Ten years after the Arab Spring protests toppled governments across the Middle East and North Africa, Egypt’s economy shows remarkable growth potential and resilience. The most populous country in the Arab world and Africa’s second-largest economy, Egypt was one of the few emerging markets to have avoided an economic contraction in 2020. Although weaker than its 2019 performance, GDP grew by 3.6%1 and the economy remained stable. Recent macroeconomic structural reforms and a strong policy response have in part contributed to economic resilience, and the International Monetary Fund (IMF) forecasts a strong comeback, at 2.8% for the 2020-2021 fiscal year and 5.2% for the 2021-2022 fiscal year.2 The Economist ranks Egypt #4 of 50 on its “global normalcy index,” which tracks large economies’ return to pre-pandemic life.
Despite structural reforms and a promising economic outlook, Egypt continues to face obstacles. Unemployment is high,3 the non-oil private sector has grown slowly,4 political tension is rampant and poverty remains widespread. Amidst this challenging landscape, digitalization offers the state an opportunity to tap into its full growth potential by diversifying the economy, creating new jobs and strengthening the middle class. Fortunately, Egypt’s digital transformation was well underway even before the onset of the COVID-19 pandemic.5 Vision 2030, launched in 2016, seeks to achieve sustainable development goals, and includes commitments towards financial inclusion, digital transformation, a culture of entrepreneurship, knowledge-based economic growth and resilience and competitiveness of the economy.6 In line with Vision 2030, the Ministry of Information and Communications Technology (MICT) launched the Digital Egypt strategy, which seeks to promote overall digitalization, digital jobs and skills, and innovation.
During the health crisis, digital transformation accelerated as the public and private sectors moved operations online and consumer preferences shifted. Egypt’s leading digital payments platform, Fawry, saw a surge in growth,7 and the government estimates that the ICT sector will contribute 8% to the GDP by 2024.8 A spate of recent regulations—including the Non-Cash Payment Law and a fintech regulatory sandbox—will be instrumental in attracting new entrants and investment funds to the state’s fintech ecosystem.9 Although cash still dominates and the number of unbanked individuals remains high, this burgeoning fintech sector could promote financial inclusion, contribute to economic recovery and help the state to compete with more established digital economies like the United Arab Emirates and Saudi Arabia.
Egypt’s 2021 digital agenda focuses on digital banking and financial inclusion. Regulators are especially keen to develop and adopt AI solutions and other innovative technologies, and they are looking to implement finger-vein recognition for identity verification in the national ID system.10 In 2019, the central bank announced interest in exploring the potential development of a central bank digital currency (CBDC), but it has not issued any updates. As Egypt looks towards the future, regulators must ensure that structural reforms and digitalization initiatives are applied evenly, support a young and fast-growing population and are accompanied by adequate cybersecurity standards.
Financial Regulatory Authorities
The Central Bank of Egypt (CBE) is the country’s central bank.
The Egyptian Financial Supervisory Authority (EFSA) regulates the non-banking financial markets sector.
The Financial Regulatory Authority (FRA) regulates Egypt’s financial services sector.
The Personal Data Protection Centre (the “Centre”) oversees and enforces compliance with the Data Protection Law.
Policy, Laws and Regulations
New Banking Law, 16 September 2021
Law 194/2020 (the “New Banking Law” or the “CBE Law”), published 15 September 2020, establishes a new regulatory framework for the payments sector, which was previously regulated only indirectly. Per the regulation, Payment System Operators (PSOs) and Payment Service Providers (PSPs) must obtain a banking license from the central bank, and are subject to audit and inspection. Regulated entities must keep all electronic records related to accounts and payment orders, which will be considered valid as evidence if stored according to central bank requirements.11 The central bank has the authority to issue warnings and fines, freeze activities and revoke licenses. Fintech and regtech startups may be exempted from licensing requirements, with approval by the central bank. The CBE Law also prohibits entities from conducting activities with cryptocurrency, unless licensed by the central bank.12 Regulated entities must have been in compliance by 16 September 2021. The law will be instrumental in attracting foreign direct investment (FDI) to Egypt’s fintech sector, modernizing the economy and making the banking sector more competitive.
