THIS MORNING: It’s a big week for the global economy + Maait says Egypt could be preparing new investment incentives for manufacturing and agriculture
Good morning, friends. We hope the last long weekend of 2023 was kind to you — and that you’re ready for what is shaping up to be a very busy news week.
BUT FIRST- Happy Thanksgiving to our Canadian readers, who celebrate turkey day tomorrow. Our readers in the US are also enjoying a long weekend in observance of Columbus Day.
THE BIG STORY here at home: At least four banks have imposed limits on credit card transactions in foreign currencies and / or cash withdrawals abroad. The move does not appear to have been ordered by the Central Bank of Egypt: The National Bank of Egypt (the nation’s largest lender) has not yet changed its policy on FX use and Banque du Caire tells us the limits were not ordered by the CBE. We have chapter and verse in this morning’s news well, below.
The news comes as the ministers of finance, planning, and trade and industry are set to appear before the House Industry Committee this week to discuss the availability of FX and a pileup of goods at ports.
Clouds are darkening the IMF’s crystal ball: The global economy could lose USD 4 tn in output through 2026 as we head toward recession, Bloomberg reported IMF Managing Director Kristalina Georgieva as saying ahead of the annual meetings. Things are “more likely to get worse than to get better,” Georgieva said, warning that we could be in for yet more economic shocks in the near future.
Egyptian officials are expected to attend the meetings alongside a number of senior members of the banking community. It so far seems unlikely that the IMF’s executive board will sign off on an assistance package for Egypt during the meetings: The board’s public schedule shows no sessions this week.
WATCH THIS SPACE #1- New incentives for business coming? Global economic conditions demand new investment incentives to shore up local manufacturing and the agriculture sector, Finance Minister Mohamed Maait said at a conference on Wednesday, according to a statement. The incentives are needed to make space for more private sector participation in the economy and clear “hurdles” facing the business community to create a better business environment, Maait said. The minister did not give hints about the types of incentives that might be in the pipeline.
WATCH THIS SPACE #2- Bulgaria wants LNG from Egypt: Bulgaria is interested in importing liquefied natural gas from Egypt, Bulgarian Energy Minister Rossen Hristov told Oil Minister Tarek El Molla during a meeting on Wednesday, according to a ministry statement. Egypt’s natural gas could make its way to other southeastern European countries through Bulgaria, the statement says. Egypt has been looking to ramp up its exports of natural gas to bring in additional foreign currency.
SOUND SMART- Greece and Bulgaria recently commenced commercial operation of a natural gas pipeline that’s designed to decrease southeast Europe’s reliance on Russian gas and to bolster energy security, Reuters reported.
PSA- No National Dialogue before economic conference, COP. The Sisi administration’s National Dialogue won’t begin until after the COP27 climate summit has wrapped, sources with first-hand knowledge of the matter told us yesterday. The Madouly government’s planned economic conference in late October and the major UN summit in early November “will make it difficult” to hold the dialogue in the next few weeks, we’re told.
KUDOS- Naguib Samih Sawiris is launching an elite, leadership- and service-oriented boarding school in El Gouna — with need-based scholarships to attract students from across the country, whether they’re coming from public, private or international schools. Two nonprofit foundations will help ensure Egypt’s best and brightest can afford to attend Manara School, which Sawiris said in a statement (pdf) will “provide students with a rigorous educational program, along with an academic, leadership and athletic program, in addition to community service activities and daily household tasks.” Teachers and faculty will also live on the Gouna campus, which will enroll its first class in 2023. Manara aims to cap class sizes at 15 students. More of this, please.
Inflation to notch new highs? Analysts are expecting inflation to have continued rising in September due to the weakening EGP after reaching highs not seen since November 2018 in August. We’ll find out when Capmas and the CBE release figures tomorrow.
A green Monday for the Senate: The Senate will on Monday discuss legislation that could set up a new regulatory body to make policy for the electric vehicles (EV) industry. Enterprise Climate last week reported in depth on the EV bill, which would also set up a fund to provide financing and incentives to investors looking to get in on local EV assembly in Egypt.
