Financial Supervision approves project to finance medium and small projects
The Board of Directors of the Financial Supervisory Authority (EFSA) approved in its session Wednesday morning a draft law amending the provisions of Law No. (141) for the year 2014 concerning the organization of the microfinance activity to include all financing activities for SME projects in order to maximize Of the target groups and SMEs to access various funding means, and will be sent to the Prime Minister to start issuing legislation.
Dr. Mohamed Omran, Chairman of the Egyptian Financial Supervisory Authority (EFSA), said that the draft law is a step by the regulator of non-bank financial services in order to understand the developments revealed by the actual application of the law regulating the microfinance activity over the past four years. , And to provide a new ceiling of funding for another category and in order to facilitate the associations and civil institutions to engage in financing activity in light of the changes in the Egyptian economy.
Omran said in a press statement on Wednesday that the Egyptian constitution issued in 2014 obliged the Egyptian state to work to protect economic, production, service and information activities as a basic component of the national economy, and because the activity of financing small and medium enterprises outside the banking sector. Is subject to an integrated legal regulation. Much of it is practiced through informal mechanisms and customary practices that lack the legal basis, which deprives the national economy of the advantages of efficiency, justice and stability in financing transactions in this field, despite representing more than 80% of the economic structure. In addition to representing more than 99% of the private agricultural sector in Egypt.
Omran added that the bill will enable the gap of funding to be absorbed into hundreds of thousands of jobs annually, thus reducing unemployment. On the other hand, it will regulate the work of the financing providers and limit the risks they may face, encourage them to expand this activity, By establishing the institutions they provide under a strict regulatory system, in accordance with international best practices in this regard.
The legal framework of the draft law includes an amendment to the microfinance law to regulate the financing of small and medium-sized enterprises as well as the microfinance activity, in accordance with the rules and regulations of practicing companies in a manner that achieves flexibility and ease of application. The project also emphasizes that the activity of financing small, medium and small enterprises of non-bank financial instruments and then subject to the provisions of Law No. (10) of 2009.
Dr. Imran noted that the most important part of the bill includes:
Replace the title of Law No. (141) for the year 2014 with the regulation of the microfinance activity, with the following title: "Regulation of Micro, Small and Medium Enterprises Financing Act", and the term "Microfinance" shall be replaced by the term "Financing SMEs, Law No. (141) for the year 2014 referred to.
The licenses granted to companies, associations and private institutions to carry out microfinance activity shall continue to apply unless they are canceled in accordance with the provisions of the accompanying law
Add definitions related to MSMEs.
Determining the issued and paid up capital of companies working in the field of financing medium and small projects so that they are not less than 20 million pounds for financing medium and small projects and 5 million pounds for financing micro projects. Companies wishing to engage in SME and microfinance activities together must meet the minimum issued and paid up capital for both activities.
Amend the statutes of the Egyptian Union for Microfinance to include the entities involved in financing the projects of medium and small enterprises, and amend the name of the Union to become the Egyptian Union for the financing of small, medium and small enterprises.
Licenses of practicing companies, associations and civil institutions licensed by the Commission to engage in financing activities of medium and small projects, financial leasing activity, taking into account the provisions stipulated in Law No. (176) for the year 2018, issuing the law regulating the financial lease and crediting activities referred to.
It is worth mentioning that the draft law has witnessed several sessions of community dialogue in the past period with representatives of financial institutions interested in financing small and medium enterprises, SME and SME, as well as companies and associations licensed to finance microfinance activity.
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