The consumer prices or inflation have gone up in Egyptian cities at its fastest pace since May 2019, affected by the continued rise in global food prices

Newsletter

11 Apr 2022

For our top talks today, first, as expected and previously mentioned in our yesterday morning talks, the consumer prices or inflation have gone up in Egyptian cities at its fastest pace since May 2019, affected by the continued rise in global food prices. Annual inflation accelerated to 10.5% last March, compared to 8.8% in February, according to data from the Central Agency for Public Mobilization and Statistics on Sunday. Inflation figures in March exceeded the target by the Central Bank of Egypt of 7%, (by an increase of two percentage points or less) until the end of 2022. Inflation in Egypt jumped after the state liberalized the exchange rate of the pound at the end of 2016. On a monthly basis, inflation increased 2.2% in March from 1.6% in February. The increase in food and beverage prices by 19.8% was the main factor behind the increase in annual inflation, as it represented the largest single component in the inflation basket. On a monthly basis, food prices increased by 4.1%, reflecting the increase in shopping before the holy month of Ramadan, which began in early April. (CAPMAS)

Second, the Central Bank of Egypt’s (CBE) net international reserves (NIR) have dropped to 37.082 billion USD at the end of March, compared to 40.994 billion USD at the end of February.
Despite the monthly decrease in NIR, the CBE remarked that it still remains at “ample levels” as it covers more than five months of imports, surpassing reserve adequacy measures. The decline in CBE’s NIR was a result of the ongoing Russian invasion of Ukraine which “caused massive sell-offs in emerging markets and volatility in global asset prices,” the CBE noted. Accordingly, the CBE will temporarily deploy its excess foreign currency reserves to ease pressures faced by the markets amid the Russian-Ukrainian crisis to maintain price stability. This decision will help the central bank to cover sustainable foreign investor outflows, as well as partially cover local demand, with the aim to secure imports of strategic goods and to settle external debts on time. (CBE)
Moreover, the Egyptian Ministry of Electricity is considering cooperating with General Electric in the field of energy, particularly renewable energy and green hydrogen.
The meeting reflects the ministry’s keenness on reinforcing cooperation with various organizations over the coming period to benefit from their expertise in the field of renewable energy. The government’s strategy targets boosting the contribution of renewable energy in the electricity generation mix, reducing carbon dioxide emissions, and attracting further investments from the private sector in such projects.
In addition, Egypt targets raising the contribution of renewable energy to the country’s energy generation mix to 42% by 2035.
Egypt has already cooperated with global companies to mull over and implement pilot projects for green hydrogen production, with the possibility of exporting output. Also, Egypt has signed a memorandum of understanding (MoU) with the European Bank for Reconstruction and Development (EBRD) to finance the necessary consulting works in setting up the national strategy for hydrogen production. (Arab Finance)
Egypt has achieved a gross domestic product (GDP) growth of 9% in the first half (H1) of fiscal year (FY) 2021/2022, targeting economic growth of 5.7% by the end of June, Minister of Finance Mohamed Maait said in a recent official statement.
The government is working on cutting the debt-to-GDP ratio to below 90% this fiscal year, despite the ongoing global crisis, Maait highlighted. Moreover, Egypt seeks to reach a debt-to-GDP ratio of 85% by 2025, the minister pointed out. The country plans to keep the preliminary surplus at 1.3% of GDP, with the budget deficit not surpassing 6.2% by the end of FY 2021/2022, he added.
He also mentioned that Egypt’s tax revenues grew by 13.6% during the period from July 2021 until February 2022.
As per the state’s budget for FY 2022/2023, the government has allocated a sum of EGP 2.7 billion to help around 500,000 families under the Takaful and Karama initiative, Maait noted. In March, Prime Minister Mostafa Madbouli announced that the Egyptian government plans to cut the budget deficit to 6.1% of GDP for FY 2022/2023. Furthermore, Egyptian President Abdel Fattah El-Sisi previously approved a 13% increase in pensions as of April 1st, instead of the beginning of the new fiscal year. The government also decided to upgrade the tax exemption limit to 15,000 EGP from 9,000 EGP to include individuals receiving an annual wage of 30,000 EGP, instead of the current limit of 24,000 EGP. Citizens receiving monthly wages of up to 2,500 EGP will be fully exempted from paying taxes. (Arab Finance)
Moving to our EGX and companies talks, Sprints, a EdTech startup, raised 1.2 million USD in a Series A funding round.
The funding round was led by the Alexandria Angels Network as well as co-members from MED Angels and other investors such as AUC Angels, Cubit Ventures, Challenge Fund, EdVentures, Falak Startups and Cairo Angels. Sprints is a talent support company in the technology sector, providing a comprehensive solution to bridge the gap in the field, from assessing talent pools, offering a customized learning journey, securing a higher paying job, and supporting graduate career growth. The startup also offers guaranteed placement programs that benefit all graduates, and the value of the training programs is paid in installments without interest. Founded in 2019 by Ayman Bazraa and Bassam Sharkawy, Sprints targets young adults in the 18-35 age group who want to start or advance their career in software in the Middle East and Africa region. (Arab Finance)
Edita Food Industries (EFID) is set to invest EGP 1 billion in the next three years to expand its operations.
The investment plan was announced during a visit by Prime Minister Mostafa Madbouly and Minister of Trade and Industry Nevine Gamea to Edita’s factory in the 6th of October City, which includes 10 production lines producing 181,535 tons annually. It is worth highlighting that Edita Food Industries reported a consolidated net profit attributable to the parent company of 528.73 million EGP in 2021, up from 347.72 million EGP in 2020. (EGX)
Abu Dhabi Developmental Holding Company (ADQ) is set to buy a 21.5% stake in Abu Qir Fertilizers and Chemicals Industries Company (ABUK) from National Investment Bank which the bank’s whole stake in the company.
Abu Qir Fertilizers is a listed company and shareholders have the right to take such a decision, Chairman Abed Ezz El Regal commented. Pumping new investments into Egypt is a positive indicator of the attractiveness of the market, he added. Moreover, ADQ is reportedly seeking stakes in Misr Fertilizers Production Company (MOPCO) (MFPC) and Alexandria Container and Cargo Handling Company (ALCN). It is worth noting that Abu Qir’s net profit after tax amounted to 3.203 billion EGP in the six-month period ended December 31st 2021, compared to 1.49 billion EGP in H1 FY 2020/2021. (Asharq Business)
The extraordinary general meeting (EGM) of Arab for Development and Real Estate Investment (ADRI) has approved an increase in the issued and paid-up capital to 32.53 million EGP from 29.57 million EGP via bonus shares.
The capital will be distributed over 5.91 million shares at a nominal value of 0.50 EGP per share. The company will increase the capital through a bonus share distribution of 0.1 shares for every one share, aggregating at a total value of 2.95 million EGP. It is noteworthy to mention that during the first nine months (9M) of 2021, the company's net profits retreated to 1.21 million EGP from 1.87 million EGP in the year-ago period. (EGX)