Fortnightly, 11 December 2019

Fortnightly, 11 December 2019

December 11, 2019
|

FortnightlyReport

THE FORTNIGHTLY
A Review of Middle East Regional Economic & Cultural News & Developments
11 December 2019
13 Kislev 5780
14 Rabi ul Akhar 1441

Written & Edited by Seth J. Vogelman*

TABLE OF CONTENTS:

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Minister Steinitz Says No More Coal in Israel After 2025
1.2 Israel’s Fiscal Deficit Running at 3.7% of GDP
1.3 Vaughan, Ontario Advances City-Building Agenda in Israel

2:  ISRAEL MARKET & BUSINESS NEWS

2.1 Breach and Attack Simulation Platform Cymulate Raises $15 Million in Series B Funding
2.2 Nielsen Innovate Invests In 5 Israeli Retail and Media Tech Startups
2.3 Israel’s Leviathan to Begin Supplying Gas by the End of December
2.4 Gong Raises $65 Million in Series C Led by Sequoia Capital
2.5 Crescendo Venture Partners Completes First Closing of New Early Stage Israeli VC Fund
2.6 ELTA Awarded $125 Million Contract for Czech Mobile Air Defense Radar (MADR) Program
2.7 WalkMe Raises $90 Million to Help Organizations Maximize Their Software Investments

3:  REGIONAL PRIVATE SECTOR NEWS

3.1 Lime to Launch E-Scooters in Abu Dhabi
3.2 PBSC Urban Solutions to Supply 3,500 e-Bikes for Careem Project in Dubai
3.3 UAE-based Call Answering Startup Callix ‎All Set for Global Expansion ‎
3.4 Dubai’s Fetchr Secures $10 Million to Prevent Collapse
3.5 Wamda Invests in UAE-Based Fintech Startup FlexxPay
3.6 Nejree Raises $4 Million in Funding to Fuel GCC Expansion
3.7 Raseedi Raises $400,000 in Seed Round to Launch “Direct Recharge”
3.8 Wasla Browser Successfully Secures $1 Million in Seed Funding from Venture Capital Investors
3.9 Egyptian Delegation Discusses Purchase of Agricultural Products from South Dakota

4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Carrefour Launches First UAE In-Store Farms to Reduce Carbon Footprint
4.2 Careem to Operate Dubai Bike Sharing Scheme Following RTA Agreement
4.3 UAE’s Masdar Signs $320 Million Deal for Armenian Solar Power Projects
4.4 Athens Provides Incentives for Green Energy Projects

5:  ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Average Inflation Rate at 2.45% by October 2019‎
5.2 Lebanon’s Fiscal Deficit Contracted by 12.8% to $2.95 Billion in August 2019
5.3 Lebanon’s Gross Public Debt Increased by 3.5% YOY to Reach $86.77 Billion
5.4 Total Number of Registered New Cars in Lebanon Slumped by 28% by October 2019
5.5 Jordan’s Prime Minister Presents Third Incentive Package to Stimulate Economy
5.6 Jordan Has Received Only 21% of Funding Required Under 2019’s Plan

♦♦Arabian Gulf

5.7 UAE Extends Excise Tax System
5.8 Dubai’s Economy Grows by 2.1% in 2019’s First Half
5.9 Dubai Plans Major Expansion of Specialized Clinics
5.10 Ajman Crown Prince Launches $272 Million Medical City Project
5.11 Saudi Budget Deficit Set to Grow to $50 Billion in 2020

♦♦North Africa

5.12 Egypt’s GDP Growth to Reach 5.6% in FY 2019/20
5.13 Egypt’s Tiba-1 Communications Satellite Successfully Launched Into Orbit
5.14 Egypt’s Inflation Rate Increases by 0.5%
5.15 Morocco Considers Making Exchange Rate More Flexible in January
5.16 Germany-Morocco Sign Sustainable Economic Growth Agreement

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s 11 Month Exports Surpasses $165 Billion
6.2 Turkish Imports Jump in November While Exports Contract
6.3 Greece’s EU-Harmonized Inflation Increases to 0.5% in November

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Columbia University Launches Dual Degree Program with Tel Aviv University
7.2 Bolivia to Renew its Ties With Israel

*REGIONAL:

7.3 US to Appoint Ambassador to Sudan for First Time in 23 Years
7.4 Saudi Restaurants No Longer Need To Segregate Women and Men
7.5 Kurdish Self-Identification in Turkey Doubles in 10 Years
7.6 Turkey Places 40th Among 41 Countries in Social Justice Index
7.7 PISA Assessment finds Cyprus Achieving a Low Ranking

8:  ISRAEL LIFE SCIENCE NEWS

8.1 Israel’s Sheba Medical Center Becomes World’s First Fully VR-Based Hospital
8.2 Zebra Medical Vision Secures a Fourth FDA Clearance for AI for Medical Imaging
8.3 AstraZeneca and Jerusalem Venture Partners Sign Agreement to Develop Digital Health in Israel
8.4 Israeli Team Uses Silicon Chip to Deliver Alzheimer’s-Busting Protein to Brain
8.5 DiA & IBM Watson Health Arm Clinicians with its AI-powered Cardiac Ultrasound Software
8.6 Therapix Biosciences Continues Development of THX-210 Cannabinoids Based Treatment
8.7 BGU & Cincinnati Children’s Researchers Technology for Removal of Secretions from Airways
8.8 Alpha Tau’s New Cancer Radiology Method Proves Effective
8.9 New Pancreatic Cancer Treatment by Israeli Researchers Eradicates Disease in Two Weeks
8.10 FDA Clears Sight Diagnostics’ Finger-Prick Blood Test for US Market
8.11 OncoHost Opens Proteomics Lab for Host Response Analysis for Cancer Therapy
8.12 Ibex & Maccabi Roll Out AI-powered Diagnostic System for Detecting Breast Cancer
8.13 Eitan Group Launches New Preventative Maintenance Servicing Solution
8.14 RSIP Vision AI-Based Multiplex IF Image Analysis Solution for Tissue Diagnosis
8.15 Sartorius Acquires a Majority Stake in Cell Culture Media Specialist Biological Industries
8.16 Tress Capital Makes Strategic Investment in iCAN, an Israeli Cannabis Innovator

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Air Europa Selects Riskified PSD2 Optimization to Improve Customer Experience
9.2 Nemesysco Empowers Emotion Detection and Analysis Service for Operations in Japan
9.3 CloudAlly a Leading Cloud Backup Software in Newsweek’s Best Business Tools 2019
9.4 UVeye Unveils Industry-Leading Vehicle-Inspection Technology
9.5 XM Cyber’s First Breach and Attack Simulation (BAS) for Hybrid Cloud Environments
9.6 Delta Galil Receives US Patent for Touch&Go Hook and Eye Bra Accessory
9.7 SAM Enables Telenet to be Europe’s First ISP Providing IoT Security for Its Subscribers
9.8 Rezilion Launches Autonomous Solution for Securing Cloud Production Environments

10:  ISRAEL ECONOMIC STATISTICS

10.1 Foreign Exchange Reserves at the Bank of Israel as of November 2019
10.2 Israeli Construction Companies Report Booming Home Sales
10.3 Record 4.6 Million Incoming Tourists Projected for Israel in 2019
10.4 Israeli Startups Raise Nearly $900 Million During November 2019
10.5 Some 42% of Israeli Families Live in Overdraft

11: IN DEPTH

11.1 ARAB MIDDLE EAST: Arab Spring 2.0? – Making Sense of the Protests Sweeping the Region
11.2 JORDAN: Jordan Plans to Grab Excess American Weapons
11.3 BAHRAIN: Bahrain Outlook Revised to Positive on Improving Fiscal Prospects
11.4 SAUDI ARABIA: Saudi Arabia Fuel Station Market Outlook, 2019-2024
11.5 EGYPT: Fitch Affirms Egypt at ‘B+’; Outlook Stable
11.6 EGYPT: Brief on the Grand Ethiopian Renaissance Dam
11.7 MOROCCO: Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable
11.8 TURKEY: Turkey on a Favorable Macro Turnaround, But Not Out of the Woods Yet
11.9 CYPRUS: IMF Executive Board Concludes 2019 Article IV Consultation with Cyprus

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Minister Steinitz Says No More Coal in Israel After 2025

Speaking at the 2019 United Nations Framework Convention on Climate Change in Madrid, Israeli Minister of National Infrastructure, Energy and Water Resources Steinitz declared that Israel was committed to the Paris Agreement, saying, “The coal era in Israel will end in 2025.” Steinitz began his speech by saying that Israel was aware of its great responsibility and need to join the global effort to promote a low-coal economy.

Steinitz remarked that use of coal in Israel would be reduced by up to half by the end of 2019, and that use of coal would be completely halted by 2025. He said that the proportion of electricity produced with coal, which was 65% in 2012, would fall to zero, adding that he would consider increasing Israel’s commitment to electrical production using renewable energy sources from 17%to 25 – 30% by 2030. According to Steinitz, the expanded use of natural gas has reduced pollution from electrical production: sulfur dioxide by 57% and nitrous oxide by 40%. By 2025, carbon dioxide emissions from electricity production will fall by over 30%.

Steinitz said that Israel was planning to launch a platform of innovative energy cities that would “enable cities to be energy-efficient and reduce carbon dioxide by promoting energy efficiency, electric vehicle infrastructure, energy storage, and smart networks.” A number of discussions on the matter took place during the conference in which cities were placed in the forefront of the effort to cope with the climate crisis. (Globes 10.12)

Back to Table of Contents

1.2 Israel’s Fiscal Deficit Running at 3.7% of GDP

Israel’s cumulative fiscal deficit for the past twelve months (from December 2018) stands at 3.7% of GDP, the Ministry of Finance announced on 4 December. This is similar to the level of the deficit last month, and close to the annual deficit that the ministry expects for 2019 (3.6%).In absolute numbers, the deficit totals NIS 37.1 billion since the beginning of the year, which compares with NIS 24.8 billion in the corresponding period of 2018. Since the beginning of 2019, government expenditure has risen 6.1% in comparison with the corresponding period. The planned increase in the budget was 5.1%. Spending by civilian ministries rose 8.2%, while defense spending rose 1.4%.State revenues rose 2.6% in nominal terms comparison with the corresponding period.

The Knesset Finance Committee approved an across-the-board cut of NIS 1.47 billion in the budgets of government ministries, to finance a supplementary budget for the Ministry of Labor, Social Affairs and Social Services, higher education, housing and construction, and transport development. The committee approved budget transfers totaling NIS 9.43 billion for various needs, including NIS 1.66 billion to the Ministry of Defense for unspecified purposes. Meanwhile, taxation figures indicate a 6.3% drop in vehicle imports so far this year in comparison with the corresponding period of last year. The Tax Authority explains the decline by the particularly high vehicle import numbers at the beginning of 2018. (Globes 04.12)

Back to Table of Contents

1.3 Vaughan, Ontario Advances City-Building Agenda in Israel

The city of Vaughan, Ontario’s 2019 trade mission to Israel, led by Vaughan Mayor Bevilacqua, included a delegation with local and regional councilors, and the Vaughan Chamber of Commerce.

Mayor Bevilacqua, Members of Council and members of the delegation took part in a series of meetings with leading Israeli government, business and academic officials. A meeting took place with Haifa’s Rambam Medical Center, one of the largest medical centers in Israel, seeing first-hand the cutting-edge technologies that are improving patient care. Also taking part in the mission were leaders from the Vaughan Healthcare Centre Precinct project, representing York University, Mackenzie Health and ventureLAB. On 2 October, Mayor Bevilacqua signed a memorandum of understanding (MOU) with these organizations to identify opportunities to maximize the best use of lands surrounding the site of the Mackenzie Vaughan Hospital through a feasibility study. The goal is for the Vaughan Healthcare Centre Precinct to leverage resources to bring healthcare, innovation and jobs to the community. The tour of Rambam Hospital provided an important opportunity for these partners to learn of proven best practices.

Discussions included strengthening foreign-direct investment in Vaughan by showcasing the economic development opportunities in and around the Vaughan Metropolitan Centre (VMC) – the city’s emerging downtown core. The delegation met with researchers at Tel Aviv University, the country’s largest post-secondary institution, to discuss the future of Smart City technology and its role in developing autonomous vehicles to improve urban transportation.

Vaughan’s intergovernmental, economic and cultural development initiatives resulted in Mayor Bevilacqua and Ramla Mayor Vidal signing an MOU that commits the two municipalities to develop a comprehensive four-year action plan that advances cultural opportunities. The MOU calls for the establishment of a new, robust and accountable framework to ensure this action plan has clearly stated goals and objectives.

The City of Vaughan is one of Canada’s fastest growing cities with a population of more than 335,000. Incorporated in 1991, Vaughan includes the communities of Concord, Kleinburg, Maple, Thornhill and Woodbridge. (City of Vaughan 30.11)

Back to Table of Contents

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Breach and Attack Simulation Platform Cymulate Raises $15Million in Series B Funding

Cymulate announced a Series B funding round of $15M, led by Vertex Growth Fund. The round also saw participation from other existing investing partners, including the investment arm of Vertex Ventures Israel, Dell Technologies Capital and Susquehanna Growth Equity (SGE). Cymulate has raised $26 million to date, including seed investment from Eyal Gruner.

Overtaking manual, periodic penetration testing and red teaming, BAS is becoming the most effective method to prepare and predict for incoming attacks. Security professionals realize that to cope with evolving attackers, a continuous and automated solution is essential to ensure optimal security non-stop. As the leader in this space, Cymulate’s funding will be invested to fuel further growth in the US, expanding sales, marketing and operational support to broaden the customer base. The company plans to broaden its approach beyond BAS by offering end-to-end security testing platform for the entire digital estate of organizations, incorporating on-prem, cloud, IoT and beyond.

Cymulate’s SaaS-based BAS platform plays a critical role in empowering organizations to automatically assess and improve their overall security posture. Simulations of the latest threats in the wild test an organization’s security defenses and controls, across the entire kill chain of attack vectors and APT attack configurations. Simulations can be run on-demand or scheduled to run at regular intervals. Within minutes, the platform provides specific, actionable insights and data on where a company’s network is vulnerable, highlighting security gaps and mitigation procedures.

Rishon LeZion’s Cymulate is a SaaS-based breach and attack simulation platform that makes it simple to know and optimize your security posture any time, all the time and empowers companies to safeguard their business-critical assets. With just a few clicks, Cymulate challenges your security controls by initiating thousands of attack simulations, showing you exactly where you’re exposed and how to fix it—making security continuous, fast and part of every-day activities. (Cymulate 26.11)

Back to Table of Contents

2.2 Nielsen Innovate Invests In 5 Israeli Retail and Media Tech Startups

Nielsen Innovate announced on a $3 million early-stage investment in five Israeli startups. The startups, which focus on media and retail tech, will join the Nielsen Innovate incubator based in Caesarea. The Nielsen Innovate team will provide mentoring, strategic guidance and operational support to these early-stage startups as part of the fund’s goal in order to help them become successful global companies.

The five companies are CYOU, a firm that analyses the in-store customer journey and provides insights and live alerts; Momentum Technologies, a Blockchain-centric loyalty infrastructure that helps brands and consumers turn their loyalty program participation into revenue; Voiceable, a firm that creates smart AI-based voice assistants for websites; ARPalus, a company helping CPGs and retailers better execute their in-store operations; and INVIOU, a Blockchain-based platform for financial records management.

Caesarea’s Nielsen Innovate (NIF) is an early stage incubator and investment fund that specializes in retail, research, marketing and media technologies. Nielsen’s goal is to help early stage startups become successful global companies. Their team provides mentoring, strategic guidance, operational support and introductions to potential follow on investments. Unlike traditional investment funds, Nielsen Innovate offers the strong connection and access to Nielsen and its globally located Fortune 1000 clients. NIF was launched in 2013 by Nielsen, a global performance management company that provides a comprehensive understanding of what consumers watch and buy, and Partam Hi-Tech, one of Israel’s top early stage venture capital funds. (Nielsen Innovate 02.12)

Back to Table of Contents

2.3 Israel’s Leviathan to Begin Supplying Gas by the End of December

Israel’s largest offshore natural gas field, Leviathan, will begin supplying the local market by the end of this month, with exports to Egypt and Jordan following shortly after, Noble Energy said on 2 December. The company said that within 2 to 3 weeks they will open the wells and start to supply the gas, reaffirming the company’s pledge to begin production by the end of 2019.

Leviathan, discovered in 2010 roughly 130 kilometers (81 miles) west of Haifa, holds an estimated 22 trillion cubic feet of natural gas. The field was the world’s largest offshore discovery of the past decade. The Leviathan partners have already signed major, multi-billion dollar export deals to Egypt and Jordan. (Reuters 03.12)

Back to Table of Contents

2.4 Gong Raises $65Million in Series C Led by Sequoia Capital

Gong has raised $65 million in a Series C round led by Sequoia Capital, with participation from existing investors Battery Ventures, Norwest Venture Partners, Shlomo Kramer, Wing Venture Capital, NextWorld Capital and Cisco Investments, bringing the total funding raised to $134 million. Gong will use this new capital to continue to fulfill the strong market demand for its Revenue Intelligence Platform, investing in the company’s product, engineering, and go-to-market teams.

Revenue intelligence brings the power of true customer reality to revenue organizations, instead of relying on biased opinions of sales people manually entering information into their CRM system. Gong does this by capturing all customer interactions, leveraging the latest AI technology to understand these interactions, and then delivering actionable insights to revenue leaders in order to improve sales professionals’ skills, win more deals, and roll out strategic sales motions.

Herzliya’s Gong enables revenue teams to realize their fullest potential by unveiling their customer reality. The patented Gong Revenue Intelligence Platform™ captures and understands every customer interaction, then delivers insights at scale, empowering revenue teams to make decisions based on data instead of opinions. Over 700 innovative companies like AutoDesk, Service Titan, KeepTruckin, Pinterest, LinkedIn, GE, Hubspot, and Drift trust Gong to power their customer reality. With Gong, customers experience improved win rates, increased deal sizes, and accelerated employee ramp-times. (Gong 03.12)

Back to Table of Contents

2.5 Crescendo Venture Partners Completes First Closing of New Early Stage Israeli VC Fund

Tel-Aviv based venture capital firm Crescendo Venture Partners is launching its new VC fund planned which is aiming to raise $80 million-$100 million. The new fund, which has completed its first closing and is planning to have its final closing in H1/20, is managed by a group of seasoned venture capitalists with over 75 years of cumulative experience on both sides of the table, in partnership with the Switzerland based Crescendo Group, which manages client assets in excess of $ 3 billion.

Crescendo has a long track record of investing in as well as managing attractive and unique private market investment solutions including, but not limited to venture capital. The fund will invest in early stage Israeli software startups in fields such as big data, AI and machine learning with an emphasis on software that transforms traditional sectors such as agriculture, education, construction, healthcare and industry. The Fund began operations during 2019 and has already made its first investment when it led the A round of Lightico, an Israeli startup that has developed an automation solution for the last mile of the customer journey in contact centers. (Crescendo Venture Partners 03.12)

Back to Table of Contents

2.6 ELTA Awarded $125 Million Contract for Czech Mobile Air Defense Radar Program

ELTA Systems, a subsidiary of Israel Aerospace Industries (IAI), announced that a Government-to-Government (GTG), contract was signed in Prague, by the International Defense Cooperation Directorate (SIBAT) at the Israel Ministry of Defense and the Czech Ministry of Defense. The agreement was signed for the Czech Mobile Air Defense Radar (MADR), program and comprises eight ELTA ELM-2084 Multi-Mission Radars (MMR) with air surveillance, air defense, and artillery capabilities. IAI’s ELTA will assume the role of prime contractor.The MADR systems will be delivered, tested, licensed and accepted in operational condition during 2021-2023 in Czechia and will be adapted to operate in accordance with Czech and NATO command and control systems.

The Israeli party will transfer state-of-the-art technology and know-how. The program also includes a substantial contribution from Czech industries, amounting to 30% of the contract value. The cooperation with local companies will apply to all parts of the program including design, manufacturing, assembly, integration, testing and life-time maintenance of the systems. Certain security components will be manufactured locally,including advanced Gallium Nitride (GaN) radar modules, as well as auxiliary sub-systems such as trucks and camouflage nets.This agreement is part of the ongoing and excellent cooperation between the two countries on the political, industrial, defense and homeland security levels. (ELTA 05.12)

Back to Table of Contents

2.7 WalkMe Raises $90 Million to Help Organizations Maximize Their Software Investments

WalkMehas closed a $90 million round of funding led by Vitruvian Partners with participation from previous investor Insight Partners. With this latest funding round, WalkMe will continue to scale and help leading enterprises realize the full potential of their software assets and empower digital transformation across their organization.With over $307 million in funding raised to-date, almost doubling its valuation in the last year and more than 2,000 customers across the globe, WalkMe has experienced exponential growth since its launch in 2011. In Q2/19, WalkMe crossed $100 Million in ARR, and in Q3/19 WalkMe’s new business bookings grew 100% compared to Q3/18. WalkMe will use the investment to drive expansion into new markets, including Latin America, and will continue to invest in and rapidly scale its Digital Adoption Platform (DAP) to meet growing customer demand. WalkMe’s DAP makes it effortless to use any software, website or app – analyzing and automating processes so users can complete tasks faster and easier.

