Business Today Egypt (BT) July - August 2021

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July-August 2021

Vol 27 Issue 7 LE 30

Opening Up the

Export Market

Mohammed

El-Sallab

is highly optimistic

Egypt, and for good

reason.




Editor’s Note

4

bt

New Budget,

New Beginning

It is summer, but that does not mean it that our economy is in vacation.

The Egyptian economy is about to move from reform to modernization,

with parliament recently approving the national budget for the

fiscal year 2021/22 and pushing Egypt’s economy into the next phase of

economic improvement. During the past few years, the country’s macroeconomic

and structural reforms stabilized the economy and helped

it maintain improved fiscal and external accounts through the global

COVID-19 crisis.

The most populous Arab country’s economy is proving resilient to the

immense human and financial costs caused by the COVID-19 crisis. This

resilience is mainly explained by the successful implementation of the

economic reform program since 2016, which amplified the fiscal space to

withstand the pandemic’s adverse effects.

While Egypt posted negative economic growth rates from April to June

2020 at the height of the crisis, overall economic growth remained positive

at 3.6 percent for fiscal year 2019/20. This estimate is only slightly lower

than initial projections of the pandemic’s impact on Egypt’s economy, with

its early estimates of annual economic growth amounting to 3.8 percent,

according to the International Food Policy Research Institute (IFPRI)

and the Ministry of Planning and Economic Development (MPED). The

deviation between the early and final estimate can be mainly explained by

lower-than-expected growth rates in the manufacturing and health services

sectors as well as the better-than-expected performance of the trade and

transport sectors.

In this issue of Business Today, we analyze the Egyptian economy’s performance

in light of the new national budget and tackle the challenges that

country’s economy will face in amidst the fourth wave of the coronavirus

pandemic.

We also highlight the senate’s approval of the unified public finance bill,

which holds much promise for the Egyptian economy. Business Today

Egypt speaks with Akmal Nagaty, Secretary of the Senate Financial and

Economic Affairs Committee and a member of the Coordination of Youth

of Parties and Politicians, to understand the bill and its achievable returns.

The draft law is in line with the new Egyptian constitution, achieving

Egypt’s strategy for sustainable development (Egypt Vision 2030) and considering

international practices, as it integrates the state’s budget law and

the government accounting law into a unified law, according to Nagaty.

The draft law also comes within the framework of the state’s legislative reform

move, working to improve the Egyptian economy, in light of changes

in the general budget, as well as international institutions’ recommendations

on developing financial performance.

Happy summer!

July-August 2021

Mohamed Abdel Baky

mabdelbaky@egypttoday.com

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In This Issue

Vol. 27 No. 7-8 | July/August 2021

www.BusinessTodayEgypt.com

Cover design by Heba Mekky

4 Editor’s Note

8 In Brief

Infographic

10 Mena Data Response: Egypt

Consumer Prices (Jul.)

The CBE will keep rates on hold for

now, as inflation moves back within

targets.

By James Swanston, MENA Economist

14 MENA Data Response: Saudi

Arabia GDP

(Q2, Flash Estimate)

Recovery picking up the pace.

By James Swanston, MENA Economist

News in Focus

18 Egypt’s Plastic Currency on its Way

Egypt revealed the first pictures of its

upcoming plastic LE 10 and LE 20

notes.

By Hanan Mohamed

22 Fitch is positive on the EGP

Egyptian Pound to Remain Stable in

H221, slightly depreciating in 2022.

By Fitch Solutions

26 Spotlight on Egypt’s Unified

Public Finance Law

Business Today Egypt speaks with

Akmal Nagaty, Secretary of the

Senate Financial and Economic

Affairs Committee, to understand

the bill and its prospective returns.

By Hanan Mohamed

30 Establishing Arab Court of

Arbitration in Egypt

What are the benefits and

advantages of this decision,

entailsingthat the court will begin

operating?

By Hanan Mohamed

6 July/August 2021

www.BusinessTodayEgypt.com


In This Issue

Opinion

34 Egypt’s Broken Trade Link

OThe most popolous Arab

country didn’t see the benefits

that other developing countries

did in the 2000s.

By Raymond Robertson, Mexico

Vergara, Deeksha Kokas and Gladys

Lopez-Acevedo

Spotlight

36 Fintech in non-banking

financial activities: Benefits and

challenges

By Asmaa Refaat

40 The Domino Effect: Global

Chip Shortage Crisis Hits the

Egyptian Market

By Basant Gamal

Face Of Business

44 Mohamed El-Sallab Chairman

of the BoD of Mostafa El-Sallab

Group On the Egyptian

Economy and Industry Outlook

Few businesses are as successful

as El-Sallab Group. Mohammed

El-Sallab speaks about the

legacy, and why he’s bullish on

Egypt.

© COPYRIGHT BUSINESS TODAY EGYPT 2021.

All rights reserved. No part of this magazine may be

reproduced without the written consent of the publisher.

Printed in Egypt at Ahram Printing House.

Business Today Egypt, founded in 1995, is published

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In-Depth

52 Meeting The Challenge

How the ICT sector took

a global pandemic in stride.

By Christine Salzmann

64 bt Scene

74 Last Word

www.BusinessTodayEgypt.com July/August 2021

7


In Brief Egypt

EBRD provides QNB ALAHLI $50M loan to boost green investment in Egypt

The European Bank for Reconstruction and Development

(EBRD) announced providing QNB ALAHLI in Egypt a loan

worth $50 million aiming to enhance small businesses and green

investments in the state.

EBRD clarified that the loan, which includes $ 7.5 million of

concessional finance from the Green Climate Fund, will be used

for on-lending to households and local small and medium-sized

enterprises (SMEs).

“The European Union (EU) will support the financing to QNB

ALAHLI with up to €5.128 million of EU funds for incentive

payments to projects that are successfully implemented and

verified. The EU will also provide a comprehensive technical

assistance package of up to €6.2 million for all participating

financial institutions and their clients, as well as for policy

dialogue,” it added.

It clarified that QNB ALAHLI will extend the EBRD’s financing

to private sub-borrowers, including individual households and

SMEs, operating in the residential, agribusiness, industrial,

commercial and service sectors, who are developing green,

energy efficiency, water efficiency, renewable energy and resource

efficiency projects.

Egypt, Germany seal 12 development finance deals

International Cooperation Minister Rania el-Mashaat said that 12

development finance agreements were signed with Germany during the first

half of 2021.

Worth 197 million euros, the agreements were in line with a state vision

to implement development projects in the energy and vocational training

fields, encouraging private sector participation and women’s empowerment,

Mashaat said in a statement.

Two deals have been sealed with the German government, under which

Berlin is to offer Cairo a grant worth 57.5 million euros to fund ventures in

the fields of energy, technical education, vocational training, administrative

reform and sanitation, the minister said.

Such financial cooperation agreements are meant to help achieve the

sustainable development goals, including good education, gender equality,

suitable jobs, industry and infrastructure, as well as peace and justice, the

minister noted.

She added that 10 other contracts have been signed with the German

Corporation for International Cooperation (GIZ) in the form of grants: 4

million euros to be offered to the Sports Ministry, 14 million euros to be

offered to the Trade and Industry Ministry, and 8 million euros to build

institutional potentials.

Three other grants worth 14.5 million euros, 14.9 million euros and 16

million euros will be offered to the Education Ministry.

One of the GIZ contracts also offers grants worth 6 million euros and

7 million euros to the Environment Ministry and Agriculture Ministry

respectively.

The Financial Regulatory Authority (FRA) should also receive a GIZ grant

worth 10 million euros, while the Housing Ministry is set to get 3.5 million

euros from the same corporation.

July-August 2021

8 www.BusinessTodayEgypt.com


In Brief Egypt

Egypt’s agricultural exports rise to

$2.2B in 10 months

Egypt’s exports of agricultural crops increased during the first

10 months of the 2021/2020 export season, recording about

$2.215 billion, compared to $2.013 billion during the same period

of the 2020/2019 season, marking a 10 percent increase.

The report issued by the Agricultural Export Council showed

an increase in the total quantities exported from the sector during

the period from September 2020 to June 2021, recording about

3.971 million tons, compared to 3.755 million tons during the

same period from 2019/2020, increasing by 5.7 percent.

Regarding the most important geographical blocs importing

Egyptian agricultural crops, the report indicated that “Arab

countries” acquired 33% of the value of Egypt’s exports during

the first 10 months of the export season 2021/2020, at about $741

million, as well as by 41 percent of the total volume of exports

by about 1.614 million tons during that period from the previous

season.

The exported quantities of Egyptian agricultural crops to

“European countries outside the European Union” recorded

about 1.008 million tons, valued at 570 million dollars, accounting

for 26% of the total value of exports.

Egypt’s annual inflation

records 6.1% during July,

rises 1% monthly

Egypt’s annual consumer price inflation

recorded 6.1% in July 2021, compared to

4.6%in July 2020 and 5.3% in June 2021,

state-statistics body said.

On a monthly basis, inflation recorded

114.4 points in July 2021, marking an

increase of 1% compared to July 2021, the

Central Agency for Public Mobilization

and Statistics (CAPMAS) said.

CAPMAS attributed the rise in inflation

to the increase in the prices of the group of

the dairy, cheese and eggs group by 2.2%,

the meat and pourtly group by 1.2%, the

vegetables group by 1.1%, and tobacco by

1.7%.

It also referred to the increase in the

group of electricity, gas and other fuel

materials by 8.9%, organized tourism trips

by 6.9%, and personal care group by 1.2%.

The agency indicated that this rise

despite the decrease in the prices of fruits

group by 3.4%.

Egypt’s annual core inflation

records 4.6% in July:

CBE

Annual core inflation rate recorded

4.6% in July 2021, compared to 3.8% in

June 2021, the Central Bank of Egypt

(CBE) said in a statement.

The Consumer Price Index in Egypt

recorded a monthly rate of 0.6% in July,

compared to -0.1% for the same month

last year, and to 0.1% in June 2021, the

statement added.

Core inflation discounts or strips out

certain categories that are considered

more volatile.

www.BusinessTodayEgypt.com

July-August 2021

9


Infographic

Mena Data Response

Egypt Consumer Prices

(Jul.)

The CBE will keep rates on hold for now, as inflation moves back

within targets.

By James Swanston, MENA Economist

Egypt’s headline inflation rate rose to

an eight-month high in July, and is

likely to drift higher in the upcoming

months. Against this backdrop,

we think the Central Bank of Egypt (CBE)

will keep interest rates on hold for much of

this year despite the weakness of the economy.

•The headline rate – covering only urban

consumers – rose from 4.9% y/y in June to

5.4% y/y last month, the strongest rate of inflation

since November and is now back within

the CBE’s target range of 7±2%. (See Chart

1.) On a month-on-month basis, which tends

to be volatile due to seasonal effects, prices

rose by 0.9% – the sixth consecutive monthly

increase in prices.

•The breakdown of the data showed that

most of the rise in the headline rate was due

to a further jump in food inflation, from 3.4%

y/y in June to 4.9% y/y in July. Non-food inflation

remained unchanged, though housing

and utilities, clothing, and recreation and culture

prices picked up as a sign of re-opening.

–The latter is likely due to a sharp rise in

package holiday prices. (See Table 1.)

•We expect that the headline rate will continue

to increase in the coming months on

the back of stronger food and energy inflation.

The hike to local fuel prices at the end of

July and the expected hike to state-subsidised

bread prices will push up inflation. Global factors,

such as higher global commodity prices,

supply shortages and higher freight costs will

also add to price pressures.

•Additionally, we think that the pound is

likely to weaken gradually, which will push

up inflation of imported goods. Our forecast

is that the headline rate will peak at around

6.7% y/y in September. Against this backdrop,

policymakers at the CBE will probably

opt to keep interest rates on hold for much

of this year.

•However, we think that in the final few

months of the year inflation will fall back below

the lower bound of the CBE’s target and

July-August 2021

10 www.BusinessTodayEgypt.com


Infographic

hover around that level over 2022-23. That

should open the door for policymakers to

reduce the policy rates and we think there’s

scope to do so given how high real interest

rates are. We expect the overnight rate to be

reduced late this year, with a total of 150bp

of cuts by the end of next year (taking it to

6.75%). Most analysts don’t expect any change

in interest rates during this period.

www.BusinessTodayEgypt.com

July-August 2021

11


In Brief Egypt

Egypt to offer Administrative Capital for Urban Development on

EGX within 2 years

Egypt has a plan to put the Administrative Capital

for Urban Development (ACUD) on the stock

exchange in the upcoming period, according to the

Egyptian President Abdel Fattah El-Sisi.

This came during his speech at the opening of a

number of residential projects in Badr City.

Sisi said: “We will offer the company on the stock

exchange at the earliest opportunity. The solvency in

the company’s fund is LE 100 billion. We are talking

about liquid funds amounting to LE 100 billion for

the Administrative Capital Company.”

“This is another pure idea to manage our

capabilities and resources, and the state will not

pay a penny, and I imagine that during the next

two years, after it was put on the stock exchange,

the company’s assets exceed LE 3 and 4 trillion,

and this applies to El Alamein and other cities,” he

continued.

Egypt’s trade deficit increases 10% to $3.34B in May

Egypt’s trade deficit rose 10% in May 2021, recording

$3.34 billion, compared to $3.04 billion in the same month

of 2020, according to the state’s statistics agency CAPMAS.

In its monthly bulletin on foreign trade data, CAPMAS

said exports hiked 80.3% to reach $3.11 billion in May

2021, compared to $1.72 billion during the same month

of 2020.

The bulletin attributed the increased exports to the rise in

the exports of various commodities, such as: plastics in their

primary forms by 96.6%, pasta and various food preparations

by 81.4%, and fresh fruits by 70.9%.

Meanwhile, exports of other commodities witnessed a

decrease in May, such as: fertilizer by 48.1 %, dairy products

by 29.2%, furniture by 19.8% , and perfumes and cosmetics

by 9.4% .

Moreover, the bulletin showed an increase of 35.4% in

the imports to hit $6.45 billion in May of 2021, compared to

$4.76 billion in the same month of 2020.

July-August 2021

12 www.BusinessTodayEgypt.com


In Brief Egypt

Egypt offers LE 2.8B in financing for small and micro projects in 6

months

The Medium, Small and Micro Enterprise Development

Agency (MSMEDA) financed 87.7 thousand small and micro

projects in the first half of 2021 (from January to June) with a

total of LE 2.8 billion, which created about 146.5 thousand job

opportunities, according to CEO of the Agency Nevine Gamea.

Gamea added in a statement that young people in the 30-40

age group received up to 36 percent of this funding, and the

governorates of Upper Egypt benefited with more than 43

percent of the funding.

She stressed that the agency works in constant coordination

with the concerned authorities to implement the political

leadership’s directives by providing all aspects of support to

the small enterprise sector and providing the appropriate

environment to encourage citizens to engage in self-employment

and establish new small projects that contribute to the local

market’s needs for various services and products, thereby

contributing to reduced imports and supporting the national

economy, and providing thousands of job opportunities.

Egypt’s treasury bears LE 73.3M as part of vehicle replacement initiative

Egypt’s Minister of Finance, Mohamed Maait, said

that the state treasury bore LE 73.3 million in value

of the green incentive from April to the end of July

2021, given the presidential initiative to replace aging

vehicles with new cars powered by natural gas.

The minister indicated in a statement that 3,000

citizens have acquired their new cars since the start of

delivery in April to the end of July 2021.

The Egyptian Ministry of Finance revealed that 1,700

new cars were delivered to the presidential initiative’s

beneficiaries to replace aging cars with natural gas

during August 2021.

Chairman of the Board of Directors of the Vehicle

Replacement Fund at the Ministry of Finance, and

Executive Director of the initiative to replace aging

cars with new ones powered by natural gas, Amgad

Mounir confirmed that 3,472 old cars were scrapped

so far.

www.BusinessTodayEgypt.com

July-August 2021

13


Infographic

MENA Data Response

Saudi Arabia GDP

(Q2, Flash Estimate)

Recovery picking up the pace.

By James Swanston, MENA Economist

The 1.1% q-on-q expansion in Saudi

Arabia’s GDP in Q2 was driven by

the unwinding of the voluntary oil

output cuts and the easing of virusrelated

restrictions supported domestic activity.

With the OPEC+ impasse now resolved oil

production will be raised further and remaining

virus restrictions are being relaxed, the

economic recovery looks set gather pace over

the second half of the year.

•The General Authority for Statistics (GAS)

released its flash estimate of GDP this morning,

which showed that, following a 0.5% contraction

in Q1, the Saudi economy expanded

by 1.1% q/q in seasonally adjusted terms in

Q2 (this was slightly weaker than our forecast

of a 2.1% q/q expansion). That put real GDP

1.5% above its level from a year earlier. (See

Chart 1.) The flash estimate is subject to revision

and a final reading will be published on

13th September.

•The breakdown showed that both the oil

and non-oil sectors expanded last quarter. The

oil sector grew by 2.5% q/q as the Kingdom began

to unwind the voluntary 1mn bpd output

cut that lasted from February to April. And in

the non-oil private sector, output expanded by

1.3% q/q, leaving it 10.1% higher than a year

ago. (See Table 1.) This was helped by the accelerating

COVID-19 vaccine rollout and the

easing of restrictions last quarter.

•More timely data and developments point

to a strong start to Q3. High frequency point

of sales transaction data and consumer confidence

data for July remained very strong.

Meanwhile, the Kingdom’s vaccination rollout

has ramped up with more half of the population

having received at least their first dose, the

majority of whom have been fully vaccinated.

This has recently paved the way for a further

easing of containment measures, particularly in

the tourism sector.

July-August 2021

14 www.BusinessTodayEgypt.com


Infographic

•What’s more, the end of the OPEC+ impasse

last month saw an agreement to raise output

quotas from August. This will support a further

recovery in the oil sector over the rest of this

year and next.

•Overall, while the Q2 GDP figures were a little

weaker than we had expected, they still paint

a positive picture: that the economic recovery

is gathering momentum. And it should pick up

the pace over the second half of this year. We

have pencilled in GDP growth of 4.8% this year

and 6.3% in 2022. This is much stronger than

the consensus forecasts for growth of 2.4% and

4.6% respectively.

