OTTAWA: In September, two months after China’s state-owned CNOOC Ltd. made an unexpected $ 15.1 billion bid for Canadian energy company Nexen Inc, Canada’s spy agency told ministers that takeovers by Chinese companies may threaten national security.
The rare warning from the Canadian Security Intelligence Service (CSIS), which was disclosed to Reuters by intelligence sources, did not stop the takeover. That was approved by Canadian authorities recently.
But the intervention and an influential US lawmaker’s warning in October that Canadian companies should be careful about doing business with Chinese telecom equipment companies Huawei Technologies Co. and ZTE Corp. made the approval process for the deal more difficult than initially expected.
“CSIS did not like the Nexen bid and thought it was a bad idea for Chinese firms to be investing in the oil sands. It all played into their greater fears about firms like Huawei,” said one person familiar with the agency’s concerns. “They do not want to wake up one day and realize a crucial sector of the economy is under the control of foreign interests.”
And after listening to the spy service, which usually keeps a low profile, Canada drew up surprisingly tough foreign investment rules that were unveiled when approving the Nexen deal, China’s biggest-ever successful foreign takeover. In a clampdown on companies it deems influenced by foreign governments, Canada will block similar purchases in the future.
CSIS has been silent about what it said to Ottawa on the Nexen transaction, and it declined to comment for this story. It didn’t specifically recommend the CNOOC deal be blocked, but rather warned more generally about such deals with Chinese entities, the person said.
In reality, the government was unlikely to want to block the CNOOC bid, given a high-profile push by Prime Minister Stephen Harper earlier in the year to boost ties with China, and given that a lot of Nexen’s assets are outside Canada, and it has underperformed other energy companies.
By pushing back aggressively, CSIS ensured that it got foreign investment policy tightened significantly to deter similar such takeovers by companies under the sway of foreign governments.
“I think people at CSIS and elsewhere are going ‘Good. That was a very good response by the government’,” said Ray Boisvert, a former CSIS assistant director of intelligence, who retired this year after almost three decades at the agency.
“It did reflect some of those deep strategic concerns that practitioners have had about this kind of investment.”
Specific worries include theft of Canadian intellectual property, espionage, computer hacking and foreign companies gaining too much influence over crucial sectors of the economy, said the person familiar with the agency’s views.
The government could, in theory, nationalize assets if it thought foreign control was problematic. But the pro-business Conservatives would likely find it politically unpalatable to take such a step.
“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” Harper said as he announced the new investment rules.
In October, the US House of Representatives’ Intelligence Committee urged US firms to stop doing business with Huawei and another Chinese telecom equipment company ZTE on the grounds that Beijing could use products made by the two companies to spy.
The House Intelligence Committee’s chairman, Rep. Mike Rogers, a Michigan Republican, urged Canada to take a similar stance, and two days later, the Canadian government indicated it would not let Huawei help build a secure government communications network because of possible security risks.
“The Huawei business caused a lot of political complications for the CNOOC bid,” another person familiar with the CNOOC deal said of the US committee’s report.
Both Huawei and ZTE have repeatedly denied the allegations in the report, and China’s foreign ministry dismissed as “baseless” the idea that security concerns could impede commercial ties.
“We hope that the relevant party can objectively and justly treat Chinese companies’ overseas investment and cooperation plans, and stop actions which harm Chinese companies’ image and do more to benefit the promotion of bilateral trade and business cooperation,” said ministry spokeswoman Hua Chunying.
In its annual report, released in September, CSIS noted risks that included espionage and illegal technology transfers, and said some foreign state-owned enterprises had “pursued opaque agendas or received clandestine intelligence support for their pursuits” in Canada.
The agency did not give details, but added: “When foreign companies with ties to foreign intelligence agencies or hostile governments seek to acquire control over strategic sectors of the Canadian economy, it can represent a threat to Canadian security interests.”
CSIS, hit by controversy in 2010 after its head suggested China had too much influence over some Canadian provincial politicians, did not mention any country or firm in its report.