As organizations set out on their digital transformation journey, lacking a digital adoption strategy can strongly impact both employee and customer experience. C-suite executives of global organizations rely on the WalkMe platform to significantly improve the ROI on costly enterprise software investments, ensuring that all users get the maximum value out of these tools. With WalkMe automation, for example, employees have an 81% higher success rate for completing certain business processes, gaining the agility to complete three times as many tasks in the same amount of time.

Tel Aviv’s WalkMe provides a digital adoption platform that simplifies the user experience and drives action using insights, engagement, guidance and automation capabilities. Using artificial intelligence/machine learning, analytics and automation, WalkMe’s context-intelligent platform anticipates users’ needs and provides help exactly when and where they need it. (WalkMe 09.12)

Back to Table of Contents

3:REGIONAL PRIVATE SECTOR NEWS

3.1 Lime to Launch E-Scooters in Abu Dhabi

San Francisco’s Lime, the urban mobility provider, has announced plans to launch in Abu Dhabi, with the first e-scooters already deployed. The UAE capital is the first market in the GCC to launch Lime scooters and joins a network of over 120 cities worldwide. An initial fleet of 300 scooters will be available at locations along the capital city’s 8 km. long Corniche. Lime joins Berlin-based Circ which was the first to deploy e-scooters in the UAE capital in September.

Abu Dhabi legalized the commercial rental of e-scooters in July on the Corniche and Khalifa Street. The pilot will run for six to 12 months. Speeds must be restricted to 15 – 20 km. per hour. The authority did not set out pricing structures and only said the service should be a “nominal cost” for users. Riding on Lime will cost AED3 to unlock and every minute of riding will be an additional AED1. (Lime 27.11)

Back to Table of Contents

3.2 PBSC Urban Solutions to Supply 3,500 e-Bikes for Careem Project in Dubai

Longueuil, Québec’s PBSC Urban Solutions announced more details about an electric bike-share network that it will launch in Dubai in a partnership with Careem and the Roads and Transport Authority (RTA). PBSC said over the coming months it will start deploying its E-FIT electric pedal-assist bikes and smart stations throughout Dubai. The multi-year contract provides for 3,500 bikes and 350 stations and represents PBSC’s first foray into the Middle East, after successfully launching earlier this year in cities such as Barcelona, Buenos Aires, Santiago and Monaco.

In recent years, the RTA has made a concerted effort to improve mobility infrastructure in Dubai through a network of cycling lanes, with plans to more than double these dedicated thoroughfares by 2030. PBSC said the E-FIT is the “perfect vehicle” to help the city’s residents and visitors take advantage of these efforts and has an autonomy range of up to 70km and its central motor can propel riders up to 25km/hr.   Dubai’s network, dubbed Careem Bike, will feature PBSC’s smart station technology, which allows riders to recharge their e-bikes directly at the docking point. (PBSC 02.12)

Back to Table of Contents

3.3 UAE-based Call Answering Startup Callix ‎Ready for Global Expansion

Dubai’s Callix, an intelligent cloud-based call ‎answering solution providing 24/7 services and data analytics to businesses of all sizes, ‎announced its plans for international expansion starting with its launch in ‎Saudi Arabia in Q1/20, with further plans already on the way to roll out in the ‎United States, Canada and the UK. The startup, having entered the market in ‎‎2017, is this year’s recipient of the Best Digital Customer Center award at the Government ‎Excellence Awards as recognition for its focus on bolstering its clientele’s customer happiness ‎agenda and supporting the SME sector with its ease of setup and system integration, affordable ‎pricing packages, multilingual live agents, and most importantly, advanced data analytics.‎

Apart from user interface and data analytics, Callix also utilizes sentiment analysis for agent ‎training purposes. Call recordings are made available to the customer for quality assurance, ‎allowing them to monitor how agents handle client calls.‎The decision to make Saudi Arabia the next Callix base was grounded on recent ‎developments in the kingdom’s startup and VC ecosystem, and sees that the country has ‎boundless market potential.

Callix is an intelligent, cloud-based 24/7 call answering solution that is 95% cheaper than any ‎competitor and leverages the perks of both technology and human intervention with its team of ‎dedicated and highly-trained customer service agents supporting businesses through seamless ‎customer experience with built sentiment analysis and data analytics providing actionable ‎insights.‎(Callix ‎28.11)

Back to Table of Contents

3.4 Dubai’s Fetchr Secures $10 Million to Prevent Collapse

Courier app Fetchr, once one of the Middle East’s largest start-ups, raised as much as $10 million in emergency funding to help avoid collapse.The Dubai-based company, which offers delivery and logistics services to e-commerce firms, is also in the process of securing as much as $25 million in additional funding to turn the company around. Existing Fetchr investors, who had put up more than $50 million since the company was founded in 2012, will see the value of their shares diluted to almost zero.

Fetchr confirmed the company had raised up to $10 million in financing from existing and new investors. Silicon Valley investors such as New Enterprise Associates, Nokia Oyj’s venture capital arm and Winklevoss Capital are among its backers, as well as prominent regional investors such as malls operator Majid Al Futtaim. Fetchr marketed itself as a tech company that delivers packages from mostly online retailers in six countries and almost 500 cities across the Middle East, using the customers’ phone as a GPS location. (Fetchr 04.12)

Back to Table of Contents

3.5 Wamda Invests in UAE-Based Fintech Startup FlexxPay

Wamda has invested in UAE-based financial technology startup FlexxPay. The social impact company provides employee benefit solutions for businesses of all sizes in the Middle East and North Africa (MENA) region. Wamda’s investment is part of FlexxPay’s latest round of funding, which includes previous individual and corporate investors.

FlexxPay’s proprietary cloud-based solution provides employees access to a series of services and benefits, including the ability to access their earned salary and earned commissions whenever needed. By offering an alternative to the traditional payment cycle, FlexxPay aims to reduce the financial stress on employees and increase their motivation, and in turn, enhance productivity, sales and employee retention rates for businesses.

Financial matters rank top of the list for employees when it comes to primary sources of stress, with 59 % stating finances were their primary cause of concern, according to “PwC’s 8th annual Employee Financial Wellness Survey” of 2019. This has created a space for fintech startups to address employee benefits and create a system supporting traditional human resources (HR) and finance teams in addressing pay period timing and bridging the gap between pay and spend times for employees. The model has widely been proven in the US and Europe with players such as Earnin (US), PayActiv (US) as well as Wagestream (UK) and Hastee (UK). FlexxPay currently operates in the UAE and Saudi Arabia, with plans to expand to the rest of MENA in the near future. (Wamda 08.12)

Back to Table of Contents

3.6 Nejree Raises $4 Million in Funding to Fuel GCC Expansion

Riyadh’s Nejree, a leading premier online sneaker destination in the GCC, has raised $4 million in Pre-Series A funding led by AlKhaila Investment Co, and Teejan Technologies Co.The new capital will further fuel the Saudi-based startup’s expansion into new markets; invest in technologies to enhance online customer experience and company new technology initiatives. The fund will also assist to increase inventory, product line, the capacity of warehouses, vehicle fleet, and build a solid operational system.The funding represents another major milestone for the company, following a banner year in 2019 that included selling more than 100,000 sneakers, driven by its unique product offerings, high social media engagement, and repeat customer base. The company achieved 90% delivery rate within 24 hours through its own fleet in Riyadh.

Nejree is the first online specialized sneaker destination in the region. Having strong brands relationships, Nejree offers a wide range of unique products including sneaker mainstays Adidas, Nike, Puma, Asics, Reebok, Fila, Fendi, D&G, Gucci, and Balenciaga among other luxury sneakers brands. (Nejree 04.12)

Back to Table of Contents

3.7 Raseedi Raises $400,000 in Seed Round to Launch “Direct Recharge”

Cairo’s Raseedi, the mobile application that optimizes telecom spend for users with a focus on dual SIM users, has raised $400,000 in a Seed funding round led by 500 Startups, MENA’s leading VC fund, with participation from Falak Startups, and EFG-EV Fintech.Raseedi’s’ marketplace addresses an enormous pain-point that affects over 70% of Egyptians, who are dual SIM users. In a country with the cost of cross operator minute reaching 5 times more than minutes used on the same network, Egyptians have resorted to simultaneously using two SIM cards to optimize on their spend. However, with over 500 different packages being offered in the market by telecom operators, it is extremely difficult to subscribe to the most suitable packages for both lines/SIMs. Raseedi uses a smart algorithm to cross match user consumption with the most suitable packages on both lines, then automates calls through its dialer app from the cheapest SIM for each call. With over 200,000 downloads for the application in only 10 months serving nationwide operators, Raseedi plans to expand to fully automate the experience. By allowing users to directly recharge Raseedi credit instead of recharging 2 separate SIM cards, Raseedi will tap into the EGP 100 million daily recharges market, and subsequently expand to optimize in different sectors such as Food, Utilities and Ride hailing with their full and first of its kind “Optimization Wallet”. (Raseedi 04.12)

Back to Table of Contents

3.8 Wasla Browser Successfully Secures $1 Million in Seed Funding from Venture Capital Investors

Cairo’s Wasla Browser successfully secured $1 million in its latest round of funding, after a year of organic growth, continuous testing and product development. The round was backed by Egypt Ventures, Glint Ventures and EBTIKAR for Financial Investments, in addition to a group of strategic angel investors. Proceeds from the funding round are allocated towards fueling the company’s go-to-market strategy, growing the team, and the introduction of new product verticals.

After launching a beta version of Wasla Browser in December 2018, Wasla successfully attracted over 100,000 users organically, with no marketing activities. This initial traction allowed Wasla to prove product market fit and the growing need for affordable mobile internet.

Wasla serves as a centralized platform for all online activity, operating as a gateway that will expand beyond a browser, to a platform that encompasses social networking, shopping, entertainment, and payments. They reward users based on their engagement and users can redeem their points for free airtime directly from their Wallet; Browse, Collect, Redeem! (Wasla Browser 04.12)

Back to Table of Contents

3.9 Egyptian Delegation Discusses Purchase of Agricultural Products from South Dakota

Egypt is already one of the 10 top purchasers of U.S. soybeans and U.S. corn, but leading Egyptian officials came to South Dakota in November to discuss the purchase of agricultural products. They toured Brookings, Volga, Watertown and Aberdeen. Egyptian purchasers of soybeans, corn and agricultural technology came to visit South Dakota sellers, who want them to see the quality of the products first hand before Egypt purchases them. The Egyptian purchasers were in the United States for five days; three of those days were in South Dakota and the other two were in Iowa. (Egypt Today28.10)

Back to Table of Contents

4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Arcos Dorados &UBQ to Use Climate Positive Materials in McDonald’s Restaurants

Montevideo, Uruguay’s Arcos Dorados Holdings, the largest independent McDonald’s franchise in the world, is expanding its environmental impact initiatives with an unprecedented partnership with the Israeli company UBQ. UBQ has developed a patented process for converting unsorted household waste into a plastic substitute that reduces carbon emissions. The goal of the alliance is to begin using this new environmentally-friendly material in some restaurants’ items starting in the first quarter of 2020.

Arcos Dorados remains committed to meeting the brand’s global goals under the “Scale for Good” initiative to reduce greenhouse gas emissions by 36% by 2030, plus 20% throughout the supply chain within the same time period. To produce this new thermoplastic material, UBQ breaks down unsorted household waste into its most basic natural components (lignin, cellulose, sugar, fiber) and creates a new composite and environmentally-friendly material, through a process which does not use water or emit harmful fumes. As a raw material, UBQ can be made into thousands of applications including bricks, shopping carts, pipes, trash cans, and automotive parts. The material has been developed over the last five years by UBQ scientists.

A certified B-Corp, Tel Aviv’s UBQ envisions a world where finite resources are infinitely reused. UBQ has transformed household waste a renewable resource. Through its patented process, unsorted household waste becomes UBQ Material, a renewable, bio-based, thermoplastic material with ever-expanding applicability. (Arcos Dorados 21.11)

Back to Table of Contents

4.2 Abu Dhabi Set to ‘Substantially Reduce’ Single-Use Plastics by 2021

Abu Dhabi aims to substantially reduce its consumption of single-use plastic by 2021, a top official has announced. “We will have the draft policy on single-use plastic by early 2020. We are actually aiming to have a phenomenal reduction of consumption of single-use plastic by 2021,” said Dr. Shaikha Al Dhaheri, secretary-general of the Environment Agency-Abu Dhabi (EAD) without providing specifics. The policy will include an implementation plan and the required instruments and incentives to be implemented by 2021. Al Dhaheri said people and businesses will get almost one year to get prepared before the measures are implemented. EAD will make sure reusable alternatives are available in the market and will conduct awareness campaigns for consumers and businesses. (AB 27.11)

Back to Table of Contents

4.3 UAE’s Masdar Signs $320 MillionDeal for Armenian Solar Power Projects

Masdar, the UAE-based renewable energy companies, has entered into a formal agreement with the Armenian National Interests Fund (ANIF) to develop solar power projects with a total capacity of 400 MW in Armenia. The deal represents an investment of up to $320 million into the Armenian economy. The move follows the signing of a memorandum of understanding in July between Masdar and ANIF for the origination, development, construction, operation and maintenance of renewable power plants, including fixed and floating solar PV and wind energy. The first project planned under the deal is a 200MW utility-scale solar photovoltaic plant in the west of Armenia that will produce electricity from both direct and reflected sunlight.

Armenia has pledged to generate 30% of its electricity from renewable sources by 2025 and has the potential to integrate as much as 1,000MW of solar energy. Today it has around 2,800MW of installed power capacity, evenly distributed between nuclear, hydro and thermal generation from imported natural gas. Armenia has small and mid-size solar PV plants already in operation, with a combined capacity of 50MW, another 250MW worth of solar projects licensed for construction, and a total of 700MW planned. (AB 03.12)

Back to Table of Contents

4.4 Athens Provides Incentives for Green Energy Projects

Athens is planning new funding tools that aim to achieve the greatest possible leveraging of funds for “green investments” in order to meet the ambitious targets of the National Plan for Energy and the Climate, according to the Energy and Environment Ministry.

The targets require total investments of €43.8 billion in renewable energy sources (RES), natural gas and electricity transmission and distribution networks, electrical mobility and energy saving up to 2030. The government also intends to coordinate the ministries to give a boost to major investment projects in RES while weighing the strategic targets and the cost-benefit ratio. The plan is currently in the public consultation stage. (eKathimerini 02.12)

Back to Table of Contents

5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Average Inflation Rate at 2.45% by October 2019

According to the latest data published by the Central Administration of Statistics (CAS), average consumer prices in Lebanon rose by 2.45% year-on-year (YOY) by October 2019, ‎compared to a rigorous rate of 6.31% registered by October 2018. The monthly ‎inflation rates since January 2019 had eased compared to last year’s figures. Nonetheless, ‎average inflation is expected to rise by the end of 2019/20, as a result of ‎the demonstrations that erupted in Lebanon since 17 October 2019.

The first 10 months of ‎the year witnessed annual increases across the main components of the consumer price ‎index (CPI), except for Transportation and Health. The average costs of Housing and ‎utilities, including: water, electricity, gas and other fuels (grasped a combined 28.4% of CPI) ‎added a yearly 1.59% by October 2019. Average owner-occupied rental costs (13.6% ‎of this category) grew by a yearly 2.28%. In turn, the average prices of water, electricity, gas, ‎and other fuels (11.8% of housing & utilities) recorded a yearly rise of 0.48% over the same ‎period. Moreover, the average prices for Food and non-alcoholic beverages (20% of the CPI) ‎and Education costs (6.6% of CPI) registered annual upticks of 3.6% and 5.01%, respectively, ‎by October 2019.

In turn, the average prices of Clothing and Footwear (5.2% of the CPI) ‎climbed by a noticeable 13.80% YOY in the first ten months of the year. Meanwhile, the ‎average consumer prices of Health (7.7% of the CPI) and Transportation (13.1% of the CPI) ‎declined by a yearly 0.58% and 1.1%. The drop witnessed in the latter component can be ‎attributed to average oil prices slipping from last year’s $73.6/barrel by October 2018, to this ‎year’s $64.2/barrel by October 2019. (CAS 02.12)‎

Back to Table of Contents

5.2 Lebanon’s Fiscal Deficit Contracted by 12.8% to $2.95Billionin August 2019

The fiscal deficit (on cash basis) of Lebanon narrowed from $3.38B in the first 8 months of 2018 to $2.95B by August 2019. The reduced deficit is attributed to a 4.81% annual decline in government spending, which outweighed the 1.13% yearly down tick in public revenues. As such, total revenues and expenditures (including treasuries) stood at $7.7B and $10.7B, respectively. Meanwhile, the primary balance which excludes debt service, posted a surplus of $368.9M over the same period, compared to a $74.2M in surplus by August 2018.

The breakdown of the government’s fiscal performance revealed that tax revenues (composing 82.9% of public revenues) rose by an incremental 0.95% year-on-year (YOY) to $6.1B by August 2019, of which VAT revenues (constituting 26.2% of total tax receipts) were slashed by 9.2%YOY to $1.6B. It is worthy to mention that the drop in VAT revenues was driven primarily by the stifled growth and thus reduced spending in the Lebanese economy since the beginning of the year, which outweighed the positive effect of raising the VAT rate from 10% to 11% since January 2018. For example, a sample of the VAT collected after the registration of new cars in Lebanon shows that the number of total new cars registered by August 2019 witnessed a yearly contraction of 23.9% to 19,151 cars according to the Association of Lebanese Car Importers. Moreover, revenues from the Lebanese Customs (14% of total tax receipts) lost an annual 5.1% to settle at $854.7M over the same period.

In turn, non-tax revenues (17.1% of total revenues) decreased by a substantial 10.1% YOY to stand at $1.3B by August 2019. This came on the back of a 29.7% YOY slump in telecom revenues (36.4% of non-tax revenues) to settle at $457.8M over the same period.

On the spending front, total government expenditures retreated by a yearly 4.8% totaling $9.9B in the first 8 months of 2019. The breakdown of spending shows transfers to Electricité du Liban (10.2% of total public expenditures) declined by an annual 7.8% to settle at $1B. The reduction is affiliated to a 9.7% annual decline in the average international oil prices which stood at $65/barrel by August 2019. In its turn, total debt-servicing (inclusive of interest payments and principal repayments) fell to $3.3B by August 2019, down by an annual 3.9%. Interest payments on domestic debt (62.4% of total interest payments) fell by 5.7%YOY to $1.9B, while interest payments on foreign debt declined by 1.3%YOY to $1.2B, even though gross debt by August 2019 climbed by 3.1%YOY to 86.3B. This is most probably because the government settled the interest expenses from its deposits with BDL. (MoF 08.12)

Back to Table of Contents

5.3 Lebanon’s Gross Public Debt Increased by 3.5% YOY to Reach $86.77Billion

The latest data released by the Ministry of Finance (MoF) revealed Lebanese gross public debt grew by a yearly 3.5% to reach $86.77 billion in Q3/19. Domestic debt (denominated in LBP) increased by a yearly 12.08% to reach a value of $54.28 billion. Correspondingly, the share of domestic debt from gross public debt grew from 57.76% by September 2018 to 62.55% by September 2019. Meanwhile, total foreign currency debt slipped by 8.22% year-in-year (YOY) to amount to $32.49 billion over the period. In fact, the foreign debt constituted 41.5% of total gross debt in Q3/18, compared to 37.4% in Q3/19. As for the total net debt which excludes public sector deposits at commercial banks and the central bank, it increased by 6.07% YOY to stand at $78.09 billion over the same period. (MoF 28.11)

Back to Table of Contents

5.4 Total Number of Registered New Cars in Lebanon Slumped by 28%by October 2019

Jordan’s trade balance deficit has seen a 13.4% decrease in the in the first nine months of 2019 compared to the same period in 2018, driven by an increase iThe number of new cars registered during the month of October 2019 has dramatically dropped by 62 % in comparison with the month of October 2018”, according to the latest statement by the Association of Lebanese Car Importers (AIA).

