Fortnightly, 8 January 2020

Fortnightly, 8 January 2020

January 8, 2020
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FortnightlyReport

THE FORTNIGHTLY
A Review of Middle East Regional Economic & Cultural News & Developments
8 January 2020
11 Tevet 5780
13 Jumada Al-Awwal 1441

Written & Edited by Seth J. Vogelman*

TABLE OF CONTENTS:

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1  Israel’s Leviathan Offshore Natural Gas Field Goes Online
1.2  Israel Signs Major Gas Pipeline Deal with Greece & Cyprus
1.3  Verkhovna Rada Ratifies Free Trade Agreement Between Ukraine and Israel

2:  ISRAEL MARKET & BUSINESS NEWS

2.1  Via to Open Jerusalem Technology Innovation Center
2.2  Israel is Home to 362 R&D Centers of Multinational Companies
2.3  OTI Raises $2.5 Million from Investors
2.4  First Accelerator Program for Italian Startups to be Launched in Israel
2.5  Elbit Systems Wins a $144 Million Contract to Supply Small Caliber Ammunition
2.6  Tesla to Open Pop-Up Store in Tel Aviv Mall
2.7  Israel’s TriEye & Porsche to Develop Visibility Tech for Autonomous Driving
2.8  More than 80% of Israel’s $20 Billion Food Industry is Kosher
2.9  Sapiens Acquires Germany’s sum.cumo to Expand Its Footprint in the DACH Region
2.10  Elbit Systems Wins $31 Million Contract from Israel to Supply Iron Fist Systems

 3:  REGIONAL PRIVATE SECTOR NEWS

3.1  HyperPay Closes an Investment Round led by Mad’a Investment Company
3.2  Wadi Makkah Ventures Company Makes Series A Investment in Pavegen
3.3  Badir Incubator Technology Startups Raise SR 508 Million in 10 Years
3.4  KFC Signs Partnership to Source Chicken from Saudi Farms
3.5  ExxonMobil Secures Exploration Acreage Offshore Egypt
3.6  Agility Ventures Invests in ExpandCart
3.7  Egypt Approves Uber Acquisition of Careem, But with Conditions

 4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1  Jerusalem to Fund New Golan Wind Farm Technology
4.2  Saudi’s ACWA Power Signs Deals for Ethiopian Solar Plants
4.3  Morocco Gets Closer to 2020 Renewable Energy Objective
4.4  Azelio Produces First Electricity Output in Morocco before End of 2019

5:  ARAB STATE DEVELOPMENTS

5.1  Lebanon’s Trade Deficit Falls to $13.51 Billion in October 2019
5.2  Lebanon’s Fiscal Deficit Drops by 15% to Reach $4 Billion in October 2019
5.3  Jordan Ranks First in Arab Region for Economic Freedom
5.4  Amman Announces Fourth Economic Incentive Bundle
5.5  Abu Dhabi Fund Agrees to a $300 Million Aid Package to Jordan
5.6  Experimental Supply of Natural Gas by Noble Energy to Jordan Begins
5.7  Jordanian Expatriates’ Remittances in November Amount to $3.4 Billion

♦♦Arabian Gulf

5.8  Philippines Issues Ban on Domestic Workers in Kuwait
5.9  Construction Starts on Network of Abu Dhabi and Al Ain Health Centers
5.10  Dubai Sets Aside $540 Million Reserve to Promote Expo 2020
5.11  UAE Reveals Plan to Launch New Five-Year Tourist Visa
5.12  Oman’s 2020 Budget Increases Spending to $34.4 Billion
5.13  Saudi Economy Contracts Marginally in Third Quarter as Oil Output Falls
5.14  Saudi Allows Businesses to Operate 24/7 from the First of January

♦♦North Africa

5.15  Egypt’s Domestic Liquidity Increases by EGP 160.4 Billion
5.16  Sudan Passes 2020 Budget with Expected Deficit of $1.62 Billion
5.17  UAE Makes a $15 Million Pledge to Improve Sudan Education System
5.18  Morocco to Receive New Batch of AMRAAM Missiles from the US
5.19  Moroccan Rail Company ONCF Gets First Electric Engine
5.20  Foreign Currency Limit for Moroccan Tourists Hits MAD 200,000

6:  TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1  Turkey Boosts its Indigenous Defense Sector in 2019
6.2  Turkey Hit by Significant Price Hikes During 2019
6.3  Turkey’s Foreign Trade Deficit Reaches $2.23 Billion in November 2019
6.4  Over 280 Turkish Farmers Applied for Cannabis Farming Since 2018
6.5  Turkey to Begin Mass Production of Domestic Cars in 2022

7:  GENERAL NEWS AND INTEREST

*ISRAEL:

7.1  Ultra-Orthodox Women Power Rises in Sector’s Standard of Living
7.2  Israel’s Population Reaches 9.14 Million on Eve of 2020

*REGIONAL:

7.3  AURAK Signs Extra Cooperation Agreement with Appalachian State University
7.4  Egypt Launches Health Campaign for Pregnant Women
7.5  More Than 400,000 Moroccan Students Dropped Out of School in 2018

8:  ISRAEL LIFE SCIENCE NEWS

8.1  Augmedics Announces FDA 510K Clearance and U.S. Launch of xvision
8.2  Check-Cap Announces Positive Results from U.S. Pilot Study of C-Scan® System
8.3  Sol-Gel Positive Trial Results of Twyneo for the Treatment of Acne Vulgaris
8.4  Microbot Medical Unveils First Fully Disposable Robotic System for Endovascular Procedures
8.5  Yeda and Deerfield Create Orchard Innovations
8.6  New Data Shows Can-Fite’s Namodenoson Induces Weight Loss
8.7  Vayyar HOME Gives Any Facility a Health Monitoring System Without the Need for Wearables
8.8  IceCure Receives FDA Clearance for Expanded Indications of Cryoablation Technology

9:  ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1  Eyesight Technologies Awarded First Place in 2019 GGAI Golden Globe Awards
9.2  Pcysys PenTera Selected by Yigal Arnon & Co. Law Firm for 1-Click Penetration Testing
9.3  Mitsubishi & Otonomo to Deliver Connected Car Applications to Benefit Drivers and Cities
9.4  Foresight Announces Major New Technological Features for QuadSight Vision System
9.5  Jungo and Qualcomm to Deliver Next-Generation Driver and In-Cabin Monitoring Systems
9.6  UVeye to Unveil Industry-Leading Vehicle-Inspection Technology
9.7  PenTera Selected by Sweden’s Skanska to Automate Cyber Security Validation
9.8  Noveto Systems to Unleash a Sound Solution Game Changer Game Changer

10:  ISRAEL ECONOMIC STATISTICS

10.1  Israel’s Economy Grew by an Estimated 3.3% in 2019
10.2  Israel’s 2019 Fiscal Deficit Equal to 3.7% of GDP
10.3  Israel Tax Revenues from Cars Rises by 20% in 2018
10.4  Israel Doubles Number of Unicorns in 2019
10.5  Fewer Israeli Startups Are Being Founded
10.6  Israeli Startups Raise Record $8 Billion in 2019
10.7  This Year was a Record One for Israeli Tourism

11:  IN DEPTH

11.1  UAE: UAE Economic Report for 2020
11.2  UAE: Dubai’s Non-Oil Foreign Trade Rises 6% to ‎‎$272 Billion
11.3  OMAN: Sell-Off Reveals Privatization with Regional Characteristics
11.4  EGYPT: Egypt Moves into Position as a Regional Energy Hub
11.5  EGYPT: New Oil & Gas Fields in Egypt Promise More Discoveries
11.6  EGYPT: Egypt’s Military Adds New Factory to Industrial Portfolio
11.7  EGYPT: Egypt’s Tech Sector Struggles to Deepen Growth
11.8  TURKEY: IMF Executive Board Concludes 2019 Article IV Consultation with Turkey
11.9  MOROCCO: Moroccan Economy to Continue Steady Growth in 2020

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1  Israel’s Leviathan Offshore Natural Gas Field Goes Online

Israel’s Environmental Protection Ministry has approved the operation of the Leviathan offshore natural gas field, allowing it to finally go online on 31 December. Leviathan, discovered in 2010 roughly 130 kilometers (81 miles) west of Haifa, holds an estimated 22 trillion cubic feet of natural gas. The field was the world’s largest offshore discovery of the past decade. The Environmental Protection Ministry said that Texas-based Noble Energy, which operates Leviathan, was given approval following a review of its operations which met all of the required conditions. A joint statement from partners Noble Energy, Delek Drilling and Ratio said that the start of production was expected to lead to an immediate reduction in domestic electricity prices and the start of exports.

Both the Environmental Protection Ministry and Nobel Energy stressed that the activities carried out on the platform do not impact routine life. Leviathan gas exports to neighboring countries are expected to begin in the coming weeks. Delek and Noble reached a $15 billion 10-year deal with Egypt’s Dolphinus last year to supply 64 billion cubic meters (2.26 trillion cubic feet). It will be the first time Egypt imports gas from its neighbor. Israel had previously bought gas from Egypt, but land sections of the pipeline were targeted multiple times by Islamic radicals in 2011 and 2012.

The Tamar and Leviathan gas will reach Egypt through the mainly undersea East Mediterranean Gas Company pipeline connecting Ashkelon with the northern Sinai Peninsula. Tamar, which began production in 2013, has estimated reserves of up to 238 billion cubic meters (8.4 trillion cubic feet). Jordan has been purchasing gas from Tamar on a small scale for nearly three years. (Various 31.12)

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1.2  Israel Signs Major Gas Pipeline Deal with Greece & Cyprus

On 2 January, Israel, Greece and Cyprus signed an agreement for a major pipeline project to ship gas from the eastern Mediterranean to Europe. The 2,000-kilometer (1,200-mile) EastMed pipeline will be able to carry between nine and 12 billion cubic meters of gas a year from offshore reserves held by Israel and Cyprus to Greece, and then on to Italy and other southeastern European countries. Prime Minister Netanyahu, Greek Prime Minister Mitsotakis and Cypriot President Anastasiades joined the ceremony at which their respective energy ministers signed the deal in Athens. The cost of the installation from the eastern Mediterranean to Italy is estimated at €6 billion ($6.7 billion).

The EastMed project is expected to make the three countries key links in Europe’s energy supply chain. It could also help counter Turkey’s effort to extend its control to the eastern Mediterranean. Turkey already faces European Union sanctions over ships searching for oil and gas off Cyprus, whose government in Nicosia is not recognized by Ankara.

The discovery of hydrocarbon reserves in the eastern Mediterranean has sparked a scramble for the energy riches and a row between Cyprus and Turkey, which occupies the northern part of the Mediterranean island. The agreement comes amid tensions with Turkey over its activities in the area and a maritime deal with Libya expanding Ankara’s claims over a large gas-rich area of the sea. (ToI 02.01)

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1.3  Tel Aviv E-Scooters Now Have License Plates

On 1 January 2020, the Tel Aviv Municipality introduced new regulations requiring electric scooter ridesharing rental companies Lime, Bird and Wind to attach license numbers to their e-scooters. The new regulation follows a sharp rise in the number of people being injured by scooters. The Tel Aviv Municipality has introduced a new 106 app for people to report incidents including scooters being illegally ridden on sidewalks. Reports must include a photograph of the offender and the e-scooter company will then be required to take action against the subscriber. For a first offense a person will receive a warning, for the second offense a two month ban from using the company’s e-scooters and for the third offense a permanent ban.

The municipality has a unit of 22 inspectors, whose main focus is to ensure that e-scooters do not ride on sidewalks. The inspectors are able to issue tickets for sidewalk violations only the police have the authority to issue tickets to riders not wearing helmets, as required by law; 21,000 tickets for sidewalk offenses were issued in 2019.

On 1 February, the Tel Aviv Municipality will introduce more new regulations banning electric scooters and bikes from certain busy areas such as Tel Aviv Port and lowering the speed limit in some areas from 25 kilometers per hour to 15 kilometers per hour. From 15 June, the e-scooter rental companies will be required to provide riders with helmets. (Globes 01.01)

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2:  ISRAEL MARKET & BUSINESS NEWS

2.1  Via to Open Jerusalem Technology Innovation Center

Israeli real-time ridesharing solutions developer Via Transportation is opening a technology innovation center in Jerusalem. The company will hire 50 engineers for the new center over the coming year to lead Via’s major smart transport projects in Israel and abroad. The new innovation center will open in early 2020 and will work closely with the company’s Tel Aviv R&D center, which has 250 engineers.

Via’s smart ridesharing services, which were first launched in New York City in September 2013, now operate in 90 locations worldwide including London, Tokyo, Washington DC, Chicago, Los Angeles, Tel Aviv, Sydney, Amsterdam and Berlin and serve 60 million passengers. Via’s systems were developed in Tel Aviv and the new Jerusalem innovation center will enhance the company’s capabilities. (Globes 24.12)

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2.2  Israel is Home to 362 R&D Centers of Multinational Companies

A new report published by IVC, GKH and IATI reveals that the depths and scope of Multinational Technology Companies involvement in Israel has reached such a level that it influences the National Budget calculations. The term Multinational Technology Companies (MNC) refers to a foreign corporation that controls the R&D or owns a high-tech company in Israel (some entities such as Intel and HP have in addition to R&D large manufacturing facilities in Israel).

With the growth of M&A activity in the last two decades, the presence of MNCs has become an integral part and a major contributor to the Israeli tech ecosystem. According to the report, there are 362 active multinationals in Israel (in 2019), employing approximately 62,000 employees. Israeli based MNCs are about to pay nearly $8.85 billion taxes in 2019 (based on tax payment of $142,500 per employee). This amount is equivalent to approximately 2.6% of Israel’s estimated GDP for 2019, and 18% of the total income from direct tax, which is expected to be $48 billion this year.

The majority of MNCs in Israel are U.S. based corporations, accounting for 63% of the 362 companies. While there was a noticeable German presence in 2016 and Chinese presence during 2017, currently there is no other country with any significant presence other than US. The three top technology clusters in MNCs in Israel are: Machine Vision, IoT and Cyber Security. Approximately 32% (115 companies) of all MNCs develop technologies in at least one of these clusters.

Many MNCs started as a result of M&A deals (70% of all M&As between 2014 and 2019 were by foreign companies). Most global companies acquiring Israeli startups are from the US, with a steady number of more than 50 exit deals each year. Most active corporate buyers of Israeli companies in the last 5 years are Google (10) and Microsoft (8). Intel, on the other hand, is the most active corporation in Israel. During 2014–2019, Intel Capital participated in 52 investment deals and Intel corp. acquired 5 companies totaling $17.5B. The largest number of employees is in a manufacturing facility (Intel Fab in Kiryat-Gat) and not an R&D center. (IVC 26.12)

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2.3  OTI Raises $2.5 Million from Investors

On Track Innovations entered into a share purchase agreement with Jerry L. Ivy, Jr. Descendants’ Trust and two other investors who are members of the Company’s Board of Directors. The Agreement relates to a private placement of an aggregate of up to 12,500,000 ordinary shares of the Company at a purchase price of $0.20 per share, for aggregate gross proceeds to the Company of up to $2,500,000. The initial closing of the private placement took place on 23 December 2019. At the initial closing, 6,500,000 shares were issued for aggregate gross proceeds to the Company of $1,300,000. A subsequent closing for the remainder of the amount to be invested is subject to the Company obtaining approval of its shareholders to, among other things, an increase the authorized share capital of the Company.

In addition, under the terms of the Agreement and following the initial closing, the Board agreed to appoint one representative to the Board, designated by Ivy. An additional representative designated by Ivy will be appointed to the Board following the Subsequent Closing.

Rosh Pina’s On Track Innovations (OTI) is a global leader in the design, manufacture and sale of secure cashless payment solutions using contactless NFC technology. OTI’s field-proven innovations have been deployed around the world to address cashless payment and management requirements for automated retail and petroleum markets. (OTI 24.12)

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2.4  First Accelerator Program for Italian Startups to be Launched in Israel

Italy has chosen seven startups to take part in the first-ever accelerator program for Italian startups in Israel beginning in January. They were chosen from a total of 40 applicants from various sectors, including health, smart mobility, food tech, and clean tech all seeking to develop their new business ideas in Israel. The three-month program, slated to take place between January and March 2020 at the Eilat Tech Center, is a joint venture set up by the Italian Embassy in Israel and the Intesa Sanpaolo Innovation Center, part of the Intesa Sanpaolo Group, a bank based in Italy. The program will offer mentors and tutors to help the Italian entities, and the startup founders will have networking meetings with successful Israeli companies in related sectors. Funding will be provided by the Italian embassy in Israel, which has designated €100,000 ($112,000) for the program.

