Dr. Mohamed Farid – FRA Chairman:
- FRA focuses on innovation and fintech to promote financial inclusion and support startups and entrepreneurship
- FRA constantly updates regulations to enhance flexibility and foster a favorable investment environment across sectors.
- FRA has created tailored startup evaluation methods based on business models, facilitating expansion and growth.
- FRA reduced the minimum capital requirement for fintech startups in non-banking financial activities from EGP 75 million to EGP 15 million.
- FRA established regulations for listing and trading Special Purpose Acquisition Companies (SPACs), paving the way for the launch of Egypt’s first SPAC.
- FRA has authorized portfolio management companies to use Robo-Advisors, bringing automated investment advice to Egypt for the first time
- FRA launched the first regulatory sandbox in the non-banking financial sector, enabling startups to develop and test new financial solutions.
- FRA encourages non-banking financial services startups and entrepreneurs to utilize the regulatory sandbox to develop and refine their business models.
Dr. Mohamed Farid, FRA Chairman delivered a keynote speech at the 3rd Edition of Egypt VC Summit, a two-day event. The event included government ministers and prominent figures: Hassan El-Khatib, Minister of Investment and Foreign Trade, Amr Talaat, Minister of Communications and Information Technology and Rania Al-Mashat, Minister of Planning and Economic Development and International Cooperation. In addition to, Basel Rahmy, CEO of MSMEDA , Ayman Soliman, EPEA Chairman and Holger Illi, Head Of Development Cooperation at German Embassy Cairo , Stephane Guimbert, Country Director for Yemen, Egypt and Djibouti, World Bank and Ahmed El-Alfi, Chairman of Sawari Ventures and Co-founder of Flat6Labs .
In his speech, Dr. Farid emphasized that FRA has issued numerous regulations and executive decisions to bolster entrepreneurship, innovation, and financial technology. These measures aim to create a supportive regulatory environment for all startups. One key initiative he highlighted was the issuance of startup evaluation standards. FRA has revamped its startup evaluation methodologies to provide assessments that are better tailored to the unique business models of startups. This involved incorporating new methods and approaches that accurately reflect the nature of their operations and growth stages. Crucially, these updated methods are designed to assess startups even before they generate substantial revenue or sales. By implementing these improved evaluation standards, FRA aims to facilitate access to funding for startups, empowering them to expand their operations, scale their businesses, and ultimately achieve their strategic objectives.
FRA has established specific requirements for the establishment and licensing of fintech startups operating in non-banking financial activities. Notably, FRA has set the minimum capital requirement for these startups at 15 million Egyptian pounds. This is a significant reduction from the 75 million Egyptian pounds previously required for companies engaged in non-banking financial activities (excluding real estate finance). For real estate finance companies, the minimum capital requirement stands at 100 million Egyptian pounds.
On the other hand, FRA has finalized the regulatory framework to accelerate digital transformation and broaden access to non-banking financial services. This comprehensive framework encompasses a series of decisions and executive regulations specifically designed to digitize non-banking financial transactions. These measures aim to expand the reach of these services, increasing the number of beneficiaries.
This regulatory progress follows the foundation laid in 2022 with Law No. 5, which governs the use of financial technology in non-banking financial activities. This was complemented by Decree No. 58, which details the conditions and procedures for establishing, licensing, and approving fintech companies. Most recently, FRA issued Decree no. 139 of 2023 which introduces crucial guidelines for companies seeking licenses for non-banking financial activities through fintech. In addition to the previously mentioned decree, FRA issued Decree no. 140 of 2023 regarding digital identity, digital contracts, digital records and compliance requirements. This is the first regulatory decree outlining eKYC (electronic Know Your Customer). Also, Decree No. 141 of 2023 defines the outsourcing registry for non-bank financial technology, specifying authorized companies for customer identification and electronic contract services.
These regulatory initiatives have led to the registration of four companies as Outsourcing Services Providers. These registered providers have secured contracts with approximately 40 non-banking financial institutions, with ongoing efforts to finalize agreements with roughly 60 more. Additionally, four companies, including non-banking finance startups, have received licenses to offer their services using financial technology.
On the other hand, a significant milestone has been reached with the first partnership between an insurance company and a telecommunications provider for the e-marketing and distribution of insurance policies, marking a new era in insurance accessibility.
Dr. Farid stressed the continuous improvement of the legislative and regulatory environment, focusing on empowering startups and entrepreneurs and encouraging innovation across all sectors. He further noted that digital transformation is the key to improve access to appropriate financing for all segments of society, facilitating economic expansion, new business creation and ultimately, a higher quality of life.
Dr. Farid announced that FRA, in accordance with Decree No. 148 of 2024, has issued regulations for listing and trading Special Purpose Acquisition Companies (SPACs). These regulations require SPACs seeking a temporary listing on the Egyptian Exchange to have a minimum issued and paid-up capital of EGP 10 million, which must be increased to EGP 100 million in cash within three months of listing.
Following FRA’s issuance of SPAC regulations, the first application to establish a SPAC has been received and approved. This SPAC will target acquisitions in the non-banking financial services and fintech sectors, including companies involved in financing, financial services, and payment platforms.
Dr. Farid also confirmed that FRA has issued Decree No. 57 of 2024, which establishes the rules for regulating the operation of Robo-Advisors for Investment. This marks the first time such regulations have been introduced in Egypt. He explained that a Robo-Advisor is an electronic system that provides financial advice to clients for the purpose of creating, managing, and rebalancing an investment portfolio using AI algorithms. He added that portfolio management companies are now authorized to provide automated investment advice via Robo-Advisors.
Moreover, FRA has launched a regulatory sandbox which provides a controlled testing environment for non-banking financial institutions using fintech, as well as entities registered (or seeking registration) fintech providers. These entities can test innovative fintech applications, business models, and related operational mechanisms. Dr. Farid emphasized that this initiative will strengthen FRA’s support for fintech startups offering non-banking financial services. The sandbox is expected to stimulate innovation, expand the reach of financial services and enhance the capabilities of non-banking financial companies and fintech providers.
Dr. Farid emphasized FRA’s commitment to adapting to the rapid pace of technological change to the advantage of all stakeholders. This is being accomplished by creating a collaborative ecosystem connecting fintech providers, non-banking financial institutions, research centers, universities, business incubators and accelerators, investors and global technology firms.
He further explained that the regulatory sandbox will be instrumental in realizing FRA’s vision: supporting and encouraging innovation in non-banking financial services, ensuring consumer benefit from emerging technologies, and upholding robust regulatory standards. The sandbox will also play a key role in helping startups build investor confidence, attract capital and contribute to a sustainable growth environment.
FRA Chairman called on startups and entrepreneurs in the non-banking financial services sector with smart and innovative solutions to take advantage of the regulatory sandbox to develop their business models and increase the efficiency of their projects
Last modified: February 11, 2025