Civic protests erupted across Lebanon since 17 October 2019, paralyzing economic activity and business operations, including the car market. As such, the total number of new cars registered amounted to 1,049 cars in October 2019, down from 2,744 cars in October last year. The number of passenger cars fell by 61.7% year-on-year (YOY) to 960 cars, while that of commercial cars contracted by 62.1% YOY to 89 cars by end-October.

The slump in the cars market had persisted over the first 10 months of 2019, with October particularly weighing down on performance. In fact, the cumulative number of new registered “commercial” and “passenger” cars fell by an annual 28% to stand at 22,008 cars by October 2019. The breakdown of the AIA’s statistics revealed that the number of newly registered “passenger” cars dropped by 27.2% to 20,825 cars. In turn, the number of new registered “commercial” vehicles contracted by a yearly 39.5% to 1,183 cars by October 2019. BLOMInvest Bank projects car market statistics to deteriorate further in November 2019, given the month will reflect the full materialization of the protests that started since October 2019. (BLOM 20.11)

Back to Table of Contents

5.5 Jordan’s Prime Minister Presents Third Incentive Package to Stimulate Economy

On 5 December, Amman launched the 3rd economic stimulus package, focusing on raising efficiency of public sector and improving the citizens’ living standards, coming within an economic program to stimulate economy growth and improve services. Launching the package, Prime Minister Razzaz announced the amount of salary hikes for employees and retirees in the government and military services, to be implemented in early 2020, in line with the Royal directives to improve the citizens’ living standards.

The 3rd package’s decisions, which aim at improving the citizens’ living conditions, include a new civil service system in a bid to raise efficiency of public sector employees through a reform vision and adoption of new employee-based career ranks. In this context, the salary increase for public sector workers will range between 15-20% for the first, second and third categories, in addition to bonuses that will be linked to career ranks as soon as they are ready.

For civil retirees, the monthly pensions have been increased by a minimum of JOD10 to a maximum of JOD80, benefiting about 81,000 retirees. The salary increases for employees of the Jordanian Armed Forces and the security services will be of the same value to all ranks. (Petra 05.12)

Back to Table of Contents

5.6 Jordan Has Received Only 21% of Funding Required Under 2019’s Plan

Funding for the 2019 Jordan Response Plan (JRP), aimed at alleviating the Hashemite Kingdom’s burdens ensuing from the Syrian crisis, has so far reached only 21 % of the aid required under the scheme. At a meeting of the EU Regional Trust Fund in Response to the Syrian Crisis, the MADAD Fund, Jordan urged the international community to shoulder its responsibility and share burdens of hosting refugees. On 5 December, the EU announced the adoption of a new €297 million -assistance package to support refugees and host communities in Jordan and Lebanon via MADAD.

Latest UNHCR figures stated that 32,000 refugees have voluntarily returned to Syria from Jordan since the border reopened in October 2018. Jordan hosts 1.3 million refugees, with UNHCR figures from 2017 showing that the Kingdom hosts the second largest number of refugees per capita in the world, with one in 11 people forcibly exiled.

The EU said it has decided to extend the mandate of the Trust Fund which will allow its projects to run until the end of 2023. The assistance package consists of €59 million to strengthen the self-reliance of refugees and host communities in Jordan, work towards an inclusive national social protection system and the creation of decent job opportunities for Syrians. The aid also comprises €39 million for the establishment of an integrated solid waste management system in Syrian refugee camps and neighboring communities to improve health, environmental conditions and create job opportunities.

The Ministry of Planning and International Cooperation said in early November that the JRP is only 21% funded for 2019 with a deficit of around $1.89 billion. Under the plan, which helps manage the economic pressure resulting from sheltering Syrian refugees, around $2.4 billion was requested and only around $503 million has been funded, which leaves Jordan to cover any deficit resulting from this gap. Jordan recently said that the cost of hosting Syrian refugees up until the end of 2017 totaled $10.3 billion, adding that this contributed to exacerbating the Kingdom’s economic challenges and increasing the rates of debt, poverty and unemployment. (Various 08.12)

Back to Table of Contents

►►Arabian Gulf

5.7 UAE Extends Excise Tax System

On 1 December, the UAE’s Federal Tax Authority (FTA) implemented an expansion of excise taxes. The scope of excise taxes included sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices. They will be added to the list of products that have been subject to excise tax since it first came into effect in October 2017, which included tobacco and tobacco products, energy drinks, and carbonated beverages.

The FTA has previously called on all businesses registered for excise tax to comply with the minimum price it has set for tobacco products. The authority said the price cannot be set under 40 fils for one cigarette while the minimum price for water pipe tobacco, known in Arabic as ‘Mu’assel’, has been set at 10 fils per gram. The minimum standard price for a pack of 20 cigarettes has been set at AED8 and at AED25 for every 250 grams of waterpipe tobacco. This applies to all brands of cigarettes and locally traded tobacco products. (FTA 01.12)

Back to Table of Contents

5.8 Dubai’s Economy Grows by 2.1% in 2019’s First Half

Dubai’s economy grew by 2.1% y-o-y in H1/19, with the emirate’s GDP reaching Dh208.2 billion at constant prices in the first six months of 2019, according to data published by the Dubai Statistics Centre (DSC). The wholesale and retail sector supported the overall growth of the local economy thanks to Dubai’s strong infrastructure as it helped boost its re-export business and trade with countries both in the region and around the world. The trade sector posted a real growth of 3.3% backed by higher external trade, and higher re-exports which grew by 3% to reach Dh210 billion in H1/19.

The wholesale and retail sector, which contributes 25.5% to Dubai’s GDP, grew 3.3% YoY, while external trade grew by 17.7% to Dh76 billion. The transport and storage sector grew by 6.2%. The sector plays a vital role in Dubai’s economy since it is highly related to all other economic sectors.

Activity in the hospitality and restaurant sector, which contributed 5.1% to GDP, grew 2.7%. Total visitors to Dubai in H1/19 reached 8.4 million, a 3.2% growth compared to the same period in 2018, according to data from the Department of Tourism and Commerce Marketing. Manufacturing activity, which contributed 9.5% to Dubai’s GDP, grew by 0.3% in the first half of 2019, compared to the same period in 2018. Real estate activity also grew by 2.1% in the first half of 2019 compared to the same period in 2018 and contributed nearly 7.4% to the total GDP.

Adding to that, mining, construction, professional activities, administrative services, public administration, education, health, arts, entertainment, and other service activities and household activities grew 2% YoY, with a combined contribution of 23% to Dubai’s GDP. Meanwhile, agriculture, electricity, gas, water, waste management, information and communication activities, as well as financial and insurance activity, declined by 1.4%. YoY. These sectors contributed 17% to the total GDP. The decline had a slight impact on overall growth. (WAM 24.11)

Back to Table of Contents

5.9 Dubai Plans Major Expansion of Specialized Clinics

Dubai Health Authority (DHA) has announced plans to expand its services with a new four-story building dedicated to 127 specialized outpatient clinics.The Dubai Hospital building will include clinics in the fields of ophthalmology, internal medicine, orthopedics, cardiovascular, endocrine, tumors, surgery, obstetrics and gynecology, dental and reproductive medicine.The DHA has signed a memorandum of understanding (MoU) with Emirates Islamic Bank to support the initiative by donating AED25 million to build the building.

The specialized clinics will have the capacity of 254 patients per hour while a radiology facility will have the capacity of 46 patients per hour.Construction of the 32,100 square meter building, which is two and half times bigger than existing specialized clinics in Dubai Hospital, is expected to start in the first quarter of 2020.The expansion project aims to move existing specialized medical services in the hospital to the new building to enhance treatment and diagnostic services and increase capacity to meet growing demand from the UAE and abroad.The plan for the new building comes as the DHA reported that 2.17 million customers visited outpatient clinics across its facilities in 2018, out of which, 360,000 visited Dubai Hospital’s outpatient clinics. (DHA 09.12)

Back to Table of Contents

5.10 Ajman Crown Prince Launches $272 Million Medical City Project

Sheikh Ammar bin Humaid Al Nuaimi, Crown Prince of Ajman and chairman of Ajman Executive Council, has launched the $272 million Thumbay Medicity project in the emirate.He also inaugurated the Thumbay University Hospital at Thumbay Medicity, a new regional hub of futuristic medical education, state-of-the-art healthcare and research, built by the Thumbay Group. The Thumbay University Hospital is a dedicated 100-bed long-term care and rehabilitation unit with an upcoming center for oncology as well as 10 surgical suites for all major specialties, a 10-bed dialysis unit and other healthcare facilities.

The hospital has a “therapeutic garden” for better relaxation and holistic recovery of in-patients while Marhaba Services, personalized fast track services for patients, are also available, in addition to Presidential Suite Rooms, VIP Rooms and Private Rooms.The hospital also has a dedicated medical tourism department. (WAM 09.12)

Back to Table of Contents

5.11 Saudi Budget Deficit Set to Grow to $50 Billion in 2020

On 9 December, Saudi Arabia said its budget deficit for next year would widen as the world’s top oil exporter faces tumbling oil prices and production cuts.The kingdom projected a budget deficit of $50 billion for 2020, for the seventh year in a row, up $15 billion on this year. The announcement followed a cabinet meeting chaired by King Salman, who said Riyadh would also cut spending for next year in a rare belt-tightening measure.Spending was projected at $272 billion, down 7.8% on 2019 estimates while revenues were estimated at $222 billion, also lower by 14.6%.

Oil prices have remained sluggish despite recent additional production cuts agreed by OPEC and its allies. Oil income contributes to more than two-thirds of Saudi public revenues. Riyadh has also committed to larger production cuts to support prices.King Salman said his government is determined to continue to diversify sources of income and sway the kingdom away from reliance on oil. The finance ministry later said that actual spending in 2019 came at $279.5 billion and revenues at $244.5 billion, leaving the same projected shortfall of $35 billion.Saudi Arabia has posted a budget deficit each year since 2014 when oil prices crashed. (MoF 09.12)

Back to Table of Contents

♦♦North Africa

5.12 Egypt’s GDP Growth to Reach 5.6% in FY 2019/20

Egypt’s GDP growth slowed marginally in the first quarter of FY2019/20, which ran from July to September, according to preliminary financial indices from a FocusEconomics report. FocusEconomics expects GDP growth of 5.6% in FY 2019/20, which is up 0.1% from last month’s forecast. For FY 2020/21, FocusEconomics forecast an economic growth of 5.5%.

Although the comprehensive financial data are not yet available, Egypt’s private consumption was likely strong, given that inflation cooled significantly in Q1/20 and that the unemployment dropped to 7.5% in 4Q19. Moreover, upbeat bank lending in the first two months of Q1/20 suggests fixed investment held up well, while recent improvements in the ease of doing business in Egypt, as highlighted by the World Bank’s new Doing Business Report, should have supported investment activity.

FocusEconomics expects total investments to grow 11.5% in FY 2019/20, which is down 0.1% from the last month’s forecast, and 10.3% in FY 2020/21. The report forecasts that economic growth should stabilize in FY 2019/20. Particularly, higher government spending, improved ease of doing business and lower interest rates should support fixed investment growth. However, the report indicates that weak global growth will weigh on the external sector, while security risks could deter tourist arrivals.

The report cites that the Egyptian pound traded at EGP 16.11 per US dollar. However, FocusEconomics expects the pound to depreciate going forward after strengthening significantly this calendar year, partly as the CBE is expected to continue easing monetary policy. It sees the pound ending 2020 at EGP 16.91 per US dollar and 2021 at EGP 17.94 per US dollar. (DNE 28.11)

Back to Table of Contents

5.13 Egypt’s Tiba-1 Communications Satellite Successfully Launched Into Orbit

On 26 November, Egypt has launched its first communications satellite Tiba-1 into its orbit. The Egyptian government described the move as an improvement to the telecommunications infrastructure, internet services, and attracting investment to Egypt. It also considers it a cornerstone to support development projects not only in Egypt, but also in Africa and the Arab region. Arianespace, a commercial European launch company, launched the 5.6-tonne-satellite Tiba-1 from a space center in French Guiana department.

TIBA-1 is a civil and government telecommunications satellite for Egypt developed by Thales Alenia Space and Airbus Defense and Space as co-prime contractors. The satellite will be owned and operated by the government of Egypt, and will remain in orbit for at least 15 years to provide communication and internet services over every inch of Egypt. TIBA-1 is the fourth satellite to be launched by Arianespace for Egypt, as the company has deployed three satellites for the operator NileSat between 1998 and 2010. (DNE 28.11)

Back to Table of Contents

5.14 Egypt’s Inflation Rate Increases by 0.5%

Egypt’s year-on-year inflation rate for consumer prices in urban areas has increased to 3.6% in November, up from 3.1% in October, with a total increase of 0.5%, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced on 10 December. Meanwhile, Egypt’s total inflation rate recorded 2.7% in November, down from 15.6% in the same month in 2018. The inflation rate is expected to drop to 0.5% in December, but the year-on-year rate it is expected to go up to 0.7%. (CAPMAS 10.12)

Back to Table of Contents

5.15 Morocco Considers Making Exchange Rate More Flexible in January

Morocco’s central bank, Bank al-Maghrib, hosted a workshop with the European Bank for Reconstruction and Development (EBRD) to discuss making the dirham exchange rate more flexible. Morocco may take the next step in its gradual liberalization of the dirham in January 2020. The reform would be “an important step towards enhancing transparency,” said Abderrahim Bouazza, CEO of Bank al-Maghrib.

The Moroccan dirham is pegged to a “currency basket” of the euro and US dollar, weighted 60% to the euro and 40% to the US dollar. Some of the world’s strongest currencies, such as the US dollar and euro, are traded openly in the market: If a buyer and seller agree on the exchange rate, they are free to exchange money at whatever rate they choose. Other currencies, such as the Emirati dirham, have a “fixed exchange rate,” meaning that it is illegal to trade them for another currency unless using the established rate. Sometimes fixed rates lead to a vastly different black market rate when the central bank declares the currency’s worth to be different than sellers or buyers consider it.

Since 2018, Morocco has taken a middle of the road approach, allowing the dirham to be traded for international currencies within a certain range of exchange rates. On 15 January 2018, the central bank began a process of liberalizing the Moroccan exchange rate so that it could be more flexible in the face of external market shocks, such as the 2008 global recession. Before the process began, the dirham could only be traded within a range of 0.03% above and below the established exchange rate. In 2018, Morocco widened the range of the flexible exchange rate to 2.5% above and below the set rate. The workshop’s purpose was to discuss the possible effects of further reform in the dirham’s monetary index, according to statements from EBRD and the Moroccan central bank. The International Monetary Fund (IMF) worked with Morocco to gradually introduce a more flexible exchange rate. In July 2019, the IMF again encouraged Morocco to “use the current window of opportunity” to expand its exchange rate flexibility. (MWN 28.11)

Back to Table of Contents

5.16 Germany-Morocco Sign Sustainable Economic Growth Agreement

Morocco signed a memorandum with Germany for the setting up of a “reform partnership,” in the form of a contribution from Germany within the framework of the G20 Initiative “Compact with Africa.” Moroccan Minister of Economy and Finance Benchaaboun and German Development Minister Müller signed the memorandum on 30 November. The reform partnership is in line with plans announced at the G20 Investment Summit in Berlin. The German-African Business Association and the Sub-Saharan Africa Initiative of German Business (SAFRI) organized the conference. The Compact with Africa (CWA) was initiated under the German G20 Presidency to promote private investment in Africa. Its primary objective is to increase the attractiveness of private investment.

Under the partnership, Germany will provide €571 million over the period of 2020-2022 to support the implementation of the reforms that Morocco has undertaken. The reforms involve improving the country’s business and investment climate and financial sector, as well as strengthening advanced regionalization. They aim to further develop the potential of the private sector and promote sustainable economic growth. The program focuses in particular on facilitating access to financing and improving the framework conditions for the support and development of Small and Medium-Sized Enterprises (SMEs) and start-ups, in order to turn them into a real lever for economic and social inclusion. (MAP 01.12).

Back to Table of Contents

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s 11 Month Exports Surpasses $165 Billion

Turkey’s foreign trade gap has shrunk significantly, as its exports increased and imports declined over the course of 11 months of this year. Indicating the gap between exports and imports, the foreign trade deficit fell 51.84% to $25.16 billion, down from around $52.25 billion in the January-November period of 2018. Twelve-month exports reached $179.86 billion. Imports, on the other hand, went down by 11.29% year-on-year over the January-November period totaling $190.23 billion.

Turkish exports in November totaled $16.2 billion, the fourth-highest monthly export figure in 11 months. Exports over the month marked a 1.14% decline year-on-year. As for imports, these increased by 11.44% last month to nearly $18.17 billion. There was a significant decrease in imports in H1/19, while the recent increase in imports had positive aspects due to the increase in both production and investments. Turkey’s export-import coverage ratio rose to 86.8% this January-November, up from 75.6% in the same period last year.

The automotive sector took the lead with $2.7 billion in exports, followed by the chemicals sector with $1.8 billion. Ready-made clothing and apparel sector reached $1.5 billion, putting it in third place. Rising by more than 100% over the period were chemical product exports to Lebanon, Nigeria, Singapore, the Netherlands and Slovenia, steel products to Saudi Arabia and Ukraine, automotive exports to Azerbaijan, and hazelnut exports to Italy.

“The EU took the largest share in Turkey’s export with a volume of $7.7 billion, or 47.5% of total exports, followed by the Mideast with $3.2 billion, non-EU countries ($1.4 billion) and Asian countries ($1.1 billion). Germany, Iraq, and the UK were the leading 3 recipients if Turkish exports. (Various 02.12)

Back to Table of Contents

6.2 Turkish Imports Jump in November While Exports Contract

Turkish imports climbed at an annual rate of 11.4% in November, according to preliminary data. Imports rose to $18.2 billion, the Trade Ministry said. Exports fell by an annual 1.1% to $16.2 billion. The overall trade deficit was about $2 billion.

Turkey’s economy is recovering from a currency crisis in the summer of 2018 that ravaged consumer demand. The economic downturn also helped rebalance the economy as imports contracted sharply and exports climbed. That trend now appears to be reversing.

Turkey’s foreign trade deficit more than tripled in October, the Turkish Statistical Institute said. The deficit widened to $1.81 billion from $497 million in October last year. The trade gap had increased by an annual 6.6% in September and by 1.2% in August. It narrowed 47% in July. In November, exports covered 89% of imports, the ministry said. The ratio was 90% in October. (TurkStat 02.12)

Back to Table of Contents

6.3 Greece’s EU-Harmonized Inflation Increases to 0.5% in November

Greece’s annual EU-harmonized inflation rate accelerated in November, statistics service ELSTAT data showed on 10 December. The reading was 0.5% from -0.3%% in October. The data also showed that headline consumer price inflation swinging to positive territory at 0.2% from -0.7% in the previous month.

Greece had been in a protracted deflation mode since March 2013 based on its headline index, as wage and pension cuts and a multi-year recession took a heavy toll on household incomes. Deflation in the country hit its highest level in Nov. 2013 when consumer prices registered a 2.9% year-on-year decline. The economy emerged from deflation in June 2016. Eurozone inflation jumped to 1% in November from 0.7% in October. (ELSTAT 10.12)

Back to Table of Contents

7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Columbia University Launches Dual Degree Program with Tel Aviv University

On 5 December, Columbia University announced that it will launch the Dual Degree Program between Tel Aviv University and Columbia University.The program, which will welcome its inaugural class in the fall of 2020, transcends traditional study abroad opportunities by providing the chance to pursue a rigorous undergraduate liberal arts education spanning two continents. Upon completion of the four-year program, graduates earn two bachelor’s degrees, one from each institution.

The Program joins the Columbia University School of General Studies (GS) current portfolio of highly-regarded international undergraduate dual and joint degree programs with Sciences Po, Trinity College Dublin, City University of Hong Kong, and List College of the Jewish Theological Seminary (JTS). Created in 1954, the Joint Program with JTS was the first program of its kind to be established at GS.

Students spend years one and two at Tel Aviv University (TAU), Israel’s largest and most comprehensive higher education institution, studying within one of eight academic programs, after which they matriculate at Columbia to complete a major and the University’s core curriculum in years three and four. Dedicated Dual Degree Program advisors from both TAU and Columbia are assigned to students as soon as they enroll, providing guidance and support on academics and student life.This multidisciplinary educational experience, focused in the humanities and social sciences, provides students with a strong liberal arts education while empowering them to succeed in an increasingly complex and fast-changing world.