The program’s final event, to be held in Tel Aviv, will include an expo and a pitch event attended by representatives from the government and industries, as well as investors from Israel, Italy, other parts of Europe and the United States. The program was organized under the Italian-Israeli Agreement for industrial, scientific and technological cooperation. (Israel Hayom 01.01)

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2.5 Elbit Systems Wins a $144 Million Contract to Supply Small Caliber Ammunition

Elbit Systems was awarded a contract by the Production and Procurement Directorate of the Israeli Ministry of Defense (IMOD) valued at approximately $144 million for the supply of small caliber ammunition to the Israeli Defense Forces. This five-year contract, work on which will commence in 2021, will be a continuation of the existing multi-year contract with the IMOD.

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. The company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems. (Elbit Systems 01.01)

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2.6 Tesla to Open Pop-Up Store in Tel Aviv Mall

US-based electric carmaker Tesla is entering the Israeli vehicle market in January, opening a pop-up store in the Ramat Aviv mall in North Tel Aviv. In November, Tesla registered a fully owned subsidiary company in Israel – Tesla Motors Israel and in December advertised for a country manager in Israel and sales manager.

Tesla Model 3, whose official price in the US started at $40,000, and the crossover Tesla Y, which will debut next year with a $35,000 basic price. Tesla is now beginning Model 3 production at a new plant in Shanghai, but chances for a lower price as a result of the moving of production from the US to China is slight.

What the price for Israeli consumers will be is anyone’s guess. Taking into account the price structure in Europe and the current taxes on electric cars in Israel before the upcoming January revision of taxes on environmentally friendly vehicles, which include a 10% purchase tax, shipping, and VAT, the result is a price in the NIS 200,000-220,000 range for the basic Tesla Model 3 with a 400 kilometer range. The price of the Tesla Y, which has a 300 kilometer range in the basic configuration, may be lower. This is a relatively accessible price, but it still appeals to a fairly limited segment of the Israeli market, which is crowded with electric and hybrid competitors. Tesla’s leading models, S and X, are likely to cost NIS 400,000-500,000 in Israel, which restricts the market for them to a few dozen or a few hundred sales a year. (Globes 30.120

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2.7 Israel’s TriEye & Porsche to Develop Visibility Tech for Autonomous Driving

Porsche and Tel Aviv based fabless semiconductor company TriEye announced a new collaboration to improve the German sports car manufacturer’s advanced driver assistance systems (ADAS) and self-driving systems. Founded in 2016, TriEye developed sensing technology that will allow ADAS and autonomous vehicles to enhance vision capabilities under common adverse weather (fog, dust) and low-light or night-time conditions.

TriEye said that Porsche, a strategic investor in the company, has identified TriEye’s CMOS-based SWIR camera as an important component to achieving better visibility capabilities, especially in adverse weather conditions. TriEye’s technology is based on nearly a decade of advanced nano-photonics research by Professor Uriel Levy at the Hebrew University in Jerusalem. Intel Capital led a $17 million investment round in TriEye back in May, which grew to $19 million after the Porsche investment. (Porsche 01.01)

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2.8  More than 80% of Israel’s $20 Billion Food Industry is Kosher

Israel’s food industry is largely kosher even though there is today a growing segment of non-kosher retail stores. Despite its growing food manufacturing capacity, Israel still imports large quantities of food, according to the USDA. It is one of the reasons why so many manufacturers around the world, particularly in Southeast Asia seek kosher certification. In 2018, imports of agricultural products reached $6.92 billion with 7% coming from the US. Israel has 1,800 food processing facilities that largely produce kosher food. Multi-national food manufacturers like Nestlé, Unilever, Danone and Pepsi Co. partner with well-known Israeli food companies such as Osem and Strauss. Four groups dominate the local food processing industry: Tnuva, Osem-Nestlé, Unilever and Strauss. Sales in supermarket chains account for over 60% of total retail food market sales with more than 90% carrying exclusively kosher certified items. The EU is the biggest market for Israeli agricultural and food exports.

In recent years there has been an increase in demand for non-kosher foods, especially from immigrants from the former Soviet Union. But this demand is stymied because of Israeli laws that require imported meats to be kosher. Many Arab Israelis and other Muslims also buy kosher products. In previous surveys, approximately 70% of Israelis said that they eat kosher. (KT 06.01)

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2.9 Sapiens Acquires Germany’s sum.cumo to Expand Its Footprint in the DACH Region

Sapiens International Corporation has acquired sum.cumo, the German-based technology provider that offers disruptive, digital, innovative and consumer-centric solutions mainly to the insurance sector, for up to €28.4 million. Sum.cumo services insurers in the DACH region (Germany, Switzerland and Austria), helping them to set up their business model and obtain a marketing edge. The company’s experts in consulting, user experience, marketing and technology enable the region’s insurers to launch successful e-commerce environments.

The acquisition will enable Sapiens to expand its footprint by offering Sapiens’ complete product and services portfolio in the DACH region, alongside sum.cumo’s offerings. Sapiens will continue to invest in and support sum.cumo’s offerings, and enhance Sapiens’ digital offerings worldwide via sum.cumo’s solutions and expertise.

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 500 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements. (Sapiens 07.01)

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2.10  Elbit Systems Wins $31 Million Contract from Israel to Supply Iron Fist Systems

Elbit Systems was awarded an initial contract from the Production and Procurement Directorate of the Israeli Ministry of Defense (IMOD) valued at approximately $31 million to provide Iron Fist Active Protection Systems (APS) for the Eitan Armored Fighting Vehicles (AFV) of the Israeli Defense Forces (IDF). The contract will be performed over a five-year period.

Under the contract Elbit Systems will equip the IDF’s new wheeled AFVs with the Iron Fist Light Decoupled (IFLD) systems. The Iron Fist system uses optical sensors, tracking radar, launchers and countermeasure munitions to defeat threats at a safe distance. The Iron Fist system provides 360-degree protection coverage for close-range scenarios in both open terrain and urban environment. The systems’ high-performance, versatility and negligible residual penetration, as well as its low size and weight and ease of integration, position the Iron Fist as an optimal APS for any fighting vehicle.

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 07.01)

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3:  REGIONAL PRIVATE SECTOR NEWS

3.1  HyperPay Closes an Investment Round led by Mad’a Investment Company

HyperPay, an award-winning payment service provider in the MENA region, announced the closing of an 8-digit investment round, led by Mad’a Investment Company, with participation from Saudi Venture Capital Company (SVC), iNet, MEVP and other investors. The round also included successful exits for investors who participated in early-stage funding. This latest round of funding will be used in three key areas, which are investing in infrastructure in Saudi Arabia, growing a suite of products, and accelerating expansion across Egypt and the GCC.

Founded in 2014, Amman’s HyperPay has been processing millions of transactions every year for thousands of merchants selling goods and services online. The company offers world-class payment solutions to local and global businesses in the region, contributing to the Saudi Kingdom’s Vision 2030 by moving towards a cashless society and boosting digital transactions and e-commerce. (HyperPay 24.12)

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3.2  Wadi Makkah Ventures Company Makes Series A Investment in Pavegen

Saudi Arabia’s Wadi Makkah Ventures announced it is signing an initial investment agreement and entering as an investor in the startup London’s Pavegen, in the first round of investment (Series A) joining several international investors. Pavegen, a UK-based clean-tech company, specializes in the development and installation of kinetic walkways that convert footsteps into off-grid electricity and personalized data. Energy generated goes to power local applications, such as lighting, or to store in batteries for later use. Pavegen’s patented design uses triangular tiles, which creates a continuous articulated surface to avoid ‘dead zones’, allowing energy to be generated from every step. Pavegen has implemented more than 200 projects in 36 countries worldwide, from the US to Hong Kong and the UAE to China. One of the possible projects for Pavegen in the coming period is the implementation of their technology and its transfer to the Kingdom of Saudi Arabia through the NEOM project, and the two parties are currently working on providing ideas and studies necessary to implement the project.

Wadi Makkah Ventures has discussed with the Pavegen team studying the possibility of applying Pavegen technology and data collection in certain areas in Mecca to contribute to the process of providing clean energy and collecting the data needed to use it to facilitate crowd management, and other processes. Wadi Makkah Ventures aims to invest in local and international startups that provide services and technologies to improve and develop the quality of the services in the Hajj and Umrah sector. (Wadi Makkah Company 29.12)

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3.3  Badir Incubator Technology Startups Raise SR 508 Million in 10 Years

Technology startups incubated by the Badir Program for Technology Incubators and Accelerators, one of the leading initiatives of Riyadh’s King Abdulaziz City for Science and Technology (KACST), closed 2019 on a high note, raising a record SR 236 million ($62.93 million) led by venture capital firms, individual investors, private companies, and governmental institutions. The total funding for startups increased to SR 508 million ($135.47 million) from 2010 until the end of December 2019 across 184 deals, according to a statistical report compiled by the Business Incubators and Accelerators Company (BIAC), which manages and operates the Badir Program.

The report revealed that venture capital firms were the most active in terms of funding size, investing SR 203 million into startups, equivalent to 40% of the total amount of funding and investment, while private sector companies provided SR 168 million, 33% of the total funding. BIAC report further disclosed that the total financing by individual investors amounted to SR 104 million, 20% of the total amount of funding, followed by government institutions who invested SR 35 million, 7% of the total investment volume.

The Badir Program offers one of the most important national and innovative environments in the field of entrepreneurship. The Program was established in 2007 by the King Abdulaziz City for Science and Technology, to support and provide opportunities for technology- and innovation-based business enterprises. (Badir 06.01)

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3.4  KFC Signs Partnership to Source Chicken from Saudi Farms

KFC, the world’s largest chicken restaurant, has announced a partnership with leading poultry companies and suppliers in Saudi Arabia to source its chicken from local farms. As a step towards strengthening its long-standing commitment to Saudi Arabia, KFC said the partnership will entail the supply of fresh chicken to over 200 KFC restaurants in the kingdom daily. The meat will come from Almarai’s premium poultry brand, Alyoum, as well as from Al-Watania Poultry, the largest poultry establishment in the Middle East, and Tanmiah Food Group. KFC restaurants have been serving fried chicken to more than 55,000 customers in the Saudi kingdom every day since 1975.

KFC operates more than 22,000 restaurants in over 135 countries and territories around the world. It operates in the MENA region – UAE, Saudi Arabia, Jordan, Lebanon, Kuwait, Bahrain, Oman, Qatar, Iraq, Egypt, Morocco and Tunisia – Turkey and Pakistan with 999 franchised units. (KFC 28.12)

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3.5  ExxonMobil Secures Exploration Acreage Offshore Egypt

ExxonMobil has secured more than 1.7 million acres for exploration offshore Egypt. The acquisition includes acreage in the 1.2 million North Marakia Offshore block, which is located approximately five miles offshore Egypt’s northern coast in the Herodotus basin. The remaining 543,000 acres is in the North East El Amriya Offshore block in the Nile Delta. ExxonMobil will operate both blocks and hold 100% interest. Operations, including acquisition of seismic data, are scheduled to begin in 2020.

The awards add upstream interests to ExxonMobil’s long-standing downstream presence in Egypt, where it has been a leading fuels, lubricants and specialties marketer since 1902. ExxonMobil, the largest publicly traded international energy company, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil is a global leader in LNG project execution and holds an industry-leading inventory of resources, is one of the largest refiners and marketers of petroleum products, and its chemical company is one of the largest in the world. (ExxonMobil 30.12)

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3.6  Agility Ventures Invests in ExpandCart

Agility Ventures, the venture capital arm of global logistics company Agility, announced that it has invested in ExpandCar. The investment is part of a funding round closed this year by Agility, Graphene Venture Capital, Betatron, and other angel investors.

Agility announced the investment, saying it was part of Agility’s drive to expand its leadership in digital logistics and e-commerce. According to a 2019 Bain & Company study, the Middle East and North Africa (MENA) e-commerce market is worth $8.3 billion and has grown by 25% annually since 2014. It is expected to reach $28.5 billion by 2022 and could grow even larger, given that e-commerce penetration in MENA remains low compared with other regions.

Cairo’s ExpandCart provides merchants with mobile-responsive online templates available in Arabic and English, as well as offering marketing, support, and hosting services. Additionally, it allows store owners to integrate with more than 20 payment and shipping options, streamlining the store-building process from start to finish. More than 10,000 sellers have launched their stores on ExpandCart, allowing the merchants to receive more than 190,000 orders. In addition to store-building tools, ExpandCart offers sellers support for digital marketing, handling and fulfilment, a point-of-sale system, branded native mobile apps, and after-sale service. (Agility Ventures 29.12)

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3.7 Egypt Approves Uber Acquisition of Careem, But with Conditions

Egyptian regulators have approved Uber’s $3.1 billion acquisition of regional rival Careem after agreeing to a set of commitments proposed by the US-based ride-hailing service meant to reduce harm to competitors. The Careem acquisition was announced in March after more than nine months of stop-start talks between the two companies, handing Uber a much-needed victory after a series of overseas divestments. The deal is expected to close in January, depending on regulatory approval in various territories of which Egypt is among the most significant. Egypt, with a booming population seen swelling to 100 million, is the biggest in the Middle East for ride hailing services. Careem will become a wholly owned subsidiary of Uber but will continue to operate as an independent brand with independent management.

Under a series of commitments Uber has made to the ECA, the San Francisco-headquartered company has agreed to abandon exclusivity provisions with partners and intermediaries and reduce barriers to entry into the market. An independent monitoring trustee will be nominated by Uber and approved by the ECA to ensure adherence to the commitments. Uber will share random samples of trip data with the trustee monthly to ensure compliance. The commitments must be adhered to for five years from the date the transaction closes, or when one or more ride-hailing providers achieves 20% of weekly rides individually or 30% collectively in overlapping areas excluding Cairo and Alexandria, Egypt’s biggest cities. Excluding surge pricing and promotions, Uber will cap its yearly fare increases beyond inflationary costs at 10% for Uber X and Careem GO, the most popular services in Egypt. Surge pricing, a mechanism that raises prices when demand far exceeds supply, will also be capped on Uber X and Careem GO at 2.5 times. Surge prices will be applied to a maximum of 30% of annual trips on the two services. (Various 29.12)

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4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Jerusalem to Fund New Golan Wind Farm Technology

Israel’s Ministry of Defense and Ministry of National Infrastructure, Energy and Water Resources are to fund development of technology that will make it possible to build wind turbines farms in the Golan Heights without disrupting the activity of the IDF and the air force in the area. The new agreement, which will regulate the construction and operation of hundreds of wind turbines in the north for producing electricity, was signed on 31 December by the Ministry of Finance and the Public Utilities Authority (Electricity). Joint funding for developing the new technology will total NIS 250 million.

The Ministry of Defense said that when the technological development is completed, a number of ventures that are currently in the planning stages would go forward in the following years. The Ministry of National Infrastructure, Energy and Water Resources added that the agreement was an important milestone on the way to attaining the 2030 targets set by Minister of National Infrastructure, Energy and Water Resources Steinitz, while developing an electricity sectors based on clean energy, including solar energy, among other things. (Globes 01.01)

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4.2  Saudi’s ACWA Power Signs Deals for Ethiopian Solar Plants

Saudi-based ACWA Power has signed two long-term power purchase agreements with Ethiopia’s state-owned electricity producer Ethiopian Electric Power (EEP) for two projects over 20 years. ACWA Power said it won the bid for the two 125MW plants during the first round of Ethiopia’s solar program. With a combined capacity of 250MW, the projects are estimated to power 750,000 homes in Ethiopia and offset 320,000 tonnes of carbon dioxide per year. The new plants will be located in Dicheto, in the Afar region, and in Gad, in the Somali region of the country.

The 250MW projects are the first of a kind in the Ethiopian utilities landscape and will be a support the diversification of the energy mix within the country. ACWA Power was selected as the winning bid out of 12 pre-qualified bidders. The company already operates in Africa with solar and wind assets in Morocco, South Africa and Egypt. (Various 28.12)

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4.3  Morocco Gets Closer to 2020 Renewable Energy Objective

The Moroccan Agency for Renewable Energy (MASEN) announced that Morocco’s renewable energy capacity reached 3,685 megawatts (MW) by the end of 2019, including 700 MW of solar energy, 1,215 MW of wind power and 1,770 MW of hydroelectricity. While Morocco did not inaugurate any new power plants in 2019, the agency announced the launch of several solar energy and wind power projects in 2020, in order to reach the country’s goal of 6,000 MW capacity by 2020. According to MASEN, the 2020 objective will be attained with the launch of the new projects.

Morocco aims to make 42% of its energy production renewable in 2020 and increase to 52% in 2030. The Kingdom’s renewable energy is currently produced by four solar plants and 11 wind power plants. The solar plant of Noor Ouarzazate has the highest capacity, with 580 MW. In the wind power sector, the Tarfaya plant has the highest capacity, with 301 MW, followed by Aftissat and Akhfenir, with 200 MW each.

