Ministry of Planning and Economic Development will invest around 43 billion EGP in the electricity sector during FY 2021/2022.

Newsletter

30 Aug 2021

For our top macro talks today, first, we need to highlight that the Ministry of Planning and Economic Development will invest around 43 billion EGP in the electricity sector during FY 2021/2022. The ministry aims at boosting the electricity sector’s production by 7.4% to 180 billion USD in FY 2021/2022, from an expected production of 168 billion USD in FY 2020/2021. We believe that the electricity sector’s contribution to Egypt’s gross domestic product (GDP) is targeted to reach 1.7% in FY 2021/2022.

Second, it is important not to neglect mentioning the Ministry of Planning’s announcement plan for the year 21/2022 aiming to increase the GDP of the Suez Canal at fixed prices by 5.6%, to raise the output from 93.9 billion EGP in 2020/2021 to 99.3 billion EGP in 2021/2022, and to exceed the achieved output before the occurrence of the Corona pandemic. So, to maximize the economic returns of the Suez Canal, it is intended to develop the economic zone and turn it into a high-tech industrial zone and a logistical zone to be a major center for global trade,
and a supportive element for efforts to enhance the international competitiveness of the Suez Canal on the map of global shipping lanes. We believe that the comprehensive view of the development of the Canal region is based on adopting new development projects that would bring about an economic boom, turning the region in its surroundings into a pole of growth.
With this in mind, the volume of Egyptian exports to France increased by 21% year-on-year in the first half of 2021 valued at 350 million EUR, compared to 288 million EUR in the year-ago period.
On the other hand, the Egyptian imports from France dropped by 9% year-on-year to 913 million EUR in H1-2021, compared to 5 million EUR in H1-2020. We think that the growth rate in Egyptian exports to France and the decline in imports from the European country have contributed to cutting the trade deficit with France by around 21% in H1 2021.
Given these talks, El-Araby Group is aiming to export 20,000 gas stoves to France for the first time this year from the La Germania brand, which recently opened a new factory in Egypt.
Al-Araby group intends to expand its partnership to offer its products in a number of Arab, African and European countries, as it aims to conclude a new partnership with the Al-Barbari Group in Sudan to produce televisions distributed in the Sudanese market, as well as opening an office in Saudi Arabia to distribute its products in the Kingdom. Not to mention, last week’s partnership agreement with the Chinese company Hisense, with a total investment of 170 million USD, in refrigerator, air conditioning and television products, providing more than 4,000 job opportunities.
Moreover, it is interesting to reveal that there is a positive correlation between the compulsory insurance premiums and the number of accidents, deaths and injuries. In other words, we could say that the Egyptian Consortium for Compulsory Insurance for Civil Liability arising from Vehicle Accidents achieved a 45% growth in its issued premiums during 2020/2021, reaching 1.2 billion EGP, compared to 846.9 million EGP during 2019/2020.
The number of accidents rose to 2,330 during 2020/2021, compared to 150 accidents during 2019/2020, and the number of deaths in these accidents rose to 2,549, compared to 146.
By the same token, Mubasher Capital Holding Company for Financial Investments is considering acquiring a stake in one of the existing insurance companies as part of the expansion process and adding new activities during the coming period.
Also, the company intends to establish direct investment funds in the fields of education and health, in addition to traditional investment funds in stocks and debt instruments. We strongly believe that affordable insurance products are expected to be key drivers of insurance growth moving forward. Noting that micro-insurance is the main way to boost inclusivity, alongside closing the protection gap and increasing the uptake of digital technology. Micro-insurance is complementary to many financial products for marginalized and underserviced populations, so it is a necessary part of the government’s efforts to achieve financial inclusion.
Equally important, Swvl, an Egyptian ride-sharing company based in Dubai, is aiming to adopt an ambitious strategic plan over the coming three years, with around 250 to 300 million USD in investments, following the completion of the merger deal with the American company Queens Gambit Growth Capital in the last quarter of this year, as part of its plan to increase its business volume 10 times and operate about 50 thousand buses globally in 2025.
Noting that Swvl’s plan is based on geographic expansion penetrating Brazil, Mexico and Malaysia, in addition to entering into new activities during 2023, which are to provide a service of transporting goods (logistics), advertising and marketing campaigns on buses, and financial technology activities.
In the same fashion, Imtenan Company for Healthy and Functional Foods has signed a cooperation protocol with the Saudi Treasures of Wisdom Company, to export and distribute Imtenan products in the Saudi market.
According to the protocol, 25 branches of Imtenan will be launched in the Saudi market, and more than 100 high-quality products of the company will be exported. It is worthy to mention that Egypt exports about 4,000 tons of honey annually, of which only 3.2 thousand tons are exported to Saudi Arabia, pointing out that Imtenan is working on exporting the product completely packaged for consumption directly, to give an added value to the Egyptian product.
In addition, the Saudi Labs company working in the field of business logical solutions and systems, aims to achieve a turnover of 13.5 million USD during the next year, compared to 9.5 million USD currently.
The company’s strategy is based on consolidating the relationship with SAP for Business Solutions as a strategic partner for it in Egypt and developing ready-made solutions and software packages that suit the needs of customers, both for the sector Restaurants, wholesale sales, or other specialized services.
Moving to the EGX talks, foreign sales in the Egyptian Stock Exchange have decreased by 77% since the beginning of 2021 compared to the same period in 2020 to record 2.6 billion EGP, compared to 11.2 billion EGP in the same period.
We think that the weak movement of foreign investors in the Egyptian market is attributed to several factors, the most important of which was the large number of taxes imposed on the investor, in addition to the weak representation of large attractive entities in the local market, and the absence of local institutions from the scene so that individual dealers remain dominant over speculative shares.