EFSA - Egyptian Financial Supervisory Authority : Microfinance Drafts Discussion Law at Faculty of Economics and Political Sciences - Wednesday 08/1/2014

Microfinance Drafts Discussion Law at Faculty of Economics and Political Sciences - Wednesday 08/1/2014

•EFSA presents the microfinance drafts law
• Economics professors all for an integrated system to encourage micro-enterprises
• Microfinance is a tool that may push  the economy , if properly used

The  Faculty of Economics and Political Science , Cairo University held a seminar for Monday which was prepared by Dr . Hala Al-Said - the Dean of Faculty of Economics and Political Science to review the draft  laws  regulating the activity of microfinance.  Mr. Sherif  Samy - EFSA's Chairman introduced the philosophy and objectives of the draft law. He explained the most important articles of the Law, indicating the urgent need for the issuance of this law which was submitted  to the Minister of Investment ,  the competent minister.

The Presentation was followed by questions and many interventions from professors and graduate students regarding the role of NGOs and the need to protect the beneficiaries of finance, as well as the mechanisms proposed by the Law to manage corporate risk and to identify sources of finance.

Dr. Sami Elsayeed - Head of the Department of Economics- presented the benefits from the initiatives that facilitate financing of micro-projects and their impact on development. He added that he wishes that this law will let the government pay attention to the programs set for the advancement of micro projects

Mr. Sherif Samy - EFSA Chairman summed up the most important issues in the draft law - which was submitted to the Minister of Investment- in the following points:

• Granting license for companies wishing  to practice this activity. In a form of a joint stock company.
•Associations in which statute includes the fact that it provides finance for others do not need an additional license to practice the activity of microfinance.
• EFSA shall supervise the work of the licensed companies. EFSA shall  set the rules of its work, capital adequacy and disclosure standards as well as  rules to participate in the credit information systems
•  A Board  to oversee the associations and institutions working in the field of microfinance shall be established  under the umbrella of the Ministry of Social Solidarity  . The Board shall set rules and standards to practice microfinance and managing the risks related to the associations and civil institutions. The said rules and standards shall be submitted to the competent minister to issue a decision in this respect.
• The said Board shall  include in its membership experts in the field appointed by the Minister of solidarity, as well as representatives from the Central Bank  , EFSA and the Social Fund for Development and a representative from the  Union that includes  all parties practicing   microfinance .
• Civil associations and institutions may establish or contribute  in establishing companies practicing microfinance .These companies shall be subjected to the provisions of the law.
• The accrued revenues paid by companies, as well as other funds which cannot be collected from the deductible costs upon determining the net taxable income in accordance with the provisions of the Income Tax Act No. 91 of 2005
• Companies shall  disclose to the clients  all details related to financing services or products  as well as financing burdens to be paid by the clients.
• The provisions of Trade Law shall be applied on corporate transactions , as well as transactions held by  civil associations and institutions . Disputes and Lawsuits shall be subjected to the provisions of the said Law and to the jurisdiction of the Economic Court.
• The drafts law Prohibits microfinance companies from receiving any deposits. Companies shall not practice any activity other than the licensed activity being approved by EFSA.

Mr.  Sherif Samy asserted that a wide social discussion related to the drafts law was held.  The discussion included meetings with the Social Fund for Development and Microfinance Network, which includes NGOs working in the field and representatives from banks through the Egyptian banking Institute (EBI) as well as companies interested in obtaining license. Besides, discussions held with the Minister of Social Solidarity and international financial institutions e.g.  the World Bank , the International Finance Corporation (IFC) and the German Agency for International Cooperation (GIZ).