Last week, the General Authority for Investment and Free Zones(GAFI), Financial Regulatory Authority [FRA) and the Information Technology Industry Development Authority (“ITIDA”) signed a cooperation protocol. This protocol aims to create an attractive legislative and procedural climate for investment in Egypt.
Protocol also involves finding innovative solutions to fit the nature and work of emerging companies, facilitating transactions and creating a work environment for entrepreneurs to attract international and local capital to finance the growth and partnerships of start-ups in Egypt.
Amr Mahfouz, CEO of ITIDA, stated that start-ups are one of the most important sources for investment and job creation in Egypt. This sector has seen remarkable prosperity and steady growth in investments over the past years. It is expected that there will be more growth this year.
Mahfouz stated that the three bodies collaborated with Abdel Shaheed Law Firm for the formulation of the necessary procedures to improve the sector’s investment potential.
The process of evaluating start up companies is one of these procedures. It was left to the investors and start-ups to decide.
The cooperation protocol between these entities encourages investment in Egyptian start–ups; attracts capital and finance to them; and establishes more local, regional and international partnerships that help to increase the added value of Egypt’s economy and make Egypt a regional or international centre for technology based creativity and entrepreneurship.
GAFI will prepare the protocol and prepare a unified form for the shareholders agreement to create start-up companies. They will also verify that the initial evaluation of emerging businesses was valid by estimating the amount of investment required to operate the activity and determine the timing and method of pumping in new investments through public offerings or mergers.
The FRA will also establish controls to facilitate the transfer of ownership of companies or entities that engage in risk capital activity through investing in emerging businesses via financing tools that can convert into shares ownership. It will also determine procedures for transferring shares ownership in emerging businesses in order for the Egyptian Exchange to implement ownership transfers.
The ITIDA will offer greater protection to minority investors in emerging companies by introducing new mechanisms like including appropriate clauses into shareholder agreements. It also addresses the needs of start ups to join them.
It is worth noting, that the ITIDA has formulated and co-authored a comprehensive five year strategy with global consultancy Deloitte, which is being funded by USAID.
The strategy has four main axes: enhancing the work environment of start-ups and their growth factors; facilitating access finance and investments; developing technical skills and increasing the number of professionals to facilitate their access; and creating a climate that encourages pioneering and innovative thinking.
2022 Daily News Egypt. SyndiGate Media Inc.Syndigate.info).
Mohamed Alaa El-Din