The Eifa And Islamic Finance In Egypt

The Egyptian Islamic Finance Association (EIFA) was founded in 2012 as a non-profit civil society organisation to promote the knowledge and understanding of Shariah- compliant finance in Egypt. The EIFA is headed by Dr. Mohamed Al-Beltagy, who has been the chairman since the organisation’s inception. Professionals regularly attend the EIFA’s seminars to train professionals on Islamic finance and banking basics. Additionally, the EIFAcoordinates with financial institutions and government agencies to expand the growth of Islamic finance in Egypt.

Shariah-compliant finance has flourished in Egypt over the past four years. Despite many attempts to create a flexible, effective legislative framework for sukuk, including Sukuk Law no. 10/2013, the Egyptian legislature was not successful until 2018, when it introduced amendments to Capital Markets Law no. 95/1992 that provided for the issuance of corporate sukuk denominated in Egyptian or foreign currencies. Sarwa Securitization Company and EFG Hermes have obtained sukuk issuance licenses from the Egyptian Financial Regulatory Authority (FRA). Prominent real estate companies such as Talaat Moustafa Group and Amer Group have utilized sukuk to finance suburban developments in Greater Cairo.

Last year, Egypt issued its first sovereign sukuk legislation, Sovereign Sukuk Law no. 138/2021. The law’s Executive Regulations followed early this year. However, the anticipated Ministry of Finance sovereign issuance has been postponed until 2023, due to the economic circumstances and uncertainty the country is currently facing.

The Islamic banking sector has witnessed steady growth, which is especially relevant in a country where an estimated 67% of the eligible population is “unbanked”. The Shariah-compliant niche represents 5% of the total market and was worth EGP 429 billion last year. With the establishment of the now defunct Mit Ghamr Bank in 1963, Egypt was the first country to offer formalized  Shariah-compliant banking services. Today, the market is split between purely Islamic banks and conventional banks with Islamic windows.

EIFA’s activities are very important in the larger social and economic context. Although Egypt is a Muslim- majority country, many customers do not understandthe benefits of Shariah-compliant banking in comparison with conventional banking. Some believe that the “Islamic” qualifier is merely a marketing gimmick and that thereare no real differences between them. In this regard, there are many avenues for cooperation between EIFA and the Participation Banks Association of Türkiye (TKBB). There’s value in learning from the Turkish experience with Islamic banking and integrating it into the wider sector. Through collaboration, the two associations can host online events and cross-cultural opportunities for Islamic finance professionals.

The Egyptian Islamic Finance Association (EIFA)