On October 11th 2020, President Abdel Fattah al-Sisi promulgated Law No. 201 of 2020, amending certain provisions of Law No. 141 of 2014 regulating microfinance activities, to be enacted from the date of its publication.
The law aims to support the national and informal industrial economy by raising the funding limit for medium, small and micro-enterprises respectively, addressing the influx of micro financing activity within the country following the enactment of the previous law.
For example, assisting a significant category of citizens by allowing them to transform their ideas into economically viable projects that can contribute to the economy, and consequently raise the living standard for citizens, whilst simultaneously increasing demand for work and production.
Similarly, encouraging NGOs and institutions that wish to engage in this activity by adopting new and flexible mechanisms to provide financing and facilitating procedures for project establishment. Such new mechanisms, develop rules and regulations for companies engaging in financial activities according to industry needs and development patterns, in a flexible and accessible manner. This will in turn facilitate the practice of this activity by said NGOs and institutions.
Beside several advantages the law has, the most notable of which is that it has provided a new ceiling for financing, to accommodate the largest amount of micro, small and medium-sized projects, raising the micro-finance limit from EGP 100 000 to EGP 200 000. The Board of Directors of the Financial Regulatory has been authorized to increase the funding of the micro-project by no more than 10% per year, depending on the country’s economic circumstances.
In spite, however, of these advantages, the state covers a proportion of the technical training cost for small, medium and micro-entrepreneurs, and accordingly increases their production capacities in the market.
Furthermore, the law provides effective safeguards and guarantees to the operators by granting the Authority the power to establish strict measures in the event that the licensed association or civil institution violate the provisions of this law or a licensing condition, in order to maintain market stability and to strengthen the legal rights of practicing operators
Finally, this law exemplifies the legislative evolution occurring within the country, that aims to broaden the application of legislation to take into account citizens who are not traditionally eligible to deal directly with banks, allowing them to engage in various types of projects, and consequently benefit the national economy.
We at Andersen Egypt can provide full support and answer any inquiries regarding this law.
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