الهيئة العامة للرقابة المالية

Dr. Mohamed Farid – FRA Chairman:

• Digital transformation and sustainability are key pillars to develop non-bank financial markets and expand access to their services.
• Our policy emphasizes integrating non-bank financial  activities to enhance market efficiency and competitiveness
• New regulations were issued to govern investments of private insurance funds and insurance/reinsurance companies in the capital market, aiming to boost investment performance and maximize returns.
• The Authority mandated an increase in minimum capital for insurance sector companies to strengthen their financial solvency and enable them to handle larger risks.
• Investment banks need to play a greater role in educating the public about private insurance funds and their investment strategies.
• A community dialogue has been initiated to examine the compatibility of financial solvency standards for non-bank financing companies with Basel 3 requirements, in order to incorporate market feedback.
• Egypt’s pioneering voluntary carbon market supports the country’s commitment to achieve carbon neutrality and reduce emissions.

Dr. Mohamed Farid, FRA Chairman met with Canada Egypt Business Council “CEBC” during a seminar entitled: “FRA’s Strategy for Navigating Global Financial Challenges”. The seminar highlighted efforts to develop the non-bank financial sector, broadening access to its markets and institutions to support the national economy and promote financial, investment, and insurance inclusion.

The event was attended by a broad range of stakeholders, including Eng. Motaz Raslan, CEBC Chairman; Hanaa El-Hilaly, Head of SMEs Committee – CEBC and number of FRA leaders. In addition to representatives from market-operating companies, members of the Egyptian Business Council for International Cooperation (ECIC) and members of Canada Egypt Business Council (CEBC).

Dr. Farid stated that digital transformation and sustainability are fundamental pillars of FRA’s strategy for developing non-bank financial markets, with the goal of expanding the reach of financial services. He affirmed FRA’s ongoing commitment to formulate policies, design plans and issue the necessary regulations to safeguard the stability and promote the development of non-bank financial markets and institutions, while upholding the rights of all stakeholders.

He stated that the Authority’s development policy for the non-bank financial sector centers on strengthening the integration of non-bank financial activities to enhance market efficiency and competitiveness.  He highlighted the insurance sector as a prime example, pointing to the significant achievement of the Unified Insurance Law No. 155 of 2024.

This law provides a comprehensive legislative framework, consolidating four previously separate laws and incorporating international best practices.  It also aligns with Egypt’s development vision, particularly in promoting insurance inclusion. He stressed the urgent need to modernize traditional insurance business models, leveraging technology to achieve sector growth and maximize its contribution to the national economy.

Dr. Farid noted that FRA has mandated insurance companies to raise their minimum issued and paid-up capital in two phases over two years, in accordance with the Unified Insurance Law (July 2024). This will enhance their financial solvency, enabling them to underwrite larger risks and strengthen the sector’s financial stability.  The increased capital will also allow companies to invest in modern technology, improving customer service and ensuring they can meet their obligations to policyholders, while supporting greater insurance inclusion.

Dr. Farid highlighted the strong performance of the insurance sector, with total premiums rising 34.1% year-on-year to 82.3 billion Egyptian pounds in the fiscal year ending June 2024, up from 61.4 billion pounds the previous year. Paid claims also increased significantly, by 34.2% to 36.7 billion pounds, following a 27.3% rise in 2022/2023.  Total investments reached 298.2 billion pounds in June 2024, compared to 208.8 billion pounds in June 2023.

He emphasized the importance of substantial investment by insurance companies in the training and development of professionals, especially insurance intermediaries, noting that professional development and technology adoption are essential for achieving broader insurance inclusion.

FRA is actively working to develop the non-bank financial markets by focusing on a continuous assessment of market needs.  This involves creating a supportive environment for both businesses and investors, addressing the demand for investment, insurance, and financing services among individuals, and facilitating diversified funding options for companies.  These funding options are intended to support business development, improve financial and operational performance, and align with global best practices.  Furthermore, these efforts are integrated with the Egyptian government’s broader sustainable development agenda.

