Egypt Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Egypt
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Egypt
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation8 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking13
document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 14 at that time.
Payment Systems 16
Facts and Figures
Cash Management 17
Capital/Other major cities: Cairo/Alexandria, El Giza, National holidays: 2019 — 7, 25 Jan,
Port Said Source: www.goodbusinessday.com. 25, 28, 29 Apr, 1 May, 5, 6 Jun*,
Electronic Banking 19
1, 23 Jul, 10–12 Aug*, 1 Sep*,
Area: 1,001,450km2
Trade Finance 20 6 Oct, 9 Nov*
Population: 94.67m
Business hours: 08:00–17:00 (Sun–Thu)
Useful Websites 22
Languages: Arabic, English, French
Banking hours: 08:00–16:00 (Sun–Thu)
Currency: Egyptian pound (EGP)
Stock exchange: The Egyptian Exchange (EGX)
Country telephone code: 20
Leading share index: EGX 30 Index
Weekend: Friday and Saturday
Sectoral distribution Agriculture 11.9%,
National holidays: 2018 — 1, 7, 25 Jan, of GDP (% of GDP): Industry 33.1%,
Source: https://www.cia.gov/library/
Source: www.goodbusinessday.com. 8, 9, 25 Apr, 1 May, 15, 16 Jun*, Services 55.7%
publications/resources/the-world-
1, 23 Jul, 21–23 Aug*, 11 Sep*, factbook/index.html. (2017 estimate)
6 Oct, 20 Nov*
* The date shown may vary by plus or minus one day. These dates are derived by converting from a non‑Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar.
Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are
determined by the sighting of a new/full moon.
Government Head of state
Legislature Abdel Fatah al-Sisi, president since 8 June 2014.
A republic with a unicameral parliament.
®® The president is elected every four years and can serve two
®® House of Representatives: currently 596 members are elected terms in office.
to serve five-year terms.
Political leader
Sherif Ismail, prime minister since 12 September 2015.4 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 5
Country credit rating
Fitch Ratings rates Egypt for issuer default as:
Term Issuer Default Rating
Short B
Long B
Long-term rating outlook Positive
Source: www.fitchratings.com, April 2018.
Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%)
Economy
2017
2011 2012 2013 2014 2015 2016 20 20 16 16
Q1 Q2 Q3 Q4
Exchange rate* (EGP/USD) 6.0169 6.3057 6.9430 7.1431 7.8080 18.1250 18.084 18.040 17.606 17.681
15 15 12 12
Interest rate (lending rate) (%) **
11.0 12.0 12.3 11.7 11.6 13.6 16.6 17.2 19.2 19.7
Unemployment (%) 12.0 12.7 13.2 12.9 12,8 12.6 12.0 12.0 11.9 NA 10 10 8 8
Consumer inflation*** (%) + 10.1 + 7.1 + 9.4 + 10.1 + 10.4 + 13.8 + 29.8 + 30.3 + 32.2 + 26.1
5 5 4 4
GDP volume growth*** (%) + 1.8 + 3.7 + 1.5 + 13.5 + 4.3 + 4.3 NA NA NA NA
GDP (EGP bn) 1,371 1,542 1,887 2,047 2,242 2,708 – – – – 0 0 0 0
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (USD bn) 228 245 272 287 287 149 – – – –
Exchange rate (EGP/USD) Consumer inflation %
GDP per capita (USD) 2,870 2,855 3,102 3,436 3,062 1,561 – – – – Interest rate (lending rate) (%) GDP volume growth %
BoP (goods/services/income) as % GDP – 9.1 – 10.9 – 10.2 – 11.7 – 12.8 – 24.6 – – – –
* End period. ** Upper margin on commercial bank loans to the general public. *** Year on year. Sources: IMF, International Financial Statistics, April 2018 and 2017 Sources: IMF, International Financial Statistics, April 2018 and 2017 Yearbook; and World Trade Organization.