It is unclear how much, if any, influence the US had on the Canadian authorities’ foreign investment policy.
Fen Hampson, head of the global security program at the Center for International Governance Innovation in Waterloo, Ontario, said he had learned that a US official visited Ottawa in the last few months to discuss mutual concerns about foreign state-owned enterprises.
US Ambassador David Jacobson said he was not aware of such a meeting, but he said officials from the two countries met constantly.
“I would be surprised if almost any issue you could think of has not come up in one or more of those conversations,” he said.
“The US has not sought to influence Canada’s decision with respect to that (CNOOC’s bid)... We respect that decision.”
The Canadian government did not respond to a request for a comment.
Chinese companies have bought up smaller Canadian energy firms before, but the July 23 bid for Nexen was their first attempt to buy one of the larger players.
Nexen has assets in Canada, the North Sea, Nigeria and the Gulf of Mexico. Technology that Nexen and its partners use for deep sea drilling could interest CNOOC.
Asked about the CSIS concerns, a spokeswoman for Industry Minister Christian Paradis replied: “The government has the authority to take any measures it considers necessary to protect national security.”
Yet two people close to the deal noted that the Canadian government did not exercise its option to do a separate review of the potential security risks of the CNOOC-Nexen bid, again signaling its concerns were tied to overall Chinese investment rather than to this particular deal.
Under the new rules, which Paradis is responsible for enforcing, foreign state-owned enterprises can no longer buy controlling stakes in assets in the oil sands, the biggest reserve of crude oil outside Saudi Arabia and Venezuela.
Such enterprises can buy minority stakes in the oil sands, or majority stakes in companies outside the oil sands. Companies deemed to have strong government links will be treated with particular caution wherever they propose to invest.
“When it comes to our security and intelligence services, they would rather pull up the drawbridge than let it down,” said Hampson, co-author of a report on trade ties between Canada and emerging nations that he discussed with Harper in June.
Security fears dogged Canada debate on China energy bid
Security fears dogged Canada debate on China energy bid
Point-of-sale spending in Saudi Arabia hits record $16bn, SAMA reveals
RIYADH: Food and beverages transactions helped drive point-of-sale payments in Saudi Arabia to a record SR59.68 billion ($15.91 billion) in March, official data has revealed.
Figures released by the Saudi Central Bank, also known as SAMA, show an 8 percent annual increase in spending across all sectors, with outlays during the holy month of Ramadan likely responsible for driving the uptick, alongside an expanding market with flexible payment options.
Spending on food and beverages in March made up the largest portion, accounting for 17 percent of total payments for the month.
Expenditures on restaurants and cafes, along with miscellaneous goods and services, each represented 12 percent of overall spending.
In February, Redseer Strategy Consultants predicted a heightened eagerness among consumers in Saudi Arabia to explore new attractions and destinations during Ramadan.
Their survey, probing changes in shopping behavior for Ramadan 2024 compared to the previous year, revealed that 62 percent of Saudi respondents planned to increase their spending, surpassing the 48 percent of respondents from the UAE.
The report highlighted that this surge is driven by factors related to platforms and experiences, particularly flexible payment options and the launch of exclusive products of high quality.
The research showed that in the UAE, where the market has matured, consumers are placing a growing emphasis on affordability, prioritizing products with the lowest prices.
Factors such as product variety, fast delivery, and quality no longer serve as significant brand differentiators, as the market has leveled the playing field.
Conversely, in Saudi Arabia, a market experiencing growth, there is a notable focus on platform and experience-related aspects. Flexible payment options and strong customer support are becoming increasingly important, indicating a shift in consumer preferences.
According to data from SAMA, the primary drivers of growth during this period were increased spending on miscellaneous goods and services, which include personal care supplies and cleaning products.
This category represented the second-highest share of March spending at 12 percent, having grown by 28 percent to reach SR7.06 billion. This growth accounted for 36 percent of the overall annual increase in POS spending.