Tel Aviv University (TAU) is Israel’s largest and most comprehensive institution of higher learning, home to over 30,000 students studying in nine faculties and over 125 schools and departments across the spectrum of sciences, humanities and the arts. Consistently ranked in the top 20 in the world in terms of scientific citations and among the top 100 universities internationally, Tel Aviv University is also Israel’s first choice for students, and its graduates are the most sought after by Israeli companies. (Columbia University 05.12)

Back to Table of Contents

7.2 Bolivia to Renew its Ties With Israel

Bolivia announced that it will restore diplomatic ties with Israel, a decade after then-President Evo Morales severed relations because of the 2008 – 2009’s Operation Cast Lead. The renewal of ties with Israel was announced by interim Foreign Minister Longaric as part of an overhaul of Bolivia’s foreign policy following Morales’s resignation this month. Many Israeli tourists visited Bolivia before Morales cut off relations with Israel, and the hope is that they will return, Longaric said. Foreign Minister Katz welcomed the Bolivian announcement.

The ouster of Bolivia’s former hostile president, Morales, and replacement with a “friendly government” had also made it possible, Katz said. Morales, who espoused socialism, claimed victory in a 20 October presidential election. But opposition protesters alleged fraud and the military turned on Morales, forcing him to resign and seek asylum in Mexico. (IH 29.110).

Back to Table of Contents

*REGIONAL:

7.3 US to Appoint Ambassador to Sudan for First Time in 23 Years

On 4 December, the United States said it would name an ambassador to Sudan for the first time in 23 years as it welcomed the country’s new reformist civilian leader.The U.S. hailed early steps taken by Prime Minister Abdalla Hamdok to “break with the policies and practices of the previous regime,” which had tense relations with the West.Secretary of State Mike Pompeo announced that the U.S. would appoint an ambassador to Khartoum, subject to Senate confirmation, and that Sudan would restore full-level representation in Washington.

Hamdok, a British-educated former diplomat and U.N. official, is the first Sudanese leader to visit Washington since 1985.However, he had a low-key welcome, meeting the State Department number-three, David Hale, as well as lawmakers. Both Pompeo and President Donald Trump were away on foreign travel.

Hamdok took charge in August after months of demonstrations led by young people that brought down veteran strongman Omar al-Bashir and then a military council that had tried to stay in power.The protests were triggered by discontent over the high cost of bread and other economic concerns. The United States had tense relations with Bashir, who took power in 1989 and embraced Islamism, including welcoming Al-Qaida leader Osama bin Laden. (AFP 04.12

Back to Table of Contents

7.4 Saudi Restaurants No Longer Need To Segregate Women and Men

Women in Saudi Arabia will no longer need to use separate entrances from men or sit behind partitions at restaurants in the latest measure announced by the government that upends a major hallmark of conservative restrictions that had been in place for decades.The decision, which essentially erodes one of the most visible gender segregation restrictions in place, was quietly announced on 8 December in a lengthy and technically worded statement by the Municipal and Rural Affairs Ministry.

While some restaurants and cafes in Jedda and Riyadh’s upscale hotels had already been allowing unrelated men and women to sit freely, the move codifies what has been a sensitive issue in the past among traditional Saudis who view gender segregation as a religious requirement. Despite that, neighboring Muslim countries do not have similar rules.Restaurants and cafes in Saudi Arabia, including major Western chains like Starbucks, are currently segregated by “family” sections allocated for women who are out on their own or who are accompanied by male relatives, and “singles” sections for just men. Many also have separate entrances for women and partitions or rooms for families where women are not visible to single men. In smaller restaurants or cafes with no space for segregation, women are not allowed in.Across Saudi Arabia, the norm has been that unrelated men and women are not permitted to mix in public. Government-run schools and most public universities remain segregated, as are most Saudi weddings.

In recent years, however, Saudi Crown Prince Mohammed bin Salman has pushed for sweeping social reforms,with women and men now able to attend concerts and movie theaters that were once banned. He also curtailed the powers of the country’s religious police, who had been enforcers of conservative social norms, like gender segregation in public.Two years ago, women for the first time were allowed to attend sports events in stadiums in the so-called “family” sections. Young girls in recent years have also been allowed access to physical education and sports in school, a right that only boys had been afforded. (AP 09.12)

Back to Table of Contents

7.5 Kurdish Self-Identification in Turkey Doubles in 10 Years

Turkish citizens who self-identify as Kurdish have almost doubled between 2008 and 2018, according to the 2018 Lifestyles and Gender report by pollster Konda. The ratio of men who self-identified as Kurdish rose from 9% in 2008 to 16% in 2018, with the 2008 data including the Zaza ethnicity among the Kurdish population, the study found. In 2018, 2% of men identified as Zaza, an ethnic group related to Kurds.

Eight percent of women self-identified as Kurdish and Zaza in 2008, and the ratio doubled to 16% in 2018. The survey, conducted with a total of 5,793 people throughout Turkey, said the almost doubling in the percentage of citizens of Turkey who identify as Kurdish is in part due to the increase in population. (Ahval 02.12)

Back to Table of Contents

7.6 Turkey Places 40th Among 41 Countries in Social Justice Index

Turkey has ranked 40th among 41 EU and Organization for Economic Co-operation and Development (OECD) countries in a social justice index measuring categories such as education and health.The country placed 31st in poverty prevention, 41st in access to equal education, 37th in access to the labor market, 39th in inclusion in social life and non-discrimination, 18th in intergenerational justice, and 36th in health, the annual report prepared by Germany’s Bertelsmann Stiftung foundation found.Turkey’s measured risk of poverty dropped from 17.5% to 14.9% since the 2009. However, this figure still remains high in comparison to other countries included in the study.

Turkey is recovering from a deep economic downturn sparked by a currency crisis in the summer of 2018, pushing inflation to 25.2%, the highest level in a decade and a half.The country hit the bottom of the index with regard to democracy quality, declining by 2.0 points relative to its 2014 level.In the aftermath of a coup attempt that Turkish President Erdogan’s Justice and Development Party (AKP) government survived in July 2016, there have been serious concerns about Turkey’s human rights and rule of law.Only Mexico lagged behind Turkey, according to the study. (Various 08.12)

Back to Table of Contents

7.7 PISA Assessment finds Cyprus Achieving a Low Ranking

Cyprus scored below average in yet another international student assessment to measure school standards, but stakeholders argue such tests are not a clear reflection of a country’s education system. In the 2018 International Student Assessment known as PISA, Cyprus came 50 among 77 countries when for reading and understanding a text, dropping 3 spots compared to the 2015 report. Cypriot pupils under 16 came 43 and 47 for math and science respectively. PISA 2018, carried out by the OECD, assessed the cumulative outcomes of education and learning at age 15 a point when most children are still enrolled in formal education, before leaving the school system.

The OECD average was 487. Pupils in Cyprus scored 424 points, ranking Cyprus 50th of 77 countries. In 2015 Cyprus ranked 47, so improvement has been marginal if any. In math, the OECD average was 489. Cyprus scored 451 points and shared 43rd place with Greece among 78 countries. In 2015, it was ranked 49. For science, the OECD average was 489. Cyprus scored 439 points, placing it 47 from 78 countries, two places up from 49 in 2015.

The teacher’s union of Cyprus tertiary education (OELMEK) says responsibility for student failure in PISA, but also in other international assessment programs falls squarely on the shoulders of the Ministry of Education. The poor performance of pupils in the assessment has to do with the inability of teachers to find time to teach them what PISA is asking for, and this, he said, should be a concern for the Ministry. (FM 07.12)

Back to Table of Contents

8: ISRAEL LIFE SCIENCE NEWS

8.1 Israel’s Sheba Medical Center Becomes World’s First Fully VR-Based Hospital

Tel Aviv’s XRHealth, a leader in extended reality and therapeutic applications, and Sheba Medical Center, ranked by Newsweek magazine at the 10th best hospital in the world, announced that they are partnering to create the first fully VR-based hospital, utilizing XRHealth’s technology throughout each department. The integration of virtual reality technology is part of the medical center’s innovation efforts and commitment to digital health.

Sheba Medical Center is strategically transforming the hospital into a center of innovation that embodies a startup culture and that encourages the hospital’s complete transformation to digital health. The hospital is guided by a strategy named Innovation ARC that stands for accelerate, redesign, and collaborate with a focus on investing in digital health, collaborating with key partners and inspiring innovation. As part of this vision, Sheba is partnering with XRHealth to use their VR platform for cognitive therapy, physical therapy, pain relief, and many other applications throughout the entire hospital.

XRHealth’s flagship product, the VRHealth Platform, is offered to healthcare facilities and provides them with VR medical apps, including cognitive assessment and training apps, motor function apps, pain management apps, and behavioral apps. The VRHealth and ARHealth platforms are particularly useful for medical professionals since they can analyze patient data in real-time to track their recovery both on-site and remotely. (Israel Hayom 27.11)

Back to Table of Contents

8.2 Zebra Medical Vision Secures a Fourth FDA Clearance for AI for Medical Imaging

Zebra Medical Vision announced its fourth FDA 510(k) clearance for the HealthCXR device intended for the identification and triaging of pleural effusion in chest X-rays. The recently cleared AI product expands its growing AI1 bundle of triage and prioritization applications for chest X-rays. Zebra-Med’s new solution automatically identifies findings suggestive of pleural effusion based on CR, DR, and/or DX scans and notifies radiologists, enabling them to better address and prioritize cases.

Zebra-Med is now part of the Digital Health Software Precertification (Pre-Cert) Pilot Program. As outlined by the FDA, the program will help inform the development of a future regulatory model that will provide a more streamlined and efficient oversight of software-based medical devices. In the Pre-Cert program, the FDA is proposing that software products from pre-certified companies will continue to meet the same safety and efficacy standards that the agency expects for products that have followed the standard path to market.

Kibbutz Shefayim Zebra Medical Vision’s imaging analytics platform allows healthcare institutions to identify patients at risk of disease and offer improved, preventative treatment pathways, to improve patient care. The company is funded by Khosla Ventures, Marc Benioff, Intermountain Investment Fund, OurCrowd Qure, Aurum, aMoon, Nvidia, J&J and Dolby Ventures. Zebra Medical Vision has raised $52 million in funding to date, and was named a Fast Company Top-5 AI and Machine Learning company. (Zebra Medical 27.11)

Back to Table of Contents

8.3 AstraZeneca and Jerusalem Venture Partners Sign Agreement to Develop Digital Health in Israel

AstraZeneca, the leading global pharmaceutical company, launched its official first entry into the Israeli innovation sector through its ambitious project, BeyondBio, its unique investment program in the digital health sector in Israel.Project BeyondBio was launched as part of the Memorandum of Understanding for Investment in Israel that was signed six months ago by AstraZeneca and the Israel Innovation Authority. The first investment in Israel by AstraZeneca is estimated to be about NIS 10 million.The program’s flagship project, “PLAY BeyondBio,” is envisioned to develop and promote start-ups in the digital health field in order to locate and create ground-breaking solutions that provide technological answers to the most pressing challenges and problems that the industry currently copes with.

The program is a strategic partnership between AstraZeneca and the venture capital fund, JVP, the Israel National Initiative Association, Maccabitech Healthcare Research and Innovation Institute, Morris Kahn, the Sagol Fund, and Microsoft Corporation. The program will enable local start-ups access to a wide range of resources that includes guidance and mentoring, access to databases, professional training and enrichment, finance, etc.As part of the BeyondBio project, AstraZeneca has also recently entered into partnership with the ARC Innovation Center at the Sheba Medical Center, Tel HaShomer, where the company will provide support in research and development for the challenges the healthcare system faces in Israel.

Jerusalem’s JVP Fund is a leading international fund that stands at the forefront of global technology innovation. Since its founding in 1993, it has raised $1.4 billion and has invested in more than 140 companies. During this period, JVP has led dozens of exits and launched a number of listings on Nasdaq, and as the leading Israeli venture capital fund, has been ranked by the research company, Preqin, as one of the top six most consistently performing venture capital funds in the world. JVP invests in early-stage start-ups and later-stage companies, artificial intelligence, big data, cyber-security, fintech, mobile, storage etc. (JVP 27.11)

Back to Table of Contents

8.4 Israeli Team Uses Silicon Chip to Deliver Alzheimer’s-Busting Protein to Brain

Researchers at the Technion–Israel Institute of Technology and Bar-Ilan University have developed technology they hope will help inhibit the progression of Alzheimer’s disease. The major cause of the disease is the accumulation of a protein called amyloid beta (Aβ) in brain tissues. The protein blocks and kills nerve cells, also called neurons, in different regions of the brain. This leads, in part, to damage of the “cholinergic mechanisms,” the neurons in charge of brain function. Research has previously shown that administering a specific protein, called “neural growth factor,” inhibits damage to the cholinergic mechanisms and slows the disease’s progression. The protein is known to have restorative qualities, but the problem is how to get it to the brain.

Delivering the protein to the target area is not a simple task because the brain is shielded by the blood-brain barrier from infiltration by bacteria and harmful substances in the blood. This protective barrier, however, also restricts the passage of drugs from the bloodstream to the brain, making it difficult for brain-curing medications to get through. Thus, the neural growth factor proteins, if given in drug form, do not pass through the barrier, and even if they could, they would not live long enough to make the long journey to the brain. Some clinical trials have already started injecting these neural growth factor proteins directly into the brain via a catheter, but the procedure is complicated, invasive and very risky.

Now, the Technion and Bar-Ilan University researchers say they have created nanoscale silicon chips that could meet this challenge. The chips allow the insertion of the curative protein directly into the brain and its release at the targeted tissue. These chips have a nanoscale porous structure that allows them to be loaded with large amounts of the protein. Through precise control of various features, including the dimension of the chips’ pores and the chemical properties of their surface, the researchers were able to create a silicone structure that retains the protein in its active form and then releases it gradually, over a period of about a month, to the target area in the brain. After releasing the drug, the chips safely degrade in the brain and dissolve. With the use of the chips as a vehicle, the protein no longer needs to cross the blood-brain barrier, since the chip is inserted directly into the brain.

In a series of experiments, the researchers showed that the two ways of delivering the platform into mice brains led to the desired result. The technology has also been tested on a cellular model of Alzheimer’s disease, where the protein release led to the rescue of the nerve cells. The team is already conducting pre-clinical studies on animals at Bar-Ilan and hopes to expand them to clinical trials if all goes as hoped. The research was conducted with the support of the Russel Berrie Nanotechnology Institute at the Technion. (Technion 26.11)

Back to Table of Contents

8.5 DiA & IBM Watson Health Arm Clinicians with its AI-powered Cardiac Ultrasound Software

DiA Imaging Analysis announced a collaboration with IBM Watson Health, a leading provider of innovative AI, enterprise imaging, and interoperability solutions used by medical professionals worldwide. The IBM Imaging AI Marketplace will offer DiA’s FDA-cleared, AI-powered cardiac ultrasound software, designed to assist clinicians to analyze cardiac ultrasound images automatically. Analyzing ultrasound images is often a visual process that can be challenging and highly dependent on user experience. DiA’s solutions address this challenge by assisting clinicians to objectively and accurately analyze ultrasound images, reducing the subjectivity associated with visual interpretation.

With the launch of the IBM Imaging AI Marketplace, IBM will be introducing DiA’s LVivo EF solution, one of several cardiology and general imaging AI solutions that the company has developed. DiA’s LVivo EF application offers clinicians an AI-based quantification solution that will provide automated clinical data such as Ejection Fraction (EF) and Global Longitudinal Strain (GLS). The company anticipates adding additional solutions to the Marketplace in the near future.

Beer Sheva’s DiA Imaging Analysis is the leading provider of artificial intelligence (AI) powered ultrasound analysis solutions that make ultrasound analysis smarter and accessible. By using its advanced AI-based technology, DiA assists clinicians at all levels of experience to acquire and analyze ultrasound images – objectively and accurately, improving patient management. (DiA Imaging Analysis 02.12)

Back to Table of Contents

8.6 Therapix Biosciences Continues Development of THX-210 Cannabinoids Based Treatment

Therapix Biosciences announced the progression of its RESPECTRUM product candidate into clinical stage. The company plans to initiate a randomized, double blind placebo controlled study to evaluate the efficacy, safety and tolerability of RESPECTRUM in treating patients with Autism Spectrum Disorder (ASD). The trial objective is to assess the efficacy and safety of RESPECTRUM versus cannabidiol (CBD)-rich oil by ASD severity measurements. Patient population is expected to include autistic subjects aged five to 35, and is based on the “entourage effect” phenomenon, hence the company expects improved efficacy, safety and tolerability over CBD alone.

This announcement follows Therapix’s previous October 2019 release describing positive results obtained in its pre-clinical program. The RESPECTRUM medicinal cannabis product is a proprietary novel preparation containing non-psychoactive CBD and Cannamide, the company’s proprietary palmitoylethanolamide (PEA) formulation.

Givatayim’s Therapix Biosciences is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. Their focus is creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the company is currently engaged in the following drug development programs based on tetrahydrocannabinol (THC): THX-110 for the treatment of Tourette syndrome (TS), for the treatment of obstructive sleep apnea (OSA), and for the treatment of pain; and THX-160 for the treatment of pain; and an additional drug development program based on non-psychoactive cannabinoid Cannabidiol (CBD) and palmitoylethanolamide (PEA) for the treatment of epilepsy, as well as inflammatory conditions. (Therapix Biosciences 02.12)

Back to Table of Contents

8.7 BGU & Cincinnati Children’s Researchers Technology for Removal of Secretions from Airways

BGN Technologies, the technology transfer company of Ben-Gurion University (BGU) of the Negev, announced that researchers at BGU, Cincinnati Children’s Hospital Medical Center (Cincinnati Children’s), University of Cincinnati (UC) and Soroka Medical Center, Beer Sheva, Israel have developed a novel technology for unblocking and removing secretions from airways for the treatment of patients suffering from diseases effecting the respiratory tract such as bronchiolitis, asthma, chronic obstructive pulmonary disease (COPD), and cystic fibrosis (CF).

The technology is being developed through a collaboration between professors at BGU, Soroka Medical Center, and Cincinnati Children’s. The technology introduces air pressure and acoustic pulses into the airway and lungs over a low-pressure airstream aimed to treat the core of obstructive airways pathophysiology diseases and buildup of mucus in the small airways. The idea is to simultaneously apply a combination of low frequency flow oscillations and high frequency acoustic waves to facilitate detachment of the mucus from the airway wall and removal of mucus by breaking down or agglomerating mucus chunks.

In 2012, BGU and Cincinnati Children’s entered into a multi-year collaboration to address the lack of medical devices designed specifically for children. The goal of the collaboration is to improve health outcomes for children by ensuring device design that is customized to meet children’s unique physiology and medical needs.

BGN Technologies is the technology company of Ben-Gurion University, Israel. The company brings technological innovations from the lab to the market and fosters research collaborations and entrepreneurship among researchers and students. To date, BGN Technologies has established over 100 startup companies in the fields of biotech, hi-tech, and cleantech as well as initiating leading technology hubs, incubators, and accelerators. (BGN Technologies 02.12)

Back to Table of Contents

8.8 Alpha Tau’s New Cancer Radiology Method Proves Effective

Alpha Tau Medical announced good results in its clinical trial for a new treatment method for cancer. The method, based on Alpha Radiotherapy (Alpha DaRT), differs from the radiology method currently used on most cancer patients. The new method is designed to provide more powerful and focused treatment. Alpha Tau reported a response in 100% of tumors and a full response in 78% of tumors in patients with squamous cell carcinoma of the skin and of the head and neck. 61% of the patients had already undergone some unsuccessful treatment, leading to their participation in the trial. Some 28 cancer centers were treated, and no severe or permanent side effects were reported. The results were impressive, given the fact that the patients were adults who had undergone previous treatment. Alpha Tau said that it would continue testing the treatment on other types of cancer.

A year ago, Alpha Tau raised $29 million in a financing round led by Shavit Capital, indicating the company’s intention of holding an IPO in the coming years, with a preference for a US stock exchange. Among the other participants in the round were the OurCrowd crowdfunding firm; Madison Ventures, the venture capital arm of Madison Pharma, an Israeli drug marketing company; and private investors Sir Ronald Cohen and Alan Patricof, founders of Apax Partners. Alpha Tau has raised a total of $72 million since it was founded, including $50 million since it was restarted under the name Alpha Tau.

