Fortnightly, 13 November 2019

Fortnightly, 13 November 2019

November 13, 2019
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FortnightlyReport

THE FORTNIGHTLY
A Review of Middle East Regional Economic & Cultural News & Developments
13 November 2019
15 Cheshvan 5780
16 Rabi ul Awal 1441

Written & Edited by Seth J. Vogelman*

TABLE OF CONTENTS:

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 New Government of Israel Initiative to Fund Training of AI Specialists

2:  ISRAEL MARKET & BUSINESS NEWS

2.1 SKF Acquires Industrial Artificial Intelligence Company Presenso
2.2 HYPE Sports Innovation Partners With AquaBloom Sports Group to Expand Into China
2.3 Namogoo Raises $40 Million to Prevent Customer Journey Hijacking & Protect User Privacy
2.4 Elbit Wins $50 Million Portuguese Contract for EW Suite for New KC-390 Aircraft
2.5 Equitable Life of Canada Goes Live With Sapiens’ Underwriting Solution
2.6 AgroKlinge Becoming Part of ADAMA, Strengthening its Peru Business
2.7 Elbit Systems Selected for Swiss Software Defined Radio Program
2.8 Centrical Launches with $13 Million in Additional Funding by Aleph
2.9 French SFP Joins ADAMA to Strengthen Its PGR and Fungicide Presence in Europe
2.10 Proofpoint to Acquire ObserveIT for $225 Million
2.11 Papaya Global Raises a $45 Million in Series A Funding Round
2.12 Sepio Systems Completes $6.5 Million Series A Funding Round
2.13 SafeRide Technologies Named Auto-ISAC Strategic Partner

3:  REGIONAL PRIVATE SECTOR NEWS

3.1 Modus Capital Launches $75 Million Modus Mena Venture Fund I
3.2 Abu Dhabi Plans Merger to Create New Defense & Tech Giant
3.3 Etihad & Cleveland Clinic to Promote Abu Dhabi as Medical Tourism Destination
3.4 JustClean Invests In Dubai-Based On-Demand Car Services App Keno
3.5 Tabby Raises $2 Million in Seed Funding Round
3.6 Trukker Raises $23 Million in Series A Funding Round led by STV
3.7 UAE Dairy Products Market Set to Exceed $2.6 Billion by 2024
3.8 WWE and the Saudi General Entertainment Authority Expand Event Partnership
3.9 Saudi Arabian Retail Market Analysis & Forecast Report, 2019 – 2024
3.10 Saudi Arabia Passenger Car Market Analysis & Outlook: 2014-2024
3.11 Nala Raises $1 Million & Debuts World’s First Arabic Medical Artificial Intelligence
3.12 Tripdizer Raises $300,000 in Seed Round
3.13 GA-ASI to Conduct Series of Capability Demonstrations in Europe

4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Solar Energy Produces 5% of Israel’s Electricity
4.2 Bird Chooses Israel to Trial Scooter Recharging Points
4.3 Iraqi Cabinet Agrees New Set of Reforms
4.4 MSMEDA Finances Car Conversion to CNG
4.5 Egypt Signs Protocol to Start Recycling 14,000 Tons of Solid Waste Daily

5:  ARAB STATE DEVELOPMENTS

5.1 Jordan’s Inflation Rises During the First Ten Months of 2019

♦♦Arabian Gulf

5.2 UAE Approves $16.6 Billion Budget for 2020 with No Deficit
5.3 UAE Central Bank Will Soon Launch FinTech Coordination Authority
5.4 Saudi Arabia Projects Wider 2020 Budget Deficit

5.5 Saudi Arabia Grants First Permanent Residencies to Foreigners

♦♦North Africa

5.6 Egypt’s External Debt Jumps to $108 Billion at the End of June
5.7 Egypt’s Inflation Reaches 2.4% in October, Lowest in Nearly a Decade
5.8 Egyptian Inflation Forecast to Average 8.4% in 2020 by Capital Economics
5.9 Egypt Achieves 60 New Oil & Gas Discoveries During FY 2018/19
5.10 Egypt Telecoms Infrastructure, Operators & Regulations Statistics – 2019
5.11 UNCTAD Says Egypt is the Most Attractive African Market for FDI
5.12 Foreign Direct Investments in Morocco in Decline
5.13 Morocco Signs Nuclear Medicine Agreement with International Partners
5.14 Moroccan Parliament Debates Progressive Sugar Tax
5.15 Morocco Telecoms Infrastructure, Operators & Regulations Statistics – 2019

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey at the Bottom of the OECD’s Health Expenditure Index
6.2 Over 16 Million Rely on Social Welfare in Turkey
6.3 Cyprus Signs Deal for Offshore Gas Concession
6.4 Greece’s Early Repayment to IMF Will Improve Its Credit Metrics

7: GENERAL NEWS AND INTEREST

♦♦ISRAEL

7.1 Education First Ranks MENA Countries for English Proficiency in Global Index

♦♦REGIONAL

7.2 UAE Cabinet Approves National Holidays for Public and Private Sector

7.3 Morocco Maintains ‘Very Low’ Score in English Proficiency Index

8:  ISRAEL LIFE SCIENCE NEWS

8.1 Else Nutrition Holdings Ushers in Next Generation of Clean Label Baby Nutrition
8.2 iCAN & Headquarters Partner to Bring Israeli Cannabis Innovations to the California Market
8.3 Panaxia Completes a European Regulation Audit Towards EU-GMP Standard
8.4 Vertical Field Recognized With NGBS Green Certification for Buildings in the USA
8.5 Compugen Announces FDA Clearance of IND Application for COM902
8.6 IMC Lists on Canadian Securities Exchange
8.7 Hospitech Airway Management System Reduces Ventilation Complications in Lung Transplants
8.8 Can-Fite Granted U.S. Patent for Piclidenoson in the Treatment of Osteoarthritis
8.9 Hallura Closes Its $7 Million Financing Round
8.10 Foamix & Menlo Merger to Focus on Therapeutics for Dermatologic Indications

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 ŠKODA Optimizes Manufacturing Processes and Cuts Costs Using Seebo’s Solution
9.2 Isay Chooses MySizeID Technology to Increase Customer Loyalty and Reduce Returns
9.3 Magal Receives $2.4 Million in Perimeter Security Contracts for International Airports
9.4 Robotic Arm that Fits All Developed by Researchers at Ben-Gurion University
9.5 Nano Dimension & CBTP MOU for Additive Manufacturing Collaboration
9.6 Symbolab Surpasses 100 Million Users: The New Gold Standard in Math Education
9.7 NEC and AudioCodes Collaborate to Provide Monitoring and Analytics Solution
9.8 Renesas and Altair Semiconductor Announce Collaboration for Cellular IoT Solutions
9.9 Coral Detection Systems Wins the London AWARDS.AI 2019 for “Best AI Startup”
9.10 Mini-Circuits and Vayyar Offer Development Kits for 4D Millimeter Wave Imaging
9.11 NASA to Send Israeli-Designed Solar Power Generator to International Space Station

10:  ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Budget Deficit Narrows Slightly
10.2 Strong Holiday Tourism Keeps Israel on Course for Record Year
10.3 Israel’s Unemployment Falls in the Third Quarter
10.4 Israeli Startups Raise Over $800 Million During October
10.5 Beit Shemesh is Israel’s Fastest Growing City

11: IN DEPTH

11.1 LEBANON: Moody’s Downgrades Lebanon’s Credit Rating from Caa1 to Caa2
11.2 KUWAIT: Kuwait Hospital Market Review & Forecast Report 2012-2022
11.3 UAE: The IMF Forecasts Faster UAE Growth Driven by Expo 2020
11.4 MOROCCO: IMF Completes Second Review Mission of Liquidity Line for Morocco
11.5 TURKEY: Fitch Revises Turkey’s Outlook to Stable; Affirms at ‘BB-‘

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 New Government of Israel Initiative to Fund Training of AI Specialists

To help supply Israel’s mounting demand for tech talent, and specifically for artificial intelligence specialists, the Israeli government will cover the cost of their training. A new initiative announced on 12 November by governmental investment arm the Israel Innovation Authority (IIA) will see it reimburse companies who develop and implement specialized AI training programs.

As part of the new initiative, the IIA will issue a call for proposals to companies who will formulate training procedures based on the agency’s guidelines. The IIA is looking to sponsor consortiums of five or more companies who will collaborate to train their own employees under the aegis of the IIA. Accepted proposals will receive backing of up to two-thirds of the costs or up to NIS 2 million (approximately $570,000) per year over three years. The new program targets both startups and large multinationals.

It is felt that tertiary education institutions simply cannot keep up with the demand for trained AI specialists. The pace of changing technologies is faster than before; every two years there is a technological leap ahead. IIA data shows a current shortage of some 2,000 AI specialists in Israel. (Calcalist 12.11)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 SKF Acquires Industrial Artificial Intelligence Company Presenso

Gothenburg, Sweden’s SKF has acquired Presenso. Presenso’s AI capability enables production plants to find and act on anomalies that were previously undetectable, automatically and without the need to employ additional data scientists. Presenso’s solution is used by industrial plants to increase production output and revenue by reducing the incidence of unplanned asset downtime. Presenso , located in Haifa, Israel, built its solution based on innovations in the field of Automated Machine Learning or AutoML. AutoML accelerates the rate of AI deployment, enabling plants to scale industrial analytics across a large asset base. The company’s existing clients include leading industrial manufacturers in Europe and the Americas. Founders Advisors, a US boutique investment bank assisted in the transaction.

Presenso provides AI driven Industrial Analytics tools for Predictive Maintenance. Presenso’s system collects immense amounts of data at very high speed from hundreds of machines (thousands of sensors) and streams the data to the Cloud in real-time. Using unique, proprietary machine learning architectures, Presenso’s analytic engine autonomously interlinks events with components within the machines and ultimately predicts evolving failures. In addition, it provides valuable information about the remaining time to failure and its origin within the machine. These tools are accessible to maintenance and reliability professionals without the need to hire Big Data experts. Presenso solution is available today for both OEM’s which are now developing their Industry 4.0 offerings and to end users operating their own equipment. (Presenso 31.10)

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2.2 HYPE Sports Innovation Partners With AquaBloom Sports Group to Expand Into China

HYPE Sports Innovation signed an exclusive partnership agreement with Hong Kong-based AquaBloom Sports Group for the Greater China market. ABSG and its Founder have over 20 years of successful track record in North America, Asia and China’s sports industries. With many top notch IP resources, well established global/local network and unique expertise + know-hows; it’s platform is committed to be the best bridge, portal and springboard to work with first rate international sport IPs and maximize its successes together in Greater China’s markets; in addition, creating the integration and synergy among the global and China’s sport industry developments. Some examples of ABSG’s projects are the FIS sanctioned Asia Open 2020, Nike Sports Camps-Asia, Forbes Global Sports Summit, National Scouting Reports, and ATP/GPTCA’s Coach Certifications.

Hod HaSharon’s HYPE multiplies the global reach with their unmatched network of global companies in this field, with more than 40,000 members from brands, sports clubs, federations, and academia, together with more than 11,000 startups. In the past years HYPE has completed 19 accelerator cycles with 12 global partners such as FC Koln and NYU, and executed more than 40 “shark-tank” competitions alongside major sporting events. The partnership between the two will integrate into HYPE’s global accelerator network bridging and contributing to the evolution and growth of the Chinese sports technology ecosystem. With over 30 fundraising rounds now complete and success stories like Batfast and Digifood under its belt, the HYPE SPIN® Accelerator network participants have the rare opportunity to benefit magnanimously from this partnership. (HYPE Sports Innovation 31.10)

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2.3 Namogoo Raises $40 Million to Prevent Customer Journey Hijacking & Protect User Privacy

Namogoo announced a $40 million Series C funding round led by Oak HC/FT. Existing investors GreatPoint Ventures, Blumberg Capital, and Hanaco Ventures also participated in the round, which brings the company’s total funding to $69 million. Namogoo’s pioneering client-side technology gives online enterprises a new generation of visibility, efficiency and governance over their websites and applications ecosystem, enabling superior digital customer experiences and business results. The funding will be used to further expand Namogoo’s client-side platform offerings—starting with the launch of its Customer Privacy Protection solution. The solution detects and mitigates against customer privacy risks associated with 3rd- and 4th-party vendors running on company websites and applications.

Over the past year, Namogoo has grown its customer base by 150%. The company’s platform is used by more than 150 leading global brands in over 38 countries, including Tumi, Asics, Argos, Dollar Shave Club, Tailored Brands, Upwork, and others. In the first half of 2019 alone, Namogoo has enabled its clients to recoup more than $575 million in online revenue.

Herzliya’s Namogoo protects the customer journey and user privacy for online enterprises, powering superior digital experiences and business results. The first company to discover and solve Customer Journey Hijacking, Namogoo’s client-side platform prevents unauthorized ad injections from hijacking online customers to competitors and mitigates against privacy and compliance risks emanating from 3rd and 4th party vendors. Analyzing over 500 million web sessions weekly, Namogoo’s self-learning solutions empower enterprises with a new generation of visibility, efficiency, and governance of their website ecosystem. (Namogoo 31.10)

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2.4 Elbit Wins $50 Million Portuguese Contract for EW Suite for New KC-390 Aircraft

Elbit Systems was awarded a contract valued at approximately $50 million from the Portuguese Ministry of Defense (MoD) to supply the Portuguese Air Force (PtAF) with a complete Electronic Warfare (EW) suite and Customer Logistics Support for the new KC-390 multi-mission aircraft. The contract will be performed over a five-year period. Under the contract, Elbit Systems will supply the PtAF’s KC-390 aircraft with a complete EW suite comprised of Radar and Laser Warning Systems, IR Missile Warning System, Countermeasures Dispensing System, a Directional IR Countermeasures (DIRCM) system and Active ECM (AECM) POD system.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land, and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems and munitions. (Elbit Systems 31.10)

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2.5 Equitable Life of Canada Goes Live With Sapiens’ Underwriting Solution

Sapiens International Corporation announced that Equitable Life of Canada (Equitable Life) has launched Sapiens UnderwritingPro for Life & Annuities (formerly known as StoneRiver LifeSuite). Equitable Life, a mutual life insurance company since 1920 that is based in Ontario, expects that this go-live will modernize its new business processes, including task automation. The company plans to significantly decrease turnaround times via UnderwritingPro, a web-based solution for automated underwriting and new business case management. Equitable Life anticipates a significant number of process improvements, new capabilities and cost savings, resulting in higher advisor satisfaction and faster turnaround times. Process improvements include automated ordering of underwriting requirements data and immediate approval on qualified insurance plans.

Sapiens UnderwritingPro for Life & Annuities is part of Sapiens Platform for Life & Annuities. UnderwritingPro speeds new business processes for insurance carriers and their channels, offering an intuitive user interface with critical updates and task assignments provided on a real-time dashboard. The solution enables underwriters and case managers to work on multiple cases simultaneously.

Holon’s Sapiens International Corporation empowers insurers to succeed in an evolving industry. The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers’ compensation and financial markets. With more than 35 years of experience delivering to over 450 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements. (Sapiens 30.10)

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2.6 AgroKlinge Becoming Part of ADAMA, Strengthening its Peru Business

ADAMA will be acquiring Peruvian crop protection company AgroKlinge. Established almost eight decades ago, AgroKlinge has become one of Peru’s leading domestic crop protection and plant nutrition companies, with a robust product offering that includes a wide portfolio of crop protection, biopesticide and nutrition products. Over the decades, AgroKlinge has built a strong brand and reputation in the $240 million Peruvian crop protection market, bringing it a large customer base throughout the country, with a special emphasis on large, industrial farmers.

