الهيئة العامة للرقابة المالية

• A comprehensive dialogue with the attendees to explore the latest developments and prospective investment opportunities within the non-banking financial sector.

Key Insights from Dr. Farid’s Address:

• FRA is seriously committed to enhance business environment within the non-banking financial sector. This strategic focus aims to bolster the trust of both domestic and international investors in its financial markets.
• Investment climate derives credibility directly from the trust of domestic investors in the reliability of policies frameworks and operational environment.
• FRA’s strategic objectives are designed to align with government efforts to execute economic development plans, particularly by boosting private sector’s contribution to growth rates.
• Digital transformation is essential for enhancing financial inclusion, with FRA consistently prioritizing governance, risk management and data security to safeguard stakeholders’ rights.
• Market stability stands as the foremost objective for any financial sector regulator.
• FRA bolsters trust among non-banking financial market participants and investors through ongoing reforms that enhance market efficiency and depth.
• Developing the Egyptian Accounting Standards is pivotal in enabling investors and financing entities to make well-informed decisions, relying on accurate and transparent financial data.
• Refining valuation methodologies for startups will foster their growth and facilitate access to necessary funding.
• Establishing a regulated Voluntary Carbon Market enhances Egypt’s position in the sustainable finance landscape, attracting vital climate-related investments.
• Diversifying financial and investment instruments and products is key to empower stakeholders and investors to meet their diverse needs and achieve their financial goals.
• FRA’s consistent aim is to establish stable, flexible and clear legislative and regulatory policies to boost the competitiveness of non-banking financial markets.

Dr. Mohamed Farid, FRA Chairman delivered a keynote address at “Egypt Day” event hosted by the London Stock Exchange. His participation was a key part of an official Egyptian delegation’s promotional tour, organized by the British Egyptian Business Association (BEBA) and aptly titled “Egypt’s New Era… Investment Opportunities.” Dr. Farid also engaged in an insightful open dialogue with investors, moderated by Yasmin Saleh, Editor-in-Chief of Zawya Arabic. The esteemed delegation included prominent figures such as Ahmed Kouchouk, Minister of Finance; Ramy Aboul Naga, Deputy Governor of the Central Bank of Egypt (CBE); Ghada Nour, Assistant Minister of Investment and Foreign Trade. In addition to Dr. Mohamed Abdel Aziz, Assistant to FRA Chairman; Noha Khalil, Acting CEO of the Sovereign Fund of Egypt (SFE); Heba El Serafi, Vice Chairman of the Egyptian Exchange; Dr. Tarek Seif, Executive Director of the Financial Services Institute ( FRA’s training arm); and various other leaders from governmental bodies.

During his presentation, Dr. Farid underscored FRA crucial role in implementing Egypt’s “Vision 2030” strategy, highlighting efforts to unleash private sector growth through a robust economic reform agenda. A central theme of his address was FRA’s commitment to digital transformation, recognizing it as a fundamental pillar for strengthening the non-banking financial sector’s contribution to the national economy. This commitment extends to strategic initiatives such as formulating robust regulations for financial technology (FinTech) to foster both protection and innovation within the market, refining Accounting Standards to enhance transparency and facilitate precise valuations, spearheading the launch of Egypt and Africa’s inaugural regulated and supervised voluntary carbon market and progressing towards the enactment of a unified insurance law.

Dr. Farid stressed FRA’s serious dedication to reform the non-banking financial sector’s business environment. This initiative aims to

enhance trust of both local and foreign investors in these markets. He further clarified that the credibility of Egypt’s investment climate begins with the local investor’s trust in its policies and operational landscape.

He emphasized that FRA’s foremost objectives include ensuring market integrity and stability, protecting stakeholders’ rights, promoting digitalization and simplifying procedures wherever possible. Dr. Farid concluded by stating that developing markets and introducing innovative products that offer investment opportunities in the non-banking financial sector will remain a constant priority, coupled with continuous efforts to cultivate a highly conducive environment for investment and growth within the sector.

