• Activate, via a presidential decree, the coordination council, which serves as a channel through which the government and the CBE work together to set monetary policy goals. This does not undermine the independence of CBE, especially that its law requires that CBE and the government collaborate, through this council, to reach an agreement on the goals of the monetary policy.

• CBE must launch an intensive campaign to promote a program for providing low-cost financing for the purchase of capital equipment, as well as developing and modernizing the current production capacities. In light of the current circumstances, it is important to revisit the restrictions imposed on banks with regard to contributing to share capitals in new companies; these restrictions constraint the diversification of the financing process.

• Activate CBE’s decision regarding the setting up of small bank branches in governorates and remote areas. The current fees for opening bank accounts must be lowered, and the procedures simplified to encourage citizens to open accounts.

On May 10, 2020, CBE issued a number of instructions, which entailed the following:

• Suspending all fees and commissions on POS, ATMs, and electronic wallets for 6 months, as well as exempting in-country local currency transfers from all the fees and charges for 3 months.  
• Raising the maximum limits for mobile phone accounts and prepaid cards; allowing banks to open internet and mobile accounts for existing clients using the data held by the bank; using electronic identification procedures for new clients, and allowing the issuance of electronic wallets and prepaid cards at no fee for 6 months. 
• Setting a temporary daily limit on withdrawals and deposits for individuals: LE 50,000 in banks’ branches and LE 20,000 from ATMs.

• Provide foreign currency to import production inputs/necessities to avoid having an insignificant pricing that does not reflect the reality of pricing and falls under haphazard/random estimations

• To have a clear monetary policy that must be compatible with a fiscal policy that is stable and transparent.

• In spite of all efforts exerted to promote financial inclusion and limit cash transactions, a number of institutional and legislative barriers continue to persist.

• Address the legal and institutional barriers to creating a cashless economy.
• Expedite the issuance of the executive regulations of Law No. 18 of 2019— The Use of Cashless Payment Methods Law.

• On March 11, 2019, the House of Representatives passed a law to regulate the use of non-cash means of payment. Law No. 18 of 2019 was signed by the President and published on April 16, 2019. Issuance of the law’s executive regulations and its implementation and enforcement remain to be seen.  

• With few exceptions, all laws regulating sovereign payments do not include provisions that require electronic or bank payments. Currently, the use of an electronic payment mechanism is required only under Law 201 of 2014 (amending the Income Tax Law No. 91 of 2005) and Decrees No. 117 and 172 of 2015 issued by the Minister of Finance, which pertain to income tax payments.

• Amend the relevant laws regulating sovereign payments so that they mandate the use of bank or electronic payment methods for concluding transactions that exceed a prescribed threshold amount. The amendments should also allow the use of mobile payments for transactions that fall below the threshold amount.
• Enforce the law with respect to transactions carried out by the private sector or individuals if the transaction amount exceeds the thresholds stipulated in the law or its executive regulations, once issued.

• Law 18 of 2019 requires all government entities, state-owned companies, and private enterprises to use cashless means for making all payments to their employees, experts, and board and committee members, as well as the social insurance subscriptions. Besides, the law requires government entities and agencies, and public legal persons, referenced in Article 2, to pay all dues to contractors, suppliers, and service providers through non-cash methods, whenever the dues exceed a specified threshold amount to be specified in the executive regulations of the law.

• None of the laws regulating non-bank financial services include any provision that requires parties to use electronic payments or payments through bank accounts (e.g. Companies Law, Capital Market Law, Insurance Services Law, Mortgage Law and Financial Leasing Law). 

• Include new provisions in the laws regulating non-bank financial services, such that non-cash payment mechanisms—bank accounts or electronic means, including mobile phones—become mandatory for concluding any transaction that involves buying, selling, installment payments, lease payments, or others.

• Article 5 of Law No. 18 of 2019requires the use of non-cash payment methods, whenever the due amount exceeds a threshold to be specified in the executive regulations. This applies to the following payments: 

1. Taxes; customs duties; fees and fines.
2. Service fees and other dues owed to entities referenced in Article 4 of Law 18 of 2019. 
3. Cash finance installments, insurance policy premiums, syndicate subscriptions, and private insurance funds subscriptions. 
4. The disbursement of subsidies and donations through civil society organizations.

•  The collection of payments associated with the sale, lease, use, or usufruct, of land, property, or express transport vehicles, by the state authorities, juridical persons, and establishments referenced in Article 2 of the law.

• The National Council for Payments does not have in place a clear plan, with specific interim objectives to guide the universal implementation of the cashless payment system.

• The National Council for Payments should develop a national plan, which includes clearly defined interim objectives, well-developed implementation mechanisms, and criteria for measuring and assessing performance.