While the Peruvian crop protection market is one of the most advanced in the region, only a few multi-national companies have direct presence in the country. This acquisition will allow ADAMA to further improve and expand its business in Peru, broadening its portfolio and enhancing its access to large scale industrial farmers. Through this acquisition, ADAMA will become one of the leading crop protection companies in Peru, with a comprehensive portfolio of solutions for Peruvian farmers, and a leading commercial platform throughout the country.

Airport City’s ADAMA is one of the world’s leading crop protection companies. They strive to Create Simplicity in Agriculture – offering farmers effective products and services that simplify their lives and help them grow. With one of the most comprehensive and diversified portfolios of differentiated, quality products, their more than 7,000-strong team reaches farmers in over 100 countries, providing them with solutions to control weeds, insects and disease, and improve their yields. (ADAMA 30.10)

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2.7 Elbit Systems Selected for Swiss Software Defined Radio Program

Elbit Systems announced that following extensive testing by Federal Office for Defense Procurement (Armasuisse) and the Swiss Armed Forces, the company was selected by the Swiss Federal Department of Defense, Civil Protection and Sport (DDPS) to provide the Swiss Armed Forces with an army-wide tactical Software Defined Radio (SDR) solution under the Telecommunications Armed Forces (TK A) program, Ersa mob Komm. The contract award is subject to Swiss Parliament approvals. The solution that will be supplied by Elbit Systems to the Swiss Armed Forces is based on the open architecture E-LynX SDR family.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land, and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems and munitions. (Elbit Systems 29.10)

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2.8 Centrical Launches with $13 Million in Additional Funding by Aleph

The provider of the holistic employee engagement and performance management platform announced its new corporate name, Centrical, and the closing of a $13 million funding round led by Aleph, a new investor, along with the company’s largest investor Jerusalem Venture Partners (JVP). The company now has $34 million in total funding. Other existing investors who participated in the latest round included La Maison Compagnie d’investissment, and 2B Angels.

Centrical, formerly GamEffective, will use the investment to boost growth, increase R&D activities, add to its array of solutions, build strategic alliances, and expand its customer roster, which already includes Microsoft, Novartis, Synchrony Financial, Unilever, and Swiss Life, among others. This investment lets Centrical increase its team’s size and strength to better manage rapid growth. In addition, it will intensify work in AI and related areas to yield smarter and autonomous solutions so large enterprises can better handle their complex, constantly changing business challenges.

Ra’anana’s Centrical employee engagement and performance management solutions help companies motivate employees to exceed their own KPIs. It does this by blending advanced gamification with personalized micro-learning and real-time employee performance management. Centrical’s platform produces improvements like +12% employee productivity, +20% average deal values, +30% faster onboarding, and +12% customer satisfaction KPIs for multinational enterprises in consumer-packaged goods, business process outsourcing, financial services, insurance, pharmaceuticals, technology, telecommunications, and travel & hospitality, among others. (Centrical 04.11)

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2.9 French SFP Joins ADAMA to Strengthen Its PGR and Fungicide Presence in Europe

ADAMA announced it will acquire French-Swiss crop protection company SFP. SFP, based in Aix en Provence, France and in Sion, Switzerland, was founded in 1987 and has developed strong, focused positions in key products in Europe, most notably in the plant growth regulator and fungicide segments. Plant growth regulators influence the development of crops, harmonizing their growth and preparing them for harvest. Such products are highly valued by farmers and widely used in agriculture and gardening, constituting a $375 million market in Europe.

SFP’s products are highly complementary to ADAMA’s European portfolio, and with ADAMA’s strong commercial network throughout the continent, are poised to drive significant growth for the Company going forward. In addition, certain active ingredients in SFP’s products are also manufactured by ADAMA, providing the potential to benefit from the competitive cost, quality assurance and traceability provided by backward integration.

Airport City’s ADAMA Ltd. is one of the world’s leading crop protection companies. With one of the most comprehensive and diversified portfolios of differentiated, quality products, their more than 7,000-strong team reaches farmers in over 100 countries, providing them with solutions to control weeds, insects and disease, and improve their yields. (ADAMA 04.11)

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2.10 Proofpoint to Acquire ObserveIT for $225 Million

Sunnyvale, California’s Proofpoint, the leader in people-centric cybersecurity, has entered into a definitive agreement to acquire ObserveIT, the leading insider threat management platform. Closing of the transaction is expected to occur late in the fourth quarter of 2019, and is subject to customary closing conditions, including Hart-Scott-Rodino merger review, and any other required regulatory approvals.

With this acquisition, Proofpoint will extend its data loss prevention (DLP) capabilities with endpoint joining email, CASB, and data-at-rest to form an enhanced enterprise DLP offering. The combination of ObserveIT’s leading lightweight endpoint agent technology and data risk analytics with Proofpoint’s industry leading information classification, threat detection, and intelligence, will give enterprises unprecedented insights into user activity with their sensitive data, wherever it resides. In tandem, Proofpoint will invest in ObserveIT’s leading insider threat management solution, which empowers security teams to detect, investigate, and prevent potential insider threat incidents by delivering real-time alerts, and actionable insights into user activity in one easy-to-use solution.

The integrated DLP platform will deliver real-time detection of the anomalous interactions across people, data, devices, and applications allowing security teams to understand and respond to data being mishandled, whether on a corporate device, in a cloud app like Office 365, or via email. The integrated solution will become part of the Proofpoint information protection suite and is expected to be available some time in 2020.

Tel Aviv’s ObserveIT , the leader in Insider Threat Management, delivers comprehensive visibility into user and data activity providing security organizations with a powerful tool for protecting employees and valuable assets while saving time and resources. With more than 1,900 global customers across all major verticals, ObserveIT empowers security teams to proactively detect insider threats, streamline the investigation process and enable rapid response. (Proofpoint 03.11)

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2.11 Papaya Global Raises a $45 Million in Series A Funding Round

Papaya Global announced the close of a $45 million funding round led by Insight Partners, with participation from Bessemer Venture Partners and existing investors New Era Capital Partners and Dynamic Loop Capital. The funding will be used to support the company’s rapid growth, invest more in scaling and automation, and launch new products to further support global companies, such as benefits management and salary benchmarks.

Papaya’s platform currently serves clients both large and small including, Kong, Rubrik, Yubico, Sonder, Fiverr, Wix, Microsoft, Teradata, CyberArk and more.

After a period of hyper-growth, Papaya Global is emerging as the biggest SaaS platform capable of supporting all types of workers – from EoR to payroll, and contractors. Papaya covers 100 countries and all aspects of employment – from onboarding, to automation of all payroll cycles, to cross-border payments.

Tel Aviv’s Papaya Global offers a total workforce management solution supporting all types of global workers (payroll, EoR, and contractors) in over 100 countries. The automated, cloud-based SaaS platform provides an end-to-end solution, from onboarding to on-going management and cross-border payments. The platform integrates with all existing workforce management tools, provides real-time business intelligence, and eliminates errors. It gathers all employee information into one place, creating a highly visible system for tracking payroll spending. The platform ensures GDPR and SOC compliance to maintain the highest standard of security. (Papaya Global 05.11)

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2.12 Sepio Systems Completes $6.5 Million Series A Funding Round

Sepio Systems has raised a $6.5 million in a Series A funding round led by Hanaco Ventures and Merlin Ventures, with the participation of existing investors Energias de Portugal (EDP), Mindset Ventures and Pico Partners. Since its establishment Sepio Systems has raised $11 million.

Sepio offers the world’s first end-to-end solution that detects and mitigates hardware-based attacks, rogue peripherals, invisible network devices and manipulated firmware. The company’s Sepio Prime, which is a software-only solution, has been successfully deployed in over 25 banks, insurance and telecom companies in the U.S., Singapore, Brazil, South Africa and Israel. Merlin’s partnership with Sepio includes bringing its Rogue Device Mitigation solution to market in the US Federal space. As part of its expansion, Sepio is opening a new office in Mclean, Virginia for supporting the US federal customers.

Tel Aviv’s Sepio is disrupting the cyber-security industry by uncovering hidden hardware attacks. Sepio Prime provides security teams with full visibility into their hardware assets and their behavior in real time.

A comprehensive policy enforcement module allows administrators to easily define granular device usage rules and continuously monitor and protect their infrastructure. Leveraging a combination of physical fingerprinting technology together with device behavior analytics, Sepio’s software-only solution offers instant detection and response to any threat or breach attempt coming from a manipulated or infected element. (Sepio Systems 07.11)

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2.13 SafeRide Technologies Named Auto-ISAC Strategic Partner

Washington’s Automotive Information Sharing and Analysis Center (Auto-ISAC) announced SafeRide Technologies as a strategic partner. SafeRide is a leading automotive cybersecurity company offering artificial intelligence (AI) based anomaly detection and threat prevention solutions. SafeRide Technologies will provide its expertise on the application of AI on automotive cybersecurity to the Auto-ISAC’s membership. The Auto-ISAC Strategic Partnership Program brings great value to members collaborating with innovators who support learning and sharing tools and techniques in managing the emerging complexity of automotive cybersecurity.

SafeRide’s expertise will help the Auto-ISAC achieve its key goal of preventing cyber threats in connected and autonomous vehicles. SafeRide’s technology can uncover unknown vulnerabilities before an attack happens. The AI learns the normal behavior of the vehicle and can then detect any anomaly or deviation from that behavior and send an alert of a potential attack. The company’s vSentry™ AI solution provides vehicle-level intrusion detection of zero-day attacks based on its vXRay™ machine learning and deep learning technology. SafeRide is the TU Automotive Awards winner for best AI/Data product for 2019.

Tel Aviv’s SafeRide Technologies is the provider of vSentry™, the industry-leading multi-layer cybersecurity solution for connected and autonomous vehicles that combines state-of-the-art deterministic security solution with a groundbreaking AI profiling and anomaly detection technology to provide future-proof security and unlock data driven services. SafeRide provides OEMs, fleet operators and automotive suppliers early detection and prevention of cyber-attacks, and helps to improve operational efficiency, avoid financial damage, prevent reputation loss, and save lives. (Auto-ISAC 11.11)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Modus Capital Launches $75 Million Modus Mena Venture Fund I

Modus Capital, a New York-based hybrid venture capital firm, announces the launch of its first regional fund, Modus Mena Venture Fund I (MMVFI), a $75 Million fund targeting early and growth stage companies across the Middle East and North Africa. The versatile fund is adaptable for a range of industries and structured to invest across asset stages from early to lower-mid market. The fund will invest in companies that have strong positive social impact as a by-product, including those with a focus on women and financial inclusion, health, education, and battling unemployment. Strengthening Modus Capital’s commitment to the region, the first investment from the fund was made in Q4/18 complemented with the launch of the Egypt office in November.

The Modus Mena Venture Fund I will focus on MENA-based early stage/post-accelerator technology companies as well as Small-to-Medium Enterprises (SMEs) where technology can enable them to grow rapidly. The asset allocation by stage serves as a major de-risking measure to Limited Partners as more mature companies carry significantly less risk. The fund also includes an allocation for US based companies that are portable to the MENA region.

Modus Capital is making investments through an incubation program starting from $50,000 to $250,000, and up to $1 million for Seed and Series A rounds. The verticals that the firm has particular interest include FinTech, HealthTech, Direct to Consumer e-commerce, Enterprise & Consumer SaaS products in addition to products leveraging Blockchain Protocols. Modus Operations will develop, operate, and grow companies by providing holistic support throughout their various stages of growth. Modus Events will organize highly focused workshops and other events with the aim of facilitating knowledge transfer and encouraging collaboration among different stakeholders of the ecosystem. The Modus Collective will create collaborative co-working spaces, with plans to inaugurate the concept in Cairo & Dubai in mid-2020. (Modus Capital 03.11)

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3.2 Abu Dhabi Plans Merger to Create New Defense & Tech Giant

Abu Dhabi plans to combine its defense and technology firms, creating one of the biggest defense groups in the Middle East, as the oil-rich emirate pushes ahead with consolidation efforts. The new holding firm, called Edge, will put 25 companies, including businesses that were once under Emirates Defence Industries Co, under its umbrella. Abu Dhabi, home to about 6% of global oil reserves, is stepping up efforts to consolidate its entities as the emirate adapts to lower oil prices. It has combined banks and sovereign wealth funds, as well as joined 11 entities, including ports and airports, under Abu Dhabi Development Holding Co. (WAM 05.11)

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3.3 Etihad & Cleveland Clinic to Promote Abu Dhabi as Medical Tourism Destination

Etihad Airways and Cleveland Clinic Abu Dhabi have signed an agreement, the first of its kind in the region between an airline and medical services provider, to promote the UAE capital as a premier medical travel destination. As part of the agreement, Etihad will offer specific medical travel packages to key markets around the world, delivering a single solution for booking flights, accommodation and medical treatments at Cleveland Clinic Abu Dhabi, which covers more than 40 medical and surgical specialties. The move to cooperate on medical travel services was announced as part of both companies’ support for Abu Dhabi’s wider strategy to become a leading center for medical tourism, announced earlier this year by Abu Dhabi’s Department of Health and the Department of Culture and Tourism.

With a fleet of more than 108 aircraft flying to destinations across the globe, Etihad Airways will bring Cleveland Clinic Abu Dhabi’s services to new markets. In 2018, Cleveland Clinic Abu Dhabi treated 1,380 international patients from more than 93 countries. Since opening its doors in 2015, it has performed a number of UAE and regional firsts, including the UAE’s first heart, liver and lung transplants. In 2019, it broke ground on a new oncology center. (AB 29.10)

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3.4 JustClean Invests In Dubai-Based On-Demand Car Services App Keno

JustClean, a Kuwait-based technology company, announced their recent participation in the most recent round of funding for Keno, a Dubai based car care on demand application. With this investment, JustClean has solidified their commitment to upgrading the cleaning sector through technology

Launched in 2017, Keno is a Dubai-born company that holds the distinction of introducing the path breaking on-demand car wash service to the UAE market. With Keno, car owners save time and money while getting a premium eco-friendly wash. get rid of deep stains. Keno Car Wash App aims to ease the life of car owners, offering on-demand car care services such as car wash, refuelling, detailing, oil change, tire change, battery recharge/change, and a host of other features, all at through a robust highly user-friendly mobile App.

Thanks to their world class dry washing technology formula, Keno uses no more than a regular glass of water per wash while still leaving a protective long lasting finish that users enjoy. Hence, Keno’s service has helped users save up to 10 million liters of water since launching in 2017 while still getting the quality service they deserve. Now, Keno has expanded its service offering to on demand vehicle maintenance, detailing, polishing and tinting. (JustClean 03.11)

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3.5 Tabby Raises $2 Million in Seed Funding Round

Dubai’s Tabby , a fintech startup, has raised $2 million in a seed funding round led by venture capital firm Global Founders Capital. The round was joined by Middle East and North Africa-focused venture capital firm Wamda Capital, Hong Kong-based Arbor Ventures and other investors. Tabby offers consumers across the UAE and Saudi Arabia the flexibility to pay for their online and offline purchases either in a single payment at a later date or in multiple instalments. By enabling users to complete their purchase without entering their credit or debit card details, it seeks to become a credible alternative to cash-on-delivery (COD) or cash payments. The capital raised, which marks the first round of external funding for Tabby, will be used to further develop its proprietary technology, grow its merchant network and hire talent across multiple geographies. Tabby is currently integrating its technology solution with a number of large retail merchants and e-commerce sites in the region. This is Tabby’s first round of funding and it will be used to further develop its proprietary technology, grow its merchant network and hire talent across multiple geographies. (Tabby 10.11)

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3.6 Trukker Raises $23 Million in Series A Funding Round led by STV

Trukker, a digital marketplace for land freight based in the U.A.E, has raised one of the largest initial rounds of capital for a startup in the region. The $23 million Series A financing round is being led by STV, a $500 million Saudi technology venture capital fund that previously invested in Careem. The capital raise would be the fourth largest Series A on record for the Middle East, according to data from research firm MAGNiTT. The average venture investment in delivery and transport projects in the region is $2.9 million year-to-date, according to a MAGNiTT report.

