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Egypt accounts for EGP 347bn of global Islamic banking of $2.7trn: Finance Ministry - Daily News Egypt

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Egypt accounts for EGP 347bn of global Islamic banking of $2.7trn: Finance Ministry

Finance Ministry cooperates with FRA, Al-Azhar, and Islamic banks to issue regulations of Sukuk Law

The first Arab forum on sovereign sukuk and its role in the development of Arab societies has concluded with the issuance of 17 recommendations. 

It was held under the auspices of Mohamed Maait, Minister of Finance, in the presence of representatives of 14 Arab and Islamic countries who participated in its sessions over two days.

In a speech delivered on behalf of Maait, Head of the Public Debt Management Unit at the Ministry of Finance Mohamed Hegazy stressed that the Egyptian government pays great attention to sovereign sukuk.

He added that the volume of the Islamic banking industry worldwide exceeded $2.7trn in 2020, of which Egypt’s share was only EGP 347bn. Islamic deposits reached about EGP 321.7bn, accounting for 7% of the whole Egyptian banking market.

Hegazy noted that sovereign sukuk represents a new alternative to provide the necessary financing for investment and development projects listed in the economic plan of the state’s general budget. Moreover, sukuk also attracts a new segment of investors who prefer financial transactions that follow the Islamic Sharia law.

He added that Egypt’s issuance of a new law on sovereign sukuk stresses the Egyptian state’s tendency to be present in the global Islamic finance market. This law serves as the legislative umbrella for the development of this new type of government securities in Egypt. He also pointed out that the Ministry of Finance is currently working on preparing the executive regulations for the law in cooperation with the Financial Regulatory Authority (FRA), Al-Azhar, and leading banks in the field of Islamic finance. They aim to give the law legal, technical, and marketing dimensions, in accordance with international best practices.

He explained that work is underway to prepare an organizational structure for the issuance, in line with the principles of Islamic Sharia, in addition to establishing the sovereign sukuk company to be responsible for the issuance. Moreover, the Cabinet will be approving the formation of an oversight committee to review all legal, procedural and regulatory issues. The offering process in the financial markets will also begin, and will include choosing formulas, pricing, timing, and listing in the financial markets.

The final statement of the forum included a number of recommendations adopted by the participants representing ministries, government agencies and banking leaders, in addition to academics, researchers and specialists from Arab research centers and universities.

The recommendations included working to provide the necessary funding for new investment projects, and using sukuk to finance agencies, companies and sectors that account for a large share of public investment, such as electricity, transport, water, roads and ports. Banks of all kinds, as well as investment funds and investors were encouraged to participate in investment and financing through sukuk as a general market indicator, making the best use of the experiences of successful countries.

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