No.1 TV Brand in Japan [Sharp] launches Optimum Luxury TV Screens in Egypt

For 16 years in a row, Sharp has been the No.1 TV brand

in Japan*; maintaining its global position as the top TV

manufacturer around the world. This Japanese brand

takes specifications seriously; whether in quality or technology;

while still owning luxurious, modern, and aesthetic designs.

Always keen on granting full comfort and pleasure to its

customers, Sharp just launched its DL6EX Series of frameless

Android TVs, which boast exclusive features; that are available

for the first time in Egypt!

Ezz Eldin Ahmed - Marketing Management Director

of Elaraby Group - reveals those features to

be: The Far-Field Voice Control which enables direct

orders to the TV set through Google Assistant

without the need to use the remote control. This series

of Sharp Android TVs uses the latest Android

version; Android 10, which is perfectly compatible

with Google; enabling the installation of +10,000

applications; including games and other entertainment

apps.

This is made possible through a 32-Giga internal

memory; making it the smart TV set with the highest

internal memory available now in Egypt. Ezz

also states that Google’s own Chromecast built-in

feature in this TV series enables the sharing of all apps, videos,

and games between the mobile phone, tablet, or any other device

and the TV screen; easily and smoothly.

The resolution of the screens is 3,840 X 2,160; which is more

than 8 million pixels, while being optimized with the 4K Ultra

HD technology. This means that the quality of the screens is

4 times higher than the full HD. It’s an amazing feature that

even the series is referred to as “Sharp 4K Android TVs”

through its 3 models of 50, 55, and 65 inches [4T-C50DL6EX,

4T-C55DL6EX and 4T-C65DL6EX]. The Dolby Vision feature,

also in this series; is the latest technology used in movie

production around the world. It features 68 billion colors, with

even extra control over contrast, and lighting - to apply any

edits if needed.

The Dolby Atmos feature in the Sharp 4K Android TVs,

on the other hand, creates an atmosphere that is

fully-loaded with sound; just like being in a movie

theater, without the need to install any other

gadgets other than the TV set. This technology exceeds

all previous TV sound systems by sending

out 128 whole sound waves simultaneously, and in

all directions.

Through the years, Sharp has built its reputation

in Egypt as a home appliance brand of top performance;

granting an exclusive 3-year warranty

through Elaraby Group. These long-term special

corporate relations between Sharp, in Japan, and

Elaraby Group, here in Egypt, has indeed resulted

in several consecutive successes and a real leap in

the local market of home appliances in Egypt.

Previously through air conditioners, refrigerators, home

freezers, and now TV screens, this new deal will definitely set

Egypt at a remarkable position in the markets of manufacturing,

distributing, and marketing for Japanese Sharp TV screens.

In this quest, Sharp and Elaraby Group promise to continue

developing new integrated investments for even more market

expansions in the near future.

www.BusinessTodayEgypt.com

July-August 2021

15


In Brief Egypt

Fitch Affirms NBE’s rating at ‘B+’;

with stable outlook

Egypt, Japan sign agreement to increase JICA grant to $19M to promote health sector

Egypt and Japan signed an agreement to increase

the value of the Japan International Cooperation

Agency (JICA) grant to $19 million.

The agreement aims to construct a new outpatient

clinic at Abu al-Rish Japanese Hospital, coming

within the framework of distinguished Egyptian-

Japanese ties promoting the health sector’s

development.

The signing ceremony was attended by Minister of

International Cooperation Rania al-Mashat, and Dr.

Khaled Abdel Ghaffar, Minister of Higher Education

and Scientific Research, who signed the agreement.

Ambassador Noki Masaki, the Ambassador of

Japan in Cairo, and Yoshifumi Omura, the main

representative of the JICA office in Cairo, were

present.

Fitch Ratings affirmed the National Bank of Egypt’s

(NBE) Long-Term (LT) Issuer Default Rating (IDR) at ‘B+’

with a Stable Outlook.

Fitch has also affirmed National Bank of Egypt (UK) Ltd’s

(NBEUK) Long-Term IDR at ‘B+’ with Stable Outlook and

Support Rating at ‘4’. NBEUK is a wholly owned subsidiary

of NBE. A full list of rating actions is below.

Fitch stated that pressures on the domestic operating

environment have eased since end-3Q20, moderating

downside risks to Egyptian banks’ credit profiles. “This

reflects improving foreign-currency (FC) liquidity, with the

banking sector’s net foreign assets (NFAs) reaching $3.5

billion at end-April 2021 from a net foreign liability position

of $5.3 billion at end-April 2020. This was supported by a

strong increase in foreign holdings of Egyptian treasuries,

sovereign Eurobond issuance and resilient remittances.”

Its view also factors in healthy growth momentum, with

real GDP growth expected to accelerate to 6% in fiscal

year 2022 (3% in FY21), in line with pre-pandemic levels.

The sector’s average loan growth was 6% in 1Q21, which

we expect to accelerate to low double digits in 2021.

According to the rating agency, deterioration in loan

quality following the expiry of the Central Bank of Egypt’s

(CBE) six-month credit moratoria in September 2020 has

largely been contained. The sector average stage 3 (S3)

loans ratio remained stable at 3.4% at end-3Q20. The stage

2 (S2) loans ratio varied significantly across banks, ranging

from 2 percent to more than 30 percent of total loans.

In Fitch’s opinion, the higher portion of S2 loans for

some banks is an indication of more conservative loan

classifications rather than weaker underlying asset quality.

Banks’ asset quality is also underpinned by high exposure

to the sovereign, including investments in bonds and

lending to public-sector entities.

16 July-August 2021

www.BusinessTodayEgypt.com


In Brief Egypt

EGX launches its Treasury Bonds Index

The Egyptian Exchange (EGX) launched its Treasury Bonds

Index on August 3, after the adoption of its methodology by

the Indices Committee.

The EGX clarified that the new index is to complement its

efforts of developing indicators to measure the performance

of securities traded. This is done in accordance with

international best practices, for the first time in the Egyptian

exchange’s history.

EGX’s indices have been designed to include bonds with

sufficient liquidity, reliable pricing as well as complete and

easily monitored terms. The EGX Treasury Bond Index

measures the market-value-weighted performance of local

currency Treasury bond markets.

The Treasury bond index comprises four sub-indices to be

launched shortly and are determined based on maturities.

The sub-indices allow investors to compare the performance

of Treasury bonds with close maturities. The Treasury Bonds

index is reviewed monthly. The review includes the exclusion

of ineligible bonds and the inclusion of bonds that meet

the criteria for joining, ensuring good representation of the

Egyptian bond market. Treasury bond indices were calculated

starting from January 3, 2021 with a value of 1000 points.

Egypt’s stock market develops new methodology for calculating shares’

closing price

The Board of Directors of the Egyptian Stock Exchange

(EGX) has activated full amendments to the Egyptian Stock

Exchange’s trading systems, related to the foundations and

its determinants of calculating shares’ closing prices, to be

implemented early next September.

The new methodology for calculating the intraday closing

price of shares is based on the 30-minute time-moving

“Moving VWAP” weighted average.

This is in lieu of the current method of weighted average

volumes over the duration of the daily trading session.

The new methodology also includes the creation of an

auction session to determine the pre-close auction’s closing

price before the end of the trading session and within the last

half an hour, provided that the stock exchange administration

sets the date of the auction session during the next week.

Moreover, if the auction session results in a new closing

Kuwaiti “Zain” invests $10M in merger of Swvl, Queens Gambit

Mobile Communications Company Zain announced that

it will invest $10 million in the recent merger of Swvl and

Queens Gambit, amounting to approximately 3 million

Kuwaiti dinars.

Zain said in a statement to the Kuwaiti Stock Exchange,

that Swvl and Queens Gambit entered into an agreement

to merge the business to become through Swvl, the first

company in the Middle East with an estimated value of more

than $1 billion to be listed on the Nasdaq Stock Exchange.

price, ownership transfers are allowed for a period

determined by the stock exchange before half past two and

after the auction session on the closing price resulting from

the auction session; this is called “Trade-at-close”.

In the event that the bidding session does not achieve a

new closing price, the transfer of ownership will be allowed

at the last “Moving VWAP” price during the Trade-at-close

session.

The amendments to shares’ closing price also included

unifying the daily rate of listed securities’ prices to be

throughout the entire day in entire sessions combined, which

includes the pre-opening auction session, the continuous

trading session and the auction session determining the

closing price as 20% throughout the entire day, which is the

last of the precautionary procedures applied after the 2011

revolution.

Dubai-based Swvl is the owner of an innovative and

sustainable mass transit platform, while Queens Gambit is

a special purpose acquisition company.

The Egyptian company Swvl was established by Mostafa

Kandil in 2017, as a smart service for mass bus transportation

in Egypt, and then expanded to reach other markets in the

region, and is headquartered in Dubai, while the company

plans to merge with Queens Gambit Growth Capital in a

deal to raise the company’s value to about $ 1.5 billion.

www.BusinessTodayEgypt.com

July-August 2021

17


News in Focus

Egypt’s Plastic

Currency on its Way

Egypt revealed the first pictures of its upcoming plastic LE 10 and

LE 20 notes.

By Hanan Mohamed

In early August, Egypt revealed the first pictures

of its soon-to-launch LE 10 and LE 20

plastic notes. The design of the published

plastic notes, slated for release next November

from the Central Bank of Egypt in the New

18 July-August 2021

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News in Focus

Administrative Capital’s new printing press, has

yet to be edited.

Sources confirm to Business Today Egypt that

the new currency will be carried out in alignment

with the world’s latest currency production lines

and with the latest insurance specifications at the

international level. The new LE10 and LE20 plastic

notes will be circulated alongside current currency

notes.

Banknotes are printed according to an economic

calculation process that considers the rate

of the rise in prices of goods and services produced

within the country, the inflation rate, and the rate

of achieved economic growth. They are printed

based on the volume of cash circulating within the

Egyptian economy.

The money issued by the Central Bank enjoys

what is called “the power of discharge” in the sense

that it is equal in value to goods and services, and

it is obligatory for all parties to pay the monetary

category’s value. When the Central Bank issues a

new edition with a different design, the old version

of the monetary category does not stop.

The design of the plastic notes

The 10-pound note’s new design carries a picture

of the New Administrative Capital’s Al-Fattah

Al-Alim Mosque, which was inaugurated in 2019.

The 20-pound one has a picture of the Mosque of

Mohamed Ali, one of the important and famous

archaeological mosques in Cairo, established by

Muhammad Ali Pasha.

More than 30 countries use plastic currencies, including

Britain, Canada, Fiji, Vietnam, Mauritius,

New Guinea, New Zealand, Australia, Romania,

Brunei, Nigeria, United Kingdom, Cape Verde,

Chile, Gambia, Nicaragua, Trinidad and Tobago.

Plastic currencies are produced from polymer,

and were first used as currency-making material

in Australia in 1988. In 1968, Australia began researching

for a scientific solution to combat forgeries

of the new decimal currency after it issued

its $10 notes in 1966. The state spent 10 years in

trials to overcome technical problems. In 1996,

Securency International was formed as a joint venture

between the Reserve Bank of Australia (RBA)

and Innovia Films to market the technology.

“By 1998, all Australian banknotes were issued in

plastic and by 2009 Securency was exporting to 25

countries, with more than 3 billion polymer notes

in circulation,” notes CSIROpedia.

The Bank of England argues polymer is cleaner

and more durable than other currency-comprising

materials, and it allows the addition of extra security

features. Polymer reportedly is about 2.5 times

longer than paper notes, and takes longer to biodegrade.

A Bank of Canada study revealed that at the end

of the lifecycle of paper money, it is usually torn

and transported to the landfill. The polymer sheets

extracted from the circulation are chopped into

granules and used to manufacture everyday plastics,

such as garden furniture.

As for Egyptian currency, experts expect that

a transition to plastic currency will reflect a new

economic image for Egypt, and this will positively

reflect on the Egyptian economy.

“Printing the new currency from the new administrative

capital gives a message that Egypt will start

a new economic era bringing prosperity and economic

welfare to all Egyptians,” Economic Expert

Shimaa Emara previously explained in a statement

to BT. “This currency has a lot of benefits, such as

a longer lifespan than the paper one, its printing

cost is less than the paper one and it is considerably

difficult to fake.”

Emara noted that many countries have been using

plastic currency for decades, like Spain, France,

and the UK.

www.BusinessTodayEgypt.com July-August 2021

19


News in Focus

Senior economist

at League of Arab States

Mahmoud Fathallah agrees with

Emara, saying that the decision of issuing

plastic banknotes in Egypt is a very good choice

economically.

Fathallah tells BT that Egypt is one of the highmonetizing

countries strongly depending on cash

transactions, so the level of daily cash circulation is

very high. “Cost wise, regular paper banknotes cost

a lot because they need to be replaced after a short

period of time, that’s why the issuance of coins was

intended to reduce the rate of erosion even if the

cost of making coins is high.”

On the other hand, Senior Economist Esraa

Ahmed believes that manufacturing plastic currency

is a good move towards a more efficient

money issuance system, but no major economic

impact will take place. “Switching from manufacturing

the Egyptian pound using copper, steel

and other materials to using polymer banknotes

is a matter of efficiency rather than an ‘economic’

move, and they are widely used worldwide

[Canada, Vietnam, New Zealand and others use

Polymer banknotes, and other countries will join

them soon.] It is all about more efficient coins,

as they are more durable and less costly when

it comes to issuance feasibility and the material

used. Using conventional copper and other relatively

expensive materials proves inefficient, especially

after the high level of cumulative inflation

that caused the value of the coin material to exceed

the value of its denomination,” Ahmed says.

The origin of the Egyptian Pound

Money has been made from a variety of materials

over the years , be it leather in China during the

Han Dynasty, or shells, precious metals, cotton paper,

and most recently, plastic. The materials

reflect the social and political climate of the time

as well as available technologies and resources, according

to Ping Wang, the Communications Officer

at the IMF’s Communications Department.

Egypt used gold and silver coins until 1834,

when the Egyptian pound appeared. Before 1834,

there was no specific monetary unit that served as

the basis of the monetary system, and only a small

number of currencies were seized.

The Egyptian pound was formed as a currency to

be dealt with in paper form for the first time after

its formation and circulation in 1834. On April 3,

1899, the National Bank of Egypt issued banknotes

for the first time in Egypt, with a camel design and

the name of the bank inscribed on one side.

The Egyptian pound’s design has changed several

times since its inception, as in 1930 when it

changed from its previous orange color to blue

and brown, with a picture of the Sphinx on its front

and a mosque on its back. In 1950, the pound was

redesigned to have an image of King Farouk l on

the front and with a picture of the Isis temple in

Aswan on the back, but this did not last long until

a new version appeared in May 1952, returning to

the old face under King Fouad while retaining Isis

Temple on the other side.

The pound’s shape developed in 1968 to carry

an image of the Sultan Qaytbay Mosque on one

side and the Temple of Abu Simbel on the other

side. Eleven years later, in 1979, it became the currently

known paper, but with changes in color and

decorations of Qaitbay Mosque on the front, while

the other side carries a different image from the

Temple of Abu Simbel.

In a new transformation of the pound, the Egyptian

government converted the paper pound to a

metal pound in 2006.

20 July-August 2021

www.BusinessTodayEgypt.com



News in Focus

Fitch is positive

on the EGP

Egyptian Pound to Remain Stable in H221, slightly depreciating in

2022.

over the Grand Ethiopian Renaissance Dam, and

faster-than-expect global monetary tightening.

At Fitch Solutions, we believe the Egyptian

pound will continue trading in

a narrow range between EGP15.50/

USD and EGP15.80/USD in the short

term, as the Central Bank of Egypt (CBE) will

continue to intervene in the currency market to

offset mild appreciatory pressures.

Over the long term, we expect a pick-up in inflation

will lead to narrowing real rates, putting

a gradual depreciation pressure on the pound,

which we forecast will average EGP16.10/USD

in 2022.

We see moderate downside risks to our forecast

from monetary easing in Egypt in the event

of a sluggish economic recovery and lower-thanexpected

inflation, as well as from the intensification

of tensions between Egypt and Ethiopia

Short-Term Outlook (three-to-six months)

We at Fitch Solutions expect the Egyptian

pound will remain stable in the short term. The

recent stability of the pound came despite the

rebound in portfolio inflows, strong remittance

inflows, a modest recovery in tourism activity, and

access to IMF funding. Indeed, the Central Bank

of Egypt (CBE) has been active in building up foreign

currency reserves, with the exchange rate’s

stability reflecting proactive market interventions

by the CBE. We expect this trend to continue over

the short term, as the CBE intervenes to offset appreciatory

pressure on the currency.

From a technical perspective, we expect the

Egyptian pound will continue to trade between

EGP15.50/USD and EGP15.80/USD for the remainder

of 2021, as has been the case since September

2020 (see chart above). Indeed, positive

bullish fundamentals supporting the currency

will be offset by CBE’s build-up of FX reserves.

We also expect that portfolio inflows to Egypt

Fitch Solutions Egypt Currency Forecast

22 July-August 2021

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News in Focus

will remain strong in the short term due to elevated

real interest rates, exerting upside pressure

on the pound. Egypt continues to boast the highest

real policy rate globally (3.3% in June), which

along with favourable macroeconomic conditions

in the country, will preserve the appeal of

Egyptian debt instruments to foreign investors.

We expect real interest rates in Egypt to remain

elevated over our forecasted period as we anticipate

that the CBE will keep monetary policy on

hold throughout 2022, while inflation remains

within the CBE’s target band of 7.0%±2.0 percentage

points.

