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Sunday, 30 October 2022

Last Night’s Talk Shows: The gov’t really wants to talk about industry as the EGP devaluation sends the currency to record lows against the greenback

The economy dominated the conversation on the airwaves last night and over the weekend in the wake of the currency devaluation on Thursday and the announcement of a fresh loan agreement with the IMF. Everyone covered the 16%+ slide in the EGP, with Al Hayah Al Youm host Mostafa Sherdy describing the float on Thursday as “bitter medicine” (watch, runtime: 3:58) and Kelma Akhira’s Lamees El Hadidi trying to explain to her viewers why the government has had to again devalue the currency and what might come next for the economy (watch, runtime: 21:44). Since launching on Thursday, savers have invested more than EGP 12 bn into the National Bank of Egypt’s three-year 17.25% CDs, NBE Vice President Yehia Aboul Fotouh told Kelma Akhira (watch, runtime: 5:52).


President Abdel Fattah El Sisi used an appearance at an manufacturing expo to pressure the private sector to raise wages, asking Federation of Egyptian Industries (FEI) boss Mohamed El Sewedy in a back-and-forth how much the private sector planned to raise wages. El Sewedy told the president businesses were committed to an EGP 300 bump.

BACKGROUND- El Sisi asked the question just days after he (a) suggested EGP 10k is an appropriate minimum wage for “a working man” and (b) after his government promised it would give civil servants and employees of state-owned enterprises an EGP 300 per month bump and raise the minimum wage to EGP 3k.

El Sewedy and Federation of Investors Associations boss Sobhi Nasr (among others) hit the airwaves to drive home the message, promising that private-sector employees will get an extra EGP 300 in their next monthly paycheck.

The catch: Neither FEI nor EFIA have the power to impose a wage hike on anyone, including their members. The private-sector minimum wage is set by Cabinet’s national minimum wage council. The private-sector minimum wage is currently EGP 2.4k.

Yes, it will be inflationary, but raising the minimum wage is the right thing to do: Regular readers know that we think that figure is ridiculously low — and that we think the council should with extreme prejudice reject applications for exemptions from the minimum wage. If you can’t find a way to build a real business while paying the minimum wage, then your business (or industry) doesn’t deserve to exist.

A push for import substitution: The talking heads made a big deal of last week’s IMCE expo, which saw the launch of a new government initiative dubbed Ebda that aims to accelerate the localization of industrial production and lower the country’s reliance on imported goods. “We must manufacture a large segment of the industrial components we buy abroad. This way we help the GDP grow and create jobs,” President Abdel Fattah El Sisi said at the event yesterday, calling on companies to focus on ramping up local production (watch, runtime: 2:11).

About Ebda: The National Initiative of Developing Egyptian Industry (Ebda) will offer a number of incentives to companies to invest in industrial production in a bid to onshore manufacturing, reduce imports and create jobs. It will offer companies five-year tax exemptions and land plots under a usufruct framework, according to Ittihadiya, which is yet to provide further information. The conference saw the launch of 64 projects in various industries under the initiative, Gebaly said.

Golden licenses for all: El Sisi announced that all investors will be granted three-month golden licenses, making it easier for them to set up projects. This got coverage from DMC’s Al Youm (watch, runtime: 3:05), El Hayah Al Youm (watch, runtime: 1:16) and Kelma Akhira (watch, runtime: 0:38). Check our explainer on golden licenses here.

El Gebaly waxed lyrical on the event and what it could mean for local industry: The IMCE will be a “great push” for local industries in the coming period, El Gebaly told DMC’s Al Youm (watch, runtime: 3:11). He also phoned in to Kelma Akhira (watch, runtime: 11:00) and talked to El Hadidi about some of the projects that were inaugurated at the event including a EGP 1 bn feed project in Gamasa’s industrial zone in Dakahlia and a revived soda ash project. The launch of the projects under the initiative also got coverage from Al Hayah Al Youm (watch, runtime: 19:03).

Also on the airwaves last night:

  • Automotive distributors are worrying about the prices of foreign cars in light of the devaluation: Alaa El Sabaa, member of the Federation of Egyptian Chamber of Commerce’s auto division, told Ala Mas’ouleety that some international car companies will likely hike prices based on USD prices at banks, adding that one company has already raised prices by 10-12% (watch, runtime: 5:50).
  • Price tag everything, or else: Companies that don’t put a price label on products would be in risk of an immediate fine of up to EGP 2 mn, Ayman Hossam El Din, head of the Consumer Protection Agency told Ala Mas’ouleety (watch, runtime: 5:19). His statements come hours after PM Moustafa Madbouly ordered the watchdog to monitor citizens’ complaints on any exaggerated selling prices and take action against any violating traders, according to a statement.

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