Yearbook; and World Trade Organization.6 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 7
Legal and
Regulatory
Central bank
The Central Bank of Egypt (CBE) is an autonomous institution
Reporting
All transactions between residents and non-residents must be
®® Anti-Money Laundering Law No 80 of 2002, as amended and
supplemented by subsequent laws and Decrees in 2003, 2008 In 2017, the CBE
operating in accordance with Law No 88 of 2003 (of the Central reported to the CBE on a monthly basis. and 2014; and
Bank, Banking Sector and Money) and its amendments.
Companies are responsible for submitting transactions data
®® The Anti-Terrorism Law of August 2015.
announced the
Bank supervision directly to the CBE. Data can be submitted electronically. The CBE has also published associated AML Regulations and
The CBE’s Banking Control Department supervises the banking
sector in Egypt. Exchange controls
Rules. cancellation of the
USD 100,000 limit on
Egypt is a member of the Common Market for Eastern and Egypt is a member of the Middle East and North Africa Financial
Resident/non-resident status Southern Africa (COMESA) regional trade zone. COMESA has Action Task Force (MENAFATF). The Egyptian Money Laundering
A company is considered resident in Egypt if: implemented a Regional Payment and Settlement System Combating Unit (EMLCU), the country’s financial intelligence
®® It is incorporated in accordance with Egyptian law;
(REPSS), a multilateral netting system designed to facilitate
cross-border payment and settlement between central banks in
unit, is housed within the CBE. The EMLCU is a member of the
Egmont Group. individuals’ transfers
®® The company’s headquarters are located in Egypt or if it’s the COMESA area. The Bank of Mauritius acts as the settlement
actual centre of management and top management are
located in Egypt; or
bank. REPSS processes payments in EUR or USD and reduces
the time taken to effect transfers from five days to one.
Account opening procedures require formal identification of the
account holder and beneficial owners. Identification procedures abroad and the
should include the data of originator, trustee and beneficiaries
USD 50,000 monthly
®® It is a company in which the Egyptian state, or any public
juridical entities, own 50% or more of its share capital. The Egyptian pound (EGP) is Egypt’s official currency. In and the purpose of the accounts. Financial institutions are also
November 2016, the CBE floated the EGP. required to identify the names and addresses of the authorised
deposit cap on non-
Bank accounts signatories for the legal person and legal arrangement, in addition
Resident ®® Foreign exchange controls are administered by the CBE. Since to identifying the legal status of the legal arrangement.
Foreign exchange accounts can be held by residents both the flotation of the EGP, some restrictions on the export of
domestically and abroad. Resident domestic currency (EGP)
accounts cannot be held abroad, but are freely convertible into
capital and the repatriation of funds have been relaxed.
In June and November 2017 respectively, Egypt’s central
Any individual conducting occasional transactions above a
threshold set by the relevant supervisory authorities must be priority imports.
foreign currency. identified. For banks, the Post Office and foreign exchange
bank announced the cancellation of the USD 100,000 limit on dealers, the threshold is EGP 30,000.
Non-resident individuals’ transfers abroad and the USD 50,000 monthly deposit
Non-resident bank accounts are permitted in both foreign and cap on non-priority imports. Financial institutions in the broadest sense must record and
domestic currency. Foreign exchange accounts (free accounts) report suspicious transactions to EMCLU.
Travellers may take out/bring in up to EGP 5,000 in cash and must
may be credited and debited with foreign currency payments
disclose any foreign currency exceeding the amount or equivalent All records must be kept for at least five years after the end of a
between accounts held abroad, and may be used to make
of USD 10,000. business relationship.
payments within Egypt. Non‑resident domestic currency
accounts are freely convertible into foreign currency.
CBE approval is required by a company intending to acquire more Individuals entering or leaving Egypt must declare any foreign
than a 10% stake in, or take actual control of, an Egyptian bank. currency they are carrying equivalent to, or exceeding,
Interest can be offered on current accounts, savings accounts
and demand deposits. Overdraft facilities are available to USD 10,000 to the customs authorities who must record this
Anti-money laundering/counter-terrorist financing1 information.
residents and non‑residents.
