CGI Gulf Insights of the Week (149)

ByCGI Gulf Insights of the Week
Monday, 25 November 2019
Published inNovember 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Egypt

Risk Indicator - DB5d
Risk Level - High
Ratings Trend - Deteriorating

Egypt's prime location as a base for exports to the Middle East, Asia and Africa creates potential for long-term economic growth, as does its large population of almost 100m. Economic reforms enacted since late 2016 have sought to address deep-seated weaknesses and create the basis for sustainable high rates of growth over the medium term. The government has cut fuel prices based on its new indexation system, as a stronger EGP has reduced costs of procurement.

Market Overview

Dubai backers help Ivory Coast raise billions for the tourism industry
Ivory Coast raised 5.8 billion euros ($6.4 billion) for its tourism sector during a roundtable in Germany on November 22, 2019, the second such bid in about a month to attract foreign hotels and tour operators to the West African country. The government said in a statement it hoped to raise $1 billion during the roadshow in Hamburg. Last month it raised $5 billion in pledges during a similar drive in Dubai, it said in a statement without giving any details. Ivory Coast’s Tourism Minister Siandou Fofana said by phone from Hamburg; the government had signed 12 memorandums of understanding with several companies. It didn’t name any of the investors. The world’s top cocoa producer wants to make tourism the third pillar of its economy by 2025 to create with the goal of creating 700,000 jobs in the sector. The industry was wiped out during a decade-long conflict that ended in 2011 and divided the country into a rebel-held north and government-run south.

Berlin needs to offer incentives if it wants direct flights from Dubai, says Emirates chairman
Emirates Airlines should be offered some incentives by officials in Berlin if the German capital is serious about wanting the airline to start direct flights to the city, the Dubai-based carrier’s chairman said in a media roundtable discussion at the Dubai Airshow. Under the existing air services arrangement between Germany and the United Arab Emirates, Emirates is allowed to operate to any four cities in Germany. At present, it currently operates in Frankfurt, Munich, Düsseldorf, and Hamburg. Therefore, if the Dubai carrier wants to operate direct routes to Berlin it would have to sacrifice one of its existing four successful routes. Earlier this year, Michael Müller, Mayor of Berlin, told Arabian Business “the government of Berlin is in favor of direct flights to Dubai”. However, Sheikh Ahmed bin Saeed Al Maktoum, the carrier’s chairman, and CEO said the German capital needed to offer some kind of incentive if Emirates was to switch to flying to Berlin and abandon one of the four profitable routes it already operates under the current air services agreement with the German government. “This issue has been going on for a long time. I think, for the Germans, sticking to the four points they are firm in that, that they don’t want to [expand] it. For us also we have invested a lot in those 4 points,” Sheikh Ahmed said in relation to a question from Arabian Business.

UAE billionaire wealth falls more than $4bn to under $20bn
The number of billionaires living in the UAE remained unchanged in 2018 compared to the previous year, a new report has revealed. In the UAE, there were seven billionaires last year and their total wealth decreased from $24 billion to $19.6 billion, according to annual UBS and PwC Billionaires Insights report. It also revealed that billionaires’ wealth globally dipped by $388 billion in 2018, following five years of growth. The strong dollar and volatile equity markets saw billionaire wealth decrease to $8.5 trillion after five years of growth. Asia’s billionaires saw a correction following five years of significant growth, during which their wealth almost quadrupled. By contrast, the Americas saw a slight wealth increase this year, led by prominent US tech billionaires. Despite slowing growth last year, billionaire wealth is over a third higher (34.5 percent) than five years earlier, amounting to an increase of $2.2 trillion. Tech billionaires saw their wealth increase more than any other sector last year, fuelled by existing businesses and disruptive new market entrants. The number of female billionaires has grown by 46 percent in five years. Ali Janoudi, head, Central and Eastern Europe, the Middle East and Africa at UBS Global Wealth Management, added: "The study shows that over two thirds of billionaires in emerging markets Saudi Arabia and the UAE, as well as in the more established countries Poland and Cyprus, are self-made, which is encouraging as it highlights just how much economic opportunity and entrepreneurial drive we can find in these regions."

Saudi Aramco said to plan IPO investor meetings in Dubai, Abu Dhabi
Saudi Aramco is reportedly planning meetings with investors in Dubai on November 24, 2019, as part of efforts to raise up to $25.6 billion in the world's biggest share sale. Reuters quoted sources saying the state oil giant and its advisors are hosting meetings at Dubai's Ritz Carlton Hotel at the Dubai International Financial Centre. According to an investor who has seen the invitation, Saudi Aramco also plans to meet investors in Abu Dhabi on November 25, 2019. Aramco could not be immediately reached for comment, Reuters said. Saudi Aramco earlier canceled the London leg of its initial public offering roadshow in the latest sign that the giant Saudi oil company has scaled back the international ambitions for the IPO because of lackluster demand from money managers. The company had already decided not to market the share sale in the US, Canada or Japan. Saudi Aramco on November 24, 2019, set an indicative price for the deal, valuing the company at up to $1.7 trillion, below the $2 trillion sought by Saudi's crown prince but putting it in the running to become the world's biggest IPO.

New debt law hailed as 'crucial step' by UAE banking chief
The chairman of the UAE Banks Federation has hailed a decision to approve a federal law to decriminalize insolvency and protect those who are unable to pay their debts from going bankrupt. Abdul Aziz Al Ghurair called the move a "crucial step" as the UAE advances its positioning as a regional economic hub and financial safe haven. "Regulations too will evolve to support the financial wellbeing and stability of local entrepreneurs and business owners. I commend the Ministry of Finance for taking such a crucial step in supporting individuals in their time of need, and improving the ease of doing business in the country," he said. "The regulation will undoubtedly prove mutually beneficial to both the business community and the banking sector, offering individuals an opportunity to restructure their finances while helping local lenders reduce their cost of bad debt," he added. The UAE Cabinet passed the new law, to be implemented at the start of next year, to support those struggling with financial difficulties, help them reschedule their debts and give them the chance to receive new concessional loans. In protecting them from legal prosecution, it will also offer an opportunity to work and provide for their families.

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