Return to Transcripts main page
Quest Means Business
Gains Driven by Tech and AI-Related Stocks; Government Pushing to Increase Visitor Numbers; Elon Musk Meets Macron in Paris; Pentagon Papers Leaker Daniel Ellsberg Dies At 92; Ramaphosa Calls For De-Escalation Of Conflict. Aired 3-4p ET
Aired June 16, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:29]
ELENI GIOKOS, CNN INTERNATIONAL HOST: The bulls are in play, the S&P finishes out its best week since March on a positive note. Let's take a
look to see how the markets are doing. Dow Jones is down 37 points. It is basically flat. It has turned red after mostly (AUDIO GAP) as stocks drive
a new bull market, analysts have dubbed them "The Magnificent Seven."
A delegation of African leaders go on a peace mission to Ukraine.
RICHARD QUEST, CNN INTERNATIONAL HOST: And live from Cairo, we've got a preview of the Grand Egyptian Museum, part of Egypt's plans to grow tourism
by 30 percent a year.
With Eleni Giokos in Dubai, I'm Richard Quest in Cairo and most certainly, together we mean business.
GIOKOS: All right, a very good evening and welcome to the program. We'll be catching up with Richard in just a moment.
Well, tonight, Wall Street is wrapping up a strong week for investors. Today's session in itself hasn't been too eventful.
As you can see, we're basically in the red, marginally down. Well, the S&P 500 is on track for its best week since March, however, this is said to be
its fifth straight week of gains. It is up more than 20 percent since October, even as the Fed tightens monetary policy. The Central Bank paused
its rate hikes on Wednesday, but signaled more is coming, more rate hikes on the horizon.
The recent gains have been fueled by a handful of stocks that some analysts are calling The Magnificent Seven. The group is reminiscent of the FAANG
stocks that outperformed the markets in the 2010s, and they were Facebook, Apple, Amazon, Netflix and Google.
Now, Netflix is out and in its place are Tesla, NVIDIA and Microsoft.
Art Hogan is the chief market strategist at B. Riley Wealth Management. He joins me now.
Great to have you on. The Magnificent Seven seems to be driving a lot of the optimism that we're seeing, and here we see a bull market continuing as
we see a hawkish fed.
Take me through how this is possible. The market is clearly looking at something positive in the future.
ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY WEALTH MANAGEMENT: Now, I can certainly tell you this, we are clearly well within the end of this rate
hiking cycle that's been going on for 15 months and 10 consecutive rate hikes in a row just ended at this last meeting. So, that really appears to
be good news.
The other piece of the puzzle is while we may be surprised that the Fed penciled in two more rate increases for this year, using the dot-plot that
they've put out over the course of the last couple of years as the blueprint has been a big mistake.
I think it's just the 18 members of the FOMC putting down their best guesses about an uncertain future, and I think the market is looking at
this and saying at the very most, we may get one more rate hike, and that's probably in July, but if we don't, we've probably seen the last of the rate
hikes.
So what happens after that is, all of our lens through which we look at economic data turns to good news, can be good news and this week was really
a reflection of that.
GIOKOS: Yes. Yes. Okay. So, I mean, what the market could be showing us as well is that we could be looking at a soft landing, right? I think many
people are worried about what happens to the economy, what happens to consumer spending, how this impacts overall, right, because the Fed seems
to still think we need more evidence, we are worried about core inflation.
The market is giving us a totally different signal here.
HOGAN: Yes. I think what the market is saying is it seems virtually impossible that the Fed has been able to raise by 500 basis points over the
course of the last 15 months, and yet the unemployment rate is below four percent. Consumers remain confident in spending.
We saw the retail sales that came out this week for the last month were terrific. We saw the Michigan confidence numbers, absolutely fantastic.'
And connected to that was the fact that inflation expectations have come down precipitously. So, I think that the consensus is that this is an
economy that refuses to go gentle into that good night, and the Fed has likely done enough to restrict inflation such that by the end of the year,
we'll likely see the core CPI and core PCE with a two-handle, call it two- and-a-half to two-and-three-quarters and I think that is why the market is celebrating now.
[15:05:03]
GIOKOS: Yes, so look, The Magnificent Seven, looking at AI stocks, the excitement around that, but also the major fears, right, that this could be
the end of humanity or the world as we know it.
If we strip out how those stocks have been impacting the markets, where are we really headed?
HOGAN: So that's a great question and the narrative for most of this quarter has been all of the performance is coming from The Magnificent
Seven, the AI hyper-charged mega technology companies.
But if you look at the S&P 500 index right now, which is up some 25 percent off of its October lows, we currently have 190 components or 190 S&P 500
companies that are outperforming the index itself, and the advanced decline lines, meaning how many companies are advancing versus declining just set a
new high this morning.