Planned projects that have not yet launched include the solar plants of Noor Midelt I and Noor Midelt II, with capacities of 800 and 230 MW respectively, along with other projects totaling a capacity of 1,150 MW of solar energy and 640 MW of wind power. Finally, projects that are still in the planning phase include power plants in several regions of Morocco. The projects would total a capacity of 1,000 MW of solar energy and 570 MW of wind power. (MWN 07.01)

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4.4  Azelio Produces First Electricity Output in Morocco before End of 2019

Private Swedish company Azelio announced that its verification project in Morocco has delivered, in line with its plans, electricity output for the first time. The achievement was made by the end of the year as projected. Azelio prepared the verification project during the fourth quarter of this year with Morocco’s Agency for Sustainable Energy (MASEN) at Ouarzazate Solar Power Station, one of the most powerful energy hubs in the country and across the world.

Azelio added that it has two modules on the Ouarzazate energy site. The project seeks to generate data showing the technology’s performance levels in a real world environment over the coming months. The modules include energy storage units and other units “designed to convert stored heat to electricity which is then used to boost the thermal energy storage.”

In February, Morocco announced that it produced 35% of its electricity output from renewable energy sources by the end of 2018. The country, already a leader in renewable energies, seeks to emerge as a leader in the energy industry, including renewables. The North African country’s ultimate goal is to generate 42% of its electricity from renewable energies by 2020. (MWN 30.12)

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5:  ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Trade Deficit Falls to $13.51 Billion in October 2019

Lebanon’s trade deficit narrowed in the first 10 months of the year to reach $13.51B, down by 6.25% compared to the same period in 2018. The total value of imports lost an annual 1.55% to stand at $16.61B. Also, the value of exports rose by 25.96 %to stand at $3.10B by October 2019. It should be noted that Mineral products and Vegetable products are the only 2 categories to witness an increase in its imported value. As for the month of October alone, the total deficit amounted to $1B which is 30.1% lower when compared to the same month last year.

In term of value, Mineral products were the leading imports to Lebanon in the first 10 months of the year, grasping a 33.44% stake of total imported goods. Products of the chemical or allied industries followed, constituting 10.28% of the total, while machinery and electrical instruments grasped 8.79% of the total.

Lebanon imported $5.55B worth of Mineral Products, compared to a value of 3.55B in the same period last year. In fact, the net weight of imported mineral fuels, oils and their products is still increasing since the start of the year and witnessed a yearly rise from 5,460,305 tons by October 2018 to reach 9,945,382 tons by October 2019. Meanwhile, the value of chemical or allied industries recorded a decrease of 7.07% y-o-y to settle at $1.71B and that of machinery and electrical instruments also declined by 25.70% over the same period to $1.46B. In terms of top trade partners, Lebanon primarily imported from China, US, and Russia with shares of 8.62%, 8.52% and 7.34%, respectively, in Q3/19.

For exports, the top category of products exported from Lebanon were pearls, precious stones and metals, which grasped a share of 39.02% of total exports, followed by a share of 10.25% for Machinery; electrical instruments and 10.13% for Products of the chemical or allied industries over the same period. The value of pearls, precious stones, & metals surged from 552.42M by October 2018 to reach $1.21B by October 2019. Machinery and electrical instruments recorded an increase of 18.15% year-on-year to $318M. Meanwhile, the value of Products of the chemical or allied industries, it increased by 4.28% y-o-y to $314.37M. In the first 10 months of 2019, Switzerland followed by the UAE and Saudi Arabia were Lebanon’s top three export destinations, respectively constituting 28.36%, 11.60%, and 6.43% of total exports. (MoF 05.01)

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5.2  Lebanon’s Fiscal Deficit Drops by 15% to Reach $4 Billion in October 2019

Lebanon’s cash-basis fiscal deficit narrowed from $4.73B by October 2018 to $4B by October 2019. The smaller deficit comes as a result of the 7.63% yearly decline in government spending, which outweighed the 3.17% annual retreat in total public revenues. Total government revenues and expenditures (including treasuries) stood at $8.94B and $12.35B, respectively. In its turn, the primary balance which excludes debt service, posted a surplus of $218.17M over the same period, compared to a deficit of $401.59M by October 2018.

The breakdown of the fiscal performance of the Lebanese government in the first 10months of 2019 showed that Tax revenues (constituting 80.42% of budget revenues) decreased by 4.05% year-on-year (YOY) to $7.19B by October 2019, of which VAT revenues (25.70% of total tax receipts) dropped by 19.32%YOY to $1.85B. The drop in VAT revenues is most probably attributed to the low growth environment and the ensuing reduction in spending since the beginning of the year, which outweighed the positive effect of raising the VAT rate from 10% to 11% effective January 2018. For example, revenues from the Lebanese Customs (14.39% of total tax receipts) decreased by an annual 8.99% to stand at $1B by October. 2019.

In turn, non-tax revenues (19.58% of total revenues) registered an annual uptick of 0.61%YOY to $1.75B by October 2019, despite a 0.47%YOY downtick in Telecom revenues (45.57% of Non-tax revenues) to $797.49M over the same period. On the expenditures side, total government expenditures fell by a yearly 7.63% amounting to $12.35B in the first 10months of 2019. Transfers to Electricité du Liban (constituting 10.6% of total public expenditures) fell by an annual 5.24% to stand at $1.31B. The decrease can be affiliated to an 11%YOY drop in the average international oil prices to $64.75 per barrel in Q3/19. Meanwhile, total debt-servicing (inclusive of interest payments and principal repayments) fell by 2.09%YOY to $4.24B by Oct. 2019. (Ministry of Finance 05.01)

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5.3  Jordan Ranks First in Arab Region for Economic Freedom

For the second year in a row, Jordan has earned the top ranking on the Economic Freedom of the Arab World 2019 report, with its score rising from 7.5 to 7.6 on the overall index. Economists have suggested that stability is the main driver behind the consistent high ranking. Published on 17 December by the Fraser Institute, the report compares this year’s country scores with previous years and examines available data to create an indication of future scores.

Concerning the economic freedom of all 22 countries of the Arab League, the report said that “All too often in the Arab world, the less privileged and the excluded are deprived of finding meaningful employment or building new and creative businesses by onerous bureaucracy, red tape, restrictive regulations, complicated rules, corruption and an uneven rule of law — all obstacles to economic freedom.” The report suggests that increased economic freedom removes these barriers to create opportunity for all. It also suggests that expanding economic freedom can help combat corruption. The index in the 2019 edition incorporates data from 2017, the most recent year for which full figures are available. It also presents some early data from 2018.

Last year, Jordan was ranked the most economically free country in a tie with the UAE, but this year it occupies that place alone. Jordan’s reforms are slowly but steadily improving its economic freedom, as manifested in its first place ranking in the Arab world two years in a row. It might not have the strongest market, but it has one that is stable and dependable.

For the size of government index, Jordan ranks third in the Arab world, with its score rising from 7.6 to 8.1. It ranked sixth for legal structure and security of property rights, with its score increasing to 5.3 from 5.1. In terms of access to sound money, Jordan ranks ninth, with a score of 9.5, down from 9.6. Its score for freedom to trade internationally fell to 7.7 from 7.8 and it ranked fourth on that index. (Fraser Institute 17.12)

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5.4  Amman Announces Fourth Economic Incentive Bundle

More than 50% of the government’s capital spending in 2019 will go to the education, health and transport sectors, Jordanian Prime Minister Razzaz said on 24 December. Razzaz made the remarks while announcing the fourth executive packages to improve the national economy. The premier said that the first three packages cannot be sustainable without improving the quality of education, health and transport sectors, noting that many Jordanian families are not covered by health insurance and that public transport should serve all segments of society, not just those without cars.

PM Razzaz said the implementation of the first three packages is producing tangible results; apartment sales have increased by 34% from the announcement of the first package on 21 October until 19 December. The sales of lands also increased by 48% in the same period Razzaz said, adding that sales of vehicles have also increased. The aim of the fourth package is to improve the livelihood and wellbeing of citizens and improve the quality of services, he said.

One of the biggest challenges in the education sector is kindergarten, the premier said, adding that the government will cooperate with all concerned agencies to provide kindergarten education to every place in the Kingdom. The government will also ensure that no Jordanian citizen is deprived of comprehensive health insurance or public transport services.

In October, the government announced its comprehensive program comprising four packages: Stimulating the economy and investments, management and financial reform, improving citizens’ livelihoods and improving services comprehensively. The first package provided incentives in the real-estate sector, focused on boosting exports and production and introduced measures to improve labor and employment for Jordanians. The second package lowered taxes on electric cars, removed the vehicle weight tax, reduced and controlled government purchases and resolved bureaucracy issues. The third package focused on increasing the salaries of employees and pension of retirees in the public sector and the military. (JT 24.12)

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5.5  Abu Dhabi Fund Agrees to a $300 Million Aid Package to Jordan

The Abu Dhabi Fund for Development (ADFD) announced that it is providing $300 million in development aid to Jordan. The move comes following the directives of UAE President Sheikh Khalifa bin Zayed Al Nahyan, with the support of Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. ADFD said that the UAE leadership’s decision reaffirms the commitment to standing alongside the brotherly leadership and people of Jordan. It added that this latest development aid provision highlights the “strong relations between the UAE and Jordan, which are based on brotherhood, mutual interest and respect”. (WAM 28.12)

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5.6 Experimental Supply of Natural Gas by Noble Energy to Jordan Begins

Jordan’s National Electric Power Company (NEPCO) said that the experimental supply of natural gas by U.S.-based Noble Energy from Israel began on 1 January. The experimental pumping, which will last three months, is aimed at testing the infrastructure prior to the actual commercial supply. The gas supply is in line with an agreement signed between the two companies in 2016. Under the agreement, Noble Energy will provide gas worth $15 billion to the Hashemite Kingdom for a period of 15 years, or 300 million cubic feet on a daily basis. (Petra 01.01)

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5.7 Jordanian Expatriates’ Remittances in November Amount to $3.4 Billion

Remittances of Jordanian expats abroad in the month of November stood at some $3.4 billion, according to the Jordan Central Bank (JCB). Preliminary figures issued by the JCB show that remittances of Jordanian expats abroad had increased by 1.4% in November, compared with a 1.4% decline in the same month in 2018. (Petra 31.12)

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►►Arabian Gulf

5.8  Philippines Issues Ban on Domestic Workers in Kuwait

Filipino domestic workers have been banned from travelling to Kuwait. The ban came into force on 3 January, although it exempts skilled workers or Filipinos who are already working in the country. It comes following the death of domestic worker, a deceased Filipina housemaid who was brought to Sabah Hospital and contained bruises on various parts of her body. The housemaid’s sponsor admitted to police that his wife had beaten the Filipina until she fainted and died. There are currently around 200,000 Filipinos living in Kuwait.

Kuwait and the Philippines in May 2018 signed an agreement to regulate domestic workers, after a dispute between the two countries led to a ban on Filipino workers in the Gulf state. In February 2018, President Rodrigo Duterte imposed a partial ban on workers travelling to Kuwait after a Filipina maid was murdered and her body found in a freezer. (Various 05.01)

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5.9  Construction Starts on Network of Abu Dhabi and Al Ain Health Centers

Construction has started on the first of six primary healthcare centers across nine areas in the emirates of Abu Dhabi and Al Ain. They will be managed and operated by an Australian healthcare specialist, Aspen Medical, under a contract with the Department of Health, Abu Dhabi. The Abu Samrah Primary Health Clinic is due for completion in 2020, with further clinics being constructed in Al Wathba, Shakhbout City, Umm Ghaffa, Al Dhahra, and Al Salamat. The new health centers will help to fill areas of under-provision identified by the Department of Health, particularly in some rural areas.

The clinics will provide comprehensive services to the public, including general medicine and family medicine, chronic disease management, healthcare screening and prevention services, vaccinations and immunization, management of non-communicable diseases, management of communicable diseases, management of diagnostic services and an on-site pharmacy, WAM added. (WAM 03.01)

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5.10  Dubai Sets Aside $540 Million Reserve to Promote Expo 2020

The Dubai government has announced a special reserve of 3% of total expected expenditures in 2020 to support the objective of making Expo 2020 Dubai the world’s greatest show. The reserve of nearly AED2 billion ($544 million), a first for Dubai, is in accordance with the principle of preparing for the Expo 2020. The announcement came as Dubai ruler, Sheikh Mohammed bin Rashid Al Maktoum, also Vice President and Prime Minister of the UAE, approved a three-year budget cycle for the Government of Dubai for the 2020-2022 period. The three-year budget cycle forecasts total spending of AED196 billion.

For fiscal year 2020, Sheikh Mohammed signed off spending of AED66.4 billion, making it the biggest in Dubai’s history. The Government of Dubai estimates 2020 public revenues to reach AED64 billion, an increase of 25% year-on-year despite measures to reduce some fees and freeze the increase in other fees for three years. It said oil revenues account only for 6% of total projected revenues for the fiscal year 2020. Non-tax revenues account for 60% of total expected revenue. Tax revenues account for 29%, while revenues from government investment represent 5%.

Salary and wage allowances of the 2020 budget account for 30% of total government spending and the grant and support expenditure accounts for 24%, while the government has dedicated AED8 billion to develop infrastructure projects and prepare for future commitments. Spending on construction projects will make up 12% of government expenditure. Dubai will maintain a debt service rate of no more than 5% of its total expenditure in the fiscal year 2020. (AB 05.01)

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►►Arabian Gulf

5.11 UAE Reveals Plan to Launch New Five-Year Tourist Visa

On 6 January, the UAE announced a change to the country’s tourist visa system with its first multi-entry five-year visa. Sheikh Mohammed bin Rashid, the UAE’s Prime Minister and Vice President and Ruler of Dubai, said the visa had been approved at the UAE Cabinet’s first meeting of the year. Sheikh Mohammed said the visa would allow tourists multiple entries into the country over five years, without saying if there will be a visa application fee. At present, tourists can visit the UAE with a free multiple entry visa for up to 90 days from the date of entry. Sheikh Mohammed said the move aimed to establish the UAE as a major global tourism destination. The move comes as the total number of international tourists arriving to Dubai and Abu Dhabi rose to 15.88 million in the first nine months of last year, up from 15.26 million during the same period in 2018, according to UAE Central Bank statistics. (Various 06.01)

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5.12  Oman’s 2020 Budget Increases Spending to $34.4 Billion

Oman’s government expects to increase spending this year by 2% to 13.2 billion rials ($34.38 billion). The government also expects a deficit of 2.5 billion rials, or the equivalent of 8% of the gross domestic product (GDP). Some 80% of the deficit will be funded through external and domestic borrowing, while the remainder will be funded by drawing from reserves. Revenues are estimated at 10.7 billion rials, assuming an average oil price of $58 per barrel this year. (Various 01.01)

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5.13  Saudi Economy Contracts Marginally in Third Quarter as Oil Output Falls

The General Authority of Statistics announced that Saudi Arabia’s economy contracted marginally in the third quarter from a year earlier. Figures showed a 0.46% decline, driven by a drop in oil output. The data demonstrated that the oil sector output declined 6.43%, but non-oil output grew 4.33%, led by private sector activity. The Saudi government has cut its forecast for economic growth to 0.4% in 2019 from 0.9% while it expects real GDP growth at 2.3% in 2020.

The latest figures showed that mining and quarrying, which accounts for 38.2% of GDP, saw the biggest fall of 6.39% while petroleum and refining dropped 6.11%. Growth in the third quarter came from the wholesale and retail trade, and finance, insurance, real estate and business services. (GAS 31.12)

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5.14  Saudi Allows Businesses to Operate 24/7 from the First of January

On 30 December, Saudi Arabia announced that the business activities will be allowed to stay open 24/7 in the Kingdom from 1 January 2020. The fees for granting the firms a license to function 24/7 depending on the shop’s area and type of activity should not exceed SR100,000. The ministry has also said that cameras and surveillance systems will be installed so that the shops and establishments can be issued a license to function 24 hours a day. The decision comes after considering several factors including extending support to the private sector, enhancing life during night, especially with high temperatures during the summer.

Moreover, economists believe that the decision contributes to the multiplication of the movement of markets and stimulate interaction between citizens and residents and allow more freedom to exercise lifestyles for all. While Saudi Arabia is working to reduce the unemployment rate from 11.6% to 7% by expanding the empowerment of young people to work, supporting entrepreneurs, establishing large projects, increasing private sector participation and building partnerships, the decision will create new job opportunities for citizens. (KT 31.12)

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►►North Africa

5.15  Egypt’s Domestic Liquidity Increases by EGP 160.4 Billion

The Central Bank of Egypt (CBE) reported on 1 January that Egypt’s domestic liquidity increased by EGP 160.4 billion, to record EGP 4.024 trillion at an increasing rate of 4.2% in July-October of the 2019/2020 fiscal year (FY). The report stated that the increase in domestic liquidity was reflected in the growth of quasi-money that went up by EGP 130.5 billion at a rate of 4.4% and the rise in money supply by EGP 29.9 billion at a rate of 3.2%. The surge in quasi-money was the result of the rise in non-current deposits in local currency by EGP 176 billion at an average of 7.9%, and the decrease of deposits in foreign currency by EGP 45.5 billion at a rate of 6.4%, the CBE report said. The report attributed the increase in money supply to the rise in current deposits in local currency by EGP 15.4 billion, at an average of 3.5%.

