“Financial supervision”: 370 billion pounds of non-bank financing for the past year

12:27 pm

Saturday 28 May 2022

Books – Mustafa Eid:

The activities of the community dialogue discussion session on the second phase of the comprehensive strategy for the development of non-bank financial activities (2026-2022) will begin next Monday, according to a statement from the Financial Supervisory Authority today, Saturday.

The statement said that in the presence of a group of non-bank financial sector leaders who are members of the advisory committees of the government, heads of Egyptian federations in the activities of insurance, real estate financing, financial leasing, factoring, consumer financing, the Egyptian Federation for Financing of Medium, Small and Micro Enterprises, and the head of the Egyptian Security Association. , and some executives of companies engaged in non-bank 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 government said that the follow-up to the rapid global and economic changes due to the spread of the Corona pandemic, the acceleration of the shift to digital economy patterns and the accelerated spread of digital financial technology and its role in diversification and development new methods of non-bank financing, called for the completion of the build-up to what has been achieved through the introduction of the watchdog on non-bank financial activities for the second phase The new development strategy (2026-2022).

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 to develop and stabilize. non-bank financial markets in a way that reflects the stability of the state’s macroeconomic conditions, and is capable of achieving sustainable, inclusive growth, characterized by competitiveness and diversity, and playing an effective role in the global economy; play, and to be able to adapt to economic change, maximize added value, provide suitable and productive jobs, and bring real GDP per capita 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:

 Promoting 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 completion 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 sector and the development of its regulatory and legislative environment, the entities subject to its supervision have contributed to the provision of non-bank financing. It has over the past year amounted to about 370 billion pounds by the entities and companies subject to its control, and it has been pumped into the national economy, which has provided the necessary funding for the implementation of development projects in various sectors, which annually hundreds absorbing thousands of jobs and reducing unemployment levels.

The media statement monitors the contribution of each non-bank financial activity to the total funding granted, amounting to approximately £ 370 billion during 2021; The contribution of capital market activity to the promotion of the investment wheel comes primarily by encouraging the transfer of accumulated savings to investments in new projects, which are pumped in the form of share issues, capital increases for companies or securities other than shares ( “Green securitization” securities). ; 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 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 during the year by non-bank financial activities 2021.

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

Third, microfinance balances with an EGP value of 27.1 billion, representing 7% of the total funding allocated, benefiting a wide segment of ordinary citizens, are estimated at around 3.5 million beneficiaries – women represent more as 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 rates of domestic demand by increasing the purchasing power of citizens and allowing payment. 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, giving investors the ability to make investment decisions.

Finally, the £ 8.1 billion real estate financing activity, representing 2% of the total unconventional 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 finance, restoration and maintenance, and the importance of financial technology and its role in the economic sector, 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 the use of financial technology, and that this axis will be at the forefront of the Authority’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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