So, it is easy to fall back on the fact that yes, they get all of the attention, but we've got an industrial sector that is one percent off an
all-time high. We've got the regional banks that have bounced significantly off of their lows. We've got 10 of the 11 S&P 500 sectors this week alone
have advanced. So this market is starting to broaden out.
Another way to look at that is the Russell 2000 small caps are outperforming the S&P 500 for the month of June. So while the S&P certainly
was the leadership and those Magnificent Seven companies were the leadership on the way to where we got here, I think the month of June has
been one that is seeing a lot of breadth coming into this market where participation really is a catch up to those sectors that haven't actually
performed well thus far this year.
GIOKOS: Art Hogan, thanks so much. Have a fantastic weekend.
HOGAN: Thank you.
GIOKOS: Well in Egypt, the government is pushing to grow its tourism revenue after it was crushed by the pandemic. The industry is crucial for
the country's economy. Its tourism minister is hoping to increase numbers by up to 30 percent each year for the next five years, and a big part of
that will be a long-awaited new museum just down the road from the ancient pyramids.
Richard Quest is in one of my favorite cities, in Cairo and he has been speaking to the Egyptian Tourism minister.
Richard, how is the Nile? How is Egypt right now?
QUEST: Good evening from Cairo.
Good evening.
Well, it's Friday night and you'll be well familiar with this from your Middle East home, the noise and the cacophony of sounds, the weekend and
it's even more so here in Cairo, which is a city that is teeming with millions of people seemingly all moving in the same place at the same time.
Now, what we have been looking at, I've been in Egypt for "World of Wonder" which you can see next month, but it was a perfect opportunity to also
really get to grips with the tourism industry, especially this brand new museum that cost the best part of a billion, it has taken a couple of
decades to get ready.
And if the minister as he says is true to his word, it will open quite soon. I'm talking about the GEM, the Grand Egyptian Museum.
(BEGIN VIDEOTAPE)
QUEST (voice over): In the land of one of the oldest civilizations on Earth, a new museum worthy of history, is now set to open. It is next door
to the Great Pyramids of Giza.
The Grand Egyptian Museum or GEM is expected to become the world's largest archaeological museum when finally opens its doors.
Visitors walk into the shadows of the pharaohs. A 3,000-year-old statue of Ramses II awaits your arrival.
UNIDENTIFIED MALE: It is a key object in the museum. The main story of the museum is kingship and power. The one who has built so many temples, the
one who has built so many fortresses and led so many campaigns.
QUEST (voice over): and you'll be able to explore around 100,000 artifacts throughout your visit.
Building the museum was a saga worthy of an ancient scroll itself. Construction began nearly 20 years ago. It soon faced delays, funding,
issues of construction, and in 2011, when the Arab Spring threw the government into chaos, and work was brought to a halt.
In 2014, construction began again, only to be delayed by COVID-19.
QUEST (on camera): What do we have here?
UNIDENTIFIED MALE: This is the Royal Regalia.
QUEST: It's all designed to show power.
QUEST (voice over): Finally, the GEM is set to open later this year, which can't be soon enough for the Egyptian government. A delay of a few more
years may not seem significant in a land where history goes back several millennia, where it took decades to build pyramids and tombs.
But after years of lagging tourism revenue, the opening and the tourist money it brings in will come as a great relief for the Grand Egyptian
Museum.
(END VIDEOTAPE)
[15:10:10]
QUEST (on camera): The object is to get the museum open and there will be millions of visitors each year.
As part of this greater strategy, I sat down with the minister. He is a former banker, who have come from the private sector into government, and
is causing a revolution of his own sort, in the way he is viewing and running the tourism industry.
He is putting it on a new footing. I spoke to Minister Ahmed Issa at the Grand Egyptian Museum and wanted to know when it is going to open.
(BEGIN VIDEOTAPE)
AHMED ISSA, EGYPTIAN MINISTER OF TOURISM AND ANTIQUITIES: Here, we're bringing in a whole new story to the public and to humanity. We're trying
to showcase how 30 dynasties of the old Egyptian civilization brought to the world concepts like kingship, like values and eternity, like how should
the community live together.
QUEST: You've also got things like Tutankhamun here, all being with moved in, correct?
ISSA: Correct.
QUEST: What are the stars to be seen?
ISSA: So everyone, of course, is talking about the fact that this hall is going to bring together the 6,000 pieces that were discovered in the 1920s
of last century, and I think this is correct, you know, I think everyone has the right to feel excited about this collection coming back together
for the first time since Howard Carter discovered the tomb.
But it's not only going to be about that this is just a case study, actually, a snapshot in time, given what the rest of the museum is going to
tell as a story for humanity and for Egyptians.