The second-highest contributor to the rise is clothing and footwear, with an increase that contributed 26 percent to the overall growth, reaching SR5.8 billion in March. This was followed by food and beverages, contributing 13 percent, with spending reaching around SR10 billion, marking a 6 percent increase from the same month last year.
Research from Redseer indicated a strong inclination among Saudi respondents towards purchasing groceries, fashion, and beauty or personal care products during the month of Ramadan.
According to the survey, 93 percent of respondents were open to buying groceries, 84 percent to buying fashion, and 72 percent to buying beauty and personal care products.
This period is often associated with heightened social engagements, hospitality, and generosity, leading to increased consumer spending on food, gifts, and charitable donations. Additionally, businesses often offer special promotions and discounts during Ramadan, further stimulating consumer spending.
In Saudi Arabia, there has been a notable shift towards online payments and digitalization, driven by the country’s commitment to providing cutting-edge technologies for its tech-savvy population.
With the rise of e-commerce accessibility and the increasing convenience of online shopping platforms, consumers are opting for digital transactions more than ever before. This trend is not only reshaping the retail landscape but also significantly impacting consumer behavior.
The ease of comparing prices and product options online has empowered consumers, fostering increased competition among retailers and ultimately driving down expenses.
As a result, the adoption of digital payment methods continues to grow rapidly, reflecting a fundamental shift in how transactions are conducted in Saudi Arabia’s dynamic and rapidly evolving marketplace.
One challenge that arises with this growth is the proliferation of fraudulent sites and platforms attempting to deceive interested users. During Ramadan and Eid Fitr, the increase in retail and online transactions provides more opportunities for cybercriminals.
These fraudulent entities have targeted major Saudi platforms by creating fake websites designed to intercept two-factor authentication or one-time passcode codes.
According to Cyber Security News, this sophisticated phishing tactic aims to bypass security measures and gain unauthorized access to victims’ accounts.
Consumers are therefore strongly advised to avoid sharing personal and payment information on questionable sites or with individuals posing as bank or government employees.
Reporting suspicious resources to local law enforcement and designated contacts within these organizations is crucial in helping to mitigate potential fraud risks.
Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank
RIYADH: Nearly every Gazan is living in poverty as the Israel-Hamas war continues to have a “devastating impact” on the Palestinian economy, according to the World Bank.
An analysis by the organization sets out how the economic consequences of the conflict have spread beyond Gaza and into the West Bank, with widespread unemployment and underemployment combined with inflation causing a rapid decline in purchasing power for households in both areas.
Nearly half a million jobs across the territories have been lost since October 2023, and per capita gross domestic product declined by 12 percent in 2023.
Israel has bombarded the densely populated Gaza Strip following the Oct. 7 Hamas attack on Israeli communities. Israel says Hamas killed some 1,400 people including children, and took more than 200 hostages, some of them infants and older adults.
The fiscal situation of the Palestinian Authority has dramatically worsened, according to the World Bank, with a financing gap expected to reach $1.2 billion heightening the risk of disorderly adjustments and a potential imminent fiscal collapse.
In May 2023, the World Bank forecast the Palestinian economy to grow about 3 percent by the end of the year, after a 4 percent post-COVID-19 boost in 2022.
That analysis has been completely reversed by the conflict, with the organization now forecasting the Palestinian economy will contract anywhere between 6.5 percent and 9.4 percent during 2024.
“The northern governorates of Gaza are experiencing a full-blown famine, with food insecurity reaching catastrophic levels, particularly in the northern areas and extending southward,” said the World Bank’s latest report, adding: “At least one in four Gazan is experiencing catastrophic hunger, and 95 percent of the population is suffering from food insecurity.”
Most children in Gaza are at risk of “stunting” because of the famine, the analysis added.
Reflecting on the economic impact of the conflict, the report said the outlook of the Palestinian territories for the full year of 2024 “remains highly uncertain, depending on the severity and duration of the conflict, changes in Israeli policies in the West Bank, including those related to access to the Israeli labor market, and the outcome of the clearance revenue dispute.”