Total bank deposits in Egypt increased by EGP 11 billion, reaching EGP 4.166 trillion in October, up from 4.155 trillion in September. According to the CBE report, government deposits ranged EGP 623.7 billion in October, compared with EGP 621.8 billion a month earlier. Government deposits in local currency stood at EGP 545.9 billion, and EGP 77.8 billion in foreign currency. Non-government deposits increased to EGP 3.542 trillion in October against EGP 3.533 trillion in the previous month, the report said. The total value of non-government deposits in local currency amounted to EGP 2.865 trillion by the end of October up from EGP 2.838 trillion by the end of September of 2019.

Of that total, the public enterprises sector had EGP 63.5 billion, the private sector EGP 384.5 billion and the household sector EGP 2.405 trillion. Non-government deposits in foreign currency in October reached EGP 677.3 billion, the report added. (CBE 01.01)

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5.16  Sudan Passes 2020 Budget with Expected Deficit of $1.62 Billion

Sudanese Finance Minister Elbadawi said on 29 December that Sudan has passed its 2020 budget, which includes an overall deficit of about $1.62 billion. The country’s ruling sovereign council and Cabinet agreed the budget – the country’s first since the toppling of longtime ruler Omar al-Bashir, whose final years in power were marked by deep economic woes. The budget has expected revenues of $12.63 billion and also includes increased spending for healthcare and education.

Sudan’s current government has made peacemaking with rebels fighting Khartoum one of its main priorities as it is a key condition for the country’s removal from the US list of sponsors of terrorism. That designation has left Sudan unable to tap the International Monetary Fund and World Bank for support. Sudan’s economy was hit hard when the south of the country seceded in 2011, costing it three-quarters of its oil output, a crucial source of foreign currency. Inflation soared in recent years, driven by rising food and beverage prices and compounded by a black market for US dollars.

The transitional government also studied a proposal to lift subsidies in 2020, but Information Minister Faisal Saleh said it ultimately decided to postpone the proposal until at least March when the country plans to hold an economic forum. (Various 30.12)

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►►North Africa

5.17  UAE Makes a $15 Million Pledge to Improve Sudan Education System

The UAE has announced a AED55 million ($15 million) pledge to provide school supplies to support 400,000 students in Sudan. The aid, provided by Abu Dhabi Fund for Development (ADFD) covers educational necessities, including classroom equipment. ADFD, in cooperation with the Sudanese government, supervised the delivery of the first shipment of school supplies that covers the needs of 10,000 students. All educational shipments are expected to arrive in Sudan by the end of February 2020. The school supplies support package falls within the framework of the AED11 billion ($3 billion) Saudi Arabia-UAE joint aid package aimed at supporting Sudan’s economic and financial stability.

As part of the package, Saudi Arabia and the UAE deposited a financial allocation of $500 million into the Central Bank of Sudan earlier this year to strengthen its financial position. The UAE and Saudi Arabia have also dispatched 540,000 tonnes of wheat worth $150 million to enhance food security in Sudan over a three-month period. The remainder of the aid package has been allocated to meet the urgent needs of the Sudanese population for medicine, petroleum derivatives, and seasonal agricultural supplies. (WAM 03.010

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5.18 Morocco to Receive New Batch of AMRAAM Missiles from the US

Raytheon has signed a $768,283,907 non-competitive fixed-price incentive (firm) contract for the production of AMRAAM missiles and other equipment as part of an unclassified foreign military sales contract, which includes Morocco as one of its recipients. Qatar, Romania, Denmark, Japan, Kuwait and South Korea are also among the recipients. Raytheon produces military equipment including captive air training missiles, guidance sections, the AMRAAM telemetry system and spare parts in Arizona. Raytheon expects the project to complete in February 2023.

The new military equipment comes as part of a series of military deals concluded between the US and Morocco. The military deals seek to develop Morocco royal armed forces and to enhance its military packages.

Historically, Morocco has received several batches of arms and tanks from the US. The US is Morocco’s largest supplier. Morocco’s arms deal with the US this year includes the sale of $3.8 billion worth of 25 F-16 aircraft and associated equipment in March. The US also upgraded Morocco’s existing fleet of F-16 fighter jets for a cost of $985 million. In November, the US State Department approved the sale of 36 AH-64E Apache attack helicopters and related equipment to Morocco for an estimated cost of $4.25 billion. Indeed, Morocco has surpassed Saudi Arabia in US arms acquisitions, which totaled $10.3 billion in 2019 alone. (MWN 30.12)

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5.19 Moroccan Rail Company ONCF Gets First Electric Engine

On 27 December, Morocco’s National Office of Railways (ONCF) received its first electric engine. ONCF will use the new engine on its routes from Casablanca to Fez and from Casablanca to Marrakech. The locomotive can reach speeds of 160 kilometers per hour. ONCF ordered 30 new electric engines for approximately MAD 1.5 billion ($157 million) from international train manufacturer Alstom and expects to receive two or three engines per month in the coming months. The national rail company received a 40-year loan at a favorable interest rate of 0.0016% from the French government to purchase the new locomotives. The loan includes a grace period of 10 years.

The engines will be able to transport loads of cars from the PSA Group’s factory in Kenitra, north of Rabat, to the major port of Tangier Med. ONCF explained that the electric engines will be put to use carrying containers from Tangier Med to Casablanca. ONCF also has plans for future acquisitions of self-propelled trains and notes increased demand for its transportation services in its press release.

In 2018, the rail company had 585 passenger cars and 5,498 freight cars. ONCF also completed multiple projects in 2018 to increase capacity, adding more tracks in Casablanca to free up space in overloaded stations, adding a second track from Casablanca to Marrakech, and tripling the Casablanca-Kenitra tracks. Alstom has a manufacturing facility in Fez and an office in Casablanca. (MWN 01.01)

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5.20 Foreign Currency Limit for Moroccan Tourists Hits MAD 200,000

The Moroccan Office of Change has unveiled a series of new measures set to liberalize and facilitate currency exchange operations for Moroccans. The MAD 45,000 foreign currency limit for Moroccan tourists leaving the country can now increase by the equivalent of 25% of income tax, instead of 10%. Its limit has also increased to MAD 200,000 instead of MAD 100,000.

Moroccan banks now have the possibility of opening an account for Moroccan residents with an income from a foreign source, without being recorded on the commercial register. They can also open accounts in a foreign currency or in convertible dirhams, allowing for the payment of expenses abroad. Another significant change is that Moroccans who previously lived abroad or held accounts outside the country who have transferred their fiscal residency to Morocco can now make transfers for the settlement of real estate fees and loan maturities, up to a limit of 5% of the acquisition value of these goods. Finally, the electronic commerce limit, previously fixed at MAD 10,000 per individual per year, is now set at MAD 15,000. This allocation allows for online purchases. (MWN 01.01)

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6:  TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1  Turkey Boosts its Indigenous Defense Sector in 2019

Turkey took significant steps towards developing an indigenous defense sector in 2019, stepping up efforts to meet targets set by Turkish President Erdogan for 2023. Turkish aircraft manufacturer Baykar, a company that has played a critical role in making Turkey an emerging drone power, successfully tested its first Unmanned Combat Aerial Vehicle (UCAV) in December. The new vehicle will make Turkey one of only four countries in the world able to produce UCAVs.

Meanwhile, Turkish Aerospace Industries (TAI) tested its Aksungur UAV. The Turkish military also received this year TAI’s Anka-S model UAVs, controllable via satellite. The company has been working to develop Turkey’s first fighter jet TF-X, a project which has become more crucial after the United States halted delivery of F-35 stealth fighters to Turkey over Ankara’s decision to acquire Russian S-400 missile defense systems.

TAI delivered its new Atak-type multi-role combat helicopters and a number of Atak helicopters, with 55 now serving in the armed forces. The firm also successfully completed tests for the second phase of the Atak helicopter, while its multi-role utility helicopter, Gokbey made its first certification flight in July.

Turkey started receiving shipments of Russian S-400 components in July and the first S-400 battery is expected to be fully installed in the first quarter of 2020. The country also completed tests of its first air-to-air missiles this year. Turkey initiated the MILGEM (National Ship) project in 2000 to locally design and build a fleet of multipurpose corvettes and frigates. The project’s fourth vessel, TCG Kinaliada, a corvette-type warship, became operational this year and works for building a fifth vessel were started. Turkey’s largest warship, TCG Anadolu, is also expected to come into the service in 2020. (Ahval 31.12)

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6.2 Turkey Hit by Significant Price Hikes During 2019

Turkish consumers were hit by a series of food and energy price rises in 2019. The cost of food jumped more than 42% annually while Turkish authorities hiked petrol prices for 15 times and petrol rates for residential consumers went up by 20%. The price hikes helped to push overall inflation to over 20% and prompted the government to intensify a crackdown on who it accuses of increasing prices unfairly.

Following a currency crises in August 2018, the Turkish government has tried to curb rising prices to help reinvigorate consumer spending and encourage banks to reduce interest rates on loans. The authorities have since opened food banks in major cities selling cheap, rationed produce and intensified scrutiny of companies’ pricing policies. Many supermarkets have reduced the price of key products but limited the amount people can buy. (Bold 01.01)

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6.3  Turkey’s Foreign Trade Deficit Reaches $2.23 Billion in November 2019

Turkey’s foreign trade deficit reached to $2.23 billion in November, according to TUIK on 31 December. The figure rose by 232.2% on an annual basis last month. Turkish exports went up marginally 0.1% to $15.5 billion, while imports rose 9.7% to $17.7 billion in the same period. The exports-to-imports coverage ratio fell to 87.4% in November 2019, while it was 95.8% in the same month last year. (TUIK 31.12)

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6.4  Over 280 Turkish Farmers Applied for Cannabis Farming Since 2018

A total of 283 farmers have applied for cannabis farming in Turkey in the past two years as the country looks to promote industrial cannabis production, according to the Ministry of Agriculture and Forestry. In 2018, 41 farmers applied for cannabis farming on 1.6 million square meters of farmland and in 2019, 242 farmers sought cannabis farming over land spanning 10 million square meters. The Ministry has initiated a project for the farming of cannabis with a low rate of psychoactive compounds and is expected to register the seeds for the project over the next two years.

The ministry is working with the General Directorate of Agricultural Enterprises (TİGEM) to reproduce seeds obtained from local populations and thus avoid having to import them. Recreational use of cannabis in Turkey is illegal, but the country has legalized limited medical cannabis production and use. (DS 01.01)

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6.5  Turkey to Begin Mass Production of Domestic Cars in 2022

Turkey is in the prototype production stage of its first indigenous car, whose mass production will begin in 2022. Interest in the national car is running high and procedure for pre-orders will be set up soon. They are at the stage of producing 100-150 prototypes to be tested. At the beginning of 2022, the factory will start mass production. Turkey last month unveiled the first prototypes of a series of locally made cars to be assembled with an investment of $3.7 billion.

The first car to be produced will be a C-class SUV, according to information the website of the Automobile Joint Venture Group (TOGG), who has taken on the project. It was designed by Italy’s Pininfarina. Turkey will guarantee the purchase of 30,000 units of the landmark vehicle by 2035. (Anadolu 06.01)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Ultra-Orthodox Women Power Rises in Sector’s Standard of Living

An Israel Democracy Institute (IDI) report found that ultra-Orthodox (Haredi) women are more inclined to pursue higher education and integrate into the workforce and are therefore a broad change in the standard of living in the Haredi sector as a whole. The report showed that while the integration of ultra-Orthodox men into the workforce and academic institutions remains sluggish, Haredi women are doing far better on both fronts. This has resulted in an increase in the income of Haredi families, as shown by more vacations in Israel and abroad, a considerable rise in car ownership.

The researchers noted that the process of integration of Haredi households continues, shown both by employment and income levels of women and by partial adoption of middle-class lifestyle characteristics. The integration of Haredi men, however, particularly as far as employment and academic studies are concerned, has come to a halt, apparently because of an absence of economic incentives.

According to the IDI, in 2017, the average gross monthly income of Haredi households grew by 10% to over NIS 15,000 ($4,314). This compares with a rise of just 5% for non-Haredi households. Primarily, there was a substantial fall in the rate of poverty as measured by per capita income, from 52% in 2013 to 43% in 2017. This is still severe, but the trend of improvement is dramatic.

The report noted that most Haredi girls receive their high-school education in religious seminaries and there is a steady rise in matriculation rates – from 31% in the 2008/9 school year to 51% in 2016/7. There is also a growing number of Haredi women who pursue higher education and in the past decade, the number of Haredi women, studying for academic degrees has more than doubled to 8,400 (70%) of all Haredi students in the 2018/19 academic year. (Israel Hayom 26.12)

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7.2 Israel’s Population Reaches 9.14 Million on Eve of 2020

The Central Bureau of Statistics announced that Israel’s population grew by 1.9% over the past year to 9.14 million, whereby 6.772 million (74.1%) of Israel’s citizens are Jewish, 1.916 million (21%) Arabs and 448,000 (21%) others including Russian-speaking immigrants who are not Jewish. 78% of the population growth in 2019 was attributable to births and 22% to immigration. During the year 177,000 babies were born and 34,000 immigrants came to Israel. (CBS 01.01)

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*REGIONAL:

7.3 AURAK Signs Extra Cooperation Agreement with Appalachian State University

The American University of Ras Al Khaimah (AURAK) and Appalachian State University in the United States have signed an addendum to a previous agreement to expand their cooperation. AURAK and Appalachian State University will establish a 3+1 Student Transfer Program (TSP). After successfully completing the first three years of an undergraduate curriculum for a Bachelor’s degree in Business with a major in Hospitality Management at AURAK, qualified students will be accepted into the Walker College of Business’s Department of Management to pursue Hospitality Management courses. Under the TSP, students will study for one year at Appalachian State University and complete required Hospitality Management courses to qualify for their Bachelor’s degree in Management awarded by AURAK. The agreement is to be valid for a period of five years. AURAK and Appalachian State University have been cooperating for several years.

Appalachian State University offers a challenging academic environment and energetic campus life. Known for its affordability, Appalachian enrolls about 18,000 students and offers more than 150 undergraduate and graduate majors. Small classes and close interactions between faculty and students create a strong sense of community. Appalachian, located in Boone, North Carolina, is one of 16 universities in the University of North Carolina system.

AURAK is a nonprofit, government-owned institution of higher education which provides the local, regional and international communities with a North American-style education integrated with Arab customs and traditions. (AURAK 07.01)

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7.4 Egypt Launches Health Campaign for Pregnant Women

A new health campaign focusing on pregnant women in Egypt will be launched this January, aiming to detect and treat diseases in pregnant mothers to prevent their transmission to unborn babies. In light of the strategies adopted by the Ministry of Health and Population, particularly in regards to the current steps in improving the health insurance system, advance professional medical education and train cadres, the initiative will be part of the new phase of the comprehensive health insurance system to ensure that services and healthcare to citizens is provided in accordance with international standards. The new initiative, focused on the “health of pregnant women,” will detect and treat diseases of the mother and prevent its transmission to the fetus, taking into account the health and safety of both lives.

Improving maternal health plays a significant role in saving the lives of more than half a million women who die as a result of pregnancy and childbirth each year. A majority of these deaths could have been prevented if women access to adequate diets, safe water and sanitation facilities, basic literacy and health services during pregnancy and childbirth. (ES 30.12)

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7.5 More Than 400,000 Moroccan Students Dropped Out of School in 2018

A recent report from Morocco’s Higher Council for Education, Training and Scientific Research (CSEFRS) published alarming figures exposing the rate of school drop out in the country. The report, “Atlas Territorial School Drop Out,” said that 431,876 students dropped out of public schools in 2018 “without obtaining school certificates.” The number represents 78% of students who had studied at primary and secondary schools. Several factors are behind the shocking rate including poverty, and quality of access to education establishments in rural areas.

The report emphasized that dropouts from the public school system amounted to 505,300 students in 2015. The number represents a rate of 8.8% at the national level. The number of dropouts, however, decreased significantly in 2016. The document indicates that only 407,674 dropped out in 2016 (7.1% of all students enrolled). A year later, the number of dropouts increased again in 2018 to reach 431,876 students, representing 7.4% of all students. The majority of these dropouts happen at the level of statutory education, with 78.3% of total dropouts, or about 338,000 dropouts in both the primary and secondary school.

The dropout rate affects 5.6% of girls in primary school compared to 4% of boys. Boys are more affected by dropping out of middle and high schools in rural areas. (MWN 01.01)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Augmedics Announces FDA 510K Clearance and U.S. Launch of xvision

Augmedics announced the U.S. (FDA) 510(k) clearance and the U.S. launch of its groundbreaking xvision Spine system (XVS), the first AR guidance system to be used in surgery. xvision Spine allows surgeons to visualize the 3D spinal anatomy of a patient during surgery as if they had “x-ray vision,” and to accurately navigate instruments and implants while looking directly at the patient, rather than a remote screen.