Egypt has implemented anti-money laundering and counter-
terrorist financing legislation. Notable legislation includes:
1.
Data as at May 2017.8 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 9
Taxation
1
The rate of corporate Resident/non-resident
A company is considered to be resident in Egypt if it is
Withholding tax (subject to tax treaties)
incorporated or effectively managed in Egypt. Payments to: Interest Dividends Royalties Services Branch remittances
income tax is a 22.5% Any entity in which the Egyptian state or any of its companies Resident companies 0%/20%/32%* 5%/10% None 2% NA
owns more than 50% is also deemed to be a resident in Egypt.
flat rate on annual net
Non-resident companies 0%/20% **
5%/10% 20% 20% ***
5%
Tax authority * Government bonds issued by the Ministry of Finance suffer 32% withholding tax on their interest. Treasury notes and bonds are subject to withholding tax of 20%.
** The Egyptian-resident payer must withhold 20% tax at source (regardless of whether a lower rate applies under an applicable tax treaty); the recipient must submit a request
®® Egyptian Tax Authority.
profits. Companies Tax year/filing
to the Egyptian tax authorities to obtain a refund of the tax over-withheld within six months of the date the interest was paid. Interest paid under a long-term loan (i.e. exceeding
three years) is not subject to withholding tax.
*** The Egyptian tax code does not have any specific withholding tax rules governing technical service fees, although the tax authorities may treat such payments as royalties for
undertaking oil and
The fiscal year is the Gregorian calendar year, unless otherwise withholding tax purposes (and, thus, taxable at 20%). The ultimate tax treatment will depend on the scope of services provided and will be determined on a case-by-case basis.
stated in the company’s articles of association.
gas exploration or Companies must file a tax return within four months following
the end of the financial year. Tax is assessed on the basis of the Under the participation exemption, 90% of dividends received by
a resident parent company are exempt from tax if the Egyptian
Capital gains tax
Capital gains derived by a resident or non-resident company
information provided in the tax return.
production are taxed Companies are required to pay their corporate tax in advance in
parent holds at least 25% of the share capital or voting rights
of the payer for at least two years from the date the shares are
from the sale of shares listed on the Egyptian stock exchange are
subject to a 10% corporate income tax in a separate income pool.
three quarterly (in June, September and December) pre-payments acquired, or if the holding period is not met at the time of the This tax was initially suspended for two years as from 17 May
at 40.55%. of 20% of the previous years profit. distribution, the parent commits to hold the shares for two years. 2015. However, a freeze on capital gains tax was extended for a
further three years in May 2017.
Consolidated returns are not permitted and each company must Losses may be carried forward for five years. The carryback
file a separate return. of losses is not permitted, except for losses incurred by a Capital gains derived by a resident or non-resident entity from the
construction company on long‑term contracts. Tax losses disposal of unlisted shares in Egyptian companies are included in
Corporate taxation incurred on the trading of shares may be carried forward only for taxable income and taxed at the standard corporate tax rate.
Resident companies are taxed on worldwide income with a credit three years.
for foreign tax; non-resident companies are taxed on Egyptian- Withholding tax (subject to tax treaties)
sourced income only. Advance tax ruling availability Dividends paid to a resident or a non-resident entity are subject
Taxpayers may apply for an advance ruling by submitting a to a 10% withholding tax (the tax withheld is deductible from
The rate of corporate income tax is a 22.5% flat rate on annual written request and copies of relevant documents to the tax corporate income tax where the dividends are paid to a resident
net profits. Companies undertaking exploration or production of authorities. The tax authorities will issues a decision concerning corporate entity). The withholding tax rate is reduced to 5%
oil and gas are taxed at 40.55%. There is no surtax or alternative the request within 60 days. where the recipient holds more than 25% of the capital or voting
minimum tax. rights in the distributing company for at least two years. The rate
Wealth tax for non-residents may be reduced under a tax treaty.