The Palestinian Authority is facing a significant decrease in clearance revenue transfers and shrinking domestic resource mobilization, coupled with a rigid current expenditure envelope, the World Bank said.
“The PA’s financing gap after aid for 2023 reached $682 million or 3.9 percent of GDP, and the situation is expected to worsen further in 2024, with a potential financing gap of up to $1.2 billion. A focus on fiscal policies, especially those improving spending efficiency, particularly regarding the unsustainable wage bill and enhancing tax mobilization, must remain a top priority in the reform agenda,” said the report.
The World Bank argued that the banking sector across the territories is “well regulated” by the Palestine Monetary Authority, which has “steadily been building the capabilities and resilience of local banks.”
The report added: “Presently, the banking system is well capitalized, liquid, and compliant with the Capital Adequacy Requirements set by the PMA. At the same time, institutional and economic difficulties are tilting the risks upward for the financial sector. Actively avoiding further instability is crucial to allow the financial sector to maintain its established function as a stable pillar during periods of economic challenges.”
Startup Wrap – regional startup activity flourishes
CAIRO: The startup ecosystem in the Middle East and North Africa region saw a flurry of activity as venture investments and acquisitions bloom.
Saudi Arabia-based Software-as-a-Service provider Merit has raised $12 million in its pre-series B funding round, led by Alistithmar Capital i-Cap and followed by existing series A investors Tech Invest Com and Hambro Perks Oryx Fund.
Founded in 2016 by Julie Barbier-Leblan and Thrishan Padayachi, Merit assists businesses in increasing customer and employee engagement via a suite of cloud-based SaaS platforms, enterprise solutions, applications, and software.
This new round will help Merit develop its technology to enhance customer engagement. In 2021, Merit raised $5 million in a series A round led by Saudi Arabia’s Impact46, along with Tech Invest Com, Arzan VC, Hambro Perks Oryx, and several regional angel investors.
Riyad Capital launches 1957 Ventures to support digital transformation
Riyad Capital, backed by Riyad Bank, has launched the 1957 Ventures investment fund to drive transformative growth in Saudi Arabia’s fintech sector.
The fund aims to accelerate the Kingdom’s digital transformation by creating opportunities for innovative fintech business models.
Abdullah Alshwer, CEO of Riyad Capital, stated, “The 1957 Ventures Fund embodies a forward-thinking financial vision aligned with the Kingdom’s ambitious digital transformation goals; this fund signifies a strategic investment in the future of Saudi fintech.”
“Our institutional approach will unlock new levels of innovation, driving both sector growth and sustainable economic impact,” he added.
Saudi logistics startup MDD closes $1.3m series A round
Saudi Arabia-based logistics startup MDD has closed its series A round with $1.3 million in funding for a 5 percent stake with a valuation of $26 million.
Founded in 2019, MDD provides supply chain solutions for businesses.
Saudi startup Sorbet’s raises funding round from web3 VC Adverse
Saudi web3 startup Sorbet raised an investment round from the Kingdom’s recently announced venture capital firm Adverse.
Founded by Rami Djebari and Maher Ayari, Sorbet aims to simplify business processes for freelancers by cutting fees and intermediaries.
“Receiving support from an experienced partner like Adverse will accelerate our development and enhance our market strategy. This collaboration is a milestone in breaking down financial barriers and enabling limitless growth opportunities for professionals in the region,” Djebari said.
Egyptian fintech e-Finance acquires stakes in Al Ahly Momken and EasyCash
Egypt-based fintech e-Finance for Digital and Financial Investments has acquired a 25 percent stake in Al Ahly Momken and a 13 percent stake in EasyCash for Digital Payments for an undisclosed deal value.
Founded in 2005, e-Finance is involved in the development of digital payment infrastructure and digital space to help achieve social development goals.
Al Ahly Momken, based in Egypt, is a digital payment provider, serving over 90,000 merchants and more than 5 million customers.
