Private sector activity worsens again in March

Newsletter

05 Apr 2023

Private sector activity worsens again in March. The contraction in Egypt’s non-oil private sector accelerated in March as the depreciation of the EGP, high inflation, and import restrictions continued to weigh on demand. The PMI reading inched down to 46.7 from 46.9 in February, making March the 28th consecutive month that private-sector activity has been in contraction. (S&P Global’s purchasing managers’ index report)

Egypt’s external debt hit a record high in 2Q FY 2022-2023 following two quarters of declines
External borrowing rose 5.1% q-o-q to 162.9 billion USD during the October-December quarter, compared to 154.9 billion USD in 1Q FY 2022-2023. Egypt’s external position has come under significant pressure on the back of a stronger USD, higher interest rates, and turmoil in the financial markets. The EGP has lost more than half of its value against the USD since last year, making it more difficult to repay our debts. (Al Mal)
Egypt’s external debt has more than doubled over the past five years
As the country has ramped up borrowing from multilateral lenders and turned to the international debt markets to raise funds with increasing frequency. On an annual basis, external debt rose 12% from 2Q FY 2021-2022. The 3 billion USD IMF financing package is helping to alleviate the squeeze on our external position and could help attract more FDI from other quarters. The rebooted privatization program designed to pull the country out of its financial crisis and secure much needed FX. (Al Mal)
Egypt is developing a national strategy to enhance tourism as the country aims to provide a distinguished tourism experience for visitors to Egypt
In this regard, the Ministry of Tourism has been working on several levels to achieve its goals and secure foreign currency in the midst of the latest economic challenges in securing foreign currency. During the first quarter (Q1) of fiscal year (FY) 2022/2023, tourism revenues rose by 43.5% to record 4.1 billion USD compared to 2.8 billion USD. (CBE)
Egypt to host IATF2023 in November
Egypt is currently coordinating with African Export-Import Bank (Afreximbank) to host the third edition of Intra-African Trade Fair (IATF2023) in November. The exhibition aims at enhancing intra-trade between various African countries. It is worth noting that the second edition of the IATF was held in Durban, South Africa, in the presence of 13,000 businessmen and witnessed contracts worth about 35 billion USD. (Hapi Journal)
Egypt elected as deputy chair of UN IPPC for 1st time
Egypt has been elected for the first time as the deputy chair of the United Nations International Plant Protection Convention (IPPC) for a two-year term out of the 184 member countries in the IPPC. Egypt will be the main candidate to hold the IPPC chief post after ending the two-year term. (Arab Finance)
You can now apply to the second round of the Smart Green Projects Initiative until the end of May
According to a Planning Ministry statement. Eligible projects must use technology solutions to address environmental issues, present evidence of feasibility or innovation, and provide a written acknowledgement that no awards have been received during the initiative’s first round, among other requirements. (Hapi Journal)
The Kuwait Investment Authority (KIA) has appointed advisors to look into upping its stake in Arab African International Bank (AAIB) to become the lender’s biggest shareholder
The lender is part of the government’s list of 32 state-owned companies geared for privatization. The Central Bank of Egypt (CBE) and the KIA each own a 49.4% stake in AAIB, with the remaining 1.2% owned by unnamed “others”. The bank captured almost 4.5% of total market lending in 9M 2022. Its capital adequacy ratio rests comfortably at 20%, far above the CBE’s minimum threshold of 12.5%. AAIB’s bottom line grew 54% y-o-y to USD 58.7 mn in 3Q 2022. (Al Borsa)
It’s worth remembering that the government wants strategic investors to help strengthen state-owned bank’s fundamentals ahead of potential public share sales
Stakes in AAIB, Banque du Caire (BdC) and United Bank “are better placed with a strategic partner to lay down a clear vision and a clear reading on growth and then go to market afterwards,” Sovereign Fund of Egypt CEO Ayman Soliman said. (Bloomberg Asharq)
Development Partners International (DPI) and Amethishave acquired a “significant minority stake” in local pharma player Marcyrl
The move will allow Marcyrl to invest in talent and upgrade its tech as it looks to expand at home and abroad. The transaction was made via a combination of primary and secondary capital to fund the company’s growth plans. DPI committed funds via its 900 million USD African Development Partners III (ADP III) fund, one of the largest Africa-focused PE funds in the world, and Amethis participated via its Amethis Fund II. (Al Mal)