Simplified Procedures for Opening Accounts, 24 March 2021
The central bank, in partnership with the Money Laundering and Terrorist Financing Combating Unit, issued a circular to banks regarding the application of simplified procedures for account opening. In the case that data on identity documents differs from data provided on the account opening form, alternate documentation may be supplied for proof of work or address. These documents are acceptable as evidence of work: membership card, professional license, tax card, document from the General Authority for Insurance and document from the Labor Office. A utility bill or lease contract may be utilized as evidence of address. If a small business does not have a commercial register or license, it may open an account with an ownership contract. The move comes as part of Egypt’s efforts to support financial inclusion.13
Data Protection Law, 16 October 2020
The Data Protection Law, published 15 July 2020, imposes new requirements on processors and controllers of personal data, and codifies the rights of data subjects. In order for the processing of personal data to be considered legitimate and legal, processors must obtain the data subject’s consent; and the processing must be necessary for the execution of a contractual obligation, legal action, an action in support of the data subject’s legal rights or the execution of an agreement to benefit the data subject. Data controllers and processors must obtain a license from the Personal Data Protection Centre, appoint a data protection officer and maintain records of processing activities. A fee of up to LE 2,000,000 (approximately USD $127,000) is required for the acquisition of a license. Cross-border transfers of personal data are prohibited unless permission is granted from the Personal Data Protection Centre, and personal data may not be sent to a jurisdiction with personal data protection standards of a lesser level than the Egyptian Data Protection Law. Data subjects have the rights to knowledge, access, withdrawal, objection, erasure and modification, and they may limit the scope of the processing and refuse or withdraw consent to electronic marketing. In the case of a data breach, controllers and processors must notify the Personal Data Protection Centre within 72 hours of being made aware, and data subjects have a right to be notified. The Law, influenced by the EU’s General Data Protection Regulation (GDPR), went into effect 16 October 2020. It will not be fully enforced until 2022. 14
1. “Egypt Economic Outlook.” African Development Bank Group. https://www.afdb.org/en/countries/north-africa/egypt/egypt-economic-outlook#:~:text=Egypt's%20economic%20growth%20has%20been,of%20the%20COVID%E2%80%9319%20pandemic.
2. “Egypt: Overcoming the COVID Shock and Maintaining Growth.” International Monetary Fund, 14 July 2021. https://www.imf.org/en/News/Articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth.
3. “Unemployment, total (% of total labor force) (modeled ILO estimate) - Egypt, Arab Rep.” The World Bank, 15 June 2021. https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=EG.
4. Böwer, Uwe. “Making Egypt’s Post-COVID Growth Path More Sustainable.” European Commission, May 2021. https://ec.europa.eu/info/sites/default/files/economy-finance/eb066_en.pdf.
5. “Video: How is Egypt enhancing its digital transformation agenda?” Oxford Business Group, 28 April 2021. https://oxfordbusinessgroup.com/news/video-how-egypt-enhancing-its-digital-transformation-agenda.
6. “Egypt’s Vision 2030.” Ministry of Planning and Economic Development. https://mped.gov.eg/EgyptVision?lang=en.
7. Faridi, Omar. “Egyptian Digital Payments Provider, Fawry, Experiences Record Growth Following COVID-19 Outbreak.” Crowdfund Insider, 10 September 2020. https://www.crowdfundinsider.com/2020/09/166569-egyptian-digital-payments-provider-fawry-experiences-record-growth-following-covid-19-outbreak/.
8. Ghoneim, Dr. Abdel Wahab. “Egypt Digitalization In Alignment with Egypt vision 2030 for SDGS.” Egyptian Cabinet: Information and Decision Support Center, 03 May 2021. https://idsc.gov.eg/Upload/DocumentLibrary/Attachment_A/4798/3%20-%20EGYPT%20DIGITALIZATION.pdf.
9. Werr, Patrick. “Egypt eyes surge in fintech investment after new laws.” Reuters, 22 June 2021. https://www.reuters.com/business/egypt-eyes-surge-fintech-investment-after-new-laws-2021-06-22/.
10. Dawood, Ayub. “Egypt to unlock futuristic ID verification with finger-vein recognition tech.” Mashable, February 2021. https://me.mashable.com/tech/12805/egypt-to-unlock-futuristic-id-verification-with-finger-vein-recognition-tech.
11. Youssef, Lamiaa. “Egypt’s New Banking Law Payments Fintech Electronic Evidence.” Sharkawy & Sarhan, 06 October 2020. https://www.sharkawylaw.com/egypts-new-banking-law-payments-fintech-electronic-evidence/.
12. Bälz, Kilian and Hussam Mujally. “Client Alert: The New Egyptian Central Bank Law - A Step Towards a Cashless Economy.” Lexology, 08 December 2020. https://www.lexology.com/library/detail.aspx?g=fe521813-1f32-4caf-a04e-3c162c8397a2.
13. Mounir, Houssam. “Central Bank of Egypt directs for simplified bank account opening procedures.” Daily News Egypt, 25 March 2021. https://dailynewsegypt.com/2021/03/25/central-bank-of-egypt-directs-for-simplified-bank-account-opening-procedures/.
14. “Egypt’s Data Protection Law enters into force.” Clyde & Co, 19 October 2020. https://www.clydeco.com/en/insights/2020/10/egypt-s-data-protection-law-enters-into-force.
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Last updated: November 2021