Additionally, remittances, a gradual recovery

in tourism inflows and access to IMF funding

will provide support to the currency. Remittance

inflows to Egypt continued to rise throughout

the pandemic, as they increased by 10.4% in

FY2019/20 (July 2019-June 2020), and by an estimated

10% in FY2020/21. We expect transfers

Egyptian Pound To continue Trading Within

Narrow Range In Short Term

Egypt - EGP/USD Daily

Source: Bloomberg, Fitch Solutions

www.BusinessTodayEgypt.com July-August 2021

23


News in Focus

Egypt’s Real Rates Continue To Outperform Peers

Selected Markets – Real Interest Rates, %

Source: Fitch Solutions

from Egyptians living overseas to remain strong

in 2021 and 2022, supported by an economic recovery

in key remitting countries, specifically in

the Gulf Cooperation Council. We also foresee

a gradual rebound in the tourism sector, largely

due to advancement in vaccine rollouts in Europe,

a key source of tourists for Egypt, as well

Egypt’s Real Rates Continue To Outperform Peers

Selected Markets – Real Interest Rates, %

as the resumption of chartered flights with Russia.

In addition, we anticipate that Egypt will receive

about USD2.8bn under the IMF’s initiative

to help member countries meet their financing

needs. Combined, these factors will bolster foreign

currency inflows to Egypt.

That said, we believe that the pound’s appreciation

will be contained, as the CBE continues

to intervene in the forex market in the

short term. The CBE has been active

in building up reserves, with Egypt’s

foreign currency reserves gradually recovering

from USD36.0bn in May 2020

to USD40.6bn in June 2021. While

we continue to believe the CBE will

prevent a stronger appreciation beyond

EGP15.50/USD, a breach of this

level of resistance would likely push

the pound to trade stronger towards

EGP15.25/USD.

Long-Term Outlook (six-to-24 months)

We maintain our view that the pound

will gradually depreciate in the long

term, averaging EGP16.10/USD in

2022 largely on the back of higher inflation.

We forecast inflation will average

6.6% in 2022 (up from an average

Source: CBE, Fitch Solutions of 5.10% in 2021) largely due to strong

domestic demand and increased electricity

prices amid subsidy cuts. In addition,

Egypt’s structural twin deficits and

elevated public debt level will limit the appeal of

24 July-August 2021

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News in Focus

CBE’s Interventions Preserving Exchange Rate Stability

Egypt - EGP/USD & Gross Official Reserves, USDbn

Source: CBE, Bloomberg, Fitch Solutions

Egyptian assets in the long term.

That said, we believe the depreciation of

the pound will be modest, as several positive

factors will limit downside pressure. First,

we believe that Egypt’s high nominal interest

rates can accommodate the anticipated

gradual increase in inflation without significantly

undermining the attractiveness of the

pound, with real interest rates remaining elevated.

Second, we expect authorities to continue

their fiscal consolidation measures in

FY2021/22 to narrow the wide fiscal deficit

that averaged 8.6% of GDP in the past five

years. Efforts to reduce public finance imbalances

would help to support the attractiveness

of Egyptian assets. Moreover, we believe

that the CBE’s buildup in foreign currency

reserves allow for a gradual and measured

weakening of the currency. Third, the upcoming

integration of Egypt into JP Morgan’s

Government Bond Index Emerging

Markets will boost demand for Egyptian assets.

JP Morgan is supposed to include Egypt

in the index within six months after the announcement

on April 9, 2021. This move would

likely spur demand for Egyptian debt instruments

denominated in local currency, adding appreciatory

pressure on the EGP.

Risks To Outlook

We see some downside risks to our outlook for

the Egyptian pound in the long term. A slowerthan-expected

recovery in economic activity and

weaker inflation in 2022 could prompt the CBE

Higher Inflation To Weigh On The Pound

Egypt - EGP/USD & CPI, y-o-y

to ease monetary policy, which would reduce real

rates and could accelerate the depreciation of

the pound. In addition, more pronounced tensions

between Egypt and Ethiopia on the Grand

Ethiopian Renaissance Dam could increase the

country’s risk premium and exert downward

pressure on the currency. Furthermore, a fasterthan-expected

global monetary tightening cycle

could lead to capital outflows from emerging

markets, including Egypt, resulting in a weaker

pound.

Source: Bloomberg, CBE, Fitch Solutions

www.BusinessTodayEgypt.com July-August 2021

25


News in Focus

Spotlight on Egypt’s

Unified Public Finance Law

Business Today Egypt speaks with Akmal Nagaty, Secretary of the

Senate Financial and Economic Affairs Committee, to understand

the bill and its prospective returns.

By Hanan Mohamed

The Senate approved, in the beginning

of July’s plenary session, the unified

public finance bill, which holds much

promise for the Egyptian economy.

Business Today Egypt speaks with Akmal Nagaty,

Secretary of the Senate Financial and Economic

Affairs Committee and a member of the

Coordination of Youth of Parties and Politicians,

to understand the bill and the returns it achieves.

The draft law is in line with the new Egyptian

constitution, achieving Egypt’s strategy for sustainable

development (Egypt Vision 2030) and

taking into account international practices, as it

integrates the state budget law and the government

accounting law into a unified law, according

to Nagaty.

The draft law also comes within the framework

of the state’s move for legislative reform, working

to improve the Egyptian economy, and in

light of changes in the general budget, as well as

international institutions’ recommendations on

developing financial performance.

What is the unified public finance bill passed by

the Senate?

It is a legislative development merging the

“General Budget Law (Law No. 53 of 1973 regarding

the State’s General Budget)” and Law

26 July-August 2021

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News in Focus

No. 127 of 1981 on government accounting.

What are the motives for drafting a unified public

finance bill?

There are many practices that were not mentioned

in the previous laws, such as budgetary

frameworks, financial planning, and the “Programs

and Performance” budget. Also, numerous

articles in the two laws come under the same

content, and elicit the same meaning, reflecting

a lack of interconnection between their texts.

This is evident in the application of the electronic

budget linking preparation with implementation,

and reflects the urgent need to formulate a

unified public finance law.

What is newly provided by the Unified Finance

Act?

The Act aims to achieve sufficient flexibility

in implementing the budget, and to maintain

financial allocations by reusing them in consequent

years if circumstances prevent them from

being spent during the “accreditation year” in

accordance with governing controls.

Also, the new draft law’s objectives include

investing in top cadres, acting in the financial

management of ministries and administrative

authorities, as its officials are required to have

adequate qualifications and continuous training

to ensure quality financial performance. We also

need to improve our capacity to digitize, raising

the level of human capabilities in the financial

system in line with digital changes, relying on

managing the financial system through modern

digital technology.

The law also achieves high levels of transparency

and disclosure in preparation, implementation

and control, through automation and the

use of electronic signature systems.

It also aims to apply the program and performance

budget as a means of controlling and rationalizing

public spending, consolidating the

concepts of accountability.

(GDP), especially seeing the positive expectations

for the Egyptian economy.

The project implementing the program and

performance budget is considered a means of

controlling and rationalizing public spending

and consolidating accounting and accountability.

How will the new law help the Egyptian economy?

The new law contributes to transparency and

disclosure of state resources, thereby increasing

control on growth rates in accordance with the

sustainable development plan, which contributes

to increasing the rates of the national product

and other economic institutions. Additionally,

it contributes to increasing the added value

of available resources and their optimal use.

What are the goals that the law aspires to achieve?

The draft law defines the divisions the state’s

general budget functions, and the divisions of its

resources, as well as the rules for implementing

the budget, provisions for disbursement and collection,

and rules for financial control and internal

control. Further, the budget includes, on the

side of uses, the expenses evident in six chapters

as mentioned in the draft law, in addition to the

acquisition of financial assets and loan repay-

What is the importance of approving this law

during Egypt’s current phase?

The new law aims to achieve sufficient flexibility

in budget implementation, and to maintain

financial allocations by reusing them in the following

years if circumstances prevent spending

them during the “accreditation year” in accordance

with governing controls. Also, the new

draft’s law will seriously upgrade the digitization

processes in government institutions and ministries.

The law aims to reduce the deficit in the state’s

general budget and the gross domestic product

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27


News in Focus

ments. On the resource side, it became clear

that revenues, spanning three chapters, in addition

to funding sources, include two chapters

detailed in the bill.

Regarding the classification of government

accounts, the draft law classified these accounts

into those of uses and resources, accounts of assets

and liabilities, and regular accounts. These

accounts are classified according to the divisions

in the state’s general budget, and the government

financial statistics manual. The executive

regulations specify the types of accounts at the

overall and detailed levels.

The draft law clarifies the Ministry of Planning’s

role in defining the state’s strategic goals

in all its sectors in the annual budget and the

medium-term framework budget, in coordination

with the ministries and independent bodies,

defining priorities to implement those goals,

and presenting them to the Council of Ministers

for approval in light of the controls, rules and

provisions in the state’s general planning law.

The draft law indicated that the Ministry of

Finance is preparing the state’s general draft

budget and projects economic bodies’ budgets.

This happens after studying the draft budgets

received from the administrative authorities,

seeking the Central Bank’s opinion regarding

coordination between each of the financial,

monetary and credit policies in order to achieve

the economic and social development plan’s

objectives. The draft law also clarified the right

to access the studies, research and information

necessary to prepare the state’s draft general

budget.

How does this law achieve the state’s plan for reform

and sustainable development?

Under the state’s directives for legislative reform

and the elimination of duplication and

conflict of legislation, in order to improve the

Egyptian economy, and in light of the changes

that occurred in the pattern of preparing the

general budget, as well as the recommendations

of international institutions regarding the

development of financial performance, including

the development of the budget preparation

and control system, strategic planning and

technological developments in the mechanization

of budget performance, and the existing

constitutional and legal legislation, the unified

public finance law was drafted, which came in

line with the new Egyptian constitution, and

achieved the objectives of Egypt’s strategy for

sustainable development (Egypt Vision 2030),

taking into account international practices,

where the philosophy of the draft unified public

finance law is determined in the general

framework of controlling the financial system

and good management.

What is the improvement or tangible return on

28 July-August 2021

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News in Focus

citizens from the application of this law?

The speed of completion of set plans and

implementation of projects according to announced

time schedules, makes it easy for the

regulatory and parliamentary authorities to follow

up on performance and evaluate the ministry

entrusted with the implementation of any

program.

It was announced that this law helps set a future

vision for the administrative authorities’ financial

improvement. How is this done?

The appropriations for each body included in

the budget are immediately used upon issuing

the law, and each party is responsible for taking

the necessary measures to implement its budget

and achieve the strategic objectives it sets.

The draft law was clarified in Chapter Four,

holding 12 articles spanning financial control

and internal control of administrative bodies’

accounts.

The draft law in Chapter Five included 7 articles,

and dealt with the final accounts and the

commitment of administrative authorities and

economic units to submitting all financial statements

to the Ministry and the Central Auditing

Organization.

Further, its Chapter Six held 11 articles, including

the competencies of the competent minister

in relation to the budget, the qualification

and training requirements to fill the positions of

officials in the preparation, implementation and

control of the budget at the Ministry of Finance.

In the transitional provisions, the draft law referred

to the application of the item budget until

the full implementation of the program and

performance budget within four years from the

date to enforce the law’s provisions, taking into

account the development of the oversight system

in a manner appropriate with the program’s

application and performance budget. This is to

achieve optimal, efficient use of state resources,

in alignment with the economic and social development

plan, the state’s strategic objectives, and

provided that the executive regulations specify

the requirements and controls necessary for this

transformation.

www.BusinessTodayEgypt.com July-August 2021

29


News in Focus

Establishing

Arab

Court of

Arbitration

in Egypt

What are the benefits and advantages of this decision,

entailsingthat the court will begin operating?

By Hanan Mohamed

On July 7, Egypt’s Ministry of International

Cooperation announced

establishing the Arab Court of

Arbitration, in coordination

and joint cooperation with the Cairo-headquartered

Arab Economic Unity Cairo. At

its 111th session held on June 10, the Court

approved the accession of the Arab Court of

Arbitration as a functioning body under the

council’s scope as an independent Arab body.

The Arab Court of Arbitration handles the

settlement of commercial, economic and investment

disputes through arbitration between

investors and states, handles bilateral negotiations

between states, and disputes between private

sector parties. It is an independent Arab

body that has all the privileges and immunities

guaranteeing the independence of its functions,

in a manner that achieves support and

promotion of the Trade, economy and investment

movement between Arab countries.

The Council of Arab Economic Unity was established

as a specialized Arab regional organization

based in Cairo in 1964, in accordance

with Article 3 of the Arab Economic Unity

Agreement. It aims to organize and consoli-

30 July-August 2021

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News in Focus

comes in aim to settle disputes, develop areas

of arbitration and provide services. This includes

founding an academy to prepare qualifying

international arbitrators, establishing a

comprehensive library specialized in arbitration,

raising the level of international commercial

arbitration in the region, and establishing

a training center to hold training courses in

the field of arbitration, specialized legal and

technical fields, and the amicable settlement

of disputes.

Legal expert Mohamed Al-Shaheer says this

idea represents a qualitative leap in the practice

of international arbitration. Previously,

many of the existing disputes between investors

and Arab countries were considered before

the World Bank-affiliated International

Center for Settlement of Investment Disputes

(ICSID), incurring massive expenses and difficulties

in follow-up on the cases’ procedures.

“Undoubtedly, the Arab Court of Arbitration

will attract investors to conclude its arbitration

clause, making it easier for the contract’s parties

- investors and states - to present their case

fairly, and in an environment similar to the

conflict environment,” Al-Shaheer explains.

How the court works

In a statement, Al-Shaheer argues that establishing

the court as an independent, self-contained

body that enjoys relevant privileges and

immunities, would reassure investors and the

concerned state of the Council’s impartiality

and professionalism. The Court is slated to be

an important pillar of the arbitration practice

for training and qualification activities that the

court will exercise, establishing a sophisticated

arbitration library to trade developments in

commercial life, and to handle arbitration disputes

that will be referred to under the parties’

agreement, whether it is within the terms

of the original contract, or at a later stage.

date economic relations between Arab countries

on foundations appropriate for their ties,

and to achieve the best conditions for prosperity

its economy and wealth development.

In the context of joint Arab action, the council

works to promote establishing economic

unity between Arab countries, boosting bilateral

and multilateral economic integration

among that economically empower them regionally

and internationally.

What is the benefit of establishing the Arab

Court of Arbitration in Egypt?

Establishing the Arab Court of Arbitration

Cairo’s benefits

According to the international arbitrator,

establishing the Arab Court of Arbitration will

kickstart an important and vital role in the development

of Arab cooperation in commercial

and economic fields, particularly as its boards

of trustees and directors, the likes of the former

President of the Egyptian Supreme Constitutional

Court, the former Yemeni Minister

of Justice and the former Mauritanian Prime

Minister. Egypt’s role as a country hosting the

headquarters comes as amid efforts by the political

leadership to revive economic and commercial

integration between Arab countries,

making the Egyptian state a center of gravity

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News in Focus

within regional economic blocs.

On the other hand, the move also confirms

Cairo’s regionally leading role as an arbitration

hub, hosting many arbitration centers of

international level, and in turn leading to permanent

foreign investments in the host country.

The nature of international arbitration

Legal expert and cassation lawyer Hany Sabry

says that arbitration authorizes the arbitral

tribunal to decide the dispute between disputing

parties, and this authority is derived from

the will of parties to dispute. This starts with

an agreement, followed by a procedure, and

concluded by a ruling.

The difference between national and international

arbitration

Sabry adds that there are fundamental differences

between national and international

arbitration, as national arbitration is related

to a dispute that affects one country, whether

it is civil or commercial, while international

arbitration is where one of the dispute’s parties

is a foreigner and it affects more than one

country. Each of the countries, companies and

individuals can agree to resort to arbitration to

resolve disputes.

Advantages of international arbitration

International arbitration is enjoying increasing

popularity in business and other fields,

and there are several reasons why the disputing

parties resolve their international disputes

through arbitration:

1- International arbitration can resolve disputes

more quickly than litigation before traditional

courts, due to the limited number of

appeals from arbitral awards.

2- International arbitration is often less costly

than traditional litigation.

3- International arbitration can provide a

better justice system, because many domestic

courts are overburdened with cases.

4- Clients can play an active role in selecting

32 July-August 2021

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News in Focus

an industry-expert arbitrator in international

arbitration, rather than a specialist as with local

court judges.

5- International arbitration is flexible, and

the dispute’s parties play an important role in

choosing the most appropriate procedure to

resolve their international dispute, deciding

whether to include procedures such as document

production.

6- International arbitration can be confidential,

which is useful if the parties wish to continue

their commercial relationship or avoid

negative publicity.

7- International arbitration is neutral, which

is crucial for cross-border transactions.

The arbitrators’ nationality differs from that

of the parties:

1- If the arbitration takes place in a country

other than the one to which the dispute’s parties

belong.

2- If the arbitration is conducted according

to procedures regulated by foreign law.

Types of arbitration according to geographical

criteria

This criterion is based on the distinction between

the types of international and national

arbitration on a geographical criterion in view

of the locale, the nationality of the litigants or

the applicable law, then the arbitration is international:

if it takes place in a foreign country

or if one of its parties is foreign, or if the

applicable law is foreign or there are foreign

court procedure rules, and this standard is the

one adopted by the New York Convention - the

Convention on the Recognition of Foreign Arbitral

Awards - which is applied to arbitration

awards issued in a country other than the one

from which it is required to recognize and enforce

the arbitral award on its territory.

Types of arbitration according to the economic

criterion

This criterion depends on the economic nature

of the subject matter of the dispute, so

the arbitration is international if its subject is

related to the interests of international trade

without taking into account the place of arbitration,

the applicable law, or the nationality

of the opponents.

Court Board of Trustees

The Court’s Board of Trustees is chaired by

former President of the Supreme Constitutional

Court and President of the Egyptian Senate,

Counselor Abdel Wahab Abdel Razek, along

with four deputies: former Prime Minister of

the Republic of Mauritania Sidi Mohamed

Abu Bakr, Yemen’s former Minister of Justice

Ismail El Wazir, and Deputy President of

Egypt’s Supreme Constitutional Court Abdel

Aziz Mohamed Salman, and Vice President of

the State Council and member of Egypt’s Supreme

Administrative Court Counselor Hamdy

Abu Zeid.