Tel Aviv’s Alpha Tau Medical focuses on research, development and commercialization of Alpha DaRT (Diffusing Alpha-Emitters Radiation Therapy) for the treatment of solid cancer tumors. Initially developed at Tel Aviv University, Alpha DaRT was shown to be effective and safe for treating different types of cancer in multiple animal studies. The company is running its first clinical trial in several sites in the EU and is currently commencing clinical trials at over 55 leading cancer centers worldwide.(Globes 02.12)

Back to Table of Contents

8.9 New Pancreatic Cancer Treatment by Israeli Researchers Eradicates Disease in Two Weeks

In a potential breakthrough, an Israeli research group has developed a treatment for pancreatic cancer that results in 90% of cancerous cells being eradicated in just two weeks. The research group, led by Professor Malka Cohen-Armon from Tel Aviv University, and Dr. Talia Golan from the Sheba Medical Center in Ramat Gan, devised a novel way to use the PJ34 molecule, originally developed to treat stroke. When injected intravenously in mice with transplanted pancreatic cancer, the molecule caused cancerous cells to die during mitosis – a multiplication process in which one cell splits into two. Importantly, the treatment only seemed to affect the infected cells.

The ability to target only the infected cells is the Holy Grail for cancer treatment researchers, as the current chemotherapy drugs tend to affect the healthy cells as well. This indiscriminate approach takes a heavy toll on the patient’s organism, often prompting them to give up the treatment; recently, however, Israeli researchers came up with another way to solve this issue. Pancreatic cancer is one of the worst forms of this disease in terms of survival rates, with only about 5% of patients living for more than five years after being diagnosed with it. In 2018, it caused a total of 432,242 deaths, being ranked the 11th most common cancer in the world. (i24NEWS 03.12)

Back to Table of Contents

8.10 FDA Clears Sight Diagnostics’ Finger-Prick Blood Test for US Market

Sight Diagnostics announced the U.S. FDA’s 510(k) clearance of its OLO analyzer, which performs a ubiquitous and essential blood test, the “Complete Blood Count” (or CBC). OLO provides lab-grade CBC results in minutes. The analyzer is compact, easy to use, and can reduce costs in low-volume settings.The FDA clearance follows clinical trials performed at Boston Children’s Hospital, Columbia University Medical Centre and Tricore Labs, and enables OLO’s use in laboratories run by hospitals, diagnostic providers, and outpatient clinics.

The complete blood count–which enumerates and characterizes the number of red blood cells, white blood cells and platelets in a patient’s blood sample–is one of the most basic, informative tests a doctor can conduct. OLO’s FDA approval confirms its lab-grade performance while operating from just two drops of blood, using either a finger-prick or venous sample. Combined with OLO’s size, this renders the analyzer attractive in many clinical settings–where the case for high-volume laboratory equipment doesn’t add up.

Founded in 2011, Tel Aviv’s Sight Diagnostics aims to improve health through fast and pain-free diagnostic testing. Sight’s latest blood analyzer, OLO, performs a Complete Blood Count, the most commonly ordered blood test, in minutes. Sight’s method, developed over almost a decade of research, represents an advance in diagnostic methodology. Sight’s analyzers create a digital version of your blood, by capturing around 1,000 highly detailed images from just two drops; these images are then interpreted by proprietary and fully automated algorithms. (Sight 05.12)

Back to Table of Contents

8.11 OncoHost Opens Proteomics Labfor Host Response Analysis for Cancer Therapy

OncoHostannounced the opening of its new state-of-the-art high throughput proteomics laboratory for host response analysis. The lab joins a select group of specialized proteomics laboratories around the world and is the first industrial-level lab aimed at human host response in Israel.The new lab can create proteomic signatures by analyzing more than 1,000 proteins utilizing a very low volume of plasma. The analysis is used for prediction of response to treatment as well as examination of the biological processes and key proteins that are associated with non-responsiveness to treatment. The lab is operating in research mode.

OncoHost has launched an extensive clinical program with leading international academic and clinical partners. The company’s solution, PROphet platform (Predicting Responsiveness in Oncology Patients based on Host response Evaluation during Treatment), identifies key biological processes and proteins that drive host response in patients undergoing cancer treatment. This approach identifies potential targets that may be blocked in order to reduce the host response and improve patient outcomes.By analyzing the host response in a simple blood test, oncologists can tailor cancer treatment plans to improve the chance of success, providing clinical decision support to improve patient outcomes and reduce unnecessary side effects.

Binyamina’s OncoHost combines life-science research and advanced machine learning technology to develop personalized strategies to maximize the success of cancer therapy. Utilizing proprietary proteomic analysis, the company aims to understand patients’ unique response to therapy and overcome one of the major obstacles in clinical oncology today – resistance to therapy. OncoHost’s Host Response Profiling platform (PROphet) analyzes proteomic changes in blood samples to monitor the dynamics of biological processes induced by the patient (i.e., the host) in response to a given cancer therapy. This proteomic profile is highly predictive of individual patient outcome, thus enabling personalized treatment planning. PROphet also identifies potential drug targets, advancing the development of novel therapeutic strategies and rationally based combination therapies. (OncoHost 04.12)

Back to Table of Contents

8.12 Ibex & Maccabi Roll Out AI-powered Diagnostic System for Detecting Breast Cancer

Ibex Medical Analyticsand the KSM Research and Innovation Institute at Maccabi Healthcare Services, announced the deployment of the Ibex Second Read System for breast at Maccabi’s pathology institute, the largest pathology lab in Israel.Ibex Second Read is the first-ever system that detects and grades cancer in breast biopsies. The system uses an artificial intelligence (AI) powered algorithm to analyze cases in parallel to pathologists and compares between the pathologists’ diagnoses and the algorithm’s findings, subsequently alerting in case of discrepancies with high clinical importance (e.g. a missed cancer). Now used in routine clinical practice, this clinical-grade product enhances the quality control process in the lab and provides a safety net, resulting in decreased diagnostic error rates and a more efficient workflow.

The algorithm used by the Second Read system was developed by Ibex using advanced machine learning techniques and trained on data sets from Maccabi’s pathology institute. The institute was the first pathology lab in the world to implement an AI powered cancer diagnostic system in its routine practice – the Ibex Second Read system for prostate – which is now deployed in pathology labs worldwide with demonstrated success in detecting missed cancer cases.

Tel Aviv’s Ibex provides the first-ever AI-powered cancer diagnostics solution in routine clinical use in pathology labs, supporting pathologists in delivering accurate, rapid and objective diagnosis of prostate and breast biopsies. Ibex’ product is deployed across the laboratory’s workflow and builds on deep learning algorithms developed by a team of pathologists, data scientists and software engineers. The company has raised $14 million from prominent VC funds and corporate investors.

Israel’s Maccabi Healthcare Services is one of the world’s largest healthcare providers with 2.5 million members. Maccabi has long been recognized, both in Israel and abroad, as a unique and innovative health care system which leads the way in cutting edge medical technology, comprehensive and integrated computerized information systems, cost–effective management and sophisticated monitoring and evaluation tools. (Ibex Medical Analytics 04.12)

Back to Table of Contents

8.13 Eitan Group Launches New Preventative Maintenance Servicing Solution

Eitan Group’s new preventative maintenance servicing tool, “FasTestPM (preventative maintenance),” is designed to help customers maximize their investment and simplify their compliance management processes thanks to an immediate downloadable manufacturer certificate. FasTestPM will replace Eitan Group’s previous maintenance kit and will conduct full maintenance testing, including occlusion detection, air detection and pump accuracy checks.

Eitan Group’s flagship Sapphire infusion pump is reliable and easy to use, with an advanced, highly intuitive touchscreen user interface. Sapphire devices are geared for both hospital and homecare settings due to their small bedside footprint and extended battery capacity. Sapphire is designed to bring maximum flexibility to users, allowing caregivers to spend more time with patients.

Netanya’s Eitan Group is focused on infusion therapy and technologies, developing future-ready systems for hospital care and ambulatory settings, as well as wearable solutions for easy self-administration. Eitan Group initially entered the infusion market in 2009, and a decade later, with data on over 18 million liters of infusions completed, now consists of three affiliate companies: Q Core Medical, Sorrel Medical and Avoset Health. With a focus on innovating patient-centered care, and safety, the Eitan Group is reimagining infusion therapy with connected, software-based solutions. (Eitan Group 03.12)

Back to Table of Contents

8.14 RSIP Vision AI-Based Multiplex IF Image Analysis Solution for Tissue Diagnosis

RSIP Vision is introducing an AI-based multiplex IF image analysis solution for precise results in tissue diagnosis. The new solution is based on a custom deep learning technology, allowing hospitals, pharmaceutical companies and cancer centers to better analysis and develop more effective drugs and therapeutic interventions.Developing a precise AI-based approach to tissue analysis is critical to patient treatment since cellular behavior is largely impacted by the tissue microenvironment. The new solution allows precise analysis of marker expression allowing researchers to better understand the tissue landscape providing an exact indication of the immune status which could have a direct impact in therapy selection. This is driven by RSIP Vision superior ability to detect individual cells in tissue regardless of its morphology or staining intensity, combined with the ability to better separate merging cells.

The AI-based solution solves many of the challenges researchers and R&D teams face when analyzing multiplex images. It decreases false positives, significantly improves accuracy of nuclear detection and improves accuracy of phenotypic classification of cells.

Jerusalem’s RSIP Vision is a global leader in artificial intelligence, computer vision, and image processing technology. The company draws on a depth of knowledge and experience to provide customized services, sophisticated algorithms, and deep learning technology to businesses of all kinds, most notably medical devices, pharmaceuticals, and autonomous driving. RSIP Vision develops practical AI modules that ensure precision, reduce time to market, cut costs, and free the core R&D team staff for other endeavors, saving significant time and money and giving businesses a real edge over the competition. (RSIP Vision 03.12)

Back to Table of Contents

8.15 Sartorius Acquires a Majority Stake in Cell Culture Media Specialist Biological Industries

Göttingen, Germany’s Sartorius, a leading international partner of life science research and the biopharmaceutical industry, signed an agreement to acquire a majority stake in the Israeli cell culture media developer and manufacturer Biological Industries. For approximately €45 million in cash, Sartorius is acquiring just over 50% of the shares of the company from its owners, Kibbutz Beit HaEmek and private equity fund Fortissimo Capital. An option to acquire a further 20% of the shares within three years was also agreed. The transaction is subject to customary closing conditions and expected to be finalized by mid-December.

Biological Industries focuses on cell culture media, particularly for cell and gene therapy, regenerative medicine and other advanced therapies. Founded in 1981, the company currently employs approximately 130 people mainly at its headquarters, R&D and manufacturing site close to Haifa, Israel, and at sales locations in the USA, Europe and China. Biological Industries has recorded significant revenue growth and expects to achieve sales of approximately €25 million with a double-digit operating EBITDA margin in the current year. (Sartorius 05.12)

Back to Table of Contents

8.16 Tress Capital Makes Strategic Investment in iCAN, an Israeli Cannabis Innovator

Tress Capital announced a strategic investment into iCAN.Tress’s investment will align its mostly North American strategic cannabis investments with that of iCAN, an international cannabis incubator corporation based in Israel. The companies are working on joint strategic initiatives that create an unmatched global canvas of cannabis industry coverage and capabilities.

Tress’s robust portfolio of cannabis technology companies in North America together with iCAN’s strong IP and Israel-focused portfolio will create synergies and drive expansion for the two companies. This deal also enables the organizations to explore leveraging key resources to create truly peerless global capabilities and opportunities for their clients, portfolio companies and shareholders. Tress and iCAN both believe in a responsible approach to the rollout of the cannabis industry. The investment funds will be used to grow the global CannaTech footprint and incubate cannabis-related businesses.

Beit Shemesh’s iCAN: Israel-Cannabis is building the Global Cannabis Ecosystem. iCAN is committed to accelerate Israel’s Canna-Technology industry, capitalizing on Israeli innovation and a leading cannabis regulatory environment to bring premier products to market. (Tress Capital 09.12)

Back to Table of Contents

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Air Europa Selects Riskified PSD2 Optimization to Improve Customer Experience

Riskified announced that Air Europa, the airline division of Globalia, has chosen Riskified PSD2 Optimization to allow the airline to maintain a frictionless booking experience and maximize revenue under the EU’s new PSD2 regulation. Riskified data shows that European merchants could miss out on up to 15% of their revenue if they do not proactively address the regulation.

Riskified PSD2 Optimization leverages machine learning to significantly increase the percentage of orders that undergo TRA. Moreover, PSD2 Optimization collects data from Riskified’s merchant network, providing insight into issuers and acquirers performance under the regulation. Using this product, Air Europa expects to capture £7-£12 million of revenue that would have otherwise been lost to SCA-related cart abandonment within the first year of PSD2 coming into force. Since 2017, Air Europa has used Riskified’s chargeback-guarantee fraud-prevention solution to increase approved transactions and reduce costs. In that time, Riskified has succeeded in lifting Air Europa’s order approval rate by 10% and reducing chargebacks by 95%. The company is among the first merchants to integrate Riskified PSD2 Optimization.

Tel Aviv’s Riskified helps the e-commerce industry realize its full potential by making it universally safe, accessible and economic. The world’s largest brands – from airlines to luxury fashion houses to gift card marketplaces – trust us to increase revenue, manage risk and enhance their customer experience. Merchants lose billions of dollars to legacy fraud solutions, payment failures, high-friction verification methods and more. Riskified uses powerful machine-learning algorithms to recognize legitimate customers and keep them moving toward conversion. Using Riskified, merchants can safely approve more orders, expand internationally and fulfill omnichannel flows while providing a frictionless customer experience. (Riskified 27.11)

Back to Table of Contents

9.2 Nemesysco Empowers Emotion Detection and Analysis Service for Operations in Japan

Nemesysco announced that Tokyo’s CENTRIC, a prominent provider of outsourced call center services in Japan, is using the company’s core QA7 and Layered Voice Analysis (LVA) technologies in its award winning Deep SEA service. CENTRIC is leveraging Nemesysco’s QA7 technology to enable its Deep SEA emotion detection and analysis service. The QA7 technology provides users of the Deep SEA service with real-time indications of the current emotional state of callers. Deep SEA is an add-on service that CENTRIC offers its customers as part of its outsourced call center package. The Deep SEA service is applied in live operations to optimize outbound marketing and sales campaigns as well as identify upsell opportunities during inbound calls. Based on the emotional responses measured by the QA7 technology, call center agents receive real-time recommendations, including tailored scripts on how to approach each caller.

The QA7 technology is designed to reveal the genuine emotional state of a person. It detects and measures uncontrolled psychophysiological changes to a person’s voice during conversations. The technology is indifferent to language or the content of speech and works by analyzing over 150 tiny bio-markers that correlate with many key human emotions. Examples of emotions that can be detected and measured by the QA7 technology include excitement, stress, uncertainty, anger, happiness, hesitation, embarrassment and more.

Kadima’s Nemesysco is a leading provider voice analytics technologies and solutions for genuine emotion detection. The company’s patented Layered Voice Analysis (LVA™) reveals and measures the emotions of a speaker during voice-based communications. Nemesysco’s technology has applications for call centers, insurance and financial services, human resources, mental health and more. (Nemesysco 26.11)

Back to Table of Contents

9.3 CloudAlly a Leading Cloud Backup Software in Newsweek’s Best Business Tools 2019

CloudAlly was ranked in the top five backup software solutions on Newsweek’s Best Business Tools of 2019. With the increase in the number of breaches and malware attacks, one in three enterprises has suffered extensive data loss in the cloud. SaaS backup and recovery provides a solution to this problem with a real-time copy of data to quickly restore in the event of a data breach.

The high ranking of CloudAlly’s Office 365 cloud backup solution affirms its maturity, robustness and reliability. CloudAlly’s Office 365 backup ensures the availability and protection of Office 365 data, guaranteeing compliance with regulatory requirements, and preventing intentional and unintentional data loss while greatly improving recovery time objectives.

Newsweek’s Best Business Tools 2019 list is based on a nationwide survey of more than 10,000 professional users of software and software service providers. Survey participants were asked about their willingness to recommend the software provider and to rate the provider in categories of trust, service promise, reliability, security, improvement and satisfaction.

Established in 2011, Ra’anana’s CloudAlly is a comprehensive and robust cloud backup solution. It is an industry pioneer and was the first to introduce Office 365 cloud to cloud backup. CloudAlly offers reliable backup and quick recovery for various SaaS platforms including Office 365, SharePoint/OneDrive, G Suite, Salesforce, Box and Dropbox. Its products are built on the highly-secure Amazon S3 platform and are compliant with ISO 27001, GDPR and HIPAA. With automated backups, unlimited storage, and granular/point-in-time restores, CloudAlly removes the stress of data loss by ensuring quick data recovery and seamless business continuity. (CloudAlly 02.12)

Back to Table of Contents

9.4 UVeye Unveils Industry-Leading Vehicle-Inspection Technology

UVeye plans to unveil an industry leading vehicle-inspection system based on deep-learning technology that can identify even the smallest exterior defects on any vehicle within seconds.The UVeye system uses multiple high-resolution cameras to capture exterior assembly defects, post-production damage, missing components and other quality-related issues. Atlas generates thousands of images per second at multiple angles to detect scratches or dents as small as two millimeters in diameter.

The company has raised more than $35 million in investment capital to begin the deployment of inspection systems at Volvo, Skoda, Daimler and Toyota. UVeye’s deep-learning technology was initially developed for the security industry to detect weapons, explosives, illegal drugs and other contraband.

Tel Aviv’s UVeye provides automated inspection systems for vehicles, powered by artificial intelligence and proprietary hardware.The company’s first line of products, deployed all over the world in homeland-security and defense markets, enables customers to automatically scan, detect and identify anomalies, modifications or foreign objects in the undercarriage of virtually any vehicle. UVeye is setting new standards for vehicle inspection in the automotive and security industries by changing basic approaches to vehicle inspection through automated processes, improved accuracy and standardized inspection systems. (UVeye 04.12)

Back to Table of Contents

9.5 XM Cyber’s First Breach and Attack Simulation (BAS) for Hybrid Cloud Environments

XM Cyberannounced that its HaXM platform is now the first BAS solution that can simulate attacks on Amazon Web Services (AWS). XM Cyber is the only BAS provider to address the sole crucial question for enterprises – “are my critical assets really secure?” – both on-prem and in the cloud.XM Cyber provides the only hyper-realistic BAS solution: an advanced persistent threat (APT) automated and continuous simulation and remediation platform. XM Cyber allows users to see their network from the eyes of the attacker, running continuously 24/7 to find and show all the hidden attack vectors that can go under the radar of most protective measures.

HaXM reduces cybersecurity risk by continuously simulating advanced persistent threats against an organization’s critical assets, identifying security gaps, and prioritizing remediation. Implementing HaXM in an AWS environment is a simple process requiring less than an hour.The HaXM platform audits AWS configurations via AWS API and uses that information to calculate different attack vectors. By simulating attacks on an organization’s AWS infrastructure, it is possible to find misconfigurations leading to risks such as IAM privileges escalations, access token theft or leveraging of the Cloud Instance Metadata API to pivot across the cloud. The platform enables users to operate as an “automated purple team,” combining red and blue teams’ processes to ensure that organizations are always one step ahead of the attack.

Herzliya’s XM Cyber provides the first fully automated breach and attack simulation (BAS) platform to continuously expose attack vectors, from breach point to any organizational critical asset. This continuous loop of automated red teaming is completed by ongoing and prioritized actionable remediation of security gaps. In effect, HaXM® by XM Cyber operates as an automated purple team that fluidly combines red team and blue team processes to ensure that organizations are always one step ahead of the attack. (XM Cyber 04.12)

Back to Table of Contents

9.6 Delta Galil Receives US Patent for Touch&Go Hook and Eye Bra Accessory

Delta Galil Industriesannounced that it has been issued a patent for its Touch&Go™ hook and eye accessory – US Patent 10,212,977 B2.The components of the Touch&Go hook and eye slide easily into one another, using flat wide hooks rather than the small round versions more common on the market. This allows the two components to easily click into one another, with no need for the wearer to search for the connecting piece. The intuitive fastener can be used on bras of all kinds, and its one-click on-and-off application is especially well suited for sports bras.

Caesarea’s Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children. Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality. Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men; babywear, activewear, sleepwear, and leisurewear. (Delta Galil 09.12)

Back to Table of Contents

9.7 SAM Enables Telenet to be Europe’sFirst ISP Providing IoT Security for Its Subscribers

SAM Seamless Networkannounced a partnership agreement with Telenet Group, the largest provider of cable broadband services in Belgium. SAM will provide Telenet’s broadband subscribers with smart security across their home network, made available to their customers via the operator’s Safespot offering. The agreement with Telenet Group represents the first direct partnership deal for SAM with a European service provider. The company’s technology is already integrated on parts of the network of Bezeq, Israel’s largest telecommunications operator. SAM is also currently operating pilot programs with additional top tier service providers in Europe and North America.