QUEST: What is fascinating, of course, is its location, right over there, of the pyramids. How do you make the most of it?
ISSA: We have to make sure that one of the largest public spending programs in the tourism industry and in the archaeological industry, actually, for
the past three decades generates the right returns for Egyptians and for the state.
But it's not only about the economics, of course, any museum has to tell a story, and the story that this museum is going to tell is very clear. This
is going to reconnect Egyptians with their history and it's going to explain to humanity how Egyptians over 3,000 years invented concepts of
living together, values, doing right today for the next life and so forth.
And to tell you the truth, this story requires a huge scientific apparatus and a huge scientific organization to support it. Yes, it's a grand
building, but beneath it, there are labs, there is science, there are scientists who are working day and night to try to reinvent the science of
Egyptology and archaeology.
QUEST: When are you going to open it?
ISSA: We have plans to finish all the works by October. The president himself is going to choose the opening day. It is going to be between
November and February.
QUEST: Egypt has been excellent at managing to bring tourists in. Your numbers are now back to where they were and beyond. How are you going to
grow tourism in a sustainable, manageable fashion?
You know, you and I have talked about this. Anybody can drag them in, you know, 15 million, 20 million, 30 million. Yes, you can get them in, look,
but that's not going to be very good. So how are you going to do it.
ISSA: So there are three priorities that we have set as a government and the number one, of course is to try to make sure that we have enough
aviation seats each year growing at 30 to 35 percent per annum flying into Egypt because 90 percent of Egyptian tourists actually arrive via air.
The second is actually we have to make sure that we bring up the number of hotel rooms, accommodation, and there are standards that are now set in
Egypt for ecologists, for sustainability in hotel rooms, and carbon footprint.
And the third is actually, we have to make sure that there is a good environment for investors to receive good returns as they develop tourism
in Egypt sustainably and benefit from the expected growth.
QUEST: The sheer numbers that will -- I mean, all of this is -- this is designed for tens of millions. I'd be one of the first critics that said
the pyramids were dreadfully maintained, awful. You're number one thing. You're now improving that.
How would you prevent over tourism?
ISSA: So, the key thing is actually that the private sector as it develops this industry, Richard, the understand fully that the demand trends are
shifting.
Their customers are now demanding that the industry has to be more sustainable, that the providers of services has to do it in a way that it
ESG-compliant.
QUEST: You have several choice and propositions. You have Cairo and all the culture. You then have the Nile down to Aswan. And then you have lower
Egypt with the with Sharm El-Sheikh, and you have the whole area around winter sun. Do they complement each other or compete?
ISSA: Well, they complement each other. If you look at Cairo today, the number of visitors that Cairo receives today is just a fraction of what it
deserves. And if you look at major cities in Europe and how many visitors they receive, I think with the museum opening next year, the private sector
operator of the museum expects two million visitors actually during the first year of operations.
And that number is going to recreate Cairo as a destination on its own. This museum is going to put Cairo back as an exclusive destination for
visitors to come.
But Luxor and Aswan remains a key magnet for cultural tourists.
QUEST: What do you think of the industry? I mean, you came from the exact opposite. You came into tourism, you've now been there a good while. You've
seen it. What do you think of it?
ISSA: Tourism is a is a noble industry if people truly understood what it can do to bring people together, to bring peace to the world. But to tell
you the truth, the industry, and it still suffers from a lot of under supply.
I think the industry recognizes that now. The amount of interest that I'm receiving from international investors to build hotels, to produce products
in Egypt, to tell you truth is heartening to me.
(END VIDEOTAPE)
QUEST: That's the Minister of Tourism and Antiquities on the GEM. The issue, of course in Egypt is the economy.
Later in the hour, we'll be talking about what needs to be done by way of structural reform. The Egyptian pound continues to fall. And will they need
more help from the IMF?
Its QUEST MEANS BUSINESS tonight, also from Cairo.
(COMMERCIAL BREAK)
GIOKOS: I'm Eleni Giokos in Dubai and this QUEST MEANS BUSINESS.
Now from ships to planes, trains and trucks, goods can be moved in so many ways across international borders. Technology is playing a vital role in
making transit journeys more sustainable.
[15:20:07]
We spoke to one company in Sweden that's now going the extra mile to introduce a product that could further transform the future of trade.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE (voice over): Andreas has about two hours before reaching the bridge between Norway and Sweden. Drives like these are often
perfect for some deep thinking.
ANDREAS ALLSTROM, DIRECTOR, PUBLIC FUNDING AND RESEARCH COLLABORATION, EINRIDE: Well, it's a beautiful road.
UNIDENTIFIED FEMALE (voice over): Well, most of the time.