The court is headed by former head of the

Supreme Constitutional Court Counselor

Farouk Sultan, and former Minister of Legal

Affairs in the House of Representatives Counselor

Magdy Hussein Al-Agati, holds the position

of deputy. The Council’s Board of Trustees

and the Board of Directors also includes

the elites of Egyptian judiciary, public figures

and high-ranking statesmen in Arab countries.

www.BusinessTodayEgypt.com July-August 2021

33


Opinion

Egypt’s Broken

Trade Link

The most popolous Arab country didn’t see the benefits that other

developing countries did in the 2000s.

By Raymond Robertson, Mexico Vergara,

Deeksha Kokas and Gladys Lopez-Acevedo

Since the early 1990s, developing countries

have experienced a coincidence

of rising exports – especially those related

to global value chains (GVCs)

– and improved labor market outcomes. Further,

during 2000-2010, rising trade was associated

with falling poverty and inequality for

many of them. Egypt, however, was not one

of them, even though it signed several trade

agreements and adopted policies to foster

trade growth, including slashing the maximum

tariff rate from 110% in the late 1980s to 40%

in the late 1990s, and making further reductions

in 2003-2004. Female labor force participation

(FLFP) and unemployment have remained

stubborn, for example (see figure 1).

Against this backdrop, our study “International

Trade and Labor Markets: Evidence from

the Arab Republic of Egypt” asks two questions:

Do trade agreements produce the same increase

in exports in Egypt as occurred in other

countries? And do higher exports generate better

local labor market outcomes in Egypt as occurred

in other countries?

Egypt is an excellent case to better understand

trade and labor markets for several reasons:

First, in the past decade, it has concluded several

free-trade agreements with the European

Union (EU), Turkey, Jordan, Morocco, and Tunisia

(the Agadir Agreement), and members of

the European Free Trade Association – helping

to accelerate both imports and exports.

Second, despite bold economic reforms

that allowed growth to rebound, it currently

continues to struggle with: (i) high youth unemployment;

(ii) low female labor force participation

rates; (iii) high informality rates;

and a stubborn gender wage gap. The reforms,

however, provided the underpinnings

for a second generation of reforms aimed at

strengthening human capital, and promoting

34 July-August 2021

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Opinion

Figure 1. Despite higher trade, unemployment still high and female labor force

participation (FLFP) still low

private sector-led growth.

Third, it is a vital part of the Middle East and

North Africa region, which experiences high

economic volatility, remains relatively undiversified

and dependent on a few commodities

that often see strong relative price swings, and

continues to be affected by security issues.

The results of our study suggest that there is

a broken link between trade and labor market

outcomes – enough so that Egypt might need to

rethink its export strategy.

A Reason to Rethink the Export Basket

Starting with how Egypt fared on the export

front after trade agreements, we use a gravity

model approach to predict bilateral trade flows

based on characteristics (like economic size

and geographic distance) that should typically

facilitate trade and to identify sectors and markets

for which Egypt seems to have untapped

potential. Our findings clearly highlight that

trade agreements tend to enhance trade and

Egypt has gotten more “bang for its buck” with

its trade agreements – that is, its exports following

trade agreements are even above internationally

estimated averages.

As for whether Egypt’s exports and labor

market are linked, we use a geography-based

Bartik (1991) approach to quantify exogenous

import demand shocks from the United States

and EU countries for Egyptian exports. Our

findings uncover the interaction between trade

and domestic labor market outcomes in Egypt –

clearly highlighting that trade does not connect

to domestic local labor markets in the same way

it does in other countries. At the local level, labor

market responses to export shocks differ

across regional labor markets in the short run,

Source: Authors’ elaboration, UNCOMTRADE data for 2018

and World Bank Databank, ILO’s estimations.

but preliminary evidence suggest that these effects

dissipate gradually and remain statistically

insignificant for most types of workers.

Why is the link between trade and labor markets

broken? Our study contends that one factor

is the composition of Egypt’s low-diversified

export basket in goods, with eroding global demand.

Oil exports account for almost a fourth

of its exports, followed by apparel, fertilizers,

and fruits – and since 2010, none of the nonoil

exports have managed take off. Another factor

is Egypt’s wage levels are one of the highest

among countries that export the same goods,

suggesting that it has a relatively weak comparative

advantage in currently exported goods.

Also, Egypt’s rate of participation in GVCs is

one of the lowest among its peers, rendering

backward linkages and employment opportunities

to a minimum.

As global trade faces a restructuring of GVCs

due to COVID-19 and increasing calls for GVC

regulations in the EU (a major trade partner for

Egypt), the urgency for Egypt to achieve better

labor market outcomes becomes more evident.

Part of its new trade strategy may well be to further

diversify its export basket and increase its

participation in GVCs to foster employment opportunities.

www.BusinessTodayEgypt.com July-August 2021

35


Spotlight

Fintech in non-banking

financial activities:

Benefits and challenges

By Asmaa Refaat

The world has been undergoing rapid

and successive technological developments

across almost all sectors, extending

to the monetary and financial

sectors, giving rise to new and innovative financial

products and services.

As Egypt is moving towards adopting a unified

national strategy for financial inclusion, expanding

the beneficiary base of non-banking financial

activities, and enhancing their efficiency and

reducing the cost of using them, there has been

a need to define the legal framework that govern

these innovative financial systems, ensuring protection

of investors’ rights, establishing the basis

for sound financial transactions, and promoting

a favorable investment environment.

Hence, the cabinet’s decision to approve a

draft law on “Regulating and Promoting Fintech

in Non-banking Financial Sector” with the aim

of supporting financial inclusion policy, increasing

the number of beneficiaries of the non-banking

financial services, and reducing the cost of

using those services and activities. This article

discusses mechanisms to leverage the benefits

and opportunities that fintech provides for the

non-banking financial sector and the management

inherent risks.

Fintech and non-banking financial services

Fintech can be defined as a set of financial

technologies that can be utilized in the delivery

of innovative and state-of-the-art financial services

or improving the traditional financial services

by reducing on cost and promoting fast and

easy delivery of those services, ensuring access

to financial services to a larger number of users

which promote financial inclusion services, drive

innovation and entrepreneurship, and boost financial

development and economic growth.

Fintech products take many forms including

digital currencies, cryptocurrencies, e-payment,

mobile payment, and digital financial platforms

such as barter platforms, peer to peer lending,

and crowdfunding.

Globally, fintech applications have contributed

to facilitating banking and financial services,

making lending without commercial banks’ intermediation

possible, facilitating and accelerating

payments and transfer of funds, developing

low-cost investment methods through financing

platforms, offering solutions to obstacles in the

financial sector, and addressing financial services

industry challenges, all of which have contributed

to enhancing productive sectors and boosting

economic growth rates.

With the spread of COVID-19 and the restrictions

imposed on direct interactions, there is a

growing reliance on innovative financial services

as well as a significant increase in digital and e-

transactions which suggests that fintech will be

an integral part of the world’s future.

The non-banking financial sector is recognized

as being complementary to the traditional

banking sector for its role in the mobilization of

savings, generating sources of funding for economic

ventures and individuals, enhancing the

flow of investments, protecting rights and property,

and bolstering investors’ confidence, contributing

towards economic development.

Unquestionably, financial innovations have a

significant role in maximizing the efficiency of

non-banking financial services. For example,

looking at the capital market, we find that financial

innovations make it more attractive to investors,

improve its quality, and help make data

available. This, in turn, contributes to increasing

the trading volume and reducing concentration

of capital, which translates into more capital for

companies and causes the trading rates to approach

to the securities’ fair value. Thus, market

indicators become more of leading indicators of

the economic activity, truly reflecting the economic

situation, minimizing risks and boosting

the economic growth.

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Spotlight

Considering the insurance business –which

traditionally relies on historical data analysis for

assessing risks, predicting the likelihood of those

risks occurring in the future, and determining

price of insurance policy– there’s a great potential

to leverage the advances of financial technology,

allowing for big data analyses and capitalizing

on blockchain technology to serve the

insurance industry.

Turning to micro, small, and medium enterprises,

we find they are growing significantly in

Egypt and absorb large numbers of employers,

yet the banking financing opportunities available

for them are way less than those available

for large firms. Fintech would help in this as

it promotes safe access to financial services by

providing financing services through digital

platforms such as barter platforms, peer to peer

lending, and crowdfunding.

With regard to real estate financing, fintech

provides state-of-the-art tools for reviewing housing

loan applications faster, more accurately,

and at lower costs, which means low interest

rates on loans. In this respect, Google Cloud had

announced the launch of a new solution, Lending

DocAI, which aims at increasing the operational

efficiency of the loan process through the

application of artificial intelligence technologies

and machine learning modules in processing

loan documents which include tax data and income

and asset statements.

Overall, fintech provides modern digital alternatives

for analyzing big data, assessing clients’

status based on the historical development of

their behavior as well as their financial and nonfinancial

transactions, among other indicators,

all of which ultimately reduce time, effort, and

cost. Fintech would help catalyze and attract new

clients and projects provided that a regulatory

framework is set to ensure protection of data privacy

and investors’ rights.

Regtech in fintech

The increase in the technology-driven financial

transactions and the need to effectively manage

them have led countries and governments

to put in place laws and regulations that protect

rights and prevent manipulation. These regulations

came to be known as regulatory technology

or “regtech”.

Economists are divided over the importance

of regtech in fintech. For example, George

Stiegler and Milton Friedman oppose regtech

fearing that it would limit innovation due to

bureaucracy besides the possibility of it limiting

market efficiency due to government interven-

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37


Spotlight

tion in market mechanisms through regulatory

systems. On the other hand, Christine Lagarde,

President of the European Central Bank, and

Jaime Dimon, Chief Executive Officer of JPMorgan,

underscore the importance of regtech as

a means of protecting individuals and financial

systems alike. Reconciling these two different

views can be achieved by establishing regulatory

systems that stimulate innovation, ensure efficiency

of the market, and protect individuals

and financial institutions

Globally, central banks and financial supervision

authorities have launched regulatory sandboxes

for financial technology products and services

through which innovators can explore new

financial solutions and come up with innovative

products while granting them (participants will

be proposing the financial technology apps)

regulatory exemptions, allowing them to directly

test their services and determine their efficiency,

quality, and readiness for full implementation

in the local market under the supervision of the

competent supervisory authority. Regulatory

sandboxes have been established in a number of

Arab countries including the UAE and Oman.

Likewise, in Egypt, and in line with Egypt’s vision

to become a regional hub for fintech in Africa

and the Middle East, the Central Bank of Egypt

(CBE) launched what is known as the Regulatory

Sandbox for Financial Technology Applications.

Singapore, Australia, and the United Kingdom,

among others, are examples of countries that

launched regulatory sandboxes for testing technological

services. Recently, the United States,

the European Union, and Hong Kong have participated

in a joint sandbox programme.

China’s fintech regulatory sandbox extends to

cover the whole country. This environment enables

innovators to implement new ideas without

having to worry about judicial threats or violating

the existing regulatory systems. This step comes

as an attempt to encourage financial technology

innovators to relocate to China, being a country

that has substantial capabilities for applying new

financial technologies. However, China had implemented

some regulatory measures, banned

cryptocurrencies transactions, blocked websites

that trade on cryptocurrencies, and restricted

some block-chain based applications.

As regulatory sandboxes came to exist in most

countries to provide opportunities for companies

to innovate while, at the same time, protect

consumers against risks, the forthcoming law on

regulation, development, and use of fintech in

non-banking financial activities in Egypt should

allow the Financial Regulatory Authority to establish

a regulatory sandbox for fintech applications

where fintech providers (registered or willing

to register) can test their innovative fintech

applications under the supervision of the authority,

with the authority providing some facilities

as to regulatory sandbox eligibility criteria.

Enhancing fintech benefits

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Spotlight

In 2018, the International Monetary Fund

(IMF) and the World Bank Group launched the

Bali Fintech Agenda, “a set of 12 policy elements

aimed at helping member countries to harness

the benefits and opportunities of rapid advances

in financial technology that are transforming

the provision of banking services, while at the

same time managing the inherent risks.” These

elements drew upon the experience of member

countries and are intended to serve as guiding

points to inform national authorities when developing

their own national fintech agendas.

The 12 policy elements include requirements

for developing regulatory standards for fintech,

including, building a foundational digital and financial

infrastructure that enable efficient data

collection, processing, and transmission; reinforcing

competition and commitment to open,

free, and contestable markets to ensure a level

playing field and promote high-quality financial

services. By the same token, the forthcoming law

on regulating fintech in Egypt should include

articles that address risks of market concentration

and allow fair-and-transparent access to key

infrastructure.

The Bali Fintech Agenda also outlined the importance

of adapting the regulatory framework

to match the state-of-the-art technologies, ensuring

inciting innovation, making use of modern

technologies, and protecting the financial

systems from the potential risks of exploiting

fintech for money laundering and funding terrorists,

in addition to the risks related to cyberattacks,

data protection, cybersecurity threats,

operational risks, market concentration risks,

and consumer protection. Thus, formulating

the legal frameworks should be in line with national

circumstances, and these frameworks shall

be reviewed and updated permanently to keep

pace with the technological changes and fintech

developments.

Fintech challenges

Based on global experiences, a number of

challenges affecting the safety and stability of the

fintech systems can be identified, and a number

of proposed mechanisms can be developed to

strengthen confidence in financial services and

achieve the goals of promoting investment.

Among these challenges is the risk that limited

players control the provision of financial services

due to their large databases and artificial intelligence

based software. In China, for example,

while the technological growth has been very

successful, allowing millions of new entrants to

benefit from available financial products, it has

also led to two companies controlling more than

90 percent of the mobile payments, which has

been described by the IMF as a “unique and

systemic challenge to financial stability and efficiency”.

Hence, care must be taken not to allow

specific players to monopolize the provision

of financial services. Controls on the use of data

shall be imposed as well.

Another challenge that fintech imposed was

the death of one of the founders of the cryptocurrency

trading platforms and the consequent

disappearance of huge sums of money. However,

in the case of Egypt, the CBE warned against

trading of cryptocurrencies. So, for legal consistency,

establishing platforms for trading cryptocurrencies

hasn’t been allowed.

On the other side, there is the impact of fintech

on central banks. While fintech can help

central banks improve their services, through

issuing digital currencies, expanding access to

payment services, and increasing flexibility of

financial services, it could, however, impede the

application of the monetary policy and redefine

the role of central banks as lending institutions

to be “a render of last resort”, a situation that

requires considering coordination between the

CBE and the Financial Regulatory Authority

roles in this regard.

Peer-to-peer lending offers another challenge

in fintech. In this type of social lending, a person

gets a loan from another individual and an

interest rate is identified. The higher the interest

rate is, the higher the risk. These debts are

then bundled into packages and sold to a third

party, usually a major investor. However, some

formal adjustments to those packages may be

made in accordance with the buyer’s criteria, a

sort of a change of realities. This has in fact happened

with Lending Club, one of the major U.S.

fintech companies, which led to the resignation

of its CEO. However, the regulatory regimes of

peer-to-peer lending differs from one country to

another. For example, in Germany and France,

peer-to-peer lending comes under the supervisory

authority just like banks. In the United States,

it is regarded in the same way as securities issuance

while Japan prohibits it basically.

In sum, with the many benefits and challenges

of fintech, the Egyptian government has realized

the importance of developing a legal framework

to regulate the uses of fintech in non-banking

financial activities. However, before issuing the

final draft of the law, it is necessary that all the

requirements needed to strengthen confidence

in the financial system and protect the economy

from potential risks be considered, while providing

opportunities to promote innovation and

benefit from modern technologies.

www.BusinessTodayEgypt.com July-August 2021

39


Spotlight

The Domino Effect: Global

Chip Shortage Crisis Hits

the Egyptian Market

By Basant Gamal

Since the outbreak of the COVID-19

pandemic in late 2019, the world has

been faced with unprecedented economic

challenges that went beyond

the macroeconomic aspects, i.e. contraction

of global gross domestic product (GDP) and

reduction of global trade, to hit the smallest

units of the economic system.

The pandemic has posed a significant blow

to the chips and semiconductors (which are essential

components of technology across industries/

in technology products) industry.

According to an analysis by Goldman Sachs,

up to 169 industries are likely to be hit by chips

and semiconductors’ shortage, most notably

the automotive and electronics industries, noting

that industries that spend more than one

percent of their GDP on semiconductors will

be directly or indirectly impacted by the crisis.

While Egypt isn’t an exporter of chips, it isn’t

immune to the negative impacts of the crisis.

Causes of global shortage of chips and semiconductors

Several factors converged to exacerbate the

chips shortage crisis. Chief among these fac-

40 July-August 2021

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Spotlight

Figure 1: Passenger vehicles sales in selected countries

Source: Knoema, passenger vehicles sales

tors was the outbreak of the Coronavirus which

placed considerable pressures on the global

supply chains and resulted in a decline in supply

due to the closure of a large number of chips

factories despite the high demand. Causes of

this crisis could be summarized as below:

Inaccurate expectations

The precautionary measures taken to contain

the pandemic resulted in a temporary shutdown

of car factories. Amid expectations of a

progressive decline in demand and the continued

closure of production lines in 2020, most

car companies worldwide had cancelled their

purchase orders of chips.

However, reality indicated the contrary. The

automotive industry had been revitalized faster

than expected and sales had flourished in

the last quarter of 2020 and the early months

of 2021. For this, automotive manufacturers

tried to speed up to reach high production levels

again but chips factories could not respond

quickly enough to the high demand due to a

heavy delivery schedule. The following graph

shows sales and production of cars in selected

countries over five years.

As can be seen from figure 1, car

sales showed an annual decline in all

the selected countries during 2020 by

6.03 percent in china, 11.42 percent

in Japan, 27.92 percent in the United

States, 19.2 percent in Germany, and

17.85 percent in India. This decline

came despite the recovery the industry

made end of 2020 due to the inability to

offset the accumulative losses suffered

the whole year. However, the recovery

trend is expected to continue during

2021.

As illustrated in figure 2, the total

global car sales of passenger and commercial

vehicles decreased from 90.42

million units in 2019 to 77.97 million units in

2020. As for the worldwide automobile production,

the below figure shows worldwide production

from 2002 to 2020.

Figure 3 reveals a decline in global car production

during 2020, going down from 92 million

units in 2019 to 78 million units, recording

a year-over-year decline of 15.2 percent. This

decline can be attributed to the aforementioned

reasons.