SAM’s cybersecurity software protects unmanaged networks (such as home, SMBs, SOHO or 5G networks), and all associated connected devices directly at the source of entry at the ISPs via the router. The software is installed on top of any gateway (including legacy and pre-market), without involving additional labor. It has an ultra-light footprint and does not require any extra hardware or additions to be installed on the connected devices.Telenet has packaged SAM’s security service to customers via their Safespot offering, incorporating an advanced antivirus protection that can be installed on all laptops, tablets and smartphones in the home. Safepot scans traffic and highlights any suspicious behavior of appliances connected to the home network, empowering users to block any device that appears to be compromised as well as phishing emails and fake adverts.

Tel Aviv’s SAM provides a software-based security solution that integrates seamlessly with any platform and protects local area networks by securing the gateway and all of its connected devices. Installed remotely on existing gateways, SAM doesn’t require any additional hardware or a technician to provide comprehensive network security. The solution is offered as a service, allowing users to have the enterprise-grade protection including virtually patching vulnerabilities such as KRACK and other high-level, targeted attacks. SAM works with leading chipset manufacturers, including Intel, to provide network security from the source. (SAM 09.12)

Back to Table of Contents

9.8 Rezilion Launches Autonomous Solution for Securing Cloud Production Environments

Rezilion announced its emergence from stealth and $8 million in seed funding led by Jerusalem Venture Partners (JVP). JVP was joined by Kindred Capital, LocalGlobeת Samsung NEXT. The round also included participation from angel investors and others. The investment will be used to expand their R&D team in Israel, as well as build sales operations and support in the US.

Modern enterprise infrastructure is scaling and changing at an overwhelming pace. As companies adopt automated DevOps technologies the rate of deployments grows exponentially, yet security teams are working with fixed budgets and limited human resources, and they struggle to keep up with the resulting security exposure explosion. Current cloud protection solutions require manual policy configuration and alert response. Rezilion’s innovative approach requires no human configuration and automatically returns any compromised service to its known-good state, thus enabling DevOps teams to continuously deploy without risk and eliminating friction between developers and security practitioners.

Rezilion offers a unique self-healing approach that doesn’t rely on past behavior or human vetting to separate intended functionality from malice and misconfiguration. Instead, Rezilion analyzes artifacts deployed to production and deterministically turns an organization’s CI/CD pipeline into a whitelist of known and legitimate outcomes. In case a workload is misbehaving, Rezillion returns it to a known-good state.

Beer Sheva’s Rezilion is an autonomous cloud workload protection platform that makes production environments self-healing and resilient to threats. Founded by serial cybersecurity entrepreneurs, Rezilion secures vast environments with minimal manpower by integrating security into existing DevOps and IT automation workflows. (Rezilion 10.12)

Back to Table of Contents

10: ISRAEL ECONOMIC STATISTICS

10.1 Foreign Exchange Reserves at the Bank of Israel as of November 2019

Israel’s foreign exchange reserves at the end of November 2019 stood at $122 billion, an increase of $1 billion from their level at the end of the previous month. The reserves represent 31.9% of GDP. The increase was the result of foreign exchange purchases by the Bank of Israel totaling $1,268 million, as well as private sector transfers of approximately $23 million. In contrast, the increase was partly offset by government transfers to abroad totaling approximately $246 million and a revaluation that decreased the reserves by approximately $23 million. (BOI 05.12)

Back to Table of Contents

10.2 Israeli Construction Companies Report Booming Home Sales

Israel’s residential real estate sector is again prospering. After a period during which it appeared that home buyers were sitting on the fence, the financial reports of construction companies for Q3/19 indicate a steep rise in the number of homes sold, together with a strong increase in revenue and profits. Supported by increases of over 10% in the number of homes sold by the companies in the sector, their shares have staged a recovery. Shortly before the end of 2019, it appears that the construction companies listed on the Tel Aviv Stock Exchange are going to have one of their good years, with rises of over 10%, sometime well over 10%, in their share prices.

Together with the low interest rates fueling the market, the intensity with which the Buyer Fixed Price Plan was pursued earlier this year is also a major factor in the high sales reported by construction companies. The companies that were involved in Buyer Fixed Price Plan projects stood out in comparison with their competitors. The original purpose of the plan was to lower housing prices, and the goal later was to make it easier for young families to buy a first home on more advantageous terms. Since the Buyer Fixed Price Plan was launched four years ago, it has been heavily criticized, including by contractors, but the increase in activity shows that the construction companies involved in the plan have no cause for complaint.

After benefiting from their involvement in Buyer Fixed Price Plan projects, the construction companies believe that the current uncertainty about the plan’s future resulting from the political uncertainty also supports continued demand for new housing in Israel. Some buyers delayed their home purchases until now in the hope that the Buyer Fixed Price Plan would cause prices to fall. At the same time, some of the financial reports show that under the influence of sales of housing in the plan’s projects, the average price of the homes sold fell. (Globes 02.12)

Back to Table of Contents

10.3 Record 4.6 Million Incoming Tourists Projected for Israel in 2019

The Central Bureau of Statistics announced that Israel has already received 4.2 million tourists in 2019, which breaks last year’s record when 4.1 million tourists visited Israel. For November alone, 451,000 tourists came to Israel, rising by 16% from November 2018 when 389,000 tourists came to Israel. For 2019 as a whole, the Central Bureau of Statistics forecasts a record 4.6 million tourists, increasing by 11% from last year, which was itself a record. Some 49% of tourists visiting Israel came from five countries: 21% of tourists visiting Israel came from the US, and 28% from Germany, France, Russia and the UK. (CBS 08.12)

Back to Table of Contents

10.4 Israeli Startups Raise Nearly $900 Million During November 2019

The IVC Research Center announced that Israeli startups raised nearly $900 million in November, according to press releases issued by companies that have completed financing rounds. The figure may be more as some companies prefer to remain in stealth and not to publicize the investments they have received. After raising $6.14 billion in the first nine months of the year, according to IVC, Israeli tech companies have now raised $7.84 billion since the start of 2019, having raised $800 million in October. This figure already easily surpasses the record $6.4 billion raised by Israeli tech companies in 2018, which according to IVC was up from $5.24 billion in 2017.

Some $700 million was raised by just 11 startups last month. Fraud protection company Riskified led the way in November raising $165 million followed by 3D imaging sensor company Vayyar Imaging, which raised $109 million. Cloud optimization company DoIt International raised $100 million and fintech company Blue Vine raised $102.5 million. Big Panda raised $50 million, payroll management platform Papaya Global raised $45 million and fintech company Capitolis raised $40 million. Medical device company XACT Robotics raised $36 million, IoT cybersecurity company Insight Cyber raised $30 million and Diagnostic Robotics raised $24 million. (IVC 08.12)

Back to Table of Contents

10.5 Some 42% of Israeli Families Live in Overdraft

A survey by the Central Bureau of Statistics found that 42% of Israeli families with at least one bank account were in overdraft for at least one month out of the past year. Some 5% of households had enough overdraft that the bank blocked their access to the account at least once during the past year. The statistics also showed that 2.5% of households do not have a bank account, including 13% of Arab households and 1% of Jewish households. In addition, 51% of Arab households said none of the family members have credit cards, compared to 11% of Jewish households.

‎Another 27% of Israeli households have a mortgage, representing 31% of Jewish households and just 4% of Arab households. However, Arabs often inherit or build family homes, which do not incur debts or mortgages. Nearly half (44%) of families with children under 18 have a mortgage, as well as 27% of single-parent families. In terms of savings, 66% of households reported that at least one family member has a pension plan, and 51% reported that at least one family member has a savings plan. Some 87% of households in the upper fifth of earners have a pension plan, 2.6 times more than those in the lowest fifth, where just 34% have a pension plan. Finally, 28% of households reported that they have a savings plan – 38% of the top fifth, and 13% of the lowest fifth. (Arutz Sheva 10.12)

Back to Table of Contents

11: IN DEPTH

11.1 ARAB MIDDLE EAST: Arab Spring 2.0? – Making Sense of the Protests Sweeping the Region

Sarah J. Feuer and Carmit Valensi posted in INSS Insight on 1 December 2019 that the ongoing protests across Iraq and Lebanon have invited references to a second Arab Spring, nearly nine years after a young Tunisian man set himself on fire and triggered a region-wide upheaval. The unrest comes on the heels of protests in Egypt and Jordan earlier this fall, a mass mobilization in Sudan this year, and a protest movement in Algeria that has endured since February. Recently, mass demonstrations have also broken out across Iran, suggesting the current wave may not remain confined to the Arab Middle East. Each of these episodes has been triggered by local, discrete events.

However, collectively they reflect a broader struggle underway in the region on two fronts: within each country, between the public and the political leadership over the basic contours of the social contract underpinning these societies; and between various camps wishing to see a regional order that will reflect their preferences on such core issues as Iran’s presence across the Middle East, the integrity of territorial states, relations with the West, sectarianism, and democracy. It remains too soon to tell where the current unrest is headed, but as in 2011, both the regimes’ responses, and the degree to which the protesters manage to translate their demands into actionable policies, will likely prove decisive.

With the exception of Jordan’s teachers’ strike in September, which concerned the relatively circumscribed matter of low salaries, the protests rocking the Middle East in recent months have set their sights far beyond a single issue or piece of legislation. These protests have an “anti-system” quality to them, demanding not simply the dismissal of a ruling elite but the wholesale dismantlement of the governing structures and economic systems that have nurtured that elite. Even in instances where the proximate trigger of the protests was a single policy move – for example, the decision of Algeria’s Bouteflika to run for re-election in February, or the dismissal of Iraq’s popular counter-terrorism chief in September, or a tax on WhatsApp calls in Lebanon in October, or the hike in gasoline prices in Iran – the initial provocation quickly receded in importance (and in some cases was reversed anyway) as the protests morphed into larger movements demanding systemic change.

Fueling this demand is widespread frustration with the region’s endemic problems of unemployment and corruption, the dismal provision of government services, over-reliance on income from hydrocarbons or external aid, and a toxic politicization of identity. Perhaps because few segments of these societies have been spared the effects of these structural problems, the current protests have attracted a broad-based amalgam of citizens. The marchers in Algiers since February, and in Cairo in September, and more recently in Baghdad and Beirut, cannot be tagged easily as members of a particular social class or age cohort or even religious sect. Crucially, they have been joined by their peers in various population centers beyond the capitals.

Moreover, the Algerian, Iraqi and Lebanese protest movements have transcended the ethnic and sectarian cleavages characterizing these populations, invoking nationalist tropes to insist on a common identity. In the Berber-speaking regions of Algeria, no less than the Arab cities and towns, a common chant has been, “No Berbers, no Arabs, no ethnicity, no religion! We are all Algerians!” In Iraq and Lebanon, the political and legal systems were ostensibly designed to mitigate the most damaging effects of sectarian cleavages, which had propped up a decades-old system of despotic minority rule in the former and fueled a fifteen-year old civil war in the latter. But protesters today are conveying that these arrangements have run their course, demanding an end to the sectarianism embedded in their political systems and castigating leaders from their own sects for exacerbating the very tensions these systems were arguably designed to reduce.

2019 vs. 2011

It would be tempting to interpret the current wave of protests as simply “Round 2” of the 2011 uprisings, but the similarities and differences suggest more of an upgrading than a replay of the Arab Spring, with key lessons learned in the interim by both the protesters and the surviving regimes. As in the 2011 wave, today’s protest movements remain largely leaderless and the masses of citizens taking to the streets have mostly focused on articulating what they oppose rather than on outlining a concrete vision or plan for change. The insistence on maintaining this oppositional rhetoric likely stems from the assessment that protesters in 2011 were too quick to accept their leaders’ proposed compromises. On the other hand the leaderless nature of the movements may ultimately work against the protesters to the extent it precludes a clear roadmap out of the impasse.

In contrast to 2011, there is a near total absence of calls for democracy in today’s protests. This likely reflects the protesters’ efforts to avoid the disappointments of 2011. With the exception of Tunisia, the revolts nine years ago did not generate any serious political liberalization in the region, and the current focus on issues like corruption and service provision suggests protesters are prioritizing improvements in day-to-day living conditions over grander ideological goals. Ironically, in Lebanon and Iraq, the lack of overt references to democracy may reflect an assumption that these states already experienced a democratization (however flawed), so the problem has not been a lack of democracy as much as a perversion of its implementation and an inability of elected governments to provide for their populations.

Another difference from 2011 concerns the anti-Iran sentiment coloring today’s protests. The nationalist and anti-sectarian tones of the Iraqi and Lebanese demonstrations pose a test for Iran, insofar as the Islamic Republic’s growing influence in these countries – whether through Shia militias and affiliated political actors in Iraq or through Hezbollah in Lebanon – has been perceived by the protesters as an assault on the national interests. Iran’s leaders are also facing a serious challenge at home, where frustrated citizens have taken to the streets protesting a 50% rise in the price of fuel. That move came against the backdrop of a deepening economic crisis and a lack of progress in negotiations with the West over Iran’s nuclear program. The Islamic Republic has experienced several bouts of unrest since 2009, but the anti-establishment flavor of today’s demonstrations – as evidenced by protestors’ attacks against Basij and Islamic Revolutionary Guard Corps infrastructure, and calls in the street for citizens to “take back” their country from the political leadership – stands in contrast to earlier rounds.

A final difference between the two waves concerns the responses of the respective regimes. With the events of 2011 seared into their memories, regimes have become acutely concerned for their own survival. In their response to the current protests, leaders have been torn between quickly promoting reforms aimed at appeasing the protesters and employing the more familiar tactics of suppression, whether violently through their security apparatuses, or via softer totalitarian measures such as blocking social networks. With the exception of Egypt, where the el-Sisi regime’s heavy-handed response managed to subdue the unrest for the time being, none of these tactics so far has convinced the protesters to go home.

Why Now?

Beyond the proximate triggers prompting the latest eruptions, recent regional and even international developments help to explain the timing of the current protests. The turmoil that followed the Arab Spring, and especially the emergence of the so-called Islamic State (IS), threatened the territorial integrity of states across the Middle East and North Africa, leading some to surmise that borders would soon be redrawn, if not erased altogether. But even the most damaged states – Yemen, Syria, Libya and Iraq – survived, and the overall nation-state framework in place for just over a century has turned out to be more durable than many predicted. In the last two years, both the defeat of the IS and the ebb, if not resolution, of the war in Syria restored a relative calm to the Fertile Crescent, and in that calm, populations could focus once again on the economic and social deterioration in their immediate vicinity.

Indeed, whereas in 2016 surveys were listing “the emergence of IS” and “terrorism” as the leading concerns among the region’s youth, the latest Arab Youth Survey from 2018-2019 indicated those priorities have been replaced by “the rising cost of living” and “unemployment.” It is precisely this inward turn that is reflected in the cross-ethnic, cross-sectarian, nationalist slogans animating the current demonstrations, as protesters insist on preserving and strengthening their sovereignty. For their part, Algeria and Sudan emerged from 2011 relatively unscathed, in large part because their regimes, heavily reliant on oil rents, managed to dole out hefty benefits and preempt unrest. But with the 2014 drop in oil prices, these countries’ economic predicaments further deteriorated, and today these states no longer have the luxury of staving off instability in such a manner.

Finally, there is an international element to the timing of the current protests, insofar as they come against the backdrop of a global uptick in protests. From France’s Yellow Vests movement beginning in October 2018, to the Hong Kong protests beginning in June of this year, to the anti-government demonstrations rocking Chile since last month, today’s uprisings across the Middle East evidently join a chorus of discontent around the world stemming from grievances over inequality, corruption, political disenfranchisement and an acute sense that political elites have become increasingly disconnected from the populations they claim to serve. Tellingly, with the exception of Hong Kong, most of the world’s current protest movements have not featured prominent calls for democracy, suggesting the democratic “brand” may be declining as populations express disappointment and frustration with democracy’s perceived deficiencies, especially in the economic realm. Although the resort to nonviolent protests as a means of implementing political change has increased steadily around the world since 1940, the success rate of those protests has declined dramatically since 2010, suggesting the current wave of Middle Eastern uprisings faces formidable odds of success. (INSS 01.12)

Back to Table of Contents

11.2 JORDAN: Jordan Plans to Grab Excess American Weapons

Jack Detsch reported in Al-Monitor on 26 November that Jordan is planning to obtain excess US fighter jets and large transport planes, part of an ongoing counterterror effort in the Arab kingdom.

Jordan has obtained spare American fighter jets for an undisclosed sum and plans to upgrade large transport planes, a State Department official told Al-Monitor, as the Pentagon has moved in recent months to cultivate Middle East interest to keep production going for aging US weapons systems.

The agency approved the provision of F-16 fighter jets to Jordan in September through the US government’s so-called Excess Defense Articles program, known as EDA. The official, speaking on condition of anonymity, said the Arab nation plans to use the planes, which the US Air Force no longer buys, to provide spare parts to its current fleet.

Amman will integrate the Lockheed Martin-made C-130 Hercules into its arsenal only after upgrading the avionics and traffic collision systems onboard the aircraft, the official said, which will depend upon the availability of Jordan’s funds for the project. The United States has already provided Jordan with two of the aircraft in the past two years.

Jordan received more than $30 million in Pentagon military aid for the fiscal year that ended in September, mainly to help reinforce communications networks around the country’s border areas, as the longtime American partner has faced threats from terror groups such as the Islamic State (IS). The nonpartisan Congressional Research Service estimated that as many as 4,000 Jordanian fighters left to join the militant group on battlefields across the Middle East and North Africa since 2011.

But Jordan’s homegrown efforts to counter radicalism have floundered since the government first announced a plan to curb militancy in 2014, experts say, a result of weak implementation and focus on bureaucratic instead of social channels. “Even though a special authority was established to combat extremism, the official conception of this body has continued to oscillate and has remained unsure of the role it can play at the civil level,” Saud al-Sharafat, a former brigadier general in Jordan’s General Intelligence Directorate, said in a blog post for the Washington Institute in August.

The United States has helped put up several barriers along sections of Jordan’s border to stop refugees and IS militants from getting into the country, where sluggish growth has failed to meet the government’s ambitious targets, leading to allies floating a $2 billion economic lifeline to Amman at a conference in March. The United Nations High Commissioner for Refugees estimates as many as 672,000 Syrian refugees are currently registered in Jordan, and the US government has provided as much as $1.3 billion to offset that burden.

The move to add to aging arms programs comes as the Pentagon has pushed US partners in the Middle East and elsewhere to invest in older American weapons systems to keep the production lines humming. The Trump administration is trying to load up on long-range precision fires and other arms that could be used in a potential conflict with China or Russia.

In September, then-acting Army Secretary Ryan McCarthy visited Emirati Crown Prince Mohammed bin Zayed in Abu Dhabi in an effort to get the UAE’s de facto leader on board with a plan to buy 10 Boeing-made Chinook heavy-lift helicopters. That could help offset political turmoil over defense program cuts that have deviled modernization efforts. The Army plans to significantly pare back the program in order to invest in future capabilities, a move that has generated strong protests from Congress. The United Kingdom plans to buy an additional 18 of the rotorcraft.

Jack Detsch is Al-Monitor’s Pentagon correspondent. Based in Washington, Detsch examines US-Middle East relations through the lens of the Defense Department. (Al-Monitor 26.11)

Back to Table of Contents

11.3 BAHRAIN: Bahrain Outlook Revised to Positive on Improving Fiscal Prospects

On 29 November. S&P Global Ratings revised its outlook on Bahrain to positive from stable. At the same time, we affirmed our ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings.

Outlook

The positive outlook signifies that we could raise our ratings on Bahrain within the next 12 months if its fiscal performance proves stronger than we currently expect. A further strengthening of foreign exchange reserves, coupled with a slowdown in foreign exchange usage triggered, for example, by an improvement in the current account, could also support an upgrade.

We could revise the outlook to stable if fiscal reform efforts slow or reverse, or if off-budget spending continues at elevated levels, boosting debt accumulation even as budget deficits decrease. We could also revise the outlook to stable if foreign exchange reserves fall more rapidly than expected. This could follow an increase in demand for foreign currency, for example, which would stress the exchange rate peg.

Rationale

The positive outlook primarily indicates that we expect the government to implement further reforms to keep fiscal deficits on a decreasing trajectory. Budgetary consolidation is supported by the implementation of two pillars of Bahrain’s fiscal reform plan – the introduction of a value-added tax (VAT) and a voluntary retirement program.

We currently forecast that the fiscal deficit will decline to 4.2% of GDP in 2022, compared with an average of 12% over 2015-2017. Building on reform momentum after successfully introducing VAT and reducing the public sector workforce by about 18%, we believe that the government’s further budgetary consolidation measures could lead to lower budget deficits than we currently forecast.