ALLSTROM: It's a long way to the border. It is -- we have plenty of time.
UNIDENTIFIED FEMALE (voice over): To be fair, Andreas probably isn't thinking about today's journey too much because he's focused on tomorrow.
Tech advancements have left no area of trade untouched and Andreas hopes to help goods move more efficiently by removing cargo drivers from the road.
ALLSTROM: Here we're looking at the huge transformation of the freight transport industry.
UNIDENTIFIED FEMALE (voice over): Andreas works at Einride, a tech company specializing in self-driving and electric trucks.
Dozens of startups are experimenting with driverless trucks, but Einride is one of the few trying to make them electric at the same time.
TOMAS OHLSON, FOUNDING ENGINEER AND SVP OF DRIVING SYSTEM, EINRIDE: You can have cleaner freight, you can use less vehicles and move things directly to
where they need to go.
UNIDENTIFIED FEMALE (voice over): About 80 percent of all inland European freight moves by road. This dependence on trucks can lead to a few
problems, not just in terms of pollution, but people.
OHLSON: There is of course, the driver shortage. When you have few drivers that work a lot of hours, they are away from their families for a long
time, it is really an unsustainable solution.
UNIDENTIFIED FEMALE (voice over): Einride, obviously, believes its electric driverless trucks are the answer.
Today, five customers use them, mainly on private property, because getting them out in public is complicated and that's where Andreas comes in. He is
working on a project rollout driverless trucks, not just on Swedish roads, but across the entire continent.
ALLSTROM: So the storyline of the project is to go from Rotterdam to Oslo.
UNIDENTIFIED FEMALE (voice over): Andreas and Einride are part of The MODI Project, an initiative that aims to reimagine logistics by automating them.
Partially funded by the European Union, this project brings together 36 public and private partners according to Einride. Each responsible for
different pieces of the puzzle.
ALLSTROM: I think, for me, collaboration is really what is the key here.
UNIDENTIFIED FEMALE (voice over): The project just launched in late 2022. By the time it ends, Einride hopes its trucks will be the first to cross
the national border. This one to be exact.
But to pull this feat off, the team first needs to study a variety of systems. In this case, how trucks currently navigate Customs.
ALLSTROM: We've now arrived at the Norwegian Customs on the border between Sweden and Norway. When the trucks come in, they can either do a manual
inspection or manual Customs clearance.
UNIDENTIFIED FEMALE (voice over): Although customs here do have a digital alternative in place, it is not too popular yet. But The MODI Project plans
on making the most of it to reach its goals, which, if achieved, could pave the way for cheaper, greener weights deliver goods.
(END VIDEOTAPE)
GIOKOS: Well, Elon Musk was the marquee speaker at the Viva Technology conference today in Paris. The Tesla founder also sat down with French
president, Emmanuel Macron. He has been pitching his country as a place to do business.
Anna Stewart reports from Paris.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER: Well, at the VivaTech conference this year, artificial intelligence definitely stole the show, whether it was on stage,
off stage, it is what the hot topic of conversation was, and unsurprising, given how much we've seen in terms of the development of that technology
over the last year, a lot of the conversation was on AI's potential, but a lot was also looking at the risk it poses.
Whether that's misinformation on social media, the risks to jobs that it could replace, or the risk to humanity itself, and it was on that topic,
that tech billionaire, Elon Musk really didn't mince his words over on the stage.
ELON MUSK, CEO, TESLA: There's a real danger for digital super intelligence having negative consequences. And so if we are not careful with creating
artificial general intelligence, we could have potentially a catastrophic outcome.
So now I think there's a range of possibilities. I think the most likely outcome is positive for AI, but that's not every possible outcome. So, we
need to minimize the probability that something will go wrong with digital super intelligence.
STEWART: As you can probably see, the stadium was absolutely packed. Elon Musk was only announced as a participant a week before the conference and a
fresh stadium was rented out. It can host 4,600 people and I think it had that many in it. It was absolutely heaving like a rock and roll concert,
and it wasn't just the public keen to have some time with Musk, it was also politicians.
[15:25:02]
On Thursday, Elon Musk was actually in Rome where he met with the Italian prime minister, and on Friday, with French president, Emmanuel Macron, the
second meeting with Macron within a month, which led many to wonder whether a big announcement was coming, perhaps Elon Musk will open a Tesla factory
here in France, speculation that will continue.
Anna Stewart, CNN, Paris.
(END VIDEOTAPE)
GIOKOS: All right, well, coming up, we're going to return to our Richard Quest who is in Cairo for us -- Richard.
QUEST: Good evening, Eleni.
Yes, after the break, the big problem of course affecting Egypt like many places is inflation. It's extraordinarily high.