Foreign taxes paid overseas may be deducted from Egyptian Religious wealth tax (zakat) is not levied in Egypt.
income tax payable, but the deduction may not exceed the total Profits realised by a branch or permanent establishment of a
tax payable in Egypt. foreign company are deemed distributed to the head office within
1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and
Deloitte Highlight, 2017.10 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 11
60 days from the year-end and are subject to the 5% dividend Controlled foreign companies Residential units with an annual rental value of less than Payroll and social security taxes
withholding tax, subject to the provisions of an applicable tax Income from investments in non-resident companies is EGP 24,000 are exempt. Non-residential property that is used There is no payroll tax payable by employers. Domestic tax law
treaty. recognised under the equity method of revenue recognition and is for commercial, industrial and administrative purposes with an provides that the employee’s income is subject to the Egyptian
taxed in Egypt if: annual rental value of less than EGP 1,200 is also exempt. The salary tax in the following cases:
Tax treaties/tax information exchange agreements (TIEAs) user of the property pays the tax in two instalments. The annual
Egypt has concluded over 56 tax treaties with various countries. ®® The Egyptian entity owns more than 10% of the non-resident rental value of real estate is assessed every five years. ®® Work is performed in Egypt whether or not the income is paid
entity; from an Egyptian or foreign source; or
Thin capitalisation ®® More than 70% of the non-resident company’s income is Sales taxes/VAT (incl. financial services) ®® Work is performed outside Egypt and the income is paid or
Thin capitalisation laws in Egypt apply a 4:1 (debt to equity) derived from dividends, interest, royalties, management fees or VAT applies to all commodities and services. Input VAT may be charged to an Egyptian office.
gearing ratio. Interest expense exceeding this amount is non- rental fees; and offset against output VAT on most items.
deductible. Employers make social insurance contributions at rates of 26%
®® The profits of the non-resident entity are not subject to tax in
Companies with annual turnover of EGP 500,000 or more are of the basic wage (to a maximum of EGP 1,120) and 24% of the
its country of residence, are exempt or are subject to a tax rate
Transfer pricing required to register for VAT purposes. Voluntary registration is variable wage (to a maximum of EGP 1,830).
of less than 75% of the tax rate in Egypt.
Related-party transactions must be conducted on arm’s-length possible below this limit.
terms. Transfer pricing rules apply to the exchange of goods, The basic wage consists of basic salary and all fixed allowances,
General anti-avoidance
services and the licensing of intangibles (brand, technology, The VAT applies at the rates of: while the variable wage comprises bonuses and incentives that
General anti-avoidance rules have been introduced into Egyptian
etc.), as well as to loans (financing, guarantee fees, cash pooling may be paid by the employer from time to time.
tax law, under which if an essential purpose of any transaction is
agreements, etc.). ®® 13% until 30 June 2017;
tax savings or the deferral of tax, the transaction may be adjusted
®® 14% from 1 July 2017; Employees pay at rates of 14% of the basic wage and 11% of the
to eliminate the benefit.
Five transfer pricing methods are specified: ®® 5% on machinery and equipment used to produce a variable wage.
In 2016, Egypt formally joined the OECD/G20 BEPS project to commodity or render a service; and
®® Comparable uncontrolled price; Statutory payments to employees under profit-sharing regulations
tackle Base Erosion and Profit Shifting. ®® 0% for exports.
®® Resale price; may not be deducted for corporate income tax purposes and are
®® Total cost plus profit margin; Stamp duty The additional tax/surcharge of 0.5% per week under the previous not subject to salary tax.
®® Profit split; and Stamp duty is charged at various rates and fixed charges. The law is reduced under the new VAT law to 1.5% per month.
®® Transactional net margin methods. rate on banking transactions is 0.1% per quarter; the rate is
20% on commercial advertisements; and from 1.08% to 10% on Goods and services provided by companies in the free zones will
Priority is given to the comparable uncontrolled price method. insurance premiums. be subject to a zero VAT rate.
