Egypt's Financial Regulatory Authority broadens foreign currency financing for leasing, factoring and SME finance

Egypt’s Financial Regulatory Authority has amended its foreign currency nonbank financing rules to address practical issues affecting financial leasing and factoring. The changes permit foreign currency sale-and-leaseback financing for imports, asset purchases or foreign currency obligations arising from a client’s business. Such financing and financing for import transactions must be supported by documentary credit records or other evidence of completion, although clients operating in free zones are exempt from this condition. For international factoring, free-zone assignor companies will be treated as external parties. In nonrecourse transactions where no correspondent factor is available, factoring companies may instead use a bank, insurer, venture capital company, foreign financing entity or another party accepted by the authority to safeguard participants’ rights. For recourse factoring, foreign currency financing may proceed without those entities. The amendments also expand funding sources for leasing, factoring and small and medium enterprise finance companies to include loans from shareholders, subsidiaries and sister companies, as well as other sources approved by the authority.