The business leaders say they can't get their hands on foreign currency, dollars, euros or British pounds, and there is always the question of a
further devaluation of the Egyptian pound.
After the break, what's likely next in Egyptian economy? QUEST MEANS BUSINESS, Dubai and Cairo.
(COMMERCIAL BREAK)
GIOKOS: Hello, I'm Eleni Giokos and there is more QUEST MEANS BUSINESS in a moment when we will return to Richard Quest in Egypt where the war in
Ukraine is taking a devastating toll on the economy, and Nigeria's currency has dropped nearly 30 percent in just a few days after the Central Bank
allowed the naira to trade on the open market this week. We will speak to e-commerce giant, Jumia about the impact.
Before that, this is CNN and on this network, the news always comes first.
A US jury has convicted the gunman who killed 11 people at a synagogue in Pittsburgh, Pennsylvania. Robert Bowers was found guilty of all 63 counts
against him. He faces the possibility of the death sentence. The 2018 shooting was the deadliest attack against Jewish people in US history.
Daniel Ellsberg, the whistleblower who leaked The Pentagon Papers has died. According to a statement from his family, Ellsberg died of pancreatic
cancer this morning at his California home.
In 1971, he revealed to "The New York Times" that the US knew the Vietnam War was unwinnable.
A new dinosaur species has been discovered on the Isle of Wight off the coast of England. Here's a scene that might have happened around a hundred
million years ago. Its official name is the Vectipelta barretti. Scientists say this armored dinosaur, eat only plants.
[15:30:38]
Well, South African president, Cyril Ramaphosa, has called for a de- escalation of the Ukraine conflict after meeting with President Zelenskyy in Kyiv. Mr. Ramaphosa is part of a delegation of African leaders on a
peace mission that will take them to Russia on Saturday to meet Vladimir Putin. Russia launched a barrage of missiles in Kyiv as the delegation was
arriving at the Ukrainian capital. Mr. Ramaphosa gave his reaction.
(BEGIN VIDEO CLIP)
CYRIL RAMAPHOSA, SOUTH AFRICAN PRESIDENT: There must be a de-escalation of the conflict. Today, as we were here, we heard of missile strikes. And
those types of activities are not good for fostering peace.
(END VIDEO CLIP)
GIOKOS: Well, Sam Kiley now joins me from Kyiv. Look, it is interesting to see the South African President in Kyiv. Importantly, the South Africans
have been taking a stance of not wanting to get involved. They have not denounced the war in Ukraine, the invasion by Russia. Look, it's a sense of
time. But the African delegation certainly sends a message before they head over to Russia to speak with Putin.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, if they're talking about a de-escalation, there's one man who can order a de-
escalation and indeed a withdrawal and that is Vladimir Putin. They're going to meet him on Saturday.
Now, the Ukrainians make it absolutely plain to all in any and every diplomat or peace negotiator that wants to get involved in this process,
which is that they will not talk until every single last Russian soldier is off every inch of Ukrainian soil. And that is a position that is, at the
moment, full-throatedly supported by the United States, the European Union, and other allies of the Ukrainians.
Now, that doesn't mean that at some futures date, they may not find themselves in a position in which some kind of negotiation is inevitable,
but that is something that's simply not countenancing now. So Mr. Ramaphosa's statement was no doubt endorsed by the other six nations that
he's traveling with maybe a point of criticism of Vladimir Putin for his use of hypersonic missiles to target Kyiv when they were in the Ukrainian
capital. That would be interesting to be a fly on the wall when or if Mr. Ramaphosa asked Vladimir Putin why he did that during this high level
delegation.
He does have a relationship with the Kremlin. The South Africans, as you know, Eleni, had recently naval drills with the Russian Navy, there have
been controversies and criticism from the United States in particular about the relationship between South Africa and Russia. And recently, the head of
the South African Armed Forces visited his counterpart in Moscow. So, all of that means that there may be some point of influence that Mr. Ramaphosa
has.
But ultimately, I think the South African relationship with the Russians goes back to a kind of nostalgia for the Soviet era when, of course, the
Soviets were back in the African National Congress in the struggle era. Now that era is over. The Soviet Union is over, but there is a lingering
affection, it would seem, between South Africa and Moscow. Eleni.
GIOKOS: Yes, good point, Sam. And, of course, the BRICS summit to be held in South Africa later on this year. The big question is will Vladimir Putin
be going to that? Sam Kiley, appreciate your time.
Well, Egypt's prime minister is in Kyiv as part of the delegation. His country is dealing with an economic crisis made worse by Russia's invasion
of Ukraine. Inflation is now above 30 percent. Food prices have risen 60 percent in the year to May. Egypt relies heavily on wheat imports, which
have been disrupted by the war.