However, if the information needed to apply this method is
unavailable, the other methods are used in a hierarchical order. Cash pooling Financial transactions/banking services tax
The transfer pricing rules recommend that taxpayers follow Egypt has no specific tax rules for cash pooling arrangements. There are no specific financial transactions/banking services taxes
a four‑step approach to demonstrate that their controlled in Egypt, but see Stamp duty section.
transactions are in accordance with the arm’s-length principle. Real property tax
Egyptian taxpayers are expected to prepare transfer pricing Most real property in Egypt is subject to the real estate tax.
documentation annually. The rate is 10% on the annual rental value after allowing a 30%
deduction to cover related costs for residential property (a 32%
Advance pricing agreements (APAs) are allowed under Egyptian deduction is allowed for non-residential property).
tax law, but there are no formalised procedures for applying for
an APA.12 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 13
Banking
Overview
Major banks
There are five public sector banks, 27 private and joint-venture
banks and eight branches of foreign banks in Egypt, operating a Total assets (USD millions)
Bank
total of 3,768 branches. There are also 22 representative offices of 30 June 2017
foreign banks.
National Bank of Egypt 75,460
The Egyptian banking sector is dominated by two state-owned Banque Misr 43,518
institutions: the National Bank of Egypt and Banque Misr.
Together these two banks accounted for approximately 31.7% Commercial International 16,301
of the banking sector’s total assets at the end of 2016; Egypt’s Bank (Egypt)
five largest banks by assets accounted for 63.3% of all banking Qatar National Bank Alahli 10,833
assets.
Arab African International 110,705
There are 14 banks licensed to provide Sharia-compliant Bank
products in Egypt – three full Islamic banks (Abu Dhabi Islamic Source: www.accuity.com, April 2018.
Bank (ADIB), Al Baraka Bank and Faisal Islamic Bank) and 11
conventional banks with Islamic windows.
Foreign banks, including HSBC (HSBC Bank Egypt) and Qatar
National Bank, play an active role in the country’s financial
sector. In October 2016 Barclays sold its operations in Egypt to
Moroccan bank Attijariwafa Bank, ending 150 years of operations
in the country.
The CBE plans to sell 20% of the shares it owns in Banque du
Caire and Arab African International Bank. The IPO of Banque du
Caire is expected in 2018.
Approximately 85% of Egypt’s population is unbanked, according
to the World Bank. To encourage financial inclusion and to
increase access to financial services across the country, the CBE
has introduced new regulations for mobile payments. CBE figures
indicate that there are currently more than 6.2 million mobile
payment subscribers in Egypt.
Digital banking services are being developed by the country’s
larger banks and made available to both retail and corporate
customers.14 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 15
Payment
1
Instruments
Payment statistics % value of all % volume of all
cashless payments 2015-16 cashless payments 2015-16
Thousands of transactions % change Traffic (EGP billions) % change
2015–16/ 2015–16/
2014–15 2015–16 2014–15 2014–15 2015–16 2014–15
High-value credit transfers 1,021.1 1,074.5 5.2 22,587 29,709 31.5
Cheques 3.5% Cheques 47.5%
Low-value credit and High-Value High-Value
13,439 13,500 0.4 966 1,047 8.4
debit transfers* Credit Transfers 93.2% Credit Transfers 3.9%
Low-Value Low-Value
Cheques 13,585.7 13,161.9 – 3.0 1,017.9 1,117.5 10.0
Credit Transfers 3.3% Credit Transfers 48.7%
Total 28,045.8 27,736.4 – 1.1 24,570.9 31,873.5 29.7
* Credit and debit transfers processed via the CBE ACH. Source: Central Bank of Egypt, Monthly Statistical Bulletin. Source: Central Bank of Egypt, Monthly Statistical Bulletin.
Cash Direct debits and MasterCard are the principal payment card brands issued, Electronic wallets
Cash is an important payment medium in Egypt, particularly for Direct debits are available in Egypt for low-value recurring although American Express and Diners Club credit cards are also Electronic money schemes are available in the form of reloadable
low-value retail and commercial transactions. It is estimated that payments such as utility bills. available. All cards issued are EMV-compliant. pre-paid cards.
over 94% of all transactions are conducted in cash.