The xvision consists of a transparent near-eye-display headset and all elements of a traditional navigation system. It accurately determines the position of surgical tools, in real time, and a virtual trajectory is then superimposed on the patient’s CT data. The 3D navigation data is then projected onto the surgeon’s retina using the headset, allowing them to simultaneously look at the patient and see the navigation data without averting his or her eyes to a remote screen during the procedure. The system is designed to revolutionize how surgery is done by giving the surgeon better control and visualization, which may lead to easier, faster and safer surgeries.

xvision is now available for sale in the United States, with headset distribution expected to begin in early 2020. Augmedics plans to explore additional surgical applications for xvision beyond spinal surgery. The system’s small footprint, economical cost and compatibility with current instrumentation is designed to allow easy integration into any surgical facility nationwide.

Yokneam’s Augmedics aims to improve healthcare by augmenting surgery with cutting edge technologies that solve unmet clinical needs and instill technological confidence in the surgical workflow. Its pioneering xvision system, the first augmented reality guidance system for surgery, allows surgeons to “see” the patient’s anatomy through skin and tissue as if they have “x-ray vision,” and to accurately navigate instruments and implants during spine procedures. Augmedics is backed by Terra Venture Partners and AO Invest, a venture arm of the AO Foundation. (Augmedics 23.12)

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8.2 Check-Cap Announces Positive Results from U.S. Pilot Study of C-Scan® System

Check-Cap announced positive results from the Company’s pilot study of the C-Scan System in the U.S. The prospective, multi-center, open label, single arm study was designed to evaluate the safety, usability and subject compliance of the C-Scan System. The study was performed at two sites, the NYU Grossman School of Medicine and Mayo Clinic, Rochester. The primary endpoint of the study was to evaluate the incidence of device or procedure related serious adverse events. Secondary endpoints included patient compliance, subject satisfaction and device and procedure related performance. Due to sample size, the study was not designed to be powered for statistical significance.

Usfiya’s Check-Cap is advancing the development of the C-Scan® System, the first and only preparation-free ingestible scanning capsule-based system for the prevention of colorectal cancer (CRC) through the detection of precancerous polyps. The patient-friendly test has the potential to increase screening adherence and reduce the overall incidence of CRC. The C-Scan System utilizes an ultra-low dose X-ray capsule, an integrated positioning, control, and recording system, as well as proprietary software to generate a 3D map of the inner lining of the colon. (Check-Cap 30.12)

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8.3 Sol-Gel Positive Trial Results of Twyneo for the Treatment of Acne Vulgaris

Sol-Gel Technologies announced top-line results from two pivotal Phase 3 clinical trials for Twyneo, an investigational, combination of microencapsulated tretinoin 0.1% and microencapsulated benzoyl peroxide 3% cream, which demonstrated statistically significant improvement on all co-primary endpoints in the treatment of patients with acne vulgaris. Twyneo was also found to be well-tolerated.

If approved, Twyneo has the potential to be the first acne vulgaris treatment to bring together benzoyl peroxide and a potent retinoid, tretinoin, in a once-daily cream – enabled using the Company’s proprietary microencapsulation technology. Twyneo is an investigational, antibiotic-free, fixed-dose combination of microencapsulated tretinoin 0.1% and microencapsulated benzoyl peroxide 3% cream. Benzoyl peroxide and tretinoin are widely prescribed and considered to be highly effective in the treatment for acne vulgaris; however, benzoyl peroxide causes degradation of the tretinoin, thereby reducing its effectiveness.

Nes Ziona’s Sol-Gel is a clinical-stage dermatology company focused on identifying, developing and commercializing branded and generic topical drug products for the treatment of skin diseases. In addition to Twyneo, Sol-Gel’s current branded product candidate pipeline consists of Epsolay®, a late-stage branded product candidate for the treatment of papulopustular rosacea that also leverages – the proprietary microencapsulation technology platform, and SGT-210, a topical epidermal growth factor receptor inhibitor for the treatment of punctate palmoplantar keratoderma type I. (Sol-Gel Technologies 30.12)

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8.4 Microbot Medical Unveils First Fully Disposable Robotic System for Endovascular Procedures

Microbot Medical revealed LIBERTY, the world’s first fully disposable robotic system for use in neurovascular, cardiovascular and peripheral vascular procedures. The LIBERTY robotic system features a unique compact design with the capability to be operated remotely, reduce radiation exposure and physical strain to the physician, as well as the potential to eliminate the use of multiple consumables through its “One & Done” capabilities. LIBERTY is set to revolutionize the way surgical robotics are being used in endovascular procedures, by eliminating the need for capital equipment, reducing radiation exposure and aiming to streamline the use of disposables.

Caesarea’s Microbot Medical is a pre-clinical medical device company that specializes in transformational micro-robotic technologies, focused primarily on both natural and artificial lumens within the human body. Microbot’s current proprietary technological platforms provide the foundation for the development of a Multi Generation Pipeline Portfolio (MGPP). (Microbot Medical 23.12)

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8.5 Yeda and Deerfield Create Orchard Innovations

Yeda Research and Development Co., the commercial arm of the Weizmann Institute of Science, and New York’s Deerfield Management Company, a healthcare investment firm, announced the development of an extensive translational research initiative. The research collaboration, Deerfield’s first outside the USA, is expected to catalyze the development of transformative treatments toward clinical validation for cures for diseases and improved quality of life. Up to $130 million of initial funding will be made available by Deerfield to support the initiative over 10 years through a newly launched company called Orchard Innovations, LLC. Deerfield will additionally provide its operational, managerial and developmental know-how to further cutting-edge drug research spanning a range of areas in medicine, including difficult-to-treat and rare illnesses.

Orchard Innovations, a private company wholly owned by affiliates of Deerfield, will support R&D projects out of the Weizmann Institute of Science throughout various stages of drug exploration and advancement. Starting early 2020, Yeda will submit proposals on projects for consideration by a committee comprising scientific leadership representing the Weizmann Institute of Science, Yeda and Deerfield. Under the terms of the agreement, Orchard Innovations would receive a license to intellectual property developed under Deerfield-supported projects at the Weizmann Institute of Science.

The Weizmann Institute of Science in Rehovot, Israel, is one of the world’s top-ranking multidisciplinary research institutions. Noted for its wide-ranging exploration of the natural and exact sciences, the Institute is home to scientists, students, technicians and supporting staff.

Yeda Research and Development Company is the commercial arm of the Weizmann Institute of Science. Yeda currently manages approximately 500 unique patent families and has generated the highest income per researcher compared to any other academic technology transfer operation worldwide. (Yeda 06.01)

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8.6 New Data Shows Can-Fite’s Namodenoson Induces Weight Loss

Can-Fite BioPharma announced pre-clinical data generated at the Hadassah Medical Center demonstrate that Namodenoson induces weight loss in experimental models and normalizes glucose levels. New pre-clinical studies of Namodenoson showed a significant decrease in weight in both high fat diet mouse models and in diabetic rat models. Moreover, Namodenoson normalized glucose levels in a glucose tolerance test (GTT). Based on these findings, a PCT patent application has been filed through the World Intellectual Property Organization (WIPO) for the utilization of Namodenoson as an anti-obesity drug.

Can-Fite completed enrollment in its Phase II study of Namodenoson in patients with NAFLD with or without NASH, with evidence of active inflammation. The primary endpoint of the study is serum ALT levels, with a secondary endpoint of percentage change in liver fat, as measured by PDFF (proton density fat fraction). The Company expects to release data from the Phase II NAFLD/NASH study of Namodenoson during Q1/20.

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 03.01)

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8.7 Vayyar HOME Gives Any Facility a Health Monitoring System Without the Need for Wearables

Vayyar Imaging announced Vayyar HOME. Vayyar HOME expands upon Walabot HOME’s award-winning fall detection product, to offer a holistic, health and safety solution. Vayyar HOME’s technology requires no wearables or buttons and works without the use of any camera. Vayyar HOME keeps you safe, detecting falls and identifying intruders and in case of an emergency, gets you help. Vayyar HOME’s upcoming health features include monitoring activity, sleep and breathing, sending an alarm in case an anomaly is detected. See a short video of how it works here.

Vayyar’s intelligent sensors monitor location, posture as well as vital signs, enabling behavioral monitoring such as time spent at rest, in and out of bed, nocturnal roaming, and restroom visits. Trends are detected, allowing for pre-emptive predictions of health conditions such as UTI, dementia and disorders like sleep apnea and psychological ailments including loneliness.

In addition to new features, Vayyar HOME will be available in a new miniature 3.5-inch form factor that provides an extended range at an affordable price. Once placed on the wall, it automatically scans the environment monitoring health and safety. Information can be displayed on a real-time dashboard tracking activity throughout a facility, providing simultaneous visibility of location, activity levels and vital signs for multiple people.

Yehud’s Vayyar Imaging is a global leader in 4D radar imaging technology, providing affordable, highly advanced sensors to a wide variety of industries. With applications in the automotive, smart home, robotics, retail, RF testing and medical sectors, Vayyar’s intelligent sensors can see through walls and objects, map environments, and track movements in real-time. (Vayyar Imaging 06.01)

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8.8 IceCure Receives FDA Clearance for Expanded Indications of Cryoablation Technology

Following the additional U.S. FDA clearance for its Cryoablation Technology, IceCure Medical plans to significantly extend its U.S. operations in target markets for indications with existing CPT codes and reimbursement. The new FDA clearance will enable the Company to market its solution for the treatment of cancerous and benign tumors of the Kidney; Liver; Ear, Nose and Throat (ENT); and further neurology indications.

The new 510K clearance broadens IceCure’s previous general FDA approval, and allows the Company to market, advertise and sell its advanced non-surgical cryoablation products for the treatment of new specific indications. This is particularly beneficial for the treatment of kidney and liver tumors where there is already existing CPT codes and reimbursement. Additionally, the approval includes clearance for its new MultiSense system, which will allow treatment with three needles in unison. Not only does this help to reduce the length of procedures, it will also be highly advantageous in improving the treatment of multiple tumors as well as for larger masses. The general approval previously given to its IceSense3 system enabled one needle treatment that was ideal for small tumor masses. The new approval given relates to all of the company’s cryoablation systems (IceSense3™, ProSense™ and MultiSense), including its accompanying products (needles and accessories) and software updates.

Founded in 2006, Caesarea’s IceCure Medical is a medical device company that develops and markets an advanced liquid-nitrogen-based cryoablation therapy for women’s health and the interventional oncology market, with the primary focus areas being breast, kidney and lung cancer. Its technology is a safe, effective, non-invasive alternative to surgical tumor removal that is easily performed in a short procedure. (IceCure Medical 07.01)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Eyesight Technologies Awarded First Place in 2019 GGAI Golden Globe Awards

Eyesight Technologies was awarded first place at the 2019 China GGAI Golden Globe Awards. The company won the top prize for the “Outstanding Driver Monitoring System (DMS)” category with more than 120,000 voters participating in the selection process. The GGAI Golden Globe Award recognizes leading companies who have made outstanding achievements and contributions in the field of intelligent network commercialization in the Chinese market. It is awarded based on a number of factors such as product reputation, market share in respective fields, and OEM-oriented research results. GGAI firmly believes that 2020 will be the turning point of China’s intelligent connected car industry chain, whether it is policy promotion, technology implementation, product mass production, and intelligent network penetration will enter a new stage.

Eyesight Technologies’ top finish at the GGAI Awards adds to its many accomplishments over the past year, including numerous design wins with leading Tier 1s and OEMs in top markets such as the US, China, and Europe.

Herzliya Pituah’s Eyesight Technologies is a leader in creating intelligent sensing solutions that use computer vision and AI for safer and better driving experiences. The company focuses on the automotive in-cabin environment, offering Driver Sense – driver monitoring system, Cabin Sense – occupancy monitoring systems and Fleet Sense – a driver monitoring aftermarket solution for fleets. Over a decade of research and development stand behind the company’s market-leading computer vision technology, with 30 patents and many more pending. (Eyesight Technologies 30.12)

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9.2 Pcysys PenTera Selected by Yigal Arnon & Co. Law Firm for 1-Click Penetration Testing

Pcysys announced that its Automated Penetration Testing platform, PenTera™, has been chosen by Yigal Arnon & Co. law firm and has been in use for over a year. The platform serves to assess and improve the firm’s IT infrastructure resilience on a weekly basis. Yigal Arnon & Co. is a leading Israeli law firm, known for its unparalleled experience in the technology sector.

The PenTera platform scans and ethically hacks the corporate network with the latest techniques, prioritizing remediation efforts based on a threat-facing perspective. The platform enables corporates to focus their resources on remediating vulnerabilities that take part in a potentially damaging “kill chain” or validated attack vectors. With PenTera, an enterprise can maintain the highest resilience posture by performing penetration tests as frequently as needed – daily, weekly or monthly.

Petah Tikva’s Pcysys delivers PenTera is an automated penetration-testing platform that assesses and reduces corporate cybersecurity risk. By applying the hacker’s perspective, our software identifies, analyzes and prioritizes remediation of cyber defense vulnerabilities. Hundreds of security professionals and service providers around the world use PenTera to perform continuous machine-based penetration tests that improve their immunity against cyber-attacks across their organization networks. (Pcysys 26.12)

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9.3 Mitsubishi & Otonomo to Deliver Connected Car Applications to Benefit Drivers and Cities

Otonomo has entered into a commercial agreement with Mitsubishi Motors on an initiative to provide Mitsubishi Motors’ connected car customers with exciting new services while adhering to international data privacy regulations. According to the commercial agreement, Mitsubishi Motors will integrate with the Otonomo platform so that its vehicles can seamlessly share data with third party services and application providers – such as smart electric vehicle charging, parking, safety, concierge services, preventative maintenance and mapping.

Mitsubishi Motors will join Otonomo’s growing base of automotive OEMs who are already directly connecting vehicle data sources to the Otonomo platform. This joint initiative will leverage Mitsubishi Motors’ data assets to consistently enhance customer experience, with a growing ecosystem of over 100 partners. The joint initiative will be rolled out in the US and Europe throughout 2020 and beyond and will offer benefits to Mitsubishi Motors’ drivers. By using the Otonomo Platform, the companies ensure compliance with international privacy regulations like GDPR. The Otonomo platform will also enable Mitsubishi Motors to make aggregate connected car data available for applications that benefit society by making smart cities smarter, improving roads safety and traffic flow, and reducing congestion and associated emissions.

Herzliya Pituah’s Otonomo‘s Automotive Data Services Platform fuels an ecosystem of OEMs, fleets and more than 100 service providers. Their neutral platform securely ingests more than 2 billion data points per day from over 18 million global connected vehicles, then reshapes and enriches it, to accelerate time to market for new services that delight drivers. Privacy by design is at the core of our platform, which enables GDPR, CCPA and other privacy-regulation-compliant solutions using both personal and aggregate data. (Otonomo 06.01)

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9.4 Foresight Announces Major New Technological Features for QuadSight Vision System

Foresight Autonomous Holdings has developed significant advanced features for its four-camera QuadSight vision system. The new features were developed to meet customer requirements following successful evaluation of several QuadSight system prototypes purchased over the past year. These capabilities will significantly improve the QuadSight system’s performance in accurately measuring obstacle size, location and distance, even in harsh lighting and weather conditions. The QuadSight system’s new features include automatic calibration, 3D point cloud and multispectral sensor fusion.

Foresight has developed a proprietary solution known as automatic calibration which uses unique algorithms to successfully assess relative pose estimations. Automatic calibration is fundamental for creating an accurate stereoscopic 3D perception while ensuring system robustness.

Point cloud is a set of data points which generates accurate pixel location and distance for complete 3D mapping. QuadSight is the only sensor which generates an infrared-based point cloud. Foresight’s technology generates a high-resolution depth map which is converted to a high-resolution 3D point cloud; this provides accurate information on the vehicle’s surroundings including the location and distance of any object in the field of view.

The QuadSight system combines two channels which consist of stereo visible-light cameras and stereo long-wave infrared thermal cameras to provide accurate obstacle detection in harsh lighting and weather conditions.

Ness Ziona’s Foresight Autonomous Holdings, founded in 2015, is a technology company engaged in the design, development and commercialization of sensor systems for the automotive industry. Through the company’s wholly owned subsidiaries, Foresight Automotive Ltd. and Eye-Net Mobile Ltd., Foresight develops both “in-line-of-sight” vision systems and “beyond-line-of-sight” cellular-based applications. Foresight’s vision sensor is a four-camera system based on 3D video analysis, advanced algorithms for image processing, and sensor fusion. Eye-Net Mobile’s cellular-based application is a V2X (vehicle-to-everything) accident prevention solution based on real-time spatial analysis of clients’ movement. (Foresight Autonomous Holdings 06.01)

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9.5 Jungo and Qualcomm to Deliver Next-Generation Driver and In-Cabin Monitoring Systems

Jungo Connectivity announced plans to work its collaboration with Qualcomm Technologies to feature Jungo’s next-generation Driver Monitoring System (DMS) and In-Cabin Monitoring (ICM) AI software onto 3rd generation Qualcomm Snapdragon Automotive Cockpit Platforms. As a part of the working relationship, Jungo’s CoDriver DMS/ICM AI software will leverage the compute capabilities featured on the Snapdragon Automotive Cockpit Platforms to deliver a compelling platform.

