GAFI, FRA, ITIDA sign protocol to create legislative, procedural environment for investment in Egypt
The General Authority for Investment and Free Zones (GAFI), the Financial Regulatory Authority (FRA), and the Information Technology Industry Development Authority (ITIDA) signed a cooperation protocol last week aiming to create an attractive legislative and procedural environment for investment in Egypt.
The protocol also includes finding innovative solutions that fit the nature of the work of emerging companies, facilitating their transactions, and creating a suitable work environment for entrepreneurs to attract local and international capital to form partnerships and finance the growth of start-up companies in Egypt.
Amr Mahfouz — the CEO of the ITIDA — said that start-ups have become one of the most important sources of investment and job creation in Egypt, as this sector has witnessed remarkable prosperity and steady growth in the volume of investments over the past years, and it is expected that this year will also witness more growth.
Mahfouz added that the three bodies cooperated with the Abdel Shaheed Law Firm to formulate the necessary procedures that would improve the field of investment in this promising sector.
The cooperation protocol between the three entities stipulates encouraging investment in Egyptian start-ups; attracting capital and financing to them; and establishing more local, regional, and international partnerships that contribute to increasing the added value of the Egyptian economy, making Egypt a regional and international centre for technology based on creativity and entrepreneurship.
According to the protocol, GAFI will prepare a unified form of the shareholders’ agreement to establish start-up companies, verify the validity of the initial evaluation of emerging companies by estimating the investment required to operate and start the activity, and determine the appropriate timing and method for pumping new investments through public offerings, mergers, or acquisitions.
The FRA will also establish facilitating controls for the transfer of ownership of companies and entities that practice risk capital activity by investing in emerging companies through financing tools that can be converted into shares’ ownership and will also define procedures for transferring shares’ ownership in emerging companies in order to ensure the implementation of ownership transfers in the Egyptian Exchange.
The ITIDA will provide more protection for minority investors in emerging companies through new mechanisms such as including appropriate clauses in shareholder agreements and the needs of start-ups to join them.
It is worth noting that the ITIDA has developed and formulated a comprehensive five-year strategy in cooperation with the global consultancy Deloitte that is being funded by the United States Agency for International Development (USAID).
The strategy is based on four main axes — enhancing the work environment for start-ups and developing their growth factors, facilitating access to finance and investments, develop technical skills and increase the number of professionals to facilitate access to them while creating a climate that stimulates the growth of pioneering and innovative thought, and facilitating penetration of global markets through an international promotion and marketing plan.
