Egyptian labour market is regulated by the Labour Law No. 12 for 2003. However, a new labour law is issued to improve different laws and regulations, including female employment and labour unions as well as encouraging the work in the private sector, through developing fixed guarantees for the termination of the employment relationship.

Financial sector regulations have three main sectors: capital market, banking and insurance. There are legislative reforms to enhance performance and encourage competition especially for the private sector. The government has stopped intervening directly in the financial sector since 1993, and instead has been using indirect measures to control monetary aggregates such as bond issues. The government is currently focusing on reactivating the bond market, creating new financial institutions and building strategic links with international financial institutions. Efforts are also being done to divest state ownership of joint venture, public banks and insurance companies, and encourage private sector involvement in the financial sector. Full private sector ownership, including foreign ownership, has been allowed in the banking and insurance sectors. Thereby, several financial intermediaries representing large international financial institutions in the areas of commercial and investment banking, mutual funds, insurance and securities trading are now operating in Egypt. The enactment of the mortgage law brings liquidity to the market and enhances the retail-banking sector.

The SMEs Act is an attempt to integrate the informal sector, which accounts for about 40% of GDP as declared by Minister of Planning, Monitoring and Administrative Reform in 2017. It aims at providing MSMEs’ owners with an incentive for easy access to finance in return for joining the formal sector (legitimising their situation) and paying taxes. This incentive is suggested as a 1% flat income tax on all SMEs (using Central Bank of Egypt’s definition for SMEs). In addition, SMEs will be exempted from VAT. The SMEs Act is to be finalised by the end of 2018.

CBE Initiative towards SMEs: Due to the importance of incorporating SMEs in the economy and integrating them with large firms in the value chain of different sectors, access to finance was one of the pillars of the banking reform plan in 2008. To encourage banks to grant credit to SME clusters, banks were exempted from the 14% reserve requirement. In 2016, the CBE announced an initiative to finance SMEs through a four-year program. CBE obliged Egyptian banks to give out 20% of their total loans portfolio to SMEs, redefining SMEs to companies that make annual revenues of EGP 50,000. The SME programme aims to finance 350,000 SMEs with EGP 200 billion over a four-year period at 5% interest rate loan. The program is expected to have many economic benefits as decreasing unemployment, boosting income levels, increasing local outputs and stimulating Egyptian exports. Participating banks are to deduct the loans from their required reserves at the CBE. Since 2016, 61,000 companies have benefited from the funding. In addition, CBE allocated EGP 100 million over the next five years to build business development centres, in cooperation with Nile University. The aim of these centres is to provide consultancy services to the SME sector.

New Export Development Agency (EDA) established under the Ministry of Trade and Industry (MTI) to be the formal body responsible for all matters related to export, with the aim of optimising the use of all resources available at the different export-related agencies. This helps to develop a defined comprehensive vision including all organisational and procedural related aspects, in coordination with relevant bodies such as export councils, commercial offices abroad, business associations, and industrial and commercial federations.

On the monetary side, since the devaluation of the EGP in November 2016, the CBE regularly issues new regulations with the aim of promoting investments and savings, and curbing inflation. These include increases in borrowing and certificates of deposits’ interest rates, as well as lifting the limits of transfer of foreign currency and credit card limits abroad.

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