Trukker was founded in Abu Dhabi in 2016 and offers services such as cross-border cargo transportation and commercial moves. The company also focuses on collecting data and developing technologies to build an infrastructure that allows the tracking of land freight. Apps that hook up truck drivers with potential jobs have been led by Convoy and Uber Freight, with the latter outlining plans in September to hire 2,000 people in Chicago over the next three years, and recently expanded into Europe. (Trukker 12.11)

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3.7 UAE Dairy Products Market Set to Exceed $2.6 Billion by 2024

ResearchAndMarkets.com released the “UAE Dairy Products Market By Product Type (Yogurt, Dairy milk, Cheese & Spread, Ice Cream & Milk Cream, Ghee & Butter, & Others), By Distribution Channel, Competition Forecast & Opportunities, 2024” report

The UAE dairy products market stood at $ 1.8 billion in 2018 and is projected to grow at a CAGR of over 7%, to surpass $ 2.6 billion by 2024 on account of the increasing demand for flavored and organic dairy products among UAE population, especially through modern grocery and supermarket channel and changing consumption patterns of consumers. Moreover, higher per capita sales of dairy products in the country can be attributed to expanding economy and booming population along with rising tourist inflow in the Middle East. The UAE dairy products market has been divided into three major regions among which Dubai holds the largest share as it is a popular tourist destination and has the highest population in the country.

Some of the major players operating in the UAE dairy products market are: Al Marai, Al Rawabi, Al Ain Dairy, Gulf & Safa, Al Marmum Dairy Farm, Emirates Industry for Camel Milk & Products, Bustan Al Khaleej, Fonterra Brands and United Kaipara Dairies. (R&M 31.10)

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3.8 WWE and the Saudi General Entertainment Authority Expand Event Partnership

Following the historic Crown Jewel event in Riyadh, WWE and the Saudi General Entertainment Authority (GEA) have expanded their live event partnership through 2027 to include a second annual large-scale event. WWE and GEA also continue to work towards the completion of a media agreement in the MENA region. This long-term partnership demonstrates WWE and GEA’s commitment to bring sports entertainment to the region and supports Saudi Arabia’s Vision 2030.

WWE is an integrated media organization and recognized leader in global entertainment. The company consists of a portfolio of businesses that create and deliver original content 52 weeks a year to a global audience. WWE is committed to family-friendly entertainment on its television programming, pay-per-view, digital media and publishing platforms. WWE’s TV-PG, family-friendly programming can be seen in more than 800 million homes worldwide in 28 languages. (WWE 05.11)

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3.9 Saudi Arabian Retail Market Analysis & Forecast Report, 2019 – 2024

The “Saudi Arabia Retail Market By Distribution Channel (Hypermarket, Online Retail, Exclusive Stores, Specialty Retailers, Supermarket & Others), By Product Category, Competition, Forecast & Opportunities, 2024” report has been added to ResearchAndMarkets.com’s offering.

The Saudi Arabian Retail Market is projected to exhibit a CAGR of around 6% during the forecast period of 2019-2024. In terms of product category, the Saudi Arabian retail market has been categorized into food & beverages, apparel & footwear, appliances, jewelry, pharmacy and others. Of these, food & beverages category accounted for a nearly one-third market share in 2018 and the segment is anticipated to maintain its market dominance during the forecast period as well, backed by the widespread shift in pattern from staple food towards healthier, value-added alternatives.

The Saudi Arabian retail market has been segmented into central, west, east, south and north regions. Among these regions, the Central region is the largest demand generating region in the country’s retail market, due to the strong presence of key market players in the region. Riyadh, the capital of Saudi Arabia, which is present in the Central region, has seen significant transformation than other cities of regions. Riyadh has become the central hub for new technologies and latest creations.

The Saudi Arabian retail market is fragmented in nature due to the presence of several companies. Approval and commercialization of various products and expanding geographical reach are major strategies adopted by industry participants to enhance their market share. Some of the major players operating in the Saudi Arabian retail market are Panda Retail Co (Savola Group), Lulu Group International (EMKE Group), Abdullah Al Othaim Markets Co., Fawaz Abdulaziz AlHokair Co., Majid Al Futtaim Retail LLC, among others. (R&M 01.11)

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3.10 Saudi Arabia Passenger Car Market Analysis & Outlook: 2014-2024

The “Saudi Arabia Passenger Car Market By Vehicle Type (Hatchback, Sedan, MPV, Pickup and SUV), By Fuel Type (Petrol, Diesel and Others), By Transmission Type (MT and AT), Competition, Forecast & Opportunities, 2024” report has been added to ResearchAndMarkets.com’s offering.

The Saudi Arabian passenger car market was valued at over $11 billion in 2018 and is projected to grow at a CAGR of around 16% to surpass $28 billion by 2024, on account of increasing per capita income and developing infrastructure of the country.

Removal of ban from women driving along with increasing number of CKD plants are further driving growth of the market in the country. Moreover, Saudi Arabia is the one of the largest auto and auto parts market in the Middle East, accounting for over 30% of all vehicles sold in the region. The Saudi government is looking to develop domestic automotive industries and is encouraging global vehicle manufacturers to establish local operations, which would further drive the Saudi Arabian passenger car market in the coming years.

The Saudi Arabian passenger car market can be segmented based on vehicle type, fuel type, transmission type and region. In terms of passenger car type, the market can be classified into hatchback, sedan, MPV, pickup and SUV. Sedan cars dominated the Saudi Arabian passenger car market in 2018, with the market share of over 55%, and the segment is expected to continue its dominance during the forecast period as well. The leading position of sedan segment is backed by the wide range of products in this segment, besides being comparatively more spacious and easier to maintain. SUVs segment held the second largest market share in 2018, primarily on account of SUV’s powerful engine, higher passenger capacity and suitability for off-road driving.

List of major players operating in the Saudi Arabian passenger car market include Toyota Motors Corporation, Hyundai Motor Company, Mazda Saudi Arabia, Nissan Motor Co., General Motors Co., Ford Middle East, Kia Motors Corp, Isuzu Motors Saudi Arabia Co., Volkswagen, Renault Middle East, etc. Major companies are adopting strategies such as expansion in new locations, mergers & acquisitions and product developments. With rising focus of these leading players on sales and marketing activities, the passenger car industry in Saudi Arabia is anticipated to witness intensifying competition over the next five years. (R&M 11.11)

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3.11 Nala Raises $1 Million & Debuts World’s First Arabic Medical Artificial Intelligence

Saudi Arabia’s Nala announced the launch of its artificial intelligence platform that enables instant medical diagnosis in Arabic. The platform will provide users with an accurate medical diagnosis within seconds. To further its growth, Nala has raised $1m in its first financing round.

Nala’s new platform will be an addition to Nala’s current digital health service, which provides users with instant access to personalized healthcare through a mobile app. Over 50,000 people have used Nala, a number that is growing exponentially. Dozens of licensed doctors have helped in the development of the new platform. With this new technology, patients can now receive instant medical diagnoses with an extreme precision that alleviates human error. It is currently available through Nala’s mobile app.

To strengthen Nala’s growth, the company raised $1 million in its first financing round. AlAraby Investment, which led the funding, is a Dubai-based investment group that invests in high-growth companies. With the funding, Nala will continue to grow its user base, further strengthening its position as the region’s top digital health service.

Headquartered in Riyadh, Saudi Arabia, Nala is the region’s fastest-growing digital health service. Founded as one of the private enterprises that contribute to finding solutions to the challenges of Vision 2030, following an initiative by the National Digital Transformation Unit and the Saudi Ministry of Health. All of Nala’s doctors are licensed by the Saudi Commission for Health Specialties. (Nala 11.11)

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3.12 Tripdizer Raises $300,000 in Seed Round

Tripdizer recently closed its seed round of $300,000. The round was led by 500 Startups, one of the most active venture capital firms in the MENA region, with participation from Innoventures and Jamal El Dabal. With the new round of funding, Tripdizer will accelerate its investment to develop a more dynamic product, expand its regional footprint and strengthen its brand name as one of the most innovative travel startups in the region.

Founded in 2017, Cairo’s Tripdizer recognized the difficulty and the time-consuming efforts of travelers in organizing trips and sought to provide an enhanced travel service that allows the customer to book an entire trip in a few simple steps at the touch of a button online. Tripdizer successfully managed to transform into a smart technical solution that aims to help travelers in the MENA region improve their experience by connecting with a well-established team of travel experts offering their expertise and knowledge firsthand.

Earlier this year, Tripdizer was recognized as the most innovative travel startup in the region, by the United Nations World Tourism Organisation (UNWTO) and the ministry of tourism in Egypt at an event organized for tourism startups in the region. The user-friendly simple Tripdizer website, helps the traveler to choose from an array of travel options using the preferred itinerary and book a trip in a few short steps.

Tripdizer uses machine learning to generate curated trips for travelers within a few minutes. (Tripdizer 06.11)

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3.13 GA-ASI to Conduct Series of Capability Demonstrations in Europe

San Diego, California’s General Atomics Aeronautical Systems, Inc. (GA-ASI), a global leader in Remotely Piloted Aircraft (RPA), announced that they are working with the Hellenic Air Force (HAF) in Greece to conduct a series of demonstration flights for European countries in December. Flights will be based out of the HAF’s site in Larissa and use a GA-ASI MQ-9 Guardian RPA to showcase maritime surveillance capabilities, as well as a GA-ASI-developed Detect and Avoid (DAA) system that enables RPA to fly safely in civil airspace alongside manned aircraft. The demonstration configuration is based on the MQ-9 systems operated by the U.S. Department of Homeland Security (DHS), in support of its maritime surveillance roles.

The DAA system consists of an air-to-air radar and processor integrated with Traffic Alert and Collision Avoidance System (TCAS II) and Automatic Dependent Surveillance-Broadcast (ADS-B). The DAA system from GA-ASI is operational in the U.S. The system’s collision-avoidance radar provides an essential safety feature for integrating unmanned aircraft into civil airspace. The featured Raytheon SeaVue surface-search radar system provides automatic tracking of maritime targets and correlation of AIS transmitters with radar detection. (GA-ASI 11.11)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Solar Energy Produces 5% of Israel’s Electricit

The amount of electricity produced from solar energy exceeded 5% of total electricity consumption this year for the first time, Israel Electric Corporation (IEC) announced. This is one of the lowest penetration rates in the world, especially in comparison with European countries, which have far less sunshine than Israel. In the UK, for example, renewable energy (mostly wind) supplied a larger proportion of total consumption than fossil fuels (coal, oil, and natural gas) in the third quarter.

According to figures presented, the amount of installed electrical capacity of solar electricity production systems in the electrical grid is already 2,200 megawatts, double the capacity of five years ago. The IEC now has 7,000 requests from entrepreneurs for hooking up to the grid pending. This amounts to about 1,500 megawatts (of solar electricity production systems) for connection to the grid in the next two years. The IEC claims the main obstacle to speeding up the rate of connecting solar devices to the electricity grid is the need to expand the conduction and distribution network. Public Utilities Authority (electricity) VP noted that it has been ten years since private electricity production began. Today Israel has seven private power stations producing 3,000 megawatts of private electricity. (Globes 06.11)

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4.2 Bird Chooses Israel to Trial Scooter Recharging Points

International electric scooter rental service Bird has set up three recharging stations in Tel Aviv and Ramat Gan. Bird is trying out the recharging stations in Israel for the first time anywhere in the world and it could herald a change in a business model that until now has been based on dockless electric scooters with juicers, or “bird hunters” earning about NIS 25 per scooter that they recharge.

Meanwhile, Tel Aviv Municipality has tightened the regulations on the electric scooters offered for rent by Bird, Lime and Wind. From 15 December, the companies will be required to allocate a registration number to each scooter. Each of the companies operates an estimated 2,500 scooters in Tel Aviv, Ramat Gan, Givatayim and Petah Tikva. (Globes 06.11)

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4.3 Iraqi Cabinet Agrees New Set of Reforms

The Iraqi cabinet held its regular weekly meeting in Baghdad on 5 November under the chairmanship of Prime Minister Adil Abd Al-Mahdi and in the presence of the governors. The Cabinet decided to grant the Minister of Oil the authority to recruit graduates of the 2018-2019 oil vocational training courses to become employees of the Ministry of Oil and its public companies. The Cabinet agreed to reduce customs fees on plastic granules for industrial projects.

The Cabinet decided to start the first phase of the “Babylon Sewerage Project” as per the recommendations made by the Governor of Babylon and the Ministry of Construction, Housing and Municipalities’ Audit and Approval Committee, and the executive commission. The project will be implemented by KAMA.

The Cabinet also approved the recommendation made by the Ministerial Council on Energy to implement projects on government land and properties after obtaining the initial approval from the owner and the relevant authorities and following all the necessary legal requirements. (Government of Iraq 07.11)

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4.4 MSMEDA Finances Car Conversion to CNG

Egypt’s Micro, Small, and Medium Enterprises Development Agency (MSMEDA) has signed two agreements with Natural Gas Vehicles Company (Car Gas) and the Egyptian International Gas Technology Co. (Gastec), totaling EGP 80 million, in order to convert cars to run on compressed natural gas (CNG) instead of gasoline. MSMEDA’s Executive Director Gamea clarified that the agreements are part of the “Towards Natural Gas” initiative, pointing out that MSMEDA has already converted 34,400 cars (28,000 taxis, 6,400 privately owned), totaling EGP 172 million in financing. (EO&G 06.11)

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4.5 Egypt Signs Protocol to Start Recycling 14,000 Tons of Solid Waste Daily

Egypt’s Minister of Local Development Shaarawy, State Minister of Military Production El-Assar and Minister of Environment Fouad witnessed the signing of a cooperation protocol between Cairo and Qalioubiya governorates on benefiting from the El-Salam factory for treating solid waste, which is expected to recycle 14,000 tonnes daily. This came within the framework of government efforts to quickly apply a new national solid waste treatment system to achieve a quantum leap in sanitation in the governorates.

Meanwhile, Shaarawy said that the El-Salam factory will recycle 1,000 tonnes of waste daily for Qalioubiya and 4,000 tonnes daily for Cairo. Assar said that the first stage of implementing the system will focus on the infrastructure, asserting the keenness of the Ministry of Military Production on directing all the manufacturing, technical, technological and human potentials available in its affiliated companies and units to participate in carrying out development projects nationwide. (MENA 07.11)

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5: ARAB STATE DEVELOPMENTS

5.1 Jordan’s Inflation Rises During the First Ten Months of 2019

Jordan’s Consumer Price Index rose by a slight 0.3% during the first 10 months of the current year (2019), according to official data. The increase was attributed to rising prices of rents by 0.42%; vegetables and dry and canned legumes by 0.19%; cereals by 0.2%; education 0.1% and culture and entertainment by 0.04%, the figures by the Department of Statistics revealed. Commodity groups that saw their prices declining included transportation (0.22%), dairy products and eggs (0.17%), meat and poultry (0.12%) and tobacco products by 0.1%. (Petra 11.11)

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►►Arabian Gulf

5.2 UAE Approves $16.6 Billion Budget for 2020 with No Deficit

Sheikh Mohammed bin Rashid, the UAE’s Prime Minister and Vice President and Ruler of Dubai, announced a AED61 billion budget ($16.6 billion) has been approved for 2020. Sheikh Mohammed said that the decision was taken at a meeting of the Council of Ministers. He said that one third of the budget is allocated to the social development sector, one third to government affairs and the rest to infrastructure, economic resources and living benefits. The AED60.3 billion federal budget set last year was part of a three-year, AED180 billion budget for 2019-21. (AB 29.10)

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5.3 UAE Central Bank Will Soon Launch FinTech Coordination Authority

The United Arab Emirates’ central bank plans to establish a FinTech Office ‘in the near future’ to support financial innovation in the banking sector in coordination with other national authorities. The aim of the FinTech Office will be to position the Central Bank as the coordinating authority, as the author of prudential market conduct regulatory requirements, and as an enabler and facilitator of FinTech activities in the UAE.