Although we still forecast that the government’s debt stock will grow, part of the growth will stem from concessional lending by other GCC sovereigns, of which $3.7 billion of the pledged $10 billion in support has been received. We expect the remainder of this amount to be available over the coming years, without conditions. The government expects it to meet 50% of its funding needs to 2022. This lending has a grace period of seven years and an interest rate of zero, thus helping to reduce the Bahraini government’s average cost of interest and further supporting budgetary consolidation. We expect the government to reach a primary surplus by 2022.

The positive outlook also demonstrates the more stable external position, with support from other GCC sovereigns bolstering reserve assets. Of the $3.7 billion Bahrain has received, a portion has gone to support its foreign currency reserve position. We expect these deposits to stay, helping to improve Bahrain’s external resilience and maintain confidence in the exchange rate peg.

Our ratings are constrained by our view of Bahrain’s continued budgetary dependence on oil revenues, its high stock of government debt, and its unresolved domestic political tensions, which hamper the effectiveness of the sovereign’s policymaking. The ratings are also limited by the weak trend in economic growth, as measured by real GDP per capita.

Institutional and economic profile: The government has made progress on implementing fiscal consolidation measures

  • A public sector voluntary retirement scheme was completed in 2019 and a value-added tax (VAT) was introduced at the start of the year.
  • We expect further progress on fiscal consolidation, but remain concerned that domestic stability considerations could limit the pace and level of implementation.
  • We project real economic growth will average 2.3% over 2019-2022, supported by infrastructure investment.
  • In 2019, the government enacted its strongest fiscal measures since the collapse of oil prices in 2015, demonstrating that the predictability of its policymaking has improved. Two of the largest components of the Fiscal Balance Plan, which aims for a balanced budget by 2022, were:

  • The introduction of VAT, with a phased roll-out to cover all businesses by the end of the year; and
  • The implementation of the voluntary retirement scheme, which has reduced the public sector workforce by 18%.
  • Although the government aims to balance the budget by 2022, we forecast a deficit of 4.2% of GDP by 2022. The difference in our forecast and that of the government can largely be explained by our expectation that Bahrain will continue to depend on oil revenue and that it will find it difficult to implement further expenditure-side reforms. We anticipate that Bahrain’s political and domestic tensions will continue, constraining the government’s policy choices. In our opinion, there are still risks from the entrenched polarization between the Shia and Sunni communities, and internal communal divisions.

    In our view, the economy will expand by an average of 2.3% in real terms over 2019-2022. We expect the government’s plans to promote infrastructure development, including several large projects like the refinery modernization program, to support growth. Funding will come from the private sector ($15 billion), government-owned companies ($10 billion) and GCC funds for infrastructure investment ($7.5 billion). As of year-end 2018, about $2.5 billion (6% of 2018 GDP) of the $7.5 billion GCC infrastructure support fund had been disbursed. We expect about $870 million will be disbursed over 2019, and that annual disbursements of about the same size will occur over the next three years.

    We estimate 2019 real economic growth at about 2.1%, similar to 2018 but less than the historical average. We expect the government services sector to shrink over 2019, weighing on growth. Bahrain’s relatively diversified economy still benefits from its proximity to the large market of Saudi Arabia, strong regulatory oversight of the financial sector, relatively well-educated work force, and low-cost environment.

    The population statistics indicated flat population growth in 2018, following a government exercise to clear old and inactive employment visas from the data. When GDP performance during 2013-2022 is adjusted for population levels, real growth is negative, suggesting that labor supply, rather than capital investment or innovation, is a key growth driver.

    Bahrain is a member of the coalition of Arab states that imposed a boycott on Qatar, cutting diplomatic ties as well as trade and transport links with the country on 5 June 2017. The boycott has had a minimal impact on Bahrain’s economy (except for the forgone $2.5 billion in capital investment formerly pledged to Bahrain from Qatar). Overall, we anticipate that political tensions within the GCC and Gulf region will persist, including the latest flare-up in tensions between the U.S., Saudi Arabia, and Iran.

    Flexibility and performance profile: GCC financial support will support budgetary consolidation and strengthen the central bank’s foreign currency reserve position

  • We expect the fiscal deficit will decline to 4.2% in 2022, a large improvement over recent years, but falling short of the government’s balanced budget target.
  • Bahrain has received a portion of the $10 billion in financial support pledged by other GCC sovereigns and we expect the rest to be forthcoming over 2020 – 2022.
  • We expect the likelihood of further GCC support, should it be needed, will help maintain confidence in the Bahraini dinar’s peg to the U.S. dollar.
  • The government is implementing an ambitious plan to balance its budget by 2022. The plan includes measures focusing on increasing government revenue intake from the non-oil sector of the economy. The plan depends heavily on efforts to reduce government expenditure, including cuts in the public sector workforce and fewer transfers to the Electricity and Water Authority. Taking into account the government’s new plan, we expect Bahrain’s fiscal imbalance will narrow, reaching 4.2% of GDP by 2022, from close to 10% of GDP in 2017.

    Non-oil revenue increased in 2019 due to the introduction of VAT. Implementation was gradual – we assume that VAT introduction could have an average revenue-raising effect of about 1.5% of GDP a year. Additionally, we expect an increase in non-oil revenues from government fee revisions. Nevertheless, we expect government revenues to remain heavily oil-dependent, even though the oil sector contributes less than 20% of GDP. In our forecast, we assume an oil price of $60 per barrel in 2019 and 2020 and $55 thereafter.

    The government reduced the public sector workforce in 2019 by about 18%. Most of the voluntary retirements took place in January and February. The initial outlay required to fund this scheme was about 1.5% of 2019 GDP and the cost came from a rundown of government assets, rather than the state budget.

    We expect government expenditure will continue to decline over our forecast period. The government plans to decrease expenditure through a centralized procurement structure, and to balance the revenue and expenditure of the Electricity and Water Authority, which would reduce government transfers. It also plans to reform its subsidy programs. Currently, multiple entities grant subsidies, and the government intends to consolidate disbursement and more-strictly monitor the eligibility of recipients.

    Government interest payments are an increasing expenditure item. They are expected to comprise almost 21% of total expenditure by 2020, up from about 6.5% in 2014. Throughout our three-year forecast period, the GCC support package will comprise a growing proportion of total debt. It currently comprises about 10% of total government debt. We expect the zero-interest support package to cut Bahrain’s average interest costs over our forecast period, but that interest costs will remain a large component of expenditure.

    As a result, the high level of government debt constrains the government’s fiscal flexibility, in our view. We estimate that the gross debt stock will increase toward 94% of GDP by 2022. This includes the $10 billion in fiscal support from other GCC sovereigns. Our forecasts include an additional 1% of GDP over the budget deficit in annual government debt accumulation, in relation to persistent off-budget spending by the government on defense and the Royal Court. We estimate that net debt will average 72% of GDP over 2019 – 2022.

    In our view, monetary policy flexibility is limited because the Bahraini dinar is pegged to the U.S. dollar. In addition, we consider the Central Bank of Bahrain (CBB) has limited credibility regarding its ability to maintain its exchange rate arrangements, as reserves do not cover the monetary base. Bahrain’s gross international reserves increased in 2019 to around $3.6 billion in September 2019, compared with $1.9 billion at year-end 2018, largely due to GCC financial support. This represents an improvement over the past few years, when the level of gross international reserves had been low and volatile. The CBB receives daily foreign currency inflows from the sale of oil (through the national oil companies). We forecast year-end reserves will be broadly flat over the next few years, and that current account deficits will cause a slight drain on reserves.

    We expect a modest narrowing in Bahrain’s current account deficit this year, from a deficit of 6.5% in 2018 that was partially caused by increased outward remittances. However, we assume a decline in oil prices over the forecast period, which should keep current account deficits at about 4.5% on average over 2019-2022. Increased exports of aluminum from the expansion of Aluminium Bahrain should support exports. Although we expect Bahrain to remain in a net external creditor position over the forecast period, we expect that the coverage of external liabilities by liquid external assets (narrow net external debt) will fall slightly. Gross external financing needs remain high due to Bahrain’s large banking sector.

    In assessing contingent liabilities in the banking sector, we refer only to the resident retail banks because, in our view, the government would not bear the cost of the wholesale banks’ potential financial distress in full, given the high share of foreign ownership. This is not the case, however, in our external risk analysis, where the international investment position contains both resident retail and resident wholesale banks. Bahrain has a large financial sector (domestic retail banks) whose gross assets are estimated at just over 230% of GDP. A large number of companies are majority-owned by the government. Nevertheless, we consider the government’s contingent liabilities to be limited. Our Banking Industry Country Risk Assessment for Bahrain is ‘7’ (on a scale of 1-10, with ‘1’ being the lowest risk and ’10’ the highest). (S&P 29.11)

    Back to Table of Contents

    11.4 SAUDI ARABIA: Saudi Arabia Fuel Station Market Outlook, 2019-2024

    The Saudi Arabia Fuel Station Market – Growth, Trends, and Forecast (2019 – 2024) report has been added to ResearchAndMarkets.com’s offering.

    As of 2018, the Kingdom of Saudi Arabia (KSA) held the second-largest proven oil reserve in the world, after Venezuela. Saudi Arabia was the largest crude oil producer in 2016. In 2017, the country took a strategic decision of oil production cut, to aid in the increasing crude oil prices, which, in turn, resulted in the country being the second-largest crude oil producer, as of 2018. Moreover, in order to provide impetus to the country’s economy, the economic diversification of Saudi Arabia, which primarily remains dependent on crude oil supply, has become imperative. The Government of Saudi Arabia focused on the development of the downstream sector, with an aim to diversify the country’s economy.

    Factors, such as expansion of existing fuel station infrastructure and increasing investment in the sector by both the national firms and foreign players are expected to drive the fuel station market in the country during the forecast period. However, factors, such as increasing adoption of electric vehicles, and lack of government surveillance and regulations to oversee the fuel station industry, are expected to hinder the growth of the fuel station market in Saudi Arabia, in the coming years.

    Market Trends – Increasing Adoption of Alternate Vehicles to Restrain the Market

    Under the Saudi Vision 2030, the Saudi government is looking forward to reducing its dependency on oil. As the automobile sector accounts for a significant share of oil consumption in the country, the government plans to ensure sustainable future, by executing several reforms in the country, such as promoting shift toward cleaner fuel-based automobile. Like the global trend, the country is on the urge of adopting the hydrogen-based engines and electric vehicles. In addition, the traditional vehicles also account for a large amount of greenhouse gas emissions in the country. Promotion of these vehicles is expected to result in the reduction of GHGs in the country.

    In June 2019, Saudi Arabia inaugurated its first auto hydrogen fuel station. The station is a joint venture between Saudi Arabian Oil Company (Aramco) and Air Products, and was opened at the Dhahran Techno Valley Science Park. This pilot project represents an exciting opportunity for Saudi Aramco and Air Products to demonstrate the potential of hydrogen in the transport sector and its viability as a sustainable fuel for the future.

    Moreover, keeping in mind the climate change, most of the major companies in the country are paying attention to the adoption of renewables in the country energy mix, and thus, investing in the business of electric vehicles. In a bid to move forward toward the Saudi 2030 Vision, the Saudi Electricity Company has signed an agreement with Japanese firms Tokyo Electric Power Company, Tecaoca Coco Energy Solutions Company and Nissan Motor Company, to implement an electric vehicle pilot project. Under the agreement, fast-charger stations are expected to be developed to charge EVs in 30 minutes.

    Similarly, in September 2018, the country invested $1 billion in Lucid Motors for the manufacturing of its first electric vehicle. Such efforts of the country indicate its increasing interest toward electric vehicle adoption, and this is expected to hamper the demand for fuel stations in the country, as a greater number of electric vehicles are deployed in the country.

    According to IEA, there is expected to be 50 million electric vehicles on the road in the country by 2025, and 300 million by 2040, from close to the 2 million now. This is expected to cut domestic fuel demand from fuel-based vehicles in the country, which in turn, is expected to prohibit the demand for fuel station over the forecast period. Moreover, the falling cost of associated equipment, such as battery, which has witnessed a fall of 79% from 2010 to 2017, is expected to result in reduction in the cost of electric vehicles and increase its uptake in the country, during the forecast period.

    Competitive Landscape

    The fuel station market in Saudi Arabia is highly fragmented, with more than 85% of the market share accounted by small private players in 2018. Some of the leading market players include Tas’helat Marketing Company, Aldrees Petroleum and Transport Services Company, and Naft Services Company. (R&M 02.12)

    Back to Table of Contents

    11.5 EGYPT: Fitch Affirms Egypt at ‘B+’; Outlook Stable

    On 25 November 2019 Fitch Ratings affirmed Egypt’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook.

    Key Rating Drivers

    Egypt’s ratings are supported by a recent track record of economic and fiscal reforms, and improvements to macroeconomic stability and external finances, while the ratings are constrained by still large fiscal deficits, high general government debt/GDP and weak governance scores (as measured by the World Bank governance indicators), which underscore political risks.

    Macroeconomic performance strengthened further in 2019, with real GDP growth firming to 5.6% and inflation falling to single digits. Prudent monetary policy, base effects, lower oil prices and currency appreciation have fostered disinflation. We forecast inflation to average 9.5% in 2019 and 8% in 2020-2021, down from 14.4% in 2018. Real interest rates remain comfortably positive, even after the Central Bank of Egypt (CBE) has cut its main policy rate by a cumulative 450bp in 2019, to 12.25%. We expect CBE will seek to maintain positive real interest rates, marking a shift from the monetary policy stance before the reforms of late 2016.

    We forecast real GDP growth will remain robust at around 5.5% in FY20 (the fiscal year ending June 2020) and FY21, with balanced risks to this forecast. Investment and net exports have driven faster growth, while private consumption growth has been weak, edging above 1% yoy in recent quarters. Lower interest rates should lend support to private-sector investment, employment and private consumption, while strong contributions from other drivers over the last two years may start to taper. However, recent employment growth readings have been lackluster and the business environment, while improving, remains challenging (Egypt climbed eight places to 120th in the 2019 World Bank Ease of Doing Business Ranking).

    We expect Egypt to remain committed to its reform program, following completion of its $12 billion three-year Extended Fund Facility with the IMF, which officially ends in November 2019. The final disbursement occurred in July. Egypt and the IMF will likely agree a new arrangement in the coming months, most likely a non-loan agreement, possibly with precautionary liquidity. This should maintain high levels of technical assistance and help anchor structural and fiscal reforms, even if benchmarks are not linked to disbursements.

    The government hit its fiscal targets in FY19, with preliminary numbers indicating a budget deficit of 8.2% of GDP, down from 9.7% in FY18, and a primary surplus of 2.0% of GDP. Expenditure restraint was at the heart of the improvement, with spending on wages and subsidies and social spending both falling as a share of GDP (2.4% combined). This allowed space for a sizeable increase in capex, as well as in pensions. The government’s medium-term fiscal plan is built on maintaining primary budget surpluses of 2% of GDP, with the aim of reducing debt to 80% of GDP in FY21.

    We forecast the budget deficit to narrow in FY20 to 7.6% of GDP, helped by lower interest spending in particular, but to remain slightly wider than the government target (7.2% of GDP), given lower revenue projections and weaker assumptions for real GDP growth and nominal GDP. Nonetheless, this still implies a further decline in government debt/GDP, to around 83%, an improvement of 20% from the peak of 103% in FY17. A downside risk to this forecast is if a portion of government-guaranteed debt (23% of GDP) crystallizes on the government’s balance sheet, although this currently seems a contained risk. An upside risk to our fiscal projections stems from government efforts to enhance revenue collection, including the formulation of a medium-term revenue strategy.

    Egypt’s external finances have improved since the exchange rate reform of late 2016, although we forecast that the current account deficit (CAD) will widen to around 3.2% of GDP in 2021, from 2.3% in 2018, placing modest downward pressure on foreign reserves and the exchange rate. Nonetheless, we expect reserves to remain more than 4.5 months of current external payments (CXP). This assumes that Egypt continues to roll over the vast majority of maturing GCC deposits at the CBE (the outstanding stock is $17.4 billion, with $10 billion that was due to mature in 2019 being rolled over). Net external debt has risen sharply, but at 16% of GDP it remains lower than the current ‘B’ peer median of 28% of GDP. Around 60% of sovereign external debt is multilateral, bilateral or in the form of GCC deposits.

    Foreign reserves were $45 billion at end-October, up from $42 billion at end-2018, helped by renewed portfolio inflows and substantial external borrowing (the government has issued $8 billion of Eurobonds in 2019). In addition, CBE reports $6.1 billion of foreign-currency deposits, which are not included in official reserves. Foreign participation in EGP T-bills was the equivalent of $15.2 billion at end-September (4%-5% of GDP; around 17% of the total stock of EGP T-bills), up from $10.7 billion at end-2018.

    The Egyptian pound has strengthened around 11% against the US dollar YTD in 2019, following the cancellation of the profit repatriation mechanism in late 2018. The currency displayed minimal volatility in 2017-2018. The next test for exchange-rate flexibility will be when there is depreciation pressure. Given nominal appreciation and the ongoing positive inflation differential with trade partners, the Egyptian pound has appreciated more strongly in real effective terms (CPI-based), eroding some more of the competitiveness gains from the 2016 devaluation.

    Relatively weak governance, together with security and political risks, continue to weigh on the rating. Egypt scores below the ‘B’ median on the composite World Bank governance indicator, although it registered some improvement in 2017-2018. The potential for political instability remains a risk, in Fitch’s view, given ongoing structural problems including high youth unemployment and deficiencies in governance. In mid-September rare public protests broke out in Cairo and several other Egyptian cities. Intermittent security issues have previously hit the economy via the tourism sector.

    The government has sought to mitigate the risk of discontent by bolstering social safety nets (including cash transfer schemes), maintaining food subsidies, increasing the minimum wage and pensions, boosting electricity provision and implementing some structural reform measures to improve the business environment, while the space for political opposition and freedom of expression is restricted, in Fitch’s view.

    Rating Sensitivities

    The main factors that, individually or collectively, could lead to positive rating action are:

  • Significant improvement across structural factors, such as governance standards, the business environment and income per capita, to levels closer to ‘B’ and ‘BB’ rated sovereigns’.
  • Sustained progress on fiscal consolidation leading to a further substantial reduction in the gross general government debt/GDP ratio to a level closer to rated peers’.
  • The main factors that, individually or collectively, could lead to negative rating action are:
  • Failure to narrow the fiscal deficit and keep government debt/GDP on a downward path.
  • Reversal of fiscal and/or monetary reforms, for example in the face of social unrest
  • Renewed signs of external vulnerability, including downward pressure on international reserves or portfolio capital outflows that create financing strains.

  • Key Assumptions: Fitch forecasts Brent crude to average $65/b in 2019, $62.5/b in 2020 and $60/b in 2021. (Fitch 25.11)

    Back to Table of Contents

    11.6 EGYPT: Brief on the Grand Ethiopian Renaissance Dam

    On 9 December, the Tahrir Institute for Middle East Policy (TIMEP) posted a background brief on the Grand Ethiopian Renaissance Dam and its ramifications for Egypt.

    Summary: The Grand Ethiopian Renaissance Dam, a 6,500-megawatt hydroelectric power plant being constructed in Ethiopia, has been a major point of contention between Egypt and its southern neighbors, as the completion of the dam poses serious threats to Egypt’s dwindling water supply and food security. Built along the Blue Nile in Ethiopia, the megaproject is viewed by Egyptians as a major challenge to Egypt’s historical claim to the Nile. Egypt’s agriculture sector has declined significantly in recent months, as Egypt reduced the amount of arable land nationwide for water-intensive crops and faced a shortage of crop production. This decline can be attributed to water insecurity and relations between Egypt, Ethiopia and Sudan remaining in a wavering position as the dam is built.

    Political Context: Ethiopia began construction on the dam in 2011 in an endeavor to become the region’s primary energy exporter. The uncertainty surrounding the megaproject, specifically contention over the timeline in which the dam will be filled, has become a focal point of relations between Egypt, Ethiopia and Sudan. Ethiopia has proposed filling the dam within three years, while Egypt has advocated a filling period up to 15 years. Former president Muhammad Morsi asserted with regard to the dam: “If our share of Nile water decreases, our blood will be the alternative.” While relations between the three countries normalized in the five years following Morsi’s ouster, negotiations hit a snag when Sudan recalled its ambassador from Cairo in January 2018 after Egypt’s rhetoric soured as the dam construction continued, though the ambassador returned to Egypt two months later after tensions cooled. In April 2018, Ethiopia appointed a new prime minister, Abiy Ahmed, who has been touted as a reformer. Negotiations reached an important breakthrough in May 2018 with a tripartite agreement regarding the dam. Though other agreements had been signed previously, political officials in each country hailed the May 2018 deal as the most significant to date. Under the deal, each country agrees to meet every six months on a rotating basis in their respective capital cities to discuss recent developments with the dam, though these meetings failed to occur as scheduled due to anti-government demonstrations in Sudan beginning in December 2018. A tripartite fund for the purpose of development projects was also established and a scientific research group was formed to study the impact of the dam on water resources.

