The Financial Regulatory Authority (FRA) participated in the launch event for the Financial Technology Environment Report in Egypt, organized by Intilaq in collaboration with the Dutch Embassy. This event aimed to support entrepreneurship, with a particular focus on financial technology’s role in facilitating access to non-banking financial services for individuals and businesses within a flexible regulatory framework.
Dr. Mohamed Farid, Chairman of the FRA:
Dr. Mohamed Farid emphasized that the FRA’s goal is to strike a balance between market stability and the integration of innovation and technology, thus enhancing the role of the non-banking financial sector in Egypt’s national economy. He highlighted that innovation, entrepreneurship, and technology are essential to achieving financial inclusion and stability in the non-banking financial markets.
Dr. Farid also discussed the launch of the regulatory sandbox, which he described as a crucial step in demonstrating the FRA’s commitment to fostering innovation within the non-banking financial sector. The sandbox will provide tailored solutions to overcome existing challenges. He encouraged startups and entrepreneurs in the non-banking financial services sector to leverage this sandbox to refine and expand their business models.
The Chairman further pointed out that digital transformation goes beyond simply launching a website or an app. He emphasized that it is a comprehensive journey that requires the establishment of robust systems and infrastructure, with data protection as a central focus. He also stressed the importance of digitizing non-banking financial transactions to enhance the competitiveness of the sector, which will, in turn, promote insurance, investment, and financing inclusion.
Dr. Farid reassured that the FRA is continuously refining the regulations governing the sector to ensure greater flexibility and create a conducive environment for attracting investments. Additionally, the FRA has updated its evaluation criteria for startups to better align with their business models and support their growth and expansion plans.
Key Highlights from Dr. Farid’s Speech:
The FRA has taken significant steps to support the development of financial technology in Egypt. One of the major decisions was reducing the minimum capital required to establish financial technology startups in the non-banking financial sector from EGP 75 million to EGP 15 million. This move is aimed at encouraging the establishment of more startups and easing their entry into the market. Furthermore, the FRA has approved the establishment and licensing of three new startups within the non-banking financial sector, each focusing on different activities.
In addition to these measures, the FRA has introduced new regulations for the registration and trading of Special Purpose Acquisition Companies (SPACs), along with the establishment of the first venture capital SPAC in Egypt. These efforts are part of the FRA’s wider strategy to diversify and develop Egypt’s financial markets. Additionally, the FRA has allowed portfolio management companies to offer automated investment advisory services through Robo-Advisors, marking a first in Egypt.
The FRA is also exploring the potential application of AI algorithms in various financial activities and is collaborating with all stakeholders to accelerate digital transformation. This collaboration will enable businesses to access non-banking financial services, thus supporting their growth and development.
Dr. Farid also praised Intilaq’s efforts in producing research and reports that complement the ongoing initiatives to enhance the role of innovation in supporting the national economy.
FRA’s Participation and Stakeholder Engagement:
The FRA’s participation in the event included key figures from the FRA, the Dutch Embassy, the General Authority for Investment, as well as prominent business leaders from Intilaq and the entrepreneurial community, both Egyptian and international.
On the Regulatory Sandbox:
Eng. Ahmed Khalifa, Executive Director of the FRA’s Regulatory Sandbox and Chief Data Officer, participated in a discussion on the expansion of financial technology in Egypt and the impact of startups on global economies. He highlighted the FRA’s efforts to support financial technology and market developments. He also discussed the scope of the regulatory sandbox, emphasizing how it can be used to help develop startup business models.
Key Statements from Dr. Farid:
Dr. Farid reaffirmed the FRA’s commitment to balancing market stability with the integration of innovation and technology, thus strengthening the non-banking financial sector’s role in Egypt’s economy. The launch of the regulatory sandbox is part of the FRA’s broader strategy to foster innovation in the sector and address challenges while creating an enabling environment for growth. He reiterated that digital transformation is a comprehensive process that requires strong systems and infrastructure, with a focus on data protection.
FRA’s New Regulatory Measures:
The FRA has introduced several new regulatory measures to accelerate digital transformation. Notably, Law No. 5 of 2022 was enacted to regulate the use of financial technology in non-banking financial activities, followed by additional regulations designed to outline the necessary requirements for digital services and compliance. These measures are aimed at providing a more structured and supportive environment for businesses in the financial technology sector.
Additional Developments:
Among the FRA’s recent initiatives, the authority has issued guidelines for companies wishing to offer automated investment advisory services through Robo-Advisors, which marks a milestone in Egypt’s financial sector. The FRA has also approved the establishment of three new startups in the non-banking financial sector and is actively working on further regulatory improvements to foster entrepreneurship and innovation.