This contributes to enhancing the capabilities of the non-banking financial sector and improving its competitiveness in attracting more local and foreign investments, in addition to helping international companies and institutions provide their services from within Egypt.

Moreover, Dr. Farid sheds light on Investment banks and its key role in raising public awareness of private insurance funds and their investment potential. This is especially crucial given recent regulatory amendments requiring these funds to invest at least 5% of their assets in open-ended investment funds holding shares listed on Egyptian exchanges, alongside other permissible investments. These amendments, along with existing regulations governing insurance and reinsurance company investments in the capital market are designed to boost investment performance and maximize returns.

On the other hand, FRA Chairman announced that the Authority has recently amended the rules governing voluntary delisting to achieve greater protection for all shareholders and support market stability. The new regulation requires the approval of 75% of the attendees at the General Assembly.  Furthermore, in cases where a controlling shareholder exists, a majority vote from independent minority shareholders is also required.  This dual approval mechanism aligns with international best practices and ensures equitable treatment, preventing any single party’s interests from being favored over others. This promotes equitable treatment for all involved, particularly in situations where FRA identifies a controlling shareholder.

In addition to the delisting rule amendments , Dr. Farid highlighted the issuance of decrees No. 140 and 148 of 2024. These decrees focus on updating listing and delisting rules.  That is besides an amendment to FRA’s Board of Directors Decree No. 11 of 2024.  This amendment concerns the regulation of listing and trading of shares for Special Purpose Acquisition Companies (SPACs).  This regulatory update has paved the way for the establishment of the first SPAC in Egypt.

FRA Chairman announced key updates for the non-bank finance sector, including revised minimum capital requirements and a temporary suspension of certain licensing activities. FRA has established a minimum capital of 75 million Egyptian pounds for general non-bank finance companies, with a higher threshold of 100 million pounds for those specializing in real estate finance. Furthermore, FRA has temporarily halted accepting new applications and granting initial approvals for companies seeking to offer microfinance or consumer finance through traditional channels. This one-year suspension, subject to renewal, reflects FRA’s commitment to financial stability within the non-bank financial markets. He pointed out that the rapid expansion of licensed providers in the consumer finance and microfinance sectors, evidenced by the significant number of new licenses recently issued by FRA, necessitates robust regulatory oversight.  FRA is therefore prioritizing the verification of the financial solvency and stability of these entities to safeguard market integrity and protect consumers.

Dr. Farid stressed on FRA’s dedication to ensure the financial stability and technological readiness of non-bank financial institutions.  As part of this commitment, FRA engaged in a constructive dialogue with non-bank finance companies prior to implementing Basel 3 financial solvency standards.  This engagement coincided with a review of these companies’ compliance with FRA’s minimum capital requirements: 75 million Egyptian pounds for most non-bank financial activities and 100 million pounds for real estate finance.

Dr. Farid then highlighted the establishment of Egypt and Africa’s first regulated voluntary carbon market, a landmark achievement for financial market regulators.  He provided a clear distinction between mandatory and voluntary carbon markets, outlining the legislative frameworks governing each, the participating stakeholders, their respective objectives, key success indicators, pricing mechanisms, market operations and the industries each market serves.

FRA Chairman clarified that carbon credits are tradable financial instruments that represent verified reductions in greenhouse gas emissions. Each carbon credit corresponds to one metric ton of equivalent carbon dioxide emissions. These credits are issued to the carbon project developers only after rigorous verification and validation processes, conducted in accordance with internationally recognized standards and methodologies for quantifying and certifying emission reductions.  Accredited local or international validation and verification bodies (VVBs) that are registered with FRA .

Dr. Farid emphasized the progress of Egypt’s voluntary carbon market, noting the registration of approximately 21 carbon emission reduction projects since its launch last August.  The launch event was a high-profile affair, attended by six ministers and EGX Chairman.  The market has already facilitated the registration of the equivalent of 145,000 voluntary carbon credits. These credits represent diverse sectors, including agriculture, and originate from emission reduction projects not only in Egypt but also in India, Nepal, and Bangladesh, highlighting the market’s international reach. This initiative underscores FRA’s dedication to achieve sustainable development goals.