WDL: Egypt is fifth in the world and outperforms the US, Brazil and Mexico in improving the middle classes

Newsletter

08 Sep 2021

In the First place, the World Data Lab (WDL) expect Egypt to achieve significant economic improvement over the current decade to the point where it will be able to raise more than 29.5 million people to the middle class to rank fifth in the world in the number of people who will move to this class to outperform Vietnam, the US, Brazil and Mexico. Egypt GDP growth jumped by more than 7.7% in the fourth quarter of 2020/2021, compared with a contraction of 1.7% in the same quarter of 2019/2020. Also, it is worth mentioning that Egypt is characterized by high interest rates on bonds and treasury bills, making it one of the attractive destinations for foreign investors who love to buy these government debts to the extent that the property of foreigners from these Egyptian securities currently exceeds 28 billion USD, offsetting the low tourism revenues which has reduced international flights.

Second, the demand for Egyptian cotton increased by more than 25% in the world markets, where demand increased during the export season 2020/2021, which ended a few days ago at the end of august.
We believe that the demand will continue to improve during the new season 2021/2022, in light of the decline in world production and the improvement of the quality of Egyptian cotton significantly over two consecutive seasons.
Equally important, the port of Alexandria will organize a major celebration this week on the occasion of the opening of a number of projects officially.
The station’s docks are 2,450 meters long and include trading yards of half a million meters and can receive from 6 to 7 ships at the same time. And are able to trade from 12-15 million tons of goods per year which will be divided into 3 trading stations “containers – general goods – cars.
Likewise, the Korean Ministry of Commerce has announced that it aims to resume talks on a new free trade agreement with gulf states and Egypt to forge deeper economic ties.
Korea plans not only to deepen relations with Egypt in traditional areas such as construction, but also in emerging areas including health care and consumer goods. Here, it is worth mentioning that Egypt is south Korea’s third largest trading partner on the African continent, after south Africa and Liberia.
Moving to our companies and M&As talks, first, the Egyptian startup Fora, which operates as an e-commerce service provider, announced its merger with Saudi DigiPax through an acquisition agreement, allowing the latter to expand in the Egyptian market.
We believe that the fastest option for service providers in this sector was to form partnerships that allow them to grow faster than usual while maintaining profitability rates to keep pace with the rapid growth witnessed by the e-commerce market in the Arab region due to the repercussions of precautionary measures to confront the Corona virus.
Second, the Arabian Food Industries Company (Domty) signed two contracts with US bakery equipment manufacturer AMF to supply the fourth bakery production line and the first production line for croissants with total investments of 2.5 million EUR.
The new production lines are expected to start operations by mid-2022. Also, Domty is currently negotiating with Tetra Pak to expand the capacity of the juice factory and a new agreement is expected to be reached soon.
Additionally, the International Finance Corporation (IFC) will provide a 30 million USD loan to the Baalbaki Holding Group for Chemical Industries, a manufacturer and distributor of polyurethane products based in the UAE, noting that the financing package will help expand its production in Algeria, Egypt and Nigeria.
These expansions are expected to create more than 80 direct jobs and several hundred indirect jobs in the supply chain and through a multiplier effect.
And regarding our EGX talks, Speed Medical Company, specialized in medical services, disclosed the implementation of the first purchase of approximately 8.1 million treasury shares in the EGX as part of its plan to buy a huge amount during the month, at a price of 1.86 EGP per share, indicating that this amount represents 0.73% of the capital.
Also, peed Medical disclosed in early September that it had signed an agreement with the Global Emerging Markets (GEM) fund to obtain a huge financing amounting to 1.57 billion EGP. The company moved from the Nile Stock Exchange table to the main stock exchange table after its success in increasing its capital from 71.3 million EGP to 221.8 million EGP, with a total value of 150.5 million EGP through a 100% covered subscription.
Furthermore, Eagle financial advisory is sponsoring two new companies on the small and medium-sized stock market, which are actively engaged in the industrial field of the cardboard industry.
It is worth noting that the company intends to put part of its shares in the small and medium stock market as an initial step and then to increase its capital to qualify it to comply with the conditions of listing in the main market as speed medical did recently.
And finally, the ordinary general meeting (OGM) of Fawry for Banking Technology and Electronic Payment (FWRY) has approved the purchase of Banque Misr’s 14.988% stake in Fawry Plus Banking Services at a price of 1.15 EGP per share.
The OGM also assigned the chairman to sign an agreement with Commercial International Bank (CIB) (COMI) to purchase the bank's 14.1 million shares, accounting for a 14.988% stake, in Fawry Plus Banking Services’ capital.