times is leading with the European energy crunch, and the FBI’s investigation into The Donald’s use of classified information is getting attention from the AP and Reuters.

And: “One small step for … wait a minute, can we try that again?” The New York Times and the Wall Street Journal cover the abortive launch of Nasa’s Artemis moon rocket yesterday, which was shelved due to technical issues.

CIRCLE YOUR CALENDAR-

The Africa Women Innovation and Entrepreneurship Forum (AWEIF) is taking place in Cairo for the first time on 26-27 September, according to a press release (pdf). The hybrid event will bring together more than 60 African and global policy and business experts to discuss how gender integration can boost SME growth.

The Arab Pensions and Social Ins. Conference takes place on 28-29 September in Sharm El Sheikh. The conference will bring together state-run social ins. organizations and public and private pension providers to discuss widening coverage through region-wide pension reform.

PSA #2- Exporters have until 15 September to apply to join the fifth phase of FinMin’s export subsidy program, according to a statement. Cabinet has given its approval to pay a total EGP 10 bn out to exporters, with payments to be made on 1 October and 1 December. The program allows exporters to receive overdue subsidies in a single payment rather than in installments over four to five years, in return for a haircut.

Ration card holders now have until 30 September to register their mobile numbers to their cards, in a move meant to make it easier for the Supply Ministry to contact them, the ministry said in a statement yesterday.

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

enterprise

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: A minor oil spill in the Gulf of Aqaba hit Dahab’s shores earlier this month. Community organizers and local authorities helped clean it up.

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