Egyptian Exchange (EGX) Chairman Mohamed Omran said the government is required to maximise the yield on state assets and to find balance between holding companies’ selling of products in a social price and making profits at the same time.
Omran said EGX is waiting for new IPOs from a number of state companies, which can be a new financial instrument rather than the banking sector.
Financial support is the only way to reform the system of subsidy rather than subsidies in kind that have been applied in Egypt in the past.
EGX is not competitive in terms of trading and market capitalisation compared to neighbouring markets, he said. EGX however is very advanced and has an advanced rank at the legislative level in the Capital Market through business reports prepared by international institutions.
Misr for Central Clearing, Depository, and Registry’s (MCDR) CEO Mohamed Abdel Salam said they are willing to cooperate with the Ministry of Supply and EGX’s management to establish a commodity exchange.
Chairman of the Egyptian Financial Supervisory Authority (EFSA) Sherif Samy said the authority as a supervisor of the non-banking financial sector formulated the required legislation for all players in the market and who monitor the activity.
The authority developed a number of financial instruments such as bonds and securitisation to contribute to a non-traditional financing for government agencies.
Samy confirmed that EFSA is interested in overcoming all obstacles small and medium-sized enterprises (SMEs) face. They were allowed to issue bonds without a credit rating to finance their expansion and make profits that ultimately enter the state treasury via taxes.
EFSA is currently preparing legislations to contribute to boosting economic activity in Egypt such as the Firms Law, which will help authorities and state institutions to get funds through non-banking financial instruments.
Assistant Minister of Housing and Urban Communities Khalid Abbas said the ministry will increase finances for sewage projects away from the non-banking sector during in the upcoming period.
The Beit El-Watan (Homeland House) project, recently launched by the Ministry for Egyptian Expatriates, succeeded in making sales of about $3bn and is currently studying issuing project bonds to provide hard currency.
Abbas said the Ministry of Housing made great strides implementing the projects launched in the Sharm El-Sheikh Summit in March 2015 and that the Urban Communities Authority doubled its budget and business to provide the required lands.
Chairman of Business News Company Mostafa Sakr said there are currently persistent demands for financing and that the expansion of the finance base is the main way to boost economic growth away from banks.
There has been a lack of financial instruments and that companies only relied on the banking sector. A quarter of the government’s expenses in the state budget was allocated to pay off the interests of bonds and treasury bills purchased by banks from the Ministry of Finance.
Sakr said the government has to abandon its centralised financing, diversify its financing instruments and sources, and search for other tools such as activating partnership with the private sector.
The government succeeded in securitisation of the Urban Communities Authority’s receivables for real estate companies, he said and that IPOs used prior finance major national projects stopped and should return again.
Business News Summit believes in the importance of the non-banking financial sector and urged the government to activate and stimulate the capital market as one of private and government financed instruments.