High demand on electronics

Last year, most countries enforced full lockdown

and declared curfew for longer periods

aiming at containment of the Coronavirus.

This translated into prolonged periods of time

spent at homes which resulted in a heavy and

remarkable demand on electronics either for

entertainment, communication, work, or distant

learning.

Smartphone shipments are anticipated to

grow by 13.9 percent in the first quarter of 2021

and 5.5 percent for the entire year. The following

figure presents data for the top five mobile

phones companies during the fourth quarter of

2020:

Figure 2: Global car sales

Source: International Organization of Motor Vehicle

Manufacturers, Global sales statistics

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41


Spotlight

Figure 3: Worldwide annual car production

Source: Statista, Estimated worldwide automobile production

Figure 4: Top five global smartphone shipments

Source: IDC Quarterly Mobile Phone Tracker

As is depicted in figure 4, mobile phone shipments

for the top five companies have seen an

increase during the fourth quarter of 2020, except

for Huawei which is possibly due to the

US sanctions imposed on it to limit its activities

overseas.

US sanctions on China

Before COVID-19, the chip and semiconductor

industry encountered pressure due to

the trade war between the United States and

China, which primarily affected Huawei. To reduce

the impact of sanctions, Huawei started

storing chips and Taiwan’s TSMC was its exclusive

supplier, which placed pressure on the

market.

Insufficient supply

The chip market is controlled by a small

number of market players. The global shortage

of chips has drawn attention to Taiwan’s mammoth

role in manufacturing semiconductors,

as it captures a larger share of the market as

shown in the figure below:

As illustrated by figure 5, Taiwan has got the

lion’s share of the chips and semiconductors

market, particularly TSMC whose market share

reached 54 percent till early 2021.

In addition to all the previous reasons, a chip

plant owned to the Japanese Renesas Electronics

which supplies the market with about 30

percent of the microcontroller units used in

cars was exposed to a fire last March,

and it will will take about 100 days at

least to restore full capacity.

Dire consequences

The chip shortage crisis has many

negative repercussions on several industries,

some of which have already

begun to emerge and others are likely

to emerge in the coming period. Below, we detail

these implications.

Decline of production in automotive and electronics

sectors

According to IHS Market, the global chip

shortage crisis could affect the production of

about 1.3 million cars globally during the first

quarter of 2021. The crisis forced many global

automotive manufacturers to reduce production

and accordingly adjust schedules and action

plans.

In response to this crisis, a large number of

global automotive manufacturers including

Volkswagen, General Motors, Ford, Toyota,

Daimler, and BMW, among others, have announced

procedures to overcome the pandemic

reducing production, shutting down

factories, and temporarily laying off staff.

The automotive industry, however, wasn’t

the only affected sector. The crisis also hit

technology companies after seeing an improvement

last year. For example, Apple delayed the

release of iPhone 12 for two months due to

the chip shortage. Samsung also warned that

its operations might be affected by the chips

crisis, thus confirming the transfer of the crisis

to the technology sector.

In a related context, Gigaset, a manufacturer

of smart phones and smart home appliances,

indicated that about 80 percent of its production

has been affected by the lack of electronic

chips. Moreover, AVM stated that suppliers

canceled chips’ purchase orders shortly before

the scheduled time.

Rising prices

With shortage of supply in chip-dependent

industries due to the decrease in total production

and recovery of demand in the automotive

and smart devices sectors, prices of products in

these two sectors are expected to rise in the upcoming

period. Xiaomi’s CEO pointed out to

that stating, “chip shortage has increased costs

which may pass on to consumers.”

Figure 6 show that the average price of smartphones

is constantly increasing, with expecta-

42 July-August 2021

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Spotlight

Figure 3: Worldwide annual car production

tions of it reaching $317 by the end of 2021, a

year-over-year increase of 2.5 percent.

Figure 6: Smartphones average selling price

Chip crisis and the Egyptian market

Egypt ranks high on the list of the automotive

assembly industry in the Middle East and

North Africa region. Until 2018, Egypt owned

about 12 automotive assembly plants, with local

components accounting for only 17 percent

of the final product. The government aims to

increase this percentage to 46 percent over the

coming years.

Accordingly, the automotive sector in Egypt

was naturally expected to be affected by the

global chip shortage crisis due to its reliance

on external components. In mid-April, Ghabbour

Auto announced its inability to deliver

the number of cars expected of it under the

initiative of “converting and replacing cars to

natural gas” launched by the Ministry of Finance

due to Hyundai’s shortage of electronic

control units.

The Egyptian automotive industry also suffered

shortage of production inputs following

the discontinuation of factories manufacturing

electronic control units due to COVID. In

this respect, Khaled Saad, Secretary-General

of the Egyptian Automobile Manufacturers’

Association stated that vehicle manufactures

face enormous difficulties during the current

period due to lack of inputs, anticipating low

productivity levels of local companies. Saad

pointed out that companies participating in

the initiative of “converting and replacing cars

to natural gas” may experience delays in delivery

or may even be not able to deliver if control

units remain unavailable.

A predictable corollary of this crisis is the

rise of prices of different car models, with an

increase of about EGP 15,000 since the beginning

of January. Besides the chip crisis, the deferment

of imports of components of secondhand

vehicles and the rise of cost of shipping

vehicles by sea by 300 percent will have a bearing

on the productivity of assembly plants in

Egypt and will cause shortage in some car models

in the upcoming period.

In sum, it all started with the coronavirus

pandemic which affected the demand and supply

in the chip market, with supply going down

due to the closure of producing companies for

prolonged periods of time and demand going

up due to the fast recovery of the automotive

industry and the growing demand on electronics,

all of which has had an impact on the Egyptian

market.

Source: Stat Investor, Average selling

price of smartphones worldwide

www.BusinessTodayEgypt.com July-August 2021

43


Face of Business

Mohamed El-Sallab

Chairman of Mostafa

El-Sallab Group

On the Egyptian

Economy and

Industry Outlook

Few businesses are as successful as El-Sallab Group. Mohammed

El-Sallab speaks about the legacy, and why he’s bullish on Egypt.

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Face of Business

Photography by Hossam Youssef

Location: Grand Nile Tower

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Firstly: Macroeconomics and Industry

What was the state of the Egyptian economy

prior to the economic reform program

of 2016?

In 2014, Egypt’s economy was unstable after

two revolutions, and there was a general state of

confusion following the upheaval, and therefore

this created an imperative need to implement

the economic reform program in 2016, which

included measures such as liberalizing the exchange

rate and increasing interest rates.

The weak economic situation created the

need for an ambitious plan to rebuild the state

and the economy, and it proved positive.

Four years after the launch of the economic reform

program, what are the main advantages and

disadvantages of the first phase of the program?

After 4 years, it can be said that Egypt has

strongly succeeded in implementing an economic

reform program, and this is positive for

the country in the long term.

I see the economic reform process’s resounding

success; the value of the Egyptian pound is

improving, and the economy has been able to

absorb the coronavirus crisis’s negative effects

given the economy’s capacity to withstand the

shocks.

However, one of the negative aspects of this

stage is that investments are directed to banks

due to high interest rates, and this of course negatively

affects the industry.

At the beginning of 2020, the Egyptian state

took a number of measures to localize the industry

and increase the proportion of the local

component [in goods], and these measures were

disrupted due to the Covid-19 crisis, but the state

is still proceeding with a plan to reform the industry,

because history has proven that there is

no alternative to high-tech industry in supporting

sustainable economic growth. Today, the

plan is to reduce interest so that factories can

continue, and we have seen soft financing initiatives

for factories at an interest rate of 8%. Other

initiatives included financing small and medium

enterprises at an interest rate of 5%, the initiative

to settle defaulters’ debt, and other initiatives

primarily aiming to help the industrial sector

return to growth.

How do you evaluate the second phase of the

macroeconomic program, and in your opinion,

what are the most important requirements for

reforming the industrial sector?

The economic reform program’s second phase

is completely different, as it is primarily based on

higher-priority sectors: industry, technology, and

agriculture. These sectors are also the most capable

of driving economic growth and achieving

sustainable development, by boosting exports,

supporting food security, reducing imports, and

attracting foreign investment.

There is also great interest in technical education,

with the state focusing on establishing

technical schools attached to major factories, directing

interest in small and medium industries;

this is one of the main reasons behind economic

growth and development in countries such as

Germany, China, Korea, Malaysia, Indonesia

and Vietnam. The state is working on this aspect

and provides factories, lands, facilities, logistical,

material and marketing support, and holds exhibitions

to help market these small factories.

The automation of the state’s financial system

and the digital transformation of taxes and customs

give the business community transparency

and reassurance. Additionally, one of the most

important advantages of this economic reform

stage is a shift whereby the state increasingly relies

on the private sector.

The industrial sector has borne the brunt of the

rise in energy prices, according to industry leaders.

How can you balance support for industry

while at the same time not adding new burdens

on the state budget?

It is necessary to separate energy prices from

the industry, or industry support amongst the

relevant ministries. The Ministries of Electricity

and Petroleum are the two ministries that

deal the most closely with industry and have a

problem with the industry, especially after the

price hike. The two ministries alone should not

foot the bill. The government, represented by

the Ministry of Finance, collects value-added,

income tax, and all kinds of taxes from factories.

It would be better if the Ministry of Finance

supports these industries by paying the

required support difference to the Ministries

of Petroleum and Electricity to maintain the

price. Also, local energy prices must reach the

level of international prices because our goal is

to export, and without that we wouldn’t be able

to compete; this must be done through export

and energy subsidies through the Ministry of

Finance, ensuring operational economic efficiency.

The ministries of Electricity and Petroleum

should also not deal with factories for the purpose

of profit; the industry provides job opportunities

and pays taxes, and therefore a balance

must be achieved while providing energy

at competitive prices. We need a clear energy

pricing policy, in line with the global market.

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In the same context, what are the requirements

for injecting new local and foreign investments

into the industrial sector, and what are the

sectors most in demand at the present time?

Egypt has 22 new cities under construction,

is planning to eliminate slum neighborhoods,

and has a very wide consumer market, requiring

construction, clothing, food and services, all of

which requires the localization of industries and

an increase in added value, thereby requiring the

state to have an industry map that determines

the required industries and their locations.

The state must stand by the industry and support

it in its early stages by encouraging investors

to invest in Egypt.

Egypt is an open market and the whole world

is an open market. There are landlocked countries

that do not overlook ports, but they export

three times what Egypt exports, whereas we

are a country characterized by a distinguished

geographical location and we have a great potential

to increase exports, requiring state support.

The multiplicity of taxes paid by factories

such as real estate tax, dividend tax, income tax

and value added tax, acts as a deterrent to investment.

There must be a more stable, less precarious

direction for taxation levels on factories;

the Supreme Council of Taxes is responsible for

setting up this vision and monitoring its implementation.

Furthermore, for any investor looking for

political stability and economic stability, Egypt

is also a wise choice. On the economic aspect,

there is a need for improvement on energy prices

and tax stability.

Can Egypt achieve total annual exports of $100

billion? What are the requirements to reach this

goal, what are the sectors capable of achieving it,

and what are the industries that can contribute to

this ideal target?

Egypt has a great ability to achieve this goal.

Several now-stalled factories were previously exporting;

international agreements and cost reduction

are key to achieving the goal of $100 billion

in exports. There are many industries that

can export, but their problem is the high costs; if

we are able to support exports so that the product

reaches the real cost, we will attain this goal,

open currently closed factories, and localize the

industries we need, in a way that reduces costs

and increases the ability to export. We also need

to improve collaboration with African markets.

What are the construction industry’s main challenges

in Egypt, and has the sector benefited

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International agreements and cost

reduction are key to achieving the

goal of $100 billion in national

exports.

from the high prices of raw materials such as

iron and aluminum during the recent period?

What is the impact of reconstruction projects

on the sector, and how can it support maximum

benefit?

The building materials industry faces many

challenges, just like any industry, but problems

such as energy prices, transportation and shipping

prices locally and abroad are increasing,

given that this industry is energy-intensive, and

an industry such as ceramics was not previously

included in the export subsidy program, but it

was added in the new program that came into

effect starting July 1. I expect this matter will

greatly support exports’ growth during the upcoming

period, and will contribute to Egyptian

companies’ ability to strongly participate in reconstruction

projects in Arab countries. In Libya,

Iraq, Gaza and Sudan, we will have the ability

to compete because we produce goods of high

quality and we will be able to achieve price competition

as well, which will strongly reflect on

Egyptian exports, especially building materials,

due to Arab countries’ preference for the Egyptian

product.

As for prices of raw materials, of course any

increase in raw materials will be reflected in production

costs and thus, the product price. The

industry was negatively affected by the increase

in international prices of raw materials and not

the other way around.

How has the construction upturn in Egypt affected

demand volumes of building materials,

and do you expect an increase in the prices of

building materials in the upcoming period after

the rise of some materials globally?

Of course, Egypt’s construction upturn led to

an increase in the demand for building materials,

both in new cities and national projects, but

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this demand was negatively affected during the

suspension of building licenses, especially since

construction represents a significant amount of

demand for building materials, but I expect this

demand to rebound since building permits are

back again with new requirements.

Talking about expectations of an increase or

decrease in prices is no longer as easy as it was

previously, since the price of building materials

is affected by the international prices of raw

materials that move very quickly and sometimes

with sudden movements that are difficult to anticipate,

but in the end any pricing is governed

by the rules of supply and demand.

How has the Coronavirus pandemic affected the

industrial sector, especially building materials?

Has the sector recovered from the pandemic’s

repercussions, and how can all workers be vaccinated

to ensure that production is not affected?

The industrial sector benefited from the Coronavirus

crisis, as exports increased due to other

countries halting exporting. Industries such as

medical supplies expanded, and the food sector

was one of the sectors that made the most profits

during the crisis, but what affected the building

materials sector negatively during the past period

is the suspension of building permits.

As for the vaccinations, the government is

making a great effort to vaccinate the largest

possible number of citizens within a short time

period, which are very appreciated efforts. I expect

that increased vaccination rates will contribute

to keeping the wheel of production turning,

benefiting all sectors without exception.

What industrial projects does Egypt need at the

present time, and how can Egyptian businessmen

exploit and develop public business sector

companies?

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Egypt needs to prioritize technology in all

fields, especially the industrial and high-tech industries.

Technology itself is a starting point for

any other sector. I hope that the technological

industries will witness a great renaissance that

keeps apace with Egypt’s tremendous development

in all fields, and these are great opportunities

for the private sector investment.

As for business sector companies, I see the

ministry’s tendency to involve the private sector

in development projects, which are good opportunities,

especially in companies that work in

profitable fields such as the garment industry,

spinning and weaving, and the real estate sector.

These are attractive sectors, provided that

the partnership is based on strong foundations

aimed at promoting companies and increasing

profitability, thus benefiting both parties.

El Sallab group’s legacy of excellence

Egypt is famous for its multiplicity of family

businesses. Which are the largest and most successful

of these companies, and what are the

most important challenges facing their growth

and continuity?

Egypt has many successful family businesses.

I will not mention specific names, and this exists

all over the world, such as BMW, Mercedes,

Adidas, and others. This type of company has

strong foundations for survival and continuity

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because those in charge of them always fear for

the family’s name and reputation. Family businesses

have a lifespan of more than a hundred

years, including El Sallab Group, which began

in 1912.

As for the obstacles they face, they are no different

from the obstacles and challenges generally

facing investment and the work of companies

in Egypt.

You took over from the leadership of the Mostafa

El-Sallab group at an early age, how were

you prepped to take this position? What qualities

did you inherit from your father, what were

the most prominent challenges you faced at the

beginning of your work, and what are your ambitions

for the group?

In fact, I started working with my father

at a very early age, at the age of 18, and I was

constantly trained in foreign factories, and I

worked with the group in all jobs, stores, marketing,

technology management, human resources,

sales and importing, for about 7 years

before I took any leadership positions in the

company, until I gained the necessary experience

to manage the work. I assumed the position

of Vice Chairman of the Board of Directors

in 2008 after I gained the necessary experience.

With the death of my father, I assumed the position

of Chairman of the Board of Directors, and

it was a great challenge since my brother Tarek

and I were still quite young, but we had a goal

in mind: to maintain the family name, the company’s

advancement, and ensure Sallab remains

the number one name in this field.

I have great ambitions for the group, and

of course we have plans to work in other new

fields; we also have ambitions to increase production

lines and grow the group even more.

The most important thing I learned from my

father is sincerity at work, and dealing with all

employees and workers in the company as part

of the family.

Does El Sallab Group see that the prices of its

current products reflect production costs, and

is there an intention to increase prices in the

upcoming period after demand recovers?

The group consists of Royal Factory, the

group’s industrial arm, and El Sallab Company,

the group’s commercial arm, and they complement

each other. For the factory, of course, the

cost of production was affected by the factors

you mentioned, including rising energy prices.

However, the pricing policy takes into account

all the factors of cost, production, and the market;

a cost is thereby set in proportion to the

factors of supply and demand, which determine

the price. We have no intention of increasing

prices, and this is governed by the rules of supply

and demand.

What is the volume of El Sallab Group’s export,

and how much does it represent in sales? Does

the group have export dues, and what are the

group’s proposals to increase ceramic exports

in Egypt?

El Sallab Group exports to a very large group

of European, Arab, African and Asian countries

as well as the Americas, and we were able

to open markets in all these countries despite

fierce competition due to the quality of the

product and design, distinguishably characteristic

of El Sallab Group and the Royal Factory.

We were able to strongly compete because we

have the latest machines and technology in this

field.

As for export dues, in reality the ceramic industry

in Egypt was constrained because it was

not among the industries included in the export

support program, but this matter was remedied

in the last program that began as of July

1, and the ceramic industry was included in the

export support program, which will bring great

benefit to Egypt during the upcoming period,

especially due to the export opportunities represented

in reconstruction projects. This will

have a major role for Egypt’s building materials

sector, given that it is one of the strongest

countries in the building materials industry and

there is global popularity in this field.

What are the most profitable sectors in Egypt,

and what is a prospective project you wish to

establish?

