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Micro-finance Law is published in the Egyptian Gazette and EFSA is preparing the Related Executive Decisions - Tuesday 18/11/2014

• Rules set for granting license to companies and associations to practice Microfinance
•Micro-credit Loans are exempt from taxes, fees and stamp duty
•Civil Associations and institutions can establish Microfinance Companies

 Law no. 141 of 2014 is published in the Egyptian Gazette- issue no. 46. The said Law regulates Microfinance activity. Sherif Samy- EFSA’s Chairman explained that EFSA is preparing the executive decisions and regulations related to the Law to regulate the activity. In addition, EFSA is setting licensing requirements for the companies and NGOs.  In this respect, EFSA is seeking to prepare all regulatory requirements to review licensing requests submitted by companies wishing to practice this activity for the first time in Egypt.

Sherif Samy said that a Unit is to be established to supervise microfinance activity in civil associations and institutions, in which the law granted them six months to adjust their positions. The Unit’s Board of Trustees includes experts in the field, heads of these associations, representatives from relevant ministries, the Central Bank and Social Fund for Development (SFD).  The new Law has allowed civil associations and institutions to contribute in the establishment of companies practicing microfinance.

EFSA’s Chairman   revealed that upon the preparation of the said law, the text doest not include the existence of the Executive regulations. The law was transferred to EFSA’s BOD to issue the necessary detailed decisions, including: identifying areas of   micro-finance, Financing value as well as licensing requirements for practicing the activity, capital adequacy standards and rules of supervision and control. Also, EFSA’s BOD identifies the basis set for calculating allocations in light of on the credit, financial, and operational risks as well as disclosure rules and the data to be published. Noted that the return on debt (ROD) paid by the company , other means of finance and allocations are deductible costs upon determining the net taxable revenue, that is according to the criteria set by EFSA and what is approved by the company's auditor. Micro-credit Loans and other forms of microfinance are exempted from taxes, fees and stamp duty.

The Law prohibits companies and associations from receiving any deposits, as these companies are working under the supervision of the Central Bank of Egypt. Microfinance is not restricted on lending only but it could include forms of   financial leasing, Murabaha, trading and so forth.

In the provisions of this law, microfinance means financing any economic productive or service or commercial purposes with the value determined by EFSA and it shall not exceed one hundred thousand pounds. The said value can be increased to 5% per year pursuant to a decree issued by the Prime Minister on the proposal of the Board of Directors and in accordance with the economic conditions and the requirements.

Sherif Samy noted that he will address the Prime Minister to form grievances’ committees to review companies and associations ‘grievances against the administrative decisions pursuant to the provisions of the law. A decision is to be issued by the Minister of Justice to grant the status of judicial police to EFSA’s regulators with regard to companies, civil associations and institutions.

To review the decision (click here)