Ras El Hekma deal, FX shortage gets infrastructure, & Pharma price hikes

Egypt Claps

The Clap?

This is not a drill: Ras El Hekma USD 22 billion deal is confirmed, awarded to an Emirati consortium.

What

The General Authority for Investment and Freezone (GAFI) chose an Emirati consortium to be responsible for the development of the USD 22 billion project in Ras El Hekma, head of GAFI Hossam Heiba told CNBC Arabia.?

Potential impact

Not all the details are out yet, but the deal can potentially boost the country’s foreign direct investments (FDI) and FX inflows.

Some Context

As revealed by the government earlier this month, one of the country’s 2030 goals is to increase FDI by 10% annually to reach USD 19 billion.

The Clap

Due to the hard currency shortage, construction companies are struggling with raw material scarcity.

What?

The FX shortage affected infrastructure projects, such as roads and bridges, which the government is currently working on completing, sources told Asharq Business.?

So What

Steel and cement companies reduced their contracted quantities to less than 50%, the head of one of the major state-owned contracting companies told the same source.

Some Context?

Earlier this month, the government cut investments in new projects and governmental entities won’t be allowed to make any external financing agreements that require FX.

The Clap

Pharma players are meeting with the Egyptian Drug Authority (EDA) next week to possibly hike med prices, a source from within the sector told Enterprise.?

What

The drug makers want to hike prices by 30-50% on the back of the FX shortage and high shipping prices, which led to raw material shortage.?

So What

The Houthi attacks in the Red Sea have disrupted medication shipments, forcing pharma companies to turn to more expensive shipping alternatives, according to the same source.

“The potential price hike would have a positive impact on EGX-listed pharma companies with revenues and volumes expected to rise,” Amr Hussein Elalfy, Chief Equity Strategist at Thndr Securities Brokerage told Claps.?

Some Context

90% of medicine produced in Egypt are made from imported active material, Ali Ouf, head of the pharmaceutical division at the Federation of Egyptian Chamber of Commerce said in a talk show on MBC Masr last July.