In the UAE, there are several stakeholders developing fintech initiatives, including Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), and Emirates Securities and Commodities Authority (ESCA). (Zawya 04.11)

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5.4 Saudi Arabia Projects Wider 2020 Budget Deficit

Saudi Arabia announced on 31 October that it expects its budget deficit to widen next year to 187 billion riyals ($49.86 billion), projecting a shortfall for the seventh year in a row amid low oil prices. This marks a substantial increase from a projected budget deficit of 131 billion riyals ($35 billion) for this year, Finance Minister Mohammed al-Jadaan said in a statement ahead of a final budget announcement in December.

Saudi Arabia has posted a budget deficit since 2014, when a crash in oil prices shrank the country’s revenues. Prices have partially recovered since then, but in the face of persistent budget deficits the OPEC kingpin has introduced a raft of reforms to diversify its economy away from oil. The kingdom has increased the prices of fuels and electricity, imposed a 5% value added tax (VAT) and levied duties on 11 million expatriates in a bid to generate additional revenue.

Earlier in October, the IMF sharply downgraded growth projections for Saudi Arabia, citing low oil prices among other factors. The forecast for Saudi Arabia was cut to just 0.2% for 2019, a substantial 1.6% lower than April’s projections. The outlook is the worst since 2017 when the kingdom’s economy contracted by 0.7%. But the IMF raised its Saudi growth forecast for next year to 2.2%, slightly above April’s projections, on expectations that the non-oil sectors will strengthen following subsidy reforms. (AB 01.11)

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5.5 Saudi Arabia Grants First Permanent Residencies to Foreigners

Saudi Arabia has granted 73 foreigners “premium” residency under a new program to attract overseas investment by enabling selected people to buy property and do business without a Saudi sponsor. The kingdom received thousands of applications after offering permanent residency for 800,000 riyals ($213,000) or a one-year renewable permit for 100,000 riyals. The first batch of recipients come from 19 countries and include investors, doctors, engineers and financiers, according to a statement Monday from the government’s Premium Residency Centre. It didn’t detail how many were granted permanent residency.

The program, approved in May, is the latest sign of how the kingdom is rethinking the role for foreigners as it works to reduce the economy’s dependence on oil. It is a landmark move in a region where many overseas workers are subject to some of the world’s most restrictive residency rules. The premium residencies also allow holders to switch jobs, exit the kingdom easily and sponsor visas for family members. The idea for a long-term Saudi residency was first proposed in 2016 by Crown Prince Mohammed bin Salman. At the time, he estimated the program would generate about $10 billion in annual revenue by 2020.

While Saudi Arabia is seeking to encourage the affluent to stay, monthly fees imposed on foreign workers and their families, along with sluggish economic growth, have prompted hundreds of thousands of other expats to leave. Those levies are designed to spur private businesses to hire Saudi nationals as citizen unemployment hovers above 12%. (AB 11.11)

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►►North Africa

5.6 Egypt’s External Debt Jumps to $108 Billion at the End of June

The Central Bank of Egypt (CBE) said that the external debt rose to about $108.7 billion at the end of June 2019, up by $16.1 billion (17.3%), against June 2018. In its recent report on the performance of banks and the economy, the CBE said that this increase in external debt came as a result of increasing foreign loans and facilities by $16.5 billion and the decline of exchange rates of most of the borrowing currencies against the US dollar by about $400 million.

The CBE noted that debt services reached $13.4 billion in fiscal year 2018/19, including $10.2 billion in instalments and $3.2 billion in interest. The ratio of external debt to GDP has fallen to 36% by the end of June 2019, noting that they are still in the safe limits in accordance with international standards. In the same context, the CBE pointed out that the total domestic public debt reached about EGP 4.204 trillion at the end of March 2019, including 86.4% owed by the government, 7.3% owed by general economic bodies, and 6.3% owed by the National Investment Bank. (CBE 31.10)

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5.7 Egypt’s Inflation Reaches 2.4% in October, Lowest in Nearly a Decade

Egypt’s official statistics agency CAPMAS said inflation dropped to 2.4% year-on-year in October, plunging from 17.5% in October 2018. The decrease in annual inflation was the result of a drop in food and beverage prices by 6.3%. Urban consumer price inflation dropped to 3.1%, down from 4.8% in September.

October’s monthly inflation is 1% higher than September’s, with CAPMAS reasoning the jump to increased prices of books, newspapers, and other products. The rise came despite a decrease in the prices of vegetables, poultry and grains. Inflation has been on a downward trend since May 2019, despite a hike in domestic fuel prices in July 2019 as part of the terms of the IMF agreement which helped Egypt secure a $12 billion loan in 2016. Inflation skyrocketed to 33% in the summer of 2017, as the country proceeded with its economic reform program which included the flotation of the currency and fuel subsidy cuts among other measures.

The eased rate is still within the Central Bank of Egypt’s (CBE) target of 9%, plus or minus 3%, for the fourth quarter of 2020. The declining rate has pushed the CBE to proceed with its trend in cutting interest rates, slashing it by a total of 250 bps during the past two policy meetings since August. (CAPMAS 09.11)

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5.8 Egyptian Inflation Forecast to Average 8.4% in 2020 by Capital Economics

Capital Economics panelists expect inflation to average 8.4% in 2020, down 0.9% from last month’s expectations, although strong economic growth should stoke price pressures ahead. They expect further reduction in overnight deposit rates to end 2020 at 10.61% and 2021 at 9.88%. Inflation cooled to 4.8% in September from 7.5% in August, marking its lowest reading since December 2012, underpinned by a weaker increase in prices of foods and vegetables.

Capital Economics expects GDP to expand 5.5% in the fiscal year (FY) 2020, and 5.4% in FY 2021, which is unchanged from last month’s forecast. It also added the economy is seen slowing slightly this fiscal year on meek global economic growth, which will limit external demand growth. Solid investment growth underpinned by higher government spending and lower interest rate should cushion the slowdown.

Regarding currency, although strengthening significantly this calendar year, the Egyptian pound is seen depreciating going forward, partly as the CBE is expected to continue easing monetary policy. Capital Economics predict the Egyptian Pound ending CY2020 at EGP17.30/USD and CY2021 at EGP18.23/USD. In terms of total investments, Capital Economics expect them to grow 11.6% in FY 2020, which is up 0.1% points from last month’s forecast, and 10.2% in FY 2021.

In the MENA region, economic growth is set to accelerate notably in 2020 underpinned by expected increase in oil production. Moreover, inflation in MENA will decline in 2020 compared to this year on the back of sizable dis inflationary pressures in Egypt and Iran, although there has been a rise in global inflation due to stronger economic growth. (Capital Economics 31.10)

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5.9 Egypt Achieves 60 New Oil & Gas Discoveries During FY 2018/19

The Egyptian General Petroleum Corporation (EGPC) said that 60 new discoveries had been realized during the previous fiscal year in the fields of petroleum and natural gas, adding that two new discoveries will be announced soon: the first will be for Eni in Gulf of Suez region, while the second will be for Petro Gulf in Sinai.

During the House of Representatives’ Planning and Budgeting Committee, it was clarified that there is an ambitious plan to develop and raise the efficiency of seven old refineries. EGPC established new firms like the Egyptian Refining Company (ERC) with a cost of $4.4 billion, aiming to produce 4.2 million tons per year. This is in addition to Assiut Company, which will start production in the first quarter of 2020 (for the gasoline production unit), and the Red Sea Company. The EGPC’s 24 subsidiaries realized profits representing 18.6% of the investments’ value, amounting to EGP 21.5 billion. The two companies were liquidated due to their lack of economic feasibility. (EO&G 03.11))

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5.10 Egypt Telecoms Infrastructure, Operators & Regulations Statistics – 2019

The “Egypt – Telecoms Infrastructure, Operators, Regulations – Statistics and Analyses” report has been added to ResearchAndMarkets.com’s offering.

Supported by a population of over 96 million, Egypt has one of the largest telecom markets in North Africa. There is effective competition in most sectors, and this has been supported by the recent award of unified licenses to allow operators to offer fixed-line as well as mobile services. The incumbent telco Telecom Egypt secured one of the licenses in August 2016 and launched mobile services in the following year. The three mobile network operators initially failed to bid for the remaining three licenses, which would have enabled them to enter the fixed-line market and provide fully convergent service offerings. This prompted the government to consider opening the bidding process to international operators, but shortly afterwards the three secured licenses, being assigned spectrum in June 2017.

The country’s political crisis following the Arab Spring’ revolution which began in 2011 adversely affected the telecom sector. Although revenue has remained stable, capital expenditure has been under pressure and profit margins have fallen due to a weaker local currency and inflation. International investors have also shown considerable caution in response to political uncertainties.

The government in recent months has endeavored to secure billions of dollars in funding to roll out next-generation networks, develop technology parks and extend broadband availability. In terms of investment, and in smart infrastructure developments, the government’s ambitions to develop a new capital city east of Cairo promises to be a catalyst for an intensification in the deployment of 5G and fiber networks in coming years. Egypt is well connected by several international submarine fiber optic cables, while it also has an extensive national fiber backbone and some of Africa’s most vibrant FttP deployments. (R&M 01.11)

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5.11 UNCTAD Says Egypt is the Most Attractive African Market for FDI

The United Nations Conference on Trade and Development (UNCTAD) announced that Egypt is the biggest foreign direct investment (FDI) attractive in Africa during the first half of 2019. In its report, UNCTAD unveiled that Egypt has attracted FDI flows worth $3.6 billion. It also mentioned that the FDI flows to Africa registered $23 billion during H1/19, down two% in the same period in 2018.

Despite this decrease, Egypt has managed to keep its position as the biggest FDI attractive in the continent, which is in line with the success of its economic reform program that Egypt’s government has adopted since November 2016, macroeconomic indices improvement and the legislative reforms that Egypt has implemented, which improve its investment climate. On the other hand, the global FDI flows reached $650 billion in H1/19 with an increase rate of 24% compared to the same period in 2018, according the report. The report anticipated that global FDI flows would witness a slowdown increase due to the global trade tensions. (UNCTAD 28.10)

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5.12 Foreign Direct Investments in Morocco in Decline

Foreign Direct Investments (FDIs) are in decline in Morocco, according to the latest statistics from the Moroccan Exchange Office. The flow of FDIs in Morocco reached MAD 13.35 billion by the end of September 2019, compared to MAD 19.62 billion at the same time of 2018, recording a 32% decline. The reasons behind this decline are a 19% decrease in FDIs receipts, along with a 7.8% rise in FDIs expenses, according to the exchange office. In the first nine months of 2019, the net flow of Moroccan direct investments abroad (IDME) almost tripled from MAD 2.96 billion at the end of September 2018 to MAD 6.57 billion at the end of September 2019.

Remittances made by Moroccans living abroad (MRE) remained stable. At the end of September 2019, remittances amounted to MAD 49.80 billion against MAD 50.02 billion in the previous year. Travel receipts amounted to MAD 59.79 billion at the end of September 2019, compared to MAD 56.23 billion in the same period of the previous year. Travel expenses, on the other hand, recorded an increase of 7.9% at MAD 15.65 billion. The balance of travel receipts and expenses recorded an increase of 5.8% for the first nine months of 2019.

Despite the decrease in the flow of FDIs in Morocco, the country still attracts the fifth-most FDIs in Africa, according to a report from the US State Department. Morocco’s political stability, its infrastructure, and its strategic location all contribute to Morocco’s status as a popular investment hub. Morocco also attracts investors through its macro-economic policies, trade liberalization, investment incentives, and structural reforms, according to the report. Morocco aims to be among the top 50 countries worldwide in the rankings by 2021. (MEO 04.11)

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5.13 Morocco Signs Nuclear Medicine Agreement with International Partners

Moroccan Minister of Energy, Hydrocarbons and the Environment Rabbah signed a Memorandum of Understanding (MoU) with the National Center for Energy and Nuclear Science and Technology (CNSTN), the American Long Island University, France’s Dassault Systemes, and the national Canadian laboratory Canadian Nuclear Laboratories. The agreement was signed on 8 November in Rabat.

The MoU aims to establish a strategic partnership (consortium) to contribute to the strengthening of nuclear medical services in Morocco, and to improve the production processes for radioactive pharmaceuticals. CNSTN’s main role is to promote scientific research and the application of nuclear techniques, the organization also prepares the technological bases necessary for the introduction of nuclear power in Morocco.

The MoU is aimed primarily at improving international nuclear medicine services, particularly on the African continent, through a new and innovative approach to the value chain of radioactive pharmaceutical production. The agreement also involves improving production processes in nuclear research reactors and accelerators and the development of education and training programs in African countries. The training programs include certification in nuclear medicine and radiation pharmacy. Through the MoU, the CNSTN will benefit from shared best practices with its renowned partners with the aim of strengthening nuclear medicine services in Morocco. (MWN 09.11)

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5.14 Moroccan Parliament Debates Progressive Sugar Tax

As Morocco’s 2020 Finance Bill is under review by Parliament, debate has sparked regarding progressive measures to ensure the health of Moroccan citizens. The internal consumption tax (ICT), as featured in Article 5 of the Finance Bill, increases the tax on beverages sweetened with sugar. Taxation for different beverages will vary depending on how much juice a drink contains. More than 10% fruit juice in sodas or non-carbonated drinks, or more than 6% lemon juice in lemonade, would garner just an additional MAD 10 to 15 per 100 liters.

If a beverage is below the juice threshold, the rate of taxation rises. If a drink has five grams of sugar or less per 100 milliliters, the tax will be MAD 30 per 100 liters. Between 5 and 10 grams per 100 milliliters would garner a tax of MAD 37.50 per 100 liters. Drinks above 10 grams per 100 milliliters would experience a tax rate of MAD 45 per 100 liters.

While all the same drinks would be available, the bill’s proponents hope it will incentivize people to decrease their sugar intake due to the proposed shifts in pricing. If Article 5 passes, the more sugar a drink has, the more expensive it will be. Parliament aims to create a society in which maintaining a healthy lifestyle is cost-efficient, while decreasing the difficulties that arise with high rates of sugar intake. (MWN 08.11)

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5.15 Morocco Telecoms Infrastructure, Operators & Regulations Statistics – 2019

The “Morocco – Telecoms Infrastructure, Operators, Regulations – Statistics and Analyses” report has been added to ResearchAndMarkets.com’s offering.

Morocco has developed one of the most advanced telecommunications markets in Africa, supported by government programs aimed at extending the availability of internet services nationally and in developing a digital economy. The partially privatized incumbent telco Maroc Telecom remains the dominant player in the fixed-line sector though has effective competition in the mobile sector. A key regional player, Orange Group, entered the market through the acquisition of a major stake in the telco Mdi Telecom (Mditel), which has since been rebranded as Orange Morocco.

The country also has one of the highest mobile penetration rates in the region as well as some of the lowest prices for broadband internet access, despite there being relatively little competition in the fixed-line broadband sector. Competition in the provision of DSL services intensified during 2016 following the launch of services by Inwi and Orange Morocco, though the number of fixed-line broadband subscribers remains far lower than that for mobile broadband accesses.