Interbank direct debit payments are processed via the ACH. Government Payroll cards enable government and public Mobile wallet payment apps are offered by a number of banks
In January 2017, the CBE established the National Council for Funds are available to the beneficiary on a next-day basis. sector employees to collect their salaries and pensions via ATM and by providers such as Etisalat, Vodafone and Orange. There
Payments with the goal of transforming Egypt into a cashless terminals. There are currently five banks participating in this are more than 4.5 million mobile wallet users in Egypt, according
society. Cheques scheme. to MasterCard.
The cheque is the dominant cashless payment instrument for
Credit transfers both retail and commercial payments. Internationally branded debit and credit card payments are The Phone Cash mobile service is available to the country’s
Credit transfers in Egypt can be paper based or automated. processed by the card-issuing companies. banked and unbanked population. The service can be linked to
Cheques are processed manually by the CCH. Final settlement credit cards and payroll cards and enables the user to pay bills,
®® High-value and urgent credit transfers are cleared and settled is via the RTGS. Cheques drawn at banks within Cairo’s clearing There were 9,832 ATMs and 61,764 POS terminals in Egypt at deposit/withdraw cash and to transfer funds.
via Egypt’s national RTGS system on a same‑day basis. house district are settled on a next-day basis. All other cheques the end of 2016. The national ATM network, the 123 network, is
®® High-value credit transfers can also be effected on an can take up to five working days to clear. operated by the Egyptian Banks Company. All ATMs are EMV-
interbank basis via SWIFT’s FIN Y-Copy service (a high-value compliant. 123 is also a debit and pre-paid card brand. Its 37
settlement system) with the CBE acting as settlement agent. Card payments bank participants have issued an estimated 18 million cards.
There is limited use of payment cards in Egypt.
®® Low-value and non-urgent credit transfers are processed and
settled via the ACH. Low-value credit transfers include payroll,
There were approximately 12.1 million debit cards and 3.9 million
supplier and third-party payments. All government employees
credit cards in circulation at the end of 2016, a year-on-year fall
receive their salaries through bank accounts.
of 1.7% in debit cards but a rise of 17.6% in credit cards. Visa
1.
Central Bank of Egypt, Monthly Statistical Bulletin.16 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 17
Payment Cash
Systems Management
Type The CCH Domestic Custody and securities settlement1
The RTGS system, Egypt’s national interbank real-time gross Cheques are manually exchanged at the CCH. Notional pooling Depository
settlement (RTGS) system, is operated by the CBE. Notional pooling is permitted between resident and non-resident ®® Misr for Clearing, Settlement and Central Depository (MCDR).
Final settlement takes place across participants’ accounts held companies on a domestic and cross-border basis. One or more
The CCH (Cheque Clearing House) is operated by the CBE. at the CBE via the RTGS. Cheques drawn in Cairo are settled on legal entities may be included. The main objectives of the MCDR are to apply the central
a next-day basis. All other cheques can take up to five working depository system, effect central registry of securities traded in
The EG-ACH (Egyptian Automated Clearing House) is operated days to clear. Cash concentration the Egyptian capital markets, and facilitate securities trading on
by the Egyptian Banks Company, an organisation made up of the Cash concentration is permitted between resident and non- dematerialised shares. The MCDR also aims to undertake clearing
CBE and Egypt’s leading banks. The EG-ACH resident companies on a domestic and cross-border basis. One or and settlement on securities traded in the capital markets and
The EG-ACH processes credits and debits on a net settlement more legal entities may be included. apply the delivery versus payment system.
Participants basis.
The RTGS, CCH and ACH systems have 40 participants. Collections Settlements cycle
Final settlement takes place across participants’ accounts held at Several banks in Egypt offer cash and cheque collection services ®® T+0 for securities traded on the Intra-day Trading System.
Transaction types processed the CBE via the RTGS. to corporate clients. ®® T+1 for government bonds that are traded through the Primary
The RTGS system processes high-value and urgent EGP-
Dealers System.
denominated electronic credit transfers. In addition, it effects the Cross-border
®® T+2 for all other securities.
final settlement of participants’ net balances originating from Cross-border payments are routed via SWIFT and settled through
Egypt’s other clearing houses. accounts held with correspondent banks abroad.