This joint effort allows automotive OEM and Tier1 suppliers to quickly add DMS and ICM functionality into their infotainment or other automotive systems based on Snapdragon, alongside other applications such as infotainment, mapping, surround view and personal assistants, accelerating production timeframes, lowering costs and allowing for the seamless integration with world class DMS and ICM software. Multiple OEMs already selected the integrated solution for various production deals, with SOP starting 2021.

Netanya’s Jungo is a global leader of in-cabin sensing AI software, offering CoDriver, an advanced driver monitoring and in-cabin monitoring software. Additional products from Jungo include its infotainment multimedia and connectivity software, which has been deployed millions of cars to-date. (Jungo 06.01)

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9.6 UVeye to Unveil Industry-Leading Vehicle-Inspection Technology

UVeye plans to unveil an industry-leading vehicle-inspection system based on deep-learning technology that can identify even the smallest exterior defects on any vehicle within seconds. The company’s Atlas 360-degree quality-control system uses multiple high-resolution cameras to capture exterior assembly defects, post-production damage, missing components and other quality-related issues. Atlas generates thousands of images per second at multiple angles to detect scratches or dents as small as two millimeters in diameter.

The company recently announced that one of its Atlas assembly-line inspection systems will be installed at a major Volvo assembly plant in Sweden next year. The company’s proprietary algorithms, cloud architecture, sensor fusion, artificial intelligence and machine-learning technologies allow it to automatically check vehicle chassis components, suspension systems, sheet metal and tires within seconds. UVeye’s deep-learning technology was initially developed for the security industry to detect weapons, explosives, illegal drugs and other contraband. Its inspection systems today are deployed at hundreds of high-security locations throughout the world and have generated millions of vehicle scans.

UVeye’s deep-learning-driven “Inspection as a Service” unified platform provides an objective, scalable and efficient standard practice for identifying issues in vehicles as they move throughout the Automotive Lifecycle. UVeye’s anomaly detection and alerting solutions offer support from a manufacturer’s paint shop or assembly line to the automotive aftermarket with insurance providers, fleet managers, rental agencies, dealerships and more. UVeye has headquarters in Tel Aviv, Israel, and Stamford, Connecticut. (UVeye 02.01)

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9.7 PenTera Selected by Sweden’s Skanska to Automate Cyber Security Validation

Pcysys announced that Sweden’s Skanska, the leading global Project Management and Construction Group, has chosen Pcysys’ Automated Penetration Testing platform, PenTera™, to automate its cyber security validation efforts. As a global construction and development group, Skanska places employee and customer cybersecurity at its forefront. The visibility PenTera provides to the IT infrastructure, aligns completely with its ongoing efforts by continuously improving the organization’s cyber posture.

The PenTera platform scans and ethically penetrates the network with the latest hacking techniques, prioritizing remediation efforts with a threat-facing perspective. With PenTera, a company can maintain the highest resilience posture by performing penetration tests as frequently as needed – daily, weekly or monthly. The platform covers the scope of vulnerability assessment, security controls, credential strength validation, network equipment testing, and privileged access audits, eliminating the need to maintain separate tools.

Petah Tikva’s Pcysys delivers PenTera, an automated penetration-testing platform that assesses and reduces corporate cybersecurity risk. By applying the hacker’s perspective, their software identifies, analyzes and prioritizes remediation of cyber defense vulnerabilities. Hundreds of security professionals and service providers around the world use PenTera to perform continuous machine-based penetration tests that improve their immunity against cyberattacks across their organization networks. (Pcysys 02.01)

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9.8 Noveto Systems to Unleash a Sound Solution Game Changer

Noveto is releasing the first part of its Chipset, driving Noveto Smart Audio®, the world’s first dynamic focused sound solution, enabling to precisely generate sound to the users’ ears. This marks another milestone in Noveto’s engineering phase with an aim to be mass produced by 2021 either embedded by third parties or as a stand-alone peripheral sound bar. Noveto has partnered up with Foxconn, the Global leader of advanced manufacturing to give its disruptive technology a life.

Noveto Smart Audio® technology could be easily embedded in leading consumer electronics devices be it Personal Assistants (be it by Amazon or Google), Smart TVs (such as by Samsung, Xiaomi), Monitors and Displays (such as Dell, HP), PCs & AIO (be it Lenovo, Dell, HP or others), Conference Call solutions (such as Poly’s or Yamaha’s) or any other appliance generating audio to the user.
Noveto is also becoming active in the world of digital signage, bringing sound to a market which until now was sound silent. Noveto Smart Audio® proprietary smart algorithm, sophisticated beamforming technic, face detection, tracking capabilities and state of the art DSP engines, enables it to locate the position of the user’s ears in space and beam acoustic energy to create tiny sound bubbles next to the user’s ears. When the user’s head is moving the sound bubbles will dynamically follow the user.

Petah Tikva’s Noveto‘s technology enables sound to be dynamically steered and focused. Hence, each user in a confined space (be it a living room, conference room, vehicle or any public space) can experience hers/his own audio content without using isolating headphones or sound polluting traditional audio speakers. Noveto Smart Audio® reduces the sound pollution by 90%. (Noveto Systems 02.01)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Economy Grew by an Estimated 3.3% in 2019

On 31 December, the Central Bureau of Statistics announced that in its preliminary estimate, the Israeli economy grew by 3.3% in 2019, slightly higher than forecast. The GDP grew by 3.4% in 2018 and 3.6% in 2017. The Central Bureau of Statistics also reported that the budget deficit of the government and the National Insurance Institute was NIS 50 billion, 3.54% of GDP. The method used by the Central Bureau of Statistics to calculate the deficit differs slightly from the method used by the Ministry of Finance. For example, the Central Bureau of Statistic calculated the government budget deficit last year at 3.19%, compared with 2.9% for the Ministry of Finance. The deficit in the broader government sector, which includes the local authorities, national institutions, and public non-profit associations, such as institutions of higher education, reached NIS 55 billion in 2019, 4%, compared with 3.6% in 2018.

Exports of goods and services were up 3.3% in 2019, after rising 5.6% in 2018 and 4.1% in 2017. Revenue from exports of tourist services grew 3.3%, following a 5.3% increase in 2018. Exports of services, excluding tourism and startups, which consists mostly of software and research services, jumped 9.2%, after climbing 9.9% in 2018. Diamond exports plunged 25.1%, while agricultural exports were up 2%. Imports of goods and services rose 3.4% in fixed prices, following increases of 6.4% in 2018 and 4.9% in 2017.

Figures for Israel’s trade and capital flow show an increase in the surplus, which supports further strengthening of the shekel against foreign currencies. Israel had a $9.8 billion trade surplus in 2019, compared with a $4 billion surplus in 2018. The balance of payments current account had a $14.8 billion surplus in 2019, compared with a $9.5 billion surplus in 2018. The current account surplus amounted to 3.7% of GDP in 2019, compared with 2.6% of GDP in 2018. (Globes 31.12)

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10.2 Israel’s 2019 Fiscal Deficit Equal to 3.7% of GDP

Israel ended 2019 with a fiscal deficit amounting to 3.7% of GDP, according to figures released by the Ministry of Finance on 6 January. The deficit was NIS 12 billion in excess of the level planned in the 2019 budget, which was set at 2.9% of GDP. The Ministry of Finance explains the gap between plan and execution by the fact that revenues were NIS 9.2 billion lower than forecast, and expenditure was NIS 2.8 billion higher. In absolute numbers, the cumulative deficit for 2019 was NIS 52.2 billion, which compares with a deficit of NIS 38.7 billion in 2018.

Spending by civilian government ministries grew by 7.1% in 2019, which compares with planned growth of 6%, while defense spending grew by 2.9%, when 1.7% growth was planned in the budget. The largest growth in spending came in January 2019, when government spending was no less than 25.3% in excess of the budget. This excess was investigated by the State Comptroller, against a background of claims that spending had been deferred from 2018 in order to prevent a blowout in that year.

The 2019 deficit would have been greater had the state not decided to raise taxation on hybrid vehicles. In anticipation of the tax rise, which came into force last week, many people brought vehicle purchases forward, boosting tax revenues by some NIS 350 million in December 2019 in comparison with December 2018. In 2019 as a whole, imports of hybrid vehicles with low purchase tax rates rose by some 80% in comparison with 2018, while imports of conventional gasoline and diesel-fueled vehicles fell by 7%. (Globes 07.01)

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10.3 Israel Tax Revenues from Cars Rises by 20% in 2018

The Israel Tax Authority reports that revenues from purchase taxes on all types of vehicles rose by 20% to amount to NIS 10 billion in 2018. With the addition of import taxes on spare parts, vehicle import taxes for the year totaled NIS 11.1 billion. The Tax Authority claims that one of the reasons for the steep increase is that there were fewer auto imports in 2017, but the figures show that 2018 was one of the three best years for tax collections on auto purchases and maintenance. According to the Tax Authority’s figures, state tax revenues from taxes on auto purchases rose by 32% in the past decade. According to the review, the average purchase tax on a passenger vehicle in 2018 was NIS 35,000, down 0.8% in real terms, while the average purchase tax rate fell from 59.7% in 2017 to 57.7% in 2018.

Imports of hybrid and plug-in vehicles rose sharply in 2018, and especially in 2019, and accounted for over 20% of all imported vehicles sold. Since the purchase tax on these vehicles is substantially lower than the tax on ordinary vehicles, it naturally reduces both the purchase tax per passenger vehicle and the average purchase tax. This was one of the reasons for raising the purchase tax on hybrid vehicles by 15%, starting at the beginning of 2020. Now, the purchase tax rate on a new vehicle is projected to return to the usual rate (in Israel) of 60-70%. If the spread of electric vehicles on roads in Israel begins to detract substantially from state tax revenues derived from fuel taxes in the medium and long term, the Ministry of Finance will consider measures for significantly increasing the taxes on them.

At the end of 2018, there were 311,000 company vehicles, amounting to 9.4% of all active vehicles. 240,000 of the company vehicles were owned by leasing companies. The report nevertheless shows that the proportion of mileage on company vehicles continues to be significantly higher than their proportion of the cars on the road, and has increased. (Globes 25.12)

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10.4 Israel Doubles Number of Unicorns in 2019

Globes reported that Israel now has 20 unicorns, privately-held tech companies worth more than $1 billion. There were nine new unicorns were created during the year bringing; a unicorn is a privately held company with a valuation of at least $1 billion. A unicorn is a sign of a tech eco-system’s maturity because a decade ago every Israeli startup dreamed of an exit – being acquired by a tech giant or a Wall Street IPO. But now the dream has changed into scaling-up to a growth company worth $1 billion.

Impressively Israel’s 20 unicorns are more unicorns than France, Germany and Australia have together. Only the US, China and UK have more unicorns than Israel. Among Israel’s unicorns are taxi hailing company Gett, cybersecurity company Cybereason and team management systems developer Monday.

In 2018, five Israeli startups completed financing rounds of $100 million or more, including DevOps platform developer JFrog. In 2019, 16 more startups have joined that club including fraud protection company Riskified, 3D imaging sensor company Vayyar Imaging, retail imaging company Fabric and insurtech company Lemonade. Even those who raised the money at a valuation of less than $1 billion are well on the way there. (Globes 25.12)

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10.5 Fewer Israeli Startups Are Being Founded

According to the Central Bureau of Statistics, there were 4,363 early stage startups in Israel in 2018, a 6% decline from 2017. These figures do not include the more mature growth companies who have already developed their product, service or system and begun the manufacturing stage. The Central Bureau of Statistics found that the decline in the number of early stage startups can be the result of more startups maturing to the growth stage and consequently the downward trend is not necessarily a negative one. It may well be that less Israelis are becoming entrepreneurs and prefer to take advantage of the high salaries available in growth tech startups.

The figures are based on companies registered for VAT and at the National Insurance Institute, IVC, Start-Up Nation Central and data collected by the Central Bureau of Statistics itself. The Central Bureau of Statistics noted that some startups in their very earliest stages might not yet be included in the various databanks.

Between 2011 and 2018, 5,313 startups were founded in Israel, of which 45% closed down or suspended operations. Between 2012 and 2015, at least 500 new startups were founded each year, taking advantage of the abundance of money flowing into Israel for startup investment. But between 2015 and 2018, more startups closed each year than were set up. The number of employees in early stage and growth startups doubled between 2011 and 2018 and reached 77,000. Of these employees, 29,000 were in early stage startups – a figure which grew by only 2% in this period. Some 79% of salaried jobs in startup and growth stage tech companies are in the Tel Aviv and Central region. The average monthly salary in a startup in Tel Aviv is 22,000 compared with NIS 16,600 in Jerusalem, NIS 18,000 in the south and NIS 18,500 in the north. (Various 30.12)

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10.6 Israeli Startups Raise Record $8 Billion in 2019

Israeli startups have raised $8.19 billion throughout 2019, beating the record $6.4 billion noted the year before. Having secured some $6.14 billion in the first nine months of 2019, Israeli startups went on to raise roughly $2.05 billion in the fourth quarter of 2019 – $800 million in October, $900 million in November and $350 million in December. Web-based services navigation company WalkMe led the way in December with a $90 million financing round and revenue intelligence company Gong.io raised $65 million. The 4D imaging radar developer Arbe Robotics raised $32 million, HR startup Gloat raised $25 million, and fat disorders drug developer Raziel Therapeutics raised $22 million, the report noted. (Israel Hayom 02.01)

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10.7 This Year was a Record One for Israeli Tourism

The Central Bureau of Statistics announced that a record 4.5 million tourists visited Israel in 2019, surpassing the 4.1 million visitors in 2018, 3.6 million in 2017 and 2.89 million in 2016. . Tourism is a huge economic resource (tourists spend an average of $1,400 per visit), and the country’s hotels are flourishing.

2019 ended with 25.8 million overnight hotel stays, almost half of them by foreign tourists, whose hotel stays have risen consistently since 2016. Hotel stays by Israelis have not grown since 2016 (Israelis have been spending their vacations overseas). Occupancy of Israel’s current 56,000 hotel rooms is 70% and the number of hotel rooms is projected to grow in the coming years with the entry of new players into the sector, headed by real estate companies such as Israel Canada, Nitsba and Azrieli, and expansion of activity by the existing hotel chains.

The real estate companies are taking advantage of the growing demand for hotel rooms in Israel, especially in Jerusalem and Tel Aviv, and are benefiting from stable cash flow. A financial analysis of Fattal Hotels, Isrotel and Dan Hotels shows that despite high operating costs (excessive regulation, municipal property taxes, etc.), the large chains are enjoying impressive growth. Fattal’s revenue from hotel activity in Israel grew 15% to NIS 1.3 billion in 2019. Fattal plans to open nine more hotels in Israel by 2023. Dan Hotels which acquired the Rimonim hotel chain, reported a 90% surge in profit in the first three quarters of 2019. Isrotel also reported higher gross profit, with the company planning new hotels in Tel Aviv and Jerusalem.

A report on 2018 by Hatzlacha – The Consumers’ Movement for the Promotion of a Fair Society and Economy under the Freedom of Information Law examined the characteristics of the tourists who visited Israel. Unsurprisingly, the report found that tourists focused on Jerusalem (77%) and Tel Aviv (67%). The two sites most visited by tourists were the Western Wall (72%) and the Church of the Holy Sepulcher (52%), followed by the Old City of Jaffa (51%). Half of the tourists were on their first visit to Israel. Some 55% of tourists came by themselves and 25% flew on low-cost flights. On a scale of 1 to 5, Israel’s value for money rating was 3.8. (Globes 01.010)

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11: IN DEPTH

11.1 UAE: UAE Economic Report for 2020

Beirut, Lebanon’s Bank Audi Group Research Department released its annual assessment of the UAE economy on 2 January.

Sluggish economic activity in most of 2019 to turnaround in 2020

Following a relatively challenging period, UAE’S economic activity has been slightly recovering over the past few months and is likely to pick up more momentum next year, helped by Expo 2020 and existing fiscal stimulus. The latter is underway to facilitate non-oil growth recovery, though putting pressure on public finances. Expo 2020 should provide the much needed boost to domestic demand for goods and services in the UAE. Most of the year 2019 was however sluggish for economic activity. While the array of coincident and leading indicators for the UAE is relatively limited, Purchasing Managers Index readings collapsed to a six-year low in the third quarter of 2019.