To accommodate the increasing voice and internet traffic, operators have upgraded their fiber optic national backbone networks and international connectivity. In combination with upgraded fiber backhaul, LTE services launched in mid-2015 have facilitated the take-up of mobile broadband in regional areas, and so contributed to the governments aims as drawn up in its National Broadband Plan to 2022. (R&M 04.11)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey at the Bottom of the OECD’s Health Expenditure Index

Turkey lags far behind in the share of health expenditure regarding its GDP in 2018, the Organisation for Economic Co-operation and Development (OECD) report said. Turkey brings up the rear in health care spending with 4.2% of its GDP as the OECD average was 8.8%, according to the report. Germany, France, Sweden and Japan all spent close to 11% of GDP, while a few countries spent less than 6% of their GDP on health care, including Mexico, Latvia, Luxembourg and Turkey at 4.2%. A radical change of Turkey’s healthcare system was one of the promises of the ruling Justice and Development Party (AKP), foreseeing cheap, comprehensive and practical services.

But Turkey is struggling with many healthcare problems, made worse by an economic crisis after the Turkish lira has dramatically lost its value against the dollar in 2018. The healthcare system now faces issues like the inefficient funding of hospitals, medical supply shortages, staff shortages, long waiting times and stopping the import of some drugs due to high prices following the fall in the lira. (Ahval 07.110

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6.2 Over 16 Million Rely on Social Welfare in Turkey

A total of 16.8 million people in Turkey depends on social aids while 21.2% of the country earn below the poverty rate. Around 3.4 million of those required aids by Turkey’s Social Assistance and Solidarity Foundation, 2.1 million children require government assistance to attend school, and 6.9 million people are unable to make their national insurance payments. The cost of this crisis has been borne mostly by the poorer segments of society. The ratio between the richest 20% of households and the poorest 20% of households is 7.8. Turkey’s economy has been suffering since limited U.S. sanctions and increased tariffs on metals sparked a currency crisis, leading to a dramatic fall of lira last year. The lira still remains weak while unemployment remains high, around 20%. Many companies and banks are burdened with mounting debt. (Ahval 10.11)

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6.3 Cyprus Signs Deal for Offshore Gas Concession

On 7 November, Cyprus signed a 25-year concession with a three-member consortium for the exploitation of a gas reservoir southeast of the island first discovered in 2011. The contract with Noble Energy, Shell and Delek is the first commercial exploitation license signed by the Mediterranean island. The Aphrodite field is thought to hold an estimated 4.1 trillion cubic feet (tcf) of gas. Cypriot authorities have said natural gas will start being extracted in 2025, with estimated earnings of € 9.3 billion ($10.29 billion) over an 18-year period.

In September last year Egypt and Cyprus signed an agreement to build an undersea natural gas pipeline from the Aphrodite field to a liquefaction plant in Egypt. (Reuters 07.11)

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6.4 Greece’s Early Repayment to IMF Will Improve Its Credit Metrics

The European Stability Mechanism approving Greece’s early repayment of around €2.7 billion of its roughly €8.4 billion of outstanding debt owed to the International Monetary Fund will improve Athens’ credit metrics, said Moody’s. It said the repayment will lower the Greek government’s interest expense and marginally lengthen its debt’s average maturity, improving debt sustainability. The early repayment comes after capital controls were lifted; the government returned to international bond markets, the European Commission approved the government’s ambitious plan to improve banks’ asset quality and amid generally improving economic sentiment.

Although the IMF is a relatively small creditor for Greece (2.3% of total central government debt), the early repayment is credit positive because the interest rate on IMF loans averages 4.9%, which is significantly higher than what Greece pays on its loans with the ESM and European Financial Stability Facility (EFSF), whose interest rates average 1.4%. It is also higher than the 10-year bond Greece reopened in October, which yields 1.5%, and the 1.9% yield on the seven-year bond it issued in By repaying a portion of its debt to the IMF early, Greece expects to save around €70 million, or around 1.2% of its interest expense. The government will still need to repay the IMF principal and interest of €1.9-€2 billion annually during 2021-23, and around €300 million in 2024.

The early repayment follows other recent credit positive developments, such as the full abolition of capital controls on 1 September and the government’s success issuing bonds in international capital markets. Since the end of Greece’s last adjustment program in August 2018, the government has raised €9 billion by issuing bonds at successively lower interest rates. The banking system’s large stock of NPEs is currently its biggest challenge. Although the formation of new NPEs is declining, Greek banks have the highest problem loan ratios in our rating universe, despite improvement in recent years, warned Moody’s. (FM 01.11)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Education First Ranks MENA Countries for English Proficiency in Global Index

EF Education First released the ninth annual edition of its EF English Proficiency Index (EF EPI), analyzing data from 2.3 million non-native English speakers in 100 countries and regions, including Saudi Arabia, Egypt, the UAE and other Arab countries. The Netherlands topped this year’s index, placing Sweden, last year’s top-scorer, in the second position.

In the MENA region, Bahrain scored the highest. However, the region has continued to lag behind the other regions of the world. The index has also found that in the MENA region, young adults have a somewhat similar English proficiency level as adults over 40 years of age. This suggests that English instruction in the region’s schools has not been evolving over the years. The results have also shown a great convergence in the levels of proficiency among adults in the region, with only 9 scores separating Bahrain, MENA’s best achiever, from the weakest performing country, Libya.

The EF EPI is based on test scores from the EF Standard English Test (EF SET), the world’s first free standardized English test. The EF SET has been used worldwide by thousands of schools, companies, and governments for large-scale testing. EF Education First is an international education company that focuses on language, academics, and cultural experience. Founded in 1965, EF’s mission is “opening the world through education.” (EF Logo 12.11)

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*REGIONAL:

7.2 UAE Cabinet Approves National Holidays for Public and Private Sector

The UAE cabinet has approved unified national holidays in the year 2019 and 2020 for public and private sectors on 31 October. All ministries and federal offices have been asked to abide with the approved holiday calendar for year 2019 and 2020. In March, the Cabinet had issued a decree to enforce the unification of holidays for employees in the public and private sectors in the country.

Remaining UAE Public Holidays for 2019:

  • • The Prophet’s Birthday (November 9 – Saturday)
  • • Commemoration Day: (1 December – Sunday)
  • • National Day: (2-3 December – Monday, Tuesday)

Public Holidays 2020:

  • • New Year: (1 January 2020)
  • • Eid Al Fitr: (29 Ramadan – 3 Shawwal)
  • • Arafat Day: (9 Dhu al Hijjah)
  • • Eid Al Adha: (10-12 Dhu al Hijjah)
  • • Hijri New Year: (23 August)
  • • The Prophet’s Birthday (29 October)
  • • Commemoration Day: (1 December)
  • • National Day: (2-3 December)

The final calendar dates of some of these holidays is based on moon-sightings and will be confirmed closer to the date. (GN 31.100)

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7.3 Morocco Maintains ‘Very Low’ Score in English Proficiency Index

Morocco ranked 76th in the 2019 English Proficiency Index (EF EPI), maintaining a “very low” score in the recent ranking. The index listed Morocco among the very low proficiency countries with a score of only 47.19. In 2018, Morocco scored 48.10, and the index listed it 60th out of 88 countries. Morocco maintained its position in the regional index, where it is ranked sixth behind Tunisia (fifth) and Ethiopia (fourth). South Africa, ranked sixth globally, tops the index in Africa, followed by Kenya (18th in the global ranking). The index ranked Algeria the 90th on the list.

This is particularly relevant to Morocco as senior Moroccan officials do not see English replacing French any time soon. Earlier this year, Morocco’s Minister of Education Said Amzazi said that French will remain the second language after Arabic in Moroccan schools. Languages in Morocco are one of the topical issues dividing public opinions. While some promote Arabic and English, others believe that French should continue to take the lead.

The Minister of Education urged Moroccan schools to implement the framework law 51.17 at the start of the academic year 2019-2020. Article 31 of the framework law calls for the teaching of scientific and technical subjects in middle and high schools in foreign languages (mainly French). (MWN 05.11)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Else Nutrition Holdings Ushers in Next Generation of Clean Label Baby Nutrition

Else Nutrition Holdings announced that their all-natural, 100% plant-based formula is being produced using a clean production process, transforming two whole plants, without chemically-breaking them up into derivatives, nor using chemical extraction of oils. Namely, the formula is devoid of highly-processed ingredients, purified oil blends, chemical protein isolates or hydrolysates. Additionally, the production process occurs without the addition of free amino acids, and no use of corn syrup solids. The formula contains only 3 main ingredients (superfoods almonds and buckwheat, as well as tapioca) which comprise 97% of the formula.

Else Nutrition’s sustainable 100% plant-based, all-natural and organic baby formula is free of hormones, antibiotics, hexane, gluten, GMO and solvents. The company will be launching its toddler formula & nutritional drink in North American market in Q2/20, with plans to launch the infant formula in the coming years.

Tel Aviv’s Else Nutrition is a food and nutrition company focused on research, development, manufacturing, marketing, sale and/or license of innovative plant-based food and nutrition products to the infant, toddler, children and adult markets. Its revolutionary 100% plant-based non-soy alternative to dairy-based baby formula received the “Best Health and Diet Solutions” award in the Global Food Innovation Summit in Milan in May 2017. (ACCESSWIRE 31.10)

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8.2 iCAN & Headquarters Partner to Bring Israeli Cannabis Innovations to the California Market

iCAN: Israel-Cannabis and Headquarters (HQ), a Los Angeles based product accelerator and cannabis license holder with distribution and manufacturing facilities, have formed a strategic partnership to identify the most innovative Israeli cannabis companies and products, and provide them with access to the California market, via distribution, sales and marketing support. iCAN has developed a world-class ecosystem of cannabis companies and is at the very center of all the amazing developments in the Israeli cannabis industry.

Tel Aviv’s iCAN: Israel-Cannabis is building the Global Cannabis Ecosystem. iCAN is committed to accelerate Israel’s CannaTechnology industry, capitalizing on Israeli innovation and a leading cannabis regulatory environment to bring premier products to market. iCAN is powered by CannaTech, the premier international cannabis summit held annually in Tel Aviv, and around the world. (iCAN 31.10)

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8.3 Panaxia Completes a European Regulation Audit Towards EU-GMP Standard

Panaxia Israel announced that the audit of the regulatory body of the EU, which was conducted at the plant recently, was successfully completed. It is expected to shortly receive the EU standard (EU-GMP) to manufacture pharmaceutical cannabis products.

The EU-GMP standard is necessary in order to export medical cannabis products to most of the EU countries, including Germany, Poland, Italy, Denmark, Greece and more. Since these countries do not recognize the Israeli standard (IMC-GMP). It is impossible to market products manufactured in Israel in these countries, without complying with the European EU-GMP standard. The regulation requirements compel all plants and companies which manufacture, store, use, and manage drugs of any kind in Europe. It should be noted that there are a few medical cannabis companies around the world, estimated at less than 10, with extraction plants which comply with the rigorous European standard requirements.

Lod’s Panaxia Israel is part of the pharmaceutical group of the Segal family, operating for over four decades, and manufacturing over 600 different pharmaceutical products, which it distributes in over 30 countries. constitutes the Group’s cannabis division. In addition, the sister-division of North America manufactures over 60 pharmaceutical products based on medical cannabis, including sublingual tablets, oral tablets, oils, inhalers, and more, intended to treat conditions such as post-traumatic stress, cancer, chronic pains, epilepsy, anorexia, burns, and many other medical conditions. (Panaxia 31.10)

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8.4 Vertical Field Recognized With NGBS Green Certification for Buildings in the USA

Vertical Field (VF) has been officially granted with the ICC 700 National Green Building Standard (NGBS) in the US by Home Innovation Research Labs. Home Innovation Research Labs is a full-service research, testing, and consulting firm determined to improve the quality, durability, affordability, and environmental performance of single-and-multifamily homes and home building products

Vertical Field has been operating since 2006 and conducting hundreds of projects around the globe implementing its vertical landscaping and farming solutions in the urban ecosystem, working with customers that range from big corporates to hotels, hospitals, schools and others. Vertical Field develops active vertical walls that improve air quality in indoor facilities, reduce temperature of buildings and UV blockage for outdoor. VF’s solutions combine the inherent genius of nature with advanced IoT systems, sophisticated sensors and cameras, and active the vertical landscaping.

Ramat HaShavim’s Vertical Field (VF) is a worldwide pioneer in the designing and building of modular, lush green ‎vertical gardens and fields. Innovative and unique in their approach to creating living walls, we ‎design our own system with VF’s state-of-the-art, cutting-edge technology. ‎ Vertical Field’s solutions are installed in residential, industrial, and public constructions in many countries around the globe, and the company expects to receive several other green building certifications in the near future. (Vertical Field 04.11)

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8.5 Compugen Announces FDA Clearance of IND Application for COM902

Compugen announced that the U.S. Food and Drug Administration has cleared its investigational new drug (IND) application for COM902, its immuno-oncology therapeutic antibody targeting TIGIT in patients with advanced malignancies. Under this IND, the Company intends to initiate a Phase 1 clinical trial in patients with advanced malignancies for whom standard of care therapies are currently ineffective. Expected to begin in early 2020, the clinical trial is designed to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary anti-tumor activity of COM902. The study is planned to be conducted at multiple centers in the United States and site selection activities are currently underway.

COM902, a high affinity, fully human antibody targeting TIGIT, was developed for combination treatment with COM701. Preclinical data demonstrate that TIGIT inhibition, either alone or in combination with other checkpoint inhibitors, can enhance T cell activation and increase anti-tumor immune responses. Compugen discovered TIGIT in 2009 leveraging its immune checkpoint computational discovery platform through which PVRIG was also discovered.

Holon’s Compugen is a clinical-stage therapeutic discovery and development company utilizing its broadly applicable, predictive computational discovery platforms to identify novel drug targets and develop first-in-class therapeutics in the field of cancer immunotherapy. The Company’s therapeutic pipeline consists of immuno-oncology programs against novel drug targets it has discovered computationally, including T cell immune checkpoints and additional early-stage immune-oncology programs focused largely on myeloid targets. (Compugen 04.11)

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8.6 IMC Lists on Canadian Securities Exchange

Glil Yam-based IMC (International Medical Cannabis) has raised C$20.4 million on the Canadian Securities Exchange as IM Cannabis Corp., and will start to be traded on 5 November under the symbol IMCC. For the purposes of the offering, IMC was merged into a stock market shell listed on the Canadian Securities Exchange. IMC is one of the eight oldest growers in the Israeli cannabis market, and has been active for a decade. This year, the company received the approvals enabling it to grow cannabis under the new regulations following the cannabis reform in Israel.

In February, IMC’s farm, which is near the Gaza Strip border, had an area of 16 dunams (four acres). The company can expand it to as much as 200 dunams (50 acres). In August this year, IMC bought a distribution company in Germany, and started importing cannabis into Germany from another company overseas. The plan for the future is to export products from the Israeli farm to the German company, once exports of medical cannabis from Israel are approved. (IMC 04.11)

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8.7 Hospitech Airway Management System Reduces Ventilation Complications in Lung Transplants

Following the AnapnoGuard airway management system’s FDA market clearance at the end of 2018, Hospitech Respiration announced that a new article was recently published by physicians from Mayo Clinic which describes the successful use of the AnapnoGuard system in postoperative management of lung transplant patients.

