Egypt has suffered major turmoil over the past five years,
but has at least fared better than some of its neighbours. It
will not be an easy job for the government to achieve the calls
for social justice and to confront the various challenges that
Egypt is facing including: bureaucracy, the need for economic
reform, healthcare, education, and so on. The government,
however, has taken firm steps forward towards a better Egypt
simply by identifying all the major challenges.
The legislative amendments on the agenda require a change in
the culture surrounding their enactment, mainly by attracting
more investment to fuel economic growth and finding a way out
of the existing maze of legislation.
Though not sufficient, at least a good starting point has
been created on which to build through several pieces of
Investment regime amendments
At the same time as Egypt's Economic Development Conference
in Sharm El Sheikh in March 2015, Law 17 of 2015 was
promulgated to amend certain provisions regulating investment
in Egypt to help promote investment into the country.
The changes attempted to touch on the World Bank's ease of
doing business criteria and to address bureaucratic
requirements engaging investors in an intensive process for
obtaining the approvals necessary for their projects. The law
proposed a one-stop unit of approval and the easing of the
allocation of land procedures, while also awarding certain
investment incentives and opening windows for further special
treatment in the future.
Movables Security Law
The urge to provide a more secured granting of facilities by
financial institutions especially to small and medium size
enterprises (SMEs), which in most cases lack sufficient
collateral (that is, real estate and other immovable assets) to
obtain those facilities, was the primary motivation in
promulgating Law number 115 of 2015. This law regulates the
granting of bank loans against movable securities, and is known
as the Movables Security Law (MSL).
The MSL is a step forward towards encouraging and expanding
SMEs and micro financing through allowing non-possessory
pledges to be arranged over movable assets, which will be
registered in a special electronic registry to be established
specifically for this purpose.
Under the new law, all kinds of movable assets can be used
as collateral, including intangible movables, plus future
movables that the borrower or guarantor is expected to possess
in the ordinary course of business. The immovable assets
registry will include sufficient information so as to allow the
financing bank or institution to trace immovable assets and
undertake enforcement procedures in cases of disposal by the
borrower or guarantor. The MSL is expected to boost the
granting of facilities to emerging SMEs and the development of
the micro-financing climate.
New import regulations
The Egyptian government has combined with the Central Bank
of Egypt (CBE) to adopt a new currency-support strategy that
aims at minimising the import of unnecessary or luxury finished
products and lifting the pressure on the Egyptian pound.
The strategy was first implemented by virtue of Resolution
number 992 of 2015 issued on December 31 2015 requiring foreign
exporters of certain products to Egypt to register their plants
in Egypt in order for these products to be cleared for trading
This resolution was misperceived as a ban on importing, but
its aim is to provide a more regulated import climate, where
the importing of trivial or unnecessary goods can be
The above resolution was issued simultaneously with
successive CBE circulars that regulate the financing of import
transactions and the provision of documentary credit services.
This strategy is aimed at allowing the CBE to control the
transfer of foreign currency by importers that are not
sufficiently solvent, or who are importing goods that are not
necessary in the existing economic climate.
The CBE subsequently eased deposit and withdrawal
restrictions on foreign currency, which was followed by a
historic devaluation of the Egyptian pound which occurred
contemporaneously with the offering of attractive dollar and
Egyptian pound investments at local banks.
Although Egypt has made several legislative improvements,
much more is needed to: increase the speed of doing business
and resolving disputes; and, abolish bureaucracy and improve
the capabilities of public servants to meet international
These improvements will require further changes by
parliament. In our view, it is difficult to see a way forward
for social justice unless three controversial topics are
- a strong civil service system based on
qualitative measures, and therefore a law that takes
advantage of the merits of the system;
- attracting more foreign investment by
abolishing the impact of the existing bureaucracy; and,
- increasing the number of judges, setting
time barriers on resolving disputes, as well as introducing
Mohamed Khodeir and Zeinab Shohdy