I want to get back to Richard Quest. He is in Cairo. Richard, look, we've seen the currency struggling, and here's the thing, I mean, you had to
devalue, but it was painful, necessary, but absolutely painful.
RICHARD QUEST, BUSINESS EDITOR-AT-LARGE: Yes.
[15:35:00]
And thank you, Eleni. The issue, of course, now is whether there'll be further devaluations. If you look at the way the Egyptian pound has gone --
has fallen so sharply, it's been down by nearly 40 -- or about 50 percent. Since the invasion, largely on the back of well, higher grain prices,
shortage of foreign currency, you name it, inflation and food inflation is exceptionally serious.
Amr Adly is with me. Good evening, sir. The Assistant Professor at the American University in Cairo. First of all, thank you, sir, for coming out
on a Friday night at the weekend.
AMR ADLY, THE AMERICAN UNIVERSITY IN CAIRO: My pleasure.
QUEST: How did you describe the noise, the horns?
ADLY: Well, it's like the Music City offers for free. So --
QUEST: The city, the noise and the music of Cairo for free. Good to have you with us. Now, the core issue, obviously, it got worse because of the
increased cost of grain, et cetera. But what's the real problem?
ADLY: Well, the real problem is that the Egyptian economy has been running on huge financial gaps, meaning that the economy requires more dollars than
it generates overall. And for the past years, we have been depending on filling these gaps by either borrowing money from the IMF or borrowing
money on international markets.
QUEST: But that has to come to an end. And so far, the IMF, with the last tranche, which it didn't give --
ADLY: Yes.
QUEST: -- basically said, we've given you money, we require structural reform, get on with it.
ADLY: Yes, well, the main issue really was with the -- like the hikes that the Federal Reserves introduced to the dollar. And this is what caught
Egypt, as well as many other emerging markets or developing economies, off capital markets.
What the IMF is asking for here is, in my view, not very clear, because one of the things that they are asking for is the -- like the free-floating of
the Egyptian pound. And this already translates into extremely high local inflation rates,
QUEST: Right. So they'd like -- they want a free-floating exchange rate. But they also, the IMF, want the government to be less involved in the
economy. They want more private sector involvement, subsidies, they want more reduced. Is this realistic in Egypt?
ADLY: I think it is. Subsidies had already been considerably cut. I think that now, we need some subsidies that are more targeted, especially that
you have mentioned, food inflation is extremely high. And this is something that comes at an extremely high human and social costs. So, I don't think
that subsidies is the issue.
One of the of the main issues is definitely encouraging the private sector to invest more. Private sector investment has been going down in the past,
like, decade or so.
QUEST: Now, there's no shortage. In fact, there's a vast array of public works. If I look out here tonight, I can see cranes everywhere.
ADLY: Yes.
QUEST: I'm not sure that this infrastructure spending is the most efficient in the world. But the IMF basically say -- is saying to the government,
stop it.
ADLY: Well, the investment, that infrastructure cannot be bad in itself, but you don't -- you definitely have this issue with the complementarities
that might exist between increases in public investment and the participation of the private sector, especially that the Egyptian economy
is driven by the private sector, like, more than 70 percent of the GDP, like, output, employment, investment, they all come from the private
sector.
QUEST: Whatever the economy and the ever -- whatever the difficulties of the economy, I have to say, it's a fantastic city, isn't it?
ADLY: Well --
QUEST: I mean, it really is absolutely fantastic.
ADLY: I'm happy you're enjoying it.
QUEST: Very much so. And the food is magnificent as well. Thank you very much, Amr.
ADLY: Thank you very much. It's a pleasure.
QUEST: As we continue tonight on QUEST MEANS BUSINESS, a special report from CNN's Nima Elbagir on the conflict in Sudan. This QUEST MEANS
BUSINESS. Good night.
(COMMERCIAL BREAK)
[15:41:29]
GIOKOS: The U.S. has strongly condemned the ongoing fighting in Sudan. The conflict is now in its third month. With more than 2,000 people believed to
have been killed, Doctors Without Borders describing the capital Khartoum as a violent situation that almost defies comparison. Fighting broke out in
April between Sudan's army and the paramilitary Rapid Support Forces. The U.S. State Department is warning that attacks on civilians must end.
Sudanese rights organization say atrocities are being committed in Darfur. And CNN has uncovered evidence that the Russian mercenary group Wagner is
complicit, continuing to support the RSF, Sudan's Rapid Support Forces paramilitary throughout the months of fighting, despite calls by U.S. and
others for support to cease.
In an exclusive investigation by CNN, we uncovered the Russian supply lines prolonging the conflict between the RSF and Sudan's armed forces that has
displaced around two million people since mid April and pushed the country further into humanitarian crisis.
