Good morning, friends, and welcome to a reasonably quiet Valentine’s Day (at least on the news front).

Setting the tone this morning: Just about all of the newsflow is out of petroleum expo EGYPS and the House of Representatives, though we’re very happy indeed to note Flat6Labs having hit first close on its USD 20 mn KSA fund.

ALSO- Don’t miss our sit-down with EBRD Egypt boss Khalid Hamza, who spoke with us about the EBRD’s very big (and very green) year just ended — as well as why we can expect one of our most important investors to do even more here this year. The interview appears in this morning’s Going Green, below.

MORNING RANT- We’re still feeling a bit grumpy about the government’s plan to raise wage tax to 27.5% at the top of the bracket. The move would apply to the portion of annual gross salaries above EGP 800k a year. We broke the news in December and, as of early this month, the plan is still moving forward, though we have no clarity on when it might be implemented.

This just isn’t the time to talk about tax hikes: Inflation is running at a five-year high, with urban inflation running at an annual rate of nearly 26% in January. And anecdotal evidence suggests the real rate is even higher for the nation’s white collar workers, whose basket of goods and services skews heavily toward things that are (a) imported or (b) reliant on imported production inputs. That’s not surprising: At the time of the last “big” devaluation of 2016-2017, we reported, middle and upper-middle class inflation was running at north of 80% for a time.

It took two years for wages to catch up — and even then, there’s an argument to be made that consumer spending power never fully recovered. (Is it a coincidence that the turbocharged growth of BNPL and other consumer finance solutions followed the last deval?)

Businesses are now under pressure from their staff to deliver significant raises as people cope with the rising cost of everything from groceries and tuition to clothing and car maintenance (and don’t even get us started on the price of new cars — if you can even find one.)

How big will those raises have to be? Our 2023 Reader Survey will have the lowdown when we release the results next week, but so far:

• 23% say they’re doing 6-10% raises;
• 24% will give raises in the 11-15% bracket;
• 21% will give bumps in the 16-20% bracket;
• 13% will offer raises on the order of 21-25%.

And God help you if you’re competing for software engineers, (certain types of) copywriters, UI / UX specialists, or others who are in demand by offshore employers:

• Stay in Egypt and work for hard currency for a foreign employer is now a very big “thing”;
• A growing number of software houses (not startups, software houses) are offering salaries pegged to the USD;
• Lots of Gulf-based companies (those in the KSA in particular) aren’t just looking for “work in Egypt” positions, but are headhunting talent to go live in the GCC.

“But Enterprise, I keep hearing about layoffs on Planet Startup.” Yup, you do. Again anecdotally: Some startups are shedding staff under financial stress. But plenty of those being laid off are finding WFH gigs for offshore companies in the Gulf, Europe and the US instead of looking for new jobs at other startups. We feel it is a “reassignment” of tech- and tech-adjacent talent, not a net shedding of tech jobs.

OUR TAKE- New taxes in the current climate make it more expensive for businesses to give raises and invest in the very growth that creates new jobs — particularly at companies that do not employ large numbers of blue collar workers. The folks at the Tax Authority have a tough job — we don’t envy them. But amid record high inflation, high interest rates, and our new USD-EGP reality, today simply isn’t the day to make it more expensive to employ the nation’s best and brightest.

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HAPPENING TODAY-

Several cabinet members as well as leaders of state-owned companies are still in the UAE for this year’s World Government Summit, which wraps tomorrow. Alongside appearances on panels and at networking sessions, they’re leading an effort to drum up fresh investment from the Gulf just days after Prime Minister Moustafa Madbouly unveild the contours of the rebooted privatization program.

Youth and Sports Minister Ashraf Sobhy will be in the hot seat to answer questions from MPs on youth centers, sporting clubs, stadiums and Egypt’s preparations for the Paris 2024 Olympic and Paralympic Games.

THE BIG STORY ABROAD- No single story has captured the imagination of the global business press on this fine mid-winter morning:

• Because everything old is new again, the Financial Times looks at Amazon’s vow to “‘go big’ on physical stores”;
• The Wall Street Journal warns that China will not “save” the global economy, arguing that its recent reopening from covid will benefit its domestic services industry more than anything else;
• The New York Times and Reuters are still leading with tensions between Washington and Beijing over China’s spy program after a fourth craft was downed over North America;
• Bloomberg is trumpeting what it says is an imminent bid from Qatar for Manchester United;
• CNBC is holding its breath as Chinese companies prepare to launch ChatGPT “clones.”

MORNING MUST-READ: The Economist argues that “war and subsidies have turbocharged the green transition” and may have hastened progress by as much as a decade.

DATA POINT- Another 1 mn households got broadband in 2022: The number of broadband internet subscribers was up nearly 10% y-o-y in December to reach 11 mn, according to data (pdf) by official statistics agency CAPMAS. The number of mobile internet subscribers rose to 71.5 mn last year, up 9% from December 2021.

MARKET WATCH-

SPEAKING OF ENERGY- OPEC+ won’t compensate for a drop in Russian oil output: The oil cartel doesn’t plan to up production to cover the 500k-barrel-per-day production cut Moscow is implementing in retaliation for Western sanctions, Bloomberg reports, citing UAE Energy Minister Suhail Al Mazrouei. OPEC+ will stick to planned production cuts through the end of 2023 unless “we have something that would shake the market,” Al Mazrouei said.

COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event: The Enterprise Exports & FDI Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Exports and foreign direct investment (FDI) have never been more important to our economy — or our businesses — than in the wake of the float of the EGP. We think we have a once-in-a-lifetime chance to build an export-led economy that makes us a magnet for FDI and all the benefits that will come with it for our nation.

CIRCLE YOUR CALENDAR-

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

*** 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.