The CBE might prefer to act boldly today! We believe that the Central Bank of Egypt is likely to raise interest rates by around 0.5%

Newsletter

23 Jun 2022

The CBE might prefer to act boldly today! We believe that the Central Bank of Egypt (CBE) is likely to raise interest rates by around 0.5%, although we acknowledge the costs of high interest rates on the fiscal front. Higher commodity prices and a weaker EGP will push up Egypt’s import bill and cause the current account deficit to widen this year. Against this backdrop, policymakers at the CBE will continue to tighten monetary policy on Thursday. The overnight deposit rate currently stands at 11.25%, and the lending rate is 12.25%, while the main operation and disc. rates are at 11.75%. The CBE has hiked rates by 300 bps since March in a bid to curb rising inflation and bring foreign investors back into the local market. How rates change from here will depend on when inflation peaks and how high global rates go. (Zilla Capital)

Trade exchange between Egypt and Germany amounted to 5.1 billion EUR in 2021, Egyptian Minister of Trade and Industry Nevine Gamea said on June 22nd on the sidelines of the Arab-German Business Forum.
German investments in Egypt stood at 2.9 billion USD, Gamea noted, adding that the government is keen to attract further investments into the automotive industry, the energy sector, recycling, and digital transformation. The minister also mentioned the high-speed rail contract signed with Siemens, under which the sixth-largest high-speed train network will be built in Egypt to link 60 cities through three main lines extending over 2,000 kilometers. (Arab Finance)
Telecom Egypt (ETEL) has signed an agreement with Grid Telecom, a subsidiary of Greece’s Independent Power Transmission Operator (IPTO), to connect Egypt to Greece through the extension of a branch from a subsea cable system.
The new cable is currently being laid across the Mediterranean. The agreed-upon connectivity between Egypt and Greece will boost data transfer among Africa, Asia, and Europe. The new line will be the shortest path crossing the Mediterranean basin to reach the Balkans region and other regions including Genoa and Marseilles over hybrid terrestrial and submarine networks. (Arab Finance)
And for our startups talks, Egypt-based artificial intelligence (AI) startup Synapse Analytics has raised a sum of 2 million USD in a pre-series A funding round, the company recently announced in a post on Linkedin.
The round was led by Egypt Ventures, with the Founder of Cloudera Amr Awadallah and the Founder of Africa Platforms Simon Rowlands taking part. The startup seeks to build trust between AI and businesses adopting machine learning in operations via its platform Konan. Founded in 2018 by Ahmed Abaza and Galal El-Beshbishy, Synapse Analytics plans t help businesses adopt AI through its products.
Moving to our EGX and companies talks, Saudi Arabian ACWA Power has signed, through its subsidiary Suez Wind Energy Project Company, a power of purchase agreement (PPA) with the Egyptian Electricity Transmission Company (EETC) for a wind farm in Egypt at a value of 1.5 billion USD.
Under the 25-year term contract, the company will develop, finance, build, own, and operate the wind farm which will be located in the Gulf of Suez and Gabal Al-Zayt regions. Set to have a production capacity of 1,100 megawatts (MW), the wind farm is expected to be one of the largest on-shore farms in the world and the largest in the Middle East. The financial impact of the project is projected to occur when the first phase begins commercial operations by the fourth quarter (Q4) of 2025. The PPA was one of the 14 investment agreements recently signed between Egypt and Saudi Arabia worth a combined 7.7 billion USD. (Arab Finance)
Egyptian fintech company MNT-Halan has acquired Talabeyah, a B2B e-commerce platform that offers fast-moving consumer goods (FMCG) to small merchants, retailers, and soon to consumers.
VanCampen Liem, Maatouk, Bassiouny & Hennawy, White & Case, and Van Doorne acted as legal advisors on the transaction. The takeover transaction will give MNT-Halan access to thousands of merchants, enabling it to disrupt the current multi-layered and fragmented FMCG supply chain model. The addition of a digital FMCG to the company’s merchant network will help it grow its scope to further stick to the ecosystem. (Arab Finance)
A subsidiary of Saudi Arabia’s Fawaz Alhokair Group is planning to invest around 135 million USD in a new renewable energy project in Egypt in partnership with our Electricity Ministry.
The project, the details of which are still under negotiation, could produce wind power. Meanwhile, a group of Saudi real estate developers are set to visit Egypt next week to kick the tires on potential fresh investments here, particularly in new cities, Al Mal reports, citing Egyptian Businessmen Association Vice Chairman Fathallah Fawzi. (Al Mal)
The board of directors of Abu Qir Fertilizers and Chemicals Industries Company (ABUK) has approved in principle to proceed with the establishment of a company to manage a 1.202 billion USD project planned to be launched on a land area owned by the Egyptian General Petroleum Corporation (EGPC).
The new project is set to have a production capacity of 1,200 tons per day of ammonia, 1,830 tons per day of nitric acid, and 2,400 tons per day of granular ammonium nitrate. The project will be 70% financed by loans, with the remaining 30% to be financed by equity through a partnership between Abu Qir, the EGPC, and other shareholders who expressed interest in the project after obtaining the necessary approvals. On March 9th, Abu Qir Fertilizers’ board approved studying the establishment of the Green Hydrogen and Green Ammonia project in partnership with France’s Total. (EGX)
Emaar Misr for Development’s (EMFD) ordinary general meeting (OGM) has agreed to enter into a partnership with the Egyptian unit of the Abu Dhabi-based developer Eagle Hills in a residential, tourism, and commercial project in Egypt’s North Coast.
Accordingly, the partnership will be implemented through the purchase of 25% of the company’s shares at a nominal value of EGP 15,625 per share and/or by signing partnership and management agreements to participate in 25% of the project and its profits. It is worth noting that Emaar Misr recorded 1.582 billion EGP in consolidated net profit excluding minority interest, compared to 529.12 million EGP in Q1 2021. (EGX)