Currency centre holidays
The CCH manually processes all cheque payments. 2018 1, 7, 25 Jan, 8, 9, 25 Apr, 1 May, Lifting fees
15, 16 Jun*, 1, 23 Jul, 21–23 Aug*, ®® Per mille or percentage-based fees are applied on funds
The EG-ACH processes electronic credits and debits. 11 Sep*, 6 Oct, 20 Nov* transfers between resident and non-resident accounts.
Operating hours 2019 7, 25 Jan, 25, 28, 29 Apr, 1 May,
The RTGS, CCH and EG-ACH systems operate from 08:00 to Short-term investments
5, 6 Jun*, 1, 23 Jul, 10–12 Aug*, 1 Sep*,
17:00 EST, Sunday to Thursday. ®® Interest can be earned on resident and non-residents current
6 Oct, 9 Nov*
accounts, savings accounts and short‑term deposits.
* The date shown may vary by plus or minus one day. These dates are derived by
Clearing cycle details ®® Time deposits are popular with large companies and typically
converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
The RTGS system calendar. Some of these dates cannot be determined in advance with absolute have maturities of one, three, six and 12 months.
®® 08:30–16:00 EST: the RTGS system settles transactions in real accuracy, even by the governing authorities. In the case of Muslim dates in particular, ®® Certificates of deposit are offered in EGP, USD, EUR and GBP.
the feast days are determined by the sighting of a new/full moon.
time and with immediate finality. (During Ramadan, the RTGS Maturities range up to ten years. Interest can be paid monthly,
is operational from 08:00 to 13:00.) Source: www.goodbusinessday.com. semi-annually or annually.
®® Corporate bonds are issued in EGP and are available to both
Payment instructions are submitted using SWIFT messages. residents and non‑residents.
Settlement takes place across the participant banks’
®® Treasury bills (T-bills) are issued by the CBE via weekly auctions
correspondent accounts at the CBE.
or via the secondary market. T-bills typically have maturities of
91, 182, 273 and 364 days.
®® Seven-day and 28-day repo agreements are available.
®® Money market funds are widely available.
1.
Data as at May 2017.18 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 19
Electronic
Banking
The CBE has Electronic banking is available in Egypt. There is no bank
independent electronic banking standard; each bank offers its
own proprietary systems for corporate banking purposes.
authorised Egypt Internet and mobile banking is offered by Egypt’s leading
commercial banks, but it is not commonplace. Under CBE
Banks Company to regulations, mobile banking transactions are subject to a
EGP 3,000 limit for cash withdrawals.
build and operate The CBE is keen to promote the use of electronic payments,
and mobile payments in particular, given the country’s mobile
a mobile payment penetration rate (112%). As such, it has authorised Egypt Banks
Company to build and operate a mobile payment interbank and
clearing service, the Mobile Interbank Switch.
interbank and clearing The CBE requires telecommunications companies (along with
their partner banks) to obtain a licence to operate mobile banking
service, the Mobile services from the National Telecom Regulatory Authority.
Egypt had an estimated internet penetration rate of 48% at
Interbank Switch. the end of 20171; mobile penetration is an estimated 111%2;
smartphone penetration is 57%3.
1.
www.statista.com.
2.
BuddeComm.
3.
Focus on Egypt, 2017, mideastmedia.org.20 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 21
Trade
Finance
Exporters must Imports
Documents
Prohibited imports
A negative list (of products that may not be imported) is in
Key import partners
In order to import goods into Egypt, a customs declaration, operation. It is prohibited to import certain commodities into
register with the commercial invoice (including a full description of the imported
goods), bill of lading, custom procedural certificate, delivery order,
Egypt, in order to protect fauna and flora, and for national
security and property reasons.
