£ 370 billion in non-bank financing provided by entities subject to financial supervision

Completion of the first phase of the comprehensive “financial control” strategy for non-bank financial activities

Next Monday, the activities of the discussion session for the community dialogue on the second phase of the comprehensive strategy for the development of non-bank financial activities (2026-2022), will be launched in the presence of a group of non-bank financial activities. sector leaders who are members of the Advisory Committees of the Financial Supervisory Authority, and the heads of Egyptian federations in the activities of both insurance, real estate financing, financial leasing, factoring, consumer financing, the Egyptian Federation of Medium Financing, Small and Micro Enterprises, the president of the Egyptian Security Association, and some executives of companies engaged in non-banking financial activities.

During the discussion session, the Authority will review the follow-up to global and economic changes, and monitor what has now become financial technology “FinTech” as one of the key elements at global level in the development of financial transaction instruments, and the support of innovative practices in the field of technology that helps to improve the efficiency of financial markets and systems, including Contributing to the promotion of the financial sector’s work and status and to achieving financial inclusion. The consequent rapid development of the categorical need to follow methods to ensure the employment of the financial technology revolution for the benefit of society and the economy, taking into account the protection of investors and the maintenance of the stability of the financial system.

The Financial Supervisory Authority confirmed in a press release – issued this morning – that the follow-up to the rapid global and economic changes due to the spread of the Corona pandemic, the acceleration of the transition to digital economy patterns and the accelerated spread of digital financial technology and its role in the diversification and development of new methods of non-bank financing, necessitated the completion to build on What has been achieved by the watchdog on non-bank financial activities for the new second phase of the development strategy (2026- 2022).

Dr. Mohamed Omran, Chairman of the Financial Supervisory Authority, explained that the second phase represents a roadmap for the next four years to develop the non-bank financial sector, in line with the sustainable development strategy “Egypt Vision 2030” and aims to develop and stabilize non-bank financial markets in a way that reflects the stability of the state’s macroeconomic conditions Able to achieve sustainable, inclusive growth, characterized by competitiveness and diversity, to play an effective role playing in the global economy, to adapt to economic changes. , maximizing value added, providing suitable and productive jobs, and bringing per capita real GDP to the ranks of high-income countries.

The new second phase of the comprehensive strategy for non-bank financial services (2026-2022) identified the Government’s work priorities in the next phase by focusing on six main axes:

Improving the use of financial technology and accelerating digital transformation

Achieving financial inclusion and deepening levels of sustainability

Risk management and building an effective early warning system

Development of the legislative structure

Improving levels of financial literacy and capacity building

– Market development

During the discussion session, the Authority’s aspirations and targets for each non-bank financial activity will be addressed during the second phase of the strategy, and to provide an investment-attractive environment characterized by fairness, efficiency and transparency.

The press release revealed that with the imminent completion of the implementation of the first comprehensive strategy for the development of the non-bank financial sector (2018-2022), and its results in achieving a qualitative leap in the non-bank financial sector and developing its regulatory and legislative environment, the entities subject to its oversight contributed to the provision of non-bank financing A bank amounting to approximately £ 370 billion by the agencies and companies subject to its control during the past year, and it has been pumped into the national economy, providing the necessary funding to implement development projects in various sectors, absorbing hundreds of thousands of jobs annually and reducing unemployment levels.

The media statement monitors the contribution of each non-bank financial activity to the total funding granted, amounting to approximately EGP 370 billion during 2021, where the capital market activity’s contribution to the promotion of the investment wheel comes primarily from the transfer of accumulated savings in investments in new projects, to be pumped In the form of share issues, capital increases for companies, or securities other than shares (“green securitization” bonds – sukuk); Where we find that issuance of shares not restricted to the stock exchange amounts to £ 174 billion, representing 47% of the total financing granted, and the values ​​of securities other than shares (“green securitization” bonds – sukuk) amounts to approximately £ 23.2 billion, representing 6.3% of the total financing, and EGP 20 billion represents the total value of the securities listed on the stock exchange, at a rate of 5.4% of the total funding granted through non-bank financial activities during the year 2021.

Secondly, the contract leasing activity with contract values ​​of £ 79.8 billion, representing about 22% of total non-bank financing, supports small and medium industries that want to purchase machinery, equipment and production start-up requirements through financial leasing companies – subject to the supervision of the government – to provide the necessary and non-bank financing To obtain capital assets for production and service projects of the Egyptian economy, from which jobs are generated, and to provide the option to own. assets at the end of the contract period.

And thirdly, the balances of microfinance, with values ​​of 27.1 billion pounds, representing 7% of the total funding allocated, benefiting a wide segment of simple citizens, are estimated at about 3.5 million beneficiaries – from who women represent more than 62%.

And in the fourth place, the factoring activity comes with discounted portfolio portfolios worth £ 20.5 billion, representing 6%, and the factoring activity is one of the key pillars to provide and accelerate the working capital cycle through the purchase by factoring companies of a portfolio of short-term financial instruments of companies and projects – existing – in exchange for the acquisition of value The current portfolio of that portfolio, which provides these companies with the necessary short-term liquidity without the need to awaits the expiration date of the financial rights, and this is positively reflected in the rate of working capital turnover, and the expansion of existing production projects.

Then comes consumer funding worth £ 17bn, 5% of the total funding provided by the non-bank financial sector, with its many positive aspects at the level of the national economy, as it reflects the volume of investment and operating rates in production. and service increases projects, and increases the prices of local demand by increasing the purchasing power of citizens and enabling them to pay up. On the other hand, consumer finance activity contributes to the improvement of competitiveness within the national economy, leading to lower prices, and the creation of a sound and accurate database that helps the state adopt appropriate policies and gives investors the ability to ‘ to make an investment decision.

Finally, the £ 8.1 billion real estate financing activity, representing 2% of the total non-traditional financing, which contributes to the provision of medium and long-term financing for the acquisition of real estate, whether for economic purposes or for the purposes of housing financing, restoration and maintenance

Due to the importance of financial technology and its role in the economic sector, and in line with Egypt’s Vision 2030, the Sustainable Development Strategy, and the “Egypt Launches” program, it was necessary to focus on achieving financial inclusion and sustainable development through financial technology, and that this axis will be at the forefront of the Government’s priorities in the coming period. It clearly demonstrates the importance of relying on information and communication technology solutions and applications to accelerate the achievement of financial inclusion objectives and the access of non-bank financial services to all segments of society. This is in addition to helping reduce expenses for non-bank financial institutions and customers, and helping to expand financial services to further regions to reach what is known worldwide as the concept of remote branches, which in turn contribute to the financing of a sustainable future.

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