Continued strong external position despite a challenging global trade environment

UAE has continued its efforts over the year to introduce innovative policies and services that facilitate global trade, transforming itself into one of the world’s foremost trading hubs despite a challenging global trade environment. UAE’s ability to adapt to change, its responsiveness to the needs of businesses and investors, and the diversified profile of the Emirates’ foreign sector have made it a model for the global trade map. Within this context, the trade balance surplus for the UAE is estimated to have increased by 4.1% to reach about $84.8 billion (or AED 311.4 billion) in 2019.

Public finances improving towards a zero-deficit budget in 2020

UAE’s fiscal situation continued to improve over the first half of 2019 owing to the introduction of new taxes, most notably the value-added tax in 2018. In fact, the government continued to target non-oil sources of revenues, benefitting the most, across the GCC, from the introduction of the VAT, given its larger consumer base and significant retail activity, thus supporting non-hydrocarbon revenue growth and fiscal surplus. In parallel, the UAE Cabinet approved a zero-deficit federal budget of AED 61.4 billion for the year 2020, the largest budget allocated since the establishment of the UAE.

Deflationary pressures along with interest rate cuts amid US Fed monetary easing

The year 2019 was marked by a decent growth in monetary aggregates in the UAE, deflationary pressures, expansions in the Central Bank’s gross international reserves, and interest rate cuts in line with the US Federal Reserve monetary policy easing as the UAE dirham remained pegged to the US dollar. Consumer prices went into a deflationary mode in 2019, mainly weighed down by weak domestic demand, a prolonged slump in housing costs in an oversupplied residential market, lower oil prices amid rising global growth concerns triggered by lingering US-China trade tensions, and as the impact of a 5% VAT introduced at the beginning of the year 2018 dropped out of the annual data. Consumer prices in the UAE contracted by 1.9% year-on-year in October 2019.

Continued banking activity growth in a sound financial sector

The UAE banking sector witnessed another healthy activity growth year in 2019, on the back of continued economic expansion in the country (albeit at a slightly weaker pace), Expo 2020-related momentum and large infrastructure programs favoring progression in banking aggregates. Measured by the total assets of banks operating in the UAE, banking activity grew by 6.0% in the first ten months of 2019 to reach $ 827.9 billion at end-October 2019. It is yet worth noting that lower interest rates are likely to translate into some profitability pressures going forward, with re-pricing of loan books more than offsetting lower cost of funding.

Upward price movements across UAE capital markets in 2019

The year 2019 was a favorable year for the UAE’s capital markets. The equity markets posted decent price gains amid attractive market valuations, favorable financial results and bank merger deals. Also, the UAE fixed income markets saw upward price movements across the board, mainly tracking US Treasuries move following three rate cuts by the US Federal Reserve, and as the UAE maintained its safe haven image amid lingering regional geopolitical tensions. (Bank Audi 02.01)

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11.2 UAE: Dubai’s Non-Oil Foreign Trade Rises 6% to ‎‎$272 Billion

Dubai’s non-oil foreign trade rose 6% during the first nine months to pass AED1 ‎trillion ($272 billion), according to new official figures. ‎

Dubai’s external trade rose to AED1.02 trillion compared to AED966 million in the ‎same period in 2018. Exports rose by 23% to AED118 billion, re-exports grew by 4% to AED312 ‎billion, and imports rose 3% to AED589 billion. ‎ Volumes also surged to 83 million tonnes in the first nine months of 2019, an increase ‎of 22% year-on-year. ‎

The third quarter saw the highest trade activity worth AED343 billion, a ‎growth of 7% while Q2 witnessed 3% growth to reach AED337 billion and ‎Q1 saw a 7% growth to reach AED339 billion. ‎
Dubai’s foreign trade out of free zones was a big contributor to the overall increase, ‎accounting for AED439 billion, an 11% increase year-on-year. Direct trade ‎achieved 2% growth to reach AED574 billion in the same period.


According to the figures, China remained Dubai’s largest trading partner, contributing ‎AED109 billion, a 6% increase, followed by India (AED100 billion), a growth of ‎‎16%, the US (AED57 billion) and Switzerland (AED47 billion). ‎ Saudi Arabia maintained its position as Dubai’s largest Arab trade partner. The country ‎was its fifth-biggest partner globally with AED42 billion worth of trade. ‎

The trade of gold topped the list, contributing AED129 billion, growing by 17%, ‎followed by mobile phones which grew 7% to reach AED119 billion. ‎ (WAM 29.12)

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11.3 OMAN: Sell-Off Reveals Privatization with Regional Characteristics

Karen Young posted in Al-Monitor on 24 December that across the Middle East, from Lebanon to Iraq, there is growing popular anger and frustration at government mismanagement of financial resources and service delivery. Fiscal policy is at the center of popular politics. As some states seek to hold off on cutting subsidies, raising taxes, altering state and military structures of ownership and deflating bloated public sectors, there are few policy options to raise additional sources of cash. The governments can borrow. They can sell off assets. They can increase dependence on foreign aid. Or they can devalue their currencies and pass the cost of failing to reform to citizens by erasing their savings.

Where the money comes from matters; enticing foreign investment has proved harder than some states may have expected. Saudi Arabia spent three years trying to raise capital with an initial public offering of its national oil company Aramco, only to raise $26 billion from mostly domestic investors, from an early goal of over $150 billion in an international offering of a larger portion of shares. In Oman, the sultanate has embarked on a fast track to capital raising, seeking a number of privatizations of state-owned assets. It needs the money and fast. The investors coming to the rescue are of a new kind — states and state-owned entities, many from China.

Oman faces a ballooning debt repayment cycle and a persistent fiscal deficit. This year its budget deficit stood at $2.4 billion in the third quarter of 2019, a 75% increase year-on-year from 2018. The oil sector accounts for over 70% of fiscal revenue, and with a year of declining oil receipts the pressure is building to find alternate funding to continue government spending. Debt repayment is beginning to eat up a large portion of government funds, at a cost of more than $1.14 billion in just the first three quarters of 2019, according to research by HSBC; debt servicing is now nearly nine times higher than it was three years ago.

So, the sell-off in Oman has begun. In 2018, Oman raised $480 million in the sale of gas pipelines and $1.3 billion for a 10% stake in its Khazzan gas field to Petronas, the national oil company of Malaysia. The Omani government’s holding company for electricity sector entities, Nama, sold a 49% stake in the Oman Electricity Transmission Company to China’s State Grid for $1 billion in December. Nama controls a number of other electricity providers within Oman, many also slated for partial privatizations, including an expected sale of Muscat Electricity Distribution Company in 2020. Oman’s oil minister has announced the intention for an initial public offering of 20% to 25% of shares in the state-owned Oman Oil Company.

Oman continues to rely on Chinese loans for infrastructure. However, China’s own investment commitments to Oman’s new port at Duqm have been slower to materialize. The Chinese seem happy to lend and buy existing assets, but less keen to put their own capital to work to build new ones.

Added to the economic instability in the Middle East are questions of leadership succession, foreign intervention and the effects of low growth, low productivity and stubborn youth unemployment. Military expenditure is also rampant and remains protected from deep cuts. Five of the 10 countries with the highest military burden (military spending as a proportion of GDP) in the world in 2018 were Arab states: Saudi Arabia (8.8% of gross domestic product), Oman (8.2%), Kuwait (5.1%), Lebanon (5%) and Jordan (4.7%).

How to jump-start growth, even without the consideration of conflict and post-conflict reconstruction, is a bit of an enigma to development economists. But tax collection would certainly help in the oil exporting states of the Gulf; it would also require a massive shift in state-society relations. Of the six Gulf Cooperation Council states, only the United Arab Emirates, Saudi Arabia and Bahrain have implemented a 5% value added tax. There is no personal income tax in the oil-rich Arab Gulf states; though excise taxes on “sin” products from sugary drinks, alcohol and tobacco are now gaining ground. In states with income tax, both reporting and collection are weak. States with significant expatriate populations, migrants and refugees are struggling to regulate labor markets, with renewed efforts to privilege jobs for nationals. As economists Abhiijit Banerjee and Esther Duflo argue, better allocating the resources that are present in an economy — whether of technology, human capital or financial capital — all matter. It also matters to whom you sell your assets.

Ideas about development are normative in their core assumptions. Right now, across the Middle East, there remains a preference for state-directed growth. If your government can’t find the capital to fund its development projects, maybe another government can. China and Malaysia are favorites in Oman, but the combined efforts of Gulf sovereign wealth funds and the Russian Direct Investment Fund are also forces of financial investment and intervention in the Middle East and beyond. The scarcity of private capital for development and infrastructure projects in the region is striking. If anything, the Aramco IPO revealed how even star state-owned entities have trouble attracting private institutional capital and foreign investors.

In 20 years, how will citizens view the processes unfolding now, in which state assets are sold off to other states with little public debate? What is the true price of privatization in which the fiscal policies that created demand for new capital don’t change? How might external sovereign actors begin to use their economic leverage? Privatization in the Middle East can be a force for expanding the number of stake holders in national economies, including citizens, firms and foreign investors. It can also reinforce state management of the economy, with regional characteristics.

Karen Young is a resident scholar at the American Enterprise Institute (AEI), where she focuses on the political economy of the Gulf Cooperation Council states and the broader Middle East. (Al-Monitor 24.12)

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11.4 EGYPT: Egypt Moves into Position as a Regional Energy Hub

Rami Galal posted on 26 December in Al-Monitor that President Abdel Fattah al-Sisi has announced Egypt is ready to export electricity to Africa at low prices.

Egyptian President Abdel Fattah al-Sisi announced in an 11 December speech at the Aswan Forum for Sustainable Peace and Development that Egypt is fully prepared to export 20% of its surplus electricity to African countries. In response to Niger’s President Mahamadou Issoufou saying that the average cost of producing electricity in Africa is 14 cents per kilowatt, Sisi said that Egypt is willing to provide the rest of the African continent with electricity at half this price. He pointed out that the main obstacle to the goal is the lack of transmission lines.

Sisi’s words come amid an Egyptian-Ethiopian conflict over the Grand Ethiopian Renaissance Dam. While for Ethiopia, the dam is a national project that will help it export electricity and implement developmental projects, Egypt is concerned about its impact on the Nile River’s already dropping water levels. Ayman Hamza, spokesperson for the Ministry of Electricity, told Al-Monitor, “Egypt wants to become a regional energy hub. Many electrical lines have been erected in this regard, including with Jordan and Libya. There is also a plan to establish a line with Saudi Arabia.”

“Electrical lines with southern Africa require lines with Sudan, which Egypt has completed with capacities of 100 MW to 300 MW through a double circuit transmission line that goes from Egypt’s Toshka 2 transformer station to Arqin station in Sudan,” he added. “The line with Sudan stretches over 97 kilometers [60 miles] and costs $56 million. Each country is to bear the cost of the work carried out on its territory and the trial operation period will start with a capacity of 50 MW in early 2020 until political stability is achieved in Sudan and until the Sudanese side finishes the implementation of the second phase, which will witness increased connectivity capabilities.”

He pointed out that Egypt is looking forward to exporting electricity to Europe through a project between Egypt, Cyprus and Greece, for which a framework agreement has been signed. The agreement provides for the extension of a submarine cable with a capacity of 2,000 MW. Hamza stressed that per political agreements, the price of kilowatt-hours for African countries will be determined by the presidency.

Farouk al-Hakim, the head of the Electricity and Energy Division of the Engineers Syndicate, told Al-Monitor, “After Siemens completed the three giant power plants in July 2018, Egypt’s energy production reached 50,000 MW, and since we only consume 30,000 MW of it, we were left with a surplus of 20,000 MW, hence Egypt’s willingness to export electricity.” The rest of the current surplus will be kept for a potential increase in the domestic electricity consumption. He stressed that electrical connection with African countries will help cover the operational costs of power stations, including fuel. He said that this step will also help Egypt benefit from its entire energy production and bring financial returns to countries through which the electrical lines pass.

Maj. Hamdi Bakhit, a member of the Egyptian Parliament’s committee on defense and national security, told Al-Monitor that the solutions to the problems of African countries lie in African hands and not those of the countries that drain African wealth. He added that Egypt is seeking to solve problems by achieving sustainable development in Africa, as doing so will eliminate poverty, terrorism and instability. In other words, he added, Egypt believes that an African renaissance will be achieved through economic integration.

“Despite Egypt’s limited economic capabilities and the absence of a budget surplus that can be directed to the development of African countries, Egypt is doing its utmost to export to the rest of Africa economic and scientific expertise in the fields of irrigation, electricity, agriculture, construction, transportation and the construction of new roads such as the Cairo-Cape Town highway. Egypt also sends health missions to other African countries,” Bakhit said.

He continued, “At the security level, Egypt offers scholarships to African officers while offering expertise and support to the countries of the Sahel and Sahara Basin in the war against the Islamic State, Boko Haram, al-Qaeda and the Mujahideen Youth Movement….Egypt will export its electricity surplus to the African countries that are in need of such energy. It wants to do so before Ethiopia exports electricity generated by the dam to neighboring countries instead of meeting the electricity needs of its own people. Egypt has repeatedly offered to cooperate with Ethiopia in the field of hydroelectric power, but all Ethiopia wants is to conspire against Egypt’s water quota, which is a vital matter for us. We will resort to all international entities to fight for our cause,” he continued.

Abbas Sharqi, head of the natural resources department of the African Research Institute of Cairo University, told Al-Monitor, “The African continent has many natural resources. Water in Congo is sufficient to meet Africa’s electricity needs if the dam is built, but such energy is worthless in the absence of an electrical network. Unfortunately, 70% of the population of southern Africa is without electricity, even though the continent has great potential.” He pointed out that the dam will be of no benefit to the Ethiopian people because the water that is expected to fill the reservoir won’t be used for agricultural projects or for establishing drinking water networks. Neither, he added, will the electricity to be generated by the dam, estimated at 6,000 MW, benefit Ethiopia due to the high cost of establishing electricity networks across the country.

He said that if the project brings no agricultural, water or electrical benefits to the Ethiopian people, a revolution will be likely. He emphasized that any electrical network between Ethiopia and Sudan will be of no value without Egypt, meaning that Ethiopia’s cooperation with Egypt over the water issue is as important as Egypt’s cooperation with Ethiopia over electricity.

Rami Galal is a contributor for Al-Monitor’s Egypt Pulse and works as an investigative reporter for the Rosa el-Youssef website. (Al-Monitor 26.12)

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11.5 EGYPT: New Oil & Gas Fields in Egypt Promise More Discoveries

Ahmed Youness posted on 2 January in Al-Monitor that Egypt’s successive governments have largely ignored drilling of oil and gas in the Western Desert given the high cost of such an operation, although the area is rich.

Egypt announced on 19 December the discovery of a new oil and gas field in the Abu Senan area in the Western Desert. The Egyptian Ministry of Petroleum and Mineral Resources said in an official statement that the new oil and gas field was discovered after excavation work by Borg El-Arab Petroleum Company, a government-affiliated company.

The statement indicated that the new field’s production is expected to reach an average of 7,000 barrels of crude oil per day, as well as 10 million cubic meters of gas. It added, “New discoveries in the Western Desert are proof that this region is still characterized by its high oil and gas possibilities, especially in the deep layers, in light of modern technologies contributing to achieving several promising discoveries in the area.”

On 12 December, Russia Today quoted Adel al-Bahnasawy, a journalist specializing in energy affairs, as saying that the new oil and gas field discovered in the Western Desert was a huge field compared to previous discoveries in the same area, stressing that this discovery will open the door to the possibilities of finding new oil fields in the Western Desert. Bahnasawy told Al-Monitor over the phone that several discoveries have been made in the Western Desert, and that government officials believe the area is rich in undiscovered oil and gas fields.

He said that in October 2008 oil and gas wells in the Western Desert were discovered; at that time, a major petroleum discovery in the West Kalabsha concession area was announced, with a daily production capacity of 5,000 barrels in the US Apache concession area for oil and gas exploration. Bahnasawy added that Apache Corporation CEO John Christmann said in October during a meeting with Prime Minister Mustafa Madbouly that his company envisions a promising future for the Egyptian oil sector in light of the great developments over the past years. He added that the company plans to increase activities in Egypt.

In addition, Bahnasawy noted that David Chi, regional vice president and general manager of Apache Egypt, said in a press statement that there are large potential oil and gas discoveries in Egypt, especially in the Mediterranean and Western Desert. Bahnasawy added that these recent discoveries attracted the attention of officials toward the Western Desert, which prompted the government to reassess the area and explore the presence of oil and gas fields.

Hamdi Abdel Aziz, spokesman for the Ministry of Petroleum and Mineral Resources, told Al-Monitor, “The new petroleum discovery in the Western Desert is great proof that this area is very promising in terms of oil and gas discoveries, and that the government should take care of it and support it in the coming period, which the ministry is already planning to do.” He explained that these discoveries were the culmination of the development plans of the Egyptian government — represented by the Ministry of Petroleum and Mineral Resources — with Minister Tarek El-Molla signing three agreements for oil and gas exploration in the Western Desert on 26 August 2017.