AnapnoGuard AG100s Control Unit and AnapnoGuard Endotracheal Tube Hospitech’s AnapnoGuard AG100s Control Unit serves as an integrated, multi-purpose airway management system, highly effective in protecting the lungs and tracheal tissues from infections and tissue injury. The AnapnoGuard Endotracheal Tube (AG ET Tube) provides an advanced solution to well-known complications related to prolonged mechanical ventilation, which prevents potential infections and injury of the trachea and vocal cords. AnapnoGuard AG100s Control Unit and AnapnoGuard Endotracheal Tube Hospitech’s AnapnoGuard AG100s Control Unit serves as an integrated, multi-purpose airway management system, highly effective in protecting the lungs and tracheal tissues from infections and tissue injury. The AnapnoGuard Endotracheal Tube (AG ET Tube) provides an advanced solution to well-known complications related to prolonged mechanical ventilation, which prevents potential infections and injury of the trachea and vocal cords.

The AnapnoGuard system (AG100s control unit and AG ETT) is a novel system which continuously monitors leaks around the endotracheal tube (ETT) cuff, automatically adjusts the cuff pressure to ensure sealing at minimal pressure, and evacuates subglottic secretions by simultaneous suction and rinsing.

Kfar Saba’s Hospitech Respiration is a medical device company focused on developing and marketing of advanced airway management solutions for mechanically ventilated patients. The Company utilizes extensive expertise and experience to improve patient safety and reduce complications of ventilated patients. The AnapnoGuard system is FDA 510(k) cleared and CE marked. (Hospitech Respiration 06.11)

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8.8 Can-Fite Granted U.S. Patent for Piclidenoson in the Treatment of Osteoarthritis

Can-Fite BioPharma announced that the U.S. Patent and Trademark Office has issued to the Company Patent #10,265,337 titled “Use of A3 Adenosine Receptor Agonist in Osteoarthritis Treatment” for its drug candidate Piclidenoson for the treatment of osteoarthritis in mammals.

Can-Fite is evaluating potential partnerships with companies in the animal health pharmaceutical market that may in-license and develop Piclidenoson for the companion animal market, a substantial and rapidly growing global market. Current treatments for canine osteoarthritis include oral non-steroidal anti-inflammatory drugs (NSAIDs) which only treat symptoms and carry significant harmful side effects, and an injectable disease modifying osteoarthritis drug (DMOAD) that targets the progression of the disease. Piclidenoson, an oral drug that has a favorable safety profile in humans and in animal studies, offers a potentially safe and effective oral treatment for canine osteoarthritis.

Petah Tikva’s Can-Fite BioPharma is an advanced clinical stage drug development company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and sexual dysfunction. The company’s lead drug candidate, Piclidenoson, is currently in Phase III trials for rheumatoid arthritis and psoriasis. Can-Fite’s liver cancer drug, Namodenoson, recently completed a Phase II trial for hepatocellular carcinoma (HCC), the most common form of liver cancer, and is in a Phase II trial for the treatment of non-alcoholic steatohepatitis (NASH). (Can-Fite 11.11)

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8.9 Hallura Closes Its $7 Million Financing Round

Hallura closed its Series A financing round of $7 million. The financing round was led by a group of US, Europe and Israel-based private investors; most of the investment comes from leading plastic surgeons and dermatologists. Hallura’s HA Dermal Fillers are based on proprietary technology developed by the company over the last two years. Unlike the 20-year-old technology used in currently available HA fillers which are based on using BDDE for cross-linking; Hallura developed a novel crosslinking technology answering the growing demand for natural and soft non-invasive aesthetic treatments. Hallura’s products are based on a radically different crosslinking mechanism which maintains and protects natural HA long chains. Hallura completed a full set of in-vivo animal studies of its products showing excellent safety and higher potential for skin lifting compared to the leading products in the market.

Yokneam’s Hallura brings a disruptive HA technology to the fast growing aesthetic injectables market using proprietary HA crosslinking technology. Hallura’s HA dermal fillers answer the growing demand for better, safer fillers with natural and soft aesthetic results with a wide range of aesthetic applications.

Alon MedTech Ventures incubator, based in Yokneam, is investing and partnering with outstanding entrepreneurs to transform innovative medical device ideas into successful companies. Alon Medtech invests in novel technologies and solutions that significantly improve the well-being and quality of life of humankind around the globe. (Hallura 11.11)

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8.10 Foamix & Menlo Merger to Focus on Therapeutics for Dermatologic Indications

Foamix Pharmaceuticals and Menlo Therapeutics have signed a definitive merger agreement to create a combined biopharmaceutical company focused on the commercialization and development of therapeutics to serve patients in the dermatology space. The Boards of Directors of both Foamix and Menlo have unanimously approved the transaction. The combined company will have a diversified portfolio including an approved product and three late-stage product candidates focused on dermatologic indications.

Foamix recently received FDA approval for AMZEEQ (minocycline) topical foam, 4%, for the treatment of inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in adults and pediatric patients 9 years of age and older. AMZEEQ is the first topical formulation of minocycline. Foamix is finalizing the implementation of the commercial infrastructure in preparation for a U.S. commercial launch anticipated in January 2020.

Foamix recently submitted a New Drug Application to the U.S. FDA for FMX103 (minocycline) topical foam, for the treatment of moderate-to-severe papulopustular rosacea. The FDA set a Prescription Drug User Fee Act action date of June 2020. If approved, FMX103 would be the first minocycline product available for rosacea patients. Foamix is also conducting a Phase II trial for FCD105, a topical combination foam of minocycline and adapalene, currently being evaluated for the treatment of moderate-to-severe acne vulgaris.

Rehovot’s Foamix is a specialty pharmaceutical company working to solve some of today’s most difficult therapeutic challenges in dermatology and beyond. With expertise in topical medicine innovation as a springboard, the Company is working to develop and commercialize solutions that were long thought impossible, including the world’s first topical minocycline, AMZEEQ. Foamix is a different type of specialty pharmaceutical company by design, driven to see the solutions, overcome barriers in all aspects of business, and reimagine what’s possible for conditions with high unmet needs. (Foamix 10.11)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 ŠKODA Optimizes Manufacturing Processes and Cuts Costs Using Seebo’s Solution

Seebo announced a new cooperation, with ŠKODA AUTO, the leading Czech car manufacturer. ŠKODA and Seebo have partnered in order to predict and prevent losses in ŠKODA’s engine production lines by using Seebo’s unique process-centric AI solution. The deployment of Seebo Predictive Quality will be carried out in ŠKODA’s automotive production lines, to optimize manufacturing processes and reduce production costs. Seebo Predictive Quality collects and analyzes data from production lines and automated inspection systems, providing production teams continuous actionable insights, to enable better decision making. Leveraging predictive analytics and automated root-cause analysis, Seebo ensures production efficiency is kept at its highest level.

Tel Aviv’s Seebo develops process-centric AI solutions, enabling manufacturers to predict and prevent process inefficiencies that damage production yield and quality. Leveraging predictive alerts and automatic root cause insights, Seebo drives continuous process improvement and manufacturing excellence. Seebo solutions are deployed worldwide, at manufacturing sites of multiple industries including, Automotive, Food & Beverage, Chemicals and others, to optimize manufacturing by increasing throughput, while continually improving quality. (Seebo 31.10)

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9.2 Isay Chooses MySizeID Technology to Increase Customer Loyalty and Reduce Returns

My Size announced that Isay, a Danish brand sold in more than 500 physical stores and on different online platforms in Northern Europe, chose MySizeID to increase customer loyalty and reduce returns. As of 1 November, Isay customers across Northern Europe can be prompted to measure their correct size when shopping at Isay online after completing their body profile using the MySizeID application- a process that takes less than 5 minutes and is only done once. In less than 30 days Isay evaluated the MySize technology on 50 women. The proof of concept was carried out by the Isay team on tops & bottoms. The Isay team measured each woman manually and, in parallel, each woman using the MySizeID application. The findings showed that the MySizeID technology delivered a higher sizing accuracy.

Airport City’s My Size has developed a unique measurement technology based on sophisticated algorithms and cutting-edge technology with broad applications including the apparel, e-commerce, DIY, shipping and parcel delivery industries. This proprietary measurement technology is driven by several algorithms which are able to calculate and record measurements in a variety of novel ways. (My Size 31.10)

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9.3 Magal Receives $2.4 Million in Perimeter Security Contracts for International Airports

Magal Security Systems has won contracts amounting to $2.4 million, supporting the critical perimeter security infrastructure of airports. Most of the awards were for two major international airports, but also includes products and services for several other airports globally. The majority of orders were for the maintenance related to previously purchased products and services from Magal.

These new contracts are a testament to Magal’s ability to execute, providing highly reliable products and quality services to their customers. These orders are also a demonstration of how their large existing customer base is a potential source of further orders down the road. The majority of these new orders were for ongoing perimeter security maintenance. Airport protection remains a key long-term growth vertical for Magal and they look forward to continuing the expansion and deepening the penetration of their customer base.

Yehud’s Magal is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management. Since 1969, Magal has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 100 countries – under some of the most challenging conditions. (Magal Security 31.10)

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9.4 Robotic Arm that Fits All Developed by Researchers at Ben-Gurion University

BGN Technologies, the technology transfer company of Ben-Gurion University of the Negev (BGU), introduced a novel technology allowing one end-effector to fit various targets. The invention, developed at the Department of Mechanical Engineering at BGU, allows for the design of non-dexterous graspers for a production robot that will enable the grasping of parts with different geometries, thus reducing the cost of production of the parts, while increasing versatility in the production lines. The invention relies on a proprietary search algorithm that defines available grasping areas in a set of parts that are used in a given production line, taking into account multiple parameters, such as the force required to hold the part firmly. The algorithm then defines a common set of grasping points for all objects in a given group, enabling the design of one robotic arm that will be able to handle all the parts.

Beer Sheva’s 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. Over the past decade, it has focused on creating long-term partnerships with multinational corporations such as Deutsche Telekom, Dell-EMC, IBM, PayPal, and Bayer, securing value and growth for Ben-Gurion University as well as for the Negev region. (BGN Technologies 30.10)

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9.5 Nano Dimension & CBTP MOU for Additive Manufacturing Collaboration

Nano Dimension has signed a multi-year Memorandum of Understanding (MoU) with Chungbuk Technopark (CBTP) in South Korea, for research collaboration in the field of additive manufacturing of electronics. The collaboration will focus on joint research to streamline electronics development, based on Nano Dimension’s award-winning DragonFly system, the only precision additive manufacturing system of its type. Nano Dimension will provide knowledge, technical expertise and end-to-end support to CBTP researchers, to help integrate electronics into existing structures and improve components in terms of space, weights and assembly.

The partnership has already resulted in novel applications for the electronics sector, including a fully functional 3D printed IoT communication device that can shorten development times for IoT devices by up to 90%, compared to traditional devices. Researchers at CBTP’s premises in Cheongju have also printed capacitors in PCBs and side mount boards on the DragonFly additive manufacturing system. The extra space afforded through embedding capacitors and side mounting allows design engineers to pack more functionality on the circuit board which is particularly relevant for IoT and Industry 4.0 where customized designs and shapes are a growing demand.

Ness Ziona’s Nano Dimension is a leading electronics provider that is disrupting, reshaping, and defining the future of how cognitive connected products are made. With its unique 3D printing technologies, Nano Dimension is targeting the growing demand for electronic devices that require increasingly sophisticated features. Demand for circuitry, including PCBs – which are the heart of every electronic device – covers a diverse range of industries, including consumer electronics, medical devices, defense, aerospace, automotive, IoT and telecom. (Nano Dimension 29.10)

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9.6 Symbolab Surpasses 100 Million Users: The New Gold Standard in Math Education

Symbolab has reached over 100 million users worldwide with its groundbreaking AI-driven math education platform. Developed with proprietary machine-learning and deep-learning algorithms, the Tel Aviv-based startup is the universal go-to math tool for solving any math problem with comprehensive steps and adaptive learning capabilities. Its unique calculator incorporates the full range of computation tools to provide an unprecedented solution for a new generation of students.

Symbolab’s complex analysis of big data provides each user with a customized learning experience tailored to their specific needs. Coupled with its algorithm-powered math solving proficiency, Symbolab has become an indispensable tool for math students from elementary school through advanced university studies. An intuitive keypad and sophisticated OCR allow users to type in or scan any math problem to generate immediate answers with detailed explanations. Its ease of use, adaptive learning capabilities and instant functionality have led to rapid adaptation by math students on a transformative scale.

Symbolab (Eqsquest) is a global leader in education technology with over 100 million users worldwide. Symbolab is committed to helping students learn math, providing step by step solutions to any math problem, as well as AI-driven personalized learning, assessments, insights and more. It is the most comprehensive math education tool, offering a fully automated platform based on advanced machine learning algorithms. (Symolab 04.11

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9.7 NEC and AudioCodes Collaborate to Provide Monitoring and Analytics Solution

AudioCodes is collaborating with NEC Corporation to offer a comprehensive voice and data layer network monitoring and analytics solution. The joint solution is facilitated through integration of the AudioCodes One Voice Operations Center (OVOC) and NEC’s MasterScope and is designed to help enterprises, contact centers and service providers simplify voice network operations, improve user experience and reduce downtime. Both companies will sell the joint solution to customers around the world.

The combination of OVOC and MasterScope enables customers to monitor and analyze voice and data layers via a single pane of glass. Customers can corroborate statistics from different network layers to ensure accurate troubleshooting and root cause analysis. Current and historical call data can be viewed along with the underlying data layer information with just a few clicks, offering intelligent insights into network trends and performance that can assist in network planning and design.

AudioCodes’ One Voice Operations Center (OVOC) is a holistic life-cycle FCAPS (fault, configuration, accounting, performance and security) management and voice network design solution that combines management of voice network devices and quality of experience monitoring into a single, intuitive web-based application. OVOC enables administrators to adopt a holistic approach to network lifecycle management by simplifying everyday tasks and assisting in the troubleshooting process from detection to correction. Through the collaboration with NEC, OVOC is now able to monitor a variety of NEC network devices.

Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world. (AudioCodes 04.11)

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9.8 Renesas and Altair Semiconductor Announce Collaboration for Cellular IoT Solutions

Japan’s Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, and Altair Semiconductor jointly announced a partnership aimed at bringing ultra-small and ultra-low-power cellular IoT solutions to the global IoT market. Cellular IoT device makers will be able to use this combination of best-in-class solutions to create highly differentiated IoT products and services that offer much greater efficiencies and faster time to market. These integrated solutions will be delivered through Renesas’ sales channels, enabling cellular connectivity to all of its markets.

As a first step of this collaboration, Renesas and Altair plan to develop cellular IoT solutions with CAT-M and NB-IoT dual mode chipsets and technologies. They will also design a variety of development tools and software to further streamline the adoption of cellular IoT solutions for industrial and consumer applications. This partnership aims to achieve technical leadership in size reduction, power consumption, and IoT security.

Hod HaSharon’s Altair Semiconductor, a Sony Group Company, is a leading provider of Cellular IoT chipsets. The company’s flagship ALT1250 is the smallest and most highly integrated LTE CAT-M and NB-IoT chipset, featuring ultra-low power consumption, hardware-based security, and a carrier-grade integrated SIM (iUICC), all 5G ready. Altair partners with leading global vendors, including G+D (Giesecke+Devrient), HERE Technologies, Murata, Sierra Wireless and WNC, to provide low-power and cost-efficient modules for a range of industrial and consumer IoT applications such as trackers, smart meters, wearables, and vehicle telematics. (Altair Semiconductor 05.11)

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9.9 Coral Detection Systems Wins the London AWARDS.AI 2019 for “Best AI Startup”

Israel’s Coral Detection Systems, one of the most innovative players in the field of water safety technologies, has developed the world’s first AI-based drowning detection system for residential pools that provides 24/7 active under-water drowning detection. Coral has been named winner of the Awards.AI “Best AI Startup” category. Awards.AI is The Global Annual Achievement Awards for Artificial Intelligence held annually in London.