There are many profitable sectors in Egypt,

although any field will witness a gain and a loss,

but Egypt has more than one hundred million

citizens, a wide consumption market, and any

project can make a profit if it is studied well, but

what any sector needs to achieve the required

profitability is to overcome the investment obstacles

it faces.

The project I most wish to create, which is

my dream, is to establish a technical school in

the name of Mostafa El Sallab to teach Egyptian

workers and train them in the technical skills

needed to succeed in the labor market. It would

be particularly beneficial for the ceramics sector.

Who is your role model among businessmen in

Egypt and outside Egypt?

Mostafa El Sallab [my father].

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In-Depth

Meeting The

Challenge

How the ICT sector took

a global pandemic in stride.

By Christine Salzmann

What will future generations say defined

the COVID-19 pandemic? Most

likely, it will go down in history as

one of the modern world’s largest

health and economic crises, as it should, but also as

a driver for digitalization and innovation.

Throughout history, crises provided stimulating

environments for change, discovery, and accelerated

development compared to stable time periods,

and the ongoing COVID-19 pandemic is no different.

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OBG Covid-19 Recovery Roadmap Graph source: IMF

World Economic Outlook Database, April 2021

Technology adoption on all sides – from

governmental institutions to businesses and its

consumers – has become one of the pandemic’s

most defining features, with the global information

and communications technology (ICT) industry

taking the lead on solving each challenge

the pandemic threw at the world.

Highlighting Egypt’s economic resilience and

pandemic recovery, global research company

Oxford Business Group’s (OBG) latest report

on Egypt sheds light on how the government

mobilized the ICT sector through various initiatives

and programs in a bid to reduce the pandemic’s

effects on the country’s economy.

The State of ICT in Egypt

Egypt is home to a robust and innovative ICT

sector, with growth outpacing broader economic

expansion, writes OBG, adding that the government

has long prioritized ICT development.

Pre-pandemic, the ICT sector’s growth outperformed

the country’s broader economic

expansion. The sector was at “one of the fastest

rates of expansion across all economic sectors”,

growing by 16% in the fiscal year (FY)

2018/2019, reaching LE 93 billion with overall

GDP growth of 5.6%.

It was previously forecasted to continue its upward

trajectory, with the government projecting

growth of 15.2% in FY 2019/2020 yielding an

estimated LE 108 billion in revenue, as well as

comprising 4.4% of GDP.

The Oxford Business Group writes that the

“industry’s strong performance stands in contrast

to that of many other sectors”, projecting

16% growth in FY 2020/2021.

Egypt’s economic reforms and efforts to fortify

and diversify the economy were also central

to the pandemic’s success, providing Egypt with

a more secure economic base in the face of external

shocks and strengthening its ability to respond

to the pandemic.

Aiming to keep apace with digitalization and

meet its heightened need during the pandemic,

Egypt’s Ministry of Communications and Information

Technology (MCIT) launched Digital

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Graph source: IMF

Egypt in mid-2020, a comprehensive plan to

shift towards a more digital society and encourage

innovation.

“The [Digital Egypt] project digitalizes all government

activities and services. As of July 2021,

75 public services were digitalized and are being

offered nationwide, and we plan to increase this

to 170 services by the end of 2021,” Minister of

Communications and Information Technology

(MCIT), Amr Talaat, told OBG.

Through the program, the MCIT worked towards

transforming the country with targeted

investments, capacity-building and training programs,

as well as the adoption of e-government

services and infrastructure improvements, the

report read.

“The pandemic has been an unprecedented

opportunity to encourage the uptake of digitalized

services,” Talaat explained. “As of mid-

2021, more than 1.3 million citizens had registered

for and accessed government services

online.”

Meeting Increased Demand

Highlighting the need to expand both the

ICT infrastructure and capacity, the pandemic

saw a surge in demand for ICT products and services,

as people became ever reliant on digital

Graph source: MCIT

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In-Depth

Infographic source: We are Social; Hootsuite

tools and services.

“People went fully digital in most aspects of

their lives,” Talaat told OBG in September 2020.

“The pandemic caused an immediate surge in

internet usage patterns, both in terms of users

and peak hours.”

According to a report from the National

Telecom Regulatory Authority, in mid-March

and mid-April alone, there was a 40% year-onyear

increase in online traffic.

Peak hours for internet services and online

applications doubled to 15 hours per day, writes

OBG, as web browsing skyrocketed by 131%,

home internet usage climbed by 87%, and mobile

internet activity rose by 18%. ADSL subscriptions

also saw a big jump, as the number

of subscriptions increased by 6.9 million in June

2019 to 8 million in June 2020.

According to the International Data Corporation,

the number of smartphones shipped to

Egypt increased by 16.5% in 2019 to 14.9 million

units, and the OBG report attributes this to

the young generation’s willingness to spend and

buy new consumer goods.

In turn, the uptick in smartphone purchases

boosted mobile internet use, with Egypt witnessing

a 24% rise in the number of mobile internet

users to 42.3 million in January 2020, according

to the MCIT.

To meet amplified demand, the MCIT’s Information

Technology Industry Development

Agency (ITIDA) disbursed over LE61 million in

export subsidies to 106 ICT companies between

mid-April and July 2020 through the ExportIT

program, the report reads.

ICT exports, as well as business process outsourcing

(BPO) and information technology

outsourcing (ITO) services, are an important

source for the country’s revenue, with market

research firm IDC expecting returns to grow

from $3.3 billion in 2017 to $4.7 billion in 2020,

according to OBG.

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In addition to subsidies, the MCIT increased

the capacity of the country’s international gateways

by over 50%, provided hospital staff access

to the internet and data at no charge, and created

digital platforms for public school students

to during the online learning period.

With increased traffic came an intensified

need for an infrastructure capable to accommodating

demand. The MCIT’s previous investment

in prioritizing strengthening ICT infrastructure,

worth $1.9 billion, supported the

country’s ability to the bulk of this additional

demand.

Digitalizing the State

Digital transformation was the star buzzword

Infographic source: ITIDA

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In-Depth

Infographic source: Oxford University Covid-19 Government Response Tracker

Graph source: CBE

of 2020, tackling the pandemic’s challenges

with triumphant results.

Aligning with Egypt’s digital transformation

strategy, which aimed to meet Egypt’s 2030 Vision

goals, various ministries signed new cooperation

protocols with the Ministry of Communications

and Information Technology to digitize

all state-run services.

To meet their needs, ITIDA launched the Our

Opportunity is Digital platform in 2020, writes

OBG, explaining the platform as a place where

“national digital transformation projects are offered

specifically to small and medium-sized enterprises

for either direct implementation or in

partnership with large local and multinational

companies.”

The move towards a more digital Egypt is facilitated

by the government’s requirements for

certain transactions conducted through digital

payments, such as customs duties and taxes,

which has encouraged the private sector to of-

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Infographic source: MCIT

fer similar solutions enabling the transition, the

OBG explained.

With the remote working trends, digital payments

and e-commerce are expected to continue,

and there is plenty of opportunity for public-private

collaboration to strengthen digital

infrastructure, OBG writes further into the report,

with further financial inclusion expected

to be a priority into the future.

“Egypt is working with global leaders in this

space. The Ministry of Public Enterprise Sector

announced in November 2019 that Microsoft

and software solutions provider SAP won a

tender to apply the digital transformation of 60

state-owned firms and holding companies. The

tender, at the time being the largest of its kind

in the Middle East, would facilitate the standardization

and automation of operations to

improve efficiency.

In May of that year, the MCIT and the General

Health Care Authority announced they would

create a framework to facilitate the digitalization

of the authority’s operations in order to

streamline health services and make care more

accessible,” the report also read.

Additionally, OBG mentions the government’s

work towards strengthening cybersecurity

at the national level to protect data, highlight-

Infographic source: ITIDA

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In-Depth

Graph source: Gartner

ing the National Cybersecurity Strategy 2018-21,

and Egypt’s recent ranking as the fourth out of

22 Arab states and 23rd out of 175 countries in

the International Telecommunication Union’s

latest Global Cybersecurity Index. Cybercrime

in Egypt rose by 190% between 2012 and 2017,

according to the Cabinet’s Information and Decision

Support Centre.

It also pointed out the 2018 anti-cybercrime

law and the Personal Data Protection Law, modeled

after the EU’s General Data Protection

Regulation (GDPR), coming into effect in July

2020.

The report stressed that “with more firms conducting

business operations online, a high level

of awareness of data security and the required

protections will be necessary for companies to

thrive in 2021 and beyond.”

The Digital Workplace on the Cloud

The COVID-19 pandemic drastically changed

how organizations work and operate, introducing

a new challenge for businesses around the

world, remote working.

As governments implemented a host of measures

aiming to curb the spread of Covid-19,

businesses were required to shift office traditions

such as face-to-face meetings and open

floor plans to virtual meetings and home office

spaces.

Playing a vital role in facilitating remote work,

the public cloud services market swiftly expanded,

quickly becoming central to the economy’s

home working transition.

OBG calls public cloud services as “core contributors

to the ICT sector’s growth” in recent

years, with a fast expanding market, stating

“Africa [is] expecting more than $15 billion in

data center investment between 2020 and 2025,

much of which will be concentrated in Egypt,

Morocco, Nigeria, Kenya and South Africa.”

Moreover, its MENA region revenues are expected

to grow by 21% in 2020 to reach $3 billion,

according to global research and advisory

company Gartner.

Companies moved their operations to reliable

cloud platforms in order to use video-conferencing

applications and other remote-work

technologies, allowing both employees and customers

to carry out daily operations and transactions

at home, the report wrote.

This allows businesses to effectively manage

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Graph source: Gartner

their resources and reduce costs without any interruption

to workflow.

For today’s workforce, the technology became

invaluable. According to an April 2020 survey by

the American Chamber of Commerce in Egypt,

over 90% of respondents had adopted infectioncontrol

procedures, and nearly all had shifted

non-essential employees to remote work, the

OBG report explained.

“Now the culture of working from home is

prevalent in Egypt, and is increasingly acceptable,”

Talaat told OBG, adding that “hopefully,

when the pandemic is over, people will not go

back to how they learned or worked before”.

“When people had to leave their offices, we

had the capacity to allow them to work from

home, and this left us with over 17% of the

outsourcing market worldwide,” Amr Mahfouz,

CEO of ITIDA, told press outlets in December

2020, adding that the government’s investment

of $1.6 billion between 2018 and 2020 to improve

internet provision facilitated the transitions

necessitated by the pandemic.

Cloud technology will also be prevalent in the

New Administrative Capital (NAC), the report

added, enabling the smart city to provide sup-

Graph source: ITIDA

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In-Depth

New Administrative Capital

New Mansoura City

Smart

Cities

New Alamein City

New Obour City

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Infographic source: Council of Ministers

port to the government ministries, diplomatic

missions, international universities, and residential

neighborhoods that it will soon host.

A continued journey towards digitalization

Like many countries, Egypt is adapting to fasting

changing needs in the continued wake of a

global pandemic, with its ICT sector serving as a

core pillar in its economic resilience and ability

to become one of the only countries to see positive

growth.

The country’s fiscal and economic reforms

in recent years put in place strong foundations

that gave it protection from periods of instability

such as the Covid-19 pandemic, with the government’s

pre-pandemic investment to strengthen

ICT infrastructure and increase internet penetration

empowering business continuity across

several sectors.

Even with the sudden and accelerated demand

for ICT services and products, the OBG’s

report reflects the state’s pre-pandemic and

on-going effort for robust economic impact

through export subsidies, its national digital

transformation program “Digital Egypt,” and so

much more to prepare it for a brighter future.

Digital payment

use in Egypt,

2019

Infographic source: We Are Social; Hootsuite

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63


BT Scene

Altibbi and Reckitt® Sign a Long-

Term Agreement to Spread Awareness

about Common Health Issues in

the Region

The leading digital health platform in MENA, Altibbi, has announced

signing a joint cooperation agreement with Reckitt,

manufacturers of many household brands. The ceremony took

place at Reckitt’s headquarters in the UAE earlier this June.

This prospective collaboration aims to provide consultation

& medical guidance regarding common health-related issues,

such as Gastroesophageal reflux disease (GERD), Sore Throat

Management, Hygienic Habits and Sexual Well-being. The

scope will also highlight the negative side-effects of strong

medications overuse, such as antibiotics and proton pump

inhibitors (PPIs), in addition to introducing healthy lifestyles.

On this occasion, Founder & CEO of Altibbi, Mr. Jalil Allabadi

declared: “We are pleased that a renowned multinational such

as Reckitt has chosen Altibbi for a long-term partnership;

building on the huge success we achieved together amidst the

global Covid-19 crisis. Through our combined efforts, we hope

to engage our customers in discussions about their health &

wellbeing, as well as serve more users in more diverse specialties;

including the range of health & hygiene products that

are Reckitt’s area of ​expertise.”

Moreover, Co-founder & COO of Altibbi, Mr. Ayman Sharaiha

elaborated: “We are proud that Altibbi is MENA’s leading

platform in providing the latest digital transformation solutions

for businesses, especially FMCGs. Altibbi has already

worked with Gaviscon; a Reckitt brand, and with experienced

physicians to spread awareness about digestive maladies. The

aforementioned online campaigns have reached more than

3 million unique users across the KSA and the UAE, during

Ramadan 2021. “He added “We have also conducted targeted

opinion surveys among doctors & mothers regarding the PifPaf

brand. We are mostly proud of managing to break inhibitions

& psychological barriers preventing users from seeking sexual

healthcare, as well provide them with easy access to critical

information. Free & virtual health consultations were made

available, thanks to Durex’s sponsorship; enabling users to receive

a reliable medical opinions, confidentially and securely.”

On Reckitt’s part, Marketing Director of Reckitt Middle East,

Mr. Imran Yousuf stated: “At Reckitt, we want to use the power

of our brands to protect, heal, and nurture individuals, families,

and communities to live cleaner and healthier lives through our

products and initiatives. Our brands like Dettol, Strepsils, Gaviscon,

and Durex have a clear purpose and role to play in society

and with a platform like Altibbi, we can educate consumers

better on the immediate line of action for prevention and treatment

when it comes to common health concerns. We have a

commitment to invest & support the digital transformation e.g.

telemedicine in the region, and we are glad to be a founder partner

with Altibbi to help people in the Arab world”

Through applying the latest communication technology innovations,

Altibbi platform strives to provide distinguished

telemedicine consultations in all medical specialties; especially

those that affect common health concerns, treatment,

and prevention methods. Altibbi’s telemedicine services

also cover cases where paying a visit to the doctor’s office is

not required, as well as some other cases of sensitive and

a highly-private nature. The offered services take several

optional forms; be it direct contact with specialists via phone

calls, video chats, or text. Users also get to review on-site

articles & webisodes; all at their convenience and at reasonable

prices.

Danone and FAO collaborate to improve nutrition and agricultural practices in Egypt

Danone signed a partnership with The UN-Food

and Agriculture Organization (FAO) aiming at improving

nutrition, agriculture practices and food safety

across Egypt for more sustainable food systems.

The collaboration involved exchanging the most

recent information on developing food safety problems

as well as sharing data on food consumption

and nutritional intakes in order to enhance awareness

and encourage the adoption of better eating habits in

Egypt as a pilot nation.

Furthermore, it included exchanging information

about food systems and nutrition security through

the FAO’s provision of e-learning courses and digital

certification to Danone employees; and promoting

compliance with the Sustainable Development Goals

(SDGs) and responsible corporate behavior in global

agricultural supply chains.

“The collaboration will reinforce the company’s

goal to promote health through food to as many people

as possible through its products,” Mr. Haitham

Sadek, General Manager and Managing Director at

Danone Egypt. “We have a clear set of long-term

objectives that contribute to the United Nations’ 2030

SDGs and inspired by our ‘One Planet. One Health’ vision.

Through these goals, we pledge to, among other

things, impacting Egyptian’s health, laying the groundwork

for healthy generations,” he added.

The UN-FAO Agency and Danone recognize that

sustainable food and farming practices need to be

strengthened, and people need to have access to

more diversified and healthier nutritious meals. “This

partnership will assist in promoting efforts to enhance

food security and nutrition as well as improve

the sustainability of food systems,” FAO Director-

General Qu Dongyu emphasized.

With a plant in Obour city and a world-class dairy

plant in Nubariya city, Danone Egypt, a subsidiary

of Danone company, has many positive contributions

to the Egyptian society that support healthier

lifestyles.

64 July-August 2021

www.BusinessTodayEgypt.com


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Bayer Middle East supports German Red

Cross on a COVID-19 humanitarian aid initiative

in Lebanon

Bayer Middle East announced its support to the German Red Cross providing

humanitarian aid together with the Lebanese Red Cross for vulnerable

families through public health services in Lebanon in the context of COVID-19.

The partnered initiative provides financial aid via the German Red Cross to the

health program of the Lebanese Red Cross, which supports communities in

need of health services and resources. To achieve this, Bayer Middle East will

support the German Red Cross program funded by the Federal Foreign Office

of Germany with a donation of EUR 25,000.

In addition to the economic crisis and civil unrest, Lebanon is also affected

by the COVID-19 pandemic. The humanitarian project was crafted to support

the community in Lebanon through health services to help ease the COVID-19

pandemic. In 2020 only, the project benefitted 155,000 people directly and

650,000 people indirectly and now aims to target around 850,000 people of

the most vulnerable communities in need.

The project tries to capture the complexity of context and existing situation

with a multi-sectoral support approach to the Lebanese Red Cross. Most of

the targeted groups will be aided with health-related relief, basic assistance,

and resources, such as COVID-19 awareness sessions, emergency medical

services, food parcels, hygiene kits, recreational kits, disinfection material

for families, training of Lebanese Red Cross volunteers, and cash assistance

given to the vulnerable Syrian refugee communities and Lebanese families in

need.

Samer Al Faqih, Managing Director Bayer Levant &Commercial Area Head,

Jordan & Lebanon stated, “Bayer Middle East is honored to play a role in supporting

this public health initiative and helping the devastated communities

in Lebanon. We are grateful to have the opportunity to assist an organization

such as the German Red Cross, responding to the critical health needs to

achieve a shared vision of improving public health. At Bayer, we believe in

our vision “Health for all, Hunger for none”. This essential initiative will help

us realize the heart of our promise through increasing access to health and

supporting awareness.”