Meanwhile, EasyCash, also based in the north African country, provides payment services for individuals, merchants, and businesses.
These acquisitions align with e-finance’s strategy to expand its footprint in the digital payments market and support Egypt’s Vision 2030 for digital transformation.
Egypt’s OneOrder closes $16m series A round
Egypt-based logistics startup OneOrder has raised $16 million in a series A round in a mix of equity and debt, led by Delivery Hero Ventures, with participation from Norrsken22 and existing investors, Nclude and A15.
Founded in 2022 by Tamer Amer and Karim Maurice, OneOrder is a tech-enabled supplier and wholesale distributor that offers the food and beverages industry a supply of quality goods with embedded financing.
The company plans to expand into the Gulf Cooperation Council region by the fourth quarter of 2024. In December 2022, OneOrder closed a seed round at $3 million.
Jordan’s fintech liwwa takes $5m loan
Jordan-based fintech liwwa has secured a $5 million loan from the US International Development Finance Corp..
Founded in 2013 by Ahmed Moor and Samer Atiani, liwwa is a peer-to-peer lending network that connects investors and small businesses through smart business loans.
The latest cash influx will enable liwwa to finance further small and medium sized enterprises across various sectors. Liwwa’s last funding round was in 2022, when it raised $18.5 million in a pre-series B round of equity and debt.
Egyptian investment bank EFG Hermes acquires stake in Danish wealth management firm
Egypt’s investment bank, EFG Hermes, a subsidiary of EFG Holding, has acquired a minority stake in the Danish digital wealth manager Kenzi Wealth for an unknown value.
The new partnership will enhance EFG Hermes’ digitalization vision. By combining EFG Hermes’ client network and Kenzi Wealth’s AI tools, EFG Hermes will be able to offer its clients a more efficient and personalized investment experience.
Founded in 2021 by Mohamed El-Masri, Kenzi Wealth specializes in tailoring investment features to meet the needs of investors.
UAE’s Plain Tiger raises funding round
UAE-based business-to-business marketplace Plain Tiger has raised an investment from UAE’s venture capital firm AngelSpark for an undisclosed amount.
Founded in 2021 by Alexandra Polson and Oliver Baillie, Plain Tiger connects hotels with eco-friendly suppliers, saving them time, money, and reducing their environmental impact.
The investment is part of Plain Tiger’s $1.5 million seed round, which will be used to expand into Saudi Arabia and accelerate more hotels’ pathway to net zero procurement.
UAE’s Revent closes $900k in pre-seed round
UAE-based electronics marketplace Revent has raised $900,000 in a pre-seed round, provided by Techstars and a group of angel investors.
Founded in 2022 by Baldeep Singh and Dhananjay Choubey, Revent offers SMEs pre-owned devices on monthly subscriptions across the UAE and Saudi Arabia.
The funds will be used to build a self-service platform for businesses, along with growing Revent’s client base in Saudi Arabia.
UAE’s proptech Keyper closes $4m equity round
UAE-based proptech Keyper has raised $4 million in equity in a pre-series A round, led by BECO Capital and Middle East Venture Partners, with participation from existing investors Vivium Holding, Jabbar Group, Signature Developers, and new investors Annex Investments, Pin Investment, and Al Qahtani Investment, among other angels.
The company has also received an additional $30 million in Shariah-compliant sukuk financing from global asset manager Franklin Templeton Investments Ltd., bringing its cumulative capital raised to-date to over $40 million.
Founded by Omar Abu Innab and Walid Shihabi in 2022, Keyper offers a property management platform where tenants can track their expenses and charge online, and investors get real estate portfolios and access to data-driven insights.
Keyper will invest the fresh funds into digitizing the rental experience in the UAE and scaling its innovative rent now, pay later solution. Last October, Keyper raised a $6.5 million seed round.
UAE’s proptech Huspy raises investment round
UAE-based property technology firm Huspy has raised a fresh investment round led by Balderton Capital, with further participation from existing investor Fifth Wall, amongst other investors.