The RSF denies links to Wagner and any involvement in mass rape. As part of this investigation, CNN verified and corroborated incidents of rape
perpetrated by the RSF, including one which was captured on video. We feel it is important in the face of the RSF's repeated denials to broadcast part
of that video, and we must warn you it is graphic and it is disturbing. CNN's Chief International Investigative Correspondent, Nima Elbagir brings
us the story.
(BEGIN VIDEOTAPE)
NIMA ELBAGIR, CNN CORRESPONDENT: The fighting on the streets of Sudan is relentless. Ceasefire after ceasefire has not held. Forces previously
accused of genocide returning to a well-worn playbook, terrorize, expel, and ethnically cleanse.
The paramilitary Rapid Support Forces, RSF, are currently engaged in a fight for dominance with Sudan's army. But years before that rivalry
spilled blood in Sudan's streets, they were implicated in atrocities in Darfur. Now, once again, Darfur, to the west of the country, is stalked by
the specter of genocide. The damage brought by these force is so extensive you can see it from satellite images. This is Al Junaynah, west Darfur,
hundreds killed, whole districts razed to the ground. And it's not only Al Junaynah that is burning, this is Andur, and this, Kudumi.
On the ground, it looks like this. These scenes sadly familiar in Darfur. Twenty years ago, the region descended into genocide. The same RSF
leadership in place as their men killed, occupied and raped. Now, once again, women's bodies are part of the field of war.
This video is too disturbing to broadcast in full, but it goes on to show a girl, believed to be just 15 years old, being raped. You see here a man in
light-colored fatigues matching those worn by the RSF. We've paused the video just before the camera pans to show another soldier wearing the same
uniform, forcing himself onto the prone girl.
[15:45:10]
CNN verified and geolocated the area where this happened. We're not revealing the exact location in Khartoum to protect our sources and the
young girl. This is not an isolated incident. We received and reviewed dozens of cases where women say they were raped by RSF soldiers,
identifying them by their light-colored fatigues and the insignia on their right shoulders. So, who is complicit in this pain?
The RSF's key ally, the notorious Russian mercenary group Wagner, has been sustaining their fight and providing the impetus to slaughter innocent
people by supplying arms. We're going to show you how. This is an Ilyushin il-76 cargo plane operated by Wagner sitting at a Libyan airbase. A
previous CNN investigation exposed how this Russian cargo plane was providing the RSF with deadly arms from a Russian naval base in Latakia,
Syria via Wagner-controlled bases in Libya.
This passing starts just days before the war begins in Sudan. Libya, Syria and back and it picks up pace. What's interesting here is the new focus on
the city where it goes next. Bangui, the capital of the Central African Republic. After our exposure of the Libya route, a route directly from the
Central African Republic into Darfur, became crucial for the RSF.
Eyewitnesses at key transit points and intelligence active in the region told CNN arms and supplies from this Ilyushin transported overland using
the truck captured here and others like it. First, to a Wagner base in Birao, and then into South Darfur, to an RSF base in Um Dafuq. Wagner,
putting their thumb on the scales here to secure access to Sudan's resources through Darfur, creating chaos and terror, helping tip the
balance of power in their war in Ukraine, whatever the cost. Nima Elbagir, CNN, Juba, South Sudan.
(END VIDEOTAPE)
GIOKOS: All right. Well, Jumia was once Africa's tech unicorn, now with a new leader at the helm. It is trying to gain back investors' confidence.
We'll be talking to the CEO, Francis Dufay, right after this short break. Stay with QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:50:14]
GIOKOS: Welcome back. This is Quest Means Business. I'm Eleni Giokos in Dubai.
Now Nigeria's central bank allowed the country's currency, the naira, to plunge this week on the foreign exchange market. You can see the drop there
on Thursday. It follows the suspension and detention of the previous central bank governor who oversaw multiple exchange rates.
Jumia is Nigeria's largest e-commerce platform. It was hailed as Africa's first unicorn when it went public in 2019. Now doubts about its future
growth and path to profitability promptly set back its valuation. Its founders and co-CEOs stepped down last year, giving way to new leadership
and a new strategy grounded in low costs and wider reach. So far so good. This past quarter, Jamia reported its lowest losses in four years.
Jumia CEO, Francis Dufay, joins me now from Casablanca, Morocco. So great to have you on the show. I mean, we've been talking about currency
devaluations, whether we're seeing it in Cairo where Richard Quest is broadcasting from tonight, or whether we're seeing it in Nigeria. We're
actually seeing so much pressure on African currencies. Would you say that the foreign exchange risk that you're facing in Africa is the biggest
problem you have right now?
