الهيئة العامة للرقابة المالية

• Farid: FRA Prioritizes Entrepreneurship Support in Non-Banking Financial Sector Development
• Building a successful startup demands unwavering determination, a steady foundation, and adaptability amidst numerous challenges and sacrifices
• The Diagnostic Report of Entelaq offers a valuable assessment of the challenges and opportunities faced by entrepreneurs, contributing significantly to sustainable development

 Dr. Mohamed Farid – FRA Chairman participated in the launch of Entelaq Second Edition of  Bi-annual Report on Egyptian Entrepreneurship Sector. The report evaluated government policies, social inclusion, financial inclusion, risk capital financing, ease of doing business, cross-border capital flows, private sector contributions, and development sector contributions to entrepreneurship. Its goal was to provide a clear understanding of the challenges and opportunities within Egypt’s entrepreneurial ecosystem.

Dr. Rania Al-Mashat – Minister of Planning, Economic Development and International Cooperation attended a ceremony. Also Hossam Heiba, CEO of the General Authority for Investment and Free Zones “GAFI” participated in the event in addition to Basil Rahmi, CEO of the Egyptian Micro, Small, and Medium Enterprises Development Agency (MSMEDA) and Ahmed Hassan Elzaher- CEO of Egypt’s Information Technology Industry Development Agency (ITIDA).  That is besides Sherif Yahia- Deputy Assistant to FRA Chairman and Ahmed Hussein, Deputy Assistant to FRA Chairman; Mohamed Ayad, Director of FRA Media Center and leaders of Entelaq Company.

Dr. Farid states that FRA emphasizes the significance of fostering entrepreneurship within the non-banking financial sector. He adds that the Authority believes that entrepreneurship is crucial across all economic fields. Fintech and digital technology are now essential for achieving economic growth and development.

 He adds that while entrepreneurial success is celebrated, it often comes at a significant personal cost. Entrepreneurs face challenges in areas like finances, mental health, and family relationships. To overcome these hurdles, they need resilience, adaptability, and a willingness to make sacrifices. Also, Dr. Farid thanks the founders of Entelaq for their hard work in creating this report and their support of local entrepreneurs.

Dr. Farid points out that innovation and entrepreneurship are driving economic growth across various sectors. By reducing the burdens on entrepreneurs, we can encourage the development of new and successful business models. He emphasizes that Egypt has the potential to benefit from this approach, and FRA is incorporating this into its policies for the non-banking financial sector.

He appreciates Entelaq efforts in creating the second diagnostic report. This valuable report examines the challenges and opportunities facing entrepreneurs, which is crucial for the sustainable development of all sectors of the Egyptian economy.

 He points out that FRA has implemented various regulations and executive decrees to support entrepreneurship, innovation and fintech. The Authority has developed the Egyptian Standards for the Financial Evaluation of Enterprises, which provide valuation criteria tailored to the unique business models of startups. He adds that by incorporating new methodologies that align with the characteristics and growth stages of startups, especially those in the pre-revenue or pre-sales phases, the Standards can assist these startups in securing the necessary funding for growth, expansion, business development, and achieving their goals

On the other hand, FRA has established specific requirements for fintech startups seeking licenses to engage in non-bank financing activities. The regulations set a minimum capital of 15 million Egyptian pounds, instead of 75 million Egyptian pounds for companies operating in non-banking financing activities other than real estate financing, which requires a minimum capital of 100 million Egyptian pounds.

FRA finalized a comprehensive legislative and regulatory framework to expedite digital transformation and expand financial inclusion. This framework includes a series of resolutions and regulations aimed at digitizing non-bank financial transactions, thereby increasing the number of individuals benefiting from these services.

In addition, FRA issued Law No. 5 of 2022 to regulate the use of financial technology in non-banking financial activities. Then, Decree No. 58/2022 was issued to set the requirements and procedures for establishing, licensing and approving companies and entities seeking to engage in non-banking financial activities through fintech. Also, the Authority issued Decree No. 139 of 2023 to establish standards for the equipment, technological infrastructure, information systems, security measures for fintech institutions. That is besides decree No. 140 of 2023, the first regulatory decision issued by FRA, establishes guidelines for digital identity, digital contracts, digital records and the use of fintech in non-banking financial activities. The decree outlines specific requirements for customer digital identification. In addition to Decree No. 141 of 2023 to establish the Outsourcing Registry, for companies engaged in FinTech activities offering outsourcing services (Outsourcing Service Providers). These companies offer electronic customer identification and contract record services for non-banking financial institutions.

As a result, four Outsourcing Service Providers were registered  and have entered into contracts with approximately 40 non-bank financial institutions. Negotiations are underway with an additional 60 non-bank financial institutions. Meanwhile, four companies, including non-bank financial technology startups, have obtained licenses to provide their services.

The Authority issued Decree No. 57 of 2024, establishing regulations for the Robo-Advisor investment program, a first-of-its-kind automated financial advisor in Egypt. Additionally, Decree No. 69 of 2023 mandated insurance companies to connect their databases to the Authority’s database, ensuring technological infrastructure compatibility.

That is besides Decree No. 292 of 2023 which expanded the channels for distributing micro-insurance policies electronically by allowing telecommunications companies and licensed electronic stores to market these products through their information systems.

As well as Decree No. 59 of 2024 which authorized insurance companies to market their products through telecommunications company branches. Additionally, Decree No. 60 of 2024 established guidelines for insurance companies to market their products through banks licensed by CBE or the National Postal Authority or Nasser Social Bank.

This led to the establishment of a pioneering partnership between Misr for Life Insurance and E & Egypt, enabling the electronic marketing and distribution of insurance documents. Additionally, a cooperation agreement was signed with the National Telecommunications Regulatory Authority to validate customer data and accelerate the digital transformation of the non-banking financial sector.

The Authority set rules for special purpose acquisition companies (SPACs), as outlined in decree No. 148 of 2024. These companies were required to temporarily list their shares on the Egyptian Stock Exchange with a minimum of 10 million Egyptian pounds of issued and paid-up capital. Additionally, they were obligated to increase their capital in cash to 100 million pounds within three months of listing.

The Authority received the first application to establish a special purpose acquisition company (SPAC), a venture capital firm focused on acquiring companies operating in the non-banking financial services and fintech sectors, including finance, various financial services, and payment platforms.