Cabinet ratifies law on financial leasing and factoring

CAIRO – 23 August 2017: Egypt’s Cabinet approved the law on financial leasing and factoring and referred it to the State Council, the Head of the Egyptian Financial Supervisory Authority (EFSA) said on Wednesday.

The law decreases the fees of the financial leasing contracts by more than 70 percent with a maximum of LE 500 ($28.19) instead of LE 3,000, EFSA Head Omran said, adding that the value of contracts currently reached LE 21.5 billion.

Financial leasing contracts’ value rose 7 percent to reach LE 11.8 billion ($658 million) in the first six months of 2017 from LE 11 billion in the same period last year. The number of financial leasing contracts decreased from 1,239 to 894 contracts.

The volume of factored securities hiked 45 percent to LE 3.5 billion by the end of June 2017 compared to LE 2.4 billion in the period last year, distributed as 88 percent local factoring and 12 percent export.

The Minister of Investment Sahar Nasr said that EFSA has made a comprehensive review for the regulations governing the financial leasing and factoring to develop them, as they are a part of the important activities that serve projects’ finance and promote the development goals.

A draft law for regulating the financial leasing and factoring was prepared with the assistance of the best international experiences in such matter, considering them non-banking financial instruments to serve the economic projects, the Minister added.

Nasr noted that the law contributed to promoting the financial inclusion and participates in the spread of the non-banking financial instruments all over the state to the society’s categories.

Moreover, the draft law allows the licensed companies, communities and civil society institutions to practice the micro-finance activity and provide micro-financial leasing services, in light of the controls set by the authority’s board, Nasr said.

Earlier in August, EFSA announced that it disclosed the first digital map for microfinance that shows the licensed bodies that practice microfinance.

The map includes licensed companies, communities and civil organizations, along with their activities in different governorates. It also lists the branches of the macro-financial bodies, their addresses, and the number of clients and the value of finance in each governorate.