CAIRO: One of the major changes in Egypt's economy this year came in June with the creation of the Egyptian Financial Supervisory Authority (EFSA), which brought several regulatory bodies under one umbrella. The EFSA came on the heels of Law 10/2009, which regulates control on non-banking financial markets and instruments, and began operating in July under the chairmanship of Ziad Bahaa Eldin, former chairman of the General Authority for Investment and Free Zones (GAFI). Experts commenting on its launch were optimistic that it would "activate the non-banking sector. Investment Minister Mahmoud Mohieldin said at the time that it was not a direct response to the global financial crisis and instead coincides with a surge in the non-banking financial sector. The EFSA was tasked with improving market performance and transparency, developing more complicated financial instruments, and overseeing the capital market, the insurance market, mortgage finance and similar non-banking activities. Egypt's new regulator replaced the Capital Market Authority, the Mortgage Finance Authority and the Egyptian Insurance Supervisory Authority in enforcing related regulations. While the Central Bank of Egypt retains oversight of the banking sector, the EFSA has the power of licensing, supervising and regulating these markets - and has in the past year acted as arbitrator, most notably in the ongoing dispute between Orascom Telecom and France Telecom over Mobinil. Taxing property The heated debate over Egypt's new property tax law continued well into 2009, and will be back in the spotlight when it goes go into affect this January. In August, Finance Minister Youssef Boutros-Ghali confirmed that Egypt's Property Tax Law will be applied to residential and commercial properties with the start of the new year. Since it was first proposed a couple of years ago, much of the debate surrounding the new law centered on which property would be taxed and how much that would amount to. While advocates argued that it adheres to social solidarity, opponents were wary of the strain it would put on Egyptians already grappling with financial burdens. These terms were made clear in 2009, and helped quell some of the concerns about the tax. Houses and flats valued less than LE 450,000 will be exempted from taxes, while houses valued at LE 1 million would be taxed LE 660 per year, officials said. Individuals and corporations must submit their real estate assets by the end of the year for valuation, which will take into account location, quality of construction, provision of basic services and proximity to public parks, health and education facilities. Owners will be able to appeal the valuation of their properties within 60 days of the decision and the units will be appraised every five years. The local press quoted Tarek Farag, chairman of the Real Estate Tax Authority, as saying that "90 percent of Egyptians will be exempt and so it will not be an added burden. The tax was placed at 10 percent with LE 6,000 waived from the original evaluation, and 30 percent off the total value of the property for maintenance expenses. Access to finance The banking sector witnessed a surge in microfinance activity this year as an increasing number of financial institutions began catering to the under-served market, which has mainly had access to finance through non-profit organizations and state-owned banks. In October 2009, the Ministry of Investment finalized a law approving the establishing of microfinance companies with a minimal capital of LE 5 million. Around 21 million people are expected to benefit from the new microfinance program, according to estimates from the ministry. Developing the microfinance sector and supporting small- and medium-sized enterprises is seen as an essential contributor to economic growth. Another important source of financing got attention in 2009 as the government announced plans to amend its mortgage finance law. The amendments set out to change the mortgage percentage of total income, facilitating access to funding particularly to youth, Mohieldin told local press earlier this year. According to the original law, the percentage of the mortgage shouldn't exceed 25 percent of income, and the amendments aimed to raise that to between 30 and 33 percent, while maintaining lower risk levels for mortgages. In September, Egypt's central bank also said it was finalizing the regulatory framework for mobile money transfer and mobile banking will soon be available as telecom operators geared up to offer the long-awaited service.
