• Dr. Omran: The conference puts factoring in Egypt in the circle of concern of decision-makers from international financial institutions
• Dr. Omran: 9 billion EGP is the total value of factored securities by the end of 2017
• Dr. Omran: 6.4 billion EGP is the total of value of factored securities during the first eight months of 2018
Dr. Mohammed Omran – FRA’s Chairman emphasized that factoring is one of the most promising non-banking financial activity in the Egyptian economy, as such industry has the potential to achieve the goals of the 2030 strategy through Factoring Companies which play a vital role in providing liquidity to a growing sector of small and medium-sized companies. He added that factoring companies purchase the financial dues, which is reflected in increased liquidity in the market and improve the ability of small and medium-sized enterprises to finance their production lines quickly and recycle working capital. The total number of factored securities was doubled to three times within four years and jumped from 3.3 billion EGP by the end of 2013 to reach 9 billion EGP by the end of 2017. Moreover, the value of factored securities was amounted to 6.4 billion EGP from the beginning of this year until August 2018.
This came during the participation of FRA’s Chairman in the opening session of an International Conference entitled “Factoring as a tool for financing SME” organized by the Egyptian Factoring Association (EFA), the African Export-Import Bank (Afreximbank), the International Factoring Association (IFA) and the German Agency for International Cooperation (GIZ), with the participation of a number of experts from industry, finance and economy in Egypt and Arab and foreign countries as well as decision-makers in financial and industrial institutions during the 26th and 27th of September.
The conference which was held under the auspices of the Financial Regulatory Authority (FRA), discussed the developments of factoring in Africa and the Middle East as well as international best practices to support small and medium enterprises in Egypt, considering factoring as a financing tool for these types of companies.
Moreover, Dr. Omran witnessed signing of a memorandum of understanding between the Egyptian Factoring Association (EFA) and the Micro, Small & Medium Enterprise Development Agency ‘MSME’ to support factoring activity through granting loans at a low interest rate.
On the other hand, FRA’s Chairman stated that the timing of the conference reflects the importance of factoring in the Egyptian economy, which witnessed in August the issuance of Law No. 176 of 2018 on regulating financial leasing and factoring, adding that this is one of the steps of the Authority’s ambitious program to develop legislations governing non-banking financial markets and instruments. The said Law regulates factoring activity in a manner that allow the projects to obtain the present value of their short-term financial rights through the companies licensed by FRA to practice factoring. It is worth mentioning that in 2011 there were two factoring companies only and this number jumped to nine companies by the end of August 2018.
The law also regulated the international factoring activity to encourage exportation by allocating the financial rights owed to exporters to their customers from importers outside Egypt. The volume of international factoring reached 1.1 billion EGP by the end of August 2018.
Dr. Omran emphasized that launching Movable Guarantees Registry in March has significantly supported and promoted the activities of companies operating in non-banking financial services and protected the rights of these companies, including factoring.
FRA’s Chairman added that the sessions of the conference discussed the global developments in the field of factoring, exchanging ideas and visions among different parties to develop factoring, that is through presenting the successful experiences in Egypt and discussing the importance of factoring as a financing tool for banks and financial institutions, which are also supported and promoted by local and regional associations as well as the governments and Central Banks. In addition, the sessions include a presentation of future plans for the development of this vital field, where factoring transactions are still held in the local market by 82.5%, of which 3.09% goes for import factoring , 14.4% export import and this requires raising awareness and promoting communication among various parties in the financial field.