The Financial Regulatory Authority (FRA) is streamlining the path for fintech startups in Egypt with the issuance of Decision No. 268 of 2023. This decision outlines clear regulations and procedures for establishing and licensing startups involved in non-banking financial activities, fostering growth in the sector and boosting the national economy. To ensure financial stability and responsible practice, Decision No. 268 sets a minimum capital requirement of EGP 15m for each activity a startup seeks to undertake. Notably, it mandates that technology specialists hold at least 25% of the company's capital, emphasising the importance of technological expertise in this area. This decision aligns with the provisions of Law No. 5 of 2022, which regulates and promotes the use of financial technology in non-banking financial activities. It is also in accordance with the FRA's Decision No. 58 of 2022, which specifies the conditions and procedures for the establishment, licensing, and approval of companies engaging in non-banking financial activities through financial technology. According to the Financial Regulatory Authority, this new decision applies to fintech startups seeking licences for various non-banking financial activities, including real estate financing, financing for medium and small projects, microfinance, leasing, factoring, and consumer finance. The decision introduces a digital application form for the establishment, accessible through authorised agents or the FRA's dedicated portal. This streamlines the process and removes unnecessary hurdles for potential entrants. The decision outlines the conditions and procedures that fintech startups must follow to obtain a licence for their activities. These include commencing activities within two months of licence issuance, obtaining the Authority's approval for opening new branches, ensuring that financial leverage does not exceed four times the net equity, completing capital increase procedures in accordance with the FRA's regulations for each activity, refraining from distributing profits to shareholders before completing the capital increase and obtaining the final licence, providing technological tools for digital connectivity as per the FRA's requirements, and signing an insurance policy against electronic risks with an authorised insurance company. Startups will receive a two-year initial licence, during which they must demonstrate their viability and growth potential. This includes increasing their capital to meet activity-specific regulations and ensuring compliance with other obligations. Failure to do so may result in licence revocation. The FRA chairman, Mohamed Farid, emphasised the Authority's commitment to supporting startups, recognizing their vital role in economic development and job creation. He further highlighted the importance of a favourable regulatory environment and the recent improvements in Egyptian financial evaluation standards, specifically tailoring assessments to the unique characteristics of startups and facilitating their access to funding.
