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Monday, 18 October 2021

House committee gives final nod to proposed fintech law

The House of Representatives’ CIT Committee yesterday gave final approval to a draft law to regulate Egypt’s fintech sector, Al Mal reports. The proposed law would govern fintech use by non-banking financial services (NBFS) providers, as well as put the Financial Regulatory Authority in charge of overseeing the fintech space. Under the draft approved yesterday, NBFS players that want to use fintech will need to obtain approval from the FRA by submitting a standard request form, along with proof the company has sufficient capital.

The bill also mandates that the FRA set up a lab to test new fintech products — and that it put in place provisions for digital identification systems, as well as regulations for issuing digital contracts. The bill also reportedly covers crowdfunding, robo-advisory, nano-finance and insurtech, and introduces penalties that include imprisonment of at least six months or fines of EGP 200k-1 mn for unlicensed operators.

What’s next for the law? It will be handed over soon, along with a committee report, to the House general assembly for a final discussion and vote, after which it can be signed into law.

Background: The bill — which received Cabinet approval last April, and was given a preliminary nod by the house in May — is a bid to expand the sector’s beneficiaries and promote financial inclusion by granting the Financial Regulatory Authority (FRA) the power to license and regulate NBFS businesses and fintech startups. Under the law, the FRA would have supervisory powers over the sector to ensure companies adhere to transparency and governance standards, in addition to protecting consumer rights. The FRA had drafted and approved the bill last year.

ALSO FROM THE HOUSE- Some good news for the private sector: The House of Representatives’ general assembly gave preliminary approval yesterday to proposed amendments to the Public-Private Partnership (PPP) Act, according to a statement. The entire bill was approved “in principle” except for article 17, which still needs further review to square it in with a recently-ratified law governing the Sovereign Fund of Egypt, whose investment mandate focuses on partnerships with the private sector, Al Mal reported yesterday.

What we know about the law: The proposed amendments would explicitly state that government authorities are allowed to partner with private companies on infrastructure and utility developments in sectors including transport, energy, communications, and healthcare. The House Planning Committee approved amendments to the PPP Act early this year.

Other details we know about the changes: The amendments would cut the time to issue tenders for PPP projects and introduce new mechanisms for private sector contracting, including allowing private sector players to submit unsolicited proposals. The government would also be allowed to negotiate directly with a sole bidder without needing to take the project through the competitive bidding process. The government is looking to encourage private sector involvement in infrastructure, public services, and utility developments, particularly in the new cities.

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