The Senate will also discuss amendments to the Environment Act that would see a “green fee” of between EGP 1k and EGP 500k levied against new diesel and gas vehicles. As the bill currently stands, some 80% of the proceeds would go towards localizing our EV industry, with the rest to be split between the Environment Protection Fund and the state budget.
ICYMI- The government’s automotive committee held its first meeting last month, inching us closer to the long-awaited automotive strategy.
COUNTDOWN TO COP–
US President Joe Biden will attend the Sharm El Sheikh climate summit, the Washington Post reports. Biden’s attendance will bring extra heft to the conference, the Post says — and likely more than makes up for last week’s news that the UK’s King Charles III is set to skip the climate gathering at UK Prime Minister Liz Truss' request.
MEANWHILE- The UAE is already talking up COP28, saying the gathering next year will be the “most significant climate conference since Paris,” according to a report in the National.
GFANZ is allowing banks to set their own green rules: Bank of England governor Mark Carney’s Glasgow Financial Alliance for Net Zero (GFANZ) will allow member firms to set their own governance structures, after banks reportedly threatened to leave the alliance due to legal risks associated with meeting strict decarbonization rules, Bloomberg writes. The move that will likely hurt ties with UN-backed Race to Zero, which had called for the banks to sign up to binding rules on cutting out fossil fuels.
Take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?
We want to hear from you: We’re taking the pulse on how the nation feels about Egypt’s nascent EV transition. Take a few minutes to fill out our short survey. We’ll be back with the results in a couple of weeks.
THE BIG STORY ABROAD-
OPEC+ on Wednesday pushed ahead with deep oil production cuts of 2 mn barrels per day — drawing the ire of US President Joe Biden, who had asked members of the oil cartel to help alleviate tight markets, Reuters reports. Ties between the US and key OPEC member Saudi Arabia will be strained by its biggest production cut since 2020, with US officials reportedly seeing the move as evidence of a Saudi shift toward Russia. Saudi officials are reported to have told counterparts in Washington that if it wants more oil in the markets, it should pump more of its own. The announcement saw oil prices rise some 4% on Friday to a five-week high, with Brent crude closing at USD 97.92 — bringing it closer to the USD 100-mark that was breached in the aftermath of the outbreak of war in Ukraine.
ALSO- An explosion yesterday caused damage to Russia’s crucial Crimea road and rail bridge, which serves as the country’s connection to the occupied Crimean Peninsula and the most important supply line for Russian forces located in southern Ukraine. Noone has yet claimed responsibility for the explosion, which killed three people. Russian President Vladimir Putin called on authorities to investigate. Rail traffic and some road traffic has already resumed.
MENA is the world’s fastest-growing crypto payment market, with USD 566 bn in crypto payments received between July 2021 and June 2021, rising 48% y-o-y, according to a Chainalysis report. Turkey — which the report considers part of the region — leads the pack with the largest crypto market, although its y-o-y growth has lagged behind other countries in MENA. Egypt comes in second, with Chainalysis noting the role of remittances and plans between the National Bank of Egypt and California-based Ripple to set up a “remittance corridor” allowing Egyptian expats in the UAE to send funds home.
REMEMBER- Crypto trading remains unregulated here and the central bank has issued several warnings — most recently last month — against trading digital assets.
CIRCLE YOUR CALENDAR-
Fuel prices to rise this month? We’re expecting the government to hike fuel prices for the seventh consecutive quarter when the fuel pricing committee meets this month. Fuel prices have risen by as much as 28% over the past 18 months in response to heightened international oil prices, which surged earlier this year on the back of Russia’s invasion of Ukraine.
The CEO Women Conference takes place in Cairo on Monday, 10 October. The event will bring together Arab and African businesswomen together to discuss women’s leadership and forge closer ties.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.
*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.
In today’s issue: Amid margin pressures and a slowdown in global VC funding, B2B e-commerce players are amending their financial models, including integrating new verticals and reworking their transaction costs and margins.