Coral spent over 5 years developing their AI technology. Unlike drowning detection systems for public pools that aid a lifeguard on duty that can tolerate dozens of false alarms per shift, the challenge here is to reach near-perfect detection rates, while hardly generating false alarms. The magnitude of residential pool drowning has grown to be the leading cause of injury related death among kids ages 1 to 4, and the 2nd leading among kids ages 5 to 18, with hundreds dying and thousands severely injured every year. Coral Manta was developed with a single mission – to harness top-of-the-art tech to changing the worldwide pool-drowning statistics and save lives. Being recognized as an AI tech leader is extremely empowering, and the company will continue perfecting the system performance and developing additional smart systems spearheading the implementation of advanced technologies to make the world a safer place. (Coral Detection Systems 07.11)

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9.10 Mini-Circuits and Vayyar Offer Development Kits for 4D Millimeter Wave Imaging

Brooklyn, New York’s Mini-Circuits has expanded its collaboration with 4D radar imaging pioneer, Vayyar to offer researchers in the Radio Frequency /microwave industry and academia a ready-to-use, 4D millimeter wave (mmWave) imaging and sensing application development platform. The VTRIG-74 is a mmWave imaging and sensing development kit powered by Vayyar’s high-resolution integrated RF transceiver technology and radar IP. This kit enables researchers and application developers to explore and rapidly develop mmWave imaging and sensing applications without the cost and overhead of building their own bespoke hardware. Potential applications already include industrial IoT, robotics, smart homes, motion and obstacle detection, vehicular operator and passenger detection, medical patient monitoring and many more.

Yehud’s Vayyar Imaging is a global leader in 4D radar imaging technology, providing highly advanced intelligent sensors to a wide variety of industries including automotive, smart home, robotics, retail and medical. Vayyar’s sensors can see through walls and objects and track and map everything happening in an environment in real-time. Unlike other products that rely on cameras and optics, Vayyar’s sensors do not collect any optic data, protecting users’ privacy at all times. (Vayyar 07.11)

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9.11 NASA to Send Israeli-Designed Solar Power Generator to International Space Station

NASA is set to send a prototype of an Israeli-developed miniaturized solar-power generator to the International Space Station (ISS) in its first launch of 2020. The solar- power generator is designed at the Ben-Gurion University of the Negev (BGU), along with US colleagues from the Pennsylvania State University, University of Illinois, George Washington University, U.S. Naval Research Laboratory, H-NU Systems and Northwestern University.

The generator will be sent for testing under cosmic radiation and the enormous temperature swings in extraterrestrial operation. The prototype is said to offer a “major step forward for commercial space missions” because of a need “to invent and demonstrate feasible innovative solar solutions” that are ultra-compact and can affordably enhance specific power (watts per kilogram.) This prototype is a compact, low-mass, molded-glass solar concentrator bonded to a monolithic integration of transfer-printed micro-scale solar cells. Each of these solar cells comprises several different materials that together “can efficiently exploit most of the solar spectrum.” Especially notable are its liberal optical tolerance for accommodating errors in pointing at the sun, structural vibration and thermal distortion, while providing unprecedented specific power. (BGU 10.11)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Budget Deficit Narrows Slightly

Despite strenuous efforts to reduce expenditure, the budget deficit in the twelve months before 31 October was 3.7%, down from 3.8% at the end of September, the Finance Ministry reported. Without taking into account delayed tax payments, the accumulated deficit was 3.6%.

There had been expectations for a more significant fall in the budget deficit due to the strenuous efforts by Ministry of Finance officials to reduce government expenditure. For example, Ministry of Finance budget director Meridor had frozen NIS 2.6 billion from the 2018 budget surplus and released only half the sum at the beginning of November. Accountant General Hizkiyahu had also weighed in by instructing accountants in his office not to approve new contracts or extend existing contracts except in extenuating circumstances.

Since the beginning of the year government ministries (not including the Ministry of Defense and Ministry of Public Security) have increased expenditure by 8.5%, instead of the planned 6%. Ministry of Defense expenditure has actually shrunk by 0.8% instead of a planned rise of 1.7%. On the other hand, tax collection since the start of the year has risen by just 2.3%, although the Ministry of Finance estimates that tax payment totaling NIS 2.2 billion have been postponed from October to November, making the increase more like 3.1%. October tax payments were lower than usual because all the Jewish holidays fell in that month. (Globes 07.11)

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10.2 Strong Holiday Tourism Keeps Israel on Course for Record Year

Some 921,000 overseas visitors came to Israel in September and October, the Jewish holiday season, the Central Bureau of Statistics reported, up 13% from 2018. Between January and October 2019, 3.7 million tourists came to Israel, up 10% from 2018. The country has had more than 4 million visitors in the first ten months of the year, including those who did not stay overnight, up 11% from last year, and Israel looks set to break last year’s record when 4.1 million tourists visited Israel.

September and October are traditionally strong months for tourism, for vacationers rather than business tourists, with many Diaspora Jews visiting Israel for the Jewish holidays; 22% of tourists visiting Israel come from the US, with large numbers of tourists from France, Russia, Germany and the UK. (CBS 05.11)

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10.3 Israel’s Unemployment Falls in the Third Quarter

The unemployment rate in Israel among those age 15 or higher fell from 3.9% in the second quarter of 2019 to 3.7% in the second quarter, according to the latest figures published by the Central Bureau of Statistics. On a monthly basis, the unemployment rate in September fell to 3.7% from 3.8% in August. The proportion of participation in the labor force fell to 63.3% in the third quarter of 2019 from to 63.6% in the second quarter. The proportion of participation in the labor force rose from 63.2% in August to 63.5% in September. (CBS 03.11)

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10.4 Israeli Startups Raise Over $800 Million During October

Israeli startups raised over $800 million in October, 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 $6.94 billion since the start of 2019. This figure already 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.

October was a busy month for startup financing rounds despite the holidays with insurtech company Next Insurance leading the way with a $250 million financing round. More than $600 million was raised by just seven startups last month. Retail logistics company Fabric raised $110 million, fintech company Rapyd raised $100 million and stroke diagnosis company Viz.ai raised $50 million. Cybersecurity company Namogoo raised $40 million, vehicle cybersecurity company Upstream Security raised $30 million and AI accounts payable company Stampli raised $25 million. (Globes 03.11)

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10.5 Beit Shemesh is Israel’s Fastest Growing City

The Central Bureau of Statistics announced that Beit Shemesh was Israel’s fastest growing major city over the past decade. At the end of 2018, Beit Shemesh had a population of 118,676, rising 62.3% from 72,700 at the end of 2008. In contrast, Bat Yam’s population decreased by 1,500 over the same period (about 1%) to 129,000.

Israel’s second fastest growing city between 2008 and 2018 was Bnei Brak, where the population grew by 31.2%. This year Bnei Brak’s population is set to pass 200,000. Israel’s third fastest growing city during this period was Ashkelon, which now has 141,000 residents. Between 2008 and 2018, Rehovot grew by 27.4% to 142,000, while Petah Tikva grew by 22% to 244,000.

Jerusalem, Israel’s largest and capital city, grew by 21% over this period to nearly 1 million. Some 40% of Jerusalem’s residents are Arabs compared with 37% in 2008 and 30% in 1995. Israel’s second largest city – Tel Aviv – grew at a much more modest pace to 451,523 at the end of 2018.

Israel’s two largest cities in peripheral regions – Haifa and Beer Sheva – have demonstrated slow growth over the past. Haifa continues to be Israel’s third largest city but grew only 7% between 2008 and 2018 to 284,000. Beer Sheva for many years was Israel’s fourth largest city, but with a population of 209,000, it is Israel’s eighth largest city and has been overtaken by Ashdod as the largest city in southern Israel. Two Israeli cities – Herzliya and Hadera – with a population of over 95,000, are expected to join the 100,000 club in the next few years. (CBS 11.11)

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11: IN DEPTH

11.1 LEBANON: Moody’s Downgrades Lebanon’s Credit Rating from Caa1 to Caa2

On 5 November, Moody’s Investors Service (Moody’s) downgraded the Government of Lebanon’s issuer ratings to Caa2 from Caa1. The ratings remain on review for downgrade.

The downgrade to Caa2 reflects the increased likelihood of a debt rescheduling or other liability management exercise that may constitute a default under Moody’s definition since opening the review for downgrade of the Caa1 ratings at the start of October. Widespread social protests, the resignation of the government and loss of investor confidence have further undermined Lebanon’s traditional funding model based on capital inflows and bank deposit growth, threatening the viability of the peg and macroeconomic stability.

The review period will allow the rating agency to assess the likelihood of a debt restructuring scenario that could lead to losses for private investors that are larger than is consistent with a Caa2 rating. Moody’s expects to complete the review within three months.

Moody’s also downgraded Lebanon’s senior unsecured Medium Term Note Program rating to (P)Caa2 from (P)Caa1, and affirmed the other short-term rating at (P)NP. The (P)Caa2 rating is also on review for downgrade.

Lebanon’s long-term foreign currency bond and deposit ceilings have been lowered to Caa1 and Caa3, respectively. The long-term local-currency bond and deposit ceilings have been lowered to B2. The short-term foreign currency bond and deposit ceilings remain Not Prime.

Ratings Rationale

Intensification of Crisis Further Undermines the Fragile Financing Model of the Government and Economy, Threatens Macroeconomic Instability

Since placing the then Caa1 ratings on review for downgrade at the start of October, Lebanon’s economic, social and political crisis has further intensified. In the absence of rapid and significant policy change, a rapidly deteriorating balance of payments and deposit outflows will bring GDP growth to or below zero, further stoking social discontent, undermining debt sustainability and increasingly threatening the viability of the peg.

Widespread social protests and the recent resignation of the government have diminished the likelihood of the passage of the 2020 budget and implementation of the agreed reforms necessary to unlock confidence-enhancing external support packages via Conférence économique pour le développement, par les réformes et avec les entreprises (CEDRE) investments and/or secure financial support from Gulf Cooperation Council (GCC) allies that are essential to ease immediate liquidity risks and allow the economy to recover over the longer term.

In general, external financing conditions have tightened further with Eurobond yields rising to distressed levels and signs of decreasing confidence in the sustainability of the peg against the US dollar.

The Lebanese economy has traditionally relied on foreign direct investment and remittance inflows from the diaspora to sustain economic activity and fund the fiscal and current account deficits. Declining cross-border capital inflows over the past few years have led the Banque du Liban (BdL, the central bank) to draw on its existing stock of foreign exchange reserves to ensure foreign currency debt service payments by the government, while maintaining the currency peg and financial sector stability.

Moody’s expects that, in line with previous political risk shock episodes, the pace of deposit outflows will increase, further depleting the country’s usable liquid foreign exchange resources and threatening the viability of the peg. The emergence of a parallel exchange rate and the trend toward deposit dollarization which as of September 2019 stood at 73% from 65% in June 2016, already indicate the fragility of the exchange rate regime.

At present, according to Moody’s estimates, the BdL has a usable foreign exchange buffer of about $5-10 billion left to draw from based on the sum of changes in the economy’s net foreign assets in the past, or when adjusting the stock of foreign exchange reserves at $29.3 billion as of September 2019 for banks’ negative net foreign asset position at over $25 billion. In the absence of new net inflows, these $5-10 billion will likely be consumed by the government’s forthcoming external debt service payments estimated at $6.5 billion this year and next, including the $1.5 billion November 28 maturity.

In this extremely fragile environment, the Caa2 rating and review for further downgrade reflect the increasing likelihood of a debt rescheduling or other credit negative liability management exercise that could result in private sector holders of government liabilities suffering significant losses.

The central bank’s holdings of government securities imply that Lebanon has options for debt management in the near-term that would limit losses borne by the private sector in case of a default event. Although insufficient to restore debt sustainability, Moody’s estimates that maturity extension or debt cancellation options involving the BdL’s debt holdings amounting to 50% of GDP could act as first loss vehicle as long as the currency peg remains in place. However, those options are diminishing the longer Lebanon’s economic and political crisis persists.

The review period will allow the rating agency to assess Lebanon’s capacity to manage the Eurobond maturities this year and early next year. The review will also allow Moody’s to take stock of the political leadership’s progress in restoring some stability that is necessary for a government to agree reforms to unlock the CEDRE lending, and potentially financial support from the GCC, and allow for deposit inflows to stabilize. This would ease currently severe liquidity pressures, and potentially restore confidence in the peg.

Environmental, Social, Governance Considerations

Environmental considerations are relevant for Lebanon’s credit profile in particular through the impact of climate change on the tourism industry which competes with other Mediterranean resorts. Signs of water shortages will become more evident due to increased demand from agriculture and industry.

Social considerations are one of the key credit drivers for the sovereign, including for today’s downgrade and review for further downgrade. Sectarian fragmentation leads to regular protracted negotiations between political parties and government stalemates, reflected in Moody’s assessment of heightened domestic political risk.

Sectarian fragmentation also impacts governance, which is partially alleviated by the BdL’s non-partisan policy focus including on behalf of the government, providing key credit support for Moody’s assessment of Lebanon’s institutional strength.

What Could Change the Rating Down

Moody’s would downgrade the rating in the event of an increased likelihood of a destabilization of the currency peg and/or a debt restructuring that would result in larger losses than are consistent with a Caa2 rating. Moody’s may differentiate between the domestic and foreign currency ratings if a potential debt restructuring seemed increasingly likely to involve materially different losses for local- and foreign-currency debt holders.

What Could Lead to a Confirmation of the Rating at the Current Level

Moody’s would confirm the current rating if financing conditions stabilize and the risk of a default event involving larger losses than are consistent with a Caa2 rating were to diminish. This would likely include confidence in forthcoming external financial assistance disbursements which would ease immediate external and liquidity risks, and support the growth outlook. (Moodys 05.11)

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11.2 KUWAIT: Kuwait Hospital Market Review & Forecast Report 2012-2022

The “Kuwait Hospital Market Outlook to 2022” has been added to ResearchAndMarkets.com’s offering.

Market Size

In terms of revenue, the Kuwait hospital market has registered a constant growth with positive CAGR in the last five years (2012-2017). The majority of the healthcare sector in Kuwait is controlled by the Ministry of Health. Private participation in the healthcare sector is considerably low. The healthcare services in public sector hospitals are at highly subsidized rates. Owing to this, the number of outpatients and inpatients in public sector hospitals is significantly higher than in the private sector. However, the majority of the revenues generated in the hospital market is from the private sector hospitals. This is due to the enormous difference in prices for healthcare services in public and private sector hospitals.

Future Projections

The Kuwait Hospital Market is expected to grow at a positive CAGR from 2018 – 2022. Kuwait is a high income class country and the demand for high end luxurious stay at hospitals is increasing among Kuwaiti residents. The Kuwait hospital market is likely to witness the addition of numerous hospitals in the next five years, with a mix of publicly and privately owned hospitals. Specialty care hospitals for Maternity and Pediatrics, Infectious Disease and allied medicines including school health services & dentistry are likely to open in the future. The number of available hospital beds is also likely to grow significantly with the growth in the number of hospitals.

The revenue generated from private sector hospitals will continue to dominate the hospital market in Kuwait as private participation is likely to increase and so is the cost of private healthcare. It is expected that in the next five years, a number of general hospitals will come up in Kuwait. However, owing to the rising incidences and need for specialized tertiary and quaternary care, the number of specialized hospitals will be more in comparison to general hospitals. It is anticipated that by 2022, the revenue generated from outpatients will be greater than the revenue from inpatients due to the anticipated rise in the number of outpatients seeking private healthcare.

