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Monday, 2 April 2018

Nasr, Omran unveil new 2018-2022 strategy for development of non-banking financial sector

Nasr, Omran strategy to drive growth of non-bank financial sector, focus seems to be on futures exchange and easing red tape: Investment Minister Sahar and Financial Regulatory (FRA) boss Mohamed Omran announced yesterday they were launching a four-year strategy aimed at developing Egypt’s non-banking financial services sector. The plan, they say, will involve both structural and legislative reforms to boost the industry and improve its contribution to economic growth, will pave the way for the introduction of new financial instruments, Omran told the press yesterday. This includes the framework for the establishment of futures exchanges — which became possible under newly-issued amendments to the Capital Markets Act — as well as the FRA working to simplify bourse listing rules and procedures and reducing the time it takes to approve licenses and stock issuance requests, he said.

The FRA also intends to take an active role in growing the volume of Egypt’s mortgage financing market to EGP 20 bn by 2022, up from EGP 8 bn currently, Omran added, explaining that the FRA will slash much of the red tape associated with property registration, as well as introduce rules to regulate the termination of mortgage contracts and guarantee the rights of all parties involved.

Break out your decoder rings: The strategy will also see amendments to the regulations governing investment funds that would ensure they have diverse portfolios and are yielding the best values and returns for their shareholders, the FRA boss said, without elaborating.

Omran said that a committee would be established to oversee the implementation of the strategy and ensure it hits targets that include:

  • Increasing capital market contribution to GDP to 50% by 2022, up from 25%;
  • Raising the size of the capital market to EGP 3 tn from a current EGP 1 tn;
  • Growing the number of listed companies to 400 from a current 275;
  • Increasing issuances to EGP 250 bn from EGP 150 bn.

The strategy is set to be presented to the House of Representatives’ economic committees and the nation’s Supreme Investment Council, according to Nasr.

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