Sami Joost, Head of Communications, Public Affairs, Science & Sustainability

(PASS) – Bayer Middle East, added, “We are particularly proud to have

been given the chance to participate in this public health initiative, which

helps support a much-needed program with resources that aid the underserved

people of Lebanon by continuing the important work being executed

on-ground. At Bayer, we are always keen to fulfill our role as a diligent corporate

citizen, that partakes in regional cooperation that is integral during

this pandemic, particularly in light of the ongoing socioeconomic challenges

in Lebanon.”

Youtube Kids: Summer on

your terms and theirs

Top 4 Parental Controls:

With the summer season officially in full swing,

many parents wonder how they can tailor their

children’s viewing experience on YouTube Kids,

which launched in MENA in April this year. YouTube

Kids is an app built with families in mind, offering a

range of parental controls to help parents customize

their children’s viewing experience based on

their needs. The app offers a range of content for

children under the age of 13 along with parental

controls to customize their children’s experience.

Here are four of YouTube Kids’ most helpful features:

•Hand-pick content

Parents can choose to select which videos,

channels or collections they want their children

to watch on YouTube Kids. You can change the

settings by visiting settings, selecting the child’s

profile and then selecting approved content only.

You’ll then see a range of channels, collections and

videos for you to choose from.

•Search Off

If you would like to restrict your child’s experience

to a more limited set of content, you can turn

off Search using the parental settings. With Search

off, your child can’t search for videos, and your

child is limited to videos from a set of channels that

have been verified by YouTube Kids.

•Block content

You can customize content you see in the You-

Tube Kids app by signing into the app and blocking

videos or channels you don’t want your child to

watch.When you block a video or channel, you will

no longer see that video in the YouTube Kids apps

when you are signed in. You can always clear your

blocked videos and channels from Settings if you

change your mind. Please note that when you block

a specific video, it may still be available in the app

if it has also been uploaded by a different channel.

•Time’s Up! Set a timer

Let us be the bad cop. Our built-in timer lets parents

limit screen time by telling kids when it’s time

to stop watching. The timer will display a friendly

“Time’s up” alert and stop the app when the session

is over. Tap the lock icon and from there, select

“timer” and use the slide bar to set a limit.

www.BusinessTodayEgypt.com July-August 2021

65


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Capiter eyes $1 bln in revenue by 2023

Capiter, a B2B marketplace that brings together FMCGs, wholesalers,

and merchants on one platform, announced its plans to

achieve total revenues of USD 1 billion by 2023. This comes as part

of the company’s ambitious strategy to increase its business tenfold

capitalizing on the remarkable results the company achieved in

2020 despite the COVID-19 pandemic.

By bringing together FMCGs, wholesalers, and merchants,

Capiter introduces a new concept to the Egyptian retail market

through one platform with three different applications. These applications

provide several features that help merchants to gain

insights into the FMCG market, allowing them to develop their

projects and boost their work output. With cutting-edge technology

and machine-learning algorithms, Capiter aims to digitalize Egypt’s

conventional commerce to enhance the efficiency of the whole supply

chain by delivering a fast, high-quality, and user-friendly service.

“We were driven by an ambitious vision to serve a broad segment

of the Egyptian market, which is the FMCG as one of Egypt’s

most important sectors responsible for creating more jobs in

the local market,” said Mahmoud Nouh, CEO of Capiter. “This has

helped us create hundreds of job opportunities for youth across

different sectors. At Capiter, we are always keen to support Egypt’s

labor market by bringing the best talents from across the globe

while giving the chance for young talents and fresh graduates. We

aim to capitalize on the enormous growth the e-commerce sector

has achieved as Egypt takes steady strides towards digital transformation

across all fields,” he added.

Capiter currently provides its services in Cairo and Giza with aspiring

plans to expand geographically in Egypt and cover additional

cities and governorates in addition to increasing the number of

items offered through the platform to more than 30,000 products

by 2023.

“Since we launched our operations last year, we have successfully

expanded our customer network through numerous partnerships

with various companies and government entities allowing

us to serve thousands of merchants and complete millions of

transactions,” said Ahmed Nouh, Chief Operating Officer at Capiter.

“This achievement can be mainly attributed to our unique platform

that offers fast, high-quality, and user-friendly services at the best

prices for all elements of the supply chain through a well-trained

team of more than 800 employees,” he added.

Capiter strives to provide promotional services for all items on

display by highlighting the top-selling products to give consumers

insights into the quality of products they are purchasing. By providing

studies and information on market demands from merchants

and FMCGs perspective, Capiter plans to provide a holistic view of

the market in terms of opportunities and challenges addressing

some of the merchants’ problems such as pricing variance, inadequate

payment terms, poor demand on a number of products and

other factors that negatively affect the merchants. The platform enables

online purchasing, applying for finance, provides a diversified

portfolio of products in addition to technical support for merchants.

It is worth mentioning that the demand for digital payment services

has increased dramatically as a result of the COVID-19 pandemic.

As a result, e-commerce sales in Egypt jumped by 80% and

15% of Egyptian businesses reported a surge in their online sales

compared to pre-pandemic levels. According to a recent report by

the MCIT, the ICT industry was the fastest growing in Egypt during

the fiscal year 2019-2020, with a growth rate of 15.2%, valued at

EGP 108 billion compared to the previous year, and contributing

4.4% to the country’s GDP.

Ramses Hilton Won the “Spirit of Hilton Award”

We are delighted to announce that Ramses Hilton has

won the “Spirit of Hilton Award” during the Global Week of

Engagement 2021 in recognition of the Hotel Commercial

Team continued commitment in making Ramses Hilton

one of the leading hotel in the Hospitality Industry.

During the week the Hotel Commercial Team has

planned lots of activities and initiatives from intensive

sales calls, clients’ meetings to Hotel orientations for the

hotel top accounts to energize and inspire hotel clients to

rise to the possibilities of travel again and to welcome our

customers back and finally make new memories at our

Hilton properties around the world.

The week was ended by a community activity, where

the Hotel General Manager Soha El Torgoman jointly with

the commercial team has paid a visit to “ESMA” charity organization

for animals’ shelter and spend the day feeding,

playing and taking care of the animals.

66 July-August 2021

www.BusinessTodayEgypt.com


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Amazon to Launch Amazon.eg Later This Year

Today, Amazon announced that it will be launching Amazon.eg

in Egypt later this year, giving local businesses the opportunity to

reach more customers across the country. In preparation for the

new site, Amazon has announced that Amazon Seller Central, the

company’s seller management tool, is now open for registration

in Egypt via sell.amazon.eg, where they can set up their accounts.

Selling partners already selling on Souq.com, an Amazon company,

can now access Amazon Seller Central. The company is

inviting them to experience the new features of the seller tool and

validate their account information to begin selling on Amazon.eg

as soon as the site is launched. Local businesses ready to begin

selling online with Amazon for the first time can also register their

accounts via sell.amazon.eg.

“The introduction of Amazon Seller Central in Egypt is a key

milestone in our journey to continue supporting local Egyptian

businesses of all sizes, delivering greater opportunities to help

them grow and connect with millions of customers,” said Omar

Elsahy, the general manager of Amazon and Souq.com in Egypt.

“With a wealth of great retailers, sellers, brands, and handicrafts,

we are excited to be working hand-in-hand with the industrial

sector in Egypt to continue serving customers across the country.

Their success is our success, as we remain committed to providing

customers with a great shopping experience supported by what

they tell us they value the most—low prices and vast selection,

paired with fast delivery.”

Amazon’s business model is built around providing customers

with more selection, which means the company champions and

empowers third-party sellers. Today, small and medium-sized

enterprises account for more than 50% of everything on Amazon’s

online stores globally. To fuel the success of selling partners on

Amazon, the company offers a range of tools and programs to

help them grow their business like never before. Among many new

possibilities, they can create campaigns to drive discoverability for

their products and run promotions in the form of coupons any time

of the year. Additionally, sellers can choose from various easy and

stress-free fulfillment strategies when shipping orders to customers,

including Fulfillment by Amazon (FBA), whereby they send

their products to Amazon’s fulfilment center and let Amazon take

care of the rest.

Elsahy said: “The largest household brands, as well as emerging

ones, all sell on Amazon globally, and we’re excited to bring this

experience to the thousands of diverse sellers in Egypt in preparation

of the launch of Amazon.eg.” He continued “Amazon already

has a wide fulfillment network across Egypt and, with FBA, sellers

are now able to store their products in Amazon’s fulfillment centers

for faster customer shipping at the time of the launch of Amazon.

eg.”

Amazon has been operating in Egypt since 2017 through Souq.

com, an Amazon company, and it continues to deliver a great

experience to customers and selling partners in Egypt. Amazon’s

commitment to serving customers in Egypt is reflected in its robust

local operations, which have continued to develop since the

acquisition. Amazon operates a widespread local logistics and operations

network across Egypt, including its main fulfilment center

supported by 15 delivery stations across the country. Amazon also

has established corporate and customer services offices, and a

total local workforce of over 3,000 across corporate, customer service,

and operations in Egypt.

To learn more about selling on Amazon in Egypt, visit sell.amazon.eg.

www.BusinessTodayEgypt.com July-August 2021

67


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Sir Geoffrey Adams steps down as Britain’s Ambassador to Egypt

The British Egyptian Business Association held an event to bid

farewell to Sir Geoffrey Adams, British Ambassador to Egypt. It

was attended by HE Dr. Mohamed Maait, Minister of Finance, HE

Eng. Yehia Zaki, Chairman, Suez Canal Economic Zone, Dr. Ahmed

Kamaly, Deputy Minister of Planning and Economic Development,

and Ambassador Hazem Khairat.

Sir Geoffrey Adams has officially announced that he will leave

his position in August 2021, after serving as British Ambassador,

since September 2018. Sir Geoffrey began his diplomatic career in

1979 and served as the British Ambassador to the Netherlands,

as British Ambassador to Iran, and as the UK Permanent Representative

to the Organization for the Prohibition of Chemical

Weapons (OPCW) prior to his assignment to Egypt.

The event featured welcoming remarks from Khaled Nosseir,

BEBA Chairman, followed by a speech from Sir Geoffrey. It concluded

with a recognition from Khaled Nosseir on behalf of BEBA

and a gift presented on behalf of Dr. Hala El Said, Minister of Planning

and Economic Development, by Dr. Ahmed Kamaly, Deputy

Minister of Planning and Economic Development, and Ambassador

Hazem Khairat.

In a statement, Sir Geoffrey said: “It has been a privilege to represent

Britain in Egypt for the past four years. Britain and Egypt

have a long history of strong bilateral ties and it is my honor to

have played a part in strengthening these ties during my term.”

Khaled Nosseir, Chairman of BEBA, stated in his welcoming

remarks: “It has been a pleasure working with Sir Geoffrey and

the team at the Embassy. His contribution in enhancing Egyptian-

British relations has been invaluable, both in supporting private

sector businesses as well as sectors concerned with Egypt’s

socio-economic development.”

Sir Geoffrey brought unprecedented expertise to the country

through his position as the Deputy Head of Mission in Egypt

from 1998 to 2001. His other previous posts, in a long and distinguished

career, included serving as Director General (Political)

at the FCO, Director for the Middle East and North Africa, Consul

General in Jerusalem, and Principal Private Secretary to the Secretary

of State for Foreign and Commonwealth Affairs.

Raya CX launches FutureTECH accelerator powered by Openner to scale tech startups

in the customer experience domain with investment of up to EGP 1M per startup

Raya Customer Experience (RCX), one of Raya Holding’s companies,

has announced launching its first Corporate Accelerator “Raya FutureTECH”,

powered by the venture builder, Openner.

Raya FutureTECH will power early-stage tech startups that have a minimum

viable product or a solution that addresses a problem in the customer

experience field across all industries. The accelerator’s mission relies on

Raya CX’s strategic vision to drive innovation and digital transformation of its

services and solutions to keep up with the evolving customer expectations

in digital-oriented industries via implementing CX best practices.

Raya FutureTECH has opened the call for its applications till July 31st on

its website www.rayafuturetech.com. After going through the selection process

and a three-day bootcamp, Raya FutureTECH will

announce up to 10 startups that will each receive a cash

investment of up to EGP 1M alongside hands-on support

to scale their business from Openner, the program’s

main partner, in addition to gaining access to Raya CX’s

technical capabilities, customer experience expertise,

and its wide and diverse client base.

The accelerator also provides hands-on design sprints, technology support,

tailored growth plans, and 1-1 coaching for startup founders, guided by

Openner’s expert team. In addition, Raya allocated a team to work hands-on

with participating startups to facilitate more cooperation between Raya’s

stakeholders and the founders.

“We are thrilled to announce the launch of Raya FutureTech in parallel

with Raya CX’s new vision, which aims at encouraging and enabling more

digital transformation and fueling innovation. We started from the comprehensive

development of our internal operations, increasing the share

of technology, and activating more solutions to revolutionize the customer

experience, and now we continue this journey by launching a startup accelerator

that supports emerging technology startups and stimulates innovation,

in addition to enhancing cooperation between tech corporations such

as Raya CX and the startup landscape,” said Ahmed Refky, CEO of Raya CX.

He also added that the collaboration with Openner will help in achieving

the accelerator’s goals through co-investment, designing the best selection

criteria for the participating companies, and providing well-rounded handson

support to the future founders.

Raya Holding’s Head of Venture Investments, Mohamed Nazir stated

that, “The goal of establishing FutureTECH is to power techstartups and

fuel entrepreneurship in the Egyptian Market. We are looking to welcome

the founders that have a vision on how to contribute

to the improvement of customer experience across

all industries. The program comprises all the tools and

workshops needed for these startups to scale their

businesses in addition to the investment that will enable

the application of this knowledge turning it into tangible

outcome.”

Openner’s Managing Director Ahmed Elsherif expressed his thrill about

partnering with Raya CX, “Along with Raya CX, Openner aspires to build a

unique portfolio of tech startups through FutureTECH. We are also looking

to power the growth of founders to enable them to positively contribute to

the domain’s needs and future.”

Elsherif also pointed out, “This partnership comes in light of Openner’s

focus on partnering with leading corporations to help them identify new

business models and investment opportunities. We work with our partners

to co-create, co-invest in, and launch a continuously evolving pipeline of

domain-specific tech startups.”

68 July-August 2021

www.BusinessTodayEgypt.com


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The Giant French Transport Operator RATP Dev Mobility Cairo Takes Over Metro

Line 3 in Cairo

Cairo Metro Line 3 is witnessing a major shift and approaching a

new benchmark in optimizing the efficiency and quality of the services

offered to local passengers, being operated and maintained

by the French Transport Operator Giant RATP Dev Mobility Cairo

(RDMC) under the patronage of the National Authority for Tunnels

(NAT).

“As a leading global public transport operator, we are proud to

support the Egyptian authorities in their vision of the city of tomorrow

and the transformation of the urban landscape,” highlighted

Laurence Batlle, President of the Executive Board of RATP Dev.

The French company has considered many measures to provide

the passengers with a world-class experience including user-mobile

app and website to facilitate tracking real-time information on stations

and unified staff uniforms. Residents of Cairo can now enjoy a

line that will improve progressively to be more efficient, innovative,

and sustainable in accordance with international standards.

In alignment with the company’s values, RDMC looks forward to

promoting the cultural and artistic heritage of Egypt through a modernized

graphic identity, aiming to revive the passengers’ memories

of Egyptian epic history throughout various time eras. The prototype

was presented in Heliopolis station where the ‘A New Start for line

3’ Event took place in the presence of Egyptian Minister of Transport

H.E. Lieutenant General Kamel Al Wazir, H.E. Stéphane Romatet,

French Ambassador to Egypt, Dr. Engineer Essam Wali, Chairman of

the National Authority for Tunnels and Laurence Batlle, President of

the Executive Board of RATP Dev.

This cooperation between the Egyptian government and the private

sector is inking a new era in the future of urban transport. With

carefully curated co-ambitious plans that have been set to boost the

local economy, RDMC is committed to hire a minimum of 90% local

workers of its staff and train them in a global training centre to transfer

precise and international expertise.

Palm Hills Club Raises the Bar for the Tennis

Future in Egypt by hosting the Rafa Nadal

Academy’s Camp on its fields

As tennis starts to become an indispensable sport in Egypt with its

increasing popularity day after day, the fans of the game highly anticipate

the emergence of more Egyptian tennis champions participating in wellknown

international tournaments representing their country. Palm Hills

Club has contributed to shaping the talented Egyptian youth to take their

very first step towards this dream by establishing a major milestone to develop

their capabilities through dedicating its field to host the one and only

Rafa Nadal Academy’s six-day training camp. Such intensive camp is taking

place for the first time in Egypt, therefore it was graced by the Spanish

Counsel General Gonzalo Munoz. Furthermore, this camp would greatly

contribute to preparing the upcoming generation to occupy advanced positions

in international ranking in the future.

The camp aims to focus on bracing the future generations of different

regions by targeting children in each selective country aged between 8 to

14 years old with average age being 11 years. Ahmed Hassanein, Head of

Commercial at Palm Hills & Clubs General Manager said: “in light of Palm

Hills’ eagerness to contribute to Egypt vision 2030 through investing in

developing sports talents. We dedicated our club to serve as the ultimate

means by opening its tennis court for Rafa Nadal Academy to run its training

camp for the Egyptian Youth.”

Hassanein further adds: “the mission of this one of a kind collaboration,

which is managed by The Tennis Club Egypt, is to lend these young talents

a helpful hand to unleash their potential in tennis by granting them the

golden opportunity to leverage on the unique training resources of Nadal

Academy that is coming to Egypt for the first time.”

The children receive an exceptional experience from four professional

Spanish coaches that the academy has provided, who also happen to be

dedicated strength & conditioning trainers to train them on the values that

Rafa Nadal has transmitted on and off the court during his professional

circuit. Moreover, five top Egyptian coaches will be present on ground to

support the Spanish coaches in running the camp. What makes this camp

very special is its unique access to the academy’s training philosophy

on modern and creative tennis allowing the participants to benefit from

highly focused training sessions and special insights that extend beyond

the court.

