On 9 November 2023, Egypt took a significant step towards bolstering its exports and investments. Law No. 178 of 2023 was issued, establishing the Egyptian Agency for Export and Investment Guarantee (the “Agency”). This law, which came into effect on 10 November 2023, replaces the Export Credit Guarantee of Egypt (the “EGE”), initially established by Law No. 21 of 1992, with the newly formed Agency.
Transitional Period and Provisions
The Central Bank of Egypt (the “CBE”) is mandated by the law to undertake acquisition procedures for the EGE shares within a period not exceeding three months from the date the law came into force. The EGE board of directors will remain competent until the completion of the above-mentioned acquisition and the composition of the Agency’s board of directors.
The Agency’s Goals and Duration
The Agency aims to develop and encourage Egyptian exports and investments abroad by increasing its competitiveness. It also seeks to expand the Egyptian exporters’ base, enforce their participation in the international supply chain, and enter new markets by offering guarantee services to Egyptian exports and foreign investments per the Egyptian public economic policy. The law stipulates that the Agency’s duration will be 50 years from its entry into force. The Agency, entirely owned by the CBE, which guarantees its financial obligations, has a specified licensed capital and shares value.
The Agency’s Powers and Competencies
The Agency, structured as a Joint-Stock Company, operates as an independent institution aiming for profits. It is entitled to have branches, agents, or reporters both inside and outside the country. The Agency is empowered to undertake all procedures to achieve its goals, including:
- Providing guarantee services for exporting goods and services, importing raw materials with the aim of creating added value for re-exportation, the strategic projects of the state, and the Egyptian investments abroad.
- Undertaking the re-guarantee of the above-mentioned transactions, the acceptance of the re-guarantee on transactions occurred by similar entities or complementary activities.
- Providing financial, economic, or technical consultancy within the export sector.
- Concluding financial or legal contracts to ensure the related risk management for its activities, transactions, or portfolio management.
- Issuing bonds, financial tools, and securities to finance its activities.
- Cooperating with banks and international or local financial institutions to provide financial services to finance Egyptian exports and investments abroad.
Tax and Fees Exemptions
The guarantee and re-guarantee services provided by the Agency are exempted from stamp tax, value-added tax, and all other taxes and fees. This exemption further enhances the attractiveness of the Agency’s offerings to Egyptian exporters and investors.
In conclusion, the establishment of the Agency represents a significant milestone in Egypt’s efforts to stimulate its economy by encouraging exports and foreign investments. The Agency’s comprehensive range of services and its strategic objectives align with the broader economic policy of Egypt, promising a bright future for Egyptian exports and investments.