Abdel Aziz said that these agreements were signed between the Egyptian General Petroleum Corporation on the one hand, and Apache Corporation and the American Merlon Petroleum Company on the other, with investments of about $79 million and plans to drill 17 new exploration wells to search for oil and gas. He noted that the Ministry of Petroleum is working to promote these successes to attract more foreign investors and motivate international companies to expand their activities in this area, as well as to conduct more research and exploration operations.

Abdel Aziz stressed that the Egyptian government is currently working on assessing gas and oil reserves in the Western Desert. The average oil production in the area has increased from 150,000-165,000 barrels per day in 2000 to 240,000 barrels per day currently.

Abdel Khalek Farouk, economic expert and head of the Nile Center for Economic and Strategic Studies, told Al-Monitor over the phone that this new discovery is a major event, especially since it is located in a very important area that officials had not been paying attention to for many years. Farouk explained that successive governments in Egypt never bothered to focus on exploring for gas and oil in the Western Desert, in particular due to the large financial cost of such an endeavor, as well as the need for advanced technology to explore large quantities of oil and gas and to enable companies to know the expected economic return from drilling operations.

He pointed out that there are several other factors that have hindered the state from exploring gas and oil in the Western Desert, the most prominent of which is that the area is scattered with mines from World War I and World War II, which makes the excavation process difficult and increases its cost as mines must be removed in some areas first before the drilling process can begin.

Farouk denounced Egypt’s import of gas from Israel — under an agreement signed between the two countries in 2018 — despite the recent large discoveries, especially the Zohr and Nour fields in the Mediterranean, and the recent discoveries in the Western Desert.

Ahmed Youness is an Egyptian writer and journalist covering foreign and regional affairs. He writes for a variety of regional media outlets, including Al-Hayat, Aawsat and Raseef22. (Al-Monitor 02.01)

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11.6 EGYPT: Egypt’s Military Adds New Factory to Industrial Portfolio

Al-Monitor reported that Maj. Gen. Mohamed Said al-Assar, Egyptian minister of military production, recently announced the signing of a deal with the China POLY Group to build a factory to manufacture car tires in Egypt. In a 14 December statement, the ministry noted, “The factory aims to create millions of tires annually and open new industrial areas for the state,” stressing that the project is also geared toward decreasing imports, which reached $186 million in 2018.

The ministry further asserted, “[The deal] is a confirmation of the ministry’s working strategy, in cooperation with international companies, to localize and transfer the latest technologies in various fields to companies and units affiliated with the ministry to contribute to the implementation of national development and service projects in the state.” The state-run Al-Ahram reported that the factory will be the first to manufacture tires in Egypt.

Over the past few years, Egypt’s armed forces have expanded their investments. In addition to controlling military industries, they have acquired economic concerns in an array of sectors, including in the medical, tourism, iron, steel and construction sectors.

In August, Al-Monitor published a lengthy report on the military’s holdings in the tourism sector, with President Abdel Fattah al-Sisi transferring control of 47 state-owned islands in the Red Sea to the armed forces, declaring them “strategic lands of military importance.” Analysts and officials of major tourism companies saw the move as harmful to private sector companies, including local businesses reliant on tourists, especially resorts close to Hurghada. Many feared the presidential decree would lead to more taxes and other fees being imposed by the army as a condition for staying in business.

In one example of how the military’s economic interests can be harmful to private sector businesses, in May Al-Jazeera revealed a decline in sales for privately held cement factories in Egypt, after the army established a factory in the city of Beni Suef in 2018. The military — which is exempt from taxes and “employs” conscripts as workers — sold its cement for four dollars less than the privately held industries sold theirs.

In a phone interview with Al-Monitor, Ayman al-Naggar, a professor of economics at the University of Al-Azhar in Turkey, said that the Ministry of Military Production being the signatory for the tire deal, rather than the Ministry of Trade and Industry, fits the pattern of Sisi granting the army benefits, even at the expense of civilian economic investment. “The Ministry of Trade and Industry is responsible for increasing the rate of trade and industry, establishing new factories and ensuring a sound competitive environment,” Naggar said. “A civilian company was supposed to establish the [tire] factory, as was declared in November, however, things changed. Suddenly it was the Ministry of Military Production that signed the deal, without any mention of the reasons behind it.” (Al-Monitor 02.01)

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11.7 EGYPT: Egypt’s Tech Sector Struggles to Deepen Growth

African Business reported that Egypt is fast becoming a tech powerhouse but its startups are facing challenges in the areas of funding and the retention of talent.

Since Egypt emerged from its second revolution in 2013 its tech sector has grown rapidly. According to a recent report by the GSMA Accelerator and Briter Bridges programs, the country now has 56 active tech hubs – organizations offering facilities and support for tech and digital entrepreneurs – surpassing the number in Kenya and putting it in third place on the continent after Nigeria and South Africa.

Boasting a host of incubators and accelerators, decent access to venture capital funds, a vibrant ecosystem and good quality higher education facilities, Egypt could become a tech powerhouse. Yet as the sector expands, it faces various challenges relating to the breadth and depth of growth.

Bigger Tickets

Swvl, an Egyptian ride-hailing firm, raised $42m in June through a Series B-2 round led by a host of venture capital firms including Sweden’s Vostok, Dubai-based BECO Capital, China’s MSA and Endeavor Catalyst, based in New York. The 26-year-old founder and CEO, Mostafa Kandil, said the funds will be used for expansion into two or three African markets by the end of the year including Kenya and Nigeria.

This was the largest-ever funding round for an Egyptian startup. In 2018, Vezeeta, a healthcare startup active in the Middle East and North Africa, raised Egypt’s second largest amount: $12m in a Series C round from Saudi Arabia’s STV Capital. Yet aside from these two rounds, the ticket sizes are relatively small. Wuzzuf, a talent and management platform, raised the third largest amount at $6m in a Series B round last year.

Out of the 73 startups which have raised $1m or more in Africa this year, only six are from Egypt, Swvl included. Khaled Ismail, managing partner for HIMangel, a Cairo-based seed fund for early stage investments, believes there are a number of gaps in Egypt’s funding pipeline. While there are a number of domestic venture capital funds like Algebra Ventures and Egypt Ventures – as well as international funds like RAED Ventures and Arzan Venture Capital – not one institution, local or foreign, caters for the more mature startups looking to raise Series C funding. “Egyptian companies cannot get the next five to ten million dollar check,” he says. “We need somebody who can build a fund which is Series C and above. A growth fund. Nobody has done that.”

Swvl and Veezeta raised money outside Egypt, drawing from diverse pools of international capital. Those rounds will transform both companies into bigger players who can compete across Africa and beyond. Most Egyptian startups don’t have access to that kind of capital.

There is also a missing rung on the funding ladder during the early seed stages. Egypt is home to numerous incubators and accelerators like Flat6Labs and AUC Venture Lab. These institutions, along with friends and family, represent the very first stage of funding. They provide startups with five-digit injections of cash which help launch the companies.

Thanks to a number of organizations operating in this space, Egypt graduates around 200 startups every year. Yet after the initial birth of the company, Ismail believes there is a lack of early-stage funding that caters for figures of between $100,000 and $500,000. HIMangel has invested in 22 startups with ticket sizes averaging $170,000. This second stage in the pipeline comes just before Series A, which raises figures of between $2m and $15m – a sum that would swamp most early-stage startups.

To bridge the gap, HIMangel has entered into a syndicate with angel groups Alex Angels, Cairo Angel and AUC Angels. By combining funds, the group hopes to provide solutions for companies in the earlier growth stages. Ismail himself sees $12bn to $15bn worth of opportunity in the waste management sector and $10bn worth of opportunity in the health sector, two avenues of interest which have come to define HIMangel.

Retaining Talent

Along with funding issues, Egyptian tech also faces problems in attracting and retaining talent. In 2016, the country took a $12bn IMF loan in exchange for pushing through a tough reform program that included floating the currency and cutting subsidies. Though the program is widely credited with stimulating economic growth and attracting large amounts of investment, the devaluation of the currency has created problems for domestic employers.

The Egyptian pound has fallen from 8.8 per dollar to around 16 per dollar. The cost of paying an internationally attractive salary has therefore almost doubled for domestic companies, leaving many unable to compete with foreign companies and countries able to pay higher salaries. “Most of the startups today are suffering from the super-inflation of salaries for developers in Egyptian pounds,” Ismail says.

Egypt currently loses most of its talented graduates to Germany following changes to German immigration laws which make it easier for foreigners to settle and work there, he adds. Egypt’s large pool of talented developers has made it a target for international companies seeking talent. Foreign companies that work in Egypt but pay in dollars also take much of the country’s top talent.

Regional Expansion

Yet apart from the devaluation causing talent headaches for employers, the positive macroeconomic environment ushered in by the reforms has paved the way for promising growth in the technology sector as a whole. Ismail says that while the reforms brought “mixed blessings”, Egyptian tech companies will begin to feature more prominently in the sub-Saharan region as the sector’s growth pushes startups to search for new markets.

Swvl is the prime example of this move southwards and it may be just the beginning. Halan, an Egyptian ride-sharing app for motorbikes, has just announced it will begin operations in Ethiopia to build on its presence in Sudan. Contrary to those who believe that Egypt’s Gulf neighbors are natural markets for expansion thanks to the geographical and cultural proximity, Ismail argues that Africa makes more economic sense. “The Gulf is very different in terms of market size, segmentation and needs,” he says. “I see more similarities than differences with places like Nigeria and Ethiopia.” (African Business 02.01)

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11.8 TURKEY: IMF Executive Board Concludes 2019 Article IV Consultation with Turkey

On December 9, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Turkey.

In the wake of the global financial crisis, growth in Turkey became increasingly dependent on externally-funded credit and demand stimulus, and, as a result, Turkey’s economy began running above potential with a large current account deficit and high inflation. These imbalances left the economy susceptible to a change in market sentiment that ultimately triggered sizeable lira depreciation and was accompanied by a recession in late 2018.

Economic growth has since resumed, buoyed by expansionary fiscal policy, rapid credit provision by state-owned banks, and more favorable external financing conditions. The lira also recovered as market pressures abated. Import compression and a strong tourism season have contributed to a remarkable current account adjustment.

Inflation has fallen sharply, and the central bank cut policy rates by 1,000 basis points since July 2019. Inflation peaked at around 25% – five times the target – in October 2018 due, in large part, to high exchange rate pass through and rising inflation expectations. But strong base effects, relative lira stability, and a negative output gap have since contributed to a steep inflation decline, although inflation expectations remain well above target.

Fiscal discipline, a longstanding policy anchor, has been gradually weakening. After declining for several years, the central government primary balance recorded a deficit in 2018, for the first time in almost a decade. Fiscal stimulus continued in the first half of 2019, in contrast to the consolidation planned in the late-2018 New Economy Program.

State-owned banks are supporting rapid credit growth. While private banks have cut back on their lending, state-owned banks have engaged in a major credit expansion which picked up pace in early-2019.

Reserves are low and external financing needs high. Non-financial corporate and bank balance sheets have been stressed by lira depreciation, higher interest rates, and lower growth. While public debt is low, the fiscal deficit has increased and uncertainty over the possible scale of contingent liabilities and potential debt rollover pressures limit available fiscal space.

Executive Board Assessment

Executive Directors noted that stimulus-driven growth in previous years had contributed to large economic imbalances in the Turkish economy. Following the recession in 2018, expansionary fiscal policy, rapid credit provision by state-owned banks and more favorable external financing conditions led to a resumption of economic growth. Directors emphasized that the current calm remains fragile and that vulnerabilities persist. These include low reserve buffers, large external financing needs, and stressed bank and corporate balance sheets. Against this background, Directors underscored the importance of prudent policies to address weaknesses and highlighted the need for a comprehensive package of reforms to secure stronger and more resilient growth over the medium term.

Directors emphasized that fiscal policy should remain a key policy anchor. While the recent fiscal stimulus has helped the economy recover, the underlying deficit has increased significantly. Directors recommended a broadly neutral fiscal stance in 2020, combined with tight monetary and quasi‑fiscal policies, to strike a balance between supporting the nascent recovery while also containing financing needs and enhancing fiscal space. They noted that a modest consolidation is needed over the medium term to ensure that public debt remains low and stable. Directors welcomed the authorities’ efforts to strengthen oversight and management of public-private partnerships.

Given still-high inflation expectations, Directors stressed that monetary policy should focus on durably lowering inflation, which would help permanently lower interest rates. In this context, they noted that recent monetary policy easing has gone too far. Directors also called for clearer monetary and intervention policy to bolster transparency and central bank credibility. They recommended rebuilding international reserves as conditions allow.

Directors emphasized that vigilance is needed in view of the rapid credit growth of state-owned banks. They encouraged taking steps to rein in credit growth and clean up bank and corporate balance sheets to support financial stability and stronger, more resilient growth. Directors generally agreed that a third‑party asset quality review and new stress tests are needed to better understand underlying bank health. Additional reforms to improve the insolvency regime and out‑of‑court restructuring would also help release resources and restart productive lending.

Directors called for focused and carefully sequenced structural reforms to enhance medium‑term growth and increase resilience to shocks. In particular, steps to improve product market efficiency, labor market flexibility, the quality of human capital, and female labor force participation would facilitate a reallocation of resources to productive sectors. Governance reforms would also help improve the investment climate and economic efficiency. Directors commended Turkey for hosting a large number of refugees. (IMF 27.12)

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11.9 MOROCCO: Moroccan Economy to Continue Steady Growth in 2020

Morocco’s High Commission for Planning (HCP) announced that the national economy grew by 2.3% in the last quarter of 2019, exceeding the 2.1% growth of the third quarter. The commission also expects economic growth to reach 3.3% in the first quarter of 2020, exceeding the 2.5% growth of the same period in 2019. HCP published its report on the results of economic growth in the last quarter of 2019 and forecasts for the first quarter of 2020 earlier in January.

A Decline in Automobile and Phosphate Exports

The HCP recorded a small increase of 1.1% in foreign demand for Moroccan exports in the last quarter of 2019. Global demand for exports recorded a 2.8% growth in the same period of 2018. Along with the slow growth of foreign demand, Moroccan exports increased by only 0.1%, declining from a 2% growth in the previous quarter. HCP cites clothes, food, and agricultural products as the exports that decreased the most. A decrease in phosphates exports has also contributed to the slowing down of Moroccan exports by 1.2%. Additionally, automotive industry exports continued to slow down, in parallel with a global decrease in car sales, especially in Europe and China, notes the report.

On the other hand, Moroccan imports increased by 0.9% in the last quarter of 2019, recording a decline from 2.4% in the previous quarter. The decline in imports is due to a decrease in the imports of energy and raw materials, along with a drop in their prices, justifies the document. Imports of equipment, cars, plastic materials, copper and iron wires, and edible products such as cereals and sugar is set to increase because of a rise in local demand, adds the report. Overall, the trade deficit will increase by 2% while the import coverage by exports will reach 55.7%.

Increasing Consumption and “Improving” Purchase Power

The report revealed that consumption loans increased by 4.7% in the last quarter of 2019, proving that the expenditure of Moroccan households is on the rise, along with purchase power. Consumption expenditure for Moroccan households reached 2.5%, compared to 2% in the previous quarter, while public expenses increased by 3.7%. Capital growth has also increased by 2.9% because of the increasing costs of investments, explains the report.

Agricultural Recession

Agriculture will continue its recession, recording a decline of 5.4% in the last quarter of 2019, compared to the previous year. While fruit production, except citruses, has been increasing by 4.9% on average in the last ten years, it declined by 2.8% in the last quarter of 2019. On the other hand, the production of vegetables, citruses, and olives, as well as animal goods, including honey and poultry are slowly increasing.

Slight Growth in Non-Agricultural Activities

The added value of non-agricultural economic sectors increased by 3.2% in the last quarter of 2019, growing from 3% in the previous quarter. A growth in tourism and transport increased the added value of the tertiary sector by 3.3%, while the secondary sector grew by 2.7%. The metals industry recorded the highest growth in the last quarter of 2019, with 4.8%, against only 2.2% in the previous quarter.

Increase in Consumer Prices

Consumer prices increased by 0.8% in the last quarter of 2019, rising from a 0.4% increase in the previous quarter, especially the prices of fresh products. However, the inflation rate in the last quarter of 2019 was only 0.7%, after being 1.3% in the previous quarter. The inflation rate for 2019 as a whole was 1%, rising from 0.7% in 2018.

Forecasts of Increasing Growth

HCP forecasts a positive evolution for the national economy in the first quarter of 2020 because of an improving global economic climate and a reduction of tension between China and the United States. Global trade will continue to recover by increasing slowly and global inflation will reach 2%, according to the report. Under that evolution, the global demand for Moroccan exports is expected to increase by 3.1% in 2020. The report also expects the tertiary sector’s contribution to the GDP to increase by 3.3% in the first quarter of 2020, and that of the secondary sector to increase by 2.3%. Finally, the HCP predicts agriculture production to increase by 6.8%, especially in the months of February and March because of rain. (MWN 06.01)

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