Prior to his trip to Washington, DC, to attend annual meetings of the International Monetary Fund and the World Bank:
EFSA intensifies its activities with the international financial institutions (IFI)
• Studying the introduction of a short-term seasonal financing instrument
• We are keen on technical cooperation with the World Bank in developing legislations governing the green bond market.
• Informing the African Development Bank of recent legislative developments in non-banking financial markets
Before his departure to Washington DC to participate in the annual meetings of the International Monetary Fund and the World Bank, Dr. Omran said that he met a number of representatives of the international financial institutions- Egypt’s development partners- to discuss ways to support the non-banking financial sector in Egypt and raise its competitiveness and opportunities to attract investment, ensuring the importance of the non-banking financial sector in raising the rates of financial empowerment in Egypt.
Dr. Omran received a mission from the European Bank for Reconstruction and Development (EBRD) to discuss a technical cooperation project to be initiated between the two parties to develop a regulatory framework for short-term debt instruments in the Egyptian Capital Market in order to introduce a short-term seasonal financing instrument commensurate with the nature of companies characterized by the shortness of capital cycle. He added that the bonds currently available in the Egyptian stock markets are long-term bonds with duration of 13 months or more, which is considered as an obstacle for the companies to benefit from bonds’ issuance.
Dr. Omran also met a delegation from the German Agency for Technical Cooperation (GTZ) to discuss the implementation of a project that support the access of small and medium-sized companies to finance, which will be financed under the technical cooperation agreement between the Egyptian and German governments signed during the visit of President Abdel Fattah al-Sisi to Germany. This project aims at supporting the Authority’s efforts and increasing its efficiency in order to fulfill its role in providing the legislative and regulatory environment for the growth of non-banking financial markets as a whole and to ensure that SMEs receive the appropriate financing tools to serve its investment and operational plans and complementary to the non-banking financial sector.
In addition, the Chairman of the Board met an expert of the International Finance Corporation (IFC) of the World Bank Group. The meeting discussed EFSA’s request for technical support from the (IFC) in developing legislations governing the green bond market in light of large investments in green bonds, that is besides the importance of working to preserve the environment locally. Green bonds are one of the financing tools available to governments and corporations that have begun to spread in the context of international efforts to seek environmentally friendly economic system. In addition, green bonds are conditional instruments that respect environmental standards aiming at using clean energies, mitigating factors contributing to global warming, supporting climate change adaptation and mitigation. The total value of this type of bond at the international level was $ 42 billion in 2015 and $ 82 billion in 2016, and issuances of 2017 are expected to be about $ 150 billion.
In a related context, Dr. Omran received a delegation from the African Development Bank to discuss developments in the Egyptian capital market and the non-banking financial sector as a whole, this is within the context of the Bank’s readiness to provide the third tranche of the Governance and Energy Support Program, where the bank will provide an amount of one and a half billion dollars to the Egyptian government. During the meeting, Dr. Omran presented the recent legislative developments in non-banking financial markets, which included several draft laws submitted by the Authority and Dr. Sahar Nasr, Minister of Investment, issued them along with the rules issued by EFSA’s Board of Directors. Regarding the indicators of the third tranche, EFSA’s Chairman clarified during the interview that the Authority has already submitted a draft law to regulate financial leasing and factoring in order to allow practicing microfinance leasing, where the approval of the Cabinet of Ministers was obtained and submitted to the House of Representatives. In addition, EFSA’s BOD issued a decision regarding regulating the micro-insurance for the first time in Egypt, in light of the Authority’s concern to provide insurance services to all segments of society in line with the efforts of the Egyptian government to increase financial empowerment. Also, during the meeting Dr. Omran pointed out that the Authority recently selected an Egyptian company to manage the electronic movable guarantees register, which will be established by the Authority to enable a wide range of companies to benefit from their own movable assets in providing the required financing to serve their investments through movable guarantees.