FRANCIS DUFAY, CEO, JUMIA: Hi, Eleni. Thanks for having me on the show. It's a pleasure being here again.
I mean, I'm not -- I don't know if it's the biggest, but it's part of a macro environment that is extremely challenging at the moment. We had never
-- I mean, we have not seen that for a very, very long time. And, well, it's all adding up, currency trouble having a lot of impact on supply,
having impact potentially on political stability. So, it makes the environment a bit tougher for everyone. But it also pushes us to challenge
the business model and to enforce the right decisions at some point. So it's a very fair challenge. It will show very fast which companies are
strong and which ones are not. And we brace for impact, and we get ready for better times.
GIOKOS: Yes, look, it's also very unpredictable. Covering Africa for most parts of my career, I can tell you that I've seen big companies really
buckling on what they experience on the currency front, but you've got things that are in your control. You've, you know, consolidated. We've seen
job cuts, for example, you've got a new strategy in place. How does that counter what you're experiencing in the macroeconomic environment?
DUFAY: I think it's important for everyone in emerging markets, and especially for us across Africa to minimize risk at the moment. So
minimizing risk for us means, of course, being much more efficient in operations, cutting a lot of fixed costs. So with that, I mean, we've
removed nearly a third of all staff cuts in the recent past six months, and making sure that we secure the basics.
So we will not go for extravagant spend in marketing, for example, that's not the mindset -- not the time anymore for that. We'll go for really the
basics of value creation for consumers. Consumers are still here, there's still demand. But it just needs to be addressed in a much more pragmatic
way.
GIOKOS: Yes. Exactly. And look at how much they're able to spend and what - - thereafter, what products they need.
Look, on the logistics front, you also face enormous challenges, whether it's road infrastructure, you know, there's a plethora of issues as well.
When you first listed, you know, you were targeted as the Amazon of Africa, do you still believe that you can live up to that expectation?
DUFAY: Well, it's been a very high expectation. I mean, if you look in detail, what we're doing is also very different from what Amazon is doing.
We've adapted very much to the environment in Africa. A lot of -- from the outside, we're doing e commerce, but we're dealing with very different
sellers, with -- we're dealing with very different logistics. Our operation's actually quite different. We really adapted to the African
environment. So in a way, our business model is very different from Amazon. But the basics are the same.
GIOKOS: Yes. One of the most vibrant parts of the continent is the informal sector, right? It's those traders and, you know, there's a big conversation
on how to formalize the traders, how to offer them more products to get to more consumers. You're looking at expanding further and you're looking at
the rural side of things, because you can monetize that if you think about that in a pragmatic way.
DUFAY: Absolutely. Absolutely. I'm going to tell you a story. A few years back in Ivory Coast, I was talking to people in a remote pickup stations,
and we had customers who had been driving hundreds of kilometers to get to the pickup station so they could buy home appliance. I mean, -- from Europe
or from the U.S., it's crazy, right? I mean, because supply is abundant and you get everything you need nearby.
[15:55:06]
But what we're solving for across the African continent is supply for consumers. It's a daily struggle for consumers to get the right products.
So we need to bring our vendors, our best supply through smaller cities, to more remote areas where we're adding actually a lot of value and creating
that value, we can make a living for them as well.
GIOKOS: Look, I'll be honest with you, when I look at Jamia, I think that you are, in a way, a barometer, a gauge of, you know, how healthy the
African market is and just the prospects and the excitement and the opportunities that lie ahead. But you're dealing with challenges that I've
seen so many times before, with companies trying to break new ground. Do you feel confident that things are going to turn around, that you can --
yes, that you can get to where you want to be?
DUFAY: Yes, absolutely. Absolutely. I think we're going to prove, and we're starting to see the early results, we're going to prove that e-commerce in
Africa doesn't have to be expensive, can be extremely efficient, doesn't need a lot of marketing, and can create a lot of value for consumers, for
vendors, and for ourselves and can be a very valuable business.
It's a whole different approach that we explained a couple of months back. You see the first early results, at least in cost-cutting, we're rebuilding
the basics. But this business solves real problems for customers across the countries. And even in troubled situation. So you're mentioning Nigeria,
but -- I mean, you mentioned -- you saw the example of Egypt earlier in the show. Even in tough situations where infrastructure is poor, where there's
devaluation. There is still demand. I still have a job to bridge the gap between supply and demand and bring the right product to consumers. And we
see that there is business for us even in that situation. So, I'm not too worried about that.
GIOKOS: Yes. Fantastic. Well, Francis Dufay, I wish you all the best. Thank you so very much.
And that's it for me, Eleni Giokos in Dubai. We've got Richard who'll be back with a profitable moment from the vibrant and complex city of Cairo
right after this short break. Stay with CNA.
END