Market Segmentation

By Public & Private Hospitals: Majority of the hospitals in Kuwait are managed by MoH. Other government entities running hospitals in Kuwait are Ministry of Defense and Ministry of Social Affairs which operate one hospital each, specifically for military personnel and senior citizens respectively. However, in terms of revenue, private sector hospitals dominated the market in Kuwait, owing to the exorbitant cost of private healthcare in the country.

By Inpatients & Outpatients: Inpatient services are the major contributors to the overall revenue of the Kuwait Hospital Market. However, the number of patients seeking inpatient services is very small in comparison to outpatient appointments. Although the number of outpatients was more than inpatients, in 2017, the total revenue generated through outpatient appointments in Kuwait hospital market was less in comparison to the revenue generated from inpatients.

By General & Specialty: The number of general hospitals in Kuwait is greater than in specialty hospitals. Majority of the hospitals are concentrated in Al Asima Governorate and Hawalli Governorate. Most of the general hospitals in the country are operated by the MoH while a few are privately owned. Specialty hospitals provide specialized services in one particular or multiple types of diseases based on disciplines, age, organs, diseases, or other specificities.

Competition in Kuwait Hospital Market

Kuwait hospital market is largely dominated by public hospitals in terms of the number of patients and beds. However, in terms of revenue, private hospitals take the lead mainly on account of high treatment fees charged. Dar Al Shifa Hospital, Al Salam International Hospital and New Mowasat Hospital are among leading players in the Kuwait Hospital market. Royale Hayat hospital and Al Seef Hospital are luxury hospitals where healthcare services are accompanied by a luxurious hospitality experience. These are among the most expensive hospitals in Kuwait. (R&M 01.11)

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11.3 UAE: The IMF Forecasts Faster UAE Growth Driven by Expo 2020

The International Monetary Fund (IMF) has revised its growth forecast for the UAE upwards following its Article IV Consultation with UAE authorities. The IMF team, following discussions with the UAE government concluded that the country’s gross domestic product (GDP) will growth up to 3% next year from a relatively modest above 1% in 2019.

On 28 October, in its Regional Economic Outlook, the IMF had given a provisional forecast of 1.6% growth in 2019 and 2.5% for 2020.

Confidence Rising

Following the Article IV consultations, the IMF team concluded that the economy is on a recovery path and likely to pick up more momentum next year, helped by Expo 2020 and existing fiscal stimulus.

Following a challenging period, the economy is recovering. Non-oil growth could exceed 1% in 2019 and pick up to around 3% next year, the fastest since 2016, on the back of Expo 2020 and fiscal stimulus. Overall GDP growth would register 2.5% in 2020.

Various independent studies in recent months have indicated that business confidence in the UAE is on the rise supported by a stable economic outlook in the medium term. The latest HSBC ‘Navigator: Now, next and how’ survey of over 9,100 companies in 35 countries and territories, finds that 83% of the UAE’s businesses anticipate sales growth over the next 12 months, with at least 35% looking to grow by 15% or more.

“The UAE’s significant diversification efforts has meant that the country is increasingly viewed as an innovative hub for trade — benefiting both domestic and international businesses. Vision 2021 combined with Expo’s international reach and connectivity are driving opportunities for export minded companies,” said HSBC UAE.

The UAE’s economic outlook remains stable, despite a slowing global economy, trade disputes, softer energy demand and heightened geopolitical tensions, according to research published by the National Bank of Kuwait (NBK). The medium-term outlook for the UAE remains stable underpinned by sizeable SWFs (sovereign wealth funds) assets and the government commitment to forge ahead with reforms.

Medium Term Challenges

The IMF team observed that sustaining robust non-oil growth after Expo 2020 remains a key priority, especially in the context of the likelihood that global oil demand will slow in the face of technological advances as well as policy responses to climate change.

To address the medium-term challenges, the IMF team discussed two key policy priorities such as promoting the growth of the non-oil private sector, including small and medium enterprises (SMEs); and strengthening fiscal frameworks to ensure both sufficient saving of oil wealth for future generations and smoothing of short-term fluctuations.

Commending the work already done by the UAE, the IMF team observed that the authorities have already taken a number of important steps, including adopting a foreign direct investment (FDI) law allowing 100% foreign ownership in selected sectors, and reducing or eliminating fees and penalties.

The [IMF] mission welcomes the authorities’ steps to implement a comprehensive national SME development strategy. Particularly important steps in this area would include lowering startup costs; operationalizing the new insolvency framework; and promoting greater financial inclusion. The mission recommends establishing a single agency responsible for SME promotion, with any possible costs to the budget recorded transparently.

Fiscal Framework

The IMF reiterated its call for establishing medium term fiscal framework rather than short term boosts through government spending. The team observed that a fiscal framework is needed that enshrines a commitment to savings, which are currently below the level required to preserve wealth for future generations. A balance between short- and long-term objectives, however, is critical, and given current economic conditions, the authorities’ existing stimulus is appropriate.

The UAE has been coping well to the regional and global economic slowdown. The government has announced several measures to boost growth by reducing cost of business. Going forward, the UAE should have longer term fiscal plans rather than short term boost in government spending to support growth.

The IMF team called on UAE authorities to complement the fiscal reforms with better monitoring and analysis of GRE-related contingent liabilities. Welcoming the fiscal policy measures already taken by UAE authorities, the IMF mission observed that frameworks should be centered around long-term fiscal anchors, while allowing the flexibility to smooth short-run oil price fluctuations as well as the non-oil business cycle. (MAGNiTT 10.11)

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11.4 MOROCCO: IMF Completes Second Review Mission of Liquidity Line for Morocco

An International Monetary Fund (IMF) staff team visited Morocco from 29 October to 7 November to conduct discussions with the Moroccan authorities on the second review under the Precautionary and Liquidity Line (PLL) arrangement. The IMF Executive Board approved the PLL arrangement for Morocco in the amount of SDR 2.15 billion (about $3 billion) in December 2018. The authorities have not drawn on the PLL and intend to keep the arrangement as precautionary. At the end of the mission, the IMF made the following statement:

“Morocco’s macroeconomic policies and performance remain sound, despite volatility in cereal production, weak growth in trading partners, and elevated external risks. The Moroccan authorities remain committed to important fiscal, financial and structural reforms, which should strengthen the economy’s resilience to external shocks and support higher and more inclusive growth.

“Given a contraction in agricultural output and subdued non-agricultural activity, growth is projected at 2.8% in 2019, and inflation would slow to 0.4%. Unemployment rate remains at 9.4% in the third quarter of 2019 while labor market participation rate is at 44.9%.

“The current account deficit is projected to narrow to about 5.1% of GDP in 2019, while international reserves should reach $25.5 billion at the end of 2019, equivalent to about 5.2 months of imports. The IMF team welcomes the authorities’ intention to gradually move to a more flexible exchange rate regime, which will allow the Moroccan economy to better absorb external shocks and preserve its competitiveness.

“The fiscal deficit is projected to increase to 4% of GDP by 2019, due to a higher increase in capital investments than in tax revenues. The IMF team welcomed the authorities’ plans to accelerate fiscal reforms in the years ahead, in line with the conclusions of the Mai 2019 national tax conference, strengthened public investment management, and improved efficiency and quality of current and capital expenditures. These efforts will be critical to increase fiscal space to support public investment and social programs for the poorest segments of the population. It will also help reduce public debt to 60% of GDP over the medium term.

“The IMF team welcomes the progress made in strengthening financial sector soundness and financial inclusion, and in improving the business climate. It encourages the authorities to accelerate structural reforms to improve governance, combat corruption, reduce regional and social disparities and unemployment, particularly among women and the youth, and strengthen education.” (IMF 11.11)

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11.5 TURKEY: Fitch Revises Turkey’s Outlook to Stable; Affirms at ‘BB-‘

On 1 November, Fitch Ratings revised the Outlook on Turkey’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative, and affirmed the IDR at ‘BB-‘.

Key Rating Drivers

The revision of the Outlook reflects the following key rating drivers and their relative weights:-

MEDIUM: Turkey has continued to make progress in rebalancing and stabilizing its economy, leading to an easing in downside risks since our previous review in July. The current account balance has improved, FX reserves have edged up, economic growth has continued, inflation has fallen and the lira has held up despite large cuts in interest rates, buoyed by more supportive global financing conditions and the recent US announcement on removal of Syria-related sanctions.

Turkey’s current account balance strengthened to a surplus of $5.1 billion in the 12 months to August, from a deficit of $57.9 billion in May 2018, and its external financing requirement has continued to ease somewhat. The rollover rate for the non-bank private sector was a robust 97% on a rolling 12-month basis to mid-August, while banks’ demand for FX has reduced in line with a fall in FX lending (of 6% in the year to mid-October) and some drawdown in their sizeable foreign currency liquidity.

Nevertheless, Turkey’s gross external financing requirement remains large and a source of vulnerability – Fitch forecasts it at close to $170 billion (including short-term debt) for 2020. The majority of the current account adjustment has come from import compression (although exports have also grown) and Fitch expects some widening of the current account balance as domestic demand recovers, with deficits of 0.3% of GDP in 2019, 0.9% in 2020 and 1.8% in 2021 – but still well below the 2018 deficit of 3.5%.

The exchange rate has been relatively stable in the face of 10pp of policy interest rate cuts by the Central Bank of Turkey since July, depreciating 0.5% against the US dollar and trading within the range of 5.48-5.92. Exchange rate effects have been the main driver of a fall in inflation, to 9.3% in September from 16.7% in July. Gross foreign exchange reserves are up $8.1 billion in the year to September and by $3.9 billion since July, to $101.1 billion.

Turkey’s ‘BB-‘ IDRs also reflect the following key rating drivers:-

Turkey’s rating is supported by its large and diversified economy with a vibrant private sector, GNI per capita that compares favorably with ‘BB’ medians and moderate levels of government and household debt. Set against these factors are Turkey’s weak external finances, high inflation and a track record of overshooting inflation targets and of economic volatility. Political and geopolitical risks also weigh on Turkey’s ratings, with the capacity to disrupt economic adjustment, and raising concerns about government effectiveness and policy predictability in an environment where checks and balances have been eroded.

Turkey’s track record of high and volatile inflation, weak monetary policy credibility and limited central bank independence heighten the risk of renewed macroeconomic instability. Following July’s dismissal of the central bank governor for failing to following government instruction on interest rates, there has been an overhaul of senior officials at the central bank, and the main policy rate has been cut to 14% from 24%. This comes against a backdrop of President Erdogan regularly expressing unorthodox views on the relationship between interest rates and inflation.

Fitch forecasts that inflation will remain relatively high at 12% at end-2020 and 10% at end-2021, compared with the central bank forecast of 5.4% (and well in excess of the current ‘BB’ median of 3.4%). Market inflation expectations have remained sticky at 9.8% in two years’ time, although are partly adaptive. Combined with Turkey’s large external financing requirement and susceptibility to shocks, this may make it challenging to substantially reduce the main policy rate without risking renewed currency depreciation that could increase stresses on corporate and bank balance sheets.

We have maintained our GDP growth forecast of 3.1% for 2020 as rising disposable incomes support consumption, and 3.6% in 2021 as lower financing costs and some recovery in confidence also feeds through to investment growth. This is below our assessment of Turkey’s trend rate of growth of 4.3%, and similar to the peer group median (average 3.3% in 2020-2021). Our 2019 GDP forecast has been revised up 0.8pp since our last review to -0.3% on the back of stronger Q2 outturns. The return to mild growth so far this year has been driven by net trade and supported by fiscal easing (as well as state bank credit stimulus) which will provide less support from Q4/19.

Geopolitical risks continue to weigh on Turkey’s rating. Recently, the US president announced the removal of sanctions relating to Turkey’s military offensive in north-east Syria. This came after the agreement struck between Turkey and Russia on the removal of the Kurdish YPG from a 30km buffer zone that the two countries will jointly patrol. In our view, the US position also makes it more likely that the implementation of US sanctions triggered by delivery of S400 missile components from Russia will be on the lighter side of those set out in the legislation, and potentially subject to a lengthy delay. Nevertheless, the US House of Representatives also passed a new bipartisan bill threatening new sanctions on Turkey, and US policy in these areas has the potential to change quickly. We do not expect Turkey’s operation in Syria to have a significant impact on credit fundamentals in the absence of a more far-reaching conflict.

Fitch forecasts an increase in the general government budget deficit to 3.3% of GDP in 2019, from 2.4% last year, reflecting weak economic activity and counter-cyclical fiscal measures, particularly in Q1. The deficit is contained by an estimated 0.5% of GDP improvement in the local government balance, and by the transfer of half of the central bank’s contingency reserve, also equivalent to 0.5% of GDP. Fitch then expects a broadly flat general government balance, with deficits of 3.3% in 2020 and 3.1% in 2021, marginally above the government targets. We consider that the government views its central government deficit target of less than 3% of GDP as an important policy anchor and would likely adopt new, one-off measures to limit budget shortfalls that arise for example from GDP growth undershooting the 5% target. Fitch forecasts general government debt will increase to 32.5% of GDP at end-2021 from 30.1% at end-2018, but still well below the ‘BB’ median of 46.7%. There has also been a steady increase in contingent liabilities, albeit from a low base.

Fitch does not anticipate a marked acceleration of structural reforms under the New Economy Program (NEP), despite the conducive electoral cycle (with no national elections now due until 2023). The NEP retains a number of structural measures that have been welcomed by the private sector such as enhancing the insolvency process, reforming the pension system, and cutting corporation tax. However, the ambitious 5% GDP growth target and some ongoing measures to stimulate state bank lending could signal a prioritization of short-term growth over more difficult structural reforms with a longer planning horizon. Fitch views the macroeconomic forecasts underpinning the NEP as highly optimistic. Turkey has never previously sustained a combination of strong GDP growth, low inflation and current account close to balance.

Banking sector metrics remain under pressure from the challenging operating conditions. The announced classification of TRY46 billion of loans as NPLs is reported to take the NPL ratio to 6.3% by year-end, from 5.0% in September and 3.9% at end-2018. Fitch expects a further increase partly reflecting the still-high Stage 2 loans (estimated at around 12%). Loan growth has been muted, despite some pick-up since July to near 5% (FX-adjusted). Credit growth has been largely driven by state banks, resulting in erosion of their capital and profitability buffers. However, sector capital adequacy (18.4% total capital ratio in September) remains comfortably above minimum regulatory requirements and has been supported by additional Tier 1, Tier 2, issuance and foreign currency deleveraging. Pre-impairment profit continues to provide a buffer to absorb credit losses, and banks’ funding costs which have already started to decline should further benefit from the lower policy interest rate.

Rating Sensitivities

The main factors that may, individually, or collectively, result in positive rating action are:

  • • A sustained decline in inflation, a rebuilding of monetary policy credibility and a track record of greater macroeconomic stability.
  • • A reduction in external vulnerabilities, for example evident in a sustained current account close to balance, a stronger external liquidity position and reduced dollarization.
  • • An improvement in governance standards or reduction in political risk.

The main factors that may, individually, or collectively, result in negative rating action are:

  • • Disruption to the path of economic stabilization and rebalancing that is consistent with lower inflation and external vulnerabilities.
  • • Heightened stresses in the corporate or banking sectors potentially stemming from a sudden stop to capital inflows or a more severe recession.
  • • A marked worsening in the government debt/GDP ratio or broader public balance sheet.
  • • A serious deterioration in the domestic political or security situation or international relations.

  • Key Assumptions: Fitch forecasts Brent Crude to average $65/b in 2019 and $62.5/b in 2020 and $60.0/b in 2021. (Fitch 01.11)

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