The academy has developed a well-thought-out program for the intensive

six-day camp to prepare the players as per its comprehensive criteria

to reach the optimum level.

The day started with a morning match, followed by endurance training

within the Fitness Skill Zone. The academy also ensures distributing

a healthy meal encompassing all the necessary nutrition, which comes in

line with the program’s mission to prepare children to become athletes.

Then, the day is complemented by the main event “Building a Champion”

program, which includes various workshops that focus on mental training.

At the end of the program, participants will receive an evaluation with

valuable insight into their current performance, and a development plan to

improve their game once they return to their academy or school.

www.BusinessTodayEgypt.com July-August 2021

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Mountain View Announces

Completing

iCity’s Phase I

During the visit, the Prime Minister inspects the executed housing

units, as well as the finishing works, utilities, and green spaces,

in addition to the project’s clubhouse.

Madbouly stresses that the iCity project is the fruit of a successful

partnership between the public and private sectors, as the relationship

between both sectors is no longer limited to just allocation

of land plots or delivery of utilities.

For his part, El Gazzar points out that the Ministry of Housing,

represented by NUCA, has expanded during the past six years in

offering land plots for development in partnership with the private

sector, which is part of the ministry’s plan to diversify the mechanisms

of land offering, and to maximize the investment value of

land plots in a sustainable manner.

Moreover, the minister remarks that the number of partnership

projects between the public and the private sectors has so far

reached 18 projects on a total area of ​19,250 acres. The first phase

began from 2015 to 2017 and included about nine projects on a

total area of ​13,243 acres, with total investments of EGP 315 bn.

He further continues that the second phase was from 2017 to

2019 with seven projects located on an area of ​4,997 acres, and

with investments estimated at EGP 150 bn. Meanwhile, the third

phase has begun this year on an area of ​5,000 acres, and with investments

of EGP 500 bn.

Additionally, El Gazzar points out that the iCity project is located

on an area of ​500 acres, with investments estimated at EGP 65 bn,

besides it provides numerous direct and indirect job opportunities,

noting that the project’s first phase was launched in mid-2016.

In this regard, Amr Soliman, Chairman & CEO of Mountain View,

expresses his great appreciation for the visit of the Prime Minister,

saying, ”This confirms the government’s interest and confidence in

the private sector as an essential partner in the development plan.

This project is the result of the successful cooperation between the

government and the private sector, and it enhances future opportu-

nities for partnership with the government.”

Soliman mentions that Mountain View intends to deliver 600

units in the project during the next two months, in addition to 1,800

units, as part of the first phase, by the end of this year. In a related

context, Soliman explains that the iCity project is the first one of its

kind to be implemented in a four-dimensional system, identical to

the international standards.

The project is executed in four levels, taking into consideration

the environmental standards and includes smart solutions to

separate the vehicles’ road from the residential areas. It also provides

solutions for electricity consumption and supports smart

infrastructure by connecting fiber-optic networks, to ensure the

speed and quality of communications and information technology.

Besides, it provides new smart solutions to create traffic liquidity

for the population, in addition to providing the latest transportation

means.

During the visit, Mountain View has announced its latest partnership

with the Intercontinental Hotels Group, to manage and operate

the project’s hotel apartments according to international standards.

Accordingly, the Intercontinental Hotels Group will be responsible

for the management of Mountain View’s tourist projects, hotels,

and hotel apartments.

Moreover, Mountain View signed a strategic cooperation agreement

with Huawei Technologies to develop technological infrastructure

in the iCity project to become the first smart interactive

city in Egypt with investments exceeding USD 1 mn.

The iCity Project has been implemented by Mountain View, in

partnership with the Ministry of Housing, Utilities, and Urban Communities,

represented by the New Urban Communities Authority

(NUCA). During the visit, Madbouly was accompanied by Assem El

Gazzar, The Minister of Housing, Utilities and Urban Communities,

Amr Soliman, Chairman & CEO of Mountain View, and a number of

company officials.

Badya launches with stunning

Sahel party

Beautiful Nelly Karim made her stunning appearance

by joining Mostafa Amar on stage, earning

everyone’s undivided attention during Badya

Palm Hills Developments exceptional summer

night party at Kiki’s beach, with Disco 90’s perfectly

setting the tone for a nostalgic world.

The City of New Worlds took us for a trip by

having the iconic Mostafa Amar give a full on

performance, featuring a series of his favorite

throwback songs that evoked the 90’s feeling

sending the Sahel’s crowd frenzy summer vibes,

people got to join the wave of summer happiness!

70 July-August 2021

www.BusinessTodayEgypt.com


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GROHE supports the “Make a Splash!” partnership between LIXIL and UNICEF to

improve access to sanitation and hygiene for underserved communities

Going to the toilet, washing our hands – these are daily routines that

we don’t think much about. For most of us, sanitary

facilities with clean water are a matter of course,

but many across the globe are facing a different

situation: Two billion people lack basic sanitation,

673 million practice open defecation regularly and

40% of the world’s population do not have access

to handwashing facilities and soap at home. As

a result of unhygienic water and sanitation, 700

children under five die every day from diarrheal

diseases. The lack of sanitation services also has

a particular impact on women and girls who are

exposed to the threat of violence and harassment,

and the COVID-19 pandemic has exacerbated the

vast inequities in access to water, sanitation, and

hygiene.

In 2018, UNICEF and LIXIL created a bold, new

partnership called “Make A Splash!” – UNICEF’s first

global shared-value cooperation in water, sanitation,

and hygiene (WASH). It combines UNICEF’s

WASH sector leadership with LIXIL’s global expertise

in toilet design and innovation to tackle the

sanitation and hygiene crisis.

As part of LIXIL’s brand portfolio, GROHE is

launching its “Energy for Life” campaign, which

will take place from June to August in 13 countries

across EMENA to raise awareness and support

partnership activities: GROHE will donate 20 EGP

for every participating GROHE shower system or

thermostat shower system purchased to help provide

a child with access to a toilet at home or a

school with bars of soap.

“LIXIL makes better homes a reality for everyone,

everywhere. As a global organization, sustainability

is at the heart of what we do, and we have

the responsibility to leverage our expertise to make a positive impact

on the world. But sadly, access to basic sanitation and hygiene remains

one of the greatest challenges today, and LIXIL is committed to make

toilets and handwashing accessible for all through its diverse and inclusive

brand portfolio. GROHE has always supported the ‘Make a Splash!’

partnership through multiple internal fundraising activities but today

I take great pride in reaffirming our support with the ‘Energy for Life’

campaign, that invites end users to help drive change,” says Jonas Brennwald,

Leader LIXIL EMENA and Co-CEO Grohe AG.

“Growing up in a clean and safe environment is every child’s right.

Basic toilets and hand washing facilities at home and school are critical

to keep children healthy and prevent the spread of disease. We appreciate

GROHE’s support to the LIXIL and UNICEF ‘Make a Splash!’ partnership

which will help to ensure more children have access to clean, safe

toilets and hand hygiene so they lead healthier lives”, says Carla Haddad

Mardini, Director, Private Fundraising and Partnerships Division, UNI-

CEF.

A bold mission: LIXIL and UNICEF are tackling the sanitation crisis

The “Make a Splash!” partnership contributes to the Sustainable Development

Goal target 6.2 “to achieve access to adequate and equitable

sanitation and hygiene for all, and end open defecation, paying special

attention to the needs of women and girls and those in vulnerable situations.”

GROHE will support the work of LIXIL and UNICEF to rehabilitate

WASH facilities and promote good hygiene practices in at least 10

primary health facilities, helping 200,000 children and their families stay

healthy by improving access to clean sanitation and hand washing and

promoting safe hygiene habits., The partnership between LIXIL and UNI-

CEF builds on their strengths to realize a shared ambition to tackle the

global sanitation crisis.

As UNICEF changes people’s attitudes about open defecation and the

use of poor, unsafe facilities, people are demanding better sanitation and

hygiene services. LIXIL helps meet this demand through its SATO toilet

products, which provide safe, affordable and sustainable solutions for

communities to improve and sustain proper sanitation and hygiene.

In response to the COVID-19 pandemic, LIXIL devised the SATO

Tap, an affordable and innovative handwashing station for low-income

households that lack access to running water. The SATO Tap consists

of a plastic base with a soap holder and a nozzle that can be fitted with

widely available plastic bottles. It can be operated with a simple nudge,

ensuring minimal contact and releasing just enough water to practice

safe hygiene.

SATO toilets were first introduced in 2013. Featuring a counterweight

trap door that helps prevent unpleasant odors and insects, a SATO toilet

consumes 80% less water to flush than a conventional toilet. SATO aims

to be a self-sustaining social business by establishing a local Make, Sell,

Use cycle in the community – creating jobs and allowing local manufacturers

and stakeholders to continue the business independently to help

communities continuously improve sanitation.

www.BusinessTodayEgypt.com July-August 2021

71


bt scene

YouTube Shorts arrives in Egypt

YouTube announced the arrival of the beta version of YouTube

Shorts in the Egypt, the company’s new short-form video experience

to create short, catchy videos from mobile

phones. First announced in September 2020,

YouTube has since expanded Shorts to 26

countries and will now be available across

more than 100 countries - including countries

in the Middle East and North Africa

- where YouTube is available.

While short form videos were already

viewable in the platform, people around the

world will be able to access for the first time

Shorts’ creation tools which include a multisegment

camera to string multiple video

clips together, the ability to record with

music, control speed settings, and more. In

addition, and timed with the product’s international

expansion, we’re bringing a new set

of features to the existing ones such as:

•Add text to specific points in your video

•Automatically add captions to your Short

•Record up to 60 seconds with the Shorts camera

•Add clips from your phone’s gallery to add to your recordings

made with the Shorts camera

•Add basic filters to color correct your Shorts, with more effects to

come in the future

The new features also include the ability to

sample audio not only from other Shorts but

also from videos all across YouTube -- which

includes billions of videos worldwide -- unlocking

a new playground of creativity like

never before. This means that users can give

their own creative spin on the content they

love to watch on YouTube and help find it a

new audience — whether it’s reacting to their

favorite jokes, trying their hand at a creator’s

latest recipe, or re-enacting comedic skits.

Creators will be in control and will be able

to opt out if they don’t want their long form

video remixed.

Supporting mobile creators

YouTube has helped an entire generation

of creators turn their creativity into businesses

and become the next generation media companies. Over the

last three years, we’ve paid more than $30 billion to creators, artists,

and media companies.

SOMABAY Witnesses International School Inauguration Thriving with Educational

Services Across Red Sea Governorate

Egypt Education Platform, the leading education services provider

in Egypt and Somabay announced signing a Memorandum of Understanding

to develop and operate the first international school in

Somabay under GEMS International Schools stream-EEP.

The cooperation aims at providing quality educational services for

the local community and the cities in the Red Sea governorate.

Ibrahim El Missiri, CEO of Abu Soma Development Company commented:

“Our long-term vision is to develop Somabay as a permanent

fully integrated residential community, which also goes in line

with Egypt’s 2030 vision, creating sustainable communities across

Egypt. We are very excited to commence our first school project with

GEMS International Schools under EEP, as a reputable education

partner to develop and manage the school, ensuring a top-quality

education model provided at Somabay; so we can maximize the

value of our prime location by attracting interest of families from

all over the Red Sea governorate looking for a quality neighborhood

education.”

Ahmed Wahby, the CEO of Egypt Education Platform said: “We

are committed to our expansion plan ensuring we touch the lives

of many families across Egypt, via providing a world-class education

service. The partnership with Somabay is another milestone in

our progressive strategy to continue pursuing new opportunities by

which we utilize our global expertise serving different communities

and segments. This includes international educational benchmarks,

advanced information technology infrastructure, academic and operational

experience, and distinguished training capacities.”

“Our plan for the new school is to create long-term value through

conveniently-located quality education provision, which contributes

to Somabay turning into a permanent residential destination rather

than just being a seasonal touristic attraction” Wahby added.

Egypt Education Platform (EEP), the full-fledged educational platform,

comprises several independent streams that cater to different

segments in the educational market. This includes GEMS International

Schools, Prime National Schools, Hayah Schools Enterprise

and two other streams to be launched and announced soon.

The latest agreement with Somabay is a testament to the record

of success that EEP has been demonstrating on all streams’ levels.

Somabay’s school project, apart from its strategic importance derived

by the prime location, is the third accomplishment in a row for

EEP, post a major partnership with The Sovereign Fund of Egypt to

develop and operate two schools in West Cairo with a total capacity

of 5,000 students, followed by a featured integration with Haya

International Academy, as an independent stream under the platform.

The newly developed school in Somabay will officially launch in

September 2023 under the GEMS International Schools stream and

following an international curriculum.

72 July-August 2021

www.BusinessTodayEgypt.com


bt scene

ZED Club Launches Its New

Women’s Football Academy

ZED FC Club, one of Egypt’s top private clubs, announced today the inauguration of ZED’s

Women Football Academy, in partnership with “Empower Women Football Academy”. Through

this partnership, ZED FC Club aims to establish its first football team for women, develop highperformance

athletes, and spread the message that football is a game for women too. This

collaboration aligns with ZED FC’s strategy to introduce a variety of new sports and develop

high-level sports academies. The new cooperation falls in line with Egypt’s vision 2030 aiming

to promote sports as well as enhance youth participation in shaping the future of their country.

ZED Club chose Farida Salem’s “Empower” Football Academy to manage the new academy

to utilize its vast experience in identifying potential talents and following analytical training programs

that help boost the skills of female football players. Farida Salem, founder and director

of “Empower Football Academy”, is an inspirational former football player who has been coaching

for 12 years, with ambitious goals to dispel old beliefs about sport and laying the foundations

of a new generation of athletes which aligns with ZED’s strategy.

“The club is constantly keen to create an effective sports system by introducing various

unconventional sports and laying the groundwork for a new generation of top-level athletes,”

Ahmed Abdullah, the Head of the football sector at ZED club stated. “We are not only interested

in local championships, but also in preparing a new generation with worldwide standards capable

of competing on a global scale. Therefore, we have collaborated with Farida Salem who

is one of the most efficient women’s football coaches because of her experience in the sports

field and the value she can add to the ZED Women’s Football Academy,” he added.

Farida Salem started playing football at an early age and pursued her dream in Canada’s

Vancouver Island University where she received a BA in sports and physical education. Moreover,

she is the first Egyptian woman to play in the Abu Dhabi team.

“I am extremely delighted to cooperate with ZED to launch the New Women’s Football Academy,”

Farida Salem, the founder of “Empower” Women’s Football Academy and the head coach

at ZED Women’s Football Academy stated. “I coached hundreds of female footballers over the

last 12 years and I have seen the progress of many gifted young women with extraordinary

talents and tremendous skills through my work at Empower,” she added.

Registration for the ZED Academy is open to children aged 5 to 8 years old as well as juniors

aged 9 to 17 years old. Furthermore, the academy will hold professional tournaments for players

under the age of 17 and under the age of 19 in order to enhance the performance of female

talents until they achieve a professional level that allows them to join the first team of the ZED

women’s football club.

Tamweely Microfinance won “Fastest Growing Microfinance Company” awarded

by The Global Economics UK

Tamweely Microfinance has won The Global Economics Awards 2021

for “Fastest Growing Microfinance Company” and the announcement

was made on the Global Economics website. And Tamweely CEO, Ahmed

Khorched, has also been awarded “Most Emerging CEO in Microfinance”.

Over the last three years, Tamweely Microfinance has grown into a

viable non-banked financial institution serving over 141 thousand client

with a loan portfolio exceeding EGP 3.6 billion of which 46%

are women entrepreneurs and 79% reside in Upper Egypt.

Currently, Tamweely has over 2,000 employees across a

network of 97 branches in 15 governorates in Egypt and

with a strategy to cover all governorates within the next

few years.

The year 2020 was remarkable year as Tamweely has

witnessed growth in terms of clientele, loan portfolio and

branches. In 2020, 73 thousand clients benefited from the

services offered by Tamweely compared to 52 thousand

client in 2019 and this illustrates a growth of 41%. Tamweely’s

gross loan portfolio has grew by 53% in 2020,

booking EGP 906 million against EGP 593 million in 2019. Tamweely disbursed

67 thousand loan in 2020, an increase of 18% from 56 thousand in

2019. Number of branches has grown by 51% in 2020.

Furthermore, Tamweely has leveraged its expansive network to secure

key strategic partnerships with leading FinTech players that have positioned

Tamweely to provide exceptional tech-driven solutions to promote

financial inclusion.

Commenting on the win, Ahmed Khorched, Chief Executive Officer,

Tamweely Microfinance said, “We are honored for the recognition that has

been given to Tamweely Microfinance for its growth performance and it

is a testament to all the efforts that have been made by the employees

during the pandemic. We are constantly striving to enhance our portfolio

with diversified financial services and products that adapt to the needs of

various target micro-entrepreneurs and ensure a unique

client experience.”

Amr Abou El-Azm, Executive Vice Chairman and CEO of

Tamweely, explained “these awards are testaments of the

success story of Tamweely in just a short time; therefore,

I would like to extend my warmest congratulations to

Ahmed Khorched who played a crucial role in our company’s

success and to all employees who significantly

contributed to the company’s competitive position in the

microfinance sector in Egypt.” Furthermore, Abul-Azm

expressed his aspirations to the continuation of the success

in the upcoming coming years and to become the leader of

microfinance sector in Egypt.

The Global Economics Limited is a UK based financial publication and

a bi-annual business magazine giving thoughtful insights into the financial

sectors on various industries across the world. One of their major highlights

is the prestigious country specific Annual Global Economics awards

program where the best performers in various financial sectors are identified

worldwide and honored.

www.BusinessTodayEgypt.com July-August 2021

73


Last Word

“Egypt responded to the COVID-19 crisis with

timely and prudent fiscal and monetary easing,

which helped mitigate the health and social

impact while safeguarding economic stability, debt

sustainability, and investor confidence.”

— the Executive Board of the International Monetary

Fund (IMF).

74 July-August 2021

www.BusinessTodayEgypt.com



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