    Construction on the dam has stalled over the apparent suicide of the dam’s project manager in 2018, strikes by workers protesting insufficient wages, and the replacement of contracting companies because of delayed progress, all of which have occurred as Abiy attempts to implement reforms. Although the date of completion remains unknown, Egypt’s water scarcity raises additional political implications hampering the negotiations process. Political officials have described the dam as a “life or death” situation for Egypt and declared a state of emergency due to its shortage in water flow, which environmental experts have attributed to climate change, outdated irrigation techniques, and overpopulation. Egypt’s water insecurity, coupled with the threat of a filled dam, has led to additional crop imports, especially those that are water-intensive in production. Egypt’s wheat imports project to reach an all-time high for the country in 2019 with over 12,500 metric tons projected to be imported, maintaining Egypt’s status as one of the top importers of wheat worldwide.

    Despite the previous agreements and construction difficulties regarding the dam, minimal geopolitical developments occurred surrounding the mega-project in 2019, primarily due to the Sudanese revolution. Negotiations between the three countries came to a halt upon the rise of anti-government protests and eventual overthrow of Sudanese President Omar al-Bashir in April 2019. As civilian and military leaders worked through the formation of a transitional government in Sudan, officials in Egypt and Ethiopia provided monetary support, led negotiations between military and civilian groups in Sudan, and offered direction for the country in transition in part as a means of building rapport for future negotiations regarding the dam. Once negotiations finally resumed in September 2019, they became increasingly bilateral in nature, with Sudan assuming more of a third-party role. Negotiations reached a “deadlock,” as described by Egyptian officials with Abiy threatening to gather “millions” of individuals to defend the dam should hostilities emerge between Egypt and Ethiopia. The deadlocked negotiations and increasingly harsh rhetoric from Ethiopia prompted the United States to intervene and mediate discussions between the three countries in November 2019, where the three countries agreed to hold additional meetings in Washington and resolve the dispute by 15 January 2020.

    Legal Context: The tension over the dam dates to the 1959 Nile Waters Agreement signed by Egypt and Sudan, which is based on the 1929 Anglo-Egyptian Treaty regarding the Nile. Under the 1959 agreement, Egypt is granted 55.5 billion cubic meters of water in the river as measured in Aswan, while Sudan is granted 18.5 billion cubic meters under the same conditions. Ethiopia, being excluded from the original agreement, has dismissed the pact in negotiations regarding the dam calling it outdated, while Sudan asserts that the agreement does not reflect its country’s current needs; meanwhile, Egypt has promoted the pact as its primary legal defense during discussions with the other two countries. Ethiopia, along with other Nile River basin countries, signed the Cooperative Framework Agreement in 2010 to establish formal governance over the river’s water distribution, but the agreement was rejected by both Egypt and Sudan as an attempt to reduce their respective water supplies. As part of the 2019 discussions based in Washington, the three countries agreed to invoke Article 10 of the 2015 Declaration of Principles if they fail to reach an agreement by 15 January 2020. On a domestic level, Egypt safeguards the 1959 agreement through Article 44 of its constitution, which states, “The state commits to protecting the Nile River, maintaining Egypt’s historic rights thereto, rationalizing and maximizing its benefits, not wasting its water or polluting it. The state commits to protecting its mineral water, to adopting methods appropriate to achieve water safety, and to supporting scientific research in this field.”

    Trend Analysis: Following the resumption of tripartite negotiations in September 2019, the future of the mega-project remains in a precarious position due to tense relations between the three countries. Though Sudan had increasingly aligned itself with Ethiopia to reap the economic benefits of the dam and increase its stake to the Nile prior to 2019, the new transitional government in Sudan has remained relatively neutral in the most recent series of negotiations. While Abiy’s status as a reformist and the May 2018 tripartite agreement shed a positive light for future negotiations, Egyptian and Ethiopian officials have dedicated additional attention in public comments to the dam in recent months. Furthermore, the accusatory statements by officials from Egypt and Ethiopia against their counterparts represent the greatest tension in the negotiations since Sudan recalled its ambassador to Cairo in January 2018.

    Implications: The most prominent implications of the dam for Egypt pertain to Egypt’s agricultural sector and international relations. Though the dam is not yet complete, Egypt’s agriculture industry has already felt the effects of the megaproject coupled with its ongoing status as water-insecure: The country’s wheat harvest fell 350,000 tons short of its expected yield in 2018, prompting projections for 2019 that Egypt would import the largest amount of wheat in its history. These agricultural trends are expected to worsen once the dam becomes operational, as some experts predict that up to 60% of arable land in Egypt will no longer be suitable for agriculture after the dam is filled. Coupled with Egypt’s growing population and outdated irrigation methods that create overly salient water unfit for agricultural usage, the Grand Ethiopian Renaissance Dam may pose disastrous effects for the country’s agriculture sector.

    While the dam poses pressing concerns for Egypt on a geopolitical level, these risks are overblown compared to the domestic problems associated with Egypt’s water insecurity. Under its current irrigation system, Egypt loses three billion cubic meters of water annually. Before attributing its water insecurity to Ethiopia to the dam, Egypt must address its outdated irrigation systems to yield more transparent negotiations between involved parties. However, the dam poses major economic implications for the region, as Ethiopia and Egypt both vie to become prominent regional exporters of energy resources, though Egypt has relied on nonrenewable resources such as natural gas compared to renewable hydroelectric power generated by the dam.

    Sudan’s diminished role as deal broker in 2019 has created an opening and need for a neutral party or parties to support mediated negotiations, an opportunity to turn discussions around the dam’s construction from contentious politics toward solutions rooted in strategies for sustainable and equitable water management and lasting peace. (TIMEP 09.12)

    Back to Table of Contents

    11.7 MOROCCO: Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable

    On 10 December 2019 Fitch Ratings affirmed Morocco’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook.

    Key Rating Drivers

    Morocco’s ‘BBB-‘ rating is underpinned by a record of macroeconomic stability reflected in relatively low inflation and GDP volatility; a low share of foreign-currency (FC) debt in total general government (GG) debt, and relatively comfortable external liquidity buffers. These strengths are balanced against weak development and governance indicators, high GG debt, and budget and current account deficits (CAD) that are wider than in rating peers.

    Fiscal deficits widened in 2018-2019 on a combination of adverse exogenous developments and moderate spending pressures from social issues. The 2019 budget raised social spending in the wake of repeated protests fueled by economic discontent. Staged wage increases, under a three-year agreement concluded with labor unions in April, will raise payroll spending by 0.5% of GDP in 2019 and around 1% of GDP cumulatively in 2020. Fitch projects the central government (CG) deficit to widen for the second consecutive year in 2019, to 4% of GDP from 3.7% in 2018, slightly overshooting the initial budget target (excluding privatization receipts) of 3.7%.

    Under our baseline, we forecast the CG deficit to stabilize at 4% of GDP in 2020 and narrow slightly to 3.7% in 2021. Savings on operational primary spending and efficiency gains on payroll management will offset higher personnel costs. Tax revenues will slowly pick up with the implementation of fiscal reforms recommended by the May 2019 national tax conference to broaden the tax base, reduce distortions and streamline collections. Fitch expects the government will adjust capital spending to actual revenue performance to keep the deficit contained. The GG deficit, which also includes social security, local governments and extra-budgetary units, will average 2.3% in 2019-2021, above the current ‘BBB’-median of 1.7%.

    Debt dynamics remain relatively benign. GG debt will peak at 53% of GDP in 2020 (CG: 66.6%), on Fitch’s forecasts, up from 52% in 2018 (CG: 65.3%), and decline to 52.3% in 2021 (CG: 66%). The debt burden compares unfavorably to the current ‘BBB’ median of around 43.5% of GDP. Privatization of non-strategic state assets and the opening of the capital of some major state-owned enterprises (SOEs) to the private sector will reduce borrowing needs modestly. Around 74% of GG debt is dirham-denominated and held by a captive domestic investor base while the share of commercial debt in external debt remains low despite a €1 billion Eurobond issuance in November, the first such operation in five years. This favorable debt composition limits rollover and exchange-rate risks, and moderates interest service costs.

    External deficits compare unfavorably to rating peers and are forecast to improve only slowly over the medium term. Fitch projects the CAD to narrow from 5.5% of GDP in 2018 to 5% in 2019 and 4.5% in 2020, versus a forecast ‘BBB’ median of 1.4% in 2020. The improvement in the CAD will be driven by the expansion of supply in the automotive industry and strong performance in light manufacturing, mining and tourism in combination with the projected decline in oil prices under Fitch’s baseline. However, buoyant domestic demand will boost imports, while the difficulties faced by the global automotive sector and the loss of growth momentum in the Eurozone – Morocco’s main external partner – will constrain exports.

    Relatively large CADs will be mostly debt-financed, as net FDI inflows will average only 2% of GDP in 2019-2021. This will lead net external debt to edge up to 21% of GDP in 2021, under Fitch’s forecasts, from 16% in 2018 and compared to a current ‘BBB’ median of 7.5%. Foreign-currency reserves are relatively comfortable and external resilience is reinforced by capital restrictions on investments abroad by Moroccan residents and an ongoing precautionary arrangement with the IMF. However, increasing external financing needs against the backdrop of limited exchange-rate flexibility will exert pressures on FC reserves in the medium term.

    The government’s commitment to prudent economic policies is a key support for the rating. Consistent, albeit slow, progress on reforms has streamlined the macroeconomic policy framework and enhanced resilience to shocks. In particular, fiscal reforms have addressed short-term spending pressures from fuel subsidies and the pension system, and have considerably improved public finance management. Over the past year, the authorities have implemented measures to tackle overdue VAT credits and long payment delays in the public sector, a key impediment for private sector activity. A 75-rank rise in Morocco’s position on the World Bank’s Ease of Doing Business Indicators over the past decade underscores strong progress on improving the business climate.

    Economic growth is in line with peers and expected to be broadly stable through 2021. Unfavorable base effects in the agricultural sector and drought will lead GDP growth to slow to 2.7% in 2019 from 3% in 2018 before picking up to its long-term average of 3.5% in 2020, driven by domestic demand. Morocco’s growth model is heavily reliant on physical capital accumulation with investment around one-third of GDP versus a current ‘BBB’-median of 23%. Productivity gains remain subdued reflecting deep-rooted impediments to private sector activity, including poor education outcomes and barriers to competition.

    Morocco ranks below peer medians on governance and development indicators. In particular, GDP per capita is less than one-third of the current ‘BBB’ median and only half of the current ‘BB’ median. Persistently high unemployment, particularly affecting urban youth, is a potential source of social tension against the backdrop of recurring bouts of unrest in the Middle East and North Africa region. A cabinet reshuffle in October has further weakened the position of the government head’s PJD party within the cabinet. It also saw a junior coalition member leave the governing alliance, which nonetheless still enjoys a comfortable majority in Parliament. Fitch expects the government to hold until the 2021 general elections despite continued differences within the five-party governing coalition.

    RATING SENSITIVITIES

    The main factors that may, individually or collectively, lead to positive rating action are as follows:

  • Fiscal consolidation, for example from implementation of tax reforms, leading to a trend reduction in government debt/GDP;
  • Sustained improvement in the current account balance consistent with declining net external debt/GDP;
  • Over the medium term, stronger growth potential leading to an improvement in GDP per capita and/or an improvement in governance indicators.
  • The main factors that may, individually or collectively, lead to negative rating action are as follows:
  • An increase in government debt/GDP driven by the fiscal stance or a materialization of contingent liabilities;
  • Continued high trade and current account deficits placing net external debt on an upward path over the medium term;
  • Security developments or social instability affecting macroeconomic performance or leading to significant fiscal slippages.
  • Key Assumptions

    We expect global economic trends and commodity prices to develop as outlined in Fitch’s December 2019 Global Economic Outlook. Fitch forecasts real GDP growth in the Eurozone, Morocco’s main trading partner, to average of 1.2% in 2019-2021. The agency forecasts a drop in average oil prices from $65/bbl in 2019 to $60/bbl in 2021. (Fitch 10.12)

    Back to Table of Contents

    11.8 TURKEY: Turkey on a Favorable Macro Turnaround, But Not Out of the Woods Yet

    Lebanon’s Bank Audi’s Group Research Department announced that while the Turkish economy has experienced crisis last year and suffered a downturn early this year, better-than-expected economic data recently released signal the country may be experiencing some turnaround. Fresh data also shows GDP grew by 1.2% in the second quarter, compared with the previous quarter, beating expectations and favored by government expenditures and export receipts, an improvement that apparently continued in the third quarter. Having said that, real GDP is expected to rebound in the remainder of the current year and grow by 3.0% next year.

    Turkey’s current account balance recording its first surplus since 2002

    The Turkish economy has experienced major external adjustments over the past twelve months. In fact, the significant reduction in Turkey’s external imbalances, combined with a sharp decline in import demand and a pick-up in exports, contributed to a shift in the current account balance from a deficit of $ 29.2 billion over the first nine months of 2018 to a surplus of $ 3.7 billion over the first nine months of 2019. This considerable shift in the current account balance over the period to its first surplus since 2002 was mainly attributable to a lower trade deficit and stronger services income, supported by a boost from tourism income in the peak summer months.

    Budget deficit continues to widen amid substantial fiscal stimulus

    Turkey’s fiscal deficit continued to widen this year as the authorities have relied on fiscal stimulus to ride out Turkey’s first recession in a decade and reverse the economic slump. In parallel, budget revenues have failed to keep pace after the government cut taxes while companies, suffering from the economic downturn this year, made fewer profits. As such, the budget deficit has expanded this year, to exceed the government’s year-end target, despite the government bolstering revenue by drawing on tens of billions of Turkish liras from Central Bank profits and emergency reserves.

    Noticeable monetary policy easing amid cooling inflationary pressures

    Turkey’s monetary conditions were marked in 2019 by cooling inflationary pressures, aggressive monetary policy easing aimed to bolster economic activity growth, a recovery in Turkish lira when compared to last year’s record low levels, and a rebound in international reserves. Consumer Price Inflation descended into a single-digit territory this year, falling from 20.3% year-on-year in December 2018 to 8.6% year-on-year in October 2019, which is its lowest level since December 2016.

    Continued growth in banking activity indicators amid adequate financial standing

    The Turkish banking sector has had a somewhat better year in 2019 in relative terms amid a gradual return of confidence in the market translating into a deposit base increase. Measured by the total assets of banks operating in the country, banking sector activity grew by 10.5% in local currency terms in the first nine months of 2019, or 3.3% in US dollar terms, to reach the equivalent of $758.8 billion at end-September 2019. Deposits, accounting for 55% of total banks’ balance sheet in Turkey, rose by 8.5% in US dollar terms over the first nine months of 2019 to reach the equivalent of $419.8 billion at end-September. Turkish banks have weathered the difficult environment rather well, continuing to collect deposits and displaying adequate liquidity and capitalization ratios. Banks continued to constitute provisions against asset quality risks which caused their profitability to decline in the current difficult conditions domestically.

    Long-term approach to policymaking apt to strengthen the confidence factor

    In brief, Turkey is now on a favorable turnaround though not out of the woods yet. Turkey’s remarkable external adjustment, stronger than expected rebound, the recovery of the lira and the decline in inflation are widely recognized by market participants, overseas analysts and international observers. Finally, with the next parliamentary and presidential elections not due until mid-2023, the government is in a position to defuse domestic political tensions and take a more long-term approach to policymaking which is apt to strengthen investor confidence and favor sustainable economic growth ahead in the medium to long term. (Bank Audi 04.12)

    Back to Table of Contents

    11.9 CYPRUS: IMF Executive Board Concludes 2019 Article IV Consultation with Cyprus

    On 27 November 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Cyprus.

    Following a period of rapid recovery from the 2012–13 financial crisis, Cyprus’s economic growth momentum is gradually slowing. Growth decelerated to 3.2% (year-over-year) in the first semester of 2019, from 4.0% in 2018, amidst a slowing global economy and Brexit-related uncertainty which has taken a toll on tourism receipts and service exports. The underlying current account deficit widened due to slower growth of trading partners. Fiscal performance was strong as the underlying general government primary surplus rose to 5.4% of GDP in 2018. Inflationary pressure remained low, and the unemployment rate continued to decline, reaching close to pre-crisis levels. While the banking sector has made significant improvements, challenges remain. Non-performing loans, at 30% of loans, remain among the highest in Europe. A large private sector debt overhang persists, given continued difficulties in debt workouts. Lagging productivity growth and political pressure to unwind key reforms also weigh on the outlook.

    The near-term outlook remains robust despite increasing external headwinds. Real GDP growth is projected to moderate to around 3% in 2019–20, supported by construction and services sectors. Over the medium term, economic growth is projected to slow to its long-run potential rate of around 2½%, as the transitory effects of the investment boom dissipates. Private consumption is expected to remain resilient, however, on the back of tightening labor markets and the gradual credit recovery as banks’ balance sheet improves. Public debt is projected to decline to 65% of GDP by 2024 on the back of continued high primary surplus. Risks to the outlook are predominantly on the downside arising from sharper-than-expected external shocks.

    Executive Board Assessment

    Executive Directors agreed with the thrust of the staff appraisal. They welcomed the strong economic recovery and declining unemployment rate, and commended the authorities for the good progress in addressing banking sector vulnerabilities and improving macroeconomic fundamentals. Directors pointed out that productivity growth has been weak, reflecting institutional bottlenecks and the slow pace of technology adoption, and that private sector indebtedness remains high amid ongoing challenges in debt workouts. Looking ahead, given the significant downside risks, Directors encouraged further steadfast efforts to address crisis legacies by continuing to reduce debt vulnerabilities, improve public spending efficiency, and raise economic growth potential and inclusiveness.

    Directors emphasized the importance of steady NPL resolution and sustainable debt workouts. They highlighted the need for ensuring a well‑functioning NPL resolution toolkit, including through implementation of a credible foreclosure framework, along with complementary reforms in the judiciary. Directors also stressed the need to continue strengthening the supervisory and regulatory framework of credit acquiring companies and to finalize the governance structure of state‑owned Cyprus Asset Management Company. They underlined the importance of minimizing moral hazard risks inherent in the state‑subsidy scheme for primary homeowners (Estia).

    Directors saw a need for broader efforts to further strengthen banks’ balance sheets and profitability. They advised that banks should continue to maintain adequate provisions and capital buffers. Directors agreed that to ease pressures on profitability, policies should encourage lower cost‑to‑income ratios through diversifying income sources, rationalizing operations, and implementing digitization solutions. Directors noted that macro‑financial risks from the property market appear limited now but warrant close monitoring.

    Directors welcomed Cyprus’s strong fiscal performance, and stressed the need to continue to reduce debt sustainability risks and to enhance the efficiency of expenditures. Directors considered that expenditure growth, particularly which of the wage bill, should be contained to keep debt firmly on a downward path and to prevent crowding out of productive spending. They agreed that there is scope to improve the efficiency of education spending and increase investment in technological innovation and human capital buildup to reduce skills mismatches and achieve more inclusive growth, particularly among the youth. Managing incentives and costs of services as well as ensuring the competitiveness of the public health sector is key to control fiscal risks from the recently implemented National Health System.

    Directors emphasized that structural reforms are key to raise medium‑term growth potential. Given low labor productivity growth and challenges to investment and economic efficiency, they called for policies to support greater market diversification, competition, and technology adoption. Directors welcomed the authorities’ strategy to improve STEM training and research and development innovation and to ease access to finance, as well as their national digital strategy. They recommended continued efforts to improve the efficiency of the judiciary and strengthen public sector governance. Directors agreed that mitigating existing inherent AML/CFT risks remains a critical priority. (IMF 10.12)

    Back to Table of Contents

    ** – Copyright 2019 by Atid, EDI.  All rights reserved.

    The Fortnightly newsletter is a free service of Atid, EDI.  We are a team of economic and trade development consultants, headquartered in Jerusalem, but active throughout the region and beyond.  EDI works with an international clientele interested in identifying and researching business opportunities in the region. We also serve as the regional representative offices for a number of U.S. states and bilateral Chambers of Commerce, as well as European clients.  

    EDI’s other services include development of feasibility studies and tailored research reports, as well as identification of potential joint ventures for commercial clients.  For more information on how we may better assist you, please visit our Web site at:  http://www.atid-edi.com.

    *  END  *