• The Minister of Finance announced that the rate of electronic collection of taxes and customs duties has increased.
• CBE has introduced a national e-payment system (Meeza Card), which provides users access to various financial services, thus enhancing financial inclusion. 
• The Minister of Interior presented an updated overview of the scheme to develop the national ID smart card.

• The disconnect between the government’s efforts to transition to a cashless economy and its digitalization plan.

• Transitioning to a cashless economy should not be limited to automation; rather, moving to cashless transactions is an integral part of the digitalization process. 

Delays in customs clearance result in many challenges, including:

• Disruption of production, undermining the ability of industrialists to meet deadlines and diminishing the efficiency of working capital. Ultimately businesses incur significant losses due to late delivery penalties that they have to payout. 
• Burdening businesses with excessive storage fees, as trucks wait long in ports awaiting loading.

Several factors contribute to customs clearance delays, including:

• The procedures for inspecting, appraising, reviewing, and examining cargoes are laborious and lengthy.  
• The opening and full inspection of export containers in the customs area, with no consideration given to putting into effect the whitelist, which includes exporters with a solid track record of fulfilling the customs requirements on time. 
• Prolonged cargo clearance processes in airports, particularly with the introduction of one-stop shops (the process can take up to 3 months), noting that fees can reach LE 1,300 per shipment.
• Fees for laboratory analysis fluctuate, even when the volume/quantity of the sample remains fixed.
• In some instances, the Customs Authority will stop doing business with some inspection companies without notifying importers. 
• Many spaces that are designated for cargo examination are located outside the customs area, which prolongs the time period for sample examination.
• The severe shortage of ultrasonic testing equipment, and the reliance on the manual examination and inspection, which entails opening the containers.
• The insufficient number of laboratories in customs points to carry out all kinds of analysis and testing.
• The continued reliance on traditional paper-based processes, rather than adopting digital communication methods for interacting with clients or other government entities. 
• The less than adequate digital interconnectivity across the various customs points, especially in remote areas, which results in delays in cargo release. 
• For cargoes that require a permit from the Ministry of Health, the Customs Law does not provide for a specific time frame for completing the sample inspection. In some instances, the inspection takes up to 25 days due to strikes by workers of the Central Laboratories (affiliated with the Ministry of Health) in the Port of Alexandria. As a result, samples are sent to Cairo for analysis, which leads to the accumulation of samples awaiting analysis, and thus delays in the clearance process.  
• Due to the poor coordination among the different competent entities, customs officials sometimes issue arbitrary decisions to halt the clearance of shipments, which disrupts work.  

The following examples illustrate the problem:

• The release of shipments containing materials used in the manufacturing of cosmetics came to a halt in border customs points until the payment of the health stamp tax (retroactivity, going back to 2015). This decision was based on a decree issued by the Ministry of Health; however, the said decree did not pertain to cosmetics, but rather pharmaceuticals, and had no legal basis.
• Customs officials suspended export shipments of tea bags for weeks, on account of an internal circular concerning tobacco, which had nothing to do with tea.
• An examination of frozen corn shipments intended for human consumption came to a stop in response to a letter from the commercial representation office in Spain, the country of origin; the letter noted injuries in the corn crop, however, without providing any scientific evidence.

• The Prime Minister issued Decree No. 20 of 2019 forming a ministerial committee to monitor the implementation of the single-window system. The system, which aims at facilitating trade and improve the investment climate, is implemented by the Ministry of Finance.
• The Minister of Finance issued Decree No. 74 of 2019, which stipulates that an Egyptian company, MTS Logistics, shall implement, manage and operate the national single-window system in accordance with the contract concluded with the Customs Authority. The implementation framework for the single-window system was released.
• The plan, including the timetable, for developing and implementing customs applications for the national single-window system for foreign trade was released.
• A study prepared by the Ministry of Planning and Administrative Reform on rationalizing imports and developing exports included the following two key recommendations:

1. Continue with the efforts to prevent smuggling at customs points and harshen the penalties against smugglers.
2. Accelerate electronic connectivity between the Customs Authority, GOEIC, and IDA to reduce the time and cost of transactions.

• The ceramics industry did not take advantage of CBE’s COVID-19 related initiatives. 

• Launch a special initiative to support the ceramics industry; the initiative should address the price of natural gas and offer finance instruments that the factories can benefit from. 

• Access to affordable finance.

• Encourage the banking sector to provide low-cost loans and short-, medium, and long-term finance to the industry. 
• Review the status of the distressed factories and explore different mechanisms, including creating a special fund, that will help them operate at maximum capacity.