Egypt has just gotten a visit from Prince Mohammed bin Salman. Arriving in the region in an attempt to “deepen the alliance between two of the region’s powerhouses,” other matters discussed at the meeting with Egypt’s President Abdel-Fattah el-Sissi included: regional matters and the fight against Islamic militants. While there was pull back in relations in 2016 due to opinion strategy disparity on the Syrian war, this meeting improved matters.
Data from MENA has shown that we are currently encountering a “new era of economic ties between Egypt and Saudi Arabia.” President of the General Federation of Egyptian Chambers of Commerce Ahmed Al-Wakil said the total Saudi investments are worth up to $27bn. Industries include: oil and electricity.
It is expected that there will be a further escalation in Saudi Arabia’s investment into Egypt given that officials from Egypt and the Kingdom have commented that they are hoping obstacles between the two countries will be reduced, facilitating the transportation of goods and services between them.
Crescent Petroleum – in the post Saddam Hussein era – could now very well be equipped to enter Egypt’s oil and natural gas exploration field. Indeed, according to the Director of Exploration and Production at Crescent Petroleum, Abdulla Al-Qadi, discussions are taking place with the Ministry of Petroleum as a way forward of gaining an insight into the potential opportunities for entering the Egyptian market.
Al-Qadi did however express concern about investments in Egypt, calling it “challenging.” But having said that, he still believes that long-term, making an investment in Egypt will actually end up being very positive for Crescent Petroleum and indeed Egypt as a whole.
There has been a trust built up since the Egyptian government never breached any terms of its agreement with Emirati companies. A trust – since then – has been formed and because of that there was investment from a range of Gulf states.
It’s always great to explore other countries, but no matter how much fun it is, tourists often find they miss the taste of home. Well now, thanks to Evan Burschkopf, CEO of the restaurant-bar franchise Zarsha Leo, those visiting Cairo can still get their onion rings, Buffalo wings and French fries.
This is due to the fact that Burschkopf has recently started expanding his bars to the international realm and is aiming to have some kind of presence in all corners of the world. “This has been a life-long dream for me,” he explained at the launch of his newly-opened bar in Cairo. That, wherever a McDonalds exists, a Zarsha Leo would not be too far behind. With time, I hope this dream becomes a reality.”
For a while now, Egypt had been unable to send natural gas due to damage. But, according to MENA news agency, the problem was fixed last week and the country was able to resume its pumping. Israel for example, is now receiving gas again which is great, but the levels have been way below contractual obligations, which is problematic. In other words, while gas supply has been restored, it is nowhere near at full capacity.
Unfortunately, the North Sinai pipeline has undergone some quite substantial problems following the deposition of Hosni Mubarak. Indeed, it has been blown up 10 times, with the most recent attack occurring last month. Such attacks have resulted in approximately $4bn worth of damage to Israel’s economy.
But, there is a small piece of good news. Now that gas pumping has been resumed (albeit on a lower level), there was a 3.6 percent escalation on the Tel Aviv Stock Exchange of Ampal-American Israel Corp. (proprietor of a stake in a company that exports gas from Egypt to Israel).
As if the Middle East didn’t have enough to deal with already – rising food prices are now threatening to cripple many already strapped people. QNB Capital reported that the rising food prices in the area are a result of many factors including rising income levels in countries like China, unseasonal weather and fule price spikes.
Food prices rose a record amount in 2010, with a 25% increase. As reported by QNB Capital, the index of global food prices maintained by the UN Food and Agricultural Organization rose by 25% in 2010, surpassing previous records set in June of 2008. This number has increased even further in 2011, increasing by another 9.9% so far this year.
Hitting the Poor
The World Bank reports that these figures are hitting the poorest in society the hardest and bringing the world, as they report, near a “breaking point.” The World Bank’s food price index is at record levels as well, having increased 15% between October 2010 and January 2011. The Economist Intelligence Unit (EIU) has also projected a 19% rise in food prices for this year.
Food Price Impact
The impact that these food price increases have on the area depends on the share of household food expenditures in each location. For instance, in Egypt, food represents 39,9% of the Consumer Price Index compared to Qatar where it’s only 13.2%. In addition, the current food price increases are mostly for basic foods, rather than for more expensive or processed food items. This impacts poor populations more than it does the wealthy, since poorer people tend to buy more basic foods such as rice.
As QNB Capital reported, “As the Middle East relies mainly on food imports, the region is particularly vulnerable to food security concerns. If this trend of rising food prices continues, Arab countries will likely be forced to increase their strategic food reserves and develop technologies to boost domestic production to meet growing food demand.”
After approximately seven weeks of silence, the Egyptian stock exchange is finally back on its feet. As expected, the first few days were difficult, as shares fell and sent the benchmark index to a 23 month low. Many international investors sold holdings to free money that had been locked up for the almost two month duration.
EFG-Hermes Holding SAE, for instance, the nation’s biggest investment bank, went to the lowest point since July 2009. In general, international investors, including Arabs, sold US$28 million.
Mohamed Abdel Salam
In addition, the head of Egypt’s stock market, Mohamed Abdel Salam, recently announced that the exchange was suspending the trading of 46 companies. These companies have failed to meet disclosure requirements that ask them to disclose if they have assets or shareholders under investigation.
Press Conference News
As Abdel Salem said in a televised press conference on state television, “The market has been closed for almost 60 days, so we required all companies to tell us how they’ve been affected and if they have shareholders under investigation.”
Those in the know predict that the market will continue to fall for a bit, as investors try to exit positions from the lock up period.