Founded in 2020 by Jad Antoun and Khalid Ashmawy, Huspy facilitates the home buying and financing process through its online marketplace.
The company claims that this round of funding is at a higher valuation than the $37 million series A raised in 2022. The newly acquired capital will be deployed to build a super app for real estate.
Egypt’s proptech Birdnest raises pre-series A round
Egypt-based proptech Birdnest has closed an undisclosed pre-series A funding round for a 20 percent stake in the company, led by Beltone Venture Capital and CI Venture Capital.
Founded in 2020 by Mostafa El-Nahawy and Ahmed Fadda, Birdnest offers furnishing services and rental management solutions to ensure maximum returns for real estate investors and value for tenants.
The funds are earmarked for the expansion of the regional quality team, the enhancement of proprietary technologies, and marketing initiatives to reinforce Birdnest’s market position.
Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand
SINGAPORE: Oil prices were stable on Friday as investors considered the latest comments from the US Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal US fuel demand lent support, according to Reuters.
Brent crude futures rose 2 cents at $81.38 a barrel at 6:15 a.m. Saudi time, while US West Texas Intermediate crude futures were down 1 cent at $76.86.
Both benchmarks settled at multi-month lows on Thursday, with Brent crude futures closing at their weakest point since January and US crude futures hitting a three-month low.
Brent futures were headed for weekly declines of more than 3 percent, while WTI futures were poised for a slide of nearly 4 percent from last week as ongoing macroeconomic constraints in the US held prices in the balance.
“The sore demand sentiment owing to the hawkish Fed outlook at rates and the backdrop of ‘possibly higher-for-longer rates’ weighed significantly on oil prices this week,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
Minutes released on Wednesday from the Fed’s latest policy meeting showed policymakers questioning whether current interest rates are high enough to tame stubborn inflation.
Some officials said they would be willing to hike borrowing costs again if inflation surged. However, Fed Chair Jerome Powell and other policymakers have since said they feel further rate hikes are unlikely.
Higher rates could slow economic growth and crimp fuel demand.
Meanwhile, strengthening US gasoline demand was helping to stabilize prices ahead of the Memorial Day holiday weekend, which is considered the start of the US summer driving season.
Gasoline demand in the US reached its highest level since November, the Energy Information Administration said on Wednesday. That helped support the market as US drivers account for around a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” ANZ analysts said in a note.
All eyes are now on the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, set to meet on June 1, where they are expected to discuss whether to extend voluntary oil output cuts of 2.2 million barrels per day.
“The market is also tentative about taking an aggressive positioning ahead of next week’s OPEC meeting, where supply policy will be discussed,” ANZ analysts added.
Oil creeps back up after three days of losses
Oil prices crept up on Thursday, clawing back some of the previous three days’ losses.
The gains were made despite the US Federal Reserve entertaining a further tightening of interest rates if inflation remains sticky, a move that could hurt oil demand.
Brent crude futures were up 92 cents, or 1.1 percent, at $82.82 a barrel by 1317 GMT. US West Texas Intermediate crude futures were 97 cents, or 1.3 percent, higher at $78.54. Both benchmarks fell more than 1 percent on Wednesday for their third straight day of losses.
Saudi crude exports
Saudi Arabia’s crude exports reached 6.41 million barrels per day in March, according to an analysis from the Joint Organizations Data Initiative.
This figure increased by 96,000 bpd, or 1.52 percent, compared to the previous month, marking a nine-month high. Furthermore, the data indicated that the Kingdom’s crude production fell to 8.97 million bpd, reflecting a monthly decrease of 0.42 percent.
This can be linked to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Saudi Arabia announced in March the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of the second quarter of 2024.
The Ministry of Energy said that the Kingdom’s production will be approximately 9 million bpd until the end of June.
Meanwhile, refinery crude output, representing the processed volume of crude oil yielding gasoline, diesel, jet fuel, and heating oil, fell by 4 percent compared to the previous month, reaching 2.56 million bpd, according to JODI data.