Dr. Farid underscored that all of FRA’s objectives are designed to bolster the government’s efforts in executing economic development plans and achieving growth targets. A key focus within these plans is to increase private sector participation in driving economic growth.

He further elaborated that financial technology (fintech) and digital transformation are foundational for boosting national savings rates and enhancing financial, investment and insurance inclusion. This, in turn, will lead to greater domestic investment, enabling the economy to be more self-reliant on funding rather than depending heavily on foreign capital. Therefore, fintech is seen as crucial for building a more resilient and integrated economy.

Dr. Farid also highlighted FRA’s issuance of regulatory frameworks for the listing and trading of Special Purpose Acquisition Company (SPAC) shares, a strategic move to help companies secure essential growth financing. Following this, FRA received and approved the first application to establish a SPAC in Egypt. This SPAC is structured as a venture capital firm with the specific aim of acquiring companies in the non-banking financial services and fintech sectors, including various financial services and payment platforms and has already been listed on the Egyptian Exchange.

He reaffirmed FRA’s commitment to implement a comprehensive electronic system built on three core components: electronic identity verification, digital contracts, and linking identity data with mobile phone numbers. This initiative has already spurred significant progress, with recent FRA data revealing over 200,000 new accounts in gold investment funds opened in just one year, attracting more than EGP 2 billion in investments. This is particularly noteworthy as gold funds were not a common market product previously.

Dr. Farid also discussed FRA’s ongoing work to finalize legislative and regulatory frameworks that stimulate investment. In the realm of crowdfunding, FRA has developed a flexible model designed to adapt various crowdfunding regulations to modern financial instruments. The Authority is also preparing to issue rules governing the operation of digital platforms for investing in real estate investment funds, confirming that the initial step will involve issuing specific regulations for these funds.

He concluded by emphasizing that market stability is the primary goal for any financial sector regulator. To achieve this, FRA is continuously working to enhance the trust of stakeholders and investors in non-banking financial markets, ensuring this commitment progresses hand-in-hand with ongoing reforms aimed at increasing overall market efficiency and depth.

Dr. Farid further elaborated on the comprehensive development of Egyptian Accounting Standards in the recent past. This significant update began by shifting asset valuation to fair value instead of book value, specifically impacting real estate investment and equity. The revised standards now incorporate a revaluation model for fixed and intangible assets and a fair value model for investment property. This ensures that companies’ financial statements accurately reflect the fair value of their assets, empowering all businesses to present a true financial position and operational performance. Such accuracy is crucial for making sound financing and investment decisions.

FRA Chairman also highlighted the Authority’s proactive steps in supporting entrepreneurship, innovation and financial technology, fostering a nurturing regulatory environment for all startups. A key initiative was the issuance of startup valuation standards. FRA developed new methodologies that allow for valuations better suited to the unique business models and growth stages of startups, particularly before they achieve significant revenue or sales. This critical move helps these companies secure the necessary funding for growth, expansion and development, ultimately enabling them to meet their objectives.

Dr. Farid then turned to the regulated and supervised Voluntary Carbon Market, launched by FRA in August 2024. The regulated and supervised Voluntary Carbon Market, launched by FRA in August 2024, plays a pivotal role in reducing carbon emissions. This new market is set to attract concessional climate financing from international institutions, channeling funds to projects dedicated to lowering their carbon footprint. This initiative not only solidifies Egypt’s unique position in the sustainable finance market but also enhances the country’s overall appeal for climate-related investments. He pointed out that without easier access to financing, sustainable projects would remain largely unattainable. Citing the African Development Bank, he noted that the African continent faces an annual climate finance gap exceeding $100 billion. Despite the importance of government funding, it remains insufficient, with the private sector’s contribution to climate finance flows in Africa currently not surpassing 14%, a stark contrast to the global average of approximately 49%.

Finally, Dr. Farid underscored that diversifying financial and investment tools and products is essential for empowering stakeholders and investors to meet their diverse needs and achieve their financial goals. He reiterated that FRA’s perpetual objective is to establish stable, flexible and clear legislative and regulatory policies to consistently enhance the competitiveness of Egypt’s non-banking financial markets.