China 13%
GOEIC. They must
packing list and certificate of origin are required. Imports also
require an inspection report. Imports of used telecommunications materials for trading Germany 8.8%
purposes are prohibited. USA 5.4%
meet a minimum
Licences Italy 4.6%
All importers are required to register with the General Exports Turkey 4.3%
Organisation for Export and Import Control (GOEIC) within the Documents Saudi Arabia 4.2%
capital requirement Ministry of Foreign Trade and Industry. All registered importers
must be Egyptian nationals and satisfy a number of conditions,
In order to export goods from Egypt, a customs declaration,
commercial invoice, packing list, customs procedural certificate,
Russia 3.8%
including those regarding financial liability. export statistical form, bill of lading and certificate of origin are
of EGP 3,000 and Payments for imports must be made through a bank operating in
required.
Key export partners
Exports also require a technical standard or health certificate.
must not have a
Egypt.
Taxes/tariffs and other fees Licences
Exporters must register with the GOEIC. They must meet a
criminal record.
Egypt is a member of the Common Market for Eastern and
Southern Africa (COMESA). Tariffs on trade within the COMESA minimum capital requirement of EGP 3,000 and must not have a
UAE 13%
free trade area have been abolished. criminal record.
Saudi Arabia 7.8%
Taxes/tariffs and other fees Italy 6.6%
Egypt is also a participant in the Agadir Agreement, a free trade
agreement between Egypt, Jordan, Morocco and Tunisia. No taxes are charged on exports from Egypt. Turkey 6.4%
UK 4.47%
As a member of the Greater Arab Free Trade Area (GAFTA), Egypt Prohibited exports USA 4.5%
has eliminated most trade tariffs with GAFTA’s 16 other member A negative list (of products that may not be exported) is in Lebanon 3.6%
states. GAFTA has established a bilateral free trade agreement operation.
with the USA. Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017
Financing imports and exports (https://www.cia.gov/library/publications/resources/the-world-factbook/index.html).
Imports are separated into six groups for tariff purposes ranging Imports
from 2% up to 32%. There are no financing requirements for imports.
There are ten free trade zones in operation in Egypt (Alexandria, Exports
Nasr City, Port Said, Port Said East, Suez, Ismailia, Damietta, There are no financing requirements for exports.
Shebin El Kom, Keft and Media Production City). There is also a
North-West Suez Special Economic Zone near the Red Sea Port
of Sokhna.22 HSBC Treasury Management Profile 2018 | Egypt HSBC Treasury Management Profile 2018 | Egypt 23
Useful
Websites
Central Bank of Egypt www.cbe.org.eg
Leading Banks: Arab African International Bank www.aaib.com
Banque Misr www.banquemisr.com
Commercial International Bank (Egypt) www.cibeg.com
National Bank of Egypt www.nbe.com.eg
QNB Alahli www.qnbalahli.com
Egyptian Banking Institute www.ebi.gov.eg
Federation of Egyptian Banks www.febanks.com
Egyptian Banks Company www.egyptianbanks.com
Disclaimer
Ministry of Industry and Foreign Trade www.mti.gov.eg
Ministry of Investment and International Cooperation www.miic.gov.eg/English This document has been produced by HSBC Bank plc and members of the HSBC Group (“HSBC”), together with their third-party contributor, WWCP Limited. We make no
representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities
arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business
Ministry of Finance www.mof.gov.eg
to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial,
legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The
Egyptian Export Portal www.expoegypt.gov.eg information contained in this document has not been independently verified by HSBC.
Federation of Egyptian Chambers of Commerce www.fedcoc.org.eg
This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or
services provided by HSBC or any form of cooperation between HSBC and the respective third parties.
General Authority for Investment and Free Zones www.gafi.gov.eg
Under no circumstances will HSBC or the third-party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption
The Egyptian Exchange www.egx.com.eg
or projection contained in this document or any other written or oral information provided in connection with the same, or (ii) any loss or damage (whether direct, indirect,
consequential or other) arising out of reliance upon this document and the information contained within it.
Common Market for Eastern and Southern Africa www.comesa.int
HSBC and the third-party contributor do not undertake, and are under no obligation, to provide any additional information, to update this document, to correct